Directs Secretary of Higher Education to establish performance-based funding plans for public institutions of higher education.

A1102

ASSEMBLY, No. 1102

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman JOE DANIELSEN

District 17 (Middlesex and Somerset)

SYNOPSIS

���� Directs Secretary of Higher Education to establish
performance-based funding plans for public institutions of higher education.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
establishing performance-based funding plans for public
institutions of higher education, amending N.J.S.18A:64A-22, and supplementing
chapter 3B of Title 18A of the New Jersey Statutes.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� N.J.S.18A:64A-22 is
amended to read as follows:

���� 18A:64A-22.� Notwithstanding
any other law to the contrary, the Council of County Colleges may submit to the
State Treasurer annual budget requests for State support of county colleges.�
Within the limits of funds appropriated for such purposes, the board of
trustees of a county college may based upon the itemized statement fixed and
determined pursuant to N.J.S.18A:64A-17 apply to the State Treasurer and
receive State support:

���� a.���� For capital projects in
amounts not to exceed one-half of the cost of said capital projects, and

���� b.���
[
For
]

Except as
otherwise provided pursuant to P.L. , c. (C. ) (pending
before the Legislature as this bill), for
operational costs to the extent
of 43% but not to exceed 50% of the educational and general costs of the county
colleges in the base year; provided, however, that for the purposes of
determining State aid, only credit courses and noncredit remedial, developmental,
general education development and adult basic education courses shall be
included in calculating such costs.� This sum shall be distributed to the
county colleges by the treasurer in consultation with the Council of County
Colleges according to a formula that includes categorical support and
differential funding based on program costs.

���� No county college shall
receive more than 50% of its projected educational and general costs through
the provisions of this act.

���� Each county which operates a
county college shall continue to provide moneys for the support of the college
in an amount no less than those moneys provided in the year in which this act
is enacted or 25% of the operational expense in the base State fiscal year,
whichever is greater.

���� State support for the
operational expenses of county colleges shall be made within limits of State
appropriation.

(cf: P.L.1994, c.48, s.134)

���� 2.��� (New section)� a.� The
Secretary of Higher Education shall develop performance-based funding plans for
the public institutions of higher education.� The purpose of the plans shall be
to increase accountability and efficiency and improve student outcomes at the
public institutions of higher education.� The secretary shall develop a plan
for the county colleges and a plan for the four-year public institutions of
higher education.� The secretary may develop a separate plan for the public
research institutions if the secretary determines that to be appropriate.

���� b.��� The secretary shall
collaborate with the presidents and the governing boards of the public
institutions of higher education, business and industry, Statewide
organizations representing faculty and staff, and such other stakeholders as
the secretary deems appropriate, to develop a system for allocating a
percentage of State operating aid to each public institution based upon the
institution�s achievement of established measures.

���� c.���� In developing the
performance-based funding plans, the secretary shall review performance-based
funding models in other states, including funding measures and methodologies,
and the weighting of measures to better recognize the unique mission of each
sector of public higher education.� The secretary shall align the
performance-based funding plans with the goals and priorities of the State as
outlined in the comprehensive master plan created pursuant to subsection a. of
section 14 of P.L.1994, c.48 (C.18A:3B-14).

���� The performance-based funding
plans shall seek to promote and increase the satisfactory progression,
matriculation, and graduation of all students enrolled in State-supported
public institutions of higher education.� The plans shall be sensitive to the differing
programmatic missions of the institutions, responsive to changes within the
institutions, and hold institutions accountable for the quality of instruction
and student learning.

���� 3.��� (New section)� a.� The
performance-based funding plan for the county colleges shall include, but is
not limited to, the following measures:

���� (1)�� the number of students
earning their first 15 semester credit hours of college-level course work at
that institution by a given year of enrollment;

���� (2)�� the number of students
earning their first 30 semester credit hours of college-level course work at
that institution by a given year of enrollment;

���� (3)�� the number of students
who progress from remedial courses to college-level courses during the academic
year;

���� (4)�� number of students who
earn an associate�s degree from that institution or complete a certificate
program during the academic year; and

���� (5)�� the number of students
who completed at least 15 semester credit hours at that institution and
subsequently enroll for the first time in a four-year institution of higher
education.

