Performance Funding Principles

1. Performance Funding Principles IBHE Board Meeting December 6, 2011

2. Performance Funding PrinciplesGeneral Principles • A clear vision and common goals for what we wish to achieve. • Process that will strive to eliminate the achievement gap and reward performance of institutions by promoting access, success, quality, and affordability. • Include first generation students, low income students, and students who have been traditionally underrepresented or underserved.

3. Performance Funding PrinciplesGeneral Principles • Focus on fundamental goal of increasing completion of college courses, certificates, and degrees. • Measure higher education institutions against themselves as opposed to each other.

4. Performance Funding PrinciplesConcerning Process • Significant changes to the process will be made in an orderly fashion to minimize confusion and disengagement. • An orderly review process will be developed to ensure that performance funding goals, metrics, funding, impact, and program success are reviewed and evaluated on a regular basis.

5. Performance Funding Principles Concerning Process • The review process will include sufficient lead time for key leaders to engage their constituents. • If additional money is not available to fund the performance funding effort, the initial funds to be set aside will be kept at a minimum.

6. Performance Funding Principles Regarding Performance Measures • Performance measures will be developed in consultation with public institutions of higher education, state educational agencies, other higher education organizations, associations, interests, and stakeholders. • Performance measures will clearly support state goal attainment. • Performance measures must be acceptable to educators as well as to the Governor, legislators, and others, balancing institutional autonomy with state-level review and control.

7. Performance Funding Principles Regarding Performance Measures • Performance measures and funding formulas will be simple and restricted to the most essential elements. • Performance measures will be selected and funding formulas will be designed to the extent possible to make it difficult for institutions to “game” the system. • Performance measures will use historical data that is currently available or readily available.

8. Performance Funding Principles Regarding Performance Measures • Performance measures will be tailored to recognize and account for the differentiated missions of institutions and sectors of higher education. • Performance measures will recognize the unique and broad mission of public community colleges through consideration of additional factors, to include enrollment, progress through key academic milestones, transfer to a baccalaureate institution, and degree completion. • Performance measures will focus on both quality and quantity indicators.

9. Performance FundingUnresolved Issues Subcommittee • At the September 28, 2011 Performance Funding Steering Committee, a group of seven individuals were charged with addressing eight (8) complex issues that were unresolved at the full committee level. • Subcommittee Members – Tim Harrington, Elaine Johnson, Anne Ladky, Ed Maloney, Santos Rivera, Wayne Watson, and Rita Cheng

10. Performance FundingUnresolved Issues Subcommittee • Subcommittee held several teleconferences and exchanged email draft responses • Input from all steering committee members was considered • Subcommittee presented draft report for full committee consideration and feedback on October 24, 2011 and submitted a final report on November 30, 2011 • Addressed all eight (8) complex issues

11. Performance Funding Principles Eight (8) Complex Issues • How do you finance the Performance Funding Effort? • A strong recommendation is that we seek increased funding for this effort and use performance funding as a focal point for discussions on the importance of higher education to the future of the State of Illinois. • Performance funding should be structured to provide positive incentives to all institutions to graduate more students. • Universities and colleges would receive additional funds for meeting their performance goals.

12. Performance Funding Principles Eight (8) Complex Issues • To what extent do you hold institutions harmless as performance funding is phased in, if at all? • Performance funding should be implemented in two phases, addressing short-term challenges and then focusing on the longer term. • In the short term, universities will focus on changes in campus policies and procedures and begin data collection. During this time, not all measures will see improvement. • After several years, the hold harmless provisions can be dropped since data will be in place and institutional changes will have been implemented.

13. Performance Funding PrinciplesEight (8) Complex Issues • What should be the extent of a stop loss provision, if implemented? • The importance of a stop loss provision will depend on the amount of funding dedicated to performance funding. • The focus of performance funding is on improvement, therefore, each institution should be able to work toward established goal. • Over the short term, organizational structures and programs may not be in place so a stop loss provision is recommended. After several years, no stop loss should exist.

14. Performance Funding PrinciplesEight (8) Complex Issues • How do you differentiate between the different types of four year institutions (i.e., Comprehensive vs. Research)? • Institutional should be differentiated by: • Mission • Carnegie Classification of Institution of Higher Education • Demographic Profile (lower quartile, Pell recipients, MAP recipients, race/ethnicity, 1st generation, