Higher Education Funding Allocation Model Changes

0 HOUSE BILL 26-1345

BY REPRESENTATIVE(S) McCluskie and Hamrick, Bacon, Boesenecker, Brown, Camacho, Clifford, Duran, English, Froelich, Goldstein, Jackson, Lieder, Lindsay, Lukens, Marshall, Martinez, Mauro, Nguyen, Paschal, Phillips, Ricks, Rutinel, Rydin, Sirota, Smith, Stewart K., Joseph, Woodrow; also SENATOR(S) Coleman and Simpson, Amabile, Ball, Bridges, Cutter, Exum, Gonzales J., Jodeh, Kipp.

CONCERNING HIGHER EDUCATION FUNDING, AND, IN CONNECTION THEREWITH, IMPLEMENTING THE RECOMMENDATIONS IN THE REPORT ON THE HIGHER EDUCATION FUNDING ALLOCATION FORMULA.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 23-18-302, amend (4 )(b ), (8), (9), ( 10), ( 14 ), and ( 17); repeal ( 18); and add (2.5), ( 11.5), and (21.5) as follows: 23-18-302. Definitions - repeal. As used in this part 3, unless the context otherwise requires:

Capital letters or bold & italic numbers indicate new material added to existing law; dashes through words or numbers indicate deletions from existing law and such material is not part of the act.

(2.5) (a) "CO-LOCATED DEGREE PARTNERSHIP" MEANS A PROGRAM FORMALIZED BY A WRITTEN AGREEMENT BETWEEN TWO INSTITUTIONS IN WHICH:

(I)

A STUDENT IS ENROLLED AS A DEGREE-SEEKING STUDENT AT

THEIR HOME INSTITUTION IN A DEGREE PROGRAM THAT IS NOT OFFERED TO COMPLETION AT THEIR HOME INSTITUTION;

(II) THE STUDENT SUBSEQUENTLY MATRICULATES AS A TRANSFER AND DEGREE-SEEKING STUDENT AT A PARTNER INSTITUTION THAT OFFERS THE DEGREE PROGRAM TO COMPLETION THAT THE STUDENT'S HOME INSTITUTION DOES NOT OFFER TO COMPLETION; AND

(III)

FOR A PERIOD OF TIME, AS DEFINED BY THE AGREEMENT

BETWEEN THE TWO INSTITUTIONS, THE STUDENT CONTINUES TO PRIMARILY BE LOCATED AT THE HOME INSTITUTION'S CAMPUS, INCLUDING RECEIVING INSTRUCTION, ACADEMIC SERVICES, LIBRARY ACCESS, OR STUDENT SUPPORT SERVICES FROM THE HOME INSTITUTION.

(b) "CO-LOCATED DEGREE PARTNERSHIP" DOES NOT INCLUDE: (I) AN ARTICULATION PATHWAY WITHOUT A CO-LOCATION DELIVERY COMPONENT, INCLUDING A STATEWIDE, BILATERAL OR MULTILATERAL TRANSFER AGREEMENT;

(II) GENERAL TRANSFER PARTNERSHIPS; (III)

CROSS-REGISTRATION OR COURSE-SHARING PARTNERSHIPS,

INCLUDING ONLINE-ONLY COURSE ARRANGEMENTS;

(IV) CONCURRENT OR DUAL ENROLLMENT WITHOUT A CO-LOCATION DELIVERY COMPONENT; OR

(V) ANY PROGRAM IN A DEGREE PROGRAM THAT IS OFFERED TO COMPLETION AT THE STUDENT'S HOME INSTITUTION.

(c) THE DEPARTMENT SHALL ENSURE THAT THE GOVERNING BOARDS COLLECT AND REPORT THE DATA IN A CONSISTENT MANNER.

"Credential completion" means the calculation of student

credential completion by a governing board based on equal weighting of the total resident student completions of postsecondary credentials in a given state fiscal year. The credential completion calculation includes: (b) Equal weighting for a resident student who transfers out of an institution with a community college 1olc and mission specified in statute, after accumulating at least eighteen credit hours at the institution in-a two-y car degr cc program AND TRANSFERRING WITHIN THE NEXT ACADEMIC YEAR INTO ANOTHER INSTITUTION, AREA TECHNICAL COLLEGE, OR LOCAL DISTRICT COLLEGE.

