SHEEO Query: Legislation to establish endowment fund initiatives

On August 16, 2012, SHEEO sent a query to the SHEEO Agency staff with this question:

One of your colleagues is looking for any other states that have or are intending to seek legislation to establish a (state) endowment in order to fund specific initiatives or projects for a university.  The concept would be that the endowment would be made up of two funding sources: state appropriations, and university matching funds.  Interest earnings from the permanent endowment would support the specific initiatives or projects. One of their regents is toying with the idea, and wants to know if there is anything like that elsewhere.  

Responses from the states:

Florida has had an operating endowment program since the late 70s. Earnings from the endowment can only be used for instruction, libraries or research programs needs. A significant number of the endowments support student scholarships. The program was suspended June 30, 2011 because the state owed $283 M in matching funds and given the economic situation had not been able to keep up with the state match.
Here is a link to our regulations describing the program.

At this time, Indiana has not investigated an endowment type program as you mentioned in your email. 

No such legislation exists in Iowa.

Kentucky does not have an endowment at the state level that provides investment proceeds to a university or group of universities to fund specific initiatives or projects, but it does have a program that provides state appropriations to universities to establish institutional level endowments to fund specific initiatives or projects.
Between 1998 and 2010, the Kentucky General Assembly appropriated four rounds of funding totaling $410 million to a Bucks for Brains program, which when matched dollar for dollar with private contributions has resulted in $820 million being added to public university endowments.  The state and private matching funds are endowed at the institutional level and provide a perpetual source of funding for research related activities.  Investment proceeds can be used to fund endowed chairs, professorships, research staffs and infrastructure, graduate fellowships, and undergraduate scholarships.
The lion’s share of the Bucks for Brains appropriations have been allocated to the state’s two research universities (i.e., $350 million of the $410 million total).  Program guidelines stipulate that 70 percent of state and private matching funds at the research universities must be endowed to support endowed chairs and their research staffs and infrastructure, and that 70 percent of program funds at the research universities be endowed in support of STEM or New Economy disciplines.

Maryland does not have such a model.

We tried this once but got no traction in the legislature.

New Hampshire
We have no such legislation being proposed in New Hampshire.

North Carolina
In North Carolina we have a Distinguished Professors Endowment program which "matches" private funds for professorships with state appropriations. 

North Dakota
We developed a proposal a few years ago around this concept, but have not forwarded it the legislature for funding, as of yet.

In 1989, the Oklahoma Legislature enacted 70 O.S.Supp.2004, § 3951 which established the Oklahoma State Regents’ Endowment Trust Fund (“Trust Fund”).  The Trust Fund was created to support an endowment program for faculty chairs and professorships and to improve the quality of instruction and research at colleges and universities within the Oklahoma State System of Higher Education. 
We have additional information regarding the scope and funding history if needed.

There is no such thing in Pennsylvania.
We (the Pennsylvania State System of Higher Education) used to receive a separate General Fund Line Item for “Special Projects.” This was a source of funds that the Board of Governors allocated for certain System-wide projects; most was used for performance funding. However, its last year of funding was 2010/11, at $18.5 million. There was never a matching requirement and it was not an endowment.

Texas established in the state constitution a fund to help promote the development of additional National Research Universities in the state.  There is certain criteria that the institution must meet to receive an allocation of the earnings off the fund.  I have copied the language of the constitution amendment below.
Sec. 20.  NATIONAL RESEARCH UNIVERSITY FUND.  (a)  There is established the national research university fund for the purpose of providing a dedicated, independent, and equitable source of funding to enable emerging research universities in this state to achieve national prominence as major research universities.
(b)  The fund consists of money transferred or deposited to the credit of the fund and any interest or other return on the investment assets of the fund.  The legislature may dedicate state revenue to the credit of the fund.
(c)  The legislature shall provide for administration of the fund, which shall be invested in the manner and according to the standards provided for investment of the permanent university fund. The expenses of managing the investments of the fund shall be paid from the fund.
(d)  In each state fiscal biennium, the legislature may appropriate as provided by Subsection (f) of this section all or a portion of the total return on all investment assets of the fund to carry out the purposes for which the fund is established.
(e)  The legislature biennially shall allocate the amounts appropriated under this section, or shall provide for a biennial allocation of those amounts, to eligible state universities to carry out the purposes of the fund. The money shall be allocated based on an equitable formula established by the legislature or an agency designated by the legislature. The legislature shall review and as appropriate adjust, or provide for a review and adjustment, of the allocation formula at the end of each state fiscal biennium.
(f)  The portion of the total return on investment assets of the fund that is available for appropriation in a state fiscal biennium under this section is the portion determined by the legislature, or an agency designated by the legislature, as necessary to provide as nearly as practicable a stable and predictable stream of annual distributions to eligible state universities and to maintain over time the purchasing power of fund investment assets.  If the purchasing power of fund investment assets for any rolling 10-year period is not preserved, the distributions may not be increased until the purchasing power of the fund investment assets is restored.  The amount appropriated from the fund in any fiscal year may not exceed an amount equal to seven percent of the average net fair market value of the investment assets of the fund, as determined by law.  Until the fund has been invested for a period of time sufficient to determine the purchasing power over a 10-year period, the legislature may provide by law for means of preserving the purchasing power of the fund.
(g)  The legislature shall establish criteria by which a state university may become eligible to receive a portion of the distributions from the fund.  A state university that becomes eligible to receive a portion of the distributions from the fund in a state fiscal biennium remains eligible to receive additional distributions from the fund in any subsequent state fiscal biennium.  The University of Texas at Austin and Texas A&M University are not eligible to receive money from the fund.
(h)  An eligible state university may use distributions from the fund only for the support and maintenance of educational and general activities that promote increased research capacity at the university.
(Added Nov. 3, 2009.)

Not currently here (UT).

We do not have such a program in Wisconsin.