State gets guidance on college spending

Productivity fund advice submitted

The University of Arkansas for Medical Sciences' Little Rock campus is shown in this file photo.
The University of Arkansas for Medical Sciences' Little Rock campus is shown in this file photo.

The Arkansas Higher Education Coordinating Board recommended a net $0 change in productivity funding for educational and general operations at the state's colleges and universities for the 2024-25 fiscal year, although the University of Arkansas for Medical Sciences would receive an influx of money as a non-formula entity.

Productivity funding is a mechanism to align institutional funding with statewide priorities for higher education by incentivizing progress toward statewide goals in the areas of efficiency, effectiveness, affordability and adjustments.

The board's recommendations will be sent to the governor and General Assembly. Non-formula entities -- "special units" like UAMS, system offices and the University of Arkansas System Division of Agriculture -- are not subject to productivity funding; rather, they make funding requests, which are considered by the Arkansas Division of Higher Education.

The total funding recommendation for educational and general operations for colleges and universities is $0 in new revenue, because there was no productivity increase by schools year to year, with $4,555,985 of one-time incentive funds being utilized for statewide purposes, according to the coordinating board.

An additional appropriation increase recommendation of 2% of the formula-based-entities funding recommendation has been added to address any changes in disbursements for Educational Excellence Trust Fund revenues or any other state funding adjustments, an increase that totals $9,946,076 for universities and $3,626,503 for two-year colleges.

This past year was the first time since the coordinating board approved productivity funding in 2017 that the state's public schools didn't increase productivity, said Nick Fuller, the state higher education division's chief financial officer. The $4,555,985 of one-time incentive funds is "for everyone, not any one institution," but its precise purpose has yet to be determined.

The board also recommended a 7% increase for non-formula entities based on the Higher Education Price Index and full funding of Operations and Program Enhancement requests, according to Fuller. This requires an additional $51.72 million, $30 million of which will be for UAMS, and that additional $30 million more UAMS received than in fiscal year 2023-24 would bring the UAMS allotment to nearly $146 million.

UAMS is a "primary source" for health care professionals in the state and "we greatly appreciate the support of" the state higher education division and the coordinating board, said Stephanie Gardner, UAMS provost. "[Our] mission wouldn't be possible without" them.

UAMS is the state's only academic medical center -- Arkansas is one of eight states with a sole academic medical center -- and 70% of health care professionals in the state trained at UAMS, said UAMS Chancellor Cam Patterson. UAMS annually ranks first or second nationally among academic medical centers in terms of retaining its graduates within its state.

UAMS, which has more than 11,000 employees, has struggled financially this calendar year due to the rapid rise in costs for medical supplies and equipment, as well as salaries in an inflationary environment. This summer, UAMS slowed hiring -- in some departments hiring was frozen -- and reduced expenses while also receiving $30 million from the state's Budget Stabilization Trust Fund, which it will pay back by the close of the current fiscal year next summer. UAMS had an operating loss of $30 million for its 2023 fiscal year.

UAMS also expects to receive another $30 million in January as part of a recent settlement with the Centers for Medicare & Medicaid Services, which had been underpaying a myriad of hospitals for a certain prescription drug program, according to Amanda George, UAMS chief financial officer and vice chancellor for finance. Though UAMS also faced headwinds the past couple of years, those struggles were offset by funds from the federal Coronavirus Aid, Relief, and Economic Security Act and American Rescue Plan, but those funds are no longer available in fiscal year 2024.

UAMS has expanded recently, opening an $85 million surgical facility dedicated to treating orthopedic and spine patients in May and a $65 million, 58,000-square-foot Radiation Oncology Center in Little Rock this summer -- the second floor of which houses the 9,000-square-foot Proton Center of Arkansas, the state's only proton center -- among other projects.

In addition to meeting workforce needs in the state, treating patients and research, UAMS facilities also function as integral classrooms for students, Gardner said. "Our students spend a lot of time [in them] learning."

UAMS also remains on course to submit its application for National Cancer Institute designation no later than 2025, and UAMS projects that NCI Designation would have an economic impact of $72 million to the state annually.

NCI designation is the country's most distinguished status for cancer centers, and there are 71 NCI-designated cancer centers in the country, but none in Arkansas, according to UAMS. More than two-thirds of funds awarded by NCI for research and clinical trials go to NCI-designated centers, and many NCI community outreach and program grants are only offered to NCI-designated cancer centers.

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