At its April 25, 2008 meeting, the Arkansas Higher Education Coordinating Board (AHECB) approved the funding models for the two-year colleges, the universities, and the technical centers. These models had been developed in conjunction with the presidents and chancellors after numerous meetings and revisions. The funding models were used to develop the comparative needs of Arkansas institutions of higher education in terms of the average funding levels of institutions in the SREB (Southern Regional Education Board) region. For the first time, Arkansas's funding formulas for two-year colleges and universities will be based in part on end-of-term productivity. Working with Governor Beebe's staff, legislators, presidents and chancellors, the Department of Higher Education has developed a plan for including the end-of-term SSCH in determining institutions' need for funding. The plan has received the consensus of the presidents and chancellors, and Governor Beebe has publicly advocated including the end-of-term SSCH in the funding for higher education as one measure of productivity. For the 2009-11 biennium, need for funding will be determined using ninety (90) percent of the census date need and ten (10) percent of the end-of-term need. At this April 2008 meeting the Arkansas Higher Education Coordinating Board approved proposing to the General Assembly two changes to the university funding formula. These changes were proposed by the the Department of Higher Education to the AHECB after receiving unanimous approval by the presidents and chancellors at their April 1st meeting. ADHE staff reviewed the justification requests submitted by the non-formula entities and prepared preliminary funding recommendations based upon those requests. After making preliminary recommendations, the staff conducted budget meetings with each non-formula entity. After the conclusion of all budget meetings, final recommendations were made in light of the appeals heard during the budget meetings. The difference between the funding model determined needs of the entities compared to the Fiscal 2009 appropriations was $192 million, a 24.3 percent increase. It should be emphasized that the funding needs of the institutions are the funds needed to bring Arkansas higher education to the average funding level of the SREB region. The AHECB operating recommendations include: restoration of the funding appropriations lost for 2008-09 when the revenue forecast was reduced; a five (5) percent increase in General Revenue funding for 2009-10, a three (3) percent increase in General Revenue funding for 2010-11, and additional non-formula funding for economic development purposes. Restoration of the 2008-09 original appropriation requires $34.8 million. The five (5) percent increase in general revenue funding amounts to $36.6 million. An additional $5.6 million in non-formula funding is to fund ADTEC (Arkansas Delta Training and Education Consortium), ADWIRED (Arkansas Delta Workforce Innovations for Regional Development) and the Crossroads Coalition; UALR's Nanotechnology Center, salary equity for Arkansas Archeological Survey (AAS), a partial restoration of services provided by the Criminal Justice Institute (CJI), the Arkansas Research and Education Optical Network (ARE-ON), and sufficient additional funding for other non-formula entities to ensure continuing level funding. (Contains 11 tables.) [For Volume 2, see ED511313.]