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UA comes out on top in productivity funding

2-year-school leader queries fairness by Jaime Adame | May 16, 2022 at 7:07 a.m.
Kassandra Salazar (left), a sophomore at the University of Arkansas from Rogers, speaks Tuesday, April 5, 2016, to a group of 11th-grade students from Heritage High School in Rogers as they walk past Old Main while on a tour of the university campus in Fayetteville.

State data shows the University of Arkansas, Fayetteville has by far gained the most dollars -- well more than three times the amount of any other school -- in a funding model that's been championed as a way to prioritize student success and program completion.

In the same model, four community colleges have hit their loss limit under rules for what's known as productivity-based funding.

For the past five years, state-supported universities and colleges have gotten a productivity funding recommendation based on a formula that heavily weighs "effectiveness," which includes credentials awarded.

Schools seeing year-over-year increases in their total "productivity index" are recommended for funding boosts, while declines result in losses.

UA-Fayetteville has gained a cumulative total of $36.9 million in added productivity-based funding dollars compared with an initial baseline of fiscal 2018 funding.

No other state college or university has seen cumulative gains greater than $10.8 million, according to a Democrat-Gazette analysis of productivity funding data provided by the state Division of Higher Education.

Setting aside UA-Fayetteville, the state's other nine four-year universities have, on average, seen $3.7 million in cumulative productivity-based gains.

While almost all universities have seen gains, six out of 22 two-year colleges have seen cumulative losses compared with their 2018 baseline.

The president of a two-year college in northeast Arkansas said in a phone interview that productivity index calculations skew in favor of enrollment, thereby hurting community colleges that see greater fluctuations in their student numbers because of economic factors.

"They're still measuring community colleges with a university yardstick," said James Shemwell, president of Arkansas Northeastern College.

Shemwell, asked about gains seen by UA-Fayetteville relative to other universities and colleges, said, "Are they that much more productive than all the other schools? No, it has everything to do with how the model is written."

Given the disparity in funding gains and losses, Shemwell said of the state's productivity funding model that "absolutely, that's a reason why it ought to be examined."


Alisha Lewis, spokeswoman for the state Division of Higher Education, in an email said that productivity-based funding increases "are awarded based on quantity of contribution."

The formula for a school's productivity index is under "constant evaluation," she said, but Lewis noted that UA-Fayetteville enrolls "roughly a quarter" of all full-time students in the state's public colleges and universities.

State data on head count totals in state public colleges and universities show that there were 130,459 students enrolled this past fall, while UA-Fayetteville enrolled 29,068 students, or about 22%.

Productivity-based funding increases at UA-Fayetteville "are a product of scale and not out of line with their footprint on Arkansas higher education," Lewis said.

Enrollment surged this past fall at UA-Fayetteville while most public universities and two-year colleges saw enrollment downturns.

While UA-Fayetteville comes out ahead in the productivity-based funding model, it also would likely be seeing a large share of gains if funding solely came down to enrollment.

Among the 10 four-year universities in the state, only UA-Fayetteville and the University of Arkansas at Pine Bluff saw greater enrollment this past fall compared with fall 2017.

Six public universities had fall 2021 enrollment declines of 10% or more compared with fall 2017, according to state data.

The Democrat-Gazette calculated cumulative gains over the productivity-based model's five years of existence by adding together the past five years of data in which a college or university gained or lost in the productivity-based funding model.

The gains or losses were measured against 2018 "base" funding, meaning the amount of state general funds provided to an institution under the state's Revenue Stabilization Act.

Productivity-based funding is not a large percentage of a school's total state funding.

For example -- due to boosts from the productivity-based model -- UA-Fayetteville's most recent funding recommendation of $130.9 million, for fiscal year 2022-23, is about 11.3% greater than it's fiscal 2018 "base" funding.

The productivity-based model rewards winners beyond a one-year bonus, however.

An institution's year-over-year productivity-based boost is calculated as a percentage increase compared with "base" funding. When this is 2% or less, it gets retained in a school's "base" funding the following year. Annual amounts greater than this percentage limit go to the institution as one-year incentive funds.

Lewis said that "one-time incentives" make up most of the $36.9 million in productivity-based funding gains seen by UA-Fayetteville.


State policy has set the loss limit due to productivity index declines at 5% of a school's 2018-2019 fiscal year level of "base" funding.

The four two-year colleges hitting that limit are: University of Arkansas -- Pulaski Technical College, located in North Little Rock; Arkansas State University -- Three Rivers, in Malvern; Black River Technical College, in Pocahontas; and Southeast Arkansas College, in Pine Bluff.

The University of Arkansas -- Pulaski Technical College is down by $756,872 in its fiscal year 2022-23 productivity-based funding recommendation compared with its 2018 baseline, according to data provided by the Division of Higher Education.

UA-Pulaski Tech is the state's second-largest community college, enrolling 4,408 students this past fall. In fall 2017, it enrolled 6,035 students.

The governor-appointed Higher Education Coordination Board last month heard a proposed policy amendment that would keep the same percentage as a loss limit but uncouple it from the 2018-19 fiscal year funding level.

"Within any consecutive 5-year period, an institution of higher education's [Revenue Stabilization Act] general revenue funding shall not decline by more than 5% due to productivity declines," the proposed amendment states.

The draft amendment, after a period open to public comment, will go to the state Legislative Council for approval.

Shemwell said his college has seen gains in the productivity model, but he said most two-year schools see ups-and-downs that are heavily affected by a region's economy.

