AN ACT relating to postsecondary funding.
HB238 revises Kentucky’s statutory postsecondary funding model for public universities and the Kentucky Community and Technical College System (KCTCS). It directs the Council on Postsecondary Education to implement a comprehensive funding formula that allocates state general fund support using a mix of student success measures, credit-hour production, and operational support factors. The bill emphasizes outcomes such as credential completion, student progression, transfers from KCTCS to four-year institutions, and production of degrees in high-demand fields like STEM and health. It also states that the formula must not include race-based metrics or targets.
For public universities, the bill would distribute funding through a formula that gives 40% weight to student success outcomes, 30% to credit hours earned, and 30% to campus operations such as facilities, administrative functions, and academic support services. For KCTCS, the formula would allocate 35% to student success outcomes, 35% to credit hours earned, and 30% to operational support. The bill also preserves hold-harmless and stop-loss protections so institutions are not reduced solely because of formula calculations, and it establishes a postsecondary education performance fund to support these distributions. The Council would certify annual amounts, and a working group would review the model every odd-numbered year beginning in 2025.
The bill’s impact on state law would be to amend KRS 164.092 and restructure how Kentucky distributes postsecondary operating funds. It would replace prior formula language, remove references to an “equilibrium” goal, revise definitions tied to the funding model, and formalize a continuing performance fund that carries balances forward. It also requires administrative regulations to implement the model and makes the performance fund a standing appropriation unit tied to education and workforce priorities. Institutions, the Council on Postsecondary Education, and the state budget director would all have new responsibilities under the revised funding framework.
The general sentiment reflected in the bill text is supportive of performance-based funding and alignment of higher education spending with workforce and student success goals. The legislation frames the model as a way to improve opportunity, strengthen the economy, and reward institutions for producing credentials and outcomes valued by the state. Because there are no committee transcripts or recorded votes provided, there is no direct evidence of debate, amendment support, or opposition in the available context.
The main points of contention apparent from the bill language are the shift toward a more formula-driven allocation and the explicit exclusion of race-based metrics or targets. The bill also narrows or removes some prior weighting concepts, such as cost differences by discipline in university credit-hour funding and certain regional or community disadvantage language in the KCTCS formula, which could affect how institutions are funded. Smaller campuses and institutions with different missions may be sensitive to how the formula’s operational and student-success components are applied, although the bill retains adjustments intended to minimize impacts on smaller campuses and preserve funding floors.
HB238 would substantially amend Kentucky’s postsecondary funding statute, KRS 164.092, by establishing a revised comprehensive funding model for public universities and KCTCS. It would direct the Council on Postsecondary Education to allocate general fund appropriations through a performance-based formula, create and maintain a postsecondary education performance fund, require annual certification and distribution procedures, and mandate periodic review by a working group. The bill would affect public universities, community and technical colleges, the Council, and the state budget process by tying appropriations more closely to student outcomes, credit production, and operational measures.
Based on the bill text alone, the overall sentiment appears favorable toward performance-based higher education funding and toward using state appropriations to incentivize completion, transfer, and workforce-aligned credentials. The measure is framed as a policy tool to improve student success and economic outcomes, and it preserves protections intended to avoid abrupt funding losses. No committee discussion or vote history was provided, so there is no recorded evidence of support, opposition, or compromise from legislative debate in the available materials.
The most notable areas of contention suggested by the bill are the formula changes themselves, especially the removal of some prior weighting and mission-specific language, and the bill’s explicit prohibition on race-based metrics or targets in the funding formulas. Institutions may also differ over how much funding should be driven by student success versus operational support, and over whether the formula adequately accounts for campus size, student disadvantage, or program cost differences. The bill retains hold-harmless and stop-loss protections, which may reduce concern about immediate losses, but the long-term distributional effects of the revised formula could still be disputed by universities and KCTCS colleges with different missions and student populations.