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AN ACT relating to the postsecondary education working group and declaring an 1
emergency. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
Section 1. KRS 164.092 is amended to read as follows: 4
(1) For purposes of this section: 5
(a) "Category I and Category II square feet" means square footage that falls under 6
space categories as defined by the Postsecondary Education Facilities 7
Inventory and Classification Manual published by the United States 8
Department of Education; 9
(b) "Comprehensive university" has the same meaning as in KRS 164.001; 10
(c) "Council" means the Council on Postsecondary Education; 11
(d) "Equilibrium" means a condition in which every institution has an 12
appropriately proportionate level of resources as determined by the 13
performance funding model established in this section given each institution's 14
level of productivity in achieving student success outcomes, course 15
completion outcomes, and other components included in the model; 16
(e) "Formula base amount" means an institution's enacted general fund 17
appropriation amount minus debt service on bonds and appropriations for 18
mandated programs; 19
(f) "Hold-harmless provision" means a provision included in the funding 20
formulas as described in subsection (9) of this section that prevents a 21
reduction of a designated portion of funding for an institution through 22
operation of the funding formula; 23
(g) "Institution" means a college in the Kentucky Community and Technical 24
College System or a public university; 25
(h) "KCTCS" means the Kentucky Community and Technical College System; 26
(i) "KCTCS institution allocable resources" means the formula base amount net 27
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of any equity adjustment as described in subsection (7)(b) of this section, any 1
amount protected by a hold -harmless provision, and any applicable increase 2
or decrease in general fund appropriations; 3
(j) "Mandated program" means a research or public service acti vity that is not 4
integral to the instructional mission of the institution and is identified by the 5
General Assembly in the biennial budget; 6
(k) "Nontraditional age students" means students between the ages of twenty -five 7
(25) and sixty-four (64); 8
(l) "Performance fund" means the postsecondary education performance fund 9
established in subsection (13) of this section; 10
(m) "Research universities" means the University of Kentucky and the University 11
of Louisville; 12
(n) "Stop-loss provision" means a provision incl uded in the funding formulas as 13
described in subsection (9) of this section to limit reduction of an institution's 14
funding amount to a predetermined percentage, notwithstanding the amounts 15
calculated by operation of the formula; and 16
(o) "University allocable resources" means the formula base amount net of any 17
small school adjustment as described in subsection (5)(c) of this section, any 18
amount protected by a hold -harmless provision, and any applicable increase 19
or decrease in general fund appropriations. 20
(2) The General Assembly hereby finds that improving opportunity for the 21
Commonwealth's citizens and building a stronger economy can be achieved by its 22
public college and university system focusing its efforts and resources on the goals 23
of: 24
(a) Increasing the retention and progression of students toward timely credential 25
or degree completion; 26
(b) Increasing the number and types of credentials and degrees earned by all types 27
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of students; 1
(c) Increasing the number of credentials and degrees that garner higher sa laries 2
upon graduation, such as science, technology, engineering, math, and health, 3
and in areas of industry demand; 4
(d) Closing achievement gaps by increasing the number of credentials and 5
degrees earned by low -income students, underprepared students, 6
underrepresented students, and nontraditional age students; and 7
(e) Facilitating credit hour accumulation and transfer of students from KCTCS to 8
four (4) year postsecondary institutions. 9
(3) (a) The General Assembly hereby declares these goals can best be acc omplished 10
by implementing a comprehensive funding model for the allocation of state 11
general fund appropriations for postsecondary institution operations that 12
aligns the Commonwealth's investments in postsecondary education with the 13
Commonwealth's postsecondary education policy goals and objectives. 14
(b) The General Assembly further recognizes that priority for state general fund 15
appropriations for postsecondary institutions should be given to each 16
institution's funding floor over appropriations to the perfor mance fund. For 17
purposes of this section, "funding floor" means an institution's fiscal year 18
2020-2021 general fund appropriation included in 2020 Ky. Acts ch. 92, plus 19
any fiscal year 2020 -2021 distribution from the performance fund, and minus 20
fiscal year 2020-2021 debt service on bonds and appropriations for mandated 21
programs. 22
(4) This section establishes a comprehensive funding model for the public 23
postsecondary education system to be implemented by the Council on 24
Postsecondary Education. The funding mod el shall include a public university 25
sector formula and a KCTCS sector formula, and shall not include any race -based 26
metrics or targets in the formulas. 27
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(5) The funding formula for the public university sector shall: 1
(a) Recognize differences in missions a nd cost structures between research 2
universities and comprehensive universities to ensure that neither are 3
advantaged or disadvantaged during the first full year of implementation; 4
