1. IBHE Presentation 1 Illinois Higher Education Performance Funding Model Steering Committee Meeting November 20, 2014 Dr. Alan Phillips

2. Topics of Discussion Current Situation Where Do We Go From Here? Sub-Category Weighting Issue Steering Committee Issues NCHEMS Performance Funding Guidelines University President Concerns Timelines IBHE Presentation 2

3. Current Situation IBHE Presentation 3

4. Current Situation A revised Performance Funding Model was developed for FY15. Colleges and universities received essentially level funding for FY15 (-$2.8M)(-.2%). However, the FY15 Performance Funding Model was not actually used to allocate funding for FY15 based on performance. Instead, the FY 15 Appropriations carried over the FY14 Performance Funding allocations. IBHE Presentation 4

5. 5 Actual FY15 Performance Funding Allocation Performance Funding* ($ in thousands) FY2014 FY2015 FY2014 - FY 2015 Appropriatio n Base Budget Level % ChangeSet Aside Performance FundsNet Change Appropriatio n$ Change % Change Public Universities $ 1,232,192.0 $ 1,229,438.5 (0.22) % $6,161.0$ $0.0 $ 1,229,438.5 $ (2,753.5) (0.22) % Chicago State University 37,262.8 37,209.4 (0.14)186.5143.8-42.8 37,166.6 (96.2) (0.26) Eastern Illinois University 44,078.1 43,927.8 (0.34)220.2257.237.0 43,964.8 (113.3) (0.26) Governors State 24,675.0 24,591.4 (0.34)123.3147.724.5 24,615.9 (59.1) (0.24) Illinois State University 74,089.2 73,882.4 (0.28)370.4377.26.8 73,889.2 (200.0) (0.27) Northeastern Illinois University 37,847.4 37,708.3 (0.37)189.0228.839.8 37,748.1 (99.3) (0.26) Northern Illinois University 93,412.6 93,247.1 (0.18)467.4409.7-57.6 93,189.5 (223.1) (0.24) Western Illinois University 52,755.1 52,622.0 (0.25)263.7271.07.3 52,629.3 (125.8) (0.24) Southern Illinois University 204,584.1 204,261.5 (0.16)1,023.5913.8-109.7204,151.8 (432.3) (0.21) Carbondale 145,219.3 144,990.3 (0.16)726.6621.5-105.0 144,885.3 (334.0) (0.23) Edwardsville 59,364.8 59,271.2 (0.16)296.9292.2-4.7 59,266.5 (98.3) (0.17) University of Illinois 663,487.7 661,988.6 (0.23)3,317.03,411.794.7662,083.4 (1,404.3) (0.21) Chicago 307,296.4 306,602.1 (0.23)1,527.91,553.525.6 306,627.7 (668.7) (0.22) Springfield 23,602.9 23,549.6 (0.23)115.8113.4-2.3 23,547.3 (55.6) (0.24) Urbana/Champaign 332,588.4 331,836.9 (0.23)1,673.31,744.871.4 331,908.4 (680.0) (0.20) * FY2015 Performance Funding is based on results from FY 2014 calculations.

6. Where Do We Go From Here? Do we stay with the original FY15 recommendation for FY16? Do we need to further revise the FY15 model, and if so, how? Do we work to address Steering Committee comments/concerns, and if so, which ones? How do we address the likely increase in the performance funding set-aside for FY16? IBHE Presentation 6

7. Refinement Committee Recommendations Do we stay with the original FY15 recommendation for FY16? – Yes. – However, In light of the board's recent progress on the Public Agenda that showed significant gaps of achievement for African-Americans, Hispanics and adult learners, Professor Karnes proposed that we double those premiums. – His view is that we need to send a strong signal to our universities that they need to commit resources to reduce and eliminate the gaps. IBHE Presentation 7

8. FY15 Performance Measures IBHE Presentation 8 MeasuresSource Bachelor’s Degrees (FY10-12) IPEDS Master’s Degrees (FY10-12) IPEDS Doctoral and Professional Degrees (FY10-12) IPEDS Undergraduate Degrees per 100 FTE (FY10-12) IPEDS Research and Public Service Expenditures (FY11-13) RAMP Graduation Rate - 150% of Time (Fall 05-07 Cohort)*Inst Data Persistence- 24 Credit Hours Completed in 1 Year (FY10-12)Inst Data Cost per Credit Hour (FY10-12) Cost Study Cost per Completion (FY10-12)Cost Study *Incorporate transfers per the CCA transfer category definitions (i.e. 30 or fewer credits, 31 to 59 credits, or 60 or more credits).