(8) "One-hundred-fifty-percent-of-time graduation rate" means, for a four-year institution, the percentage of first-time, full-time, degree-seeking undergraduate students starting in the fall term and graduating within six years with a bachelor's degree from the same institution, and, for a two-year institution, the percentage of first-time, full-time, associate degree-seeking or undergraduate certificate-seeking students starting in the fall term and completing their declared program within one hundred fifty percent of the normal time to completion, as reported to the intcgr atcd postsecondary education data system maintained by the federal department of education. If the integrated postsecondary education data system docs not include data fox an institution 01 govcming board for p1ior state fiscal yca1s, the dcpartm:cnt shall use its available data, as r cportcd by the gov crning board to the department through the student-unit record database, in place of the missing integrated postsecondary education data systctn data DEPARTMENT. The department shall ensure that the governing boards collect and report the data in a consistent manner. A student may be counted only once in a state fiscal year for purposes of this pcrfunnancc RESULTS-INFORMED funding metric. STUDENTS ENROLLED IN A CO-LOCATED DEGREE PARTNERSHIP ARE NOT INCLUDED

IN

THE

COHORTS

THAT

DETERMINE

THE

ONE-HUNDRED-FIFTY-PERCENT-OF-TIME GRADUATION RA TE.

(9) "One-hundred-percent-of-time graduation rate" means, for a four-year institution, the percentage of first-time, full-time, degree-seeking undergraduate students starting in the fall term and graduating within four years with a bachelor's degree from the same institution, and, for a two-year institution, the percentage of first-time, full-time, associate degree-seeking or undergraduate certificate-seeking students starting in the fall term and completing their declared program within one hundred percent of the

normal time to completion, as repmted to the integrated postsecondary

education data system maintained by the federal department of education. If the integrated postsecondary education data system does not include data fut an institution 01 governing boat d for pdot state fiscal years, the department shall use its available data, as reported by the governing board to the department tht ough the student-unit I ecm d database, in place of the missing integrated postsecondary education data system data DEPARTMENT. The department shall ensure that the governing boards collect and report the data in a consistent manner. A student may be counted only once in a state fiscal year for purposes of this petfutmance RESULTS-INFORMED funding metric. STUDENTS ENROLLED IN A CO-LOCATED DEGREE PARTNERSHIP ARE NOT INCLUDED IN THE COHORTS THAT DETERMINE THE ONE-HUNDRED-PERCENT-OF-TIME GRADUATION RATE. (10) 11f'cll-eligible "PELL-RECIPIENT student" means an undergraduate student who qualifies fut RECEIVES the federal Pell grant or for a grant through a successor program. (11.5) "PREVIOUS SHARE" MEANS THE PERCENTAGE SHARE OF FUNDING APPROPRIATED TO EACH GOVERNING BOARD FROM THE TOTAL AMOUNT APPROPRIATED IN THE PRECEDING STATE FISCAL YEAR PURSUANT TO SECTIONS 23-18-202 AND 23-18-303.5, EXCLUDING THE AMOUNT APPROPRIATED PURSUANT TO SECTION 23-18-303.5 (3). (14) "Resident Pell-eligible PELL-RECIPIENT UNDERGRADUATE student population share" means the resident Pell-eligible PELL-RECIPIENT UNDERGRADUATE student head count as a percentage of the overall resident UNDERGRADUATE student population head count, EXCLUDING CONCURRENT ENROLLMENT, AS DEFINED IN SECTION 22-35-103, from the end-of-term fall enrollment collected by the department. ( 17) "Retention rate" means, for a four-year institution, the percentage of first-time, full-time OR FIRST-TIME, PART-TIME undergraduate students starting in the fall term and returning for their second fall term at the same institution, and, for a two-year institution, the percentage of first-time, full-time OR FIRST-TIME, PART-TIME associate degree-seeking or undergraduate certificate-seeking students starting in the fall term and either returning for or successfully completing their declared program by the second fall term at the same institution, as reported to the integrated

postsecondary education data system maintained by the :fedct al department

of education. Ifthe integrated postsecondary education data system does not inelude data fm an institution or gov eming board for pdor state fiscal years, the-department shall use its available data, as reported by the goveming board to the department through the student-unit reeot d database, in pta-ce of the missing integrated postsecondary education data system data DEPARTMENT. The department shall ensure that the governing boards collect and report the data in a consistent manner. A student may be counted only once in a state fiscal year for purposes of this petfotmance RESULTS-INFOIUv1ED funding metric.

