Hutchinson backs college funding shift

Tying cash, degree success will boost economy, he says

Gov. Asa Hutchinson said Tuesday that he supports a proposed outcomes-based funding formula for the state's colleges and universities that the state's Higher Education Coordinating Board will consider Friday.

"Right now, we have a model of funding for our higher education [institutions] that rewards [enrollment] growth, but it does not always reward excellence," the Republican governor told about 200 people attending a luncheon meeting of the Rotary Club of Little Rock at the Clinton Presidential Center.

Hutchinson said 43 percent of the state's high school graduates go on to achieve some level of degree or certificate and the state's goal is to increase that percentage to 60 percent by 2025.

"If we can do that in Arkansas, then we are going to be driving our economy, increasing our per capita income at the same time," he said.

At his request, state officials started looking at potential changes to Arkansas' higher education funding formula to emphasize accountability, student access and degree completion, Hutchinson said.

A working group spent nine months on an outcome-based funding model for colleges and universities, and the Higher Education Coordinating Board will consider adopting the proposed framework for this model on Friday, Department of Higher Education Director Brett Powell said after the Rotary Club meeting. Then, the working group will develop the details of the measurements for the funding model, he said.

Hutchinson said the proposed funding formula places a higher priority on students completing a degree or certificate, promotes efficiency of operations and encourages a better allocation and more efficient use of resources, he said, adding "the higher education community .... has been very receptive to this."

If the proposed funding formula is approved by the Higher Education Coordinating Board and, ultimately, the Legislature in 2017, Arkansas will become the fifth state to move to a "100 percent outcome-based" funding formula, Hutchinson said.

"This is not an easy political lift," he told the Rotary Club luncheon.

"We need people's help [and] engagement in this," he said. "It is the right direction to allocate scarce resources in higher education to reward those institutions that are having a higher level degree of degree completion, improved efficiency [and] better outcomes for the students."

House Speaker Jeremy Gillam, R-Judsonia, said he is not "very familiar" with the proposed changes in the state's higher education funding formula and has only "a cursory knowledge" about them.

He said he hopes to get more details about the proposed changes during a meeting with Hutchinson.

After the Rotary Club luncheon, Hutchinson told reporters that the specifics of the proposed funding formula are "still being vetted" with higher education leaders.

"Now, I know what the [legislative] process is like and there might have to be some negotiation between now and the [2017 regular] session or during the session to get it all passed," he said.

"But I support a new higher ed formula based upon those requirements of accountability [and] of performance measures and moving away simply from a formula that is based upon attendance or that is locked in because of historic patterns," Hutchinson said.

He said there will be a need for some "hold harmless" in funding for the universities and colleges under the formula.

"We might have to look at it, whether it is going to require any more money, whether I have to ask the Legislature for more money to accomplish it," Hutchinson said.

In this year's fiscal session, the Republican-controlled Legislature and Hutchinson enacted a fiscal 2017 general revenue budget of about $5.33 billion -- up from $5.19 billion in fiscal 2016 -- with most of the increase of $142.7 million intended for the Department of Human Services and public schools. State general revenue for the colleges and universities remained flat at $733 million in fiscal 2017.

The general-revenue budget for fiscal 2017 factors in the nearly $101 million in individual income-tax cuts enacted by the 2015 Legislature and Hutchinson.

In response to a question at the Rotary Club luncheon about what he plans to propose for a tax cut in the 2017 regular session, Hutchinson said the state needs to be more competitive with its income tax rates.

"I would love ultimately to get our income tax rate down to about 5 percent," he said.

"It may or may not happen while I am governor. But we have to set those goals and we have to be competitive and I think that gives us a competitive rate with our more competitive property taxes and so on," said Hutchinson, who referred to this goal of a 5 percent income tax rate during a trip to New York in January.

The state's top rate is 6.9 percent and the 2015 Legislature enacted his plan to cut the rate from 6 percent to 5 percent for Arkansans earning between $21,000 and $35,000 a year and from 7 percent to 6 percent on incomes between $35,100 and $75,000.

As for the 2017 session, Hutchinson said Tuesday, "I am going to assure everybody we are going to be cautious about this.

"We are not going to overpromise. We are not going to overcommit in terms of tax reductions. We are going to balance it with our growing economy. We will measure it one step at a time. We really won't know what we can do until we have our budget numbers that come in October. We take a look at it then. I'll work with the Legislature and we'll determine what our budget will look like for the next fiscal year and for the next session," Hutchinson said.

Metro on 07/27/2016

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