2017-19 Postsecondary Budget Recommendations

Indiana Commission for Higher Education

October 28, 2016

Overview

• Performance Funding for Higher Education

• Indiana and the National Landscape

• Budget Process and Components

• Staff Budget Recommendation

Indiana’s Performance Funding for Higher Education

6 Performance Funding Metrics

• Overall Degree Completion

• On-Time Degree Completion Rate

• At-Risk Degree Completion (PELL)

• High-Impact Degree Completion (STEM)

• Remediation Success Rate

• Persistence Counts

Overall Degree Completion Increasing Statewide

*18-29 credit hour certificates are included for the first time.

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Increase

18-29 Credit Hour Certificates 388 1,119 2,186 2,121 2,723 2,297 492%

1 Year Certificates 2,199 2,683 3,318 4,602 7,267 7,722 251%

Associate Degrees 7,417 8,676 9,665 10,201 10,867 10,951 48%

Bachelor Degrees 20,312 21,089 22,474 23,295 23,392 23,933 18%

Masters Degrees 4,402 4,747 4,854 5,058 4,770 4,343 -1%

Doctoral Degrees 778 828 830 832 830 902 16%

TOTAL OVERALL DEGREES CONFERRED 35,496 39,142 43,327 46,109 49,849 50,148 41%

Statewide Overall Degree Completion

On-Time Graduation Rates Increasing Statewide

*Increases in on-time completion achieved at all 15 campuses.

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Increase

2 Year Institutions (Associates Only) 5.3% 4.1% 3.4% 4.5% 6.9% 7.5% 2.2%

4 Year Institutions (Bachelor Only) 27.2% 28.2% 29.8% 31.6% 32.0% 36.2% 9.0%

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Increase

2 Year Institutions (Associates Only) 601 500 474 421 641 665 11%

4 Year Institutions (Bachelor Only) 6,103 6,424 6,988 7,418 7,433 8,253 35%

Statewide On-Time Graduation Rate Increase

Statewide On-Time Completers

At-Risk & High Impact Degree Completion Increasing Statewide

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Increase

18-29 Credit Hour Certificates 182 640 1,196 1,351 1,455 1,346 640%

1 Year Certificates 850 1,326 1,735 2,669 3,525 4,123 385%

Associate Degrees 2,684 3,521 4,161 5,337 4,924 5,006 87%

Bachelor Degrees 5,032 6,197 6,855 7,716 7,781 7,969 58%

TOTAL OVERALL DEGREES CONFERRED 8,748 11,684 13,947 17,073 17,685 18,444 111%

Statewide At-Risk Degree Completion

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Increase

Bachelor Degrees 3,184 3,405 3,464 3,515 3,561 3,899 22%

Masters Degrees 492 564 644 581 560 585 19%

Doctoral Degrees 179 181 182 209 191 203 13%

TOTAL OVERALL DEGREES CONFERRED 3,855 4,150 4,290 4,305 4,312 4,687 22%

Statewide High-Impact Degree Completion

Remediation Success Rates Statewide

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Change

Only Math Courses

Gateway success rate 28.5% 24.2% 19.2% 24.7% 25.3% 28.5% -0.03%

Only English Courses

Gateway success rate 25.6% 21.8% 20.6% 19.8% 21.1% 32.2% 6.66%

Both Math and English Courses

Gateway success rate 12.7% 9.3% 9.3% 13.0% 14.9% 17.1% 4.44%

Statewide Remediation Success Rates

Statewide Persistence Benchmarks Show Declines

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

5 YR %

Change

2 Year Institutions (Persistence)

Completed 15 Credit Hours 31,289 30,404 28,698 28,134 19,947 18,015 -42%

Completed 30 Credit Hours (2YR) 18,644 21,870 20,240 18,685 16,572 14,996 -20%

Completed 45 Credit Hours 12,836 15,522 15,817 14,475 13,661 12,637 -2%

4 Year Institutions (Persistence)

Completed 30 Credit Hours (4YR) 9,080 9,316 9,454 9,136 9,575 9,011 -1%

Completed 60 Credit Hours 9,337 9,506 9,576 8,173 8,161 8,566 -8%

OVERALL STUDENTS PERSISTING 81,186 86,618 83,785 78,603 67,916 63,225 -22%

Statewide Persistence Counts

• Persistence benchmarks are closely and more quickly correlated to enrollment changes, which accounts for much of the declines presented here.

• The success rate of persistence benchmarks is slightly increasing.

Persistence Success Rates (2-Year)*3 Years of Data Available

37.0% 37.5% 37.4%

21.9%22.4% 22.2%

14.8%15.3% 15.4%

2013 2014 2015

15 Credits 30 Credits 45 Credits

Persistence Success Rates (4-Year)*3 Years of Data Available

42.7%

48.0% 48.1%

23.9%25.1%

27.3%

2013 2014 2015

30 Credits 60 Credits

Resident FTE Enrollment w/ Ivy Tech

Resident FTE Enrollment w/o Ivy Tech

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24,000

26,000

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Resident FTE Excluding Ivy Tech (UG and Grad)

BSU

ISU

IUB

IUPUI

PUWL

USI

Vincennes

IU Regional

PU Regional

Indiana and the National Landscape

Indiana’s Enrollment Increase Since 2008 Near National Average

8.2% 8.6%

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FULL-TIME EQUIVALENT (FTE) ENROLLMENT: PERCENT CHANGE SINCE RECESSION (2008-2015)

