Aligning State Resources to Better Promote Student Success

1. Aligning State Resources to Better Promote Student Success Presentation to The higher education Trustees Meeting State of Arkansas Pulaski Technical College December 10, 2010 Richard l. Petrick

2. What Is Performance Funding? “Performance funding is a method of funding public institutions based not on inputs, such as enrollments, but on outcomes, such as retention, degree completion, and job placement…. The principal rationale for performance funding has been that performance funding will prod institutions to be more effective and efficient, particularly in a time of increasing demands on higher education and increasingly straitened state finances.” CCRC Working Paper #22 Arkansas Trustees Meeting

3. Performance Funding: Introduction • Why are states turning to performance funding? What are they doing? • How can we align incentives with desired results? For institutions, students, faculty, staff? • What have we learned from previous efforts? • What are the pros and cons of performance funding? • What’s happening in Ohio? Arkansas Trustees Meeting

4. Performance Funding – Why? The Money Matters Arkansas Trustees Meeting

5. Performance Funding – Why? The Money Matters Arkansas Trustees Meeting

6. Performance Funding – Why? The Money Matters • “Mounting State Debts Stoke Fears of a Looming Crisis” • New York Times • December 5, 2010 Arkansas Trustees Meeting

7. Performance Funding – Why? The Money Matters • Projected state budget gaps: • FY 2011: $121 billion • FY 2012: $102 billion • Post-budget state budget cuts • FY 2008 - $13 billion (13 states) • FY 2009 - $43 billion (43 states) • FY 2010 - $39 billion (39 states) • FY 2011 - $14 billion (14 states) Arkansas Trustees Meeting

8. Performance Funding – Why? The Degree Matters • “Graduation Rates Fall at • One-Third of 4-Year Colleges” • The Chronicle of Higher Education • December 6, 2010 Arkansas Trustees Meeting

9. Performance Funding – Why? The Degree Matters • The United States is falling behind other • countries in educational attainment. • America’s 18 - 24 year-olds are less • well-educated than 25-64 year-olds. • Graduation rates are low for 4-year • institutions and have not improved • over time (58 percent). Arkansas Trustees Meeting

10. Performance Funding – Why? The Degree Matters • More than 75 percent of students who start at a community college fail to earn a certificate or degree within three years. • U. S. adult learners drop out of college at an alarmingly high rate. • Experts predict a serious shortage of workers with post-secondary degrees and credentials in the near future Arkansas Trustees Meeting

11. Performance Funding 1.0: 1980 – 2004Performance Funding 2.0: 2005 – 2010 Arkansas Trustees Meeting

12. Performance Funding 1.0 v. 2.0 Version 1.0 Version 2.0 Arkansas Trustees Meeting No national support Individual state experimentation Scattershot evaluation No national clearinghouse National support* State efforts are better connected & focused Stronger evaluations Information accumulating * From multiple Foundations, National Governor’s Association, and US Department of Education

13. Performance Funding 1.0 – Many States Tried It Florida Oklahoma South Carolina Pennsylvania Ohio Arkansas Missouri New Mexico Illinois Washington Tennessee Arkansas Trustees Meeting

14. Performance Funding, 1.0Two examples Tennessee was the first – 1980-81 • Piloted in 1974 • 2 % of the state $ in ‘80, then increased to 5.45% • Transparent, focused on few metrics • Embedded in the subsidy allocations – not a “bolt-on” that could be cut when times are bad • Relatively simple, flexible • Sustained South Carolina’s experiment – 1990s • Very ambitious -- sought to have 100% of funding based on performance • Very complex – large number of indicators and processes • Threatening – some saw it as a way of shrinking or closing inefficient or ineffective campuses • Terminated Arkansas Trustees Meeting

15. Performance Funding 2.0 “We need to measure what matters. We need to know what the students learn, and what jobs they get. We need to know why students of some community colleges do better in the job market than others. Why minority students at some colleges take longer to earn a degree than similar students elsewhere. We don’t know the answers. We’re not even asking the questions.” Bill Gates, 2009 Arkansas Trustees Meeting

