REGENTS REPORT 

Targets for Distribution of Funds

Incentive Funds Within the Funding Framework

In December of 1997 the Board of Regents adopted the funding framework to distribute revenues to the universities. Included in that framework is the state policy incentive funding. Based on the state higher education policy goals, incentive funding was adopted with the purpose of giving the universities incentives to strive to meet the needs of students. To accomplish this goal the Regents set targets for each university based upon that individual university’s past performance. Incentive funds will be awarded in future years based upon demonstrated improvements in five specific areas.

Source and Distribution of Funds

The funds are redistributed from university operating budgets. This represents a reallocation change of nearly 5% of each university budget. Distribution of the funds will depend on the progress shown by each university toward achieving the target set by the Regents. Targets are unique to each institution.

Incentive Fund 1 – Access

Incentive Fund 1 is designed to meet State Policy Goal One. That goal states all qualified residents will have convenient and affordable access to higher education. The purpose of the goal is to attract new South Dakota students and retain current South Dakota students. Progress toward this goal is measured from one fall term enrollment to the next. For example improvement between Fall 1997 enrollment and Fall 1998 enrollment will be used to allocate resources for the FY00 budget.

Incentive fund 2 – Economic Growth Programs

State Policy Goal Two states that the universities will increase enrollments in selected programs within their respective missions that are of particular importance to the State’s economy in order to graduate students who can contribute to the economy’s development and expansion. Meeting that goal is the purpose of Incentive Fund 2. Improvement is measured by comparing the total headcount enrollment in all of a university’s economic growth programs. Economic growth programs include entrepreneurial studies, international business, and administrative systems. These programs are essential to South Dakota’s economic growth. Again improvement between Fall 1997 and Fall 1998 will be used to allocate FY00 resources. 

Incentive Fund 3 – Academic Improvement

Incentive Fund 3 will encourage academic improvement. State Policy Goal Three states the academic programs offered by the universities will be of high quality and the universities will regularly provide evidence of quality based on measures of their students and graduates. Performance on the new general education proficiency exam (Collegiate Assessment of Academic Proficiency – CAAP exam) will be used to measure improvement of academic performance. Using a student’s entering ACT score, an expected performance level on the CAAP exam can be determined. Targets are set for each university so that every student achieves the expected academic gains.

State Policy Goal Six states the universities will work collaboratively to carry out their teaching, service, and research missions. The purpose of the fourth incentive fund is to reward the universities for sharing faculty and facilities in their instruction. This is done by transmitting a course from one university to another, hosting a course from another university on campus, or jointly teaching a program in Sioux Falls.

Incentive Fund 5 – External Funds

The universities must increase non-state financial support if they are to earn funds from Incentive Fund 5, which is intended to meet State Policy Goal Nine. The goal is to find additional funding sources from gifts and grants. Targets will be set for each of four types of non-state sources; these are annual gifts to the endowment, grants and contracts, scholarships and capital funds.

The incentive funding framework recognizes the universities for making improvements and progress toward the policy goals. Each university competes to attain it’s own improvement targets. New targets will be set each fiscal year based on the previous year’s performance.