The Instructional Subsidy
A Workshop on the Calculation of the Instructional Subsidy
Ohio Board of RegentsWinter, 2000
Presented by:
Deborah Gavlik, Director of Budgets and Resource Planning
Andy Lechler, Senior AnalystRich Petrick, Vice Chancellor for
Finance
Objectives of Workshop
Provide an introduction to the instructional subsidy;
Walk through the calculation of the instructional subsidy step by step;
Give participants the opportunity to perform calculations themselves;
Informal Q & A
Overview of Agenda -- Key Components
FTEs The Conversion Factor Two-Year and Five-Year FTEs
Allowances (from Resource Analysis) Instruction and Support Student Services Plant Operation and Maintenance
Overview of Agenda -- Key Components
Fee Assumptions Also known as ‘Local Contribution’
Overview of Agenda -- Calculations
Base Subsidy Activity-Based Earnings + Doctoral Subsidy
Square-Foot Based POM AdjustmentGuarantee or Hold HarmlessCapital Deduction “Late Space” DeductionTotal Subsidy
I. Counting Students for Subsidy Purposes
Annualized FTEsAll-terms FTEsEligible FTEs
Then -- Annualized FTEs
Used prior to FY 1999 instructional subsidy
Counted as of the 14th day of summer and fall terms
Definition of annualized FTE: Fall CH/15 + Summer CH/45 (quarters) or /30 (smstr)
Now -- All-Terms FTEs
More accurate way of counting students Reported after the end of the term, as of the 15th
day of the term by the Registrar’s office; Discourages ‘front-loading’ Rewards campuses for retaining students:
more subsidy if retain students throughout the year; course enrollments move from lower to higher models
as students progress.
Recognizes winter and spring term enrollment change
Now -- All-Terms FTEs
= 30 semester hours or 45 quarter hours;
For FY 2000 calculation, FTE data obtained through HEI for the first time
No current year data used -- lagged one year
Eligible and Ineligible FTEs
Some Key Factors Affecting Eligibility Rank Residency Selective Service Fees Paid
II. The Conversion Factor
Interim adjustment needed in the transition from annualized to all-terms FTEs
The Conversion Factor -- Why Is It Needed?
Cost allowances are now calculated in Resource Analysis based on annualized FTEs (legacy of old system)
Generally, # annualized FTEs > # all-terms FTEs
But expenditures = actual annual amounts, and do not change
The Conversion Factor -- Why Is It Needed?
Therefore, cost/annualized FTE < cost/all-terms FTEs
Without an adjustment -- a conversion factor -- we would not model expenditures correctly
Conversion factor is an interim adjustment
What is the Conversion Factor?
Ratio to Convert All-Terms FTEs to Annualized FTEs
How calculated: Ratio of Annualized FTEs/All Terms FTEs, Statewide, by Model
FY 1996 and 1998 ratios averaged to obtain conversion factors for FY 2000 and FY 2001
Calculation of the Conversion Factor, General Studies I Model
General Studies I Model- FY 1996 Annualized to All-Terms FTE Ratio = 1.089
General Studies I Model- FY 1998 Annualized to All-Terms FTE Ratio = 1.0902
Average = (1.089+1.0902)/2 = 1.0905
CINCINNATI CINCINNATISUBSIDY SUMMARY - FY 2001
Instruction & Support $87,875,839Student Services $13,195,972POM $25,019,565Base Subsidy (Excluding Doctoral Allocation) $126,091,376
