1. TEXAS HIGHER EDUCATION COORDINATING BOARD WEBINAR APRIL 9, 2014 Outcomes-Based Formula Funding for Universities

2. Outcomes-Based Funding - Objective 2 Texas Education Code Section 61.0593 states that, “it is in state's highest public interest to evaluate student achievement at institutions of higher education and to develop higher education funding policy based on that evaluation.” It further charges the Coordinating Board, in consultation with institutions of higher education, to incorporate the consideration of undergraduate student success measures in developing recommendations for university formula funding.

3. GAIFAC Recommendation – Funding Totals 3 $235 million in outcomes-based funding pool OBF pool is equal to 10% of undergraduate formula funding, but: Is outside of and in addition to the I&O formula Fund I&O and Infrastructure at requested amounts first

4. GAIFAC Recommendation– Success Metrics Total Undergraduate Degrees Total number of Bachelor’s Degrees awarded by an institution in a given year. Total Undergraduate Degrees by Graduation Rate Total Bachelor’s Degrees multiplied by the school’s six- year graduation rate, to incent timely completion. Total Undergraduate Degrees per 100 FTSE Degrees divided by Full Time Student Equivalents (FTSEs) and multiplied by 100. This aggregate measure adjusts for part-time and transfer students, providing a common framework for comparing degree productivity. At-Risk Undergraduate Degrees Degrees awarded to students who meet federal criteria for being at high risk for non-completion. Retention Metrics Points awarded for students who complete their 30th, 60th, or 90th hour at the institution, to incentivize the use of effective persistence policies. 4

5. GAIFAC Recommendation – Allocation 5 Allocate Funds based on:  Points earned on the 7 success metrics  The average of the three most recent years of data  Points scaled statewide  Points weighted by institutions  Phased-in over three biennia

6. GAIFAC Recommendation- Allocation Allocation based on each institution’s percent of statewide total points Points are based on an average of the three most recent years of performance data InstitutionTotal Points Percent of Total Points Funding (millions) A10025$58.75 B12531$72.85 C17544$103.4 Total400100$235 6

7. Outcomes-Based Funding - Average Use three-year rolling average Example FactorYear 1Year 2Year 3Average Total Undergraduate Degrees 5,3005,8006,3005,800 By Graduation Rate2,6003,200 3,000 Per 100 FTSE29323632 At-Risk Degrees3,2003,5003,8003,500 Retention to 307,0006,9007,1007,000 Retention to 603,9004,0004,1004,000 Retention to 901,8001,9002,0001,900 Total25,232 7

8. Outcomes-Based Funding - Scales 8 Scale the three-year average points using identical scales for all institutions Example – At-Risk 3-Year Average X Scale 3,500 X 7.0 = 24,500 Scaled Points FactorScale Total Undergraduate Degrees 1.0 By Graduation Rate7.0 Per 100 FTSE25.0 At-Risk Degrees7.0 Retention to 301.5 Retention to 602.5 Retention to 904.0

9. GAIFAC Recommendation- Point Scales 9 Scaling adjusts each metrics’ points to ensure comparability and significance in the model Factor Three- Year Average Percent of TotalScale Scaled Points (A) Percent of Total Total Undergraduate Degrees 5,80023.0%1 5,8007.2% By Graduation Rate 3,00011.9%7 21,00026.2% Per 100 FTSE 320.1%25 8001.0% At-Risk Degrees 3,50013.9%7 24,50030.5% Retention to 30 7,00027.7%1.5 10,50013.1% Retention to 60 4,00015.9%2.5 10,00012.5% Retention to 90 1,9007.5%4 7,6009.5% Total 25,232100.0% 80,200100.0%

10. GAIFAC Recommendation - Weights 10 Each institution decides how to weight its metrics from a predetermined set of options Each option is used once Each institution’s weights must total 100 percent Omit 1 metric – a weight of 0% Remain in place for 3 biennia 100%25% 20%15%10%5%0%Value Total1234567Option WeightFactor 5% Total Undergraduate Degrees 25% By Graduation Rate 0%Per 100 FTSE 25%At-Risk Degrees 20%Retention to 30 15%Retention to 60 10%Retention to 90 100%Total

