Illinois Higher Education Performance Funding Model

IBHE Presentation 1

Illinois Higher EducationPerformance Funding Model

Steering Committee MeetingNovember 13, 2013

Dr. Alan Phillips

Topics of Discussion

• Update on National Trends – Lumina Conference• Metrics Review• FY15 Performance Funding Recommendations

– Funding Model

– Amount Allocated to Performance

IBHE Presentation 2

Update on National Trends

IBHE Presentation 3

Lumina Performance Funding Conference• Purpose of the Conference was to compare and

contrast performance funding models across different states.

• Conference was attended by representatives from:

– Arizona– Illinois– Indiana– Kentucky– Ohio

IBHE Presentation 4

– Tennessee– Wisconsin– Lumina Foundation– HCM Strategists

Indiana

• In Indiana, higher education funding to the institutions is in support of the state’s goals.

• One model that applies to all institutions with variations in metrics for Research Campuses, Non-Research Campuses, and 2-Year Institutions.

– Degree Completion (55%), Progression Points (15%), and Productivity Metrics (30%)

– Six-years of Data

– The University School of Medicine and Dentistry is Excluded

– Set-Aside is 5% in FY13, 6% in FY14, and 7% in FY15

IBHE Presentation 5

Performance Funding Conference(Discussion Points)

Tennessee

• Tennessee has had had various iterations of performance funding models since 1979 (Enrollment Plus). Current Outcomes Based model in place since 2011 with a three year phase-in.

• Separate models for two and four-year institutions tied to the state Master Plan.

• Rational Allocation Model - 100% Allocation (includes Fixed Cost Allocation (20%) and QA Score (5%))

• Every dollar they receive for next year will be based on what they do this year.

• If state funding is level, the institutional variation from year to year can be as high as +/- 5%.

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• Although there are many similarities, every state’s situation is different.

• Most states that transitioned to a performance funding model started with an enrollment model.

• The availability and quality of data (to include definitional and personnel turnover issues) is a challenge for all of the states.

• Some states incorporate workforce data into their model from either an alumni survey or existing workforce database.

• Only certificates approved by the Board of Regents are counted, and they only count the highest level achieved.

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• Even though a few states have incorporated a quality component into their model, the effective assessment of quality continues to be a major challenge.

• The concern is that to increase performance, the institutions will lower quality, but this does not seem to be the case.

• None of the states see a reduction in quality at any of their institutions, and the college and university presidents say that it is not a problem for reasons listed below:

– Oversight (State, Administration, Faculty)

– Accreditation

– Perception of the institution (Want to be viewed as a quality institution).

IBHE Presentation 8

Performance Funding Conference(Quality)

• How much funding should be allocated to institutions based on performance?

• It depends – Performance funding forces changes in business processes to achieve desired outcomes, and you want to allocate enough to change behavior, but every state’s situation is different.

• It is very difficult, if not impossible, to tie any overall improvement in performance solely to the implementation of performance funding.

• You can, however, identify programs and initiatives that have been put into place to improve outcomes as a result of performance funding.

IBHE Presentation 9

Performance Funding Conference(Performance and Funding)

Metric Review

IBHE Presentation 10

Metric Review(Bachelors Degrees)

University* FY13 FY14 FY15 ChangeUIUC 7,249 7,388 7,497 139 / 109UIC 3,329 3,417 3,561 88 / 144NIU 3,921 4,064 4,029 143 / -35

SIUC 4,240 3,977 3,881 -263 / -96ISU 4,203 4,276 4,388 73 / 112SIUE 2,125 2,176 2,201 51 / 25WIU 2,501 2,433 2,378 -68 / -55EIU 2,322 2,290 2,243 -32 / -47NEIU 1,494 1,606 1,649 112 / 43CSU 656 750 762 94 / 12GSU 851 844 905 -7 / 61UIS 638 643 661 5 / 18


* School order based on Carnegie Classification and Enrollment.

