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.

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