11. Factor Scaled Points (A) Percent of Total Weight (B) Scaled and Weighted Points (A*B) Percent of Total Total Undergraduate Degrees 5,8007.2%5% 2901.8% By Graduation Rate 21,00026.2%25%5,25032.8% Per 100 FTSE 8001.0%0%00.0% At-Risk Degrees 24,50030.5%25%6,12538.2% Retention to 30 10,50013.1%20%2,10013.1% Retention to 60 10,00012.5%15%1,5009.4% Retention to 90 7,6009.5%10%7604.7% Total 80,200100.0%100%16,025100.0% GAIFAC Recommendation - Weights Example Institution 11

12. Outcomes-Based Funding - Points Scale * Weight * Three-Year Average = Total Points Factor Scale (A) Weight (B) Year 1 Year 2 Year 3 Average (1+2+3) 3 Scaled and Weighted Points (A*B*Avg) Total Undergraduate Degrees 1.05%5,3005,8006,3005,800290 By Graduation Rate 7.025%2,6003,200 3,0005,250 Per 100 FTSE25.00%293236320 At-Risk Degrees7.025%3,2003,5003,8003,5006,125 Retention to 301.520%7,0006,9007,1007,0002,100 Retention to 602.515%3,9004,0004,1004,0001,500 Retention to 904.010%1,8001,9002,0001,900760 Total100%N/A 25,23216,025 12

13. GAIFAC Recommendation – Phase-in 13 The difference between an institution’s percent of statewide OBF funding and percent of statewide undergraduate I&O funding can vary no more than 0.5 percent for FY16-17 and 1 percent for FY18-19.

14. GAIFAC Recommendation– Phase-in 14

15. GAIFAC Recommendation – Point Distribution: Statewide 15

16. GAIFAC Example Point Distribution: Regional Institution 16 Statewide

17. GAIFAC Example Point Distribution: Research Institution 17 Statewide

18. GAIFAC Recommendation – Next Steps 18 Considered by full Coordinating Board on April 25 Request weights from each institution Conduct a study of the At-Risk Degrees measure Submit Initial Model to the LBB (November 1) Update with FY 2014 data Submit Final Model to the LBB (March 1)

19. Total Undergraduate Degrees Total number of Bachelor’s Degrees awarded by an institution in a given year. Accountability measure #10 Number of degrees reported on the CBM009 – Graduation Report for the fiscal year  Fiscal year 2012 includes fall 2011, spring 2012, and summer 2012 reports Multiple degrees earned by a single student are included Double Majors are counted as a single degree Degrees included  Baccalaureate  Associate of Applied Science (AAS) Excludes certificates 19

20. Total Undergraduate Degrees by 6- Year Graduation Rate Total Bachelor’s Degrees multiplied by the school’s six- year graduation rate To incent timely completion. 6-Year Graduation Rate – Accountability measure #9  First-time entering degree-seeking students who enrolled in an minimum of 12 semester credit hours their first fall semester who graduated from the same institution or another Texas public or independent institution after four, five, and six academic years. This metric includes Social Security Number changes submitted on the CBM00N. First-time determined by the first-time student flag on the CBM001. Sources: CBM001, CBM002, CBM009, CBM00N Same Fiscal Year as degrees reported  For fiscal year 2012, cohort started in fall 2006 Includes same and other institutions Upper-Level institutions use 3-Year Completion Rate  First-time junior level students transferring in who graduated from the same institution or another Texas public or independent institution after three academic years.  UT-Brownsville, TAMU-Texarkana, UH-Clear Lake, UH-Victoria, and Sul Ross Rio Grande. New institutions calculated with parent graduation rate  TAMU-Central Texas, TAMU-San Antonio, and UNT-Dallas. Example InstitutionDegreesRatePoints A9,00080%7,200 B20030%60 20

21. Total Undergraduate Degrees per 100 FTSE Degrees divided by Full-Time Student Equivalents (FTSEs) and multiplied by 100. This aggregate measure adjusts for part-time and transfer students, providing a common framework for comparing degree productivity among institutions with different missions and student bodies. Degrees same as the first factor Undergraduate Full-time student equivalents (FTSE) – Accountability measure #2  Number of semester credit hours (SCH) reported on the CBM004 – Class Report for the fall of the fiscal year  For fiscal year 2012, fall 2011 Includes state funded undergraduate semester credit hours Excludes non-state funded and graduate semester credit hours Undergraduate Semester Credit Hours divided by 15 to convert to FTSE Example DegreesSCH FTSE (SCH/15) Points (Degrees/(FTSE/100)) 4,930255,00017,00029 21

