Outcomes Based Funding August 28, 2019 - PowerPoint PPT Presentation

Outcomes Based Funding August 28, 2019 StrategyLabs.LuminaFoundation.org

Relentlessly Focused on Attainment StrategyLabs.LuminaFoundation.org 2

60% of adults with high quality degrees or credentials by the Year 2025 StrategyLabs.LuminaFoundation.org 3

Lumina’s vehicle for higher education system change Strategy Labs are an open platform for leaders and influencers in all 50 states to share research and data, encourage peer learning and provide opportunities for on-request support from Lumina Foundation and its state policy partners. StrategyLabs.LuminaFoundation.org

Strategy Labs Support • Technical assistance and consulting support is provided to state leaders working to increase higher education attainment in their states. • Four types of support –Non-Partisan, Evidence-Based Policy Expertise –Convening and Facilitation –Advising Policymakers –Research StrategyLabs.LuminaFoundation.org 5

Educational Attainment (2017) Workforce-Relevant Certificates and Above Adults 25-64 50% 47.6% 40% 44.2% 30% 20% 10% 0% US LA Source: Lumina Stronger Nation StrategyLabs.LuminaFoundation.org

10% 15% 20% 25% 30% 35% 40% 45% 0% 5% Tensas 10.8% East Carroll West Carroll Assumption Franklin Adults 25-64 with an Associate Degree or Above St. Mary Grant East Feliciana Claiborne Educational Attainment by Parish (2017) Washington Caldwell Avoyelles Concordia Richland Iberia Madison De Soto Union St. Helena Allen Jackson Vermilion Evangeline St. Bernard Winn StrategyLabs.LuminaFoundation.org St. Landry Bienville Catahoula Acadia LaSalle Terrebonne Iberville Morehouse Sabine Red River St. Martin Lafourche Pointe Coupee St. James Jefferson Davis Webster St. John the Baptist Cameron Rapides Beauregard Livingston Plaquemines Tangipahoa Vernon West Baton Rouge West Feliciana Source: Lumina Stronger Nation Ouachita Calcasieu Caddo St. Charles Jefferson 42.5% Natchitoches Bossier Ascension Lafayette St. Tammany East Baton Rouge Lincoln Orleans

Educational Attainment by Race (2017) Adults 25-64 with an Associate Degree or Above 21.1% African-American 30.8% 19.4% American Indian 24.5% 49.6% Asian and Pacific Islander 62.7% 21.9% Hispanic 23.7% 36.4% White 47.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% LA US Source: Lumina Stronger Nation StrategyLabs.LuminaFoundation.org 8

OUTCOMES-BASED FUNDING NATIONAL CONTEXT StrategyLabs.LuminaFoundation.org 9

History of Higher Education Funding Models • Base-plus funding –Linked to historic funding levels –Not tied to state goals and priorities –Lacks transparency • Enrollment-driven models emerged in 1960s –Linked to goal of increasing access –Tied to number of students enrolled –More predictable and transparent –Reduced political competition and lobbying 10 StrategyLabs.LuminaFoundation.org

History of Higher Education Funding Models (cont.) • Tennessee added a performance bonus to their enrollment model in 1978 – Many states followed. Became known as “performance funding”. – Often there were design problems. – Fell in and out of favor over next decades. • In the late 2000s, several states reexamined these older funding methods that no longer aligned with state goals. – Began linking funding to student success, increased attainment, closing equity gaps – Adapted new models from what was learned from earlier models. – This is “performance funding 2.0” or “outcomes-based funding”. 11 StrategyLabs.LuminaFoundation.org

Outcomes-based Funding Theory • Aligns the state’s finance policy with state goals – Attainment, Equity, Workforce, Research, etc • Has the ability to influence institutions through: – Financial incentives – Awareness of state priorities – Awareness of institutional performance • Provides incentives to adopt and scale evidence- based student success practices StrategyLabs.LuminaFoundation.org

