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Ryan Johnson, Published May 25 2013

New North Dakota higher ed funding formula to kick in July 1

FARGO – A new formula to fund North Dakota’s public colleges and universities pulled off a “rare” achievement this spring, Sydney Hull said: earning the support of all 11 campuses for a change that he believes will lead to more transparency and efficiency in the system.

Hull, the state Board of Higher Education’s student representative, began his one-year term last summer with a top goal of helping the North Dakota University System enact funding reform.

It was an item on the wish lists of many higher education leaders in the state for years.

The timing was right during the 2013 legislative session, when lawmakers approved Senate Bill 2200 with the strong support of Gov. Jack Dalrymple to fund institutions based on the number of credits completed instead of relying on past payments and student enrollments to come up with the figures.

Hull said there are some “legitimate” concerns about the change, many of which were raised during the months of discussion and deliberation leading up to the bill’s final approval. But he said support from nearly all stakeholders was “overwhelming” for the plan that goes into effect July 1.

“The only reality that we do know is that we have arguably the best funding model we’ve ever had for the university system,” he said. “Nothing’s perfect, but I think we’re definitely moving in the right direction.”

‘Monumentally positive’

SB 2200’s primary sponsor, Sen. Tim Flakoll, R-Fargo, said it’s “legacy, breakthrough-type legislation” that will create equitable funding among the campuses.

He also thinks it will give the colleges and universities an incentive to continue to produce quality graduates and get them on track for earlier graduations.

The main advantage of the new formula, Flakoll said, is that it’s based on the actual cost to deliver academic programs. For example, the plan recognizes that offering a nursing program is more expensive than many liberal arts courses because of requirements for a smaller faculty-to-student ratio and more costly equipment.

Flakoll said the formula was based on classifications of instructions programs (CIP) codes, which track the costs of certain classes and programs to come up with a plan that would work. It ensures the schools won’t suffer a dramatic loss of funding when the formula first kicks in this summer, he said.

“Essentially, each campus is intended to get more than they received during the current biennium,” he said.

Flakoll said another component is three tiers of base funding, recognizing that the state’s larger research universities often can be more efficient in providing classes while costs are higher at the two-year colleges because of smaller enrollments. Officials track the number of credits successfully completed by students, put those figures through the formula and come up with the funding levels for the next biennium.

He said there are safeguards to prevent a campus from suffering a large financial loss – for example, the funding level can’t drop by more than 4 percent in a year.

“We don’t want any of the campuses to fall off a big ledge,” he said.

Lawmakers also added “weighting factors” to determine the appropriate level of funding. For example, the cheapest program to offer would be multiplied by a factor of 1 to determine funding, while the most expensive, such as the School of Medicine and Health Sciences at the University of North Dakota, would instead be based on a factor of more than 30.

Flakoll said this ensures that schools will continue to offer these essential programs, even if they cost more, without fearing a drop in funding.

He said North Dakota’s change is drawing the attention of higher education officials across the country, including at Harvard.

Still, there could be some revisions in the coming years. The legislation was amended during the session to include a study that will consider if more factors – such as graduation rates or graduating within a certain number of years – should be considered when determining funding levels.

Flakoll said the formula will likely go down as a major part of Dalrymple’s legacy for the governor’s work in securing enough support to enact a change that’s been discussed for years, but hadn’t become a reality until now.

“I’ve been in higher education in North Dakota for about 33 years, and this is without a doubt one of the most monumentally positive things that has happened,” Flakoll said.

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Readers can reach Forum reporter Ryan Johnson at (701) 241-5587