FISCAL NOTE

Date Requested: February 13, 2018
Time Requested: 04:18 PM

1260	Comm. Sub.	SB83
Agency:	Higher Education Policy Commission
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:	Education (Higher)

FUND(S):

Appropriated

Sources of Revenue:

General Fund 0589

Legislation creates:

Creates New Expense, Creates New Program

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

Senate Bill 83, if enacted, would require that higher education course catalogs include certain information relating to employment rate, compensation, etc. to help students decide on an area of study; create a voluntary college completion incentive program whereby an institution of higher education accepts less state funding in return for certain incentive bonuses relating to student graduation and employment of graduates; and create a tax credit for West Virginia resident students successfully completing certain courses of study. If institutions can conceive a method to collect the employment data on graduates who are not residents of the state, it is estimated that the annual cost of the incentives are about $4.1 million. It is anticipated that additional costs would not be incurred related to the acquisition of data by the Higher Education Policy Commission. The estimated cost of the tax credits is about $7.4 million. The costs associated with the administration of the tax credit and reporting job tittle data to the Higher Education Policy Commission are expected to be paid by the Secretary of Revenue.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2018 Increase/Decrease (use"-")	2019 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	0	11,500,000	11,500,000
Personal Services	0	0	0
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	0	0
Other	0	11,500,000	11,500,000
2. Estimated Total Revenues	0	0	0

Explanation of above estimates (including long-range effect):

Institutional Incentives The proposed legislation would initiate a voluntary incentive to improve student success rates by first reducing institutional state appropriations by $100 per year for every in-state student. The incentive would then add $1,000 and $500 for each four-year institution graduate and each two-year institution graduate, respectively, who find full-time employment within 12 months in the State of West Virginia in their area of study. if a four-year graduate continues into post-graduate studies, they are considered employed and the institution from which the student graduated receives the $1,000 per student incentive. The length of full-time employment required to qualify for the incentive is not defined. It is assumed that an individual employed full-time for one week could be included in the incentive. The following estimates are calculated on institutional level given that each institution can choose to participate in this option. The estimates are based on the following parameters: • Degree seeking, in-state students who were enrolled in state institution for 2014 academic year (Summer 2014, Fall 2014, and Spring 2015 semesters) were included. In-state status was based on resident fee payment during the academic year. • Graduates who were considered in-state students in 2014 academic year, completed an associate, bachelor or higher credential in 2014 academic year, and were employed earning at least $1 during 2016 calendar year were included. Due to available data, employment was captured between 1.5 and 2.5 years of graduation. For those graduating in summer of 2014, employment was determined between 1.5 and 2.5 years after graduation. For those who graduated in spring of 2015, employment was determined between 0.5 and 1.5 years after graduation. o These figures do not include students who might have obtained employment immediately after graduation in 2014 or 2015 but were not employed in 2016 or were employed out of state in 2016. o Graduates included in the estimates may have prior credentials completed before 2014. • Students who were considered in-state students in 2014 academic year; who received a bachelor degree in 2014 academic year; and who were enrolled in a state institution pursuing post-graduate studies in 2015 academic year (Summer 2015, Fall 2015, and Spring 2016) were included. o These figures do not reflect any students pursing post-graduate education at a private institution or at an out-of-state institution. Currently that data is not available. • Deposits in the fund were calculated as $100 per student enrolled in 2014 academic year. • The incentives bonus to be received was calculated as $500 for each student who completed an associate level credential in the 2014 academic year and was employed in the state earning at least $1 in the 2016 calendar year and as $1,000 for each student who received a bachelor degree or higher in the 2014 academic year and was employed in the state earning at least $1 or was enrolled in post-graduate studies in a state institution in the 2016 calendar year. • Net revenue was calculated as the difference between the incentive bonus to be received and the initial deposit in the fund. • The tax credit for one year was calculated as $1,000 for each graduate in 2014 academic year who received an associate degree or higher; was employed in 2016 calendar year; and earned at least $1. The institutions most likely to participate are those for which a positive net revenue outcome is expected. The institutions with anticipated positive net revenues are: • Concord University • Fairmont State University • Marshall University • Shepherd University • West Liberty University • West Virginia University • West Virginia State University Shepherd University, West Liberty University and West Virginia University would be designated as high-achieving institutions and would not make deposits to the fund. The high achieving designation was based upon on four-year graduation rates for bachelor seeking freshmen and bachelor’s degree completion at any public institution by the spring of the fourth year or matriculation. It is estimated that the total annual deposits to the fund would be about $2.2 million and the estimated expenditures for bonuses would be about $6.3 million. The net cost would be about $4.1 million for the incentives Tax Credit The estimated number of graduates qualifying for the $1,000 tax credit is 7,397; therefore, the annual cost is projected to be $7,397,000. College Catalog Information To comply with the requirements of the proposed legislation, it would be necessary to acquire the employment rates, compensation and other information for institutional graduates. The use of statistical methods to estimate information would not be feasible because the size of the limited data population for each program within each institution would be too small. Some information for graduates who reside in West Virginia after graduating is available from the Secretary of Revenue. The Higher Education Policy Commission could supply this information to the institutions. Employment Data would not be available for those graduates who left West Virginia. The institutions could survey these individuals, but it is likely that the response rate would not be at a sufficient level to provide accurate information. A low response rate would be a problem for programs with a low number of graduates. Graduate survey results could be unintentionally skewed if graduates who were not employed, or employed in low income jobs, did not choose to respond because of their perception of their current status or their opinion of the institution. The proposed legislation requires institutions to identify undergraduates who have continued on to postgraduate study. These data are available from the Federal Government. The Policy Commission could analyze the West Virginia graduates living in West Virginia from data provided by the Secretary of Revenue and distribute it to institutions using current resources.

Memorandum

Person submitting Fiscal Note: Ed Magee
Email Address: edward.magee@wvhepc.edu