BATESVILLE — The state’s interim higher education chief presented a proposed funding model Thursday designed to comply with a new state law that makes graduation rates a factor in determining funding.
The plan would add new requirements to the state’s existing formula, which relies largely on enrollment to determine how much money a college or university receives.
The new formula, as the law requires, will eventually determine 25 percent of an institution’s state funding.
Under the so-called performance-funding formula, required by a law passed inthe 2011 legislative session, some campuses could see drops in the current levels of state funding they receive, said Shane Broadway, interim director of the Arkansas Department of Higher Education.
Broadway presented his proposed formula to the Higher Education Coordinating Board at a workshop at the University of Arkansas Community College at Batesville on Thursday. He said it will help increase the proportion of Arkansans with college degrees while respecting the individual missions of colleges and universities by allowing each campus leader to have some say in how success is measured at his institution, he said.
“A lot of the focus has been on access to college and the college-going rate, and we have been very successful at that,” Broadway said. “But it’s not just about getting to campus. We need to start talking about what it will take to help those students earn credentials.”
The proposal was designed with recommendations from campus chancellors and presidents.
Act 1203 of 2011 calls for the board to approve a new performance-funding formula that will determine 5 percent of an institution’s state aid in the 2013 school year. That amount will grow by 5 percent each year, until 2017, when the formula will dictate 25 percent of state funding.
Under the act, a college or university’s funding will be determined under the existing model in state code. The percentage to be determined by the new performance funding formula will be “taken away” and “earned back” according to how well each institution meets the formula’s goals.
The new formula would measure universities by growth in 10 factors. Four of those factors would be mandatory. Those are the number of bachelor’s degrees awarded, number of overall degrees and certificates awarded, number of credentials awarded in science and technology fields and a new “progression” model that tracks how many students who enroll in at least six credit hours in their first fall semester have earned at least 18 credit hours within two academic years.
Each university would select the remaining six factors for its campus from a list of options that includes graduation rates for low-income students and numbers of patents awarded as a result of university research.
Community colleges would also be measured by performance in 10 areas, Broadway said. A committee plans to determine mandatory and optional measures for the 2-year institutions in the coming weeks, he said.
Campuses would receive one point for each area of growth, “earning back” 10 percent of their state aid designated to the performance formula for each point they earn.
To compensate for large enrollments of first-generation and low-income students, campuses would receive a fraction of a “compensatory” point depending on the number of students they enroll who are eligible for federal Pell Grants. For example, if a university’s enrollment is 60 percent Pell-eligible, it will receive an additional 0.6 points, Broadway said.
Higher education leaders at Thursday’s meeting said they were concerned about introducing a new method of determining state funds. But they were hopeful that the final formula would accurately measure success on their campuses.
“What we’re talking about are things that we should be doing and are doing right now,” said B. Alan Sugg, president of the University of Arkansas System. “I think there’s a consensus that these are reasonable goals.”
Ed Franklin, executive director of the Arkansas Association of Two-Year Colleges, said other states that have introduced performance funding measures have used those formulas to determine a much smaller portion of a school’s funding and haveadopted “hold harmless” clauses that prevented drops in existing funding levels.
Many of the measures under the new formula have not been tracked before, Franklin said, leaving some colleges unsure of how they will fare. Other states have tracked the data over time before tying it to funding to give campuses a chance to prepare, he said.
“They gave them a chance to get comfortable with the data,” Franklin said. “We’re not going to have that.”
Presidents and chancellors have long complained that enrollment growth has outpaced state appropriations, leaving them fewer dollars per student and giving them no choice but to use tuition increases to compensate.
The Educational and General Fund, composed of state appropriations and student tuition and fees, makes up the largest part of a college or university’s budget. That fund covers the cost of most academic programs and personnel costs on a campus.
In recent years, state appropriations have made up smaller portions of Educational and General funds.
The board in May 2010 changed the formula it uses for appropriation requests, shifting tuition and fees from 25 percent to 30 percent of the total cost at a four-year university up to 40 percentto 45 percent. At two-year colleges, it increased from 30 percent of the total cost to 35 percent.
Performance funding is part of Gov. Mike Beebe’s push to double the number of Arkansas degree holders by 2025.
U.S. Census data released in December show that Arkansas ranks second from the bottom in degree-holding adults during the latter half of the decade, with only 18.9 percent of residents older than 25 holding bachelor’s degrees.
That number was well below the 27.5 percent national average. Only West Virginia had fewer, with 17.1 percent.
While the state’s enrollment rates are on par with the region, statistics show many students admitted to the state’s schools in the past have not completed and earned a degree.
Only 37.8 of the 11,497 Arkansas students entering the state’s public universities for the first time in 2004 had earned a degree six years later, according to the most recent data available from the Higher Education department.
The board expects to approve a final version of the rule in early December so that lawmakers can review it in the 2012 session.
Arkansas, Pages 9 on 10/28/2011