S 0223 General Bill, By Elliott and Cleary
 A BILL TO AMEND SECTION 59-103-35 OF THE 1976 CODE, RELATING TO PUBLIC
 INSTITUTIONS OF HIGHER LEARNING SUBMITTING BUDGET REQUESTS TO THE STATE
 COMMISSION ON HIGHER EDUCATION, TO PROVIDE THAT ALL OF THE STATE'S FUNDS FOR
 EDUCATIONAL AND GENERAL OPERATING EXPENSES OF ALL PUBLIC HIGHER EDUCATION
 INSTITUTIONS SHALL BE APPROPRIATED TO THE COMMISSION AND ALLOCATED TO THE
 INSTITUTIONS OF HIGHER LEARNING IN A FAIR AND EQUITABLE MANNER, AND TO PROVIDE
 CERTAIN APPROPRIATION REQUIREMENTS.

   12/13/06  Senate Prefiled
   12/13/06  Senate Referred to Committee on Finance
   01/09/07  Senate Introduced and read first time SJ-131
   01/09/07  Senate Referred to Committee on Finance SJ-131

TO AMEND SECTION 59-103-35 OF THE 1976 CODE, RELATING TO PUBLIC INSTITUTIONS OF HIGHER LEARNING SUBMITTING BUDGET REQUESTS TO THE STATE COMMISSION ON HIGHER EDUCATION, TO PROVIDE THAT ALL OF THE STATE'S FUNDS FOR EDUCATIONAL AND GENERAL OPERATING EXPENSES OF ALL PUBLIC HIGHER EDUCATION INSTITUTIONS SHALL BE APPROPRIATED TO THE COMMISSION AND ALLOCATED TO THE INSTITUTIONS OF HIGHER LEARNING IN A FAIR AND EQUITABLE MANNER, AND TO PROVIDE CERTAIN APPROPRIATION REQUIREMENTS.

Whereas, general fund appropriations for educational and general operations for South Carolina's 33 public colleges and universities declined 12 percent between fiscal year 2000-01 and fiscal year 2006-07, while inflationary increases for higher education grew twenty-eight percent during the same period and full-time equivalent enrollment grew by seventeen percent from Fall 2001 to Fall 2005; and

Whereas, a direct result of these budget reductions has been a corresponding rise in tuition across all public institutions, with tuition at South Carolina's institutions increasing 114 percent between fiscal year 2000-01 and fiscal year 2006-07; and

Whereas, the Commission on Higher Education has developed, extensively tested, and had independently validated, a mechanism by which the financial needs of individual institutions may be determined for use in recommending higher educational and general operating funding; and

Whereas, this mechanism is known as the Mission Resource Requirement (MRR); and

Whereas, the MRR formula recommends the amount of funding an institution should receive from both state general fund appropriations and from individual students through tuition and fee revenue; and

Whereas, data and evidence suggests that the state share recommended by the MRR to adequately fund public higher education institutions from state appropriations has never fully been met, and, in recent years, has on average, fallen approximately forty percent short of the stated need for all public higher education institutions; and

Whereas, a likely and corresponding result of this funding disparity is a greater reliance by public higher education institutions on revenue from individual student sources such as tuition and fees; and

Whereas, the problem with funding does not lie solely with the nature of the MRR but with the lack of state resources recently made available to public higher education in South Carolina as deemed necessary by the MRR; and

Whereas, since fiscal year 1990-91, state law no longer requires that state appropriated funds for public higher education be allocated in such a manner as to insure that all institutions receive equivalent percentages of formula funding; and

Whereas, and in part as a consequence of, the elimination of the equivalent percentage requirement, large inequities have resulted in funding among public higher education institutions in general and within specific sectors of institutions such that state funding as compared to the recommended MRR funding level ranges from a low of forty-one percent of MRR to a high of ninety-two percent of MRR; and

Whereas, attainment of the mission and goals of public higher education institutions provided in Section 59-103-15, in general, and especially for those institutions which have lower relative shares of recommended state funding as compared to that recommended by the MRR, that resulted, not from performance, but rather from historical circumstances in regard to static state appropriations for institutions experiencing significant enrollment growth, are seriously jeopardized by continuation of the funding inequities; and

Whereas, the General Assembly recognizes the seriousness of the funding crisis in public higher education.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION    1.    Section 59-103-35 of the 1976, is amended to read:

"Section 59-103-35.    All public institutions of higher learning shall submit annual budget requests to the commission in the manner set forth in this section. The State Board for Technical and Comprehensive Education shall submit an annual budget request to the commission representing the total requests of all area-wide technical and comprehensive educational institutions. The budget submitted by each institution and the State Board for Technical and Comprehensive Education must include all state funds, federal grants, tuition, and fees other than funds derived wholly from athletic or other student contests, from the activities of student organizations, from approved private practice plans, and from the operation of canteens and bookstores which may be retained by the institutions and be used as determined by the respective governing boards, subject to annual audit by the State. Fees established by the respective governing boards for programs, activities, and projects not covered by appropriations or other revenues may be retained and used by each institution as previously determined by the respective governing boards, subject to annual audit by the State. The budget request for the public higher education system shall be submitted by the commission to the Governor and appropriate standing committees of the General Assembly in conjunction with the preparation of the annual general appropriations act for the applicable year.

    State funds for educational and general operating expenses of all public higher education institutions must be appropriated to the commission and must be allocated to the institutions in a uniform and equitable manner, as determined by the commission and in consultation with the institutions. However, funding by the State to each institution within a sector cannot be at a level that, when computed, would be equivalent to less than an amount expressed as the average of the prior fiscal year's combined average percentage of the Appropriations to Mission Resource Requirement ratio for that sector. The commission shall calculate the ratio annually. When computed, an institution within a sector that is calculated to have received prior year funding equivalent to a percentage that is equal to, or higher than, the combined average percentage of the Appropriations to Mission Resource Requirement ratio for that sector, that institution must receive at least the same level of state funding in the current year as it did in the prior year. For purposes of calculating the State's appropriation requirements provided for in this section, the commission shall only consider recurring appropriations from the prior year when calculating the required computations.

Supplemental appropriations requests from any public institution of higher education must be submitted first to the commission. If the commission does not concur in the requests, the affected institution may request a hearing on the requests before the appropriate committee of the General Assembly. The commission may appear at the hearing and present its own recommendations and findings to the same committee. The provisions of this paragraph do not apply to any capital improvement projects funded in whole or in part prior to July 30, 1996.

No new program may be undertaken by any public institution of higher education without the approval of the commission. The provisions of this chapter apply to all college parallel, transferable, and associate degree programs of technical and comprehensive education institutions. All other programs and offerings of technical and comprehensive education institutions are excluded from this chapter."

SECTION    2.    This act takes effect upon approval by the Governor.