{"data":{"id":"us-ky/krs-164.092","jurisdiction":"us-ky","citation":"KRS 164.092","heading":"Comprehensive funding model for the public postsecondary education","body":"system -- Legislative findings and declarations -- Separate funding formulas\nfor public university sector and KCTCS sector -- Distribution of funds --\nAnnual certification of fund ing distribution amounts -- Postsecondary\neducation working group -- Administrative regulations -- Postsecondary\neducation performance fund.\n(1) For purposes of this section:\n(a) \"Category I and Category II square feet\" means square footage that falls under\nspace categories as defined by the Postsecondary Education Facilities\nInventory and Classification Manual published by the United States\nDepartment of Education;\n(b) \"Comprehensive university\" has the same meaning as in KRS 164.001;\n(c) \"Council\" means the Council on Postsecondary Education;\n(d) \"Equilibrium\" means a condition in which every institution has an\nappropriately proportionate level of resources as determined by the\nperformance funding model established in this section given each institution's\nlevel of productivity in achieving student success outcomes, course\ncompletion outcomes, and other components included in the model;\n(e) \"Formula base amount\" means an institution's enacted general fund\nappropriation amount minus debt service on bonds and appropriations for\nmandated programs;\n(f) \"Hold-harmless provision\" means a provision included in the funding\nformulas as described in subsection (9) of this section that prevents a\nreduction of a designated portion of funding for an institution through\noperation of the funding formula;\n(g) \"Institution\" means a college in the Kentucky Community and Technical\nCollege System or a public university;\n(h) \"KCTCS\" means the Kentucky Community and Technical College System;\n(i) \"KCTCS institution allocable resourc es\" means the formula base amount net\nof any equity adjustment as described in subsection (7)(b) of this section, any\namount protected by a hold -harmless provision, and any applicable increase\nor decrease in general fund appropriations;\n(j) \"Mandated program\" means a research or public service activity that is not\nintegral to the instructional mission of the institution and is identified by the\nGeneral Assembly in the biennial budget;\n(k) \"Nontraditional age students\" means students between t he ages of twenty-five\n(25) and sixty-four (64);\n(l) \"Performance fund\" means the postsecondary education performance fund\nestablished in subsection (13) of this section;\n(m) \"Research universities\" means the University of Kentucky and the University\nof Louisville;\n(n) \"Stop-loss provision\" means a provision included in the funding formulas as\ndescribed in subsection (9) of this section to limit reduction of an institution's\nfunding amount to a predetermined percentage, notwithstanding the amounts\ncalculated by operation of the formula; and\n(o) \"University allocable resources\" means the formula base amount net of any\nsmall school adjustment as described in subsection (5)(c) of this section, any\namount protected by a hold -harmless provision, and any applicabl e increase\nor decrease in general fund appropriations.\n(2) The General Assembly hereby finds that improving opportunity for the\nCommonwealth's citizens and building a stronger economy can be achieved by its\npublic college and university system focusing its  efforts and resources on the goals\nof:\n(a) Increasing the retention and progression of students toward timely credential\nor degree completion;\n(b) Increasing the number and types of credentials and degrees earned by all types\nof students;\n(c) Increasing the number of credentials and degrees that garner higher salaries\nupon graduation, such as science, technology, engineering, math, and health,\nand in areas of industry demand;\n(d) Closing achievement gaps by increasing the number of credentials and\ndegrees earned by low -income students, underprepared students,\nunderrepresented students, and nontraditional age students; and\n(e) Facilitating credit hour accumulation and transfer of students from KCTCS to\nfour (4) year postsecondary institutions.\n(3) (a) The General Assembly hereby declares these goals can best be accomplished\nby implementing a comprehensive funding model for the allocation of state\ngeneral fund appropriations for postsecondary institution operations that\naligns the Commonwealth's investments in  postsecondary education with the\nCommonwealth's postsecondary education policy goals and objectives.\n(b) The General Assembly further recognizes that priority for state general fund\nappropriations for postsecondary institutions should be given to each\ninstitution's funding floor over appropriations to the performance fund. For\npurposes of this section, \"funding floor\" means an institution's fiscal year\n2020-2021 general fund appropriation included in 2020 Ky. Acts ch. 92, plus\nany fiscal year 2020 -2021 distribution from the performance fund, and minus\nfiscal year 2020-2021 debt service on bonds and appropriations for mandated\nprograms.\n(4) This section establishes a comprehensive funding model for the public\npostsecondary education system to be implemented by the Council on\nPostsecondary Education. The funding model shall include a public university\nsector formula and a KCTCS sector formula, and shall not include any race -based\nmetrics or targets in the formulas.