Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to...

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Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha Snyder & Nate Johnson

Transcript of Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to...

Page 1: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

Driving Better Outcomes: Aligning State Investments With

Completion NeedsTypology & Principles to Inform Outcomes-Based

Funding Models

Presented by: Martha Snyder & Nate Johnson

Page 2: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

Revenue Sources for Institutions

Page 3: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 4: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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.

Page 5: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 6: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 7: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

Driving Toward Better Outcomes: State Finance Policies to Support Completion Agenda

Page 8: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

OUTCOMES-BASED FUNDING POLICIES

Page 9: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 10: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 11: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 12: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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

Page 24: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

Implementation of OBF

Phase-in the effect of funding change Continuously improve data

Evaluate & Adjust

Page 25: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.
Page 26: Driving Better Outcomes: Aligning State Investments With Completion Needs Typology & Principles to Inform Outcomes-Based Funding Models Presented by: Martha.

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