higher education Funding Formulas & performance funding State of Louisiana Higher Education Governance Commission September 28, 2011

Richard L. Petrick Executive Director Ohio Business Alliance for Higher Education and the Economy

Overview Principles of formula funding – elements to include Pitfalls and problems – elements to avoid Performance funding in Ohio – one example Post-budget considerations – monitoring & evaluation is needed Process of decision-making is extremely important

Five principles to consider State decides what to value, and measures and rewards processes & outcomes related to those goals. Intentional Resources will be reallocated based on campus performance. Dynamic Campuses should know upper and lower bounds of short-term outcomes, and how their performance will affect the outcome. Predictable Math that drives the formula may be complex, but concepts should not be. Simple One size does not fit all. Mission Sensitive

Pitfalls and problems to avoid Thresholds create cliffs; continuous metrics don’t. Thresholds “Hold harmless” and guaranteed increases create artificial protection, and are difficult to eliminate. Guarantees Integrate all metrics into a single formula; bolt-ons tend to disappear in tough times. “Bolt-ons” New policies need time to take effect; frequent major policy changes kill the will -- and ability -- to respond to any state initiative. Frequent changes Often viewed positively to help a campus through a rough patch; but supplements – like zombies – almost never die. Supplemental core funding

FY 2010 - 2011 performance formulas in Ohio Course and degree completions, weighted by cost, with premium for at-risk students + dynamic setasides University main campuses Course completions only, weighted by cost, with at-risk premium Regional campuses “Success Points” + enrollments Community colleges

Five principles, applied to Ohio Student success goals specified in the state’s 10-year Strategic Plan. Therefore, shift from enrollment-based formula to outcomes-based formula. Intentional Reallocation of funds has occurred, but effect of formula is phased in over time.. Dynamic A ‘stop-loss’ provides a floor for loss of state funds. Predictable Math is extremely complex; but everyone understands the idea of funding student success outcomes and not inputs. Simple Ohio has three separate formulas; also provides premium for success of at-risk students. Mission Sensitive

Post-budget evaluations and assessments Design Advocacy Implemen-tation Evaluation Revision

Post-budget evaluations and assessments Design Advocacy Implemen-tation Evaluation Revision Program review Outcome evaluation

Policy-making process Problems down Solutions up

Thank you