COORDINATING BOARD FOR HIGHER EDUCATION
HIGHER EDUCATION FUNDING FORMULA TASK FORCE

KENTUCKY – A STATE THAT HAS RECENTLY MADE A SIGNIFICANT INVESTMENT IN HIGHER EDUCATION

Kentucky made a significant investment of more than $500 million in operations and more than $300 million in capital projects for higher education from 1998-2004. In 1997, the Governor supported a major investment in higher education. Initially, the legislature created six Strategic Investment and Incentive Trust Funds (two additional funds were added later) for higher education; some of the funds are endowments, some are financed through bonds, others are financed through recurring funds. The funds, their components, and overall funding are summarized below.

  1. Research Challenge Trust Fund. Its purpose is to encourage research activities at the University of Kentucky and the University of Louisville. The fund has three parts as noted below:

    1. Endowment Match Program. This program matches state money with private gifts to grow endowments. Investment proceeds are used to fund endowed chairs, professorships, fellowships, scholarships, and mission support at these institutions. The corpus of the program is $300 million. (Note: in one biennium the legislature appropriated funds to pay debt service for $100 million bond issue for this purpose).

    2. Research Challenge Program. This program provides funding for prospective programs of national excellence at the University of Kentucky and the University of Louisville. It is designed to help UK achieve Top 20 status among research universities nationwide and to help the U of L become a metropolitan research university of distinction. The program received $12 million in the 1998-2000 biennium. (Note: These are recurring funds).

    3. Enrollment Growth and Retention. This program provides funding to hire additional faculty or enhance student services and retention programs. It is designed to help Kentucky meet or exceed national averages of college participation and educational attainment by 2020. The research university portion received $3.3 million in the 2000-2 biennium. (Note: These are recurring funds).

    4. Lung Cancer Research Program. This program provides funding for competitive research grants and clinical work that seek cures for, or better treatments of lung and ovarian cancer. It received $11.2 million in 2000-02 and $11.7 million in 2002-4. This program is financed entirely with Tobacco Settlement funds.


  2. Regional University Excellence Trust Fund

    1. Endowment Match Program. This program matches private gifts to grow endowments at the comprehensive universities. Investment proceeds from the endowments are used to fund endowed chairs, professorships, fellowships, scholarships, and mission supports. A total of $50 million have been appropriated for this purpose (includes $20 million in bond debt).

    2. Programs of Distinction. This program is designed to help comprehensive universities establish programs of national prominence that also meet regional and state needs. A total of $12 million, in recurring funds, were appropriated in the 1998-2000 biennium.

    3. Enrollment Growth and Retention. This program is similar to the program for the University of Kentucky and University of Louisville outlined above, $5.7 million, in recurring funds, were appropriated in the 2000-02 biennium.

    4. Action Agenda. This program supports efforts to become distinctive universities, provide services in the community for various population, increase education levels, and work with local schools with $20 million, in recurring funds, provided in the 2000-02 biennium.


  3. Technology Initiative Trust Fund
    These funds have been used to improve statewide and campus technology infrastructures and to establish the Kentucky Virtual University and the Kentucky Virtual Library. The Trust fund has also included an Equipment Replacement Program, a Network Infrastructure Program, and a Public Communication Campaign account, and a Faculty Development program. Approximately $16 million have been appropriated for this program plus an additional $3.8 million for debt service to fund $20 million to replace and upgrade research and instructional equipment.

  1. Science and Technology Trust Fund
    This fund enables rural firms to undertake research and development in partnership with postsecondary institutions; provides greater integration of engineering and information technology education into the state’s New Economy initiative; and encourages federal investment in public university research activities through a state-matching program to leverage state funds to increase federal and private sector funding for R & D in Kentucky. Approximately $14 million have been appropriated for this program.

  1. Physical Facilities Trust Fund
    This fund is the repository of the debt service to complete capital projects of a statewide nature, $52.5 million were appropriated for this purpose in 1998-2002. These funds support capital renewal, renovation, and new construction projects of approximately $345 million.

  1. Postsecondary Education Workforce Development Trust Fund
    This Fund is for the Kentucky Community and Technical College System to provide specific workforce training for Kentucky business and industries. A total of $15 million of recurring funds were appropriated along with $4.0 million in non-recurring funds.

  1. Adult Education and Family Literacy Funding Program
    This program supports statewide efforts to improve and expand adult education in Kentucky and $23 million in recurring funds were provided in 2000-04.

  1. Student Financial Aid and Advancement Trust Fund
    The 1998 legislature established the Kentucky Education Excellence Scholarship merit based scholarship. Recurring funding levels are $63 million.

    Base Funding. In addition to these funds, Kentucky uses a “simple” formula approach for its funding of the various universities and colleges which consists of establishing a benchmark funding level based on per student funding for peer institutions (average of 50th, 55th, and 60th percentile). The peers include similar institutions as well as “aspirational” peers.

    As an example, the peers for the University of Kentucky include: UCLA, University of Michigan, University of North Carolina, University of Minnesota, Ohio State University, University of Washington, University of Virginia, University of Iowa, University of Wisconsin, University of Georgia, University of Maryland, North Carolina State University, University of Arizona, Pennsylvania State University, University of Illinois – Urbana, University of Florida, Purdue University, University of Texas at Austin, and Texas A & M University.

    Business Plans. Kentucky is now going through a process of developing a statewide business plan.