9. FY15 Sub-Categories IBHE Presentation 9 Sub-CategoryWeight Low Income (Pell/Map Eligible) 40% - Institutional Data Adult (Age 25 and Older) 40% Hispanic 40% Black, non-Hispanic 40% STEM & Health Care (by CIP Code) 40% - HLS* + CIP 51** *HLS – Homeland Security **CIP 51 – Health Professions & Related Programs

10. Sub-Category Weighting Issue IBHE Presentation 10

11. IBHE Presentation 11 Preliminary FY15 Performance Funding Allocation FY 2015 PBF Allocation with 0.5% Performance Funding Set-Aside (Subcategory Weights -.2) Performance Funding FY2015 ($ in thousands) FY2014 FY2015 Model Appropriation FY2014 - FY 2015 AppropriationSet Aside*Performance FundsNet Change0.5% Set-Aside$ Change % Change Public Universities $ 1,232,192.0 $6,161.0$ $0.0 $ 1,232,192.0 $ 0.0 0.00 % Chicago State University 37,262.8186.3 $ 119.3-67.1 37,195.7 (67.1) (0.18) Eastern Illinois University 44,078.1220.4 $ 231.911.5 44,089.6 11.5 0.03 Governors State 24,675.0123.4 $ 153.530.1 24,705.1 30.1 0.12 Illinois State University 74,089.2370.4 $ 347.3-23.1 74,066.1 (23.1) (0.03) Northeastern Illinois University 37,847.4189.2 $ 203.514.3 37,861.7 14.3 0.04 Northern Illinois University 93,412.6467.1 $ 405.9-61.1 93,351.5 (61.1) (0.07) Western Illinois University 52,755.1263.8 $ 247.9-15.9 52,739.2 (15.9) (0.03) Southern Illinois University** 204,584.11,022.9 $ 885.0-138.0 204,446.1 (138.0) (0.07) Carbondale 145,219.3726.1 $ 620.4-105.7 145,113.6 (105.7) (0.07) Edwardsville 59,364.8296.8 $ 264.5-32.3 59,332.5 (32.3) (0.05) University of Illinois*** 663,487.73,317.4 $ 3,566.8249.3 663,737.0 249.3 0.04 Chicago 307,296.41,536.5 $ 1,564.528.0 307,324.4 28.0 0.01 Springfield 23,602.9118.0 $ 109.3-8.7 23,594.2 (8.7) (0.04) Urbana/Champaign 332,588.41,662.9 $ 1,893.0230.0 332,818.4 230.0 0.07 * FY2015 Set Aside is based on a 0.5% reallocation of the final FY2014 budget level. ** SIU Administration is allocated on a pro-rated basis to each campus, SIU School of Medicine is included with the Carbondale Campus. *** UI Administration is allocated on a pro-rated basis to each campus.

12. IBHE Presentation 12 Preliminary FY15 Performance Funding Allocation FY 2015 PBF Allocation with 0.5% Performance Funding Set-Aside (Subcategory Weights -.4) Performance Funding FY2015 ($ in thousands) FY2014 FY2015 Model Appropriation FY2014 - FY 2015 AppropriationSet Aside*Performance FundsNet Change0.5% Set-Aside$ Change % Change Public Universities $ 1,232,192.0 $6,161.0$ $0.0 $ 1,232,192.0 $ (0.0) (0.00) % Chicago State University 37,262.8186.3 $ 146.9-39.4 37,223.4 (39.4) (0.11) Eastern Illinois University 44,078.1220.4 $ 246.926.5 44,104.6 26.5 0.06 Governors State 24,675.0123.4 $ 169.245.8 24,720.8 45.8 0.19 Illinois State University 74,089.2370.4 $ 353.8-16.6 74,072.6 (16.6) (0.02) Northeastern Illinois University 37,847.4189.2 $ 235.246.0 37,893.4 46.0 0.12 Northern Illinois University 93,412.6467.1 $ 439.1-28.0 93,384.6 (28.0) (0.03) Western Illinois University 52,755.1263.8 $ 267.84.0 52,759.1 4.0 0.01 Southern Illinois University** 204,584.11,022.9 $ 910.0-112.9 204,471.2 (112.9) (0.06) Carbondale 145,219.3726.1 $ 632.7-93.3 145,126.0 (93.3) (0.06) Edwardsville 59,364.8296.8 $ 277.3-19.5 59,345.3 (19.5) (0.03) University of Illinois*** 663,487.73,317.4 $ 3,392.174.6 663,562.3 74.6 0.01 Chicago 307,296.41,536.5 $ 1,504.9-31.5 307,264.9 (31.5) (0.01) Springfield 23,602.9118.0 $ 114.0-4.1 23,598.8 (4.1) (0.02) Urbana/Champaign 332,588.41,662.9 $ 1,773.2110.3 332,698.7 110.3 0.03 * FY2015 Set Aside is based on a 0.5% reallocation of the final FY2014 budget level. ** SIU Administration is allocated on a pro-rated basis to each campus, SIU School of Medicine is included with the Carbondale Campus. *** UI Administration is allocated on a pro-rated basis to each campus.

