Advancing Performance Funding in Illinois Higher Education

1. 90-Day GoalPerformance Funding Presented to the Illinois Board of Higher Education April 12, 2011

2. Performance Funding • Background and Review • IBHE Efforts and Activities • Progress and Outcomes • Next Steps

3. Performance FundingI. Background and Review • Other States • Various states across the country are implementing performance-based funding to incentivize higher education efficiencies and improve performance. • Higher Education Finance Commission • In Illinois, the Higher Education Finance Commission concluded that performance funding is a viable policy tool for achieving statewide goals. • 90-Day Goal: Performance Funding • Performance funding is an important component of the 90-day strategic plan and Illinois Public Agenda.

4. Performance FundingI. Background and Review • Other States – performance funding is not a one-size fits all methodology; each state that utilizes PF offers unique characteristics; they all do share a common goal of increasing the number of graduates. • Ohio:The Ohio model includes a stop-loss provision/99% previous years funding. Each year the stop-loss figure is reduced. • Indiana:One of few states to use performance funding to reward institutions for performance and prioritize budget cuts. • Tennessee: Has utilized performance funding since 1979 that allows institutions to earn additional funding based on performance. • Texas: In 2007, the legislature created a performance incentive fund to provide a pool of funding to institutions based on degrees awarded. The Board is proposing a 4-Year phase-in to encourage completion. • Arkansas: In March 2011, the State Senate approved legislation that would phase in a new funding formula over a 5-year period starting in 2013. When fully implemented would base 25% on graduation rates.

5. Performance FundingI. Background and Review • In Illinois, the Higher Education Finance Study Commission concluded that: • Performance funding models must: • Developed through a consultative process & broad participation • Tailored to each sector of higher education & recognize unique missions • Encourage at-risk students to complete • Tie funds to completion and degree production • Designed to Maintain quality

6. Performance FundingI. Background and Review • At the February 15th Board Meeting I presented the Board with the 90 –day goal that I would be concentrating on: • To support the drafting, revising, and passage of legislation that provides a broad framework for integrating performance funding into the higher education budget development process. • To move the goal forward I planned to work with BHE staff, legislative staff, and higher education partners to develop a draft proposal and build advocacy for performance funding. • Today, I will share with you the agency’s efforts and the activities I have conducted since February aimed at meeting this goal, the progress and outcomes of those activities, and the next steps in the process.

7. Performance FundingII. IBHE Efforts & Activities • Meetings with Legislators & Staff • Committee Hearings • Meetings with Higher Education Partners • Other Efforts & Activities

8. Performance FundingII. IBHE Efforts & Activities • Meetings with Legislators & Legislative Staff • Senator Ed Maloney • Senate Democratic Staff • Senate Republican Staff • Representative Chapin Rose • House Democratic Staff • Senator Dan Kotowski • House Republican Staff

9. Performance FundingII. IBHE Efforts & Activities • Committee Hearings • House Committee Hearing (HB 1503) 2/24/11 • Senate Committee Hearing (SB 1773) 3/15/11 • House Higher Education Appropriation Hearing 3/17/11 • Senate Higher Education Appropriation Hearing 5/4/11

10. Performance FundingII. IBHE Efforts & Activities • Meetings with Higher Education Partners • Staff attended the Complete College America academy to discuss performance funding and other goals • Public Universities • Community College President’s Council Meeting • Federation of Independent Illinois Colleges and Universities

11. Performance FundingII. IBHE Efforts & Activities • Other Efforts & Activities • Fiscal Note for HB 1503 • Developed draft testimony on SB 1773 • Developed 1-Page Briefing Document • Met with Senate Republican Staff • Briefed Chief Academic Officers • Met with House Democratic Staff • Met with House Republican Staff • Met with Senate Democratic Staff

12. Performance FundingIII. Progress • Endorsements/Support • In Committee, performance funding has been supported by ISAC, FIICU, and various institutions. • Unanimously supported by the Community College Presidents Council • Senate President has voiced strong support for performance funding • House Higher Education Appropriations Committee Chairman supports performance funding

13. Performance FundingIII. Progress • Outcomes • House Bill 1503 Representative Chapin Rose • Amended to match SB 1773 • Passed the House 102-0. 4/5/11 • Senate Bill 1773 Senator Ed Maloney • Directs IBHE to integrate PF into the FY13 budget process • Passed out of Committee 3/15/11

14. Performance FundingIII. Progress • Outcomes • HB 1503 & SB 1773: • The IBHE is directed to form a broad-based working group to devise a system for allocating resources to achieve state goals • Beginning in FY2013, performance funding must be incorporated into the IBHE Budget Recommendations • Consult with higher education stakeholders • Formula should recognize the needs of students who are academically or financially at-risk • Unique Institutional missions shall be considered • Metrics must be designed to Maintain Quality

15. Performance FundingIV. Next Steps • Continue to Advocate and Support Performance Funding Legislation • Implement the Legislation • Establish Broad-based working groups, develop criteria, create models, etc. • Incorporate Performance Funding in the FY 2013 Budget Development Process