(18) (a) "Role and mission shate" means the percentage share of funding apptopriated to each gov eming board of the total amount appropriated in the preceding state fiscal year pm suant to sections 23-18-202 and 23-18-3 03. 5, exeluding the amount appr opt iated pm suant to section 23-18-303.5 (3). (b) Repealed.

(21.5) "TOTAL PREVIOUS ADJUSTED SHARE" MEANS THE TOTAL OF THE PREVIOUS ADJUSTED SHARES FOR ALL GOVERNING BOARDS, AS DESCRIBED IN SECTION 23-18-303.5 (l.5)(c). SECTION 2. In Colorado Revised Statutes, 23-18-303.5, amend (l)(a), (2) introductory portion, (2)(a), (3), and (7); repeal (4), (5), and (8); and add (1.3) and (1.5) as follows: 23-18-303.5. Fee-for-service contracts - authorization results-informed funding.

(1) (a) For the 2021-22 2027-28 state fiscal year and each state fiscal year thereafter, the governing board of a state institution of higher education may annually negotiate a fee-for-service contract with the department pursuant to this section for the delivery of higher education services by the institution for the benefit of the state and its residents. Specialty education programs, area technical colleges, and local district colleges are funded pursuant to the provisions of section 23-18-304. (1.3) Results-informed funding metrics.

(a) THE COMMISSION, IN CONJUNCTION WITH THE DEPARTMENT AND

IN COLLABORATION WITH THE GOVERNING BOARDS, SHALL CALCULATE RESULTS-INFORMED FUNDING FOR EACH GOVERNING BOARD BASED ON THE RA TE OF CHANGE OVER TIME IN THE PERFORMANCE OF THE INSTITUTIONS OVERSEEN BY THE GOVERNING BOARD ON THE RESULTS-INFORMED FUNDING METRICS SPECIFIED IN SUBSECTION (1.3)(b) OF THIS SECTION. THE RECOMMENDATION FOR RESULTS-INFORMED FUNDING MAY REFLECT A CHANGE IN THE TOTAL STATE APPROPRIATION, LESS THE AMOUNT APPROPRIATED PURSUANT TO SUBSECTION (3) OF THIS SECTION FROM THE PRECEDING STATE FISCAL YEAR.

(b) THE RESULTS-INFORMED FUNDING METRICS INCLUDE: (I) RESIDENT STUDENT FULL-TIME EQUIVALENT ENROLLMENT; (II) CREDENTIAL COMPLETION; (III)

RESIDENT PELL-RECIPIENT

UNDERGRADUATE STUDENT

POPULATION SHARE;

(IV)

RESIDENT

UNDERREPRESENTED

MINORITY

STUDENT

POPULATION SHARE;

(V) RETENTION RATE; (VI) ONE-HUNDRED-PERCENT-OF-TIME GRADUATION RATE;

(VII) ONE-HUNDRED-FIFTY-PERCENT-OF-TIME GRADUATION RA TE; AND

(VIII)

RESIDENT FIRST-GENERATION UNDERGRADUATE STUDENT

POPULATION SHARE.

(c) (I) COMMISSION,

IN PREPARING ANNUAL BUDGET RECOMMENDATIONS, THE IN

CONJUNCTION

WITH

THE

DEPARTMENT

AND

IN

COLLABORATION WITH THE GOVERNING BOARDS, MAY ANNUALLY IDENTIFY THE PORTION OF TOTAL RESULTS-INFORMED FUNDING THAT IS ALLOCATED TO EACH RESULTS-INFORMED FUNDING METRIC SPECIFIED IN SUBSECTION

(1.3)(b) OF THIS SECTION. (II)

THE JOINT BUDGET COMMITTEE, AFTER CONSIDERING THE

COMMISSION'S ANNUAL BUDGET RECOMMENDATIONS, SHALL DETERMINE THE PORTION OF TOTAL RESULTS-INFORMED FUNDING FOR THE APPLICABLE STATE FISCAL YEAR THAT IS ALLOCATED TO EACH RESULTS-INFORMED FUNDING

(1.3)(b) OF THIS SECTION. EACH

METRIC SPECIFIED IN SUBSECTION

GOVERNING BOARD'S SHARE OF THE FUNDING ALLOCATED FOR EACH RESULTS-INFORMED

FUNDING

METRIC

IS

DETERMINED

USING

THE

CALCULATION SET FORTH IN SUBSECTION ( 1.5) OF THIS SECTION.

