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F I S C A L I M P A C T R E P O R T

SPONSOR Heaton

DATE TYPED 03/08/05 HB 737/aHAFC

SHORT TITLE Community College Science Course Funding Fix

SB

ANALYST Williams

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Commission on Higher Education (CHE)

SUMMARY

Synopsis of HAFC Amendment

The HAFC amendment removes the appropriation contained in the bill. Further, the amendment

directs the CHE to adjust the higher education funding formula so that science courses taught at

public, two-year post-secondary educational institutions are funded equitably compared to com-

parable courses at public, four-year post-secondary educational institutions.

Synopsis of Original Bill

House Bill 737 appropriates $678 thousand from the general fund to the commission on higher

education to address an inequity of the higher education funding formula for community college

science courses.

Significant Issues

Unlike the public school funding formula, the higher education funding formula is not contained

in statute. As such, the proposed formula funding change in this bill is highly unusual.

A blue ribbon task force recommended adjustments to the higher education funding formula im-

plemented in FY04. Among the task force recommendations was providing the same funding

House Bill 737aHAFC -- Page 2

level for similar classes at two-year colleges as that funding level provided for similar classes at

four-year universities. For FY06, lower division science courses at two-year community col-

leges would be incorporated into the formula at $173.01 per student credit hour under the provi-

sions of this bill, up from $115.80 per student credit hour as shown in the legislative finance

committee and executive budget recommendations.

For FY06, the CHE request included funding for the issue addressed in this bill, but funding is

not included in the legislative finance committee or executive budget recommendations.

FISCAL IMPLICATIONS

The House Appropriation Committee amendment removes the appropriation and fiscal impact in

FY06.

The cost of this formula change in FY06 would have been $678.0 thousand, a recurring expense

to the general fund. The future cost of this formula adjustment would be driven by enrollment

growth in these courses. This legislation is not a guarantee of funding; future total workload

costs of the higher education funding formula and other needs of higher education such as com-

pensation and inflationary increases will be balanced against availability of recurring general

fund monies.

OTHER SUBSTANTIVE ISSUES

According to CHE: “A basic premise of the new higher education funding formula developed

through the efforts of a CHE-appointed “Blue Ribbon Task Force” in 2002 was to establish a

common level of funding for comparable courses taught at all institutions. A complicating factor

in this regard was that the previous formulas for the universities and community colleges inde

pendently mapped the various instructional courses to formula clusters, which also varied be

tween the two formulas. The process of developing the new three-tiered formula structure was

accomplished by linking the old formula clusters in their entirety to the new three-tier grid. An

unintended consequence in this regard was that science courses at the community colleges were

funded at a lower level than comparable courses taught by the universities.

Some additional course mapping inconsistencies remain to be addressed by CHE. These result

from the new formula conversion noted above, as well as the need to implement an updated cod-

ing system for instructional programs (IPEDS) recently released by the federal government.

CHE anticipates bringing forward any further funding changes that are determined to be neces-

sary in its funding recommendations for FY 2007.”

POSSIBLE QUESTIONS

1.

What other course mapping inconsistencies occurred in the conversion to the new fund-

ing formula. What is the anticipated cost of these issues.

2.

What other funding changes might be proposed by CHE for FY07 as formula revisions.

3.

Could the cost to the general fund from the formula change proposed by this bill be

phased-in over time.

AW/yr