Understanding Subsidy
Budget Planning Council
10-3-14
Subsidy Components
State Appropriations - 4-year Institutions
Completions
Degrees
Doctoral
Medical
Access Challenge
420,430,566
699,562,035
164,816,815
110,390,889
3,923,764
1,399,124,069
30.0%
50.0%
11.8%
7.9%
0.3%
Appropriations are fixed amounts – additional subsidy for growth is relative to what all
institutions are experiencing – changing the size of slices of a fixed pie
• Completions = Formula Subsidy
• Reimbursement for credit hour production
• Based on the number of FTE students (30 semester hours) that complete the
course (I’s, F’s, and withdraws don’t count)
• Allocation for at risk completions
• Degrees = reimbursement for the number of degrees granted
• Subdivided by residency and risk
• Doctoral = a fixed pool statewide
• Allocations for FTE production (55%), degrees granted (30%) and NSF/NIH grant
funding (15%)
• Medical = direct allocation to medical schools based on headcount enrollment
• Access Challenge = Earmarks for Access institutions (Akron, Cincinnati, Cleveland,
Central, Shawnee and Youngstown)
OU FY15 Subsidy Projection
Budget Tab
• Completions – three-year
average of FTE credit hour
production
• At Risk Completions are
students completing that fit
into two categories of risk financial need (EFC < $2190
and academic risk (ACT <17
and those in developmental
courses))
• Degrees
• Non Residents weighted 50%
• At Risk degrees have four factors with all possible combinations = 16 groups
• Age > 22 when starting college
• EFC < $2,190
• ACT < 17 or Developmental Courses
• Minority Race
• POM Adjustment – set aside for campuses with excessive space costs
• Budget = 98% of Projection
• Degree allocations for the Nursing program were changed to remove the Age risk factor given
preliminary feedback that other universities were questioning the at risk calculations associated
with online-completion programs. This removed $13.6M from the budgeted subsidy
Formula Subsidy Taxonomy
• Subsidy is earned by producing credit hours
• 22 cost models
• 13 Undergraduate
• 9 Masters
• 2 Doctoral
• Represents statewide average cost of producing an
FTE (30 semester hours) in different discipline
groups)
• AH = Arts & Humanities
• BES = Business, Education & Social Science
• STEM = Science, Technology, Engineering &
Math
• Levels 1 & 2 = introductory / general education
• At Risk earnings apply only to undergraduate activity
• Shaded = Graduate
• Doctoral has separate pool and associated calculation
• Extra weighting for Graduate and STEM
• Overall reimbursement is 11% of the cost
CLWR1810
CLWR2220
COMS1010
COMS1030
ENG 1510
ENG 1610
ENG 2800
ENG 3850
JOUR1050
MDIA1091
PHIL1010
PHIL1200
PHIL1300
All other
COMS
courses
Subsidy Models
AH1
Communication
English
Journalism
Philosophy and Religion
AH2
Communication
English
Philosophy and Religion
Art
Foreign Language
Liberal Arts
Other Visual/Performing
Drama
Music
AH3
Art
Foreign Language
Journalism
Other Visual/Performing
AH4
Liberal Arts
Drama
Music
AH5
Art
Communication
English
Foreign Language
Journalism
AH6
Drama
Liberal Arts
Music
Other Visual/Performing
Philosophy and Religion
Statewide
Cost
6122
6410
6543
6675
9115
9437
9361
7040
7194
7420
8934
8063
7465
11162
9968
10209
11737
14381
16128
15615
25114
25206
21614
24307
25451
30248
36128
29747
26627
28819
• Allocation is based on discipline
• Courses are grouped together by discipline
• Course-Discipline combinations are grouped
together under a model
• Note that a discipline can show up in
multiple models – within each model you
would find different courses within that
discipline (e.g. Communication)
• The average cost across the model is the
amount used to determine the
reimbursement rate for all the courses in
that model
• The most accurate reimbursement approach
would be to tie the rate to every course
individually but that is not practical so this
approach is a middle ground where the cost
differences across disciplines and courses is
recognized using a rough approximation
