1. 1 Tennessee Higher Education Commission Higher Education Outcomes Based Formula 2010

2. 2 Tennessee Higher Education Commission Higher Education Revenues

3. 3 Tennessee Higher Education Commission Higher Education Revenues

4. 4 Tennessee Higher Education Commission Existing Funding Formula Linked to 2005-10 Tennessee Master Plan Enhanced focus on student retention Focus on adult enrollment of students age 25 and up at community colleges. Research calculation determined by Carnegie classification and Doctoral degree production. Enrollment base calculation using a three-year moving average of actual fall enrollments.

5. 5 Tennessee Higher Education Commission Existing Funding Formula Existing formula is approximately 60% enrollment driven. Incentive structure is heavily focused on inputs. Existing Performance Funding program and imbedded performance incentives provide limited leverage for policy change.

6. 6 Tennessee Higher Education Commission Interpreting the Existing Funding Formula Enrollment growth is privileged above all else. Little differentiation is made between different types of institutions. Limited acknowledgement of institutional mission and uniqueness. For the most part, success means bigger.

7. 7 Tennessee Higher Education Commission Complete College Act Develop, after consultation with the board of regents and the University of Tennessee board of Trustees, policies and formulae or guidelines for fair and equitable distribution and use of public funds … that are consistent with and further the goals of the statewide master plan. The policies and formulae or guidelines shall result in an outcomes-based model.

8. 8 Tennessee Higher Education Commission Complete College Act Outcomes-Based Model According to the legislation, the model must include: – end of term enrollment – student retention – degree production – timely progress towards a degree The model may also include: – student transfer activity – research – student success – compliance with transfer and articulation policy as enumerated further in the legislation

9. 9 Tennessee Higher Education Commission Formula Design Concepts Alter the incentive structure to focus on outputs. Find broad agreement on the activities and outcomes higher education ought to pursue. Spread the financial incentives to a larger, more appropriate set of variables (not just enrollment). Calibrate it specifically to an institutions mission by utilizing Carnegie Classifications and mission statements.

10. 10 Tennessee Higher Education Commission Formula Design Concepts Strengthen links to Master Plan Enhance incentives for student retention, research Introduce a focus on productivity, defined as degree production, transfer activity, student access, adult students, etc. Tailor the productivity emphasis to each institutions mission

11. 11 Tennessee Higher Education Commission Formula Design Concept Identify an outcome (degree attainment, transfer activity, student retention, etc.) Compile actual data on those outcomes (Fact Book, Statutory Reports). Award points for those outcomes. Weight the outcome based on an institutions mission.

12. 12 Tennessee Higher Education Commission University Formula Design Concept 1. Outcome data is taken from the THEC Fact Book and other readily available sources. Data is rescaled to account for large differences between the numbers (e.g. Research Expenditures and Time to Degree) 2. Points are awarded for each outcome by multiplying the rescaled data by the Points per Outcome. 3. Points are multiplied by outcome specific weights to determine the total points.

13. 13 Tennessee Higher Education Commission University Formula Design Concept Weights will vary depending on institutional mission. For example: A Masters level institution would have a greater weight on bachelor degree production and a lesser weight on graduate degree production and research expenditures. Conversely, an institution with a greater research focus would have a lesser weight on bachelor degree production and a greater weight on graduate degree production and research expenditures.

14. 14 Tennessee Higher Education Commission Outcomes Based Model Formula has never been and is not now an institutional budgeting tool. Outcomes based model does not have targets or goals; it is not large scale Performance Funding. Institutional excellence will no longer be overshadowed by enrollment growth.

15. 15 Tennessee Higher Education Commission Outcomes Based Model Multiple measures of productivity, previously unaccounted for, will now be credited to the institution (transfer activity, R&D success, degree production, etc.) Formula is not prescriptive in how to achieve success and excellence. Does not penalize failure to achieve pre- determined goals.

16. 16 Tennessee Higher Education Commission Outcomes Based Model Advantages Includes student successes/outcomes that hitherto have not been a factor in formula. Emphasizes unique institutional mission. More flexible and can accommodate future shifts in mission or desired outcomes. More transparent and simpler for state government. Along with new PF, the model will increase leverage for policy change and reinforce the Master Plan.

17. 17 Tennessee Higher Education Commission From the Perspective of State Government…. Enrollment growth is no longer paramount. Access for the sake of access is not enough; a successful student outcome (however defined) is the goal. Institutions have different missions and that variance must be considered.

18. 18 Tennessee Higher Education Commission From the Perspective of State Government…. What is the most effective means of allocating limited state resources among institutions? What macro-level information is crucial to making allocation decisions among institutions? What type of incentive structure can be created, with minimal operational interference but maximum leverage, to achieve state goals?

19. 19 Tennessee Higher Education Commission THEC Formula Review Committee Jessica Gibson – Comptrollers staff Tre Hargett – Secretary of State Jack Murrah – THEC Chairman Cathy Pierce – F&A Paul Robertson – Treasurers staff Gary Rogers – UT Dale Sims – TBR David Thurman – Legislative Budget Office THEC staff

20. 20 Tennessee Higher Education Commission Higher Education Outcomes Based Formula 2010