Metric Review(Masters Degrees)

University FY13 FY14 FY15 ChangeUIUC 2,638 2,950 3,131 312 / 181UIC 1,786 1,982 2,052 196 / 70NIU 1,552 1,568 1,582 16 / 14SIUC 933 970 962 37 / -8ISU 682 752 800 70 / 48SIUE 687 720 737 33 / 17WIU 633 677 677 44 / 0EIU 590 622 590 32 / -32NEIU 568 541 539 -27 / -2CSU 308 278 249 -30 / -29GSU 999 905 795 -94 /-110UIS 597 537 563 -60 / 26


Metric Review(Doctoral and Prof Degrees)

University FY13 FY14 FY15 ChangeUIUC 1,055 1,084 1,127 29 / 43UIC 862 910 930 48 / 20NIU 209 200 195 -9 / -5SIUC 325 331 345 6 / 14ISU 50 51 53 1 / 2SIUE 74 122 121 48 / -1WIU 8 9 6 1 / -3 EIU 0 0 0 0 NEIU 0 0 0 0CSU 1 2 25 1 / 23GSU 0 10 23 10 / 13UIS 3 3 1 0 / -2


Metric Review(Undergrad Degrees Per 100 FTE)

University FY13 FY14 FY15 ChangeUIUC 22.4 22.3 22.5 -0.15 / 0.20UIC 22.2 21.7 22.2 -0.57 / 0.50NIU 23.2 24.9 25.4 1.70 / 0.50SIUC 32.8 32.0 31.7 -0.84 / -0.30ISU 24.9 24.8 25.2 -0.17 / 0.40SIUE 21.6 21.1 21.1 -0.50 / 0.00WIU 24.1 24.5 24.1 0.35 / -0.40 EIU 23.7 24.1 24.3 0.37 / 0.20 NEIU 22.0 22.8 23.0 0.80 / 0.20CSU 16.5 17.4 17.5 0.88 / 0.10GSU 45.7 39.5 39.7 -6.20 / 0.20UIS 28.0 25.7 25.8 -2.28 / 0.10


Metric Review(Performance Values)*

FY13 FY14 FY15 Change Net $ ChangeUIUC 14,815 17,402 18,194 2,587/ 792 $71,400 / $110,257UIC 11,565 15,493 11,888 3,928 /-3,605 $25,600 / -$31,548NIU 3,870 4,086 4,620 216 / 534 -$57,600 / -$27,977 SIUC 4,789 6,199 4,636 1,410 /-1,563 -$105,000 / -$93,349ISU 3,435 3,762 3,723 327 / -39 $6,800 / -

$16,605SIUE 2,438 2,914 2,685 476 / -229 -$4,700 / -$19,544WIU 2,287 2,703 2,818 416 / 115 $7,300 / $3,997 EIU 2,206 2,565 2,598 359 / 33 $37,000 /

$26,471 NEIU 1,941 2,282 2,476 342 / 194 $39,800 /

$45,960CSU 1,180 1,434 1,546 254 / 112 -$42,800 / -$39,409GSU 1,079 1,473 1,780 394 / 307 $24,500 /

$45,806UIS 566 1,131 1,199 566 / 68 -$2,300 / -

$4,058


University

It is possible to improve your overall performance from year to year, and still lose funding based on performance.


Performance Funding Model (FY15)

4-Year Public Universities

Performance Funding Model Steps(4-Year Public University)

• Step 1 – Identify the performance measures or metrics that support the achievement of the state goals.

• Step 2 – Collect the data on the selected performance measures.• Step 3 – Award an additional premium for the production of certain

desired outcomes such as completions by underserved or underrepresented populations

• Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

• Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution.

• Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results.

• Step 7 – Use the final Weighted results (or Total Performance Value) - excluding high cost entities - to distribute performance funding.

• Step 8 – Add an adjustment factor (Carve-out) for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools).


Performance Measures


Step 1 – Identify the performance measures or metrics that support the achievement of the state goals.

Step 2 – Collect the data on the selected performance measures (3-year averages)

Measure Source• Bachelors Degrees (FY10-12) IPEDS• Masters Degrees (FY10-12) IPEDS• Doctoral and Professional Degrees (FY10-12) IPEDS• Undergraduate Degrees per 100 FTE (FY10-12) IPEDS• Research and Public Service Expenditures (FY11-13) RAMP• Graduation Rate - 150% of Time (Fall 05-07 Cohort)* Institutional

Data• Persistence-Completed 24 Semester Hours in One Year (FY10-12)* Institutional

Data• Cost per Credit Hour (FY10-12) Cost Study• Cost per Completion (FY10-12) Cost Study*Incorporate transfers per the CCA transfer category definitions

(i.e. 30 or fewer credits, 31 to 59 credits, or 60 or more credits).

