2012 Arkansas Code
Title 6 - Education
Subtitle 5 - Postsecondary And Higher Education Generally
Chapter 61 - Postsecondary Institutions Generally
Subchapter 2 - -- Arkansas Higher Education Coordinating Board
§ 6-61-228 - Creation of funding formula model for universities.

(a) (1) The funding formula model for universities shall serve as a framework for implementing the broad goals of the State of Arkansas and the Arkansas Higher Education Coordinating Board.

(2) The model shall ensure adequate, equitable, and stable funding and be based on reliable and uniform data.

(3) The model shall be simple to understand, sensitive to universities' differing missions, and responsive to changes within the universities and shall make provisions for special-purpose units.

(4) The model shall hold universities accountable for increasing the educational attainment levels of Arkansas citizens by:

(A) Addressing the state's economic development and work force needs;

(B) Promoting increased degree production while maintaining a high level of rigor; and

(C) Acknowledging the unique mission of each university and allowing for collaboration and minimal redundancy in degree offerings and competitive research.

(5) The model shall promote a seamless and integrated system of postsecondary education designed to meet the needs of all students.

(6) The model shall address institutional accountability for the quality of instruction and student learning, including remedial instruction.

(b) (1) The model shall determine the funding needs of universities using six (6) student-semester-credit-hour-based expenditure functions, one (1) square-footage-based function for facilities, and two (2) or more special-mission functions.

(2) The model shall also provide for economy or diseconomy of scale for universities with fewer than three thousand five hundred (3,500) full-time-equivalent student enrollment.

(c) (1) The six (6) student-semester-credit-hour-based expenditure functions shall be:

(A) Teaching salaries;

(B) Other instructional costs;

(C) Library costs;

(D) General institutional support;

(E) Research; and

(F) Public service.

(2) The square-footage-based expenditure function shall be for facilities maintenance and operations.

(3) The special missions to receive consideration in the funding formula model shall be universities with a traditional minority mission or a land grant mission, or both.

(d) (1) Teaching Salaries. To determine the teaching salary needs of the universities, the student-semester-credit-hour component of each university shall be summarized into four (4) discipline cost categories:

(A) Cost Category I shall include the following instructional discipline classifications:

(i) English;

(ii) General studies;

(iii) Mathematics;

(iv) Interdisciplinary studies;

(v) Health-related knowledge;

(vi) Interpersonal skills;

(vii) Leisure and recreational activities;

(viii) Personal awareness;

(ix) Philosophy;

(x) Psychology;

(xi) Public administration; and

(xii) Social sciences;

(B) Cost Category II shall include:

(i) Ethnic and cultural studies;

(ii) Marketing;

(iii) Communications;

(iv) Education;

(v) Languages;

(vi) Home economics;

(vii) Law;

(viii) Biological sciences;

(ix) Parks and recreation;

(x) Basic skills;

(xi) Construction trades;

(xii) Mechanics;

(xiii) Precisions;

(xiv) Production;

(xv) Transportation; and

(xvi) Business management;

(C) Cost Category III shall include:

(i) Agriculture;

(ii) Conservation;

(iii) Architecture;

(iv) Communication technologies;

(v) Computer and information sciences;

(vi) Library science;

(vii) Physical sciences;

(viii) Science technology;

(ix) Visual and performing arts; and

(x) Health professions; and

(D) Cost Category IV shall include:

(i) Engineering; and

(ii) Engineering-related technology.

(2) A university's annualized student semester credit hours component in each cost category shall be summarized into three (3) instructional levels: undergraduate, graduate, and doctoral to produce a four-by-three (4x3) matrix or table containing the university's student semester credit hours in each cost category and level.

(3) (A) Teaching salary computations shall be determined by dividing each of the twelve (12) cells of the table by the number of student semester credit hours that have been determined by research to be needed to produce a full-time-equivalent faculty member.

(B) Those student semester credit hour standards shall be: Click here to view image.

(4) (A) A university's student semester credit hours in each cost category shall be divided by the applicable standards in subdivision (d)(3)(B) of this section to determine the number of full-time-equivalent faculty needed at each of the three (3) instructional levels.

(B) (i) The number of faculty at each instructional level shall be multiplied by an average Southern Regional Education Board faculty salary for a university at that level to ensure that every university receives the same funds for the same discipline and level of student semester credit hours.

(ii) The sum of the teaching salaries at the three (3) instructional levels shall constitute the teaching salaries need of the university.

(e) Other Instructional Costs. Other instructional costs of the university shall be calculated as an amount equal to forty-five percent (45%) of teaching salaries of the university.

(f) Library Costs. Library costs shall be calculated as an amount equal to eleven percent (11%) of the sum of the teaching salaries and other instructional costs of the university.

