Of Carrots and Sticks: Higher Education Performance Funding

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Of Carrots and Sticks Higher Education
Performance Funding

• Higher Education Government Relations Conference
• December 12, 2008
• Brenda Norman Albright

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OUTCOMES?

• SHOULD OUTCOMES BE
• TIED TO DOLLARS?

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Outcomes Tied To Dollars?

• Usually externally-driven, e.g.,
• Legislative resolution in Louisiana to tie 25
  of funding to performance

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Political Leaders
REALITIES What do leaders political leaders
expect from Higher Education ? A B C and C
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Some history of performance funding

• Performance Funding 1.0

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PERFORMANCE FUNDING AND THE BUDGET

• Most states use performance in the budget
• about a dozen states have performance funding
  with direct linkage of funds and results
• frequently performance funding is legislatively
  mandated

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Performance Funding

• Usually 1-2 of budget
• Some institutions have used and abandoned
  performance funding, e.g., South Carolina and
  Missouri Why?
• Tennessee, Ohio and Florida have track records

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Tennessee Performance Funding 1.0

• Long-standing formula system plus
• Institutions earn up to 5 of funding based on
  performance
• - General Education and Major File Assessments
  and Pilots and Implementation
• - Program review and Accreditation
• - Satisfaction Surveys
• - Transfer and Articulation
• -Retention/persistence, job placement

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Ohios Performance Funding 1.0

• Long-standing formula system plus
• Mission-driven performance includes
• - Access Challenge Limits tuition increases
• - Success Challenge Promotes degree
  completion by at risk students and timely
  completion
• - Jobs Challenge Provides focused grants to
  provide better workforce
• -Research Challenge Provides incentives for
  external research

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New Funding Strategies

• Overarching strategy
• A paradigm shift - rather than the State meeting
  the institutions needs, the college and
  universities meets the States needs

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Performance Funding 2.0

• A number of states are changing funding systems
  to focus
• on degrees and course completions
• Focus is international and state competitiveness
  and efficiency

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Examples

• Texas
• Ohio
• Missouri
• Indiana
• Florida Community Colleges
• Oklahoma

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Texas Performance Funding 2.0 on the margin

• Long-standing formula approach (separate for two
  and four year)
• New focus on outputs and categorical funding

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Texas Outcomes

• Change funding to completed hours (phased-in)
• Texas legislative requirement on course drops
• Add performance focusing on degrees and
  certificates (100 million for 2-year, 4 of
  overall appropriation)

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Texas Categorical Funding

• Additional funding to accommodate dramatic growth
• Developmental Education
• Alternative Teaching Certificates
• Nursing Shortage Reduction

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Ohio Performance Funding 2.0 -comprehensive

• Three separate formulas based on mission
• E. g., the university main campus allocations
  will shift, over time, to a distribution based on
  
• - course completions,
• - degree completions,
• - contributions to the state's strategic plan.
• Course and degree completions will be weighted by
  actual cost.
• at-risk students will be weighted more heavily
  than others

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Missouri

• Caring for Missouris citizens
• - Initiative to produce more health care
  professionals

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PROS AND CONS

• Builds credibility and support
• Incentive to improve
• Focus on quality and Alternative to growth

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PROS AND CONS

• Design is difficult
• Control vs. autonomy
• Setting goals too low?
• What is quality?

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Lessons Learned

• Clarify vision and goals
• Focus on Improvement
• Connect Funding with Strategic Plan and Direction

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Lessons Learned

• Tailor the program to fit each states culture
  and institutions needs
• Promote collaboration
• Expect trial and errors and mistakes