After a history of financial deficiency, Black Hills State University President Dr. Laurie Nichols is attempting to close the academic appropriations funding gap between BHSU and other South Dakota Board of Regents universities.

For decades, BHSU has had a reputation for receiving the least amount of state appropriations from the South Dakota Legislature in order to support educational necessities.

“When we presented our budget request to the Board of Regents—there were several new Regents on the board—and they asked us [why BHSU was always so underfunded],” said Kathy Johnson, BHSU’s vice president for Finance and Administration. “Unfortunately, there’s not a really easy answer.”

Johnson believes that much of BHSU’s financial problem stems from a formula used to calculate higher education budgets in the latter part of the last century.

“One of the biggest drivers was the old instructional funding formula,” Johnson said. “Back in the 1980s and 90s, there was a formula that counted [schools’] enrollment and every credit hour which was assigned to a discipline. Then, that discipline was assigned an average salary for the university.”At the time, BHSU had relatively low-cost disciplines (departments), so the school’s funding was reduced in relation to other South Dakota universities and colleges with more expensive disciplines such as engineering.“Even after the formula went away our funding was really locked in place,” Johnson said. “I think that’s probably the biggest mathematical-driven reason.”

The financial shortage forced BHSU administration to reduce and cut numerous departments and positions within the university.“It was a little bit of a hard time because we had to continue to downsize our budget,” Nichols said. “We had to let positions go as we were losing enrollment, and our budget was coming down.”During that time, BHSU lost multiple staff members from various departments including the counseling department.

“[BHSU’s state funding] has always been a lower percentage than the other five institutions that are also supported by the state,” Nichols said. “So, a year ago, the Joint Appropriations Committee issued a letter to the Board of Regents to review the General Funding Model. [The Joint Appropriations Committee] also said that they wanted [the Board of Regents] to make it more equitable.”

As of June 2023, BHSU was facing a 23% funding gap in comparison to other South Dakota higher education institutions.

“We have about 11 million in state funding,” Nichols said. “We collect almost another 19 million through tuition and fees. Our total operating revenue is roughly 30 million. Our peers, however, are budgeted at about 39.5 million.”

These numbers leave BHSU with nearly a $9.3 million deficit and the largest proportional funding gap of all the South Dakota higher education schools.

To argue BHSU’s case, Nichols was asked by the Board of Regents to compare itself to schools of comparable size and operation within the region rather than within the state.

“[The Board of Regents] asked for us to identify six to eight peer institutions that look a lot like [BHSU],” Nichols said. “They could be in-state or out-of-state… And then they compared [our funding] to theirs rather than comparing [South Dakota schools] to each other. In the last legislative session, they gave us half a million to start hammering away at this funding gap.”

In the same session, South Dakota schools are expected to make budget requests for the next school year that must be presented to and approved by the governor.

Nichols asked the Board of Regents to put in a request for $3 million to be added to the budget for the 2024 school year. She believed that putting in a request for the whole $9.3 million would be immediately rejected by the Board, let alone the governor.

“I thought I’d ask for a third of [our budget gap] and see how it goes,” Nichols said. “The Board of Regents worked on it all summer, but they did not go with my $3 million request.”

The official request the Board of Regents will submit to the governor will be for a total of $926,406. Although Nichols will be retiring as president of BHSU, she plans to advise her successor to continue to ask for around $1 million each year in the hopes of gradually decreasing the funding gap.

“It would certainly be my hope,” Nichols said. “And, in the transition time, I would try to get them up to speed on it because they’ll actually get involved with this request because the next legislative session is in Jan.