State of South Dakota
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EIGHTY-EIGHTH SESSION
LEGISLATIVE ASSEMBLY, 2013
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497U0092
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SENATE BILL NO. 5
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Introduced by: Senators Olson (Russell), Bradford, Johnston, Jones, Kirkeby, Peters,
Tidemann, and White and Representatives Dryden, Munsterman, and Wismer
at the request of the Interim Postsecondary Education-Purpose and Funding
Study Committee
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FOR AN ACT ENTITLED, An Act to establish the public purpose and goals of postsecondary
education, to provide for the funding of postsecondary education, and to create the Council
on Higher Education Policy Goals, Performance, and Accountability.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA:
Section 1. Terms used in this Act mean:
(1) "Average state appropriation per postsecondary student," the average state general
fund appropriation for each postsecondary student including both the students
enrolled in the institutions under the control of the Board of Regents and the students
enrolled in the postsecondary technical institutes for the previous fiscal year as
determined by the Bureau of Finance and Management;
(2) "Full-time equivalent," at the postsecondary technical institutes equals thirty credit
hours of instruction per year, and at the institutions under the control of the Board
of Regents equals thirty credit hours of instruction per year for undergraduates,
twenty-four credit hours of instruction per year for students seeking master's and
doctoral degrees, thirty credit hours of instruction per year for students in law school,
and thirty-eight credit hours of instruction per year for students in medical school;
(3) "Projected state general fund increase," the estimated percentage change in state
general fund revenue, as submitted by the Governor pursuant to § 4-7-10 or as
adopted by the standing committees on appropriations;
(5) "Public postsecondary education institutions," the postsecondary technical institutes
under the control of the Board of Education and the institutions of higher education
under the control of the Board of Regents; and
(4) "Public postsecondary education systems," the system of postsecondary technical
institutes under the control of the Board of Education and the system of institutions
of higher education under the control of the Board of Regents.
Section 2. The Legislature hereby finds, and declares to be the public policy of this state,
that the purpose of public postsecondary education is to provide the following:
(1) A workforce that meets the current and prospective needs of the state's economy;
(2) Affordable postsecondary educational opportunities for all state citizens;
(3) Access to postsecondary education programs that serve to increase the educational
attainment of the state's citizenry and thereby enable citizens to provide leadership
in all sectors of life in the state; and
(4) A foundation upon which the state can grow the development and innovation
capacities of the state's economy.
Section 3. The Legislature hereby recognizes that the current goals for public postsecondary
education systems and institutions are as follows:
(1) To increase the number of graduates for the state's workforce; and
(2) To increase the growth capacity of the state's economy by increasing the innovation
and development capacity of the state and by increasing the skills of the state's
current workforce.
Section 4. The Council on Higher Education Policy Goals, Performance, and Accountability,
established in section 6 of this Act, shall use the following performance metrics to monitor the
institutional progress toward the goals declared in section 3 of this Act:
(1) For the goal in section 3, subdivision (1) of this Act:
(a) Increases in the number of graduates at all postsecondary education
institutions, particularly those graduates in select disciplines and at certain
levels, and those graduates who remain in the state for employment or further
study;
(b) Increases in the number of undergraduate degrees earned by at-risk students,
including low-income students, Native American students, nontraditional
students, and those students underprepared for higher education;
(c) Increases in credit hour completions at all public postsecondary education
institutions; and
(d) Increases in the retention of students from their first year of postsecondary
education to their second year of postsecondary education at all public
postsecondary education institutions;
(2) For the goal stated in section 3, subdivision (2) of this Act, increases in the
expenditures in research at postsecondary institutions under the control of the Board
of Regents.
Section 5. Sections 3 and 4 of this Act are repealed on June 30, 2015.
Section 6. There is hereby created the Council on Higher Education Policy Goals,
Performance, and Accountability. The council shall consist of the following members:
(1) The Governor or the Governor's designee;
(2) The secretary of the Department of Labor and Regulation;
(3) The commissioner of the Governor's Office of Economic Development;
(4) The commissioner of the Bureau of Finance and Management;
(5) Three members of the House of Representatives, appointed by the speaker of the
House of Representatives;
(6) Three members of the Senate, appointed by the president pro tempore of the Senate;
(7) The officers of the Board of Regents;
(8) The executive director of the Board of Regents;
(9) The secretary of the Department of Education;
(10) The director of the Division of Curriculum, Career and Technical Education in the
Department of Education;
(11) A president of an institution of higher education under the control of the Board of
Regents who shall serve for one year and be determined by a rotating order based on
the year of the establishment of the institution; and
(12) A president of a public postsecondary technical institute who shall serve for one year
and be determined by a rotating order based on the year of the establishment of the
postsecondary technical institute.
The Governor or the Governor's designee shall serve as the chair of the council. In 2013 and
2014, the council shall meet once each year to monitor the progress of the public postsecondary
education systems and institutions toward the goals established in section 3 of this Act.