Sub-Categories


Sub-Category Weight*• Low Income (Pell/Map Eligible) 40% - Institutional

Data• Adult (Age 25 and Older) 40%• Hispanic 40%• Black, non-Hispanic 40%• STEM & Health Care (by CIP Code) 40% - HLS + CIP 51

Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations

Sub-Categories


• Only weighted Bachelors, Masters and Doctorate and Professional Degrees• Did not weight Undergraduate Degrees per 100 FTE

- To avoid overweighting sub-populations throughout the model, the percentage weight given to the subcategories would have to be reduced from the current 40%. Otherwise, schools with high numbers of Master and Doctoral students graduating from the subpopulations would be negatively impacted, as credit given to these populations is reduced.

- The change would benefit smaller masters degree schools but would disproportionately harm research institutions.

• Did not weight Cost per Completion- It is only possible to weight the completion portion of the ratio, a weighted cost

is unavailable. Weighting completions without weighting cost does not provide an accurate measure of differential costs to educate particular sub groups.

Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations

Scaling Factors

• Averaged the measures across all of the institutions.• The average number of bachelors degrees will serve as the

base value.• Determine a scaling factor that will normalize the rest of the

averages to the average number of bachelors degrees.• Adjust the scaling factors as appropriate (i.e. Masters &

Doctorates).• Multiply all of the initial data by the scaling factor to

normalize the data.


Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

Scaling Factors


Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

Measure Universities 1-12 (Avg) Scaling Factor Adjusted Scaling Factor• Bachelors Degrees (FY10-12)• Masters Degrees (FY10-12)• Doctoral and Professional Degrees (FY10-12) • Undergraduate Degrees per 100 FTE (FY10-12)• Grad Rates 150% of Time (Fall 05-07 Cohort)• Persistence (Completed 24 Semester Hours) (FY10-12)• Cost per Credit Hour (FY10-12) • Cost per Completion (FY10-12)• Research and Public Service Expenditures (FY11-13)

2,8461,056

2362546

1,511353

37,129124,059,383

1.02.7

12.1113.0

60.31.88.1.07

.00002

112

20050

2-8

-.05.00005

Performance Measure Weights


Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution.

Doctoral/ Research-Very High Research-High Research

Measure• Bachelors Degrees (FY10-12)• Masters Degrees (FY10-12)• Doctoral and Professional Degrees (FY10-12) • Undergraduate Degrees per 100 FTE (FY10-12)• Grad Rates 150% of Time (Fall 05-07 Cohort)• Persistence (Completed 24 Semester Hrs) (FY 10-12)• Cost per Credit Hour (FY10-12) • Cost per Completion (FY10-12)• Research /Public Service Expenditures (FY11-13)

UIUC UIC NIU SIUC ISU18.0% 18.0% 28.0% 28.0% 33.0%15.0% 15.0% 15.0% 15.0% 22.0%13.0% 13.0% 8.0% 8.0% 5.0%

5.0% 5.0% 13.0% 13.0% 16.0%3.0% 3.0% 4.0% 4.0% 5.0%3.0% 3.0% 4.0% 4.0% 5.0%1.0% 1.0% 1.5% 1.5% 2.0%1.0% 1.0% 1.5% 1.5% 2.0%

41.0% 41.0% 25.0% 25.0% 10.0%100.0% 100.0% 100.0% 100.0% 100.0%

Performance Measure Weights


Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution.

Masters Colleges & Universities (Large)

Measure• Bachelors Degrees• Masters Degrees• Doctoral and Professional Degrees• Undergraduate Degrees per 100 FTE • Grad Rates 150% of Time • Persistence (Completed 24 Semester Hours) • Cost per Credit Hour • Cost per Completion• Research & Public Svc Expenditures

SIUE WIU EIU NEIU CSU GSU UIS35.0% 39.0% 38.5% 38.5% 39.0% 46.0% 43.0%25.0% 23.0% 24.0% 24.0% 23.0% 30.0% 25.0%

2.0% 0.5% 0.0% 0.0% 0.5% 0.5% 0.5%16.0% 16.0% 16.0% 16.0% 16.0% 8.0% 10.0%

3.0% 3.0% 3.0% 3.0% 3.0% 0.0% 3.0%3.0% 3.0% 3.0% 3.0% 3.0% 6.0% 3.0%2.0% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%2.0% 4.5% 4.5% 4.5% 4.5% 4.5% 4.5%6.0% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Performance Value Calculation


Step 6 – Multiply and Sum the Scaled Data times the Weight to produce the Performance Value for each institution.

