FY 1997 Appropriations Report - Higher Education

Utah System of Higher Education

    The Legislature appropriated $624.1 million to the Utah System of Higher Education (USHE) for FY 1997. (See Table 29) This is an increase of $31.1 million over the FY 1996 estimated budget of $593.0 million. Reflected in this amount is $418.9 million from the General Fund, $38.6 million from the Uniform School Fund, $155.0 million from dedicated credits (tuition revenue), and $11.5 million from other revenue sources. State tax revenues appropriated to USHE increased by $32.6 million or 7.7 percent over FY 1996.

    In the plan of financing for the FY 1997 appropriation, the Legislature increased the use of the Uniform School Fund by $38.0 million over the FY 1996 amount of $0.5 million. On the other hand, the General Fund appropriation decreased by $5.4 million over FY 1996. The switch in funding is a significant departure from the normal pattern of funding higher education. The Legislative decision to use the Uniform School fund in higher education is the result of the relative abundance of funds available from income tax revenue. Revenue collections from this source are currently deposited in the Uniform School Fund.

    For the Legislature to use the Uniform School Fund in Higher Education is not inconsistent with the opinion of the Attorney General. The Utah Attorney General's Revised Opinion No. 90-31, January 8, 1991, addressed the question: Does the use of revenue received from taxes on income for the support of the public school system include both the public education system (traditional Kindergarten - 12)  and the higher education system?

    The opinion concluded "that revenue received from taxes on income may be used for both the public education system and the higher education system as defined in the Constitution if authorized by the Legislature."

    Although many items in the Appropriation Act reflects the use of the Uniform School Fund, the Legislature, in an effort to comply with the intent of the Attorney General's opinion, passed Senate Bill 270. In this bill the Legislature allocated "for fiscal year 1996-97, $37,878,500 of revenues from taxes on income" by stating the these funds "shall not be deposited in the Uniform School Fund but shall be used to fund the higher education system."

    In addition to the statutory provisions of Senate Bill 270, the Legislative Subcommittee on Higher Education included the following intent language in the Appropriation Act regarding the use of the Uniform School Fund in the FY 1997 USHE Budget.

    All references to the Uniform School Fund for Funding of Higher Education shall be considered as funded from income tax revenue.

    It is the intent of the Legislature that for the Utah System of Higher Education in FY 1997, the General Fund, Dedicated Credits and other sources of revenue be expended before the Uniform School Fund.

    In another deviation from the normal plan of financing the budget for the Utah System of Higher Education, the Legislature appropriated separate funds for Applied Technology Education and for academic programs. Reflected in the FY 1997 budget for the Utah System of Higher Education, the Legislature appropriated a total of $67.6 million for ATE budgets. In this amount, $50.7 million is from State tax revenues and $16.9 million is from tuition and fees. Funding for academic programs totaled $556.5 million. Included in this amount is $375.2 million from the General Fund, $31.7 million from the Uniform School Fund, and 149.6 million from other sources.

Tuition

    No tuition increase is reflected in the plan of financing the appropriated budget increases to the Utah System of Higher Education for FY 1997. The students attending Utah's universities and colleges have experienced a tuition increase every year for the past 20 years. Since FY 1977, tuition has increased faster than the rate of inflation. The main revenue source reflected in the incremental budget increase, except in the area of enrollment growth, is the General Fund.

Enrollment Growth

    The Legislature provided funding for 500 new FTE students at a cost of $2.2 million. State funding amounted to $1.3 million while tuition revenue totaled $0.9 million. It was proposed that $3.3 million of General Funds be reduced from USHE budgets for 2,258 FTE students that the Legislature previously funded but were not currently enrolled. Of this amount, the Legislature restored $2.2 million.

    Enrollment growth funding for FY 1997 was based on a one year lag of actual summer and fall enrollment figures and not on projected enrollment figures. In the past, funding requests were based on projected annualized enrollments. The gross projection errors for FY 1994 are largely responsible for the current overfunding of enrollment at some institutions. The Legislature appropriated funds for nearly 8,000 FTE students based on the State Board of Regents projections. However, actual enrollment only grew by about one third of the projected amounts. This resulted in significant "over-funding" at some schools. This new procedure should minimize the chances for future "overfunding" of enrollment growth.

Compensation

    For FY 1997 the Legislature funded a 4 percent compensation package for the system of higher education. This package normally consists of dedicated credits (mostly tuition) and state tax funds in a ratio reflecting their respective share of the operating budget. Since the plan of financing for the higher education appropriation did not include a tuition increase, the compensation package was primarily funded with General Fund revenue. The salary increase and all salary driven benefits totaled $18,586,800 for FY 1997. Of this amount $18,548,000 was from the General Fund, $16,300 was from the Uniform School Fund and $22,500 came from the General Fund Restricted - Mineral Lease Account.

    There was also appropriated $989,500 to cover anticipated rate changes in the State Retirement program for employees in higher education on that system.