Doctoral Allocation (@ 100% --->) $33,574,893 Will be reduced by 2% per Grad Funding Recommendations
Total Base Subsidy $159,666,269
Subsidy Based on : 5-Year Average
ADJ USTMENTSPOM Calculation: NASF POM= $27,150,545 Activity POM= $25,019,565
POM ADJ USTMENT Revised Activity POM (Capped at 177% of NASF POM) $2,130,980
TOTAL SUBSIDY $161,797,249
Capital Deduction (1st + 2nd Cycle) $0
RATES PER SUBSIDY-ELIGIBLE FTE
Instruction & Local Student ConversionSupport Costs Contribution Services POM Weights for
FY 01 FY 01 FY 01 FY 01 Both Years3,762.00 3,415.00 594.00 488.00 1.09054,305.00 3,415.00 594.00 584.00 1.13305,259.00 3,415.00 594.00 1,217.00 1.04505,012.00 3,415.00 594.00 553.00 1.03458,477.00 3,415.00 594.00 1,175.00 1.05906,611.00 3,947.00 594.00 655.00 1.05007,582.00 3,947.00 594.00 1,109.00 0.9840
10,574.00 3,947.00 594.00 1,598.00 1.011012,300.00 8,297.00 594.00 1,022.00 1.064517,558.00 8,297.00 594.00 1,895.00 1.069523,214.00 8,297.00 594.00 2,614.00 1.117019,647.00 8,297.00 594.00 1,382.00 0.966525,840.00 8,297.00 594.00 2,613.00 1.008027,709.00 10,780.00 594.00 2,485.00 1.002539,323.00 15,105.00 594.00 3,362.00 1.0000
Conversion Factor, Example of General Studies I Model
General Studies I - FY 1998 Eligible All-Terms FTEs - 3,188 Conversion Factor - 1.0905 3,188 X 1.0905 = 3,477
General Studies I- FY 1999 Eligible All-Terms FTEs - 3,160 Conversion Factor - 1.0905 3,160 X 1.0905 = 3,446
All-terms All-terms All-terms All-terms All-terms All-termsFinal FY 98 all-terms1/10/1999 1/10/1999 Revised 2/99 FY 1999 FTEs FY 1999 FTEs
CINCINNATI Total CINCINNATI FY 1998 FTEs Total Ineligible EligibleMODEL Ineligible Eligible FTEs CINCINNATI FY 1999 FTEs as of 10/4/99
Ineligible EligibleGENERAL STUDIES I 3,370 182 3,188 3,341 181 3160GENERAL STUDIES II 3,185 198 2,987 3,098 186 2912GENERAL STUDIES III 980 51 929 927 55 872TECHNICAL I 425 15 410 419 16 403TECHNICAL III 200 8 192 211 11 200BACCALAUREATE I 3,344 159 3,185 3,349 161 3188BACCALAUREATE II 2,993 270 2,723 3,142 309 2833BACCALAUREATE III 2,668 338 2,330 2,498 327 2171MASTERS & PROF I 961 2 959 1,067 1 1066MASTERS & PROF II 1,220 1 1,219 1,292 3 1289MASTERS & PROF III 505 0 505 489 0 489DOCTORAL I 608 16 592 544 32 512DOCTORAL II 920 13 907 890 10 880MEDICAL I 0 0 0 0MEDICAL II 659 659 663 0 663TOTAL 22,038 1,252 20,899 21,930 1,292 20,638
TOTALFY 1998 FY 1998 FY 1998 FY 1999 FY 1999 FY 1999
MODEL Total Ineligible Eligible Total Ineligible EligibleGENERAL STUDIES I 3,675 198 3,477 3,643 197 3,446GENERAL STUDIES II 3,609 224 3,384 3,510 211 3,299GENERAL STUDIES III 1,024 53 971 969 57 911TECHNICAL I 440 16 424 433 17 417TECHNICAL III 212 8 203 223 12 212BACCALAUREATE I 3,511 167 3,344 3,516 169 3,347BACCALAUREATE II 2,945 266 2,679 3,092 304 2,788BACCALAUREATE III 2,697 342 2,356 2,525 331 2,195MASTERS & PROF I 1,023 2 1,021 1,136 1 1,135MASTERS & PROF II 1,305 1 1,304 1,382 3 1,379MASTERS & PROF III 564 0 564 546 0 546DOCTORAL I 588 15 572 526 31 495DOCTORAL II 927 13 914 897 10 887MEDICAL I 0 0 0 0 0 0MEDICAL II 659 0 659 663 0 663TOTAL 23,179 1,306 21,872 23,062 1,343 21,720
All-terms FTEs Weighted by the Conversion Factor
III. 2-Year and 5-Year FTE Average
Why use the 2 and 5 year average? Winning answer gets a special Regents’ cup of coffee...
