1. National Center for Higher Education Management Systems 3035 Center Green Drive, Suite 150 Boulder, Colorado 80301 Linking Finance to Performance/Outcomes presented to Montana University System Helena, Montana March 11, 2010

2. Why? What’s driving this policy shift? slide 2

3. What’s Driving this Policy Shift? 1.Increasing clarity of goals and an urgency about attaining them –National level –State level 2.Resource constraints 3

4. National Level “By 2020, America will once again have the highest proportion of college graduates in the world” President Barack Obama, February 24, 2009 slide 4

5. State Level Board of Regents Goals –Increase educational attainment of Montanans –Assist in the expansion and improvement of the economy –Improve institutional efficiency and effectiveness 5

6. Source: OECD Education at a Glance 2009 Comparing Montana with Nations & Other States in the Percentage of Young-Adult Degree Attainment (ages 25-34) 56Canada Korea 54Japan Massachusetts 52 North Dakota50 Minnesota New York48 New Zealand Connecticut Iowa New Hampshire New Jersey46 Maryland Nebraska South Dakota Vermont 44Ireland Illinois Pennsylvania Rhode Island Norway Virginia42 Colorado Hawaii Kansas Australia Belgium France Wisconsin40Denmark Sweden UNITED STATES WashingtonFinland Spain Utah38 MissouriNetherland United Kingdom Indiana Maine MONTANA Michigan Ohio North Carolina Oregon 36Luxembourg Florida Switzerland Georgia Idaho South Carolina Wyoming34 Alabama Kentucky Mississippi32 Arizona Tennessee TexasIceland Alaska Oklahoma30Poland New Mexico Louisiana Nevada West Virginia28Greece Arkansas26 24 Germany 22Hungary Portugal 20 Austria Italy Mexico 18 United States%OECD Counties California Delaware Slovak Republic (17%) Czech Republic (15%) Turkey (14%) 6

7. slide 7 Current Annual Degree Production – 2,252,212 Additional Annual Degree Production Needed – 150,528 per Year Associate and Bachelors Degrees Needed to Become the Most Educated Country by 2020 Increase in State and Local Funding at Current Cost per FTE Note: Assumes private institutions will maintain current share 7 7

8. Annual Percent Increase Needed to Reach 2020 Goal of 51% Note: for Montana this translates to 596 per year. Colorado New Jersey Minnesota North Dakota Connecticut New Hampshire Massachusetts

9. Undergraduate FTE Enrollment by Sector (2006-07) 9

10. How Montana Ranks Among Other States on Selected Measures for Education and Economic Development Source: Tom Mortenson, Postsecondary Opportunity; US Census Bureau, 2006 ACS Public Microdata Sample (PUMS) File, Kauffman Foundation, Regional Economic Information System, Bureau of Economic Analysis, US Department of Commerce State New Economy Index Personal Income per Capita Difference in Earnings Between Bachelor's & High School Diploma Difference in Earnings Between Associate & High School Diploma Migration Rate of College Graduates (Age 22-64) Overall Results on Student Pipeline (Transition & Completion Rates, 9th Grade to College Completion) Six-Year Graduation Rates of Bachelor's Students Three-Year Graduation Rates of Associate Students College-Going Rates of Students Directly Out of High School Public High School Graduation Rates Economic Development MeasuresEducation Measures 10

11. Undergraduate Credentials & Degrees Awarded at All Colleges per 1,000 Adults Age 18-44 with No College Degree, 2006 slide 11 Source: NCES, IPEDS Completions Survey 2005-06; U.S. Census Bureau, 2006 ACS 58.7 14.7 United States 33.5 48.7 Montana 32.0

12. Undergraduate Awards per 100 FTE Undergraduates 2006-07 Source: NCES IPEDS Peer Analysis System (http://www.nces.ed.gov/ipedspas/), IPEDS 2006-07 efia2007 Early Release Enrollment File; NCES IPEDS Peer Analysis System (http://www.nces.ed.gov/ipedspas/), IPEDS 2005-06 c2006_a Final Release Completions File Note: Completions reflect 2006-07 total undergraduate degrees (Associate, Bachelors) and certificates (less than 1-year, 1-2 year, 2-4 year) awarded at Title IV degree granting public and private institutions. Enrollments reflect 2006-07 annual FTE undergraduate enrollments at Title IV degree-granting public and private institutions as reported in the IPEDS 2006-07 12-month instructional activity enrollment file. Enrollment data were aggregated from an early release data file and are subject to change. 12

13. Public Research Institutions - Bachelors Degrees Awarded per 100 FTE Undergraduates, 2006-07 13 Sources: NCES, IPEDS 2006-07 Completions File; c2007_a Early Release Data File Downloaded 04-28-08; NCES, IPEDS 2006-07 Instructional Activity File; efia2007 Final Release Data File; NCES, IPEDS 2006-07 Unduplicated Headcount File; effy2007 Final Release Data File.; NCES, IPEDS Fall 2006 Enrollment File; ef2006a Final Release Data File.

14. Public Masters & Bachelors Institutions - Bachelors Degrees Awarded per 100 FTE Undergraduates, 2006-07 14 Sources: NCES, IPEDS 2006-07 Completions File; c2007_a Early Release Data File Downloaded 04-28-08; NCES, IPEDS 2006-07 Instructional Activity File; efia2007 Final Release Data File; NCES, IPEDS 2006-07 Unduplicated Headcount File; effy2007 Final Release Data File.; NCES, IPEDS Fall 2006 Enrollment File; ef2006a Final Release Data File.

