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

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

3. 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

4. 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

5. 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

6. 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

7. 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

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

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

10. Policy-making process
Problems down
Solutions up

11. Thank you