Copyright© 2000 by School Services of California, Inc.
Modifications to Program Based
Funding
(Guest Commentary by Joe Newmyer, Retired Chief
Business Official)
[Editor's Note: Over the past half-dozen years community colleges have attempted to receive equalization funding in the State Budget. The system has been successful only once in achieving that goal. Most recently, Governor Davis vetoed an augmentation of $45 million for equalization funding, in the 2000-01 State Budget. Once again the system is proposing that equalization be funded at the $45 million level, as contained in the Board of Governor's proposed community college budget for 2001-02 fiscal year. However, a new approach is being considered by the Chancellor's Office. Chancellor Nussbaum has proposed that the new request for equalization funding is entitled "Ensuring Student Success Statewide." According to the Chancellor, the basic thrust of the proposal is to address the State's and system's interest in ensuring that each student, no matter where he or she chooses to attend a community college in the State, has a reasonable level of resources supporting their attendance.
Joe Newmyer has written a proposal that takes a slightly different approach to addressing the system's needs to equalize funding statewide. Joe's approach takes a comprehensive look at how the system is currently funded under the "Program-Based Funding" model, with special emphasis on equalization funding. The following article is Joe's recommendations regarding a new approach to funding equalization.
Equalization
The revenue per FTES method for distributing equalization funds has some appeal since it is simple and is comparable to the method used by K-12. Being similar to K-12 is not necessarily a positive factor but in this case it makes it easier to sell to the legislature and hopefully to the Governor. The simplicity factor also makes it easier to sell to those same parties. Relying primarily on FTES ignores the increased costs that result when a district has disproportionately large number of headcount. However, the matriculation funds are distributed almost solely on the basis of headcount and therefore it can be argued that this inequity is addressed with that categorical allocation.
Since the noncredit FTES are totally equalized it makes sense to isolate those funds at the current rate before considering equalizations for the credit FTES. In a similar fashion it makes sense to isolate the Maintenance and Operations funds using the same computation that is used in the current system. By doing this it also provides the basis to continue providing growth funds for Maintenance and Operations. This procedure is especially useful when a new facility is opened, since it provides new funds to operate and maintain the new buildings. The remaining apportionment after deducting the noncredit funds and the Maintenance and Operations funds could then be sued for equalization purposes for credit FTES.
Everyone agrees that a scale factor to give recognition to the increased
expenses of being small should be included in the computation. Program Based
Funding provides an economy of scale factor that can be used for this purpose.
If this is not satisfactory then a discussion should be held to determine
a satisfactory scale factor for a small district. In addition, a decision
must be made on the use of a scale factor for small colleges within a small
district. Currently, there are seven colleges that receive the benefit of
this recognition. Sometimes the complexity of implementing this factor causes
a negative attitude. To simplify the procedure it might be easier to factor
up the FTES rather than to factor up the rate per FTES. The end result would
be the same and the same procedure could be used for a small district. If
this concept were utilized, then the dollars per credit FTES would be comparable
for all districts and it would be easier for everyone to understand.
--Joe Newmyer