National Center for Higher Education Management Systems3035 Center Green Drive, Suite 150Boulder, Colorado 80301

Paying for Results – Performance Funding

2012 Complete College Ohio ConferenceColumbus, OH

November 13, 2012

The Management Cycle of the Past

State

Institution

Institution

Institution

Goal-Setting

ResourceAllocation

Assessment

The Management Cycle Now

State

State

State

Institution

Institution

Institution

Goal-Setting

ResourceAllocation

Assessment

Why the Renewed Interest in Outcomes-Based Funding

• An increase in the number of states defining statewide goals for higher Education

• Outcomes-based funding is the most direct way of linking state funding to these goals

• An alternative to micromanagement – a way to negotiate autonomy with accountability

Outcomes-Based Funding is Not a New Phenomenon

• Enrollment-based funding is a form of outcomes-based funding – it rewards increased access

• What is new is the shift– From a focus on access– To a focus on student success and other outcomes

• A reminder – the importance of tuition and fee revenues to institutions continues to reinforce the importance of access

The Elements of Finance Policy

Students Institutions-Sectors

Operating Support --Outcomes-Based Funding as One

Component

StudentAid

Tuition & Fees

Scholarships &Waivers

Pell& Tax Credits

FederalGovernment

StatesPhilanthropy & Other Sources

StudentAid

Graduates

Currently in the Third Cycle of Outcomes-Based Funding

Round 1 1975 – 1984

Round 2 1985 – 2004

Round 3 2005 - Present

Round 1

• Tennessee breaks new ground• Initially 2%, then 5.4% of each institution’s

appropriation tied to performance• Rewards encouraged good practices rather than

outcomes– Accreditation of programs– Building data capacity– Using national assessments where available– Etc.

• Continued in new model as the Quality Assurance Component

Round 2

Numerous states tried it– California CCs– Florida CCs*– Illinois– Kentucky– Missouri– Ohio

– Oklahoma*– Pennsylvania(PASSHE)

*– South Carolina– South Dakota– Tennessee*

*Still in effect.

Most Faded Away for One or More Reasons

• Right idea but faulty implementation– Too complex – too many elements– Insufficient data – unavailable or unreliable– Didn’t recognize different institutional missions – one

size fits all– Imposed without institutional consultation/buy-in

• Done for the wrong reasons– A resource acquisition device – abandoned when

budgets were tight– An end in itself – not a means to promote goal

attainment

Round 3

The Current State of Development & Implementation

Outcomes-Based Funding 3.0: State Activity

Different states have constructed their performance funding models to reward production

of different combinations of outcomes.

But they have one element in common – increasing the number so students who

successfully complete a postsecondary program of study.

There is every reason for Ohio to follow suit.

Can quibble about the specific goal, but it is hard to argue that Ohio colleges and

universities must produce more – many more – college graduates than is currently the case.

Percent of Adults with an Associate Degree or Higher by Age Group – State, U.S. & Leading OECD Countries, 2010

Source: OECD, Education at a Glance 2012, U.S. Census Bureau, 2010 American Community Survey One-Year Public Use Microdata Sample

File

15

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Percentage of Jobs in 2018 that Will Require a Postsecondary Education, by State

slide 16

70 7068

67 6766 66 66

65 6564 64 64 64 64 64

63 6362 62 62 62 62 62

61 61 61 61 6159 59 59 59 59

58 5857 57 57

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OR NY

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National Average = 63%

Source: Georgetown University Center on Education and the Workforce,Projections of Jobs and Education Requirements through 2018; June 2010

Closing the Gap: Annual Percent Increase in Credential Production Needed to get to 60% by

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The Price of Inaction

slide 19

Observation 1

The completion gap can’t be closed by– Improving high school completion and college

participation of recent high school grads to best in the nation levels

– Continuing business-as-usual inside higher education

slide 20

slide 21

slide 22

Observation 2

The completion gap won’t be closed even if– High School completion and college participation rates of

recent high school graduates are improved to best in nation levels

And

– Those students graduate from college at rates equal to best in the nation

slide 23

slide 24

slide 25

Observation 3

The completion gap can be fully closed only if a very large number of adults enroll in colleges and complete a postsecondary program of study.

slide 26

slide 27

slide 28

But does outcomes based funding really work?

