|| Funding for Enrollment Growth
Everyone that we spoke with talked about the long-standing legislative policy of funding enrollment growth-rewarding institutions with additional appropriations based on the number of new students enrolled each year. "What really matters in terms of policy is where the money goes," argued one campus president. Since the mid-1980s the funding formula has had a marginal cost increase per student for each new student enrolled in an institution. This figure differs by type of institution and by level of instruction. Lower division marginal cost increases requested by the USHE in the FY2005 budget ranged from $3,237 per FTE at the College of Eastern Utah to $5,106 at the University of Utah. Upper division increases requested in FY2005 ranged from $4,300 at Dixie to $7,015 at the University of Utah.29
Those who spoke positively of this approach suggested that it encourages access. Colleges and universities are much less likely to turn away students when there is financial incentive for taking on new students. Opponents of this approach argue that funding enrollment growth alone may encourage colleges to "chase" enrollments, even when the students are not a particularly good fit for that institution.
For the three years prior to the 2004 legislative session, however, with state budget problems, enrollment growth was not fully funded, leaving many in the state to talk about the "unfunded enrollment" at each institution. The Board of Regents argues that, as of fall 2003, there were 10,474 students for whom the USHE had received no state funding, leading to an average state funding per student reduction from 1998-99 to 2002-03 of $788 per student. A more complete comparison looks at total revenues (including tuition). When tuition revenues are figured in, dollars per student have decreased by $371 over this same time period, a five percent reduction in funding per student.30 Institutions have absorbed these additional students in different ways, from greater use of adjunct faculty and increased class sizes to limiting the number of sections offered.
In the early 1990s, the state was unable to fully fund enrollment growth for one year, but the Legislature made up for it the following year by essentially repaying institutions for the lost funding. Given the current economic situation of the state, very few expect that the state will "pay back" those unfunded enrollments, and many expect that the state may not return to growth funding once they have seen that institutions can serve the extra students without the additional funds. Several people we spoke with (both higher education leaders and state policymakers) saw this as a potential positive for the state. Moving away from a formula that only awards enrollment growth, they argue, allows the state to keep the system from becoming unwieldy, where every institution has incentive to enroll as many students as possible, regardless of institutional fit.
While many in higher education would like to see changes to a formula that they feel insufficiently recognizes quality and performance, everyone still talks about "unfunded enrollments" and about how they need the funding for each of those students to provide the best education possible.
It remains to be seen what will happen with the funding formula once the state budget picture improves. The 2004 Legislature added $4.6 million to cover 10% of actual enrollment growth in the system. The Legislature also adopted "intent language" calling upon the Board of Regents and the presidents to "review and refine the funding formula" for the Utah System of Higher Education to "reduce dependence on growth funding, link to measurable system-wide and institutional specific performance indicators, respond to changes in costs of instruction…and respond to market demand and student performance as well as recognized differences in institutional roles and mission."31
Marginal cost figures are from USHE, Utah Higher Education Funding Formula, Funding Distribution Detail - FY2003-04 provided by USHE March 19, 2004.
Memo from Cecelia H. Foxley to the State Board of Regents regarding the 2004-2005 Budget Process and Priorities, September 3, 2003.
Intent language is drawn from Legislative Fiscal Analyst Web site, Recommendations for the Appropriations Subcommittee for Higher Education for the Year Ending June 30, 2005, http://www.le.state.ut.us/interim/2004/pdf/00000282.pdf (March 10, 2004).