driving better outcomes: aligning state investments with completion needs typology & principles...
TRANSCRIPT
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Driving Better Outcomes: Aligning State Investments With
Completion NeedsTypology & Principles to Inform Outcomes-Based
Funding Models
Presented by: Martha Snyder & Nate Johnson
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Revenue Sources for Institutions
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Revenue Sources of Public Degree-Granting Postsecondary Institutions (2011-12)
21%
9%
5%
8%11%
6%
19%
3%
18%Tuition and fees
Federal grants and contracts
State, local, and private grants and contracts
Sales and services of auxiliary enterprises
Sales and services of hospitals
Independent operations
State appropriations
Local appropriations
Other
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Trends in Institution Finance Source: SHEF 2014 Interactive Data, US Wave Chart
- On a Per FTE basis the (public) enterprise isn’t becoming more expensive.
- Costs are shifting to students.
- Increases the enrollment/ retention incentive for institutions.
- Limits the ability of states to leverage/drive change toward outcomes and completion.
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However…
and
State appropriations remain the largest single source of funding for institutions
There are ways to align finance policies toward outcomes and student success
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Total Funding: $86.3 Billion• 89.3% from state funding • 10.9% local funding• 0.6% state endowmentStudent Financial Aid• $6.7 billion (75%) to students
attending public institutions; • $2.2 billion (25%) to students
attending private/independent institutions
General Operating Support• Typically allocated based on FTE,
outcomes/performance, historical allocation, or combination
Special Purpose• Research, agricultural extension,
medical education
Gen-eral Op-erat-ing
Sup-port;
$66.3
Spe-cial Pur-
pose; $10.6
Student Financial Aid; $8.9
State & Local Support for Higher Education(In Billions)Source : SHEF FY 2014
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Driving Toward Better Outcomes: State Finance Policies to Support Completion Agenda
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OUTCOMES-BASED FUNDING POLICIES
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State Allocation Models
• Allocation based on prior levels of funding• Adjusted +/- based on available funds• Goal: Institutional fiscal stability• Challenge: Equity in institutional funding
Historic
• # of students enrolled at census date• Recent shift to course completion• Goal: expand access• Challenge: Incentive on prolonged persistence/retention
Enrollment
• Reward for reaching performance milestones or goals• Completion not necessarily key objective• Often ‘bonus’ (new allocation) or small % of general allocation• Challenge: Sustainability and funding
Early Performance
• Funding based on student success and completion• Significant portion of general allocation to institutions (not
reliant on new money-only/separate allocation)• Challenge: College’s ability to respond
Outcome-Based
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Objectives of Outcomes-Based ModelsAlign funding method with state/system
prioritiesCompletion/Attainment
Jobs/Economic Development
Align institution priorities Support Scaling of Proven Student Success
Practices
Programmatic Evaluation and Change
Improve Efficiency & Reward Outcomes
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Early Efforts of Performance-Based Funding
More than half of states adopted a form of performance funding in the past 35 years, challenges in sustaining the model existed because of design & implementation shortfalls:– Multiple, unaligned priorities– Lack of institutional consultation– Complicated & burdensome– One-size-fits-all– Competed with access agenda– Target oriented approach– Funding challenges
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Next Phase: Outcomes-Based
• Evolved form of performance-based funding• Similarly seeks to incent and reward progress
toward goals• More explicit connection to state needs– Focus on student progress and completion– Closing gaps in student outcomes– Refined development & modeling approaches
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Development of Outcomes-Based Funding Typology
Effort to classify outcomes-based funding policies on key elements they address and funding levels:
– Link to attainment or completion goal– Stable funding structure– Significant level of funding – All public institutions included– Differentiation of metrics across sectors– Degree/credential completion is included– Encourages increased success with underserved
students
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Typology Classification
TYPE I•No attainment/completion goal •New-money only•Does not include all institutions•Degree completion not included•Underrepresented student success not reflected
TYPE II•Completion or attainment goal in place•Part of general allocation•< 5% of overall support•Does not include all institutions•Degree completion included•Underrepresented student success likely reflected
TYPE III•Completion or attainment goal in place•Part of general allocation• Moderate funding level (5-24.9%)•All institutions included•Differentiation in metrics•Degree completion included•Underrepresented students are prioritized
TYPE IV•Completion or attainment goal in place•Part of general allocation•Significant funding (>25%)•All institutions included•Differentiation in metrics•Degree completion•Underrepresented students are prioritized•Sustained over time*
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Status of Funding Models in States
• As of Fiscal Year 2015, 35* states (70
percent) are developing (10 states) and/or implementing (26 states) some level of outcomes-based funding model
– Great variance in critical elements included in typology and reflected in associated design & implementation principles
*Oregon was both implementing and developing a new funding formula.Source: Data collected by HCM Strategists as of December 2014
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States Developing and Implementing Outcomes-Based Funding Models
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States Implementing OBF in FY 15 by Type & Sector
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States Developing OBF in FY 15 by Type & Sector
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Funding Associated with OBF Models
• Wide variation in funding associated with student success and completion
• In many states, outcomes remain a small portion of institution’s funding
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OBF as % of Overall State Institutional Support
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OBF as Percentage of Funding: Broken out by course completion, progression and degree completion
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Estimated OBF Spending in FY 15, Per Student
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Approaching the Design of OBF Research and analysis of earlier models has yielded a series of design and implementation principles to guide states. The typology is derived from
these principles.
Completion Goals & Commitment to Priorities
Make Money Meaningful &
SustainableLimited, measurable
and valid metrics
Include all institutions & allow for differentiation
Support success of underserved
student populations
Focus on completion &
reward progress
Engage stakeholders in the process
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Implementation of OBF
Phase-in the effect of funding change Continuously improve data
Evaluate & Adjust
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Understanding State Investments
• Provide transparent information on all state higher education finance policies
• Examine, collectively and individually, all elements of state finance policies– Institution allocation– Tuition– Student Financial Aid
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Discussion Questions• Considered as a business, where does higher education in your
state derive its revenue?
• Which revenue sources are best aligned with what the state wants from higher education?
• What do institutions or systems have to do to maintain or increase revenue in each category?
• How much institutional effort is required to produce the revenue in each category?
• How well do those activities or practices align with the state's interests?
• What does the state want from higher education that does not have an existing (or sufficient) revenue source available to support it?
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Thank YouPresented by: Martha SnyderEmail: [email protected]: 202.547.2222