(b) Distribute one hundred percent (100%) of the university allocable resou rces 5
for all universities in the sector, based on rational criteria, including student 6
success, course completion, and operational support components, regardless 7
of whether state funding for postsecondary institution operations increases, 8
decreases, or remains stable; 9
(c) Include an adjustment to minimize impact on smaller campuses as determined 10
by the council; and 11
(d) Be constructed to achieve equilibrium, at which point the funding formula 12
rewards rates of improvement above the sector average rate. 13
(6) Funding for the public university sector shall be distributed as follows: 14
(a) Forty percent (40%) of total university allocable resources shall be distributed 15
based on each university's share of total student success outcomes produced, 16
including but not limited to: 17
1. Bachelor's degree production; 18
2. Numbers of students progressing beyond thirty (30), sixty (60), and 19
ninety (90) credit hour thresholds; 20
3. Science, technology, engineering, math, and health bachelor's degree 21
production; and 22
4. Bachelor's degrees earned by low-income students and underrepresented 23
students; 24
(b) Thirty percent (30%) of total university allocable resources shall be 25
distributed based on each university's share of sector total student credit hours 26
earned, excluding dual credit enrol lment, weighted to account for cost 27
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differences by academic discipline and course level, such as lower and upper 1
division baccalaureate, master's, doctoral research, doctoral professional, and 2
nontraditional age students; and 3
(c) Thirty percent (30%) of to tal university allocable resources shall be 4
distributed in support of vital campus operations as follows: 5
1. Ten percent (10%) shall be distributed based on each university's share 6
of Category I and Category II square feet, net of research, nonclass 7
laboratory, and open laboratory space, to support maintenance and 8
operation of campus facilities and may include a space utilization factor 9
as determined by the council in collaboration with the working group 10
established in subsection (11) of this section; 11
2. Ten percent (10%) shall be distributed based on each university's share 12
of total instruction and student services spending, net of maintenance 13
and operation, to support campus administrative functions; and 14
3. Ten percent (10%) shall be distributed based on e ach university's share 15
of total full -time equivalent student enrollment to support academic 16
support services such as libraries and academic computing. 17
(7) The funding formula for the KCTCS sector: 18
(a) Shall distribute one hundred percent (100%) of KCTCS in stitution allocable 19
resources for all KCTCS colleges based on rational criteria, including student 20
success, course completion, and operational support components, regardless 21
of whether state funding for postsecondary institution operations increases, 22
decreases, or remains stable; 23
(b) May include an adjustment to account for community economic disadvantage 24
in some regions of the Commonwealth as determined by the council; and 25
(c) Shall be constructed to achieve equilibrium, at which point the funding 26
formula rewards rates of improvement above the sector average rate. 27
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(8) Funding for the KCTCS sector shall be distributed as follows: 1
(a) Thirty-five percent (35%) of total KCTCS institution allocable resources shall 2
be distributed based on each college's share of total student success outcomes 3
produced, including but not limited to: 4
1. Certificate, diploma, and associate degree production, weighted to 5
provide a premium for credentials that are aligned with the economic 6
needs of the state; 7
2. Numbers of students pr ogressing beyond fifteen (15), thirty (30), and 8
forty-five (45) credit hour thresholds; 9
3. Credentials earned by low -income students, underprepared students, 10
underrepresented students, and nontraditional age students; and 11
4. Transfers to four (4) year institutions; 12
(b) Thirty-five percent (35%) of total KCTCS institution allocable resources shall 13
be distributed based on each college's share of total student credit hours 14
earned, weighted to account for cost differences by academic discipline; and 15
(c) Thirty percent (30%) of total KCTCS institution allocable resources shall be 16
distributed in support of vital campus operations as follows: 17
1. Ten percent (10%) shall be distributed based on each college's share of 18
Category I and Category II square feet, net of re search, nonclass 19
laboratory, and open laboratory space, to support maintenance and 20
operation of campus facilities and may include a space utilization factor 21
as determined by the council in collaboration with the postsecondary 22
education working group established in subsection (11) of this section; 23
2. Ten percent (10%) shall be distributed based on each college's share of 24
total instruction and student services spending, net of maintenance and 25
operation, to support campus administrative functions; and 26
3. Ten percent (10%) shall be distributed based on each college's share of 27
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total full -time equivalent student enrollment to support academic 1
support services such as libraries and academic computing. 2
(9) (a) The funding formula for both sectors shall include: 3
1. A hold -harmless provision for fiscal year 2018 -2019 preventing a 4
reduction in an institution's funding amount based solely on the formula 5
calculation, and allowing a hold -harmless amount determined by the 6
formula in fiscal year 2018 -2019 to be deducted fro m an institution's 7
formula base amount in whole or in part in fiscal years 2019 -2020 and 8