Calculation of Two-Year Average FTE
Average of FY 1998 all-terms FTE and FY 1999 all-terms FTE, weighted by the conversion factor
FY 1998 FTEs come from the www-based subsidy FTE
FY 1998 = 3,477 (all-terms, converted)FY 1999 = 3,446 (all-terms, converted)Average = (3,477 + 3,446)/2 = 3,461
Calculation of Five-Year Average FTE
Average of FY 1995, 1996, 1997 eligible FTE (annualized) and FY 1998 and FY 1999 eligible all-terms FTE, weighted by the conversion factor
Calculation of Five-Year Average FTE
FY 1995 = 3,605 (annualized)FY 1996 = 3,544 (annualized)FY 1997 = 3,619 (annualized)FY 1998 = 3,477 (all-terms, converted)FY 1999 = 3,446 (all-terms, converted)Average = (3,605 + 3,544 + 3,619 +
3,477 + 3,446) / 5 = 3,538
Eligible FTES Used in the FY 2000 Calculation Eligible FTES Used in the FY 2001 CalculationAll-terms FTEs are weighted by the conversion factor All-terms FTEs are weighted by the conversion factor
TOTAL (Includes buffered Med II FTEs) (Includes buffered Med II FTEs)
MODEL 2-Year FTE Average5-Year FTE Average 2-Year FTE Average 5-Year FTE Average
GENERAL STUDIES I 3,461 3,538 3,514 3,534GENERAL STUDIES II 3,342 3,251 3,434 3,338GENERAL STUDIES III 941 1,006 957 990TECHNICAL I 421 422 426 419TECHNICAL III 208 231 207 220BACCALAUREATE I 3,346 3,440 3,367 3,394BACCALAUREATE II 2,734 2,612 2,722 2,641BACCALAUREATE III 2,275 2,567 2,265 2,493MASTERS & PROF I 1,078 1,046 1,052 1,038MASTERS & PROF II 1,341 1,424 1,358 1,386MASTERS & PROF III 555 580 611 610DOCTORAL I 534 630 603 634DOCTORAL II 901 1,108 998 1,078MEDICAL I 0 0 0 0MEDICAL II 773 778 774 777TOTAL 21,910 22,633 22,288 22,552
IV. Resource Analysis
How we determine costs (allowances) per FTE
Resource Analysis
Used to calculate the statewide average cost of instruction per FTE in the various subject areas and subsidy models
Costs reported in several categories: faculty salary administration library academic support plant operations and maintenance
Resource Analysis
Historical costs allocated to subject and level, and model
RA uses data about: student enrollments in courses salaries of instructors teaching the courses the space used by academic departments.