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OBF Typology • State funding systems vary significantly in design, focus and sophistication. • HCM Strategists has developed a typology for Outcomes-Based Funding ranging from Type I (Rudimentary) to Type IV (Advanced). Type I Type IV Type III Type II • • • • Aligned with completion/attainment goals and related priorities Not aligned with completion/attainment goals and related priorities Aligned with completion/attainment goals and related priorities Aligned with completion/attainment goals and related priorities • • • • Recurring/Base funding Reliant on new funding only Recurring/Base funding Recurring/Base funding Low level of state funding (under 5%) High level of state funding (25% or greater) Moderate level of state funding (5 - 24.9%) Low level of state funding (under 5%) • • • • • • • • Differentiates by institutional mission Does not differentiate by institutional mission Differentiates by institutional mission, likely Does not differentiate by institutional mission • • • • Total degree/credential completion included Total degree/credential completion not included Total degree/credential completion included Total degree/credential completion included • • • • Outcomes for underrepresented students prioritized Outcomes for underrepresented students not prioritized Outcomes for underrepresented students prioritized Outcomes for underrepresented students may be prioritized • • • • Formula driven/incents continuous improvement Target/recapture approach May not be formula driven Target/recapture approach likely Sustained for two or more consecutive fiscal years May not have been sustained for two or more consecutive fiscal years Not sustained for two or more consecutive fiscal years May not have been sustained for two or more consecutive fiscal years • • • • StrategyLabs.LuminaFoundation.org 14

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OBF as a Share of State Institutional Support: 2-Year Sectors OH (IV) ND (I) AR (IV) NV (IV) TN (IV) KY (IV) LA (IV) WI (IV) CO (III) WY (II) VA (III) TX (III) CA (III) AL (III) MT (III) RI (II) IN (III) FL (I) NM (III) WA (III) KS (I) NC (II) HI (II) NY (II) MI (I) UT (II) IL (II) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Course Completion Progression & Degree Completion Efficiency Other/Mission Non-OBF StrategyLabs.LuminaFoundation.org 17

OBF as a Share of State Institutional Support: 4-Year Sectors ND (I) AR (IV) NV (IV) OH (IV) OR (IV) TN (IV) KY (IV) LA (IV) ME (IV) CO (IV) FL (I) PA (I) RI (I) MT (III) IN (III) NM (III) KS (I) VA (I) WI (II) HI (II) MI (I) UT (II) 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Course Completion Progression & Degree Completion Efficiency Other/Mission Non-OBF StrategyLabs.LuminaFoundation.org 18

Common Metrics: Most Aligned with Educational Attainment • Completion –Earned certificates –Earned degrees • Progression –Earned credit hour benchmarks –Total earned credit hours –Gateway course success –Retention –Developmental/Remedial Success StrategyLabs.LuminaFoundation.org 19

Common Metrics: Most Aligned with Educational Attainment • Priority funding for underrepresented students –Underrepresented minority students –Low income students –Adult students –Underprepared students –Veterans –First generation students –Rural students StrategyLabs.LuminaFoundation.org 20

Common Metrics: Related to Specific State Goals • Research expenditures • Transfers • Job placements • Wages of graduates • High demand/STEM degrees • Non-credit workforce training StrategyLabs.LuminaFoundation.org 21

Common but More Problematic Metrics • Rate and cohort-based metrics –Graduation rate –Retention rate • Metrics without a history of trusted data StrategyLabs.LuminaFoundation.org 22

ANALYSIS OF LOUISIANA FORMULA StrategyLabs.LuminaFoundation.org 23

FY 2019 Louisiana Funding Model Funding Model Components 63% Base Funding 17% Cost • Completed Student Credit Hours • Operation of Plant and Maintenance • General Support 20% Outcomes • Student Success • Articulation and Transfer • Workforce and Economic Development • Efficiency and Accountability StrategyLabs.LuminaFoundation.org

FY2019 Model Alignment with Best Practices Criteria Alignment Yes Established completion or attainment goals are linked to the model Yes Recurring base funding is distributed A significant level of funding is distributed by outcomes Yes (>5%) Limited, measurable metrics are used, with Partial degree/credential completion being prioritized Institution mission is accounted for Partial Formula-driven to ensure incentives for continuous Yes improvement Funding model is sustained over multiple years Yes Success of underrepresented students is prioritized Partial StrategyLabs.LuminaFoundation.org 25