Colleges to see cut in state funding

Decreases based on agreed model

Most of the state’s fouryear public colleges and universities would receive slight cuts in their general revenue allocations in fiscal year 2025, which starts July 1, under Gov. Sarah Huckabee Sanders’ proposed general revenue budget.

Officials for the colleges and universities have been generally muted about the potential ramifications for students and faculty.

The proposed general revenue cuts are a result of the state’s higher education productivity model declining by 0.14% this year. That is the first time it’s happened with the model that the state created several years ago, said Nick Fuller, assistant director of finance at the state Division of Higher Education.

The higher education productivity model is based on a three-year rolling average.

“This year is the first year that we have a full year of the covid impact in that comparative, so we had a big dip in the students on the campuses in general (at that time),” Fuller told the Joint Budget Committee earlier this month.

“While we don’t recommend new funds (due to the negative productivity), there is a section where we reallocate funding from institutions that had negative productivity to the schools that did show productivity for the year,” he said.

Only one four-year university — the University of Arkansas, Fayetteville — was productive this year, Fuller said.

While new general revenue funding is not being requested for the state’s twoand four-year schools based on the higher education productivity formula, Gov. Sanders proposed allocating $4.5 million in general revenue in fiscal year 2025 to fund a sustainable build

ing maintenance revolving loan program for the state’s higher education institutions.

The $4.5 million is the balance of last year’s incentive funds that cannot be re-distributed to any individual institution due to the overall productivity decline, state Department of Education spokesperson Kimberly Mundell.

The Arkansas General Assembly will consider the governor’s proposed general revenue budget in the fiscal session starting April 10.

The Republican governor has proposed a $109.3 million, or 1.76%, increase to $6.31 billion in the state’s general revenue budget for fiscal year 2025, with a $65.7 million increase to $97.4 million for the state’s Education Freedom Accounts to help students attend private school, parochial school or home school, and a $38.2 million increase to $2.48 billion for the public school fund.

General revenues allocated to each of the four-year institutions would decline by a total of $1.8 million to $628.6 million, while the general revenue allocated to each of the two-year institutions and technical colleges would decline by a total of $606,620 to $150.1 million under the governor’s proposed budget.

The following state’s fouryear institutions would see these changes in their general revenue budgets:

University of Arkansas at Pine Bluff, an increase of $1.5 million to $27.7 million. The proposed increase resulted from Sanders proposing a $2 million increase to $5.8 million in the state’s general revenue allocation for the land-grant matching program at UAPB, which recorded negative productivity this year;

University of Arkansas, Fayetteville, a $387,468 increase to $134.1 million;

University of Central Arkansas, a $892,398 decrease to $56 million;

Arkansas Tech University, a $741,960 decrease to $36.3 million;

University of Arkansas at Little Rock, a $539,714 decrease to $60 million;

University of Arkansas at Fort Smith, a $429,507 decrease to $21 million;

Arkansas State University, a $390,716 decrease to $62.1 million;

Henderson State University, a $382,676 decrease to $18.8 million;

University of Arkansas at Monticello, a $340,750 decrease to $16.6 million;

Southern Arkansas University, a $71,151 decrease to $16.8 million.

Southern Arkansas University Interim President/ President Emeritus David Rankin said Thursday in a written statement that “It is extremely challenging to balance budgets and provide cost of living adjustments by relying on tuition alone.

“State support is so important in our effort to keep higher education affordable for students,” he said.

Asked about the potential effect of the governor’s proposed budget on students, faculty and the school, Arkansas Tech University spokesperson Samuel Strasner said Friday that “Arkansas Tech University does not have any comment on this matter at this time.”

Jeff Hankins, a spokesperson for the Arkansas State University System, when asked about the potential affect of the governor’s proposed budget at Arkansas State University in Jonesboro and Henderson State University in Arkadelphia, said Tuesday in a written statement that “Our campuses are still in the middle of the budget process and won’t make any final decisions until the end of the fiscal session.

“It would be premature for us to comment,” he said.

Mark Rushing, a spokesperson for the University of Arkansas, Fayetteville, said Friday in a written statement that “We understand the state has many important budgetary responsibilities. … The productivity formula is an outcomes-based model for higher education, created to help ensure that colleges and universities focus on better serving students by improving retention and graduation rates, and working to graduate students on time.

“It’s important to note that each institution is measured against itself, in terms of how it improves its own performance and productivity from year to year,” he said. “It’s not a competition for funding between schools. As a landgrant institution, the University of Arkansas mission is an outcomes-based model that supports access for all qualified Arkansans, student success and the attainment of a college degree, especially in high demand areas such as STEM fields, business and nursing, while helping serve the state by increasing the workforce in Arkansas on an annual basis.”