13. IBHE Presentation 13 Preliminary FY15 Performance Funding Allocation FY 2015 PBF Allocation with 0.5% Performance Funding Set-Aside (Subcategory Weights -.6) Performance Funding FY2015 ($ in thousands) FY2014 FY2015 Model Appropriation FY2014 - FY 2015 AppropriationSet Aside*Performance FundsNet Change0.5% Set-Aside$ Change % Change Public Universities $ 1,232,192.0 $6,161.0$ $0.0 $ 1,232,192.0 $ (0.0) (0.00) % Chicago State University 37,262.8186.3 $ 170.5-15.9 37,246.9 (15.9) (0.04) Eastern Illinois University 44,078.1220.4 $ 259.639.2 44,117.3 39.2 0.09 Governors State 24,675.0123.4 $ 182.659.2 24,734.2 59.2 0.24 Illinois State University 74,089.2370.4 $ 359.4-11.0 74,078.2 (11.0) (0.01) Northeastern Illinois University 37,847.4189.2 $ 262.272.9 37,920.3 72.9 0.19 Northern Illinois University 93,412.6467.1 $ 467.30.3 93,412.9 0.3 0.00 Western Illinois University 52,755.1263.8 $ 284.721.0 52,776.1 21.0 0.04 Southern Illinois University** 204,584.11,022.9 $ 931.4-91.5 204,492.6 (91.5) (0.04) Carbondale 145,219.3726.1 $ 643.2-82.8 145,136.5 (82.8) (0.06) Edwardsville 59,364.8296.8 $ 288.1-8.7 59,356.1 (8.7) (0.01) University of Illinois*** 663,487.73,317.4 $ 3,243.3-74.1 663,413.6 (74.1) (0.01) Chicago 307,296.41,536.5 $ 1,454.2-82.3 307,214.1 (82.3) (0.03) Springfield 23,602.9118.0 $ 117.9-0.1 23,602.8 (0.1) (0.00) Urbana/Champaign 332,588.41,662.9 $ 1,671.28.2 332,596.6 8.2 0.00 * FY2015 Set Aside is based on a 0.5% reallocation of the final FY2014 budget level. ** SIU Administration is allocated on a pro-rated basis to each campus, SIU School of Medicine is included with the Carbondale Campus. *** UI Administration is allocated on a pro-rated basis to each campus.

14. IBHE Presentation 14 Preliminary FY15 Performance Funding Allocation FY 2015 PBF Allocation with 0.5% Performance Funding Set-Aside (Subcategory Weights -.8) Performance Funding FY2015 ($ in thousands) FY2014 FY2015 Model Appropriation FY2014 - FY 2015 AppropriationSet Aside*Performance FundsNet Change0.5% Set-Aside$ Change % Change Public Universities $ 1,232,192.0 $6,161.0$ $0.0 $ 1,232,192.0 $ (0.0) (0.00) % Chicago State University 37,262.8186.3 $ 190.84.4 37,267.2 4.4 0.01 Eastern Illinois University 44,078.1220.4 $ 270.650.3 44,128.4 50.3 0.11 Governors State 24,675.0123.4 $ 194.170.7 24,745.7 70.7 0.29 Illinois State University 74,089.2370.4 $ 364.2-6.2 74,083.0 (6.2) (0.01) Northeastern Illinois University 37,847.4189.2 $ 285.496.2 37,943.6 96.2 0.25 Northern Illinois University 93,412.6467.1 $ 491.724.6 93,437.2 24.6 0.03 Western Illinois University 52,755.1263.8 $ 299.435.6 52,790.7 35.6 0.07 Southern Illinois University** 204,584.11,022.9 $ 949.8-73.2 204,511.0 (73.2) (0.04) Carbondale 145,219.3726.1 $ 652.3-73.8 145,145.5 (73.8) (0.05) Edwardsville 59,364.8296.8 $ 297.50.6 59,365.4 0.6 0.00 University of Illinois*** 663,487.73,317.4 $ 3,115.1-202.4 663,285.3 (202.4) (0.03) Chicago 307,296.41,536.5 $ 1,410.5-126.0 307,170.4 (126.0) (0.04) Springfield 23,602.9118.0 $ 121.43.3 23,606.2 3.3 0.01 Urbana/Champaign 332,588.41,662.9 $ 1,583.2-79.7 332,508.7 (79.7) (0.02) * FY2015 Set Aside is based on a 0.5% reallocation of the final FY2014 budget level. ** SIU Administration is allocated on a pro-rated basis to each campus, SIU School of Medicine is included with the Carbondale Campus. *** UI Administration is allocated on a pro-rated basis to each campus.

