Financing Change * Performance Funding and the Larger

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SHEEO Leadership Seminar
Seattle, WA
July 11, 2012
Jeff Stanley
Dennis Jones
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Disconnect between higher education funding and
statewide priorities
Link dollars more directly to these priorities:
o More graduates
o High-needs fields
o At-risk students
o Meeting needs of state
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Higher completion levels/graduation rates
o Reduced time to degree
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Institutional changes producing higher performance/greater
student success
o Improved remediation
o Alternative delivery options
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Increased awareness of state priorities
Increased awareness of institutional performance
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* indicates states pursuing new performance funding models
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Arkansas*
California*
Colorado*
Connecticut
Florida*
Idaho
Illinois*
Kansas
Kentucky*
Louisiana*
Minnesota
Mississippi*
Missouri*
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New Jersey
New Mexico*
North Carolina
Ohio*
Oklahoma*
Oregon
Pennsylvania*
South Carolina
South Dakota
Tennessee*
Texas*
Virginia*
Washington*
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Multiple Priorities: Often times misaligned. No clear overall
objective or goal.
Complex: Too many metrics.
Insufficient data: Metrics were often not measurable or
data sources were unreliable.
Lack of institutional buy-in: Not consulted in design process.
No accounting for differences between institutions.
Competed with access agenda: Incentivized “gaming”
through increasing admissions standards/did not provide
“at-risk” priority.
Add-on or insignificant amount of funding: Did not drive
institutional priorities. First to go in tight budget times.
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1.
Get agreement on goals before putting performance funding in
place
o Goals need to be the driving force for performance funding – not a
rhetorical afterthought
2.
Don’t construct performance metrics too narrowly
o Important that all institutions have an opportunity (not a guarantee) to
benefit by excelling at their different missions.
3.
Design the funding model to promote mission differentiation –
use it to sharpen distinctions, not blur them
o Use different metrics for different institutions
Or
o Create different pools of resources for different types of institutions –
and allow institutions to compete for resources in only one pool
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4.
Include provisions that reward success in serving underserved
populations
Among the possibilities
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5.
Low income
Minority
Adult
Academically at risk
Limit the numbers of outcomes to be rewarded
o No more than 4 or 5
o Too many and both institutional focus and the communication value are lost
6.
Use metrics that are unambiguous and difficult to game
For example:
o Numbers of graduates
Not
o Graduation rates
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1.
2.
Make the performance funding pool large enough to
command attention
Reward continuous improvement, not attainment of a fixed
goal
o For each institution, establish most recent year as baseline
o Allocate performance funds on the basis of year-over-year
improvements
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Include a phase-in provision
Employ stop-loss, not hold-harmless provisions
Continue performance funding in both good times and bad
Put in place a rigorous (outcomes-based) approach to
assessing quality and monitor results on an ongoing basis
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States
Philanthropy &
Other Sources
Student
Aid
Operating Support
Student
Aid
Students
Tuition & Fees
Scholarships &
Waivers
Institutions
-Sectors
Pell
& Tax Credits
Graduates
Federal
Government
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1.
2.
Doing business as usual, what would it cost to reach
attainment goal?
Presuming performance funding worked in such a way that
all institutions were on the “efficient surface” of
productivity?
o How much would total cost be reduced?
o How much would remain to be financed?
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Undergraduate Credentials Awarded per 100 FTE Students
NH
WA
24
NJ
IL
The efficient surface
FL
KS
CA
MD
NY
OR
UT
IA
ME
VAMI
RI
US
MN
OK ND
TX
VT
WI
SC
IN
MS
NE
KY
MT MA
WV TN
PA
AR
MO
ID
GA
AL
20
CO
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12
HI
NC
NM
DE
AK
LA
SD
CT
NV
OH
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2,000
6,000
10,000
14,000
State, Local, and Tuition and Fee Revenues (2008)
18,000
22,000
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Source: NCES, IPEDS 2007-08 Completions Survey
3.
What combination of tuition, state-funded student aid, and
additional state appropriations to institutions serve to
o
o
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4.
Provide the necessary resources to fund achieving the
achievement goal?
Keep higher education affordable to students?
Keep higher education affordable to taxpayers?
What are the options if it is concluded that none of the
options work?
o A larger role for the privates (for-profit and not-for-profit)?
o New public delivery models?
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