( 1.5) Results-informed funding - lever one. (a)

THE AMOUNT OF RESULTS-INFORMED FUNDING THAT A

GOVERNING BOARD RECEIVES FOR EACH RESULTS-INFORMED FUNDING METRIC SPECIFIED IN SUBSECTION ( 1.3 )(b) OF THIS SECTION IS BASED ON THE RATE OF CHANGE OVER TIME IN THE PERFORMANCE OF THE INSTITUTIONS OVERSEEN BY THE GOVERNING BOARD ON THE RESULTS-INFORMED FUNDING METRIC.

(b) THE RATE OF CHANGE FOR EACH RESULTS-INFORMED FUNDING METRIC IS CALCULATED ANNUALLY FOR A GOVERNING BOARD BY DIVIDING THE AVERAGE OF THE FOUR MOST RECENT YEARS OF ACTUAL DATA REPORTED BY THE GOVERNING BOARD FOR THE RESULTS-INFORMED FUNDING METRIC BY THE AVERAGE OF THE THREE OLDEST OF THE FOUR YEARS OF ACTUAL

DATA

REPORTED

BY

THE

GOVERNING

BOARD

FOR

THE

RESULTS-INFORMED FUNDING METRIC.

(c) THE RA TE OF CHANGE FOR THE RESULTS-INFORMED FUNDING METRIC IS THEN MULTIPLIED BY EACH GOVERNING BOARD'S PREVIOUS SHARE, RES ULTING IN THE GOVERNING BOARD'S PREVIOUS ADJUSTED SHARE FOR THE RESULTS-INFORMED FUNDING METRIC. THE TOTAL OF THE PREVIOUS ADJUSTED SHARES FOR ALL GOVERNING BOARDS IS THE TOTAL PREVIOUS ADJUSTED SHARE FOR THE RESULTS-INFORMED FUNDING METRIC.

(d)

EACH

GOVERNING

BOARD'S

ALLOCATION

FOR

THE

RESULTS-INFORMED FUNDING METRIC IS DETERMINED BY DIVIDING THE GOVERNING

BOARD'S

PREVIOUS

ADJUSTED

SHARE

FOR

THE

RESULTS-INFORMED FUNDING METRIC BY THE TOTAL PREVIOUS ADJUSTED SHARE FOR THE RES ULTS-INFORMED FUNDING METRIC, ENSURING THAT THE TOTAL

AMOUNT

OF

FUNDING

DISTRIBUTED

THROUGH

THE

RESULTS-INFORMED FUNDING METRIC DOES NOT EXCEED THE AMOUNT OF FUNDING ALLOCATED FOR THE RESULTS-INFORMED FUNDING METRIC.

(2) Ongoing performance funding- lever two. Prior to calculating pctfmmance funding recommendations ptttsuant to subsection (4) of this section, The commission, in conjunction with the department and in collaboration with the governing boards, may recommend an additional amount of funding pursuant to this subsection (2) for an institution, which amount is ongoing base PERFORMANCE funding for the receiving institution and is included in the calculation of funding pursuant to this part 3 in subsequent state fiscal years. The commission may recommend an additional amount of funding for the following purposes: (a) To increase appropriations over the previous state fiscal year in order to make progress toward master plan goals, which may include addressing base PERFORMANCE funding disparities, HISTORIC INEQUITIES, THE UNIQUE ROLE OF AREA TECHNICAL COLLEGES, or funding priorities not addressed through the pe1fo1mance RESULTS-INFORMED funding metrics. The commission shall focus its recommendations on broad institutional, systemwide, or state policy goals. (3) One-time investments - lever three. After calculating funding recommendations ptttsuant to subsections (2) and (4) of this section; The commission, in conjunction with the department and in collaboration with the governing boards, may recommend an additional amount of temporary funding pursuant to this subsection (-3) for an institution for purposes of making progress toward goals identified in the systemwide master planning process set forth in section 23-1-108 or other areas as identified by the commission. Additional funding received pursuant to this subsection (3) must be allocated for a specific period of time, is not ongoing base funding, and is not included in the calculation of funding pursuant to this part 3 in subsequent state fiscal years or in the calculation of the total state appropriation made pursuant to this part 3. (4) Per for mance funding metrics. (a) After calculating funding I ecommendations put suant to subsection (2) of this section, the commission, in conjunction with the department and in collaboration with the governing boat ds, shall calculate pe1fo1mance funding fot each governing board based on the rate of change ovet time in: the perfmmance-ofthe institutions overseen by the governing board on the pe1fo1mance funding metrics specified in subsection (4)(b) of this section. The recommendation for pe1fo1mance funding may reflect a