15. IBHE Presentation Performance Funding Allocation At Different Sub-Category Weights UIUC UIC NIU SIUC ISU SIUE WIU EIU NEIU CSU GSU UIS $230.0 $28.0 - $61.1 - $105.7 - $23.1 - $32.3 - $15.9 $11.5 $14.3 - $67.1 $30.1 - $4.4.07%.01% -.07% -.03% -.05% -.03%.03%.04% -.18%.12% -.04% $110.3 -$31.5 $46.0 - $93.3 - $16.6 - $19.5 $4.0 $26.5 $46.0 - $39.4 $45.8 - $4.1.03% -.01%.12% -.06% -.02% -.03%.01%.06%.12% -.11%.19% -.02% $8.2 -$82.3 $72.9 - $82.8 - $11.0 - $8.7 $21.0 $39.2 $72.9 - $15.9 $59.2 - $.1.00% -.03%.19% -.06% -.01%.04%.09%.19% -.04%.24% -.00% -$79.7 -$126.0 $96.2 - $73.8 - $6.2 - $.6 $35.6 $50.3 $96.2 $4.4 $70.7 - $3.3 -.02% -.04%.25% -.05% -.01% -.00%.07%.11%.25%.01%.29% -.01% Sub-Category Wt -.02 Sub-Category Wt -.04 Sub-Category Wt -.06 Sub-Category Wt -.08 15 -.09% -.05%.32%.02%.05%.10%.08%.21%.19%.17%.03%

16. Refinement Committee Recommendations Do we need to further revise the FY15 model, and if so, how? – Other than possible minor adjustments to the FY15 performance funding model for FY16, we should start with the performance funding baseline we have established and not make any further changes in the existing model for at least three years. – There is concern that additional changes at this time will only serve to move funding, not based on performance, from one set of institutions to another set of institutions. IBHE Presentation 16

17. Refinement Committee Recommendations Do we work to address Steering Committee comments/concerns, and if so, which ones? – At this point in time we should start work on version 2.0 of the performance funding model for implementation in the future (i.e. after 3 years). This would provide time for ILDS to come on line and for the data to mature. This would give us time to address performance funding issues such as first generation students, the inclusion of other high value programs to the STEM sub-category, quality, institutional capacity, geographical differences, efficiency measures, and assess the effectiveness of performance based funding on the institutions. IBHE Presentation 17

18. Steering Committee Comments The committee should look at what is being done in other states to see if there is a simpler or better way to do this. (Done) We should look at providing a premium to other “High Value” programs in addition to the Homeland Security (HLS) and CIP Code 51 (STEM) programs. (PBF 2.0) We should take into account the institutional capacity to produce degrees. Geographical differences – are these the same people that are counted as “low income” (PBF 2.0) We need to increase the dollar amounts allocated to performance. (FY16?) We need to reduce the number of measures in the model. (PBF 2.0) We need to include a measure of quality in the performance funding model. (PBF 2.0) We need to look at each institution to see where they need to improve. (PBF 2.0) We should significantly increase the weighting factor for efficiency measures (as much as 25%-30%) (PBF 2.0) IBHE Presentation 18

19. Steering Committee Comments Is the percentage devoted to performance funding high enough to make a difference? (FY16?) Discussion on the driving force behind performance funding in other states. (Governor, legislature, etc.) (Done) Would performance funding hurt admission practices and cause some public universities to be more selective? (Addressed in Existing Model) Increased success should be tied to increased funding. (FY16) We should identify 3-4 of the greatest shortcomings of each institution and apply performance funding to that. (PBF 2.0) We should see what else is going on in the other states. (Done) We should ensure that we are following best practices as outlined by NCHEMS in their performance funding paper – “Performance Funding; From Idea to Action” IBHE Presentation 19

20. NCHEMS Performance Funding Guidelines Design Principles Get agreement on goals before putting performance funding in place. – Tailored to the needs of the state. – Focused on the needs of the state, not the institutions of Higher Education. Do not construct performance metrics too narrowly. It is important that all institutions have an opportunity (not a guarantee) to benefit by excelling at their different missions. Design the funding model to promote mission differentiation, not mission creep. – Use different metrics for different kinds of institutions. – Create different pools of resources for different kinds of institutions (i.e. different funding models for Community Colleges and Public Universities). IBHE Presentation 20

21. NCHEMS Performance Funding Guidelines Design Principles Include provisions that reward success with underserved populations (i.e. African-American, Hispanic, low income, adult, and academically at-risk). Include provisions that reward progress as well as ultimate success (i.e. degree completion). Limit the categories of outcomes to be rewarded. Use metrics that are unambiguous and difficult to game (i.e. numbers of graduates as opposed to graduation rates). Reward continuous improvement, not attainment of a fixed goal. Make the performance funding pool large enough to command attention. Ensure that the incentives in all parts of the funding model align with state goals. IBHE Presentation 21