Operation and Maintenance

    The Legislature appropriated $2,272,400 from the General Fund for operating and maintaining new campus facilities. As the State funds new buildings or approves the construction of non-state funded facilities, the budget requests for O&M funds will increase when these buildings are completed. It is noted that a portion of the funding increase for the operation and maintenance of new facilities will be reflected in the ATE line item budgets in the Appropriation Act. However, the full amount of the appropriated funds is reflected in the following table:

Mineral Lease Funds

     In compliance with House Bill 416, "Permanent Community Impact Fund", 1995 Legislative General Session, 20 percent of the mineral lease funds appropriated to the Board of Regents, or $1,333,200, was replaced by General Funds. It is noted that an additional 20 percent of the mineral lease funds appropriated to the Board of Regents will be appropriated to the Permanent Community Impact Fund in each succeeding fiscal year until 100 percent of the funds currently appropriated to the Board of Regents are replaced.

Student Financial Aid

     The Legislature appropriated $470,600 to offset lost federal support of the State Student Incentive Grant (SSIG) financial aid program. SSIG provides financial aid for undergraduate students that can demonstrate appropriate financial need. Awards of up to $5,000 per year are available to qualifying students. Federal funds are matched at a 50-50 ratio with State resources. The Legislature appropriated the $470,600 to maintain the current level of service in this program.

    It was also projected that the State allocation of Federal Perkins Loan funds would be cut back in FY 1997. Perkins loans are low interest (5 percent) loans that offer a maximum 10 year repayment period. In order to maintain the current program level, an appropriation of $1,784,100 from the General Funds was needed to offset the anticipated funding cut.

    The Legislature did not fund the expected loss in the Perkins Loan program. Instead, they passed House Bill 64, "Utah Centennial Opportunity Program for Education", which carried an appropriation of $450,000 from the General Fund. This legislation established a State grant-in-aid program. The Utah Centennial Opportunity Program for Education (UCOPE) will eventually supplement the federal financial aid programs. UCOPE will be administered through the Board of Regents' Student Financial Aid Office and will follow the eligibility guidelines and policies defined by the federal aid programs.

Library

    A 1988 Statewide Library Study identified a need for both adequate library facilities and operating budgets at each of the State's higher education campuses. The library building program is nearly completed with new or expanded facilities.

    In an effort to provide for the staffing needs at the various campus libraries, the Legislature appropriated $326,000 from the General Fund to Utah State University in FY 1996 to operate their new science and technology library. For FY 1997, the Legislature appropriated $706,000 in one-time funding from the Uniform School fund for additional operating costs at the other higher education campuses. The distribution of these funds is reflected in the following table:

Technology

    A USHE Technology Task Force was assembled to develop a comprehensive strategic plan for implementing an initiative on the use of technology in higher education. The three main objectives of the technology initiative are to provide student access to educational institutions and services, to enhance the quality of the educational experience for all students through an expanded communication network, and to provide access to information resources. For FY 1997, the Legislature appropriated $10.5 million of one- time money from the Uniform School Fund to this initiative. The appropriation is $3.9 million more than the FY 1996 appropriation of $6.6 million for technology.

Concurrent Enrollment

    The Legislature also appropriated $400,000 from the Uniform School Fund to enhance concurrent enrollment. Several USHE institutions have not had sufficient resources to cover the costs of providing concurrent enrollment courses to rural Utah.

Legislation Affecting Higher Education

    In addition to the items funded in the Appropriations Act, several Legislative bills passed that affect the Utah System of Higher Education. These bills carry their own appropriation.

House Bill 64, "Utah Centennial Opportunity Program for Education", established a grant-in-aid program to assist students in financing their postsecondary education. The bill defines administrative rules, procedures, and student qualifications for those participating in the program. The bill carried an appropriation of $450,000 from the General Fund.

House Bill 107 House Bill 107, "Center for Persons with Disabilities Appropriation", appropriated $210,000 from the General Fund to Utah State University for State matching money on federal grants, to meet accreditation requirements for the Center for Persons with Disabilities, and to fund staff training programs.

Senate Bill 115, "Engineering Education Appropriation", increased funding of $1,000,000 was appropriated from the General Fund to enhance the engineering and technology programs at the University of Utah ($500,000), Utah State University ($300,000), Utah Valley State College ($100,000) and Salt Lake Community College ($100,000).

Other Legislation

House Bill 33, "Repeal of Outdated Education Statutes", repeals Part 3 of Chapter 7, Title 53B, "Funding of Libraries." This part provided a match of two State dollars for each new dollar paid by students through donations or contributions. The money was used for library acquisitions, library equipment or for the automation of the libraries.

Senate Bill 266, "Division of Fleet Operations", creates a Division of Fleet Operations; defines its structure, powers and duties. The bill also brings the USHE fleet operation under the jurisdiction of the Division of Fleet Operation. The bill also provides for a "process mapping" study to determine the size and scope of all State fleet operations.

Senate Concurrent Resolution 7, "Virtual University Resolution", endorses the creation and the development of a regional virtual university by which postsecondary education becomes accessible through advanced technology to students throughout the western states. The Legislative appropriated $400,000 from the General Fund for FY 1997 in support of this concept.