http://www/regents.state.oh.us/hei/RA/RAspecifications.html
Resource Analysis
For FY 2000, take average of: Allowances used in FY 1999 Subsidy (based
on FY 1995 Resource Analysis, inflated) Allowances determined from FY 1997
Resource Analysis, inflated Inflation Rates:
FY 1997 to FY 1998 - 0%FY 1998 to FY 1999 - 3.7%FY 1999 to FY 2000 - 3.7%
Resource Analysis Example GS1 Model
FY 1997 Resource Analysis Cost, inflated= $3,374 X 1 X 1.037 X 1.037 = $3,628.295
FY 1999 Rate, inflated = $3,598 X 1.037 = $3,731.126
Average = ($3,628.295 + $3,731.126)/2 = $3,579.7105, rounded = $3,680
V. Fee Assumptions
Determining the state share and the student share of modeled costs
Fee Assumptions
Subsidy= Allowance - Fee Assumption
Five fee assumptions Lower division undergraduate Baccalaureate Graduate Medical I Medical II
Fee Assumptions
Baccalaureate fee assumption is set first; all others are derived from it
Lower division fee differential protects 2-year campuses from an actual loss of subsidy
Graduate fee assumption no longer used to determine doctoral subsidy
Fee Assumptions
Now primarily a rationing device Total modeled expenditures = $2.5
billion If student share = 0%, then
Fee assumption = $0State share = 100% and Instructional subsidy = $2.5 billion
But -- current instructional subsidy appropriations = $1.6 billion
VI. Base Subsidy
The enrollment-based formula earnings
Base Subsidy
Consists of three partsAll are enrollment-based
Instruction and Support Student Services Plant Operations and Management
Base Subsidy - Instruction and Support
Two Calculations:(Instruction and Support Allowance -
Fee Assumption) X 2-Year FTE Average
(Instruction and Support Allowance - Fee Assumption) X 5-Year FTE Average
Instruction and Support Example - GS1 Model
Two-Year Average FTE Calculation:($3,680 - $3,214) X 3,461 =
$1,612,826
Five-Year Average FTE Calculation:($3,680 - $3,214) X 3,538 =
$1,648,708
Base Subsidy - Student Services
Uniform amount per FTE -- no variation by model
Differential Student Services amount by campus Student Services Weight = modified
headcount to FTE ratio
Student Services Weight
Ranges from 1.000 to 1.29Weight provides additional funding to
campuses with large part-time enrollments, such as community colleges
Campuses with highest weights are: Geauga, Sinclair Community College, Cuyahoga Community College, and Edison State Community College
Base Subsidy - Student Services
Two Calculations:Student Services Allowance X
Student Services Weight X 2-Year FTE Average
Student Services Allowance X Student Services Weight X 5-Year FTE Average
Student Services Example - GS1 Model
Two-Year Average FTE Calculation:$556 X 1.066 X 3,461 = $2,051,321
Five-Year Average FTE Calculation:$556 X 1.066 X 3,538 = $2,096,958
Base Subsidy - Plant Operations and Maintenance
Base POM subsidy calculated on activity (enrollment) basis
Two calculations:POM Subsidy X POM Activity Weight
X 2-Year FTE AveragePOM Subsidy X POM Activity Weight
X 5-Year FTE Average
Base Subsidy - POM Activity Weight
Weights FTE enrollments for Non-credit job-related training activity
(@100%) and Sponsored research (@50%)
Weights range from 1.000 to 1.157Campuses with highest weights are: North
Central Technical College, Lima Technical College, Cuyahoga Community College, Lorain County Community College, Ohio State University, and the University of Cincinnati
Plant Operations and Maintenance Example - GS1 Model
Two-Year Average FTE Calculation:$488 X 1.117 X 3,461 = $1,886,577
Five-Year Average FTE Calculation:$488 X 1.117 X 3,538 = $1,928,550
Base Subsidy - Greater of 2-Year and 5-Year Earnings
2 -Year Average Instruction and Support - $84,478,011 Student Services - $12,135,450 Augmented POM - $23,893,178 Total
$120,506,639