22. NCHEMS Performance Funding Guidelines Implementation Principles Don’t wait for new money. Include a phase-in provision. Employ stop-loss, not hold harmless, provisions. Continue performance funding in both good times and bad. IBHE Presentation 22

23. Refinement Committee Recommendations How do we address the potential increase in the performance funding set-aside for FY16? – Any increase in the performance funding allocation, assuming that there will be no additional funds allocated for performance funding, should be gradual and on the order of no more than 1% per year. – There is great concern regarding the impact of lower tax rates on higher education funding along with the potential impact of a pension cost transfer. IBHE Presentation 23

24. University President Concerns The continued implementation of performance funding in an increasingly difficult fiscal environment. – Continued decline in State higher education funding. – The resolution of the tax and pension issues and the potential impact on the universities. – The impact of a minimum wage increase. – Declining enrollment. – Declining financial aid. – Unfunded mandates. The ability to actually improve performance beyond what is already taking place. Improving performance and still losing funding. The potential increase in the performance funding set-aside. IBHE Presentation 24

25. Timelines IBHE Presentation 25

26. Next Steps 21 Aug 14- Refinement Committee Meeting (IBHE) 15 Sep 14- Steering Committee Meeting (ISU) 7 Oct 14- IBHE Board Meeting (Loyola) 30 Oct 14- Refinement Committee Meeting (IBHE) Mid-Nov 14- First Draft of FY16 Performance Funding Recommendations 20 Nov 14- Steering Committee Meeting (Heartland Community College) 2 Dec 14- IBHE Board Meeting TBD- Refinement Committee Meeting TBD- Steering Committee Meeting 3 Feb 14 (T)- IBHE Board Meeting (IBHE Higher Education Budget/Performance Funding Recommendations to Board) IBHE Presentation 26

27. Questions? IBHE Presentation 27

28. Back-Up IBHE Presentation 28

29. Performance Funding Objectives/Mandate IBHE Presentation 29

30. Performance Funding Objectives To develop performance funding models for public universities and community colleges that are… – Linked directly to the Goals of the Illinois Public Agenda and the principles of Public Act 97-320 – Equipped to recognize and account for each university’s mission and set of circumstances – Adjustable to account for changes in policy and priorities – Not prescriptive in how to achieve excellence and success 30 IBHE Presentation

31. Performance Metrics Shall: – Focus on the fundamental goal of increasing completion. – Reward performance of institutions in advancing the success of students who are: Academically or financially at risk. First generation students. Low-income students. Students traditionally underrepresented in higher education. – Recognize and account for the differentiated missions of institutions of higher education. – Maintain the quality of degrees, certificates, courses, and programs. – Recognize the unique and broad mission of public community colleges. IBHE Presentation 31 Public Act 97-320 (HB 1503)

32. IBHE Presentation 32 Performance Funding Model (FY14) 4-Year Public Universities

33. Performance Funding Model Steps (4-Year Public University) Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures Step 3 – Award an additional premium (i.e. 40%) for the production of certain desired outcomes such as completions by underserved or underrepresented populations Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results. Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools). Step 8 – Use the final Weighted results (or Total Performance Value) to distribute performance funding. IBHE Presentation 33

34. Performance Measures IBHE Presentation 34 MeasureSource Bachelors Degrees (FY09-11) IPEDS Masters Degrees (FY09-11) IPEDS Doctoral and Professional Degrees (FY09-11) IPEDS Undergraduate Degrees per 100 FTE (FY09-11) IPEDS Research and Public Service Expenditures (FY10-12) RAMP Grad Rates 100%/150%/200% of Time (Fall 02-04 Cohort)Institutional Data Persistence (Completed 24/48/72 Semester Hours) (FY07-09)Institutional Data Cost per Credit Hour (FY09-11)Cost Study Cost per Completion (FY09-11)Cost Study Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures (3-year averages)

35. Sub-Categories IBHE Presentation 35 Sub-CategoryWeight Low Income (Pell/Map Eligible) 40% - Institutional Data Adult (Age 25 and Older) 40% Hispanic 40% Black, non-Hispanic 40% STEM & Health Care (by CIP Code) 40% - HLS + CIP 51 Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations

36. Scaling Factors Averaged the measures across all of the institutions. The average number of bachelors degrees will serve as the base value. Determine a scaling factor that will normalize the rest of the averages to the average number of bachelors degrees. Adjust the scaling factors as appropriate (i.e. Masters & Doctorates). Multiply all of the initial data by the scaling factor to normalize the data. IBHE Presentation 36 Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

