Impact

Business Leaders Call for Performance-based Higher Education Funding

Date: February 2013

Austin American Statesman

Business Leaders Call for Performance-based Higher Education Funding

By Ralph K.M. Haurwitz

February 27, 2013

Texas business leaders came out forcefully Wednesday in support of a proposal to link 10% of state funding for public colleges and universities to their graduation rates and other measures of student success.

Nothing less than the future workforce of the state is at stake, said Bill Hammond, president and CEO of the Texas Association of Business, the state’s largest business group.  “The future is now in terms of jobs,” said Justin Yancy, executive director of the Texas Business Leadership Council. “We need more post-secondary success.”

Currently, 31% of adults in Texas have at least an associate’s degree, according to Complete College America, a nonprofit group. It’s estimated that 60% of jobs will require a post-secondary credential by 2020. Making up this gap in knowledge and skills is one of the defining challenges facing the state, Hammond told reporters at a Capitol news conference.

Under the proposal for performance-based funding, 10% of base appropriations for undergraduate education would be allocated to schools according to various measures. The assumption is that this would create a financial incentive for schools to do a better job of retaining and educating students. Funding is currently tied to enrollment.  A dozen states, including Louisiana and Oklahoma, have some sort of performance funding in place, and many more are considering it.

Texas’ 38 public universities would be graded on seven measures, including six-year graduation rates, degrees awarded in “critical” workforce fields, such as engineering and nursing, and degrees awarded to “at-risk” students, such as those eligible for federal need-based Pell grants.  The state’s 50 community college districts would be measured on five metrics, including the numbers of students completing developmental education courses, earning a certificate or degree, and transferring to a four-year school.

There would be winners and losers under this approach. But Rep. Dan Branch, R-Dallas, who leads the House Higher Education Committee, said he’s hopeful that legislative budget writers will include the proposal in the state’s spending plan for 2014-15.

Branch said some universities — he didn’t name them — have expressed concern about the proposal privately to lawmakers while endorsing the concept publicly. Representatives of the state’s two largest university systems said they stand squarely behind the plan, which is also supported by Gov. Rick Perry and the Texas Higher Education Coordinating Board.  “We are prepared to be accountable to the Legislature on a performance-based funding formula,” said Steve Moore, a spokesman for the Texas A&M University System.

University of Texas System Chancellor Francisco Cigarroa and the Board of Regents support the concept and the specific recommendations, said spokeswoman Jenny LaCoste-Caputo. UT-Austin officials have said the flagship campus would benefit because it graduates more students — and more students on time — than any other public university in Texas.