Outcomes-Based Funding

Lawmakers are exploring a new way to fund higher education.

The chair of the Texas House committee on higher education calls it “self-evident.” The state’s higher education commissioner says it will reward universities for their “actual performance,” rather than enrollment. It—in case you didn’t know—is outcomes-based funding, and it’s the next big thing in Texas higher education.

Graduating students on time has become the credo of higher education policymakers around the country. Texas House higher education chair Dan Branch (R-Dallas) has called the current state of college (in)completion a “crisis.”

Legislators and experts are looking toward a relatively new model with a lot of buzz. Outcomes-based funding is a system in which colleges get all or part of their legislative appropriations based on elements like degrees conferred, rather than students enrolled. The Coordinating Board has recommended that 10 percent of base funds be allocated based on outcomes, while 90 percent remain based on enrollment. Branch has gone even further, filing legislation for the current session that would allow up to 25 percent of funding to be outcomes-based.

Seven states have outcomes (also known as performance) funding in place. Eight are transitioning to outcomes funding, and 15 states are considering the move—including Texas, where public universities have worked with the Coordinating Board to create seven outcomes for undergraduates. The recommended outcomes notably lack measurements of graduate student performance or research success—two crucial projects for Tier 1 universities.

But Coordinating Board spokesperson Dominic Chavez says he expects the process, if approved, to evolve. He notes that outcomes will be reviewed every two years, and that certain areas, like which workforce fields are considered economically critical, are almost certain to change over time.

So what, exactly, are Texas’ proposed outcomes?

Critical Workforce Fields
Areas like STEM, nursing and health, and teacher certification get double weight under the proposed formula.

Total Undergraduate Degrees
With forecasts of a growing number of jobs that will require degrees, policymakers are focused on creating graduates for the Texas economy.

Non-Traditional Students
Helping students who may have started late or put off college is seen as vital to producing qualified workers.

Students who complete 30, 60, and 90 credit hours count toward this metric, rewarding universities for student progress.

At-Risk Students
Commissioner Raymund A. Paredes has stressed the importance of retaining students who meet the federal requirement for being at a high risk of dropping out.

Student debt and university operating costs rise the longer students take to receive a degree, and lawmakers are hoping to incentivize on-time graduation.

Measuring the cost of degrees will compare the number of degrees awarded to instructional costs in the hopes of lowering the cost to students.

Photo by Jon Wiley via Flickr Creative Commons.


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