Legislation passed during the Second Special Session of the 51st Legislature:

House Bill 1003, "College Savings Incentive Program", created the Utah Education Savings Plan Trust which allows individuals to invest money in a tax exempt public trust for future payment of higher education costs. This legislation is an amended version of House Bill 194, "College Savings Incentive Program", passed by the 1996 Legislature, but vetoed by the Governor. The 1996 Legislature appropriated $45,000 from the General Fund in Senate Bill 251, "Appropriation for State Government", to cover anticipated administrative costs.

    For FY 1997, the Legislature separated applied technology education (ATE) budgets from the Utah System of Higher Education (USHE) "Education and General" budgets. The FY 1996 base ATE budget was estimated at $64.2 million ($47.2 million from the General Fund and $17.0 million from tuition and fees). These estimates were based on the "maintenance of effort" reports on vocational education funding and expenditures plus an indirect cost factor identified in the Regents' annual cost study.

    For FY 1997, the Legislature appropriated a total of $67.6 million for the higher education ATE budgets, including $50.7 million from the State General and Uniform School Funds and $16.9 million from tuition and fees. This represents a 7.5 percent increase in state funds and a 5.2 percent overall increase. This includes both ongoing base budgets and one-time funding. Separate programs were identified in the Appropriations Act for ATE and Academic programs.

See Table 30.

    The Joint Liaison Committee (JLC), with representatives from both the State Board of Education and the State Board of Regents, prepared a joint budget request for the 1996 Legislature. Each of the state's nine regions prepared a coordinated budget request which included public education, applied technology centers, and higher education institutions. The Legislature held two joint appropriations subcommittee meetings of the public and higher education committees. The public and higher education components of these ATE budgets were appropriated to the respective education agencies.

    This joint budgeting process is expected to continue in the future. The 1996 Legislature passed House Bill 32, "Funding Applied Technology Education", which requires the Public and Higher Education Appropriations Subcommittees to "hold annual joint meetings to review and discuss the funding of applied technology programs in the public and higher education systems."

ATE Enrollment

    For ATE, the Analyst recommended a reduction of $658,400 in the base General Fund for funded students not currently enrolled. The Legislature appropriated $447,900 in one-time Uniform School Fund to partially offset this reduction. Dedicated Credits (tuition) were similarly restored to the FY 1997 budget.

    At Dixie College, ATE enrollment funding was increased by 21 FTE students, at a cost of $37,500 from the General Fund, plus $19,700 from tuition.

ATE Program Enhancements at WSU and CEU

    ATE programs at Weber State University (WSU) and College of Eastern Utah (CEU) were appropriated additional funds for FY 1997. WSU received $44,700 in one-time Uniform School Fund for its Chrysler apprenticeship program started with temporary federal funding. CEU received $38,700 in one- time Uniform School Fund to enhance its heavy equipment operation and drafting technology programs. Permanent funding for these program enhancements will be considered by the 1997 Legislature.

Compensation

    The Legislature appropriated a 4 percent compensation package increase for faculty and staff in the Utah System of Higher Education, along with funding for the increased retirement rates for personnel in the state retirement system. For applied technology instruction, this amounts to $2,069,800 for salaries, plus $129,900 for state retirement, based on estimated ATE related faculty and staff. As the Board of Regents recommended no tuition increases for FY 1997, these amounts were appropriated entirely from the General Fund.

Other ATE Budget Adjustments

     Some FY 1997 higher education budget adjustments have an ATE component. These adjustments were separated between academic and ATE programs based on their respective shares of the institutions' budgets. These adjustments include a reduction of $39,700 for the state Risk Management insurance premiums. It also includes increases of $4,300 for other state internal service fund rates, $203,000 for operation and maintenance of new buildings, $119,800 for new library staff, and $30,600 for utility rate increases. The funding for new library staff is one-time Uniform School Fund, while the other adjustments are funded from ongoing General Funds.

    The ATE portion of the funding switch from the General Fund to the Uniform School Fund amounts to $5,155,100. Of this amount, $3,459,300 is one-time funding.

    Recognizing the serious need for updating ATE instructional equipment, the 1996 Legislature provided $1,000,000 of Uniform School Fund, for this need at the eight public higher education institutions with ATE missions:

    Salt Lake Community College received $100,00 in one-time Uniform School Fund for a pilot job placement tracking program. The goal is to eventually enable the colleges offering applied technology education to track job placement of its students similarly to what is being done at the Applied Technology Centers.

    The Legislature appropriated $2,000,000 from the Uniform School Fund through Public Education for ATC-type instruction in all nine ATE regions. These ATE development funds are to be distributed by the Joint Liaison Committee (JLC) for secondary and adult non-credit programs in the nine applied technology regions of the State. Programs funded must be part of the regional master plans, and the funds, according to legislative intent, "shall be distributed according to performance and productivity measures to be developed and adopted by the JLC no later than May 1, 1996."

    An additional $2.7 million from the Uniform School Fund was appropriated to the State Board of Applied Technology Education for ATE instructional equipment to be distributed to the five ATCs and the four applied technology service regions.