2020-2021, as determined by the council; 9
2. A hold -harmless provision for fiscal year 2021 -2022, and every fiscal 10
year thereafter, preventing a reduction in an institution's funding amount 11
based solely on the formula calculation; 12
3. A stop-loss provision for fiscal year 2019 -2020 limiting the reduction in 13
funding to any institution to one percent (1%) of that institution's 14
formula base amount; 15
4. A stop-loss provision for fiscal year 2020-2021 limiting the reduction in 16
funding to any institution to two percent (2%) of that institution's 17
formula base amount; and 18
5. A stop -loss provision for fiscal year 2021 -2022, and every fiscal year 19
thereafter, limiting the reduction in funding to any institution to zero 20
percent (0%) of that institution's formula base amount. 21
(b) Paragraph (a) of this subsection shall not be construed to limit the level of a 22
budget reduction that may be enacted by the General Assembly or 23
implemented by the Governor. 24
(10) (a) By May 1 each year, the council shall certify to the Office of the State Budget 25
Director the amount to be distributed to each of the public universities and 26
KCTCS as determined by the comprehensive funding model created in this 27
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section, not to exceed the available balance in the performance fund. 1
(b) The Office of the State Budget Director shall distribute the appropriations in 2
the performance fund for that fiscal year to the institutions in the amounts the 3
council has certified. The a djusted appropriations to each institution shall be 4
allotted as provided in KRS 48.600, 48.605, 48.610, 48.620, and 48.630. 5
(c) 1. The certified amounts distributed from the performance fund to the 6
institutions are nonrecurring funds that shall not be incl uded in the 7
institutions' base budget amounts submitted in their biennial budget 8
requests. 9
2. The certified amounts distributed from the performance fund in the 10
previous fiscal year shall be included in the performance fund's base 11
budget amount submitted by the council in the biennial budget request. 12
(d) For fiscal year 2017 -2018, the Office of the State Budget Director shall 13
distribute to the public postsecondary education institutions, except for 14
Kentucky State University, those funds appropriated to the performance fund 15
by the General Assembly in 2016 Ky. Acts ch. 149, Part I, K., 12., in 16
accordance with the comprehensive funding model created in this section. 17
(11) (a) The Council on Postsecondary Education is hereby directed to establish a 18
postsecondary education working group composed of the following: 19
1. The president of the council , who shall serve as chairperson of the 20
working group and a nonvoting member; 21
2. The president or designee of each public postsecondary institution, 22
including the president of KCTCS; 23
3. The Governor or designee; 24
4. Five (5) members of the House of Representatives appointed based on 25
proportional political affiliation in the House, with members of the 26
majority appointed by the Speaker of the House and members of the 27
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minority app ointed by the Minority Floor Leader of the House [ or 1
designee]; and 2
5. Five (5) members of the Senate appointed based on proportional 3
political affiliation in the Senate, with members of the majority 4
appointed by the President of the Senate and members of the minority 5
appointed by the Minority Floor Leader of the Senate[ or designee]. 6
(b) Beginning in calendar[fiscal] year 2026[2020-2021] and every four (4) 7
calendar[three (3) fiscal] years thereafter, the postsecondary education 8
working group shall convene to determine if the comprehensive funding 9
model is functioning as expected, identify any unintended consequences of 10
the model, and recommend any adjustments to the model. The council may 11
call the working group to convene prior to the start of the required 12
calendar[fiscal] year to allow sufficient time for the group to complete its 13
work. 14
(c) The results of the review and recommendations of the working group shall be 15
reported by the council to the Governor, the Interim Joint Committee on 16
Appropriations and Re venue, and the Interim Joint Committee on Education 17
by December 1 of each[ fiscal] year the working group convenes. 18
(12) The council shall promulgate administrative regulations under KRS Chapter 13A to 19
implement the provisions of this section. 20
(13) (a) The postsecondary education performance fund is hereby established as an 21
appropriation unit to support improvement in the operations of the public 22
postsecondary institutions and achievement of the Commonwealth's education 23
policy goals and workforce development priorities. General fund moneys may 24
be appropriated by the General Assembly to this fund for distribution to the 25
public postsecondary institutions in amounts determined through the 26
comprehensive funding model created in this section. 27
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(b) Any balance in t he performance fund at the close of any fiscal year shall not 1
lapse but shall be carried forward to the next fiscal year and be continuously 2
appropriated for the purposes specified in this section. A general statement 3
that all continuing appropriations are repealed, discontinued, or suspended 4
shall not operate to repeal, discontinue, or suspend this fund or to repeal this 5
action. 6
Section 2. Whereas the work of the postsecondary education working group is 7
necessary for the funding of public postsecondary education institutions, an emergency is 8
declared to exist, and this Act takes effect upon its passage and approval by the Governor 9
or upon its otherwise becoming a law. 10