Model Cost Distributions
Costs per FTE
60000
50000
40000
30000
20000
10000
0
Subsidy Breakdown
7%
13%
Undergraduate
Masters
Doctoral
80%
63%
37%
Comple ons
Degrees
OU Subsidy Formula Earnings
Model
AH 1
AH 2
AH 3
AH 4
AH 5
AH 6
BES 1
BES 2
BES 3
BES 4
BES 5
BES 6
BES 7
Doc 1
Doc 2
STEM 1
STEM 2
STEM 3
STEM 4
STEM 5
STEM 6
STEM 7
STEM 8
STEM 9
Reimburs
3-Yr Avg
ment Cost Completed
FY 2015
FTEs
$7,940
1,278
$11,018
2,208
$14,234
1,376
$20,598
351
$36,036
256
$40,610
215
$7,235
477
$8,249
1,499
$10,827
1,513
$12,869
4,131
$20,853
607
$23,345
236
$32,417
273
$40,891
324
$43,301
255
$7,317
1,521
$10,285
2,004
$19,603
988
$26,147
3,961
$29,006
513
$41,382
80
$38,736
440
$58,647
123
$60,311
44
24,675
3-Yr Avg
At Risk
FTEs
493
847
420
121
190
575
672
1,455
665
765
376
1,708
144
8,430
Completion
SSI
1,108,689
2,657,009
2,138,612
789,431
1,005,850
954,310
377,109
1,350,719
1,788,822
5,806,335
1,383,290
601,807
967,724
1,215,676
2,250,988
2,115,990
11,311,068
1,626,045
362,043
1,862,647
785,466
292,082
At Risk SSI
81,466
99,533
44,193
18,211
23,945
75,237
65,446
128,362
132,120
103,701
94,820
285,989
17,571
-
42,751,713
1,170,594
Completion
Earnings
Total SSI
Per FTE
1,190,155
867
2,756,542
1,203
2,182,804
1,555
807,643
2,250
1,005,850
3,936
954,310
4,435
401,054
790
1,425,956
901
1,854,268
1,182
5,934,697
1,406
1,383,290
2,277
601,807
2,550
967,724
3,540
1,347,796
799
2,354,688
1,123
2,210,810
2,141
11,597,057
2,856
1,643,616
3,168
362,043
4,519
1,862,647
4,231
785,466
6,405
292,082
6,587
43,922,306
At Risk
Earnings
Per FTE
165
118
105
151
126
131
97
88
199
136
252
167
122
• Reimbursement Cost =
statewide average cost to
produce an FTE
• Completed FTE – OBR
projection of our three-year
average
• At Risk FTE – three year
projection of FTEs within total
that are At Risk
• Completion Earnings = FTE
times the Reimbursement
Rate
• Total SSI = both combined
• Completion SSI Earnings per
FTE = Completion SSI /
Completed FTEs
• At risk is a very small fraction
of total funding <3%
At Risk Formula Earnings
• At Risk FTEs are weighted by the extent to which completions occur in each subsidy model
across the state. This calculation creates a ratio between the completion rate for non-risk
to that of at-risk students in each model to come up with a weighting factor that will be
used to differentially inflate a university’s FTE for each model
• For example, AH1 completion rates for Non-risk students is 89% statewide while for AtRisk it is 75%. So 89%/75% = 118.44% so AH1 completions will get an 18.44% extra weight.
• For AH2 the weight is 9.46% and so on.
• These weights will be used to calculate the additional subsidy provided for At Risk
completions
Non Risk % Completion
At Risk % Completion
AH 1
AH 2
AH 3
AH 4
BES 1
BES 2
BES 3
BES 4
STEM 1
STEM 2
STEM 3
STEM 4
STEM 5
no risk elig
FTE
23,513
33,189
22,900
7,843
9,329
24,785
20,051
69,096
20,636
41,740
22,011
42,679
20,597
no risk
completed
FTE
20,827
30,629
21,532
7,375
8,274
22,179
18,653
64,826
17,288
36,900
19,821
40,250
19,469
no risk
completion
rate
89%
92%
94%
94%
89%
89%
93%
94%
84%
88%
90%
94%
95%
risk elig FTE
29,029
27,860
15,391
4,974
10,273
26,004
22,305
55,253
32,762
34,520
17,666
29,525
8,907
risk
completed
FTE
21,710
23,490
13,582
4,393
7,889
20,401
19,219
48,869
22,124
27,324
14,279
26,349
8,117
-1
risk
completion
rate
75%
84%
88%
88%
77%
78%
86%
88%
68%
79%
81%
89%
91%
weights
18.44%
9.46%
6.55%
6.48%
15.48%
14.06%
7.97%
6.07%
24.06%
11.68%
11.40%
5.68%
3.72%
At Risk Formula Earnings
• At Risk FTEs are weighted by the extent to which completions occur in each subsidy model
across the state. This calculation creates a ratio between the completion rate for non-risk
to that of at-risk students in each model to come up with a weighting factor that will be
used to differentially inflate a university’s FTE for each model
• For example, AH1 completion rates for Non-risk students is 89% statewide while for AtRisk it is 75%. So 89%/75% = 118.44% so AH1 completions will get an 18.44% extra weight.