– In most states it is too early to say– But the evidence is starting to trickle in– The evidence suggests that it promotes

improvement

slide 29

Changes from 2011-12 to 2012-13 in the Three-Year Average Funding Formula Data,

Community Colleges (THECB)

CHSCC CLSCC COSCC DSCC JSCC MSCC NASCC NESCC PSCC RSCC STCC VSCC WSCCTotal Difference + + + + + + - + + + - + +-

Students Accumulating 12 hrs + + - + - - + + + + + + +Students Accumulating 24 hrs + + + + + + + + + + + + +Students Accumulating 36 hrs + + + + + + + + + + + + +

Dual Enrollment + + + + + + + + + + + + +Associates + + + + + + + + + + + + +

Total Certificates - + - + - + - - + - - - -Job Placements + + + + + - - + + - - - -

Remedial & Developmental Success + + + + + + + + + + + + +Transfers Out with 12 hrs + + + - + + + - - + + - +

Workforce Training (Contact Hours) + - - - - + - + + + - + +Awards per 100 FTE - - - - - - - - - - - - -

*Data represents a three year average; 2011-12 Formula uses data from 2007-08 through 2009-10; 2012-13 Formula uses data from 2008-09 through 2010-11.

Weighted Outcomes Changes*

Changes from 2011-12 to 2012-13 in the Three-Year Average Funding Formula Data,

Universities (THECB)

APSU ETSU MTSU TSU TTU UM UTC UTK UTMTotal Difference + + + - + + + + +-

Students Accumulating 24 hrs + + + - + + + - -Students Accumulating 48 hrs + + + - + + + - +Students Accumulating 72 hrs + + + - + + + - +

Bachelors and Associates + + + - + + + + +Masters / Ed Specialists + + + - - + + + -

Doctoral / Law Degree + + + + - + + + 0Research and Service + - + + + + - + -

Transfers Out with 12 hrs + + - + - - + - -Degrees per 100 FTE - - - - - - - + -

Six-Year Graduation Rate + - + - + - + + +*Data represents a three year average; 2011-12 Formula uses data from 2007-08 through 2009-10; 2012-13 Formula uses data from 2008-09 through 2010-11.

Weighted Outcomes Changes*

Washington Community Colleges Total Points per College

slide 32

% Change 07–09 % Change 09–10 % Change 10–11 % Change 07–11College 001 19 25 -18 22College 002 16 12 5 37College 003 54 13 2 78College 004 27 4 -5 26College 005 20 14 -1 35College 006 4 6 3 14College 007 22 26 -4 48College 008 32 24 -3 59College 009 25 -12 3 14College 010 27 8 1 38College 011 22 18 -5 37College 012 7 12 -9 9College 013 19 10 1 32College 014 30 24 -6 51College 015 17 12 -2 29College 016 33 33 -6 66College 017 18 16 6 46College 018 37 -4 3 36College 019 28 6 2 37College 020 5 9 5 20College 021 12 11 1 25College 022 12 20 -3 30College 023 12 4 3 20College 024 28 13 -13 26College 025 15 8 -9 13College 026 12 12 12 40College 027 13 0 -10 3College 028 28 0 -6 21College 029 17 13 0 33College 030 22 13 12 54College 031 11 15 1 29College 032 3 1 3 6College 033 10 20 3 36College 034 19 17 -1 38Average per College 19 12 -1 31

Source: CCRC-IHELP Washington State Student Achievement Initiative: Achievement Points Analysis for Academic years 2007-2011

Ohio Community CollegesChanges in Performance on Student Success Factors, 2009-10

slide 33

Institution 1 2 3 4 5 6 71 + + + + + + +2 + + + + + + +3 + + + + + + +4 + + + + + - +5 + - - + - - =6 + + + + + + +7 + + - + + + +8 + + + + + - +9 + + + + + + +

10 + + - + + + +11 + + - + + + -12 + + + + + + +13 + + + + + + +14 + + - + + + +15 + + - + - + +16 + + + + + + +17 + + + + + + +18 + + - + + + +19 + + + + + + +20 + + + + + + +21 + + + + + + +22 + + - + + - +23 + + + + + + +

Success Categories

For More Information Contact:

Dennis Jones

dennis@nchems.org303-497-0301

National Center for Higher Education Management Systems

http://www.nchems.org/NCHEMSCLASPOhioModel.swf