HECB looks at other states’ funding models for ideas on improving higher education performance

Some states have begun to fund higher education on the basis of results rather than enrollment. These states believe their higher education institutions produce better results if state funding is based at least in part on operational efficiency or measurable improvements in degree production.

 The HECB is looking at the experiences of those other states to determine if they have valuable lessons for Washington.

 Don Bennett, HECB executive director, provided a brief report on alternative higher education funding models at the Senate Committee on Higher Education & Workforce Development work session Tuesday. He reported on models being implemented in Tennessee, Virginia and Ohio.

Tennessee’s funding model now encompasses performance measures such as the average time students take to earn 24, 48, and 72 credits; the number of bachelor’s and master’s degrees produced;  the amount of research and grant funding generated;  the rate at which transfer students earn degrees; and the number of degrees produced per-100 full-time equivalent students (FTE). The weight given these categories varies according to institutional type. 

No specific targets in these categories are used to determine funding levels, but tracking and reporting this information allows the state to expand the mix of variables (including enrollment) it uses to make resource allocations.

Could something similar work in Washington? Yes, said Jan Ignash, HECB’s deputy director for policy, planning and research, but only if the state’s institutions can furnish outcome data on a timely basis.

Virginia’s ‘Top Jobs’ legislation rewards institutions for achieving greater levels of operational efficiency rather than on improvements in the rate of academic progress or degree production. There are 16 finance and administrative measures to address 12 goals. If institutions meet their targets, they get to keep interest on tuition and fees, carry forward budget balances, and retain rebates earned for purchases on credit cards.

Is Virginia’s model working? Results are mixed. Some institutions say the savings aren’t worth the extra work required to monitor and track outcomes.

Ohio now funds higher education partly on a performance basis and partly on an enrollment basis. The formula starts with FTE enrollment and cost-per-FTE and then is adjusted on the basis of student completion rates and degree completion (for main campuses only). Additional adjustments are made for enrolling low-income students, for low-income students who
complete courses, and for enrollments in STEM fields.

Is Ohio’s model working? In many ways it is too early to tell. The model operates at a micro-level and depends on gathering and analyzing a substantial amount of operational data that is currently not available in Washington.