University of Arkansas System spokesperson Nate Hinkel said Thursday that the University of Arkansas System has long been supportive of funding institutions based on outcomes — incentivizing colleges and universities to improve student retention and graduation and ensure more Arkansans are able to earn a college credential.

“Our institutions understand the nature of the current funding model and how it generates the funding recommendation in the Governor’s budget,” he said in a written statement.

“At the same time, we are aware of the impact of the recent inflationary environment on the cost of education delivery and are open to discussions of how the productivity funding model could be modified to address this and other concerns such as providing funding for non-credit workforce training and the rising critical and deferred maintenance needs on campuses across the state,” Hinkel said. “We look forward to a continued dialogue on this topic with state policymakers and the broader higher education community.”

University of Central Arkansas President Houston Davis said Friday in a written statement that UCA “launched an initiative that we label ROI (Resource Optimization Initiative) that served as a tool to place a name and function to every dollar in our budget and make multi-year decisions with a mindset on the future of the institution and the challenges coming to higher education several years down the line.

“One of the primary drivers of ROI is to build upon budgeted reserves to allow careful planning and account for fluctuations in any year through (fiscal year) ’28,” he said in his written statement.

“ROI also requires forecasting of formula distributions from the state so that we are predicting and preparing for positive and negative trends — but always prepared,” he said. “This (fiscal year) ’25 distribution is part of that expected trendline that forms part of the foundation of ROI. If the funding were to be restored, we would incorporate into our reserve plans for the next three cycles.”

Asked about the governor’s proposed general revenue budget that includes reductions in general revenue for some of the state’s higher education institutions, Sen. Jonathan Dismang, R-Searcy, said that “just to be clear, this is higher ed’s recommendation.

“This was the result of a formula that they all agreed to and essentially helped develop,” he said in a recent interview.

“I understand there may be some … that would like to see some work around or put it off one more time or whatever it may be,” Dismang, co-chairman of the Joint Budget Committee. “I think what we need to do is fully understand how they utilized some of the ARPA (American Rescue Plan Act) money that has come through.

“There was a significant influx of that that was supposed to help with a transition just like this and see where the need is and what is happening,” he said. “Some institutions have prepared better than others, but they all knew what the enrollment numbers were and they were all familiar with the formula.”

That’s largely why “you haven’t heard much pushback about the outcome,” he said.

“That all said, we all know that the funding formula has to change,” Dismang said. “I think (the two- and fouryear schools) have had the opportunity to make their adjustments, and make recommendations. We are back kind of in the same boat and acknowledging it was not quite up to par with what was needed. I think the Legislature will take a lot more active role in developing what is ultimately the funding formula, maybe just not leave it to the institutions.”

Earlier this month, state Division of Higher Education Commissioner Ken Warden told lawmakers that the higher education funding formula was created in 2017 and “we are doing the best with what we have to work with at this time.”

He said the complex funding formula is based in part on the number of degrees and certifications produced at each school, and institutions that produce more degrees and certificates than previous years get a higher value in the formula.

There is room for improving the higher education funding formula, he said.

Among the two-year colleges, the University of Arkansas-Pulaski Technical College would get a $39,712 increase to $14.7 million in its general revenue budget. Northwest Arkansas Community College, the largest two-year school in the state, would get a $2,942 increase in general revenue to $11.6 million in fiscal year 2025 under the governor’s proposed general revenue budget.

National Park College in Hot Springs would get a $184,501 decrease to $9 million, and Phillips Community College of the University of Arkansas would receive a $182,119 decrease to $8.9 million in fiscal 2025.

The governor’s proposed general revenue budget for fiscal year 2025 would leave the University of Arkansas at Medical Sciences’ general revenue budget of $93 million the same.

Asked about the effect of the proposed budget on students, faculty and the institution in fiscal year 2025, UAMS spokeswoman Leslie Taylor said on Tuesday that “there will be no impact.

“Our state appropriation will be flat for FY24 and FY25,” she said in a written statement. “UAMS receives about 5 percent of its funding from its state appropriation. The majority of our funding is generated by the health system which subsidizes our education and research missions.”

The University of Arkansas’ Division of Agriculture’s general revenue budget of $65.8 million also would remain flat in fiscal year 2025 under the governor’s proposed general revenue budget.

During the Joint Budget Committee’s budget hearing on March 6, state Rep. Jamie Scott, D-North Little Rock, questioned whether there would be layoffs at some of the schools that would receive reductions in general revenue in fiscal year 2025.

Warden said the lower productivity theoretically would require fewer people to teach the coursework.

He said he hopes the schools would look for ways for “rightsizing” due to enrollment downturns through attribution and other measures rather than layoffs of employees.

Warden said each campus is responsible for handling budgetary decisions.