• For AH2 the weight is 9.46% and so on.
• These weights will be used to calculate the additional subsidy provided for At Risk
completions
Non Risk % Completion
At Risk % Completion
AH 1
AH 2
AH 3
AH 4
BES 1
BES 2
BES 3
BES 4
STEM 1
STEM 2
STEM 3
STEM 4
STEM 5
no risk elig
FTE
23,513
33,189
22,900
7,843
9,329
24,785
20,051
69,096
20,636
41,740
22,011
42,679
20,597
no risk
completed
FTE
20,827
30,629
21,532
7,375
8,274
22,179
18,653
64,826
17,288
36,900
19,821
40,250
19,469
no risk
completion
rate
89%
92%
94%
94%
89%
89%
93%
94%
84%
88%
90%
94%
95%
risk elig FTE
29,029
27,860
15,391
4,974
10,273
26,004
22,305
55,253
32,762
34,520
17,666
29,525
8,907
risk
completed
FTE
21,710
23,490
13,582
4,393
7,889
20,401
19,219
48,869
22,124
27,324
14,279
26,349
8,117
-1
risk
completion
rate
75%
84%
88%
88%
77%
78%
86%
88%
68%
79%
81%
89%
91%
weights
18.44%
9.46%
6.55%
6.48%
15.48%
14.06%
7.97%
6.07%
24.06%
11.68%
11.40%
5.68%
3.72%
Campus Risk Index
• An additional weighting is given to
universities that attract more At-Risk
students compared to others.
• In this calculation a statewide weight is
determined for each of the three risk
combinations (Financial, Academic and
Both) and each universities activity is
weighted
• Then a ratio of weighted to unweighted
activity is computed to create a campus
index
Universities with
small amounts of at
risk completions like
OU and Miami get a
smaller index than
universities with
more activity like
Central, Shawnee
and Cleveland
OU Subsidy Formula Earnings
This is the OBR calculation of our formula subsidy
Three year of FTE Completions
Two years of At Risk Completions with the third year
projected using the rates for OU derived on the At Risk tab
Three year averages
Statewide weight for at risk for each model
Athens Campus Index
At risk FTE times the two weights produces
additional FTE that get added to the main at-risk
FTE number when computing reimbursement
Total cost of FTE produced using costs on Assumptions tab
Subsidy we
will receive
Note that at risk components
are zero for graduate models
since risk applies only to
undergraduate activity
Degree Earnings
As with the cost of producing credit hours, OBR collects data on the
cost to produce degrees (Associate, Bachelors, Masters) across the
system
At Risk Degree Weights
• OBR collects data from all universities
for the number of at risk student that
enroll vs those that complete the
degree
• This is rolled up to the state level and
statewide completion rates are
created (green) that will be used to
weight at risk degrees to provide
subsidy for producing them
• From the four risk factors used for degrees, there are
sixteen combinations with a student having zero, one, two,
three or all four of the factors – Case 00 through 16
OU Subsidy Degree Earnings
• This shows the OBR calculation of subsidy for each degree level and subject
• Four parallel calculations are made for resident/non-resident and not at risk/at risk
• For Resident/Not at risk, they take our three year average, multiplied by the degree cost
that is pulled from the Degree Cost tab to get the total cost of those degrees. That total
cost is divided into the statewide total cost of all degrees produced to get a proportion
which is multiplied by the appropriation for degrees to determine the SSI earned
$4,873,556,633
Grand total cost
for all degrees in
the state
Appropriation =
$699,562,035 so
SSI is 14.35% of
cost
The three year average degrees are now adjusted to “degree credits” which take into account
instances where a degree is completed at more than one university when the student transfers
OU Subsidy Degree Earnings
OBR Degrees Tab
• For NonResident/Not at risk, the process is the similar but the total degrees are
calculated by taking the three-year average degree credits times 0.5 to weight nonresident degree at 50% and then times an institutional non-resident rate which is the
percentage of non-resident students from that university working in Ohio after
graduation. This is a different number for each institution (9.51% for OHIO)
2.4 degree credits * 50% * 9.51% = 0.11193
• This calculated number of of degrees is then multiplied by the statewide degree cost