Measure• Bachelors Degrees• Masters Degrees• Doctoral and Professional Degrees• Undergraduate Degrees per 100 FTE • Grad Rates 150% of Time • Persistence (Completed 24 Semester Hours) • Cost per Credit Hour • Cost per Completion• Research & Public Svc Expenditures

2,7221,012

2072546

1,511353

37,129124,059,383

2,8461,056

2362546

1,511353

37,129124,059,383

Data Data + Premium112

20050

2-8

-.05.00005

(Data+Premium)x Scale2,8461,056

4725,0002,3003,022

-2,824-1,8566,203

30.0%25.0%

5.0%10.0%

2.5%2.5%2.5%2.5%

20.0%100.0%

Total PerformanceValue

854 264

24 500

58 76

-71 -46

1,2412,898

xWeight = Scale

Performance Value Calculation


Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools)

• Step 1: Allocate performance set-aside funds based on and adjusted state appropriation that removes state funds for high cost entities.

• Step 2: Calculate performance funding allocations per funding model using adjusted performance set-aside amount.

• Step 3: Add back funds to institutions with high cost entities by applying performance funding set-aside percentage (i.e. .5% for FY14) to the high cost entities state appropriation.

• Step 4: Total allocated funds equal performance funding without high cost entities plus set-aside for high cost entities.

High Cost Entities Adjustment• Step 1: Allocate performance set-aside funds based on and adjusted state appropriation that

removes state funds for high cost entities.– Example: Total State Appropriation – High Cost Entities = Funds Allocated via Performance

$2.0 billion – $250 million = $1.75 billion x 0.5% (performance set-aside for FY 14) = $8.75 million

• Step 2: Calculate performance funding allocations per funding model using adjusted performance set-aside amount.

– Reallocate $8.75 million based on performance to higher education institutions per performance model

• Step 3: Add back funds to institutions with high cost entities by applying performance funding set-aside percentage (i.e. .5% for FY14) to the high cost entities state appropriation.

– Example: University A – High Cost Entity Appropriation = $100 million x 0.5% = $0.5 million University B – High Cost Entity Appropriation = $150 million x 0.5% = $0.75 million

• Step 4: Total allocated funds equal performance funding without high cost entities plus set-aside for high cost entities.

– Example: University A - $1.25 M (performance funds) + $0.5 M (high cost add back) = $1.75 M University B - $2.0 M (performance funds) + $.075 M (high cost add back) = $2.75 M

University C - $0.75 M (performance funds)



Percentages for Distribution

Total Performance Value 10,840 4,435 3,200 17,302Percentage of Total 58.7% 24.0% 17.3% 100%

Distribution: Pro Rata $587,000 $240,000 $173,000 $1,000,000

University 1 University 2 University 3 Total

Funding AllocationBased on Performance

Step 8 – Use the Weighted results (or Total Performance Value) to distribute funding based on a Pro Rata Share of the total amount of funds set aside for performance funding.


Preliminary FY15 Performance Funding Allocation

($ in thousands)% Change

Public Universities $ 1,232,192.0 $ 6,161.0 $ 6,161.0 $ 0.0 $ 1,232,192.0 $ (0.0) (0.00) %Chicago State University 37,262.8 186.3 146.9 -39.4 37,223.4 (39.4) (0.11) Eastern Illinois University 44,078.1 220.4 246.9 26.5 44,104.6 26.5 0.06 Governors State 24,675.0 123.4 169.2 45.8 24,720.8 45.8 0.19 Illinois State University 74,089.2 370.4 353.8 -16.6 74,072.6 (16.6) (0.02) Northeastern Illinois University 37,847.4 189.2 235.2 46.0 37,893.4 46.0 0.12 Northern Illinois University 93,412.6 467.1 439.1 -28.0 93,384.6 (28.0) (0.03) Western Illinois University 52,755.1 263.8 267.8 4.0 52,759.1 4.0 0.01