Base Subsidy - Greater of 2-Year and 5-Year Earnings
5 -Year Average Instruction and Support - $87,560,697 Student Services - $12,384,383 Augmented POM - $24,652,334 Total
$124,597,414
Base Subsidy - Greater of 2-Year and 5-Year Earnings
5 -Year Average = $124,597,4142 -Year Average = $120,506,639Therefore, campus is on the five-
year average
VII. Doctoral Funding
No longer FTE-driven
Doctoral Set-Aside
New Provision of H.B. 282 FY 2000 = 10.94% of total Instructional
Subsidy, or $175,177,753 FY 2001 = 10.75% of total Instructional
Subsidy, or $177,251,0462% of $177.3 million reserved for
reallocation for critical state needs in FY 2001
Doctoral I Equivalent FTEs
= sum of Doctoral I FTEs plus 1.5 times the sum of Doctoral II FTEs
Use greater of 2-year or 5-year FTEs for FYs 1994 - 1998
Annualized FTEs for FYs 1994 - 1997All-terms FTEs for FY 1998
FTEs adjusted for effects of doctoral review beginning in FY 2001
Campus Share of Doctoral Allocation
UnadjustedShare of Doctoral Revised, Final FY 2000 Revised, Final FY 2001
Doct. I Share of Doct. I Set Aside, FY 2000 Allocation $$, Adjusted Allocation %, AdjustedUniversity Equivalent FTEs Equivalents $175,177,753 for Hold Harmless for Hold Harmless
AKRON 907.5 7.054% $12,357,039.00 $12,354,113 7.052%BOWLING GREEN 751.8 5.843% $10,235,636.00 $10,233,184 5.842%CENTRAL STATE 0 0.000% $0.00 $0 0.000%CINCINNATI 2,437.10 18.942% $33,182,170.00 $33,174,304 18.938%CLEVELAND 187 1.453% $2,545,333.00 $2,544,737 1.453%KENT 1,175.88 9.140% $16,011,247.00 $16,048,997 9.162%MIAMI 490.7 3.814% $6,681,279.00 $6,679,703 3.813%OHIO STATE 4,903.25 38.111% $66,761,993.00 $66,746,157 38.102%OHIO UNIV 902.04 7.011% $12,281,712.00 $12,278,804 7.009%SHAWNEE 0 0.000% $0.00 $0 0.000%TOLEDO 597.1 4.641% $8,130,000.00 $8,128,073 4.640%WRIGHT 332 2.580% $4,519,586.00 $4,518,517 2.579%YOUNGSTOWN 15 0.117% $204,958.00 $204,905 0.117%MCOT 166.5 1.294% $2,266,800.00 $2,266,257 1.294%NEOUCOM 0 0.000% $0.00 $0 0.000%
Total 12,865.87 100.00% $175,177,753.00 $175,177,753 100.000%
Calculation of Doctoral Subsidy
Total FY 2000 Subsidy = $175,177,753
Total Doctoral I Equivalent FTEs = 12,866
U. of Cincinnati Doctoral I Equivalent Enrollments = 2,437.1
Calculation of Doctoral Subsidy
Campus Share of Subsidy, unadjusted = 2,437.1/12,866 = 18.942%
Campus Share of Subsidy, adjusted = 18.938%
Doctoral Allocation = $175,177,753 X 18.93751% = $33,174,304
VIII. Square- Foot Based POM Calculation
Protecting historical investments in campus facilities
NASF POM Rates
POM Rates listed on page 2 of detail: AV-DP $6.45 Circulation $6.53 Classroom $5.18 Labs $6.45 Offices $5.18 Storage-Mechanical $2.30 Other $5.18
NASF POM Rates - Adjusted for Inflation
Adjusted for Inflation - Same % Increases as for Instruction and Support Costs
FY 1997 Resource Analysis Cost, inflated for AV-DP= $ 5.95 X 1 X 1.037 X 1.037 = $6.40
FY 1999 Rate, inflated = $ 6.27 X 1.037 = $6.50
Average = ($6.40 + $6.50)/2 = $6.45 - FY 2000 rate
Calculation of the Square-Foot Based Subsidy
FY 2000 Net Assignable Square Feet (NASF) = FY 1998 total plus FY 99 change and FY 00 change
FY 2000 NASF POM Weight - 1.143Initial Calculation: POM rate X NASF X NASF POM
Weight
Example of Calculation of NASF POM Gross Earnings - AV-DP
POM Rate - $6.45NASF = 50,432 + 0 + 7,377NASF POM Weight = 1.143Subsidy = $6.45 X (50,432 + 0 +
7,377) X 1.143 = $426,188
Roads and Grounds Expense
Inflate historical ratesFor U. of Cincinnati - $996,340This amount added to NASF X NASF
POM Rate X NASF POM Weight for each of the seven categories of space
Gross NASF POM Earnings = $32,407,201
Next Step
Prorate Gross Earnings to Each Model
Proration based on Activity-Based POM for each Model as a Percent of the Total Activity-Based POM Subsidy
