Why One State Is Considering a New Funding Model for Higher Education

The74

Whitney Downard

November 23, 2022

From Indiana Capital Chronicle

Legislators will consider a new approach to funding higher education based on school-specific goals rather than blanket recommendations, and they got their first look at an Oct. 26 State Budget Committee meeting.

The proposed funding model comes from the Commission for Higher Education, which the General Assembly tasked with researching a new formula to cover costs at Indiana’s state colleges and universities.

Stakeholders criticized the state’s “legacy model” funding formula for not differentiating between two-year and four-year schools or research and non-research institutions. Nor does the state’s current model allow for individualized goals at different schools.

“The legacy model (of) today essentially rewards growth generally in the same five metrics for every institution and every institution type,” said Seth Hinshaw, the associate commissioner and CFO of the Indiana Commission for Higher Education (CHE). “What this (new prospective) model gives us is the flexibility to… instead identify growth targets for similar institutions but allow those targets to be specific to that institution.”

That legacy model also uses averages over the last few recent years for various factors – such as on-time degree completion – to calculate the state’s fiscal responsibility moving forward.

“You ended up with a 10-year dataset that is about two years behind by the time we implement and fund,” Hinshaw said.

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