Performance-Based Funding

Tennessee and LouisianaSAIR 2013

Edwin Litolff – University of Louisiana System

Greg Schutz – Tennessee Board of Regents

Performance-Based Funding Across the States

In Place22

In Transition 7

In Planning10

Total39

• PBF 2.0– Progression– Completion– Mission– Subpopulations

Source: PBF: The National Landscape. Sept-2013. Univ. of Alabama Education Policy Center

Louisiana – Formula Funding Introduction

Louisiana Constitution, Article VII section 5.D.4-authorizes the Board of Regents to formulate and revise a master plan for post secondary education.

Included in this master plan shall be a formula for equitable distribution of funds to the institutions of postsecondary education.

Targets appropriate funding levels for institutions based upon peer data.

Encourages and rewards indentified behavior on part of institutions.

Includes a performance factor related to retention and progression of students.

2014-2015 will be the sixth year of implementation, modifications are still being made to improve results.

New Formula Funding Approach

Two Primary Goals› Cost of delivery and performance

Cost Component (85%)› Core – Cost of disciplines and academic support› General Support – Institutional support and

student services› Operation of Plant and Maintenance – Physical

academic and support facilities Performance (15%)

› Alignment with Grad Act targeted student success metrics

Formula

SREB 1

SREB 2 SREB 3 SREB 4

Average SREB Faculty Salaries & Benefits

$93,160

$83,509 $70,098 $68,300

Average Class Size 25 25 25 25

Full-Time Student Workloads

30 30 30 30

Instruction Amount $124.21

$111.35 $93.46 $91.07

Academic Support/ Services

30% 30% 30% 30%

Academic Support Amount

$37.26 $33.41 $28.04 $27.32

Total Base SCH Value

$161.47

$144.76

$121.50

$118.39

Basic Factor Chart – Student Credit Hour Value

Cost MatrixGroup Formula Group Name LLU Factor ULU Factor Masters Factor Doctoral Factor Spec Prof Factor

01 Liberal Arts 1.00 1.96 3.94 12.04 4.0502 Science 1.53 3.00 7.17 19.29 7.1703 Fine Arts 1.85 3.11 6.51 17.47 6.5104 Teacher Education 1.28 1.96 3.23 9.95 3.3605 Agriculture 2.05 2.54 6.64 16.37 6.6406 Engineering 3.01 3.46 8.20 21.40 8.2007 Home Economics 1.58 2.12 4.34 10.79 4.3408 Law 1.00 1.96 3.22 3.22 3.2209 Social Science 1.64 1.84 5.80 11.92 5.8010 Library Science 1.45 1.52 4.22 12.26 4.2213 Physical Training 1.36 1.36 3.23 9.95 3.2314 Health Science 2.87 3.46 6.47 15.98 6.4715 Pharmacy 4.00 4.64 7.55 19.11 13.4316 Business Administration 1.41 1.59 4.59 13.91 4.5917 Optometry 1.99 2.56 5.46 19.12 7.0019 Technology 1.99 2.56 6.61 15.98 6.6120 Vocational Training - Skilled Trades 1.28 1.55 3.43 9.34 3.4321 Vocational Training - Precision Trades 1.70 2.07 4.55 12.39 4.5522 Vocational Training - Transportation 3.59 4.35 9.59 26.09 9.5996 Veterinary Medicine 1.53 3.00 7.17 19.29 13.6397 Other 1.00 1.00 1.00 1.00 1.0098 Military Science 1.00 1.00 1.00 1.00 1.0099 Nursing 3.12 5.32 6.49 16.32 6.49

Average 1.88 2.52 5.24 13.66 5.85Developmental Education = 1.45

Student Credit Hours

$144.76 Base SCH Value x 573 SCH’s x LL Science 1.53 = $126,909

$144.76 Base SCH Value x 246 SCH’s x UL Science 3.00 = $106,833

Total $233, 742

$144.76 Base SCH Value x 15 SCH’s x UL ENG 3.01 = $6,535

$144.76 Base SCH Value x 105 SCH’s x UL ENG 3.46 = $52,591

$144.76 Base SCH Value x 3 SCH’s x UL ENG 8.20 = $3,561

Total $62,687

Course Num Description Sec SCH Students DEV Lower Upper Mast Doc

BIOS 1053 Contemporary Biology 1 819 273 0 573 246 0 0

ENEE 2582 Digital System Design 1 123 41 0 15 105 3 0

Formula Funding Matrix - Example

Formula Funding Spreadsheet› Total SCH Production 261,667› Core Component $98,071,579› Core Component EOC $90,311,809› General Admin and Operational Costs› Total Dollars $114,084,325› State Share 42%› Formula Request $47,915,417

Additional Performance - Added

Pell Enrollment – 5% Research - 2% Workforce - 3%

Distribution

Formula Units – Colleges and Universities Non-Formula Units – Systems, Ag, Law,

LOSFA Preliminary Board of Regents Allocation

› 15% Performance› Maximum -4% loss› 2Year/4 Year Shift› 10% Performance (Pell, Research, Workforce)› Total Formula Distribution for $500 million