37. Scaling Factors IBHE Presentation 37 Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. MeasureUniversities 1-12 (Avg) Scaling Factor Adjusted Scaling Factor Bachelors Degrees (FY09-11) Masters Degrees (FY09-11) Doctoral and Professional Degrees (FY09-11) Undergraduate Degrees per 100 FTE (FY09-11) Grad Rates 100% of Time (Fall 02-04 Cohort) Grad Rates 150% of Time (Fall 02-04 Cohort) Grad Rates 200% of Time (Fall 02-04 Cohort) Persistence (Completed 24 Semester Hours) (FY07-09) Persistence (Completed 48 Semester Hours) (FY07-09) Persistence(Completed 72 Semester Hours) (FY07-09) Cost per Credit Hour (FY09-11) (Cost Study) Cost per Completion (FY09-11) (Cost Study) Research and Public Service Expenditures (FY09-11) 2,822 1,042 227 25 27 46 50 1,644 1,453 1,350 346 36,566 112,914,667 1.0 2.7 12.4 112.6 104.4 60.9 57.0 1.7 1.9 2.1 8.1.1.00002 1 2 200 50 2 -8 -.050.00005

38. Performance Measure Weights IBHE Presentation 38 Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Doctoral/ Research-Very High Research-HighResearch Measure Bachelors Degrees Masters Degrees Doctoral and Professional Degrees Undergraduate Degrees per 100 FTE Grad Rates 100% of Time Grad Rates 150% of Time Grad Rates 200% of Time Persistence (Completed 24 Semester Hours) Persistence (Completed 48 Semester Hours) Persistence (Completed 72 Semester Hours) Cost per Credit Hour Cost per Completion Research and Public Service Expenditures UIUCUICNIUSIUCISU 17.0%18.0%28.0% 33.0% 14.0%15.0% 14.0%23.0% 13.0%14.0%10.0%8.0%6.0% 4.0% 11.0%13.0%12.0% 1.5% 2.0% 1.0% 1.5% 0.5% 1.0% 1.5% 2.0% 0.5% 1.0%0.5%1.5% 0.5% 1.0%0.5%1.5% 45.0%42.0%28.0%30.0%15.0% 100.0%

39. Performance Measure Weights IBHE Presentation 39 Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Masters Colleges & Universities (Large) Measure Bachelors Degrees Masters Degrees Doctoral and Professional Degrees Undergraduate Degrees per 100 FTE Grad Rates 100% of Time Grad Rates 150% of Time Grad Rates 200% of Time Persistence (Completed 24 Semester Hours) Persistence (Completed 48 Semester Hours) Persistence (Completed 72 Semester Hours) Cost per Credit Hour Cost per Completion Research & Public Svc Expenditures SIUEWIUEIUNEIUCSUGSUUIS 42.0%40.0% 45.0%43.0% 28.0%25.0%26.0% 25.0%27.0% 2.5%1.0%0.0% 1.0% 12.0%13.0% 5.0%8.0% 2.0%2.5% 0.0%2.5% 1.5%2.0% 0.0%2.0% 1.0% 0.0%1.0% 5.0%1.0% 1.5%2.0% 7.0%2.0% 2.5% 0.0%2.5% 1.5%4.0% 1.5%4.0% 3.5%2.0% 100.0%

40. Performance Value Calculation IBHE Presentation 40 Step 6 – Multiply and Sum the Scaled Data times the Weight to produce the Performance Value for each institution. Measure Bachelors Degrees Masters Degrees Doctoral and Professional Degrees Undergraduate Degrees per 100 FTE Grad Rates 100% of Time Grad Rates 150% of Time Grad Rates 200% of Time Persistence (Completed 24 Semester Hours) Persistence (Completed 48 Semester Hours) Persistence (Completed 72 Semester Hours) Cost per Credit Hour Cost per Completion Research & Public Svc Expenditures 2,822 1,042 227 25 27 46 50 1,644 1,453 1,350 346 36,566 $112,914,667 3,522 1,454 240 25 27 46 50 1,644 1,453 1,350 345 36,566 $112,914,667 DataData + Premium 1 2 200 50 2 -8 -.050.00005 (Data+Premium) x Scale 3,522 1,454 480 5,000 1,350 2,300 2,500 3,288 2,906 2,700 -2,760 -1,828 5,646 30.0% 25.0% 5.0% 10.0% 1.5% 1.0% 0.5% 1.0% 1.5% 2.0% 1.5% 1.0% 20.0% 100.0% Total Performance Value 1,057 364 24 500 20 23 13 33 44 54 -41 -18 1,129 3,200 xWeight =Scale

41. Performance Value Calculation IBHE Presentation 41 Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools) Divide the amount of the university GRF appropriation allocated to fund the high cost entity by the total university GRF appropriation. Multiply this factor by the university performance value and add the result back to the performance value. This results in a total performance value for institutions with these high cost entities. Example: $20M/$200M =.10.10 X 3200 (PV) = 320 320 + 3200 = 3520 = Total Performance Value

42. IBHE Presentation 42 Percentages for Distribution Total Performance Value 10,840 4,435 3,200 17,302 Percentage of Total 58.7% 24.0% 17.3% 100% Distribution: Pro Rata$587,000 $240,000 $173,000 $1,000,000 University 1 University 2 University 3 Total Funding Allocation Based on Performance Step 8 – Use the Weighted results (or Total Performance Value) to distribute funding based on a Pro Rata Share of the total amount of funds set aside for performance funding.