to get the total cost of those degrees. That total cost is divided into the statewide
total cost of all degrees produced to get a proportion which is multiplied by the
appropriation for degrees to determine the SSI earned
OU Subsidy Degree Earnings
OBR Degrees Tab
• For Resident/At risk, the process is more complicated because the 16 risk cases are used
• First the total resident at risk degree credit for each subject are broken down into 16
values using the percentage of our degrees falling into each case
The 16 values are multiplied by the statewide at risk weights and added up to get a total number
of degrees
Multiply
•
•
As with the Resident/NonRisk degrees, this calculated number of of degrees is then multiplied by
the degree cost to get the total cost of those degrees. That total cost is divided into the
statewide total cost of all degrees produced to get a proportion which is multiplied by the
appropriation for degrees to determine the SSI earned
The same process is used for NonResident/At Risk with the additional weighting of 50% and the
9.51% Non Res Weight for OU
Doctoral Set Aside
Institution
AKRN
BGSU
CINC
CLEV
KENT
MIAM
OHSU
OHUN
TLDO
WSUN
YNGS
Base FTE
761
685
2,261
172
1,003
437
5,076
850
604
457
31
12,337
Year
Historical
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
92.50%
85.00%
77.50%
70.00%
62.50%
55.00%
47.50%
40.00%
32.50%
25.00%
Degree
Cost
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
Base %
6.17%
5.56%
18.32%
1.39%
8.13%
3.54%
41.15%
6.89%
4.90%
3.70%
0.25%
100.00%
Research
2.50%
5.00%
7.50%
10.00%
12.50%
15.00%
17.50%
20.00%
22.50%
25.00%
85% Base
697
599
1,843
163
977
445
4,612
791
652
405
20
11,204
Other =
TBD
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
• Doctoral subsidy is a flat percentage of the
appropriation with each university getting a
set share as long as they are at 85% of the
target set when doctoral subsidy was frozen.
• This limiting of the doctoral subsidy regardless
of how much credit activity occurs at the
doctoral level is where the concept of doctoral
subsidy being “capped” orginates.
• With the new taxonomy a new calculation for
doctoral was created and will be phased in
over 10 years – we are now in year 6
• Factors will be the number of degrees granted,
funded research dollars and a factor related to
mission that was never defined and is now
lumped in with the FTE portion.
Doctoral Subsidy Earnings
Inst
AKRN
BGSU
CINC
CLEV
CNTL
KENT
MIAM
NECM
OHSU
OHUN
TLDO
WSUN
YNGS
Inst
AKRN
BGSU
CINC
CLEV
KENT
MIAM
OHSU
OHUN
TLDO
WSUN
YNGS
Cost of PhD
Degrees (degrees * Shares of Phd
cost)
Degree Cost
$8,301,720
5.54%
$7,141,482
4.77%
$25,250,510
16.86%
$4,630,504
3.09%
$0
0.00%
$17,581,139
11.74%
$3,811,384
2.55%
$0
0.00%
$54,960,684
36.71%
$6,769,123
4.52%
$11,135,067
7.44%
$9,487,083
6.34%
$661,703
0.44%
$149,730,399
100.00%
FY 2011 R&D
Expenditures Federal, Industry &
Other
$20,927,000
$6,220,000
$328,481,000
$47,879,000
$16,704,000
$14,926,000
$636,722,000
$28,722,000
$50,603,000
$30,796,000
$3,422,000
$1,185,402,000
% of
Unadjusted
Research
Expend-itures
1.77%
0.52%
27.71%
4.04%
1.41%
1.26%
53.71%
2.42%
4.27%
2.60%
0.29%
100.00%
For Degree Cost, we have a three
year average of $6.7M which is 4.52%
of the total across all universities so
we will get that proportion of the part
of the appropriation allocated to
degrees (30%)
Eligible Research
Expenditures,
weighting HHS
funding = 50%
$20,014,000
$5,136,500
$201,563,000
$28,609,000
$14,384,500
$12,836,500
$491,433,000
$26,312,000
$40,036,500
$25,004,000
$3,396,500
$868,725,500
Shares of
Adjusted
Research
Expend2.30%
0.59%
23.20%
3.29%
1.66%
1.48%
56.57%
3.03%
4.61%
2.88%
0.39%
100.00%
For Research we have 3.03% of the
funded research across the state so
we will get that proportion of the part
of the appropriation allocated to
research (15)%
Doctoral Subsidy Earnings
Inst
AKRN
BGSU
CINC
CLEV
KENT
MIAM
OHSU
OHUN
TLDO
WSUN
YNGS
Total
•
•
•
•
•
Doctoral Set Aside Degree Cost
Research
Other = TBD Total Doc Set Aside
$5,589,622
$2,810,096
$583,827
$0
$8,983,545
$3,179,773
$2,417,361
$149,837
$0
$5,746,971
$16,611,033
$8,547,188
$5,879,783
$0
$31,038,004
$1,264,353
$1,567,405
$834,552
$0
$3,666,310
$7,366,418