\n(5) The funding formula for the public university sector shall:\n(a) Recognize differences in missions and cost structures between research\nuniversities and comprehensive universities to ensure that neither are\nadvantaged or disadvantaged during the first full year of implementation;\n(b) Distribute one hundred percent (100%) of the university allocable resources\nfor all universities in the sector, based on rational criteria, including student\nsuccess, course completion, and operational support components, regardless\nof whether state funding for postsec ondary institution operations increases,\ndecreases, or remains stable;\n(c) Include an adjustment to minimize impact on smaller campuses as determined\nby the council; and\n(d) Be constructed to achieve equilibrium, at which point the funding formula\nrewards rates of improvement above the sector average rate.\n(6) Funding for the public university sector shall be distributed as follows:\n(a) Forty percent (40%) of total university allocable resources shall be distributed\nbased on each university's share of total  student success outcomes produced,\nincluding but not limited to:\n1. Bachelor's degree production;\n2. Numbers of students progressing beyond thirty (30), sixty (60), and\nninety (90) credit hour thresholds;\n3. Science, technology, engineering, math, and hea lth bachelor's degree\nproduction; and\n4. Bachelor's degrees earned by low-income students and underrepresented\nstudents;\n(b) Thirty percent (30%) of total university allocable resources shall be\ndistributed based on each university's share of sector total student credit hours\nearned, excluding dual credit enrollment, weighted to account for cost\ndifferences by academic disciplin e and course level, such as lower and upper\ndivision baccalaureate, master's, doctoral research, doctoral professional, and\nnontraditional age students; and\n(c) Thirty percent (30%) of total university allocable resources shall be\ndistributed in support of vital campus operations as follows:\n1. Ten percent (10%) shall be distributed based on each university's share\nof Category I and Category II square feet, net of research, nonclass\nlaboratory, and open laboratory space, to support maintenance and\noperation of campus facilities and may include a space utilization factor\nas determined by the council in collaboration with the working group\nestablished in subsection (11) of this section;\n2. Ten percent (10%) shall be distributed based on each university's share\nof total instruction and student services spending, net of maintenance\nand operation, to support campus administrative functions; and\n3. Ten percent (10%) shall be distributed based on each university's share\nof total full -time equivalent student enrollme nt to support academic\nsupport services such as libraries and academic computing.\n(7) The funding formula for the KCTCS sector:\n(a) Shall distribute one hundred percent (100%) of KCTCS institution allocable\nresources for all KCTCS colleges based on rationa l criteria, including student\nsuccess, course completion, and operational support components, regardless\nof whether state funding for postsecondary institution operations increases,\ndecreases, or remains stable;\n(b) May include an adjustment to account for  community economic disadvantage\nin some regions of the Commonwealth as determined by the council; and\n(c) Shall be constructed to achieve equilibrium, at which point the funding\nformula rewards rates of improvement above the sector average rate.\n(8) Funding for the KCTCS sector shall be distributed as follows:\n(a) Thirty-five percent (35%) of total KCTCS institution allocable resources shall\nbe distributed based on each college's share of total student success outcomes\nproduced, including but not limited to:\n1. Certificate, diploma, and associate degree production, weighted to\nprovide a premium for credentials that are aligned with the economic\nneeds of the state;\n2. Numbers of students progressing beyond fifteen (15), thirty (30), and\nforty-five (45) credit hour thresholds;\n3. Credentials earned by low -income students, underprepared students,\nunderrepresented students, and nontraditional age students; and\n4. Transfers to four (4) year institutions;\n(b) Thirty-five percent (35%) of total KCTCS institution al locable resources shall\nbe distributed based on each college's share of total student credit hours\nearned, weighted to account for cost differences by academic discipline; and\n(c) Thirty percent (30%) of total KCTCS institution allocable resources shall be\ndistributed in support of vital campus operations as follows:\n1. Ten percent (10%) shall be distributed based on each college's share of\nCategory I and Category II square feet, net of research, nonclass\nlaboratory, and open laboratory space, to support ma intenance and\noperation of campus facilities and may include a space utilization factor\nas determined by the council in collaboration with the postsecondary\neducation working group established in subsection (11) of this section;\n2. Ten percent (10%) shall be distributed based on each college's share of\ntotal instruction and student services spending, net of maintenance and\noperation, to support campus administrative functions; and\n3. Ten percent (10%) shall be distributed based on each college's share of\ntotal full -time equivalent student enrollment to support academic\nsupport services such as libraries and academic computing.