Before the Session

Overview

The Legislature convenes on the second Tuesday in January of odd-numbered years and sits for 140 days. Before it does, many recommendations about higher education funding have been made. These include:

• The construction of the enrollment-based formulas by which most state dollars to Texas colleges and universities are allocated are based on budget recommendations from the Legislative Budget Board (LBB). The LBB is chaired by the Lieutenant Governor and the Speaker of the House is vice chair. Four Senators and four House members also serve.
• LBB staff works from Legislative Appropriations Requests submitted by each agency. The LBB also receives the formula recommendations from the Coordinating Board. Using these numbers and estimates about future revenues, the LBB drafts a budget.
• The Governor's Office of Budget, Planning, and Policy which also receives copies of the LARs, may draft a separate budget for the Governor to submit. Whether it does so is at the discretion of the Governor.

Formula Funding

More than two-thirds of state appropriations to Texas colleges and universities comes as enrollment-driven formula. The formulas try to assess the cost of delivering a semester credit hour to a student. Many variables influence the costs of educating a given student, so in Texas the formulas are highly differentiated by the type of credit hours delivered.  Some variables include the area of study, the level of study (e.g. doctoral) and the cost of serving students (e.g. instructional support, library, building maintenance).

About two years before the legislative session, the commissioner of the Texas Higher Education Coordinating Board appoints faculty, administrators, and public members to a Formula Advisory Committee and its study groups. The Formula Advisory Committee makes recommendations to the Coordinating Board, which makes recommendations to the LBB.

Each institution's student enrollment and Coordinating Board Space Model parameters are factored into the formulas to determine its funding. The enrollment is based on the summer and fall terms immediately preceding the legislative session and the spring term when the session is held. Only students enrolled for credit are counted, and for most Formula variables, the number used is student credit hours not student headcount.

In general, if an institution loses enrollment, its formula funding will decrease; if enrollment expands, formula funding will grow. This may vary substantially if the enrollment mix changes. If undergraduate enrollment declines but graduate enrollment expands, it is possible for an institution's funding to remain stable.

The formulas do not determine how much money the legislature appropriates to higher education, but they do determine how the funding is allocated among institutions.

FORMULA FUNDING IN DETAIL

Instruction and Operations Formula
Funds associated with the formulas for faculty salaries, departmental operating expenses, library, instructional administration, research enhancement, student services, scholarships, and institutional support, are distributed by a formula that is review prior to the Legislative session and recommendations for changes are made.  The formula distributes funds on a weighted semester credit hour basis determined by a matrix that differentiates between programs and the level the course is taught at--lower division, upper division, master's, doctoral, or professional level.  For the 2012-2013 Biennium recommendations for changes to the I&O formula structure include phasing in formula funding based on completed semester credit hours instead of attempted hours.  This would be done over the next four years and require a change in the census date from the 12th day of class to the last class day of the semester.

At-Risk Student Supplement
For the 2012 and 2013 Biennium, the state is proposing to include a supplement of at least 5% to the base rate for lower-division, liberal arts semester credit hours for at-risk students.

Teaching Experience Supplement 
An additional weight of 10% is added to undergraduate semester credit hours taught by tenured and tenure-track faculty. For the 2012-2013 Biennium, a recommendation is being made to move this supplement to the I&O base funding.  The state believes the current teaching supplement has not produced the results it was originally intended to achieve, which was to encourage more tenured and tenure-track faculty to teach undergraduate courses.

Growth Supplement
A supplement is provided to the Texas Higher Education Coordinating Board for subsequent distribution to universities based on their growth during each year of the biennium.

Infrastructure Support
Funds associated with the former plant-related formulas plus utilities are distributed by an infrastructure support formula. This formula is driven by the predicted square feet for the universities' educational and general activities produced by the Space Projection Model developed by the Coordinating Board. The latest available values, for the fall before the legislative session, are used for this formula. In addition, the portion of the formula that can be attributed to utilities is adjusted to reflect differences in unit costs for purchased utilities, electricity, natural gas, water, and wastewater.

Non-Formula Items
Institutions continue to receive a direct appropriation as reimbursement for staff group insurance, workers compensation insurance, unemployment insurance, public education grants, organized activities, and tuition revenue bond payments. In addition, the Legislature continues to direct appropriations to special items.

Legislative Appropriations Request

Each institution of higher education drafts a Legislative Appropriations Request (LAR) which forms the basis for the funding items which it wants to be considered. Included are requests for debt service on approved construction and special items, which are usually major research initiatives.

In recent years, universities and other agencies were told that they could request for the upcoming biennium no more than a certain percentage of what they had received in the current biennium. However, any university can seek additional funds by including "exceptional item requests" in the LAR or by presenting its case directly to members of the Legislature.