Tag: Performance Funding

Performance Funding For College Completion-Version 2.0

Over the years, 32 states have implemented some form of performance funding. This brief distinguishes between PF1.0, which involves a bonus on top of regular state funding, and PF2.0, which typically retains enrollments as one funding driver. Based on studies of PF1.0 (PF2.0 is still in its early days), performance funding  led to changes intended to improve student outcomes, but those changes didn’t work. The brief reviews obstacles and unintended impacts, then offers possible solutions. (Community College Research Center)

Big Business Calls For College Competition Through Performance Funding

Business groups back changes in higher ed funding
Ralph K.M. Haurwitz
© 2010 Austin American Statesman.

Competition is good.

That sums up the thinking by two major business groups in endorsing proposals by the Texas Higher Education Coordinating Board to revamp college and university funding and the state’s chief financial aid program.

The Texas Association of Business and the Governor’s Business Council, echoing recommendations last month by the coordinating board, urged state lawmakers to require public colleges and universities to compete for 10 percent of their funding from the Legislature on the basis of graduation rates, course completion and other measures of student success. The business groups also asked lawmakers Tuesday to give priority to low-income students with strong academic credentials over students with weaker academics in allocating the state’s Texas Grants.

Such changes are essential not only to improve the performance of higher education institutions but also to ensure the state’s economic prosperity, said Bill Hammond, president and CEO of the business association.

“For us, it’s about the ability to compete in the future,” Hammond said, noting that just over 30 percent of Texans 25 to 34 years old have at least an associate’s degree, but that nearly half of new jobs are expected to require at least a bachelor’s.

The groups’ support will be important for the coordinating board as it pursues its agenda at a business-friendly Legislature. Higher Education Commissioner Raymund Paredes has said his agency wants to reinvent public higher education in a way that is more cost- efficient and produces better academic results.

The Texas Association of Business represents more than 3,000 employers and 200 chambers of commerce. The Governor’s Business Council is a group of business leaders that, despite its name, has no formal connection with the governor’s office.

The two groups released a report with their recommendations at a conference they sponsored in Austin on Tuesday. Business and higher education leaders alike spoke of the need to “incentivize” course completion and to fund schools for “outputs” such as degrees awarded rather than “inputs” such as enrollment.

The report – “Reforming Higher Education: A Prerequisite for Continued Prosperity” – and various speakers sketched out some improvements as well as daunting challenges in Texas higher education. For example, the number of Hispanics earning degrees and certificates in Texas has increased 85 percent since 2000 but is still below targets to achieve parity with other demographic groups because of rapid growth in the Hispanic population, the report said.

Moreover, the educational pipeline in Texas leaks badly. Of 100 ninth-graders, about 14 earn a postsecondary degree within six years of high school, compared with the national average of about 20 , said Woody Hunt, chairman of the business council.

In the international arena, where a big state must also compete, Texas lags as well. On average, 56 percent of people 25 to 34 years old in Canada, New Zealand, South Korea and other countries with strong education systems hold a college credential, compared with the 30 percent of young Texans who have at least an associate’s degree.

The business groups stopped short of making any recommendations about overall state funding for higher education, although they called for an unspecified amount of state money to match locally raised public and private dollars to help postsecondary schools respond to business and community needs in their respective regions.

Tennessee Postsecondary Performance Funding Is Promising

By Patrick Callan

When business leaders and state higher education officials met with gubernatorial candidates last week, they were heartened to learn that both candidates supported the state’s new approach to funding public colleges and universities. Tennesseans should be pleased, as well.

Tennessee has long been a leader in performance-based funding. But this year, the state has taken a quantum leap by changing the financing of public higher education from bud gets based on the num­ber of students enrolled to a system that sup ports institutions for student progress and results in completing degrees. The innovative funding formula also earns high marks for supporting students currently under served by higher education and for addressing urgent workforce needs.

State leaders have agonized over how to ensure that public resources are tied to results (including student success in earning degrees) and to balance that approach by recognizing the different missions and student populations in the state. The finance formula rewards degree completion but gives institutions that serve larger percent ages of adult learners and low-income students additional support. Equally important, it weights funding for research universities to support their unique missions.

The new system recognizes that higher education is a crucial catalyst for bolstering the economy. Two-thirds of all new jobs are projected to require at least some college. To remain competitive with other states, Tennessee will need to increase the percent of its work force that is college-educated by 25 percentage points (from around 30 percent today to 55 percent by 2025).

Formula aids transparency

Unlike Tennessee, public higher education across much of the nation is responding to the economic crisis by raising tuition and limiting the avail ability of college and courses. This is exactly what Tennessee is working diligently to avoid.

The funding plan also helps community colleges meet their special responsibility of supporting students who need remediation and rewards two-year colleges for students who transfer to four-year colleges, streamlining costs for students, families and the state system as a whole.

The new formula took care to phase adjustments in over a number of years to limit potential hard ship on institutions. Higher education leaders should recognize that performance-based budgeting can strengthen the case for higher education in the allocation of limited state resources.

Public higher education, like every other sector of government, needs to be innovative and account able. Lawmakers who have long urged this kind of change should continue to support it. The formula is fair and increases transparency and account ability for spending and results.

At a time when resources are hard to come by, the plan uses the limited funds available to pay institutions for progress as they meet clear milestones aligned to state needs. This is exactly what public funding should be doing for public colleges and why elected officials, higher education leaders, and the public should support it.

Patrick Callan is president of the National Center for Public Poicy and Higher Education, an independent, non partisan organization that focuses on state policies to improve col­lege access and afford ability, student success and public accountability. Orginally published in Tennessee Today.