$5,951,139
$419,609
$0
$13,737,166
$3,209,563
$1,290,137
$374,453
$0
$4,874,153
$37,298,828
$18,603,952 $14,335,565
$0
$70,238,346
$6,247,039
$2,291,319
$767,546
$0
$9,305,903
$4,439,161
$3,769,172
$1,167,903
$0
$9,376,235
$3,355,521
$3,211,336
$729,390
$0
$7,296,248
$230,871
$223,984
$99,079
$0
$553,934
$88,792,182
$50,683,089 $25,341,544
$0
$164,816,815
Each university gets a proportion share of the each of the three appropriation pools
Doctoral Set Aside is for FTE production as long as you hit your target. So we get 6.89%
of the $88.8M allocated to that component = $6,247,039
For Degree Cost we get 4.52% of the $50.6M allocated to that component = $2,291,319
For Research we get 3.03% of the $25.3M allocated to that component = $767,546
So our total doctoral funding is $9,305,903
Subsidy in Transition
OBR two-year transition of the model:
FY14
• Move appropriation from 25% on
degrees to 50%
• Move all components
(completions and degrees) to
three-year average
• Change from funding out-of-state
degree costs at 100% to 25%
FY15
• Merge main campus and regional
campus funding models into a
single system – removes previous
restrictions on what regional
campuses could offer
• Start providing subsidy for
Associate Degrees as part of the
degree component
• Award degree subsidy on a
fractional basis for transfer
students (split funding)
• “At Risk” defined relative to
institution rather than statewide
Subsidy in Transition
Additional Formula Refinements for FY16
– At Risk Degree subsidy removed for students
entering with 30+ credit hours
– Students entering with an Associate degree will
now be partially funding for a Bachelor degree
instead of fully funded
Change to At Risk Calculation
• Students entering with 30+ credit hours have the
same completion rate as students with no risk factors
• The At Risk bonus will be eliminated for students
entering with 30+ hours
• This will decrease degree subsidy for universities
with large numbers of transfers and/or large
bachelor completion programs (RN-BSN)
• The value of all other degrees in the system
(including other OHIO degrees) will increase
FY15 Budget Adjustment
RN-to-BSN program:
• This program has a very large number of degrees which brought in $10M in at risk
subsidy for those degrees alone
• Nearly 100% of the students in that program fall into the Age risk category because they
already have an associate degree
• This attracted an enormous amount of subsidy given the additional weighting provided
for at risk degrees - $10M on top of the $20M.
• Other universities are arguing that age is not really a risk for this type of student and it is
likely that this will change, we reduced the resident at risk degrees from 721 to 150
and the non-resident at risk degrees from 11 to 1.
• This brought the at risk subsidy down by around $7M
Change to Funding Multiple Degrees
• Currently if you provide a Bachelor degree to a student
with an Associate degree you receive 100% of the funding
for the Bachelor degree – essentially double counting the
Associate degree
• Associate degrees from non-IUC schools (e.g. community
colleges) were not counted in this reduction creating a
“bonus” on Bachelor degrees for those students.
• This will change to subtracting the value of the Associate
degree from the value of the Bachelor degree and funding
the difference regardless of the school where the Associate
degree was earned.
• This drastically reduces the $20M subsidy portion for
Nursing degrees as well
Net Effect
• The rough impact of the changes using old
data from FY14 has been modeled. This is
for illustrative purposes only
• No changes will be made to FY15 subsidy
allocations based on these changes.
Modeling will be done later this fall to
estimate what would have happened in
FY15 if these changes had been
implemented
• In FY16 this reduction will be offset by
funding shifting to other degree and by
our growth in enrollment – the net effect
is still to be determined
AKRON
BOWLING GREEN
CINCINNATI
CLEVELAND STATE
CENTRAL STATE
KENT STATE
MIAMI
NEOMED
OHIO STATE
OHIO UNIV
SHAWNEE ST.
TOLEDO
WRIGHT ST.
YOUNGSTOWN ST.
3.5%
0.7%
-1.2%
-5.6%
2.4%
-1.2%
2.8%
2.5%
1.8%
-6.2%
-1.9%
2.8%
0.0%
3.3%