Ohio Colleges Asked to Design Plan for Performance Funding

The importance of performance metrics has been increasingly stressed in K-12 education, but for the most part, colleges and universities have kept it as an internal issue.

Not any longer.

Ohio governor John Kasich is now calling for leaders of 37 public colleges to get together and determine a funding formula that takes into account how effective each school is at translating state funds into well-prepared, highly-qualified college graduates. Kasich also stressed that by working together, colleges could discover ways to save money by isolating and removing redundancies in their academic programs.

Governing.com reports that the Kasich's idea to tie dollars to results isn't new — even in higher education. States have been experimenting with performance-based funding as far back as the 1970s, although the recent attention paid to the concept in the sphere of K-12 education was bound to spill over onto institutions of higher learning sooner or later.

The reasons are obvious: budget constraints and poor general performance. According to the American Association of State Colleges and Universities, 36 states cut their higher education funding in FY 2012. A report released last year by Complete College America estimated that just 61 percent of full-time students receive a bachelor's degree—and that figure drops to 24 percent for part-time students. The numbers are even grimmer for those seeking associate's degrees and vocational certificates.

Julie Morgan, an analyst for the Center of American Progress, says that like any other investor, the government wants to see that its money is contributing to quality in some tangible, measurable way. Just because a college is a public entity funded by tax revenues doesn't mean it can escape questions about value and return on investment.

Linking funding to performance targets is also one major way that state government can exercise its influence over the public university system. Colleges that make up this system typically depend on state dollars and federal financial aid money to meet the majority of their operating expenses.

Ohio actually already has a form of performance-based funding in place. In 2012, 5 percent of higher education funding was based on a school's ability to meet certain requirements, primarily course completion. Community colleges operate under their own system, which includes hours of coursework completed, associate's degrees awarded and transfers to four-year institutions. Kasich's plan is to increase the percentage of funding tied to performance to 30 percent by 2015—and that's where the input of the state's public colleges and universities comes in.

It is commendable that Kasich is inviting the schools into the conversation, allowing them to determine both the scope and the relative weight of the proposed metrics like retention and graduation rate. Tying even a small chunk of funding to objective goals could be enough to spur innovation and reform.

Governing.com does cite an example of performance-based funding gone wrong in South Carolina, where, in 1996, the Legislature made 100% of state funding dependent on meeting certain performance criteria. The move, which was approved over the objection of the higher education community in the state, was eventually dropped in 2003 after it proved to be too complex to manage properly.

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