43. Results for FY14 Performance funding values increased for all twelve of the four-year public universities from FY13 to FY14. Assuming a.5% funding set-aside: – Variance in funding allocations due to performance ranged from +.11% to -.11%. – The actual funding amount variance ranged from +$71K to -$105K. IBHE Presentation 43

44. IBHE Presentation 44 Performance Funding Model (FY15) 4-Year Public Universities

45. Performance Funding Model Steps (4-Year Public University) Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures. Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results. Step 7 – Use the final Weighted results (or Total Performance Value) - excluding high cost entities - to distribute performance funding. Step 8 – Add an adjustment factor (Carve-out) for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools). IBHE Presentation 45

46. Performance Measures IBHE Presentation 46 Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures (3-year averages) MeasureSource Bachelors Degrees (FY10-12) IPEDS Masters Degrees (FY10-12) IPEDS Doctoral and Professional Degrees (FY10-12) IPEDS Undergraduate Degrees per 100 FTE (FY10-12) IPEDS Research and Public Service Expenditures (FY11-13) RAMP Graduation Rate - 150% of Time (Fall 05-07 Cohort)*Institutional Data Persistence-Completed 24 Semester Hours in One Year (FY10-12)*Institutional Data Cost per Credit Hour (FY10-12) Cost Study Cost per Completion (FY10-12) Cost Study *Incorporate transfers per the CCA transfer category definitions (i.e. 30 or fewer credits, 31 to 59 credits, or 60 or more credits).

47. Sub-Categories IBHE Presentation 47 Sub-CategoryWeight* Low Income (Pell/Map Eligible) 40% - Institutional Data Adult (Age 25 and Older) 40% Hispanic 40% Black, non-Hispanic 40% STEM & Health Care (by CIP Code) 40% - HLS + CIP 51 Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations

48. Sub-Categories IBHE Presentation 48 Only weighted Bachelors, Masters and Doctorate and Professional Degrees Did not weight Undergraduate Degrees per 100 FTE - To avoid overweighting sub-populations throughout the model, the percentage weight given to the subcategories would have to be reduced from the current 40%. Otherwise, schools with high numbers of Master and Doctoral students graduating from the subpopulations would be negatively impacted, as credit given to these populations is reduced. - The change would benefit smaller masters degree schools but would disproportionately harm research institutions. Did not weight Cost per Completion - It is only possible to weight the completion portion of the ratio, a weighted cost is unavailable. Weighting completions without weighting cost does not provide an accurate measure of differential costs to educate particular sub groups. Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations

49. Scaling Factors Averaged the measures across all of the institutions. The average number of bachelors degrees will serve as the base value. Determine a scaling factor that will normalize the rest of the averages to the average number of bachelors degrees. Adjust the scaling factors as appropriate (i.e. Masters & Doctorates). Multiply all of the initial data by the scaling factor to normalize the data. IBHE Presentation 49 Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

50. Scaling Factors IBHE Presentation 50 Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. MeasureUniversities 1-12 (Avg) Scaling Factor Adjusted Scaling Factor Bachelors Degrees (FY10-12) Masters Degrees (FY10-12) Doctoral and Professional Degrees (FY10-12) Undergraduate Degrees per 100 FTE (FY10-12) Grad Rates 150% of Time (Fall 05-07 Cohort) Persistence (Completed 24 Semester Hours) (FY10-12) Cost per Credit Hour (FY10-12) Cost per Completion (FY10-12) Research and Public Service Expenditures (FY11-13) 2,846 1,056 236 25 46 1,511 353 37,129 124,059,383 1.0 2.7 12.1 113.0 60.3 1.8 8.1.07.00002 1 2 200 50 2 -8 -.05.00005

51. Performance Measure Weights IBHE Presentation 51 Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Doctoral/ Research-Very High Research-HighResearch Measure Bachelors Degrees (FY10-12) Masters Degrees (FY10-12) Doctoral and Professional Degrees (FY10-12) Undergraduate Degrees per 100 FTE (FY10-12) Grad Rates 150% of Time (Fall 05-07 Cohort) Persistence (Completed 24 Semester Hrs) (FY 10-12) Cost per Credit Hour (FY10-12) Cost per Completion (FY10-12) Research /Public Service Expenditures (FY11-13) UIUCUICNIUSIUCISU 18.0% 28.0% 33.0% 15.0% 22.0% 13.0% 8.0% 5.0% 13.0% 16.0% 3.0% 4.0% 5.0% 3.0% 4.0% 5.0% 1.0% 1.5% 2.0% 1.0% 1.5% 2.0% 41.0% 25.0% 10.0% 100.0%

