Topeka ? Three years ago, Kansas University officials thought they got what they asked for when then-Gov. Bill Graves approved what became known as block grant funding. It’s an arrangement in which the state appropriated funds to KU and other regents schools, ostensibly with no strings attached.

But it is not working as planned, some officials say.

Now some at KU and key lawmakers are calling for a study after the current legislative session to determine what went wrong.

“It has been difficult,” said Steve Morris, a Republican from Hugoton who is the Senate budget leader. “An interim study is justified.”

The problem, from KU’s point of view, is lack of money.

“If there’s no money to be put in the block grant, it doesn’t work,” KU Chancellor Robert Hemenway said recently.

Deregulation

Money, or the lack of it, is a big issue, but Morris and other legislators say there are other problems with block grant funding. A big one is how the system unfairly treats specialized schools, such as the KU Medical Center and Kansas State University’s Veterinary Medical Center and Extension Service and Agricultural Research Program.

“All these issues need to be looked at,” Morris said.

In 2000, Hemenway pushed to get rid of the old model of state funding of universities, where tuition was sent to the state, crunched by a complex formula and then returned to the school accompanied by a state appropriation and a lot of requirements.

Hemenway wanted the tuition to stay with the school, and for the school to have more of a hand in setting tuition. It was called tuition ownership. He wanted the state appropriation sent in without mandates on how to spend it. The theory was that the schools should be given the responsibility and accountability to manage their own affairs.

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Hemenway also wanted KU to be free of state purchasing rules and other required fees, saying the schools should be deregulated and not treated like another state agency.

The Kansas Board of Regents adopted the position.

At the start of 2001, when Graves submitted his budget for the fiscal year that started July 1, 2001, he proclaimed that the state would follow this block grant approach when it came to appropriating money to the regents schools.

But then the recession hit and state revenues constricted.

Traditional annual increases in higher education funding weren’t forthcoming and Graves was forced to cut budgets. Meanwhile, state health insurance costs for employees were skyrocketing.

Lean years

For three fiscal years, there has been no increase in the block grant to regents institutions.

Current Gov. Kathleen Sebelius’ budget director, Duane Goossen, who held the same position with Graves, said universities “are saying that we have these costs that are going up and we would like to have block grants go up at least to cover these things. I understand that.”

Sebelius’ budget for the fiscal year that starts July 1 has a $5 million increase in the block grant to higher education. Although less than a 1 percent increase, it is the first proposed increase in the block grant since the funding method was established.

Under the proposal, KU will receive a $2.2 million increase in funding, but mandated employer costs, such as health insurance, would cost KU $4.2 million, Hemenway said.

Hemenway has long complained that unlike other state agencies, the universities receive no new funding to cover these fixed costs. But Goossen said that is something of a myth. He said other state agency budgets also are having to manage these expenses while receiving significant budget cuts.

“At the root, everyone wishes there was more money to go around,” Goossen said.

But Goossen and higher education officials say the block grant funding method needs fine-tuning to make sure that KU Med and other special institutions aren’t shortchanged. These schools rely heavily on state funding and receive relatively little tuition funding.

Goossen said those adjustments should be made by the board of regents, but that he has no problem with an interim study on block grant funding.

“I don’t think it’s a problem to evaluate it and have everyone take a look and see if there are ways to see if it could be done better. I think that is a positive thing,” he said.