Section 7. Beginning in 2015, and in every year immediately following a gubernatorial
election thereafter, the Council on Higher Education Policy Goals, Performance, and
Accountability shall meet to review, endorse, and recommend to the executive branch, the
Legislature, and the respective postsecondary education governing boards the four-year goals
for the public postsecondary education systems and institutions and the performance metrics by
which the council will monitor the progress toward those goals. The initial goals established by
the council shall take effect on July 1, 2015, and subsequent goals will take effect every four
years thereafter. In intervening years, the council shall meet annually to monitor the progress
toward the goals. When establishing goals and performance metrics, the council shall draw upon
public input from any persons who may be concerned or knowledgeable in these areas. A
majority of the members appointed to the council constitutes a quorum for the purposes of
conducting business. Any action may be taken by a vote of the majority of the members present
at a meeting. The duties of the council include only those stipulated in this Act and do not
impinge on the constitutional powers and duties of the Board of Regents or the legislative
powers and duties of the Board of Education or include participation in the operation,
management, or oversight of any postsecondary education institution in the state.
Section 8. The Board of Regents and the Board of Education shall each provide to the
Council on Higher Education Policy Goals, Performance, and Accountability an annual
accountability report. The initial accountability report, to be provided to the council in 2013,
shall contain, for each of the postsecondary education institutions under the respective board's
control, information on the following:
(1) Improvements in on-time degree completions;
(2) Affordability for students;
(3) The placement of graduates in jobs or further study in South Dakota; and
(4) Improvements in the percentages of graduates who are successful in passing
licensure, certification, or exit exams administered by third parties.
The council shall determine the content of subsequent accountability reports.
Section 9. To achieve the public purpose and goals established for postsecondary education
in the state pursuant to this Act, the state funding for postsecondary education systems may be
calculated as follows:
(1) If the projected state general fund increase for the next fiscal year is equal to or
greater than the cost of the inflationary increase established in this subdivision, the
postsecondary education systems shall receive, through the normal budgeting
process, an operating budget inflationary increase equal to the annual percentage
change in the consumer price index for urban wage earners and clerical workers as
computed by the Bureau of Labor Statistics of the United States Department of Labor
for the year before the year immediately preceding the year of adjustment or three
percent, whichever is less. For the purpose of this section, the operating budget does
not include any portion of the budget that contains funding for salaries and benefits
for any employees provided by the Legislature through the General Appropriations
Act;
(2) If the postsecondary education systems receive the inflationary increase in
subdivision (1) and the cost of that increase is less than the projected state general
fund increase, the postsecondary education institutions may also receive, through the
normal budgeting process, a mission expansion increase calculated pursuant to this
subsection to reflect expanded student services and increases in enrollments and
credit hour completions. If the inflationary increase calculated in subdivision (1) and
the amount calculated in this subdivision for a mission expansion increase is greater
than the projected state general fund increase, each postsecondary education
institution shall receive a pro rata share of the total amount calculated. The mission
expansion increase shall be calculated as follows:
(a) Each institution shall receive a payment equal to one-half of the average state
appropriation per postsecondary student for each full-time equivalent
enrollment in the previous fiscal year that exceeded the total full-time
equivalent enrollment in the year preceding the previous fiscal year; and
(b) Each institution shall also receive a payment equal to one-half of the average
state appropriation per postsecondary student for each full-time equivalent of
credit hour completions in the previous fiscal year that exceeded the total full-time equivalent of credit hour completions in the year preceding the previous
fiscal year. The full-time equivalent of credit hour completions for which an
institution is entitled to a payment pursuant to this section shall be calculated
as follows:
(i) For the previous fiscal year, at each degree level, divide the total
number of credit hours completed at that institution by the number of
credit hours required to be a full-time equivalent student;
(ii) For the year prior to the previous fiscal year, at each degree level,
divide the total number of credit hours completed at that institution by
the number of credit hours required to be a full-time equivalent student;
(iii) If the product of subsection (i) is greater than the product of subsection
(ii), calculate the difference between the two at each degree level; and
(iv) Add together the results for each degree level;
In addition to the mission expansion funding calculated pursuant to this subsection,
the Legislature may also provide additional funding to institutions for the expansion
of program mission;
(3) If the postsecondary education systems receive the inflationary increase in
subdivision (1) and the postsecondary education institutions receive the mission
expansion increase in subdivision (2), and the cost of both increases is less than the
projected state general fund increase, the postsecondary education systems may
receive additional funding through the normal budgeting process for performance
funding. Any sum appropriated from the general fund for the purpose of performance
funding shall be provided to the postsecondary education systems. The governing
board of each postsecondary education system shall then determine the allocation of
funds to the institutions it governs that reflect institutional performance and system
strategic investments. For fiscal years 2014 and 2015, funds appropriated for
performance funding shall be awarded to the postsecondary education institutions
based on improvements in the following areas:
(a) For institutions under the control of the Board of Regents:
(i) One-half of the performance funding shall be based on the number of
new graduates with special emphasis on those graduates with degrees
in science, technology, engineering, and mathematics or other critical
need areas as determined by the Council on Higher Education Policy
Goals, Performance, and Accountability established in section 6 of this
Act; and
(ii) One-half of the funding shall be based on the growth of expenditures
for research;
(b) For the postsecondary technical institutes, the performance funding shall be
based upon the number of new graduates with special emphasis on those
graduates in the areas of science, technology, engineering, and mathematics
and other critical need areas as determined by the Council of Higher Education
Policy Goals, Performance and Accountability.
For fiscal year 2016 and in subsequent fiscal years, the performance funding shall be
awarded to the postsecondary education systems based on criteria established by the
Council of Higher Education Policy Goals, Performance and Accountability.