52. Performance Measure Weights IBHE Presentation 52 Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Masters Colleges & Universities (Large) Measure Bachelors Degrees Masters Degrees Doctoral and Professional Degrees Undergraduate Degrees per 100 FTE Grad Rates 150% of Time Persistence (Completed 24 Semester Hours) Cost per Credit Hour Cost per Completion Research & Public Svc Expenditures SIUEWIUEIUNEIUCSUGSUUIS 35.0%39.0%38.5% 39.0%46.0%43.0% 25.0%23.0%24.0% 23.0%30.0%25.0% 2.0%0.5%0.0% 0.5% 16.0% 8.0%10.0% 3.0% 0.0%3.0% 6.0%3.0% 2.0%4.5% 2.0%4.5% 6.0%0.5% 100.0%

53. Performance Value Calculation IBHE Presentation 53 Step 6 – Multiply and Sum the Scaled Data times the Weight to produce the Performance Value for each institution. Measure Bachelors Degrees Masters Degrees Doctoral and Professional Degrees Undergraduate Degrees per 100 FTE Grad Rates 150% of Time Persistence (Completed 24 Semester Hours) Cost per Credit Hour Cost per Completion Research & Public Svc Expenditures 2,722 1,012 207 25 46 1,511 353 37,129 124,059,383 2,846 1,056 236 25 46 1,511 353 37,129 124,059,383 DataData + Premium 1 2 200 50 2 -8 -.05.00005 (Data+Premium) x Scale 2,846 1,056 472 5,000 2,300 3,022 -2,824 -1,856 6,203 30.0% 25.0% 5.0% 10.0% 2.5% 20.0% 100.0% Total Performance Value 854 264 24 500 58 76 -71 -46 1,241 2,898 xWeight =Scale

54. Performance Value Calculation IBHE Presentation 54 Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools) Step 1: Allocate performance set-aside funds based on and adjusted state appropriation that removes state funds for high cost entities. Step 2: Calculate performance funding allocations per funding model using adjusted performance set-aside amount. Step 3: Add back funds to institutions with high cost entities by applying performance funding set-aside percentage (i.e..5% for FY14) to the high cost entities state appropriation. Step 4: Total allocated funds equal performance funding without high cost entities plus set-aside for high cost entities.

55. High Cost Entities Adjustment Current High Cost Entities Adjustment – Divide the amount of the university GRF appropriation allocated to fund the high cost entity by the total university GRF appropriation. – Multiply this factor by the university performance value and add the result back to the performance value. – This results in a total performance value for institutions with these high cost entities. – Example: $20M/$200M =.10.10 X 3200 (PV) = 320 320 + 3200 = 3520 = Total Performance Value IBHE Presentation 55

56. Revised High Cost Entities Adjustment Step 1: Allocate performance set-aside funds based on and adjusted state appropriation that removes state funds for high cost entities. – Example: Total State Appropriation – High Cost Entities = Funds Allocated via Performance $2.0 billion – $250 million = $1.75 billion x 0.5% (performance set-aside for FY 14) = $8.75 million Step 2: Calculate performance funding allocations per funding model using adjusted performance set-aside amount. – Reallocate $8.75 million based on performance to higher education institutions per performance model Step 3: Add back funds to institutions with high cost entities by applying performance funding set-aside percentage (i.e..5% for FY14) to the high cost entities state appropriation. – Example: University A – High Cost Entity Appropriation = $100 million x 0.5% = $0.5 million University B – High Cost Entity Appropriation = $150 million x 0.5% = $0.75 million Step 4: Total allocated funds equal performance funding without high cost entities plus set- aside for high cost entities. – Example: University A - $1.25 M (performance funds) + $0.5 M (high cost add back) = $1.75 M University B - $2.0 M (performance funds) + $.075 M (high cost add back) = $2.75 M University C - $0.75 M (performance funds) IBHE Presentation 56

57. IBHE Presentation 57 Percentages for Distribution Total Performance Value 10,840 4,435 3,200 17,302 Percentage of Total 58.7% 24.0% 17.3% 100% Distribution: Pro Rata$587,000 $240,000 $173,000 $1,000,000 University 1 University 2 University 3 Total Funding Allocation Based on Performance Step 8 – Use the Weighted results (or Total Performance Value) to distribute funding based on a Pro Rata Share of the total amount of funds set aside for performance funding.

58. Results for FY15 Performance funding values increased for eight of the twelve four-year public universities from FY14 to FY15. Assuming a.5% funding set-aside and level GRF Funding: – Variance in funding allocations due to performance ranged from +.19% to -.11%. – The actual funding amount variance ranged from +$110.3K to -$93.3K. IBHE Presentation 58