Transcript Slide 1

Higher Education
Outcomes Based Formula
2010
1
Tennessee Higher Education Commission
Higher Education Revenues
Total Revenue per FTE - Universities
Inflation Adjusted
StFees
ARRA/MOE
StAppr
$15,000
$13,500
$12,000
$10,500
$9,000
$7,500
$6,000
$4,500
$3,000
$1,500
$0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
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Tennessee Higher Education Commission
Higher Education Revenues
Total Revenue per FTE - Community Colleges
Inflation Adjusted
StFees
ARRA/MOE
StAppr
$9,000
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
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Tennessee Higher Education Commission
Existing Funding Formula
• Linked to 2005-10 Tennessee Master Plan
• Enhanced focus on student retention
• Focus on adult enrollment of students age 25 and up
at community colleges.
• Research calculation determined by Carnegie
classification and Doctoral degree production.
• Enrollment base calculation using a three-year
moving average of actual fall enrollments.
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Tennessee Higher Education Commission
Existing Funding Formula
• Existing formula is approximately 60%
enrollment driven.
• Incentive structure is heavily focused on
inputs.
• Existing Performance Funding program and
imbedded performance incentives provide
limited leverage for policy change.
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Tennessee Higher Education Commission
Interpreting the Existing
Funding Formula
• Enrollment growth is privileged above all else.
• Little differentiation is made between different
types of institutions.
• Limited acknowledgement of institutional
mission and uniqueness.
• For the most part, success means bigger.
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Tennessee Higher Education Commission
Complete College Act
• “Develop, after consultation with the board
of regents and the University of Tennessee
board of Trustees, policies and formulae or
guidelines for fair and equitable distribution
and use of public funds … that are consistent
with and further the goals of the statewide
master plan. The policies and formulae or
guidelines shall result in an outcomes-based
model.”
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Tennessee Higher Education Commission
Complete College Act
Outcomes-Based Model
• According to the legislation, the model must include:
– end of term enrollment
– student retention
– degree production
– timely progress towards a degree
• The model may also include:
– student transfer activity
– research
– student success
– compliance with transfer and articulation policy as
enumerated further in the legislation
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Tennessee Higher Education Commission
Formula Design Concepts
• Alter the incentive structure to focus on outputs.
• Find broad agreement on the activities and
outcomes higher education ought to pursue.
• Spread the financial incentives to a larger, more
appropriate set of variables (not just enrollment).
• Calibrate it specifically to an institution’s
mission by utilizing Carnegie Classifications and
mission statements.
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Tennessee Higher Education Commission
Formula Design Concepts
• Strengthen links to Master Plan
• Enhance incentives for student retention,
research
• Introduce a focus on productivity, defined as
degree production, transfer activity, student
access, adult students, etc.
• Tailor the productivity emphasis to each
institution’s mission
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Tennessee Higher Education Commission
Formula Design Concept
• Identify an outcome (degree attainment,
transfer activity, student retention, etc.)
• Compile actual data on those outcomes
(Fact Book, Statutory Reports).
• Award “points” for those outcomes.
• Weight the outcome based on an
institution’s mission.
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Tennessee Higher Education Commission
University Formula Design Concept
Hypothetical Institution Hypothetical
Outcomes
Data
Bachelors Degrees
2,672
Graduation Rate
42.0
Time to Degree
4.8
Research Expenditures
3,854,000
First Time Students
2,558
Students Achieving Soph. Status
2,037
Students Achieving Jr. Status
2,490
Students Achieving Sr. Status
1,846
Doctoral Degree Production
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Masters Degree Production
54
Adult Student Enrollment
3,610
Transfers In from CC
645
Points per
Outcome
9
9
9
9
8
8
8
8
8
8
8
8
100
Weights
35%
5%
5%
2%
6%
8%
10%
12%
2%
5%
5%
5%
100%
Total
Points
617
88
133
4
89
114
174
155
1
11
65
193
1,644
1. Outcome data is taken from the THEC Fact
Book and other readily available sources.
Data is rescaled to account for large
differences between the numbers (e.g.
Research Expenditures and Time to Degree)
2. Points are awarded for each
outcome by multiplying the rescaled
data by the Points per Outcome.
3. Points are multiplied by outcome specific weights to determine the total points.
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Tennessee Higher Education Commission
University Formula Design Concept
Outcomes
Bachelors Degrees
Research Expenditures
Doctoral Degree Production
Hypothetical
Institution A
Weights
35%
2%
5%
Hypothetical
Institution B
Weights
20%
15%
10%
Weights will vary depending on institutional mission.
For example:
•A Master’s level institution would have a greater weight on bachelor degree
production and a lesser weight on graduate degree production and research
expenditures.
•Conversely, an institution with a greater research focus would have a lesser
weight on bachelor degree production and a greater weight on graduate
degree production and research expenditures.
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Tennessee Higher Education Commission
Outcomes Based Model
• Formula has never been and is not now
an institutional budgeting tool.
• Outcomes based model does not have
targets or goals; it is not large scale
Performance Funding.
• Institutional excellence will no longer be
overshadowed by enrollment growth.
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Tennessee Higher Education Commission
Outcomes Based Model
• Multiple measures of productivity,
previously unaccounted for, will now be
credited to the institution (transfer activity,
R&D success, degree production, etc.)
• Formula is not prescriptive in how to
achieve success and excellence.
• Does not penalize failure to achieve predetermined goals.
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Tennessee Higher Education Commission
Outcomes Based
Model Advantages
• Includes student successes/outcomes that hitherto have
not been a factor in formula.
• Emphasizes unique institutional mission.
• More flexible and can accommodate future shifts in
mission or desired outcomes.
• More transparent and simpler for state government.
• Along with new PF, the model will increase leverage
for policy change and reinforce the Master Plan.
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Tennessee Higher Education Commission
From the Perspective
of State Government….
• Enrollment growth is no longer paramount.
• Access for the sake of access is not enough; a
successful student outcome (however defined)
is the goal.
• Institutions have different missions and that
variance must be considered.
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Tennessee Higher Education Commission
From the Perspective
of State Government….
• What is the most effective means of allocating
limited state resources among institutions?
• What macro-level information is crucial to
making allocation decisions among institutions?
• What type of incentive structure can be created,
with minimal operational interference but
maximum leverage, to achieve state goals?
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Tennessee Higher Education Commission
THEC Formula
Review Committee
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Jessica Gibson – Comptroller’s staff
Tre Hargett – Secretary of State
Jack Murrah – THEC Chairman
Cathy Pierce – F&A
Paul Robertson – Treasurer’s staff
Gary Rogers – UT
Dale Sims – TBR
David Thurman – Legislative Budget Office
THEC staff
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Tennessee Higher Education Commission
Higher Education
Outcomes Based Formula
2010
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Tennessee Higher Education Commission