Indiana’s Funding for Higher Education Decreased Less than Most States

-15.3%

-8.0%

-50.0%

-25.0%

0.0%

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50.0%

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EDUCATIONAL APPROPRIATIONS PER FTE (CONSTANT DOLLARS):PERCENT CHANGE SINCE RECESSION (2008-2015)

Indiana’s Tuition Increases Among Lowest in Nation

11.6%

31.8%

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

250.0%

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NET TUITION REVENUE PER FTE (CONSTANT DOLLARS):PERCENT CHANGE SINCE RECESSION (2008-2015)

Indiana’s Degree-Completion Growth is Outpacing the National Average

21.7%

34.3%

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TOTAL DEGREES AWARDED, EXCLUDING CERTIFICATES:PERCENT CHANGE SINCE RECESSION (2008-2014)

With Certificates, Indiana’s Growth is 2nd Highest in the Nation

12.7%

44.5%

-20.0%

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CERTIFICATES AND DEGREES PER 100 FTE:PERCENT CHANGE SINCE RECESSION (2008-2014)

Per Capita Income

$39,257 $40,068 $39,822

$40,508

$41,940

$44,732

$45,698 $45,237

$46,469

$48,112

$30,000

$32,000

$34,000

$36,000

$38,000

$40,000

$42,000

$44,000

$46,000

$48,000

$50,000

2011 2012 2013 2014 2015

Per Capita Personal Income - Adjusted for Inflation 2011 - 2015

Indiana United States

2-Year % Change (2013 Base Year)

1.74%

3.61%

1.71%

0.92%

3.72%

5.21%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

CPI-Urban CPI (Less Food/Energy) CPI (Education &Communication)

CPI (Midwest) HECA HEPI

2 Year % Change

Average 2 Year % Change = 2.82%

3-Year % Change (2012 Base Year)

3.23%

5.44%

3.26%

2.33%

5.60%

6.86%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

CPI-Urban CPI (Less Food/Energy) CPI (Education &Communication)

CPI (Midwest) HECA HEPI

3 Year % Change

Average 3 Year % Change = 4.45%

State v. Higher Ed Funding

INDIANAHigher Ed State GF

OperatingState General Fund

Operating % of Total Budget

2011 $1,754,481,203 $13,904,128,619 12.6%

2012 $1,696,072,128 $13,710,536,895 12.4%

2013 $1,701,724,252 $14,055,686,287 12.1%

2014 $1,824,198,503 $14,775,090,173 12.3%

2015 $1,807,462,173 $15,016,689,596 12.0%

2016 $1,884,453,974 $15,089,859,909 12.5%

2017 $1,901,745,590 $15,524,340,987 12.3%

2 Year % Change 5.2% 3.4%

5 Year % Change 12.1% 13.2%

5 Year CAGR 2.3% 2.5%

Indiana’s Higher Education Budget

Review of Budget Process

• Spring 2016 – Commission voted to maintain the performance funding metrics with two minor adjustments: retiring the institutionally defined metric and adding 18-29 credit hour certificates for two-year institutions

• September/October 2016 – Institutions presented budget requests to Commission

• October 2016 – Budget and Productivity Committee (including full Commission) to discuss budget recommendation development

• November 2016 – Commission votes on final budget recommendation

• December 2016 – Commissioner presents 2017-19 budget recommendation for higher education to State Budget Committee

Goals for Commission Recommendation

1. Align recommendation to Indiana’s Reaching Higher, Delivering Value strategic plan for higher education.

2. Align recommendation to support improved student success and completion—as well as greater affordability.

3. Maintain Indiana’s commitment to student financial aid.

4. Maintain state’s support for higher education.

5. Increase pool for performance funding and the amount of institutions’ total budget funded through performance.

Components of Higher Education Budget

About the Budget Components

• Operating – Largest portion of higher education funding; direct state support to institutions

• Student Financial Aid – State tuition and fee support to students attending postsecondary institutions in Indiana

• Debt Service/Capital – State support for academic/administrative buildings bonded through student fees

• Institution Line Items – Specific line items housed within institutions for programs and services outside of the general operations (includes dual credit)

• Repair and Rehabilitation – State support for maintenance and upkeep of academic/administrative buildings

• Other Higher Education Line Items – State support for higher education functions, such as CHE, Medical Education Board, leases, Statewide Transfer Website, Budget Agency, etc.

Budget & Productivity Subcommittee Budget Recommendation to Full

Commission

Budget Inputs

• Increase performance funding pool to 7% in FY18 with 3.7% reallocation and 3.5% new funds

• Increase performance funding pool to 8% in FY19 with 4.3% reallocation and 4% new funding

– New funding reflects Commission’s commitment to partnering with institutions to increase the level of performance funding in Indiana

– Recognizes institutions’ commitment to keeping tuition increases low

• Fund previously existing line items with a maximum increase being the lesser of the requested amount or 3.5% increase

• Fund USI’s security line item

• Fund dual credit at $50 per credit hour

Budget Inputs Continued

• Fund capital based on university submitted requests:• IU $78.5M (Priority 1) • PU $69M (Priority 1) • BSU $77.6M (Priority 1/minus $9.9M reduction/match agreement) • USI $41M (Funds only request) • Ivy Tech $78.9M (Priorities 1 & 2) • VU $22M (All) • ISU $15M (Funds only request)

• Resulting statewide debt ratio is 9.4% in FY18 and 10.7% in FY19 • CHE recommended in 2015-17 11.1% and 10.6% in FY16/FY17

• Fund R&R at .50% (matching 2013-15 & 2015-17 levels) reflecting a 5.6% increase overall

• Commitment to maintaining support for financial aid

Statewide Budget Recommendation