ࡱ>  f"bjbjSS 11t t $PB4v4(mFdddlllllll$prlg"B"dg"g"lRl)%)%)%g"Fl)%g"l)%)%^id e"^`4ll0(m`pps #pshididpsetd )%l Udddll$ ddd(mg"g"g"g"psdddddddddt :   Board of Governors Special Meeting Agenda Conference Room A, First Floor Administration Building Dixon University Center 2986 North Second Street Harrisburg, PA 17110-1201 Friday, September 20, 2013 via conference call 9:00 a.m. Agenda Call to Order and Roll Call of the Members Remarks of the Chair Chairman Guido M. Pichini Remarks of the Acting Chancellor Dr. Peter H. Garland Public Comments Board Action Fiscal Year 2013/14 Appropriation Allocation (ACTION) Executive Session (if needed) Adjournment ((( Board Members: Guido M. Pichini (Chair), Senator Richard L. Alloway, II, Representative Matthew E. Baker, Jennifer G. Branstetter (designee for Governor Thomas W. Corbett), Marie Conley, Sara J. Dickson, Carolyn C. Dumaresq (Acting Secretary of Education), Laura E. Ellsworth (Vice Chair), Representative Michael K. Hanna, Ronald G. Henry (Vice Chair), Jonathan B. Mack, Joseph F. McGinn, Harold C. Shields, Robert S. Taylor, Aaron A. Walton, and Senator John T. Yudichak. For further information, contact Lois M. Johnson at (717) 720-4010. ITEM #1 Board of Governors Meeting September 20, 2013 SUBJECT: Fiscal Year 2013/14 Appropriation Allocation (ACTION) UNIVERSITIES AFFECTED: All BACKGROUND: After the July 2013 meeting of the Board of Governors, the Systems allocation formula (as established by Board policy) calculated the fiscal year 2013/14 Educational and General (E&G) appropriation distribution to the 14 PASSHE universities. The allocation formula generated the greatest shift in funding among institutions (ranging from a 5.4% decrease to 4.4% increase) that has been experienced since the formula was last modified in 2007. Due to this greater than normal variability, the university presidents were notified that final allocation of the state appropriation would occur after the distribution of performance funding dollars was known and analysis could be conducted on the combined funding variability impact of the allocation formula and performance funding. Now that the performance funding results have been determined, the total allocation of state appropriationsthrough the allocation formula and performance fundingstill demonstrates significant fluctuation in funding among universities. The attached document describes the background of the issue and presents a proposed adjustment that was considered by the Finance, Administration, and Facilities Committee at its meeting on September 5, 2013, and is now presented as the Committees recommendation to the Board. MOTION: That the Board of Governors approve an adjustment to university appropriations as referenced in the attached. Supporting Documents Included: Possible Alternative to Limit 2013/14 Appropriation Allocation Fluctuation, as of August 29, 2013 Other Supporting Documents Available: 2013/14 Allocation Formula as distributed July 9, 2013; Board of Governors Policy 1984-06-A: Allocation Formula Reviewed by: Finance, Administration, and Facilities Committee, September 5, 2013 Prepared by: James S. Dillon Telephone: (717) 720-4100 Pennsylvania State System of Higher Education Possible Alternative to Limit 2013/14 Appropriation Allocation Fluctuation August 29, 2013 The fiscal year 2013/14 allocation formula results generated the greatest change among institutions (ranging from a 5.4% decrease to 4.4% increase) that has been seen since the formula was last modified in 2007. The ongoing enrollment and financial challenges faced by PASSHE universities appear to have compromised the formulas capacity to provide stability and predictability in the midst of multiple years of stagnant or reduced enrollment at most PASSHE universities and level or declining appropriations. PASSHEs founding legislation specifies that State funds appropriated to the System shall be allocated to the individual institutions on a formula based on, but not limited to, such factors as enrollments, degrees granted, and programs. PASSHEs current allocation formula, approved by the Board in 2003, is highly enrollment-driven, incorporating a two-year rolling average of in-state student enrollment and recognizing higher costs of certain programs and levels of study. The formula was designed for funding to follow the student, but still provide reasonable stability and predictability. Other elements, such as adjustments for the lack of economies of scale at smaller universities and performance funding, account for a larger portion of the general allocation pool as the appropriation has diminished in recent years. Complicating the level of fluctuation experienced in the 2013/14 allocation formula is additional volatility that has been anticipated with implementation of the new performance funding program. Historically, performance funding generates greater volatility in annual funding among universities than experienced in the allocation formula. Moving from seven to ten performance measures, most of which differ from those used in the past, creates change in how performance funds are distributed. In addition, the new performance funding program requires universities to choose half of their new indicators, resulting in a different set of performance measures for each university. These optional measures align with university goals in differing ways, some of which are long-standing goals where universities have focused performance, while others are newer aspirational goals where universities are beginning to effect change. As performance funding results are now available, the combined financial impact of performance funding and the allocation formula results are presented in the attached schedule with a proposed alternative for limiting fluctuation. The funding alternative sets a cap of 2% in which no changes are made to universities whose 2013/14 appropriation is within a 2% increase or decrease of their total 2012/13 appropriation. For those universities with greater than a 2% increase, the increase is capped at 2%, and the remainder is distributed proportionately to those universities with a reduction of greater than 2%. This method changes the funding for five universities. It is proposed that the Board of Governors consider this alternative, as it (1) honors the Boards commitment to performance funding and to the existing allocation formula that is focused on enrollment; (2) mitigates the negative impact on universities resulting from Pennsylvanias changing demographics and financial challenges; and, (3)adjusts results for the fewest universities and only those with the greatest fluctuation.      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