Formula Summary

Total Cost $1.9 billion State Share $868 million Appropriation $500 million

UL SYSTEM TOTAL OPERATING BUDGET FY 2013/14 STATE FUNDING TREND

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-140%

10%20%30%40%50%60%70%80%90%

100%

56%62% 63%

58%54%

42% 39%33%44% 38% 37%

42%46%

58% 61%67%

State Funds Self Generated

AVERAGE SYSTEM TUITION

01-02

02-03

03-04

04-05

05-06

06-07

07-08

08-09

09-10

10-11

11-12

12-13

13-14

0

1000

2000

3000

4000

5000

6000

7000$2,5

81

$2,6

09

$3,0

30

$3,3

22

$3,5

36

$3,5

90

$3,6

73

$3,8

34

$4,0

70

$4,4

72

$4,9

19

$5,5

68

$6,2

5463%

Increase

Performance Funding in TN

Higher Education in TN TN Funding Context TN Outcomes-Based Funding Current Situation Tomorrow’s Opportunity

TBR Fall Enrollment Trend

* Fall 2013 does not include session II enrollment at APSU’s Fort Campbell campus.

Fall 2008 Fall 2009 Fall 2010 Fall 2011 Fall 2012 Fall 2013*

86,180

90,890

94,98196,202

93,507

90,080

80,156

92,226

97,92696,139

92,29889,676

Source: State Enrollment Collection for Census Date Enrollment

TN Colleges of Applied TechnologyEnrollment Trends

2007-08 2008-09 2009-10 2010-11 2011-1228,000

28,500

29,000

29,500

30,000

30,500

31,000

31,500

32,000

32,500

33,000

29,647

32,27632,456

31,198

29,560

Source: TBR TCAT Collection for End-of-Year Enrollment

Funding Tennessee Higher Ed

Public Universiti

es

Pre Stimulus ARRA Post Stim

1999-00

2004-05

2007-08

2010-11

2011-12

State Appro-priations

739,999,930

694,121,096

735,872,025

499,875,300

499,157,829

Non-Recur-ring(ARRA/MOE)

      190,802,900  

Tuition & Fees

531,226,348

708,690,255

806,781,507

964,471,009

1,054,848,105

FTE 97,141 102,726 107,394 116,995 118,127

Avg Student Support 13,086 13,656 14,364 14,147 13,155

Student Share 41.8% 50.5% 52.3% 58.3% 67.9%

All years equated to 2010-11 dollars / Source: THEC Student Support Historical AnalysisARRA =American Recovery & Reinvestment Act / MOE=State Maintenance and Operating Expenses

Funding Tennessee Higher Ed

Public Two-Year

Colleges

Pre Stimulus ARRA Post Stim1999-

002004-

052007-

082010-

112011-

12State Appro-priations

248,683,595

232,877,040

224,020,518

185,851,200

187,614,232

Non-Recur-ring(ARRA/MOE)

      45,671,600  

Tuition & Fees

115,865,180

170,249,534

188,705,764

269,952,100

282,601,142

FTE 46,349 49,238 49,193 62,758 6,086

Avg Student Support 7,865

8,187 8,390 7,991 7,698

Student Share 31.8% 42.2% 45.7% 53.8% 60.1%

All years equated to 2010-11 dollars / Source: THEC Student Support Historical AnalysisARRA =American Recovery & Reinvestment Act / MOE=State Maintenance and Operating Expenses

Funding Tennessee Higher Ed

2013-14Formula Systems

Recom-mendation

($) Appro-

priation ($)

Approp Pct of Rec

Approp 1Yr

Chng TBR Four-Year Universities

525,519,70

0

307,324,200 58% 4.7%

TBR Two-Year Colleges

335,118,700

194,217,5

00 58% 5.0%

TBR Applied Tech Colleges

93,566,000

53,881,500 58% 3.1%

UT Four-Year Universities

370,233,00

0

212,818,7

00 58% 5.8%

Source: THEC Presentation – Nashville State – August 20, 2013

20

Developing a New Formula Model

Source: THEC Presentation – Nashville State – August 20, 2013

Source: THEC Presentation – Nashville State – August 20, 2013

Developing a New Formula Model

Past Concept of Bonus Pay

Enrollment-Based Funding

Performance Funding (5.45%)

Funding Models

Enrollment-Based Funding – Tuition and State Appropriations based on current enrollment.

Performance Funding – Standard formula with extra pay for meeting state objectives.

Outcomes-Based Funding (Performance-Based) › Tuition dollars based on current enrollment. › State appropriations based on recent past

performance.