���� b.��� The performance-based
funding plan for the four-year public institutions of higher education shall
include, but is not limited to, the following measures:

���� (1)�� student graduation rate;

���� (2)�� student retention;

���� (3)�� student transfers;

���� (4)�� completion of credit
hours;

���� (5)�� completion of degree
programs;

���� (6)�� types of degrees
awarded;

���� (7)�� job placement and
employment rate upon graduation;

���� (8)�� academic degrees awarded
in critical needs shortage areas, such as the science, technology, engineering,
and mathematics (STEM) fields; and

���� (9)�� reducing achievement
gaps for low-income students, minority students, and transfer students.

���� 4.��� (New section)� a.� Upon
approval of the performance-based funding plans, State operating aid
appropriated to each public institution of higher education shall incorporate
the performance-based funding plan in accordance with the following percentages
and schedule:

���� (1)�� 5% for fiscal year 2019;

���� (2)�� 10% for fiscal year 2020

���� (3)�� 15% for fiscal year
2021;

���� (4)�� 20% for fiscal year
2022; and

���� (5)�� 25% for fiscal year 2023
and each successive fiscal year.

���� b.��� During fiscal year 2018,
the secretary shall provide each institution with a detailed report on what the
impact of the performance-based funding plan would have been, if it had been
implemented at 5% in fiscal year 2018.

���� c.���� For fiscal year 2019,
no institution shall receive more than a 2% reduction in State operating aid as
compared to fiscal year 2018 due to the implementation of the performance-based
funding plan.

���� d.��� Each institution that
uses enrollment as part of its budgeting process shall calculate enrollment as
the number of students enrolled in the institution at the end of the prior
academic year.

���� 5.��� (New section)� The
Office of the Secretary of Higher Education shall post on its website by
September 1 of each year the performance-based funding plans, evaluation
criteria, performance results for each institution, and the amount of funding
each institution received in the fiscal year based on the performance-based
funding plan.� The information shall be posted on the website in a prominent
and easily accessible location.

���� 6.��� (New section)� The
secretary shall review the performance-based funding plans established pursuant
to P.L.��� , c.�� (C.���� ) (pending before the Legislature as this bill) on an
annual basis, and submit a report by September 1 of each year to the Governor,
and to the Legislature pursuant to section 2 of P.L.1991, c.164
(C.52:14-19.1).� The report shall contain an assessment of the
performance-based funding plans, including the effects on student outcomes, and
recommendations for any modifications to the plans and on the continued use of
the plans in the allocation of State operating aid.

���� 7.��� This act shall take
effect immediately.

STATEMENT

���� This bill directs the
Secretary of Higher Education to develop performance-based funding plans for
the public institutions of higher education.� The purpose of the plans will be
to increase accountability and efficiency and improve student outcomes at the
public institutions.� In addition, the plans should seek to promote and
increase the satisfactory progression, matriculation, and graduation of all
students enrolled in the public institutions.� The secretary will create a
funding plan for the county colleges and a funding plan for the four-year
public institutions, and may create a separate funding plan for the public
research institutions if deemed appropriate.

���� Under the bill�s provisions,
the secretary is directed to work with the presidents and governing boards of
the public institutions of higher education, business and industry, Statewide
organizations representing faculty and staff, and other stakeholders to develop
a system for allocating a percentage of State operating aid based on the
institution�s achievement of established measures. The secretary will review
performance-funding models in other states to assess funding measures and
methodologies, and the weighting of measures.� The plans should be sensitive to
the differing programmatic missions of the institutions, responsive to changes
within the institutions, and hold institutions accountable for the quality of
instruction and student learning.

���� The bill establishes a number
of performance measures, including degree and credit completion, to be included
in the performance-based funding plans; however, the secretary is not limited
to those measures.

���� The bill establishes a
schedule that will gradually phase-in the percentage of each public
institution�s State operating aid that will be affected by the
performance-based funding plan.� Beginning in fiscal year 2019, the following
percentages and schedule will apply:

����������� - 5% for fiscal year
2019;

����������� - 10% for fiscal year
2020;

����������� - 15% for fiscal year
2021;

����������� - 20% for fiscal year
2022; and

����������� - 25% for fiscal year
2023 and each successive fiscal year.

���� Fiscal year 2018 will be a
�learning year� in which no institution will be affected by the
performance-based funding plans, but the secretary will provide each
institution with a detailed report on what

the impact of the plans would have
been, if they had been implemented at 5% in that year.� The bill includes a
stop-loss provision for fiscal year 2019, so that no institution will
experience a reduction of more than 2% in State operating aid as compared to
fiscal year 2018.