16. Performance Funding 2.0 “Over a third of America’s college students and over half of our minority students don’t earn a degree, even after six years.  So we don’t just need to open the doors of college to more Americans; we need to make sure they stick with it through graduation. That is critical.   ” President Obama, 2010 Arkansas Trustees Meeting

17. The ABCs of Performance Funding – What Do State Policymakers Want? Accountability: • More graduates in high demand fields • More focus on success of underserved populations Better Performance: - Efficient and cost effective instructional delivery focused on completions Collaboration: - Particularly among two and four year institutions Arkansas Trustees Meeting

18. The ABCs of Performance Funding – What Do State Policymakers Want? More Cost-efficient Student Success, More Quickly Arkansas Trustees Meeting

19. Performance Funding 2.0 Some examples: • Louisiana (2010 Legislation) • Tennessee (2010 Legislation) • Indiana • Washington Community Technical Colleges • Ohio Arkansas Trustees Meeting

20. Performance Funding 2.0 Louisiana: State funding reductions, more anticipated. For 2010-11, • Adopted the GRAD Act that establishes graduation rate goals for public institutions • When institutions meet these goals they are granted more fiscal autonomy • Tied 25% of state funds to completion/ transfer and articulation/workforce/research, including graduates ages 25 and older, racial/ ethnic minorities, low income, STEM fields Arkansas Trustees Meeting

21. Performance Funding 2.0 Tennessee: Complete College Tennessee Act of 2010 Comprehensive legislation • Outcomes-based funding model, including • end of term enrollment, • student retention, • timely progress toward degree completion, etc. • Transfer/articulation – common course numbers Arkansas Trustees Meeting

22. Performance Funding 2.0 In 2009-10, Indiana modified its funding to include– • Degrees (and for low-income students) • Course completions • On-time graduation, and • Transfer Arkansas Trustees Meeting

23. Performance Funding 2.0 Washington Community/Technical Colleges – • The Board established a student success goal • Recognized students in all mission areas (including adult basic education and developmental education), reflect diverse communities served by colleges • Measures are simple, understandable, and relevant to institution, the student and policy makers • Informed by solid research at Columbia University’s Community College Research Center Arkansas Trustees Meeting

24. Performance Funding 2.0 Washington’s four categories of measures: 1. Momentum points that build towards college-level skills 2. Momentum points that build to “Tipping Point” and beyond 3. Earning college level credits in math 4. Completions Arkansas Trustees Meeting

25. Performance Funding – Advantages Institutions do respond to financial incentives Lessons from Performance Funding 1.0 • Florida • Washington • Ohio • Tennessee Arkansas Trustees Meeting

26. Performance Funding 2.0 – Advantages Opportunity to better align incentives with desired results for: • Institutions (state subsidy) • Students (financial aid, tuition, instructional delivery) • Faculty (tenure/promotion/financial awards) • Staff (promotion/financial awards) Arkansas Trustees Meeting

27. Performance Funding 2.0 -- Pitfalls • Can be difficult to design – need to involve technical expertise early • Can be difficult to account for differences in mission • Some data are hard to come by • Need to recognize funds needed to support institutions’ core functions • Could it lead to grade inflation? Arkansas Trustees Meeting

28. I. Performance Funding in Ohio, V 1.0

29. Ohio had a long history of performance-based funding The first of the four “Challenges” began in the 1980s Total funding for the Challenges equaled about 10% of total state operating subsidy for campuses by late 1990s The past successful implementation of performance funding helped set the stage for significant changes in FY 2010 and FY 2011 Arkansas Trustees Meeting

30. Performance funding foundations:Policy design Arkansas Trustees Meeting

31. Performance funding foundations: Outcomes Arkansas Trustees Meeting

32. II. Funding Formula Changes in FY 2010 and FY 2011

33. II. The Chancellor’s ten-year strategic plan: Some key elements • Strategic plan was mandated by the legislature • Explicit goals for the new public agenda: • Enroll and graduate more Ohioans. • Increase state aid, improve efficiency, and lower out of pocket expenses for undergraduates. • Increase participation and success by first-generation students. • Increase participation and success by adult students. • Each goal has a specific metric by which progress toward the plan is assessed annually. Arkansas Trustees Meeting