TN Outcomes-Based Components

Measurements – Items by system (Univ. & Com. Col.) Scales – State weights and measurement equivalency Institutional Weights - By institutional mission State 40% Premiums - Currently adult and low-income Translate to Dollar Amount - SREB Faculty Salary

Averages Funding

› THEC Recommendation (November)› Governor’s Budget (December)› Legislative Appropriations (April)› System Tuition and Fees (June)

25

TN Outcomes-Based FormulaUniversity Weighting Structure – 40% Premium in

YellowUniversities APSU UM UTK

Students Accumulating 24 hrs 3% 2% 2%Students Accumulating 48 hrs 5% 3% 3%Students Accumulating 72 hrs 7% 5% 5%

Total Progression 15% 10% 10%Bachelors and Associates 25% 25% 15%

Masters / Ed Specialist Degrees 20% 15% 15%Doctoral / Law Degrees 0% 10% 10%

Research and Service 10% 12.5% 15%Transfers Out with 12 hrs 10% 5% 5%

Degrees per 100 FTE 10% 7.5% 10%Six-Year Graduation Rate 10% 15% 20%

100% 100% 100%

Source: Funding Formula Model Simulation -THEC Website

26

TN Outcomes-Based FormulaTwo-Year College Weighting Structure –40% Premium

in YellowCommunity Colleges NESCC PSCC VSCC

Students Accumulating 12 hrs 4% 6% 2%Students Accumulating 24 hrs 5% 7% 3%Students Accumulating 36 hrs 6% 7% 5%

Total Progression 15% 20% 10%Dual Enrollment 5% 10% 10%

Associates 20% 20% 20%Certificates 1-2 Years 17% 0% 4%

Certificates Less Than 1 Year 3% 5% 16%Total Certificates 20% 5% 20%

Job Placements 10% 10% 5%Remedial & Developmental Success 5% 5% 10%

Transfers Out with 12 hrs 10% 15% 15%Workforce Training (Contact Hours) 5% 10% 5%

Awards per 100 FTE 10% 5% 5% 100% 100% 100%

Source: Funding Formula Model Simulation -THEC Website

27

Formula Share of Available State Funding

Source: THEC Presentation – Nashville State – August 20, 2013

Institution2011-

12 2012-132013-14Austin Peay 3.6% 3.9% 4.0%East Tennessee 5.9% 5.8% 5.9%Middle Tennessee 9.8% 10.0% 9.8%Tennessee State 4.0% 4.0% 3.9%Tennessee Tech 4.8% 4.9% 4.8%University of Memphis 11.4% 11.1% 10.8%Community Colleges 25.2% 25.3% 25.4%UT Chattanooga 4.5% 4.4% 4.4%UT Knoxville 19.9% 20.4% 20.9%UT Martin 3.1% 3.1% 3.0%Technology Centers 7.7% 7.1% 7.0%Total 100% 100% 100%

2010-11 2011-12 2012-13 2013-14-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Cumulative Change in Appropriations at Community Colleges Due to the Formula

Chattanooga Cleveland

Columbia Dyersburg

Jackson Motlow

Nashville Northeast

Pellissippi Roane

Southwest Volunteer

Walters Total Funding

Source: THEC Presentation – Nashville State – August 20, 2013

Current Situation Beginning fourth year of outcomes-based

funding. Phase out complete for past enrollment-based

funding policy to use the funding formula to only distribute new dollars (hold harmless).

Initial evaluations and comments on use becoming available.

Used by both TBR and UT systems for presidential evaluation.

Changes in institutional practices. Discussions for changes in the formula. New strategic planning cycle begins in fall 2015.

Current Comments

When can I change my weights? What measures should we add? What measures should we take away? How can we capture workforce and

research dollars more efficiently? Would a five-year average be better

than a three-year? How will the model perform in a time of

decreased funding?

Changes in Practice

Presidential Evaluations on Outcomes Components

Predictive Analysis on Outcomes Components

Increased scrutiny on application and acceptance policy

Increased importance on measuring the cost and effectiveness of system and campus initiatives

Changes in Formula Changes made

› Less than one-year certificates included in formula› Graduation Rates computed with trailing summer

Possible items to remove› Graduation Rates› Degrees per FTE

Possible items to add› Prior Learning Assessment› Reverse Transfer› Benchmark Certificates

Possible Formula Changes› Increase average from three-year to five-year› Include National Clearinghouse data in Graduation Rates

Conclusions

Performance-Based Funding is not a fix for higher education funding needs.

PBF does communicate state priorities and institutional mission.

The concept of outcomes funding on face value is appealing to the legislature and the public.

PBF 2.0 in a beginning look does appear to have the capability of changing institutional practices.

Many varieties of PBF 2.0 are becoming available to study.

Tomorrow’s Opportunity Maintain a data driven approach Understand your Institution Understand the politics Move toward decision support and predictive

analysis (big data analytics) Maintain focus on bread and butter IR

activities Distinguish measures best for funding and for

strategic action

(Includes concepts from Terrenzini 2013, “On the Nature of Institutional Research”)

Performance-Based Funding

Tennessee and LouisianaSAIR 2013

Edwin Litolff – elitolff@uls.state.la.us

Greg Schutz – greg.schutz@tbr.edu