Maryland higher‑education budget hearing highlights funding shifts, FAFSA rollout problems and transfer goals

Budget analysts and higher‑education leaders briefed the Education, Business and Administration Subcommittee on the fiscal 2025 higher‑education package and a suite of policy changes that could reshape access and institutional finances.

The Department of Legislative Services analyst Kelly Norton told the subcommittee that state funding for public four‑year institutions would increase by 3.9% (about $89.5 million), while other higher‑education categories would decline by roughly 7.3% (about $65.9 million), producing an overall net increase of approximately 0.7% for total higher education funding. Norton flagged a methodological shift in FTE counts used in CADE and Sellinger formula calculations — the Department of Budget and Management used ‘‘impact provided’’ counts approximately 5.5% higher, which reduces per‑FTE funding under those formulas.

Why it matters: shifts in enrollment counts and the funding formula can change allocations materially across campuses, and DLS asked the chancellor and campus leaders for specific steps to strengthen transfer pathways and student success.

The committee also heard that Maryland is close to its ‘‘55% by 2025’’ credential goal when short‑term credentials are included (57.3%), but below the goal (51.2%) when those credentials are excluded. Sarah Baker and DLS presented data showing public four‑year institutions generally meet degree targets while community colleges fell short in 2023.

On federal aid, Sarah Baker summarized the FAFSA Simplification Act changes and the state timeline for students: MHEC extended the student FAFSA submission window to June 1 with a March 1 priority deadline. Baker and DLS described federal estimates that many more Maryland students could qualify for Pell or larger Pell awards, but also warned that a small number could lose eligibility under the new formulas. DLS estimated a combined increase to the Maryland Grant and educational assistance programs in the range of $120 million to $150 million; the FY25 allowance increases these programs by $2.2 million, leaving a potential funding gap to be addressed.

Several campus leaders described operational pain points from the FAFSA rollout. Doctor Perman (University System of Maryland) warned that universities likely will not receive FAFSA data until February, delaying aid offers and possibly harming competitiveness. "The new FAFSA is a big overhaul... Our understanding is that our universities won't see FAFSA data until February," he said. Morgan State President David Wilson added: "This is just rolling out horribly, and we have no control over it," describing late award letters and stress on staff.

Leaders also discussed formula and classification changes. DLS outlined proposed Carnegie Classification revisions that separate research from basic classification and add thresholds for R1 and R2 designations; institutions and presidents reported engagement with Carnegie's public‑comment process. DLS reviewed HBCU settlement distributions and how institutions expended initial funds (Bowie State, UMES and Morgan State plans were summarized).

Community college leaders urged caution on rebasing CADE. Dr. Brad Phillips said a calculation error could mean a $19.8 million swing and warned that rebasing could produce double‑digit operating reductions—"for some of our colleges, it's double digit decreases," he said—despite enrollment increases at many campuses. He said reduced CADE obligations would strain dual‑enrollment reimbursement and program continuity.

DLS concluded with one recommended operating action: request the annual report on instructional faculty workload for public four‑year institutions.

Next steps: committee members acknowledged tight overall budget constraints but said they would seek to restore priorities where possible; DLS and agencies were asked to provide follow‑up data on transfer supports, FAFSA impact estimates, and CADE calculation clarifications.