For Release June 26

Regents Approve Targets for Distribution of Funds
Universities Required to Meet Targets to Earn Funds

MADISON—Meeting today at Dakota State University, the South Dakota Board of Regents approved the targets that each of the six public universities must meet in order to earn funds set aside as an incentive for improvement. The Regents have set targets for each university based upon that individual university’s past performance. Incentive funds will be awarded in future fiscal years based upon demonstrated improvements in five specific areas.

"Each university competes against itself to improve its performance in areas that the Regents believe will improve the South Dakota system of higher education overall," said Regents Executive Director Robert T. Tad Perry. "Up until FY99, the Regents have distributed the funds to the universities based upon the credit hours generated by the students enrolled in our institutions. With this new distribution mechanism, a portion of the revenues available will be set aside to recognize institutional improvements. The money will be allocated based upon the universities’ success in achieving certain goals that the Regents have set," said Perry.

Adopting the new funding framework in December 1997, the Regents identified five areas that they thought are important to South Dakota. Those areas are:

  1. Incentive Fund 1 – All qualified South Dakota residents will have convenient and affordable access to higher education.
  2. Incentive Fund 2 – 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 development and expansion of the State’s economy.
  3. Incentive Fund 3 – 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.
  4. Incentive Fund 4 – The universities will work collaboratively to carry out their missions.
  5. Incentive Fund 5 – The universities will work to increase the amount of non-state revenues.

"To achieve the target for Incentive Fund 1, increased access to higher education, the universities will have to attract new South Dakota students, retain current students, and advise students to enroll in full course loads," said Regents President James O. Hansen. "We need to do a better job of advising the students we have about the importance of college to their future. We need to get them through college in four years and finish the job we start with them. Since the cheapest students to recruit are the ones we already have, this fund will be an incentive to the universities to work to retain the students already enrolled."

Incentive Fund 2 awards universities that increase the enrollment in programs that have been identified by the Regents as important to South Dakota’s future. In identifying these program areas, Regents consulted with state business leaders, policy makers, educators, and the economic development experts. "These programs are heavy in the sciences, mathematics and computers," said Regent Pat Lebrun, chair of the Subcommittee on Academic and Student Affairs. "Attracting high tech businesses will require that we can supply a workforce ready to meet the needs of those demanding industries. A talented workforce attracts industry, which in turn attracts more talented workers. The two are inseparable," Lebrun added.

Improved student performance will be required to earn funds from Incentive Fund 3. The universities will have to demonstrate that they have added value to the education of their students, which they can do by showing that students learn at an expected level on the proficiency exam. "The scores were very impressive this year. The universities should be proud of their performance," said Perry. "By meeting or exceeding the expected value added performance on the proficiency exams the institutions will earn funds in that area. Not only do the universities earn resources for improvement but they will also be penalized for student performance that is less than expected. So they do have a real incentive to work with their students to show the value added."

To earn funds from Incentive Fund 4, the universities must collaborate by sharing faculty and facilities and by providing opportunities to high school students to earn university credit. "With our small population, limited resources, and large distances, South Dakota universities can’t be all things to all people. It only makes sense to share resources," said Regent David Gienapp, chair of the Subcommittee on Budget and Finance. "Policy makers have asked us to be more efficient in our delivery of instruction. This is one way to achieve that," he said.

Gienapp added that, because resources are limited, the universities will be encouraged to seek non-state revenues to help in financing programs. "To earn money from Incentive Fund 5 the universities will have to make an effort to raise funds. They can seek gifts, grants and contracts. Scholarships funded by foundations, private individuals, corporations and other third parties are also ways to bring in external funds. The universities can also launch capital fund drives, which raise revenues to support building maintenance and construction and to purchase equipment. If they reach their targeted fund raising levels, they will earn funds from this pool of money, as well," Gienapp said.

"Each of the five incentives funds is worth one percent of the university’s budget. Five percent of any operating budget that is based upon selected improvement criteria is significant. In an era of accountability, these incentive fund distributions require the universities to demonstrate performance. We think this will make a better system for South Dakota," Perry said.

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