As the need for and the cost of higher education move in the same direction — up — an increasing number of lawmakers are looking to hold colleges more accountable for their outcomes.
According to the National Conference of State Legislatures, 30 states already have adjusted their higher education funding formula to include performance-based measures and four more are in the process of implementing similar practices. While it used to be enough to get a student onto campus, colleges now are being asked to make sure they succeed.
The shift seems to be here to stay, so how does it look so far?
All of the states that have adjusted their funding formulas to incorporate performance by individual colleges have done so with their own mix of metrics. In Arizona, for example, all schools get a base level of funding, but beyond that, dollars are allocated based on degrees awarded and student progress toward degree completion (as measured by credit hours). This formula, notably, does not take into account the types of students Arizona colleges are graduating.
The formula in Indiana, on the other hand, does. Six percent of Indiana higher education spending in Fiscal Year 2015 was based on a college’s performance along seven metrics, four of which dealt with graduation. The state cares about overall degree completion, degree completion by at-risk students, degree completion in high-impact fields, and on-time graduation.
Dennis P. Jones, writing for the National Center for Higher Education Management Systems in 2013, identified one of the key concerns when implementing performance-based funding systems — that colleges will identify the types of students who do well on their campuses and exclude their lower-performing peers.
“To counter this possibility, most states that have instituted outcomes-based funding give extra weight for graduating students from at-risk populations,” Jones said.
When colleges are incentivized to maintain their campus diversity and funded based on strong outcomes for those groups, graduation rates for traditionally at-risk students are expected to rise. That’s a win-win for college budgets because persistence leads directly to higher tuition revenue and better investments in student talent.
Complete College America is a national nonprofit working to increase graduation rates and close the gap in degree attainment between traditionally high-performing students and their peers. On its website, Complete College America cites data about college enrollment and completion. While the undergraduate enrollment numbers doubled from 1970 to 2009, the graduation rate stagnated.
Complete College America identifies five “game changers” in the push for more graduates. Topping the list is, of course, performance funding. The organization specifically recommends tying state funding to a school’s track record of certificates and degrees awarded. It also suggests including financial incentives to support low-income students, as well as those graduating in high-demand fields. Its other four game changer policies cover remedial classes, full courseloads for students, structured schedules, and maps outlining the path toward degree completion for every student.
“If we are going to prepare more of today’s students to meet the challenges of tomorrow, we need to implement these five Game Changer strategies, and we need to do it now,” the CCA site reads. “The stakes are too high for us to waste any more time.”
For most college budgets, the game has already changed. It’s just time to move forward with new strategies and supports for getting students across the finish line.