(a)

1. (1) A productivity index for each institution will be calculated based on the:

   1. (A) Productivity Funding Model — Universities, 6 CAR pt. 361; and
   2. (B) Productivity Funding Model — Two-Year Colleges, 6 CAR pt. 362.
2. (2) Each institution’s current productivity index will be compared to its previous year’s index to determine productivity changes.

3. (3) One (1) productivity index will be:

   1. (A) Calculated to represent productivity changes for institutions as a collective; and
   2. (B) Used to determine how much new state funding is recommended.
4. (4) The Arkansas Higher Education Coordinating Board will limit the funding recommendation generated by the productivity-based funding model to no more than a two-percent growth over the prior year’s RSA general revenue funding amount for institutions.

(b)

1. (1) When new state funding is recommended, the proportion of new moneys to be distributed among institutions will be divided into two (2) separate funding pools for four-year and two-year institutions based upon the percentage of existing RSA general revenue.
2. (2) If any RSA general revenue funds remain unallocated to institutions due to productivity declines, the Division of Higher Education shall utilize the funds to address statewide needs in higher education.
3. (3) New RSA general revenue allocated to institutions will be distributed among the institutions with productivity index increases.
4. (4) The percentage of new RSA general revenue funding recommended for institutions with productivity index increases will be calculated as a percentage of the contribution to the overall institutions’ productivity index increases.

(c)

1. (1) Within each four-year and two-year institution group, RSA general revenue funding will be recommended for reallocation from institutions with productivity index declines to institutions with productivity index increases.
2. (2) Reallocation of RSA general revenue funding to institutions with productivity increases will be calculated as a percentage of the contribution to the overall four-year or two-year institution productivity index increases.
3. (3) Reallocation for institutions with productivity index declines will be based on their percentage of productivity index decline.
4. (4) Recommended reallocation will be introduced on a graduated scale starting with one percent (1%) of an institution’s RSA general revenue funding being reallocated in 2019-2020, up to one and one-half percent (1.5%) in 2020-2021, and up to two percent (2%) in 2021-2022 and thereafter.

(d)

1. (1) The total RSA general revenue recommendation for each institution will include any new state funding recommendation and reallocated funding recommendation.

2. (2) If an institution’s funding recommendation is greater than a one percent (1%) increase in 2018-2019, one and one-half percent (1.5%) increase in 2019-2020, or two percent (2%) increase thereafter over its existing RSA general revenue funding, the board will recommend that:

   1. (A) The amount of funding recommendation up to two percent (2%) based on the graduated scale be added to an institution’s existing RSA general revenue; and
   2. (B) Any funding recommendation in excess would be one-time incentive funding for that institution.
3. (3) The board will recommend redistribution of one-time incentive funding in the following year based on productivity index changes.