(g) General Institutional Support. General institutional support of the university shall be calculated as an amount equal to fifty-four percent (54%) of the sum of teaching salaries and other instructional costs of the university.

(h) Research. Research funding of the university shall be calculated as an amount equal to five percent (5%) of the undergraduate teaching salaries need plus twenty-five percent (25%) of graduate teaching salaries plus fifty percent (50%) of doctoral teaching salaries.

(i) Public Service. Public service funding of the university shall be an amount equal to three percent (3%) of teaching salaries of the university.

(j) (1) Facilities Maintenance and Operations. Facilities maintenance and operations funding of the university shall be based upon the university's needed square footage as determined by the Five-Factor Academic Space Prediction Model that considers the discipline and level of the student semester credit hours of each university.

(2) For each year of a biennium, the Arkansas Higher Education Coordinating Board staff shall determine a funding rate per square foot based upon the most recent cost experiences of the universities.

(3) The rate calculated in subdivision (j)(2) of this section shall be multiplied by the university's actual square footage that the space prediction model has determined the university needs.

(4) Excess square footage above the space prediction model's established need shall be funded at a rate determined by the Arkansas Higher Education Coordinating Board staff.

(5) Universities with less square footage than the space prediction model-determined need shall be funded at a rate determined by the Arkansas Higher Education Coordinating Board staff.

(k) (1) Special Missions. A federally designated land grant university shall receive special mission funding in the amount of ten percent (10%) of teaching salaries of the university in recognition of its federally mandated research and public service mission.

(2) The universities with a traditional minority mission shall receive an additional amount equal to fifteen percent (15%) of all student semester credit hours or full-time-equivalent-based portions of the funding formula.

(l) (1) Economy/Diseconomy of Scale. The funding formula shall include an economy/diseconomy of scale provision for universities with fewer than three thousand five hundred (3,500) full-time-equivalent student enrollment.

(2) The Arkansas Higher Education Coordinating Board staff in consultation with the presidents and chancellors of the universities shall determine the method of calculation.

(3) [Repealed.]

(m) (1) Funding Formula Model. The total expenditure needs of each university shall be determined by adding all of the funding needs determined under subsections (d)-(l) of this section.

(2) (A) Appropriation needs for a university shall be determined by subtracting from the total expenditure needs the tuition and fee revenues.

(B) The Arkansas Higher Education Coordinating Board shall establish biennially a tuition rate per credit hour for universities to be used for funding formula purposes.

(3) (A) This funding formula model is designed to produce educational and general operating funds for universities of higher education that generate student semester credit hours.

(B) This model does not determine the funding needs of special units, such as the medical school, division of agriculture, and system offices.

(4) This model does not provide for capital or personal services recommendations.

(5) This model does not provide funds for institutional scholarships, debt service, or fund transfers.

(6) (A) The revenue domain for the funding formula model shall include only state appropriations and student tuition and fee income and does not include private contributions and other discretionary funds.

(B) The revenue domain shall exclude funding at the universities from all sources other than from state appropriations and student tuition, including, but not limited to, the federal government, private sources, and self-supporting activities.

(C) Since the general definition specifies operating funds, the funding formula model also does not consider the appropriation and allocation of capital funds.

(n) (1) The funding formula model shall be utilized only to allocate funds to the universities.

(2) This funding formula model shall not be used to prescribe the allocation of those funds within the universities.

(o) (1) By December 31, 2011, the Arkansas Higher Education Coordinating Board shall develop an outcome-centered funding formula model that implements the broad goals for the state in subsection (a) of this section and seeks to promote and increase the satisfactory progression, matriculation, and graduation of all students enrolled in state-supported institutions of higher education.

(2) The outcome-centered funding formula model shall take into consideration, at a minimum:

(A) Course completion;

(B) Degree completion;

(C) Critical needs shortage areas;

(D) Minority students;

(E) Economically disadvantaged students; and

(F) Nontraditional students.

(p) (1) Each university's total state funding received shall be calculated at:

(A) Ninety-five percent (95%) under the funding formula model under subsections (b)-(m) of this section and five percent (5%) on the outcome-centered funding formula model for the 2013-2014 school year;

(B) Ninety percent (90%) under the funding formula model under subsections (b)-(m) of this section and ten percent (10%) on the outcome-centered funding formula model for the 2014-2015 school year;

(C) Eighty-five percent (85%) under the funding formula model under subsections (b)-(m) of this section and fifteen percent (15%) on the outcome-centered funding formula model for the 2015-2016 school year; and

(D) Eighty percent (80%) under the funding formula model under subsections (b)-(m) of this section and twenty percent (20%) on the outcome-centered funding formula model for the 2016-2017 school year.

(2) Beginning in the 2017-2018 school year, university funding shall be based seventy-five percent (75%) under the funding formula model under subsections (b)-(m) of this section and twenty-five percent (25%) on the outcome-centered funding formula model.