34. II. Changes in place for FY 2010 and FY 2011 • Major shift to success-based formulas • Creation of three new formulas: • University main campuses • University regional campuses • Community colleges • Endorsed by the Governor and approved by the General Assembly in H.B. 1 Arkansas Trustees Meeting

35. II. University main campuses • Shift from enrollment-based to course- and degree-completion based formula • Cost-based course and degree allocations • Empirically-based adjustment (extra weighting) for at-risk students • Degree-completion component to be phased in slowly • Setasides for doctoral and medical funding • Doctoral and medical funding to become more dynamic and performance-based • Effects phased in over time • 99% stop loss in FY 2010 • 98% stop loss in FY 2011 Arkansas Trustees Meeting

36. II. University regional campuses • Shift from enrollment-based to course-completion based formula • Cost-based course and degree allocations • Empirically-based adjustment (extra weighting) for at-risk students • Plan to add degree-completion component in 2 to 4 years • Time to permit regional campuses to adjust their missions to focus more on upper-level undergraduate enrollments • Effects phased in over time • 99% stop loss in FY 2010 • 98% stop loss in FY 2011 Arkansas Trustees Meeting

37. II. Community colleges • Will continue to have cost-based enrollment formula as major basis of funding • Adding State of Washington’s concept of ‘Momentum Points” -- which Ohio calls “Success Points” -- beginning in FY 2011 • Success Points share of total community college funding is 5% in FY 2011, and will increase over time • Effects phased in over time • 99% stop loss in FY 2010 • 98% stop loss in FY 2011 Arkansas Trustees Meeting

38. Toward an integrated state policy in support of student success Arkansas Trustees Meeting

39. What we know about successful programs Common threads – staying power • Commitment of political leaders, institutional leadership, faculty, staff and students • Mission sensitivity -- not every institution is expected to have high performance in every area • No funding cliffs -- effects phased in over time • Transparency/accountability with periodic reports on results • One size does not fit all: Each state approach has been unique, with some sharing of components • Improvement focus • Institutions should be able to influence the results over a reasonable timeframe • Institutions should be able to use the information to develop strategies for improving student achievement Arkansas Trustees Meeting

40. Performance and Completion:What can trustees do? • Know your campus numbers • Know your campus trend line • Know how your campus compares to peers • Know how your campus compares to top performing peers • Know your campus & state context • Set specific goals for improvement • Use the “C.A.S.E.” method to move the needle Arkansas Trustees Meeting

41. Performance and Completion:What can trustees do? • What is the “C.A.S.E.” method? • Copy • And • Steal • Everything Arkansas Trustees Meeting

42. Some sources Books, articles, presentations by: Access to Success (NASH) Brenda Albright (National consultant) Joseph Burke (The Rockefeller Institute) Community College Research Center (Columbia University) Complete College America Bill and Melinda Gates Foundation The Lumina Foundation National Center for Higher Education Management Systems rpetrick@columbus.rr.com (614) 598-9437 Arkansas Trustees Meeting

43. Thank You/Questions? Arkansas Trustees Meeting

44. Appendix: What are “success points?” • Measures of student success that are sensitive to the community college’s mission and students • Derived from Columbia University Teacher’s College study • One point for each, unweighted by student or program or level • Success Points include number of students who either: • Complete their first remedial course; • Successfully complete a developmental Math course last year, and subsequently enroll in a college level Math; and • Successfully complete a developmental English course last year, and subsequently enroll in a college level English. …and who • Earn their first 15 semester credit hours • Earn their first 30 semester credit hours • Earn at least one associate degree, from that institution, in a given year. • Complete at least 15 semester credit hours at that institution and subsequently enroll for the first time at a four year college or university, in Ohio. Arkansas Trustees Meeting