15. Public Associate Colleges - Total Credentials Awarded (Less than Bachelors) per 100 FTE Undergraduates, 2006-07

16. THE FISCAL REALITIES slide 16

17. The Flow of Funds 17 Federal Government Tax Policy Appropriations/GrantsStudent Aid Tuition Scholarships & Waivers Student Aid (Restricted) Income Available State and Local Govt. Funds Federal Government Higher Education Students Institutions Economy K-12 Corrections Health Care Other Govt. Donors Foundations Corporations Stimulus Funds

18. Income The Flow of Funds - State 18 Tax Policy Appropriations/GrantsStudent Aid Tuition Scholarships & Waivers Available State and Local Govt. Funds Higher Education Students Institutions Economy Federal Government Student Aid

19. State Tax Capacity and Effort—Indexed to U.S. Average Source: State Higher Education Executive Officers (SHEEO) AL AK AZ AR CA CO CT DE GA HI IL IN IA KS KY LA ME MD MA MS MT NE NV NJ NY NC ND OH OK PA RI SC SD UT VT VA WA FL ID MI MN MO NH NM TN TX WV WI WY 0.6 0.7 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 0.60.81.01.21.4 State Tax Capacity (Total Taxable Resources Per Capita) State Tax Effort (Effective Tax Rate) US OR Slide 19

20. Projected State & Local Budget Surplus (Gap) as a Percent of Revenues, 2016 slide 20 Source: NCHEMS; Don Boyd (Rockefeller Institute of Government), 2009

21. State/Local Funding plus Tuition Revenue per FTE Student All Institutions (Public) 21 Source: SHEEO SHEF

22. Revenues Per Student from Net Tuition, State, & Local Appropriations Public Research slide 22 Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files. NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File. NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.

23. Revenues Per Student from Net Tuition, State, & Local Appropriations Public Masters and Baccalaureate slide 23 Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files. NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File. NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.

24. Revenues Per Student from Net Tuition, State, & Local Appropriations Public 2-Year slide 24 Sources: NCES, IPEDS 2006-07 Finance Files; f0607_f1a and f0607_f2 Final Release Data Files. NCES, IPEDS 2007-08 Institutional Characteristics File; hd2007 Final Release Data File. NCES, IPEDS 2006-07 Enrollment Files; ef2006a, effy2007, and efia2007 Final Release Data Files.

25. Net Tuition as a Percent of Public Higher Education Total Educational Revenue by State, FY 2008 Note: Dollars adjusted by 2008 HECA, Cost of Living Adjustment, and Enrollment Mix Source: SHEEO SHEF 25

26. Net Tuition Revenues per FTE and State-Funded Tuition Aid per FTE by State, FY 2008 (Public Institutions Only) Note: Figures are adjusted for inflation, public system enrollment mix, and state cost of living. Funding and FTE data are for public non-medical students only. Source: SHEEO SHEF 26

27. Affordability: Need-based Financial Aid slide 27 Source: Measuring Up 2008 State need-based aid as a proportion of federal need-based aid.

28. Measuring Up: Affordability Source: Measuring Up 2008 28

29. Median Earnings of Population Age 25-64 by Level of Education, 2006 Source: U.S. Census Bureau, 2006 American Community Survey PUMS File 29

30. Education Attainment & Personal Income by Montana Counties Personal Income Per Capita Adults aged 25-64 with a Bachelor’s Degree or Higher (%) 30

31. Adjusting to Changed Circumstances Improving Productivity 31

32. Productivity: Total Funding per Degree/Certificate (Weighted*, 2006-2007) slide 32 *Adjusted for value of degrees in the state employment market (median earnings by degree type and level)

33. Degrees & Certificates awarded per FTE vs. Total Funding per FTE (2006-2007) slide 33 Source: SHEEO State Higher Education Finance Survey 2008: NCES IPEDS Completions Survey

34. Total Funding per FTE (2006-07) Performance (2006-07) Performance Relative to Funding: Bachelors Degrees Awarded per 100 FTE Undergraduates (Public Research Institutions) Source: NCES, IPEDS slide 34

35. Total Funding per FTE (2006-07) Performance (2006-07) Performance Relative to Funding: Bachelors Degrees Awarded per 100 FTE Undergraduates (Public Bachelors and Masters) Source: NCES, IPEDS slide 35

36. Total Funding per FTE (2006-07) Performance (2006-07) Performance Relative to Funding: All Credentials Awarded per 100 FTE Undergraduates (Public Two-Year Institutions) Source: NCES, IPEDS slide 36

37. How? What are Emerging Best Practices? slide 37

38. Basic Principles Applied to allocation of base – not just a small add-on Few factors that can be measured unambiguously Different factors for different types of institutions –Research –4-Year teaching –2-Year Methodology is transparent – incentives created are linked to goals in obvious ways They can be applied in good times and bad 38

39. Emerging Practices Using completed SCH – not enrolled SCH – as driver in calculating base Additional funds tied to specific goals –Increasing number of graduates – with variations for At-risk students Students in priority fields –Increasing research funding from sources other than state or institution’s own funds –“Momentum Point” attainment in two-year institutions 39