change in the total state appt opt iation, less the amount app1 opt iated pursuant to subsection (3) of this section, ftom the preceding state fiscal year; (b) The pc1fo1mance funding metrics include. (I) Resident student full-time equivalent emollmcnt; (II) C1 edential completion, (III) Resident Pell-eligible student population share, (IV) Resident undcncp1escntcd nrinodty student population share, (V) Rcte11tion rate, (VI) One-hund1cd-pe1ccnt-of-tirne graduation rate, (VII) Onc-hundrcd-fifcy-perccnt-of-time graduation rate, and (VIII) Resident fiist-gcnc1ation undc1g1aduatc student population

share:(c) (I) Beginning with the 2021-22 state fiscal year, in ptepadng budget 1cco111111cndations, the cmmnission, in conjunction with the department and in collabmation with the governing boards, may annually identify the portion of total pc1 for mancc funding that is allocated to each pc1fo1mancc funding metric specified in subsection (4)(b) of this section. (II) Fm the 2021-22 state fiscal year and each state fiscal year thc1caftc1, the joint budget committee, after considering the commission's budget rcconnncndations, shall dctctrninc the portion of total performance funding for the applicable state fiscal y cat that is allocated to each performance funding metric specified in subsection (4)(b) of this section. Each governing boar d's sha1 c of the funding allocated fo1 each pct fo1 mancc funding mctr ic is determined using the calculation set forth in subsection (5) of this section. (5) Per for n1ance funding calculation.

(a) The amount of performance fundir1g that a governing board receives for eachperformance funding metric specified in subsection (4)(b) of this section is based on the rate of.change over time in the performance of the institutions overseen by the governing board on the per for manee funding metric. The rate of change for each performance funding metric is calculated annually for a governing board by dividing the average of the fuur mostr eeent years of actual data reported by the governing board for the metric by the average of the three oldest of the four years of actual data reported by the governing board for the metric. The rate of change for the performance funding metric is then multiplied by each go'1erning board's role and mission share, resulting in the "governing board role and mission adjusted share" for the performance funding metric. The total of the governing board role and mission adjusted shares for all governing boards is the "total role and mission adjusted share" for the perfonnance funding metric. Each-go\ierning board's allocation for the performance funding metric is then determined by dividing the governing board's role and mission adjusted share for the performance funding metric by the total role and mission adjusted sh.ate fut the performance funding metric, ensuring t.hat the total amount of funding distributed through the performance funding metr ie does not exceed the amount of funding allocated for the performance funding metric. (b) Repealed. (7)

When requesting or determining a change in performance

RESULTS-INFORMED funding pursuant to subsection (4) SUBSECTION (1.5)

of this section and tuition spending authority for governing boards, the department and the joint budget committee shall consider, at a minimum, cost increases to base funding at all institutions, including those related to common policies annually submitted in the governor's November 1 budget request and adopted by the joint budget committee, and the commission's master plan goals. (8) The-board oftmstees of the Colorado school of mines ma, study and recommend to the general assembly a different funding stmctme, including but not limited to a special put pose author icy as defined in section 24-77-102 ( 15 ), that strengthens the institution and its specialized educational programs while ensuring academic quality and continued opportunities for resident students who meet the admissions criteria of the institution. PAGE IO-HOUSE BILL 26-1345

SECTION 3. In Colorado Revised Statutes, 23-18-306, amend (l)(a) introductory portion, (l)(a)(Il)(A), and (l)(a)(Il)(B); and repeal (4) as follows: 23-18-306. Duties and powers of the commission - budget provisions - periodic review of funding formula - report.