\n(9) (a) The funding formula for both sectors shall include:\n1. A hold -harmless provision for fiscal year 2018 -2019 preventing a\nreduction in an institution's funding amount based solely on the formula\ncalculation, and allowing a hold -harmless amount determined by the\nformula in fiscal year 2018 -2019 to be deducted from an institution's\nformula base amount in whole or in part in fiscal y ears 2019-2020 and\n2020-2021, as determined by the council;\n2. A hold -harmless provision for fiscal year 2021 -2022, and every fiscal\nyear thereafter, preventing a reduction in an institution's funding amount\nbased solely on the formula calculation;\n3. A stop-loss provision for fiscal year 2019 -2020 limiting the reduction in\nfunding to any institution to one percent (1%) of that institution's\nformula base amount;\n4. A stop-loss provision for fiscal year 2020 -2021 limiting the reduction in\nfunding to any institution to two percent (2%) of that institution's\nformula base amount; and\n5. A stop -loss provision for fiscal year 2021 -2022, and every fiscal year\nthereafter, li miting the reduction in funding to any institution to zero\npercent (0%) of that institution's formula base amount.\n(b) Paragraph (a) of this subsection shall not be construed to limit the level of a\nbudget reduction that may be enacted by the General Assem bly or\nimplemented by the Governor.\n(10) (a) By May 1 each year, the council shall certify to the Office of the State Budget\nDirector the amount to be distributed to each of the public universities and\nKCTCS as determined by the comprehensive funding model  created in this\nsection, not to exceed the available balance in the performance fund.\n(b) The Office of the State Budget Director shall distribute the appropriations in\nthe performance fund for that fiscal year to the institutions in the amounts the\ncouncil has certified. The adjusted appropriations to each institution shall be\nallotted as provided in KRS 48.600, 48.605, 48.610, 48.620, and 48.630.\n(c) 1. The certified amounts distributed from the performance fund to the\ninstitutions are nonrecurring funds  that shall not be included in the\ninstitutions' base budget amounts submitted in their biennial budget\nrequests.\n2. The certified amounts distributed from the performance fund in the\nprevious fiscal year shall be included in the performance fund's base\nbudget amount submitted by the council in the biennial budget request.\n(d) For fiscal year 2017 -2018, the Office of the State Budget Director shall\ndistribute to the public postsecondary education institutions, except for\nKentucky State University, those fun ds appropriated to the performance fund\nby the General Assembly in 2016 Ky. Acts ch. 149, Part I, K., 12., in\naccordance with the comprehensive funding model created in this section.\n(11) (a) The Council on Postsecondary Education is hereby directed to est ablish a\npostsecondary education working group composed of the following:\n1. The president of the council, who shall serve as chairperson of the\nworking group and a nonvoting member;\n2. The president or designee of each public postsecondary institution,\nincluding the president of KCTCS;\n3. The Governor or designee;\n4. Five (5) members of the House of Representatives appointed based on\nproportional political affiliation in the House, with members of the\nmajority appointed by the Speaker of the House and memb ers of the\nminority appointed by the Minority Floor Leader of the House; and\n5. Five (5) members of the Senate appointed based on proportional\npolitical affiliation in the Senate, with members of the majority\nappointed by the President of the Senate and me mbers of the minority\nappointed by the Minority Floor Leader of the Senate.\n(b) Beginning in calendar year 2026 and every four (4) calendar years thereafter,\nthe postsecondary education working group shall convene to determine if the\ncomprehensive funding model is functioning as expected, identify any\nunintended consequences of the model, and recommend any adjustments to\nthe model. The council may call the working group to convene prior to the\nstart of the required calendar year to allow sufficient time for  the group to\ncomplete its work.\n(c) The results of the review and recommendations of the working group shall be\nreported by the council to the Governor, the Interim Joint Committee on\nAppropriations and Revenue, and the Interim Joint Committee on Educatio n\nby December 1 of each year the working group convenes.\n(12) The council shall promulgate administrative regulations under KRS Chapter 13A to\nimplement the provisions of this section.\n(13) (a) The postsecondary education performance fund is hereby establi shed as an\nappropriation unit to support improvement in the operations of the public\npostsecondary institutions and achievement of the Commonwealth's education\npolicy goals and workforce development priorities. General fund moneys may\nbe appropriated by th e General Assembly to this fund for distribution to the\npublic postsecondary institutions in amounts determined through the\ncomprehensive funding model created in this section.\n(b) Any balance in the performance fund at the close of any fiscal year shall n ot\nlapse but shall be carried forward to the next fiscal year and be continuously\nappropriated for the purposes specified in this section. A general statement\nthat all continuing appropriations are repealed, discontinued, or suspended\nshall not operate to repeal, discontinue, or suspend this fund or to repeal this\naction.","path":["KRS Chapter 164"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=57019","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:51:14Z","sha256":"b2b0360e7184ef77cbf2782940b80d55166413f94f6848e23d47621c45ae8fab","source_id":"us-ky","stale":false,"prev":"us-ky/krs-164.090","next":"us-ky/krs-164.095"},"notice":"GroundRules: Original legal text. Not legal advice."}