While two-year colleges have a separate productivity index with slightly different factors, Shemwell said it doesn't account for workforce partnerships with industry developed by colleges or students' post-college employment, which he said are key to the mission of many community colleges.


Shemwell noted that UA-Fayetteville's enrollment gains have involved increasing numbers of out-of-state students. About 47% of all UA-Fayetteville students this past fall were from outside Arkansas.

He contrasted UA's enrollment with that of the state's community colleges, including the four at their loss limits.

"What you've got is a situation where we're taking money away from these four colleges that are educating Arkansans, and it's going to Fayetteville to educate out-of-state students. Is that really the goal that we want to achieve?" Shemwell said.

Mark Rushing, a UA-Fayetteville spokesman, in an email defended the university's funding gains.

He said that, because of UA-Fayetteville's size, any "1% increase in funding from the productivity-based model would create larger dollar increases for the U of A than a 1% increase for other institutions in the state."

Rushing also said the funding gains seen in the productivity model "are directly attributable to our emphasis on supporting student success that resulted in increasing the number of students we are graduating."

UA increased its overall graduation rates and the number of students who "are graduating in high demand areas including STEM fields, business and nursing," Rushing said. Degree completion in such fields are factors in the productivity index.

The credentials and other measures, like time to finish a degree, count within what's known as the "Effectiveness" portion of the formula, which is weighted at 80% of the total formula for universities and at 90% of the total formula for colleges.

Increasing the number of UA graduates "contributes to the potential for economic growth and productivity throughout every corner of the state," Rushing said.

He added: "We believe it is appropriate and beneficial to reward such success."


Shemwell said that he and a few other community college leaders are on a task force that's a part of the non-profit Arkansas Community Colleges, which counts the state's 22 two-year colleges as members.

"We've started a conversation" with the state Division of Higher Education about the productivity index formula, Shemwell said, adding that perhaps the formula could factor in rates of academic program completion rather than credentials awarded to be less dependent on enrollment.

Back in 2017, Gov. Asa Hutchinson supported the productivity-based funding legislation, which was introduced by Rep. Mark Lowery, a Republican from Maumelle.

Hutchinson also pledged that more state dollars would go to support higher education as he talked up goals to have more Arkansans complete their degrees or credentials.

"I take seriously objectives that we set as a state and it's a challenge for us, but it's an important objective to increase degree and certificate attainment from the 40 percent level up to 60 percent by 2025," Hutchinson said during a news conference back in 2017.

In that 2017 news conference, Hutchinson added: "In order to accomplish that, we really have to get higher-education funding right."

Higher education institutions awarded 48,227 credentials in the 2020-21 academic year, up from 44,231 four years earlier, according to state data.

But growth has slowed, and higher education institutions "overall experienced a slight increase of 0.2% in the number of credentials awarded in 2021 compared with 2020," according to a December report from the state Division of Higher Education.

Last month, a state Division of Higher Education report described "small but steady increases" in the graduation rates at the state's public four-year universities.


In the five years of the productivity-based model's existence, "[d]uring this time period, the productivity funds are the only new state funding received," Jeff Hankins, a spokesman for the Arkansas State University System, said in an email.

Public colleges and universities rely on state funding, tuition and donor support, among other funding sources, to cover their budget expenses.

In Arkansas, about $1.1 billion in state and local tax support went to higher education in fiscal 2020, according to the State Higher Education Executive Officers Association, a national membership organization.

Hankins described the productivity-based funding gains seen by Arkansas State University as relatively small compared with campus needs. The Jonesboro campus has seen cumulative gains of about $5.3 million.

"We value the productivity incentives and efforts to increase higher education funding. However, we continue to have significant capital and deferred maintenance needs that deserve funding consideration yet have no dedicated source of state funding," Hankins said.

Most recently -- for fiscal 2023 recommendations -- state Division of Higher Education documents described $11.4 million as being the state's annual productivity recommendation for state-supported colleges and universities.

For the same year, there's a projected $570.3 million in state funding for higher education under the state's Revenue Stabilization Act. The act "defines the maximum allocation of general revenue funding allowed to each fund," according to information published by the state.

Fredricka Sharkey, a spokeswoman for the University of Central Arkansas, said in an email that the Conway campus "has maximized our results under the productivity funding model by emphasizing on-time degree completion, specifically looking at the time-to-degree metric."

UCA has had cumulative gains of $10.7 million.

At the University of Arkansas at Little Rock, cumulative losses in productivity-based funding -- compared with the 2018 baseline year -- add up to about $1.3 million.

Cody Decker, UALR's vice chancellor for student affairs and chief data officer, in a statement said the productivity-based funding formula is "a lagging indicator of productivity since it uses data from prior years."

UALR "continues to see growth in effectiveness (transfer student success) and affordability metrics (time to degree and credits at completion)," Decker said, but "a decline in enrollment has negatively impacted some metrics."

He said a drop in enrollment "directly impacts the number of points received from the formula since the formula's metrics are based on the number of students meeting specific criteria."

Lewis, with the Division of Higher Education, again said that enrollment losses don't doom a school to declines in its productivity index.

"For example, Henderson State and Arkansas Tech have received additional productivity funds each year despite declining enrollment," Lewis said in an email. "This means that HSU and ATU have done more with fewer students; either by being successful with a larger number of students or producing credentials that are valued at a higher level and/or with more underserved students."

Print Headline: UA’s productivity funding leads state


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