Higher Education Funding Allocation Model

The act makes revisions to the higher education funding provisions creating a new higher education funding allocation model (new funding model).

The new funding model begins in the 2021-22 state fiscal year and includes new provisions for calculating fee-for-service contracts for institutions and makes related changes to the calculation of state funding to support specialty education programs, area technical colleges, and local district colleges. Under the new funding model, fee-for-service contracts for institutions are based on 3 components: Ongoing additional funding, performance funding, and temporary additional funding. The Colorado commission on higher education (commission), in conjunction with the department of higher education (department) and in collaboration with the institutions, shall calculate and make funding recommendations to the joint budget committee for these components as part of the annual budget request process.

Ongoing additional funding is base building and may be awarded to an institution to make progress toward the commission's master plan goals, which may include addressing base funding disparities or funding priorities not addressed through performance funding metrics. An institution may also receive ongoing additional funding through a formula set forth in the act to recognize an institution's additional costs associated with educating and providing services to first-generation undergraduate students.

Performance funding is calculated based on an institution's change over time in performance on each performance funding metric compared to other institutions' change in performance and adjusted based on each institution's share of funding in the previous state fiscal year. The performance funding metrics include:

• Resident student full-time equivalent enrollment;
• Credential completion;
• Resident Pell-eligible student population share;
• Resident underrepresented minority student population share;
• Retention rate;
• One-hundred-percent-of-time graduation rate;
• One-hundred-fifty-percent-of-time graduation rate; and
• Resident first-generation undergraduate student population share.

The joint budget committee determines the amount of funding allocated to each performance funding metric for a fiscal year after considering recommendations from the commission and department that are developed in collaboration with the institutions.

Finally, temporary additional funding, which is not base building, may be awarded to an institution for a specified period of time to address commission master plan goals or other areas the commission identifies.

Under current law and the new model, minimum funding for specialty education programs, local district colleges, and area technical colleges is based on their previous year's funding, increased or decreased by the average percentage change in state funding for all institutions (percentage change). However, the act modifies how the percentage change is calculated so that it does not include amounts awarded to institutions for ongoing additional funding or temporary additional funding in the applicable state fiscal year.

The act requires the annual budget request that the commission and the department submit relating to the new funding model to include detailed information and funding recommendations. The act also requires the commission, in conjunction with the department and in collaboration with the institutions, to identify and make recommendations to the joint budget committee by July 1, 2022, concerning ways to better measure success for students who are not first-time, full-time students. This may include a recommendation for a statutory change to the calculation of one of the graduation rate performance funding metrics.

The act repeals fiscal limits, reporting requirements, and budget provisions that do not apply to the new funding model.

The act amends statutory references to reflect the creation of a new higher education funding model.

(Note: This summary applies to this bill as enacted.)