Southern Illinois University ** 204,584.1 1,022.9 910.0 -112.9 204,471.2 (112.9) (0.06) Carbondale 145,219.3 726.1 632.7 -93.3 145,126.0 (93.3) (0.06) Edwardsville 59,364.8 296.8 277.3 -19.5 59,345.3 (19.5) (0.03)

University of Illinois *** 663,487.7 3,317.4 3,392.1 74.6 663,562.3 74.6 0.01 Chicago 307,296.4 1,536.5 1,504.9 -31.5 307,264.9 (31.5) (0.01) Springfield 23,602.9 118.0 114.0 -4.1 23,598.8 (4.1) (0.02) Urbana/Champaign 332,588.4 1,662.9 1,773.2 110.3 332,698.7 110.3 0.03

* FY2015 Set Aside is based on a 0.5% reallocation of the final FY2014 budget level. ** SIU Administration is allocated on a pro-rated basis to each campus, SIU School of Medicine is included with the Carbondale Campus.*** UI Administration is allocated on a pro-rated basis to each campus.

FY 2015 PBF Allocation with 0.5% Performance Funding Set-Aside

FY2015 ModelFY2014 AppropriationPerformance Funding FY2015

FY2014 - FY 2015Appropriation Set Aside* Performance Funds Net Change 0.5% Set-Aside $ Change


Preliminary FY15 Performance Funding Allocation

($ in thousands)% Change

Public Universities $ 1,232,192.0 $ 24,643.8 $ 1,256,835.8 $ 24,643.8 2.00 %Chicago State University 37,262.8 587.6 37,850.4 587.6 1.58 Eastern Illinois University 44,078.1 987.4 45,065.5 987.4 2.24 Governors State 24,675.0 676.7 25,351.7 676.7 2.74 Illinois State University 74,089.2 1,415.4 75,504.6 1,415.4 1.91 Northeastern Illinois University 37,847.4 940.8 38,788.2 940.8 2.49 Northern Illinois University 93,412.6 1,756.3 95,168.9 1,756.3 1.88 Western Illinois University 52,755.1 1,071.1 53,826.2 1,071.1 2.03

Southern Illinois University * 204,584.1 3,640.1 208,224.2 3,640.1 1.78 Carbondale 145,219.3 2,531.0 147,750.3 2,531.0 1.74 Edwardsville 59,364.8 1,109.1 60,473.9 1,109.1 1.87

University of Illinois ** 663,487.7 13,568.4 677,056.1 13,568.4 2.05 Chicago 307,296.4 6,019.7 313,316.1 6,019.7 1.96 Springfield 23,602.9 455.8 24,058.7 455.8 1.93 Urbana/Champaign 332,588.4 7,092.8 339,681.2 7,092.8 2.13

* SIU Administration is allocated on a pro-rated basis to each campus, SIU School of Medicine is included with the Carbondale Campus.** University of Illinois Administration is allocated on a pro-rated basis to each campus.

FY 2015 PBF Allocation with 2% in Additional Funds Allocated Via Performance

FY2014Performance Fuding FY2015

Appropriation Performance Funds 2% New Dollars $ ChangeFY 2015 Model Appropriation FY2014 - FY 201

Results for FY15

• Performance funding values increased for eight of the twelve four-year public universities from FY14 to FY15.

• Assuming a .5% funding set-aside and level GRF Funding:

– Variance in funding allocations due to performance ranged from +.19% to -.11%.

– The actual funding amount variance ranged from +$110.3K to -$93.3K.


Results for FY15

• Performance funding values increased for eight of the twelve four-year public universities from FY14 to FY15.

• Assuming a 2.0% funding increase in addition to level GRF Funding:

– Variance in funding allocations due to performance ranged from +1.58% to +2.74%.

– The actual funding amount variance ranged from +$.458M to +$6.0M.


Timelines


Next Steps

• 10 Dec 13 - IBHE Board Meeting• 19 Dec 13 - Refinement Committee Meeting • 14 Jan 14 - Steering Committee Meeting• 4 Feb 14 - IBHE Board Meeting (IBHE Higher Education

Budget/Performance Funding Recommendation to Board)


Questions?


Documents

Illinois Higher Education Performance Funding Model