22. At-Risk Degrees Degrees awarded to students who meet federal criteria for being at high risk for non-completion. Indicators are being a federal Pell Grant recipient, below average SAT/ACT score, part-time student, GED recipient, or entering higher education at age 20 or older. One point for each student awarded degrees in the first measure that meets one or more of the conditions 1. Reported by any institution as a “Pell Grant recipient” in the Financial Aid Database System (FADS) during the last 10 years 2. Earned an SAT or ACT score below the national average  Scores reported on the CBM00B – Admissions Report or by the College Board  National Averages posted on www.collegeboard.org or www.act.orgwww.collegeboard.orgwww.act.org 3. Part-Time (taking less than 12 hours) when reported as first- time in college on the CBM001 – Student Report 4. General Education Degree (GED) recipients for the last six years  Data provided by the Texas Education Agency (TEA) upon request 5. 20 or older by date of birth field on the CBM001 – Student Report when reported as first-time in college Student Received Pell Grant Earned a Below Average SAT or ACT Score First- Time in College and Attended less than 12 Received a GED First- Time in College and 20 or OlderPoints AYes 1 BNo YesNo 1 C 0 22

23. At-Risk – Data Elements Degrees awarded to students who meet federal criteria for being at high risk for non-completion. Indicators are being a federal Pell Grant recipient, below average SAT/ACT score, part-time student, GED recipient, or entering higher education at age 20 or older. CBM009 - Graduation 2 - Institution Code 3 - Student Identification Number 6 - Date of Birth 7 - Degree Conferred 8 - Level of Degree or Certificate Conferred 9 - Major CBM001 – Student 2 - Institution Code 3 - Student Identification Number 5 - Classification 6 - Date of Birth 9 - Transfer Student or First-Time-in-College 10A - Semester Credit Hour Load, On-Campus 10 - B Semester Credit Hour Load, Off- Campus 13 - Semester 14 - Year 31 - Dual Credit Course Semester Credit Hours CBM00N – Student Number Change 2 - Institution Code 3 - Current Student Identification Number 4 - Current Date of Birth 6 - Prior Student Identification Number 7 - Prior Date of Birth FAD - Financial Aid Database 1B - FICE 1D - Student Social Security Number/ID Number 31A - Federal Pell CBM00B - Admissions 2 - Institution Code 3 - Student Identification Number 24 - Application Year 25 - ACT Composite Score 26 - SAT Combined Score TEA GED Data Student Identification Number GED Certification Date SAT and ACT National Averages www.collegeboard.org www.act.org 23

24. Retention to 30, 60, and 90 Hours Points awarded for students who complete their 30th, 60th, or 90th hour at the institution. To incentivize the use of effective persistence policies. One point awarded for students successfully completing 30, 60, or 90 hours at the institution as reported on the CBM00S – Student Schedule Report  Last five years – FY 2012 includes data from fall 2007 to summer 2012  Successful completion reported as A, B, C, D, or Credit/Passed in 24  Prior to summer 2011, students receiving a failing grade are included in counts All undergraduate students enrolled at the institution College-level hours earned at the institution currently enrolled  Exclude hours earned at other institutions  Exclude developmental education hours Examples Student Hours Earned at the Institution in prior Fiscal Years Hours Earned at the Institution in current Fiscal YearTotalPoints 1030 1 22124451 330 601 44512570 56030901 675301051 790301200 82945742 24

25. Retention– Data Elements Points awarded for students who complete their 30th, 60th, or 90th hour at the institution. To incentivize the use of effective persistence policies. CBM001 – Student 2 - Institution Code 3 - Student Identification Number 5 - Classification 6 - Date of birth 18 - Semester CBM00N – Student Number change 2 - Institution Code 3 - Current Student Identification Number 4 - Current Date of Birth 6 - Prior Student Identification Number 7 - Prior Date of Birth Prior to summer 2011 CBM002 – Texas Success Initiative 2 - Institution Code 3 - Student Identification Number 4 - Reporting period 5 - Year 10A - Semester Credit Hours Completed Summer 2011 and after CBM00S – Student Schedule 2 - Institution Code 3 - Student Identification Number 10 - Semester Credit Hour Value 19 - Developmental Education Course/Intervention Level (value=0) 24 - Course Grade (value=1, 2, 3, 4, 8) 29 - Semester 25