(1) (a) For the 2021-22 state fiseal ,eat 2027-28 STATE FISCAL YEAR and each state fiscal year thereafter, the department and commission shall submit a budget request by November 1 of each year that includes: (II) Recommendations for:

(A) Changes in the amount of pe1fo1manee RESULTS-INFORMED funding pmsuant to seetion 23-18-303.5 (4) SPECIFIED IN SECTION 23-18-303.5 (1.5), if any; (B) The percentage allocation of pe1fo1n1anee RESULTS-INFORMED funding among the pe1f-o1manee RESULTS-INFORMED funding metrics specified in seetion 23-18-303.5 (4)(b) SECTION 23-18-303.5 (1.3); (4) The eominission, in eonjunetion with the department and in eollaboiation with the gove1ning boa1ds, shall identify and make reeonnnendations eoneerning ways to bette1 measu1 e the sueeess of students who are pmsuing a credential 01 deg1ee and who ate not included in the fit st-time, full-time student eohort. On 01 bef-or e Jul"j 1, 2022, the commission shall submit its recommendations to the joint budget committee, whieh mey include a 1eeommendation for a statutory change to the ealeulation of one of the g1 aduationrate pe1 fot manee funding met1 ies specified in seetion 23-18-303 .5 (4)(b).

SECTION 4. In Colorado Revised Statutes, 23-3.3-102, add (10) as follows: 23-3.3-102. Assistance program authorized - procedure- audits - definitions - repeal.

(10) (a) NOTWITHSTANDING ANYPROVISIONOFTHISTITLE23 TO THE CONTRARY, FOR THE 2026-27 STATE FISCAL YEAR, THE COMMISSION SHALL NOT ALLOCATE MONEY TO A NONPUBLIC INSTITUTION OF HIGHER PAGE I I-HOUSE BILL 26-1345

EDUCATION; PRIVATE INSTITUTION OF HIGHER EDUCATION, AS DEFINED IN SECTION 23-18-102

(9); OR PROPRIETARY INSTITUTION OF HIGHER

EDUCATION, FOR ITS STUDENTS UNDER A PROGRAM OF FINANCIAL ASSISTANCE ESTABLISHED BY THE COMMISSION PURSUANT TO THIS SECTION. (b) THIS SUBSECTION (10) IS REPEALED, EFFECTIVE JULY 1, 2028.

SECTION 5. In Colorado Revised Statutes, 23-3.3-401, add (5) as follows:

23-3.3-401. Work-study program established - requirements. (5) (a) NOTWITHSTANDING ANY PROVISION OF THIS TITLE 23 TO THE CONTRARY, FOR THE 2026-27 STATE FISCAL YEAR, THE COMMISSION SHALL NOT ALLOCATE MONEY TO A NONPUBLIC INSTITUTION OF HIGHER EDUCATION; PRIVATE INSTITUTION OF HIGHER EDUCATION, AS DEFINED IN SECTION 23-18-102

(9); OR PROPRIETARY INSTITUTION OF HIGHER

EDUCATION, FOR ITS STUDENTS

UNDER A

WORK-STUDY

PROGRAM

ESTAB LI SHED PURSUANT TO THIS SECTION.

(b) THIS SUBSECTION ( 5) IS REPEALED, EFFECTIVE JULY 1, 2028.

SECTION 6. Effective date - applicability. This act takes effect upon passage; except that sections 1 to 3 of this act take effect August 1, 2026, and sections 1 to 3 of this act apply to state institution of higher education budgets beginning in state fiscal year 2027-28.

SECTION 7.

Safety clause. The general assembly finds,

determines, and declares that this act is necessary for the immediate preservation of the public peace, health, or safety or for appropriations for

the support and maintenance of the departments of the state and state institutions.

Julie McCluskie SPEAKER OF THE HOUSE OF REPRESENTATIVES

James Rashad Coleman, Sr. PRESIDENT OF THE SENATE

Vanessa Reilly CHIEF CLERK OF THE HOUSE OF REPRESENTATIVES

Esther van Mourik SECRETARY OF THE SENATE

APPROVED on Thursday June 4th 2026 at 12:30pm (Date and Time)

Jared S. Polis GOVERNOR OF THE STATE OF COLORADO