Performance-based funding considered by California higher education institutions

State Hornet Staff

California’s public universities may soon see an alternative method of state funding based on student performance rather than enrollment totals.

Twenty-five other states, including Arizona and Nevada, have transitioned from an enrollment-based funding model to a performance-based funding model in recent years.

Senior Vice President of Planning, Enrollment Management and Student Affairs Lori Varlotta said in her spring 2014 presentation California state entities have been considering a switch as well.

The new model, if implemented, may base its funding on metrics like affordability, efficiency, timely completion of degree, graduation rates and ease of transfer.

According to Varlotta’s presentation if California moves in that direction, both the California State University and Sacramento State have programs such as advising and the Graduation Initiative that could “move the needle forward.”

The current model, while providing incentives for colleges to enroll students by basing its funding on  the number of attendees, does not necessarily provide incentives for universities to help students complete the degree program.

Sheree Meyer, associate dean for undergraduate studies, said the California legislature funds the CSU based on enrollment targets for the system, and the chancellor’s office funds individual campuses on the basis of an annualized target amount of full time students.

The total budget is then based on what the CSU provides and tuition. If the university exceeds its full-time student target or is short, there may be adjustments to the CSU budget.

The states that have abandoned the enrollment-based model now have a funding formula in place that distributes money to its public universities based on varying performance indicators like retention and the number of degrees awarded.

According to the Center for American Progress, following a national shift towards ensuring students complete their degrees, “performance-based funding is a necessary step toward aligning the objectives of state and institutional leaders, while ensuring that states are investing their limited funds wisely and productively.”

One of the first states to incorporate this new approach is Pennsylvania, which has since seen a 10-percent increase in completion rates.

Although this model is ideal for increasing graduation rates, there are schools within the CSU that provide support for many students who are unable to graduate in four years due to varying circumstances.

CSU Director of Public Affairs Mike Uhlenkamp said although the ultimate goal of a university is to graduate its students, a performance-based model may look at the CSU’s retention rate of about 6 percent without incorporating the context behind it.

“It’s about looking at overall performance and thinking of ways we’ll do better,” Uhlenkamp said. “But we must do it in a thoughtful way.”

Uhlenkamp said ideally, the state should find the best funding available to serve its students without forcing them to graduate at an unreasonable rate.