Higher Education Funding Framework

Missouri has used the "base plus" approach for higher education funding since 1992. During the 2022 legislative session, the General Assembly funded a study to develop a new funding approach for higher education and assess the efficiency of Missouri public colleges and universities. In 2024, an interim legislative committee reviewed the proposed new higher education funding model and solicited input from public institution leaders. More than half of states use metrics in funding allocations and 31 use performance-based approaches to align activities to state needs. 

An updated, metric-driven core appropriation, which includes a performance component, will provide policymakers the opportunity to better understand the funding needs of Missouri’s higher education institutions as well as see the impact of the state's investments on each campus, regardless of economic conditions.

Graphic comparing current “Base Plus” funding model with an updated model combining fixed costs (administrative needs and policy requirements) and variable costs (enrollment, program mix, and cost of delivering education).

Metric-Based Funding Benefits

The proposed funding framework focuses on the cost of delivering postsecondary education services to provide an accurate and reliable benchmark to compare to state appropriations. This core-based approachhelps ensure institutions have the financial support to provide the educational services needed in their region and across the state. In addition to guiding the state's $1.2 billion core investment in Missouri’s public higher education system, this framework also allows for: 

  • Data-driven targets and performance measures 
  • Incentives for institutions for activities aligned to the state’s workforce and economic needs 
  • An opportunity, when funds are available, to reward institutions based on performance in specific areas such as student performance, affordability, workforce alignment, collaboration, and student transfer 
Graphic showing three pillars: improved investments aligned to Missouri’s goals, data‑driven performance targets, and incentives for institutions focused on affordability, student success, collaboration, and efficiency.

Funding Model Development

MDHEWD is holding regular meetings of a technical workgroup made up of chief financial officers and institutional research experts from various institutions to provide recommendations as the model development continues. MDHEWD is regularly providing updates to the Coordinating Board for Higher Education (CBHE), as well as interested stakeholders. The first test run of the model’s core component is anticipated in the near future. 

2026 Legislative Directive

During the second regular session of the 103rd General Assembly, the Missouri State Legislature included language in MDHEWD’s budget bill (HB 2003) to present a funding model to the legislature by Dec. 1, 2026: 

The Department is hereby directed to develop and submit an objective, formula-driven funding model for the allocation of state appropriations to public institutions of higher education. The funding model(s) shall apply to all public two-year and four year institutions receiving state operating appropriations and shall establish a transparent methodology for distributing such funds. The model(s) shall be constructed utilizing the total amount of state funding appropriated for public higher education institutions in Fiscal Year 2027 and use the same amount of total funds for two-year and four-year schools. The model(s) shall not assume additional appropriations beyond the Fiscal Year 2027 funding level but shall instead reallocate such funding pursuant to the formula developed under this section. The Department shall consult with public institutions of higher education, the Coordinating Board for Higher Education, members of the General Assembly, and other relevant stakeholders in the development of the funding model(s). No later than December 1, 2026, the Department shall submit a report to the Governor, the Senate, and the House of Representatives detailing: The proposed funding formula, and simulated institutional funding allocations based on Fiscal Year 2027 appropriations.

Next Steps

Given the parameters of this legislation, it is not feasible to implement the proposed funding framework in its entirety. The development of the department’s response will be guided by the following principles:

  • Establish “guardrails” so no institution will experience large changes, either positive or negative, in core funding
  • Emphasize core costs, with goal that every public college and university will remain viable over the next few difficult budget cycles
  • Incorporate simple and limited performance metrics
  • Offer an initial ration between core maintenance and metrics that are weighted toward core maintenance during difficult times but can be adjusted as the state economy improves

We will continue to update this webpage as more information becomes available.