Use 2-Year or 5-Year Average, depending on Subsidy Base
Example of Calculation of NASF POM Subsidy - Proration of POM Activity Subsidy by Model
Subsidy Base - U. of Cincinnati = 5-year average
Total (excluding doctoral) plus doctoral = $24,652,334 + $1,008,416 + $3,096,565 = $28,757,315
% Share of POM activity based subsidy for GSI model = $1,928,550/$28,757,315 = 6.706%
Example of Calculation of NASF POM Subsidy - Prorated Amount Times Gross Earnings
Percentage share of the POM allocation then multiplied times the total amount for the seven categories of space plus roads and grounds
6.706% X $33,353,381 = $2,173,326This amount then multiplied by the
ratio of eligible FTE to Total FTE for that model
Example of Calculation of NASF POM Subsidy - Allocation by Model Times Ratio of Subsidy Eligible FTEs to Total FTEs
Eligible FTEs = 3,160Total FTEs = 3,341Ratio of Eligible FTEs to Total FTEs =
3,160/3,341 = 94.6%$2,173,326 X 94.6% = $2,055,585
Example of Calculation of NASF POM Subsidy
This calculation repeated for all models
The NASF POM subsidy = the sum of these calculations minus amounts attributable to the doctoral models
IX. The POM Adjustment
Balancing activity and square-foot POM subsidy
The POM Adjustment
Limits Activity-Based POM earnings to 161% of the NASF POM Earnings
If Activity Based POM > 161% of the NASF POM, take the difference between the Activity Based POM and 161% of the NASF Based POM
Subtract the difference from the Base Subsidy (POM adjustment is negative)
Example - Negative POM Adjustment
Hocking Technical CollegeNASF POM = $1,933,178Activity POM = $3,478,029Activity POM capped at 161% of NASF$1,933,178 X 1.61 = $3,112,417POM Adjustment = $3,478,029 -
$3,112,417 = -365,612
The POM Adjustment
IF NASF Based POM > Activity Based POM, subtract Activity Based POM from NASF Based POM
Add the difference to the Base Subsidy
Example - Positive POM Adjustment
University of Cincinnati:NASF POM = $26,249,499Activity POM = $24,652,334NASF > Activity POMSubtract Difference and add to base
subsidyDifference = $1,597,165
Total Subsidy
Total Subsidy:Base Subsidy + Doctoral Allocation =
Total Base SubsidyTotal Base Subsidy + POM
Adjustment= Total Subsidy
X. The Guarantee
Providing additional protection against loss of subsidy
FY 2000 Guarantee
Based on FY 1999 Instructional Subsidy plus:
Success ChallengeResearch ChallengePriorities in Graduate EducationAccess Challenge (less tuition restraint)Jobs Challenge (less amounts for targeted
industries)
Calculation of the Guarantee
Step #1 - Add FY 1999 Instructional Subsidy plus FY 1999 Selected Challenges
Step #2 - Multiply Results of #1 times 1.03
Step #3 - Add FY 2000 Instructional Subsidy plus FY 2000 Selected Challenges
Calculation of the Guarantee
Step # 4 - If Results of #3 Greater than the
Results of # 2 - Guarantee = 0 If Results of #2 greater than
Results of #3, Guarantee = #2 - #3
Example of the Calculation of the Guarantee
University of Akron - FY 1999 Instructional Subsidy plus Challenges X 1.03 = $94,908,180
FY 2000 plus Challenges = $94,233,243
Thus, Guarantee = $94,908,180 - $94,233,243 = $674,937
The Guarantee
3% in FY 20001% in FY 2001
XI. The Capital Deduction
“Charging” for certain capital decisions
Negative Capital Component Adjustment
Four campuses have negative capital component adjustments in FY 2000
The adjustment is negative because the amount of capital dollars they have requested and received exceeds their earnings calculated through the capital allocation formula
XII. The “Late Space” Deduction
The final POM adjustment
“Late Space” Deduction
Affects only two campuses in FY 2000.
Adjustment from prior year NASF space changes that did not occur.
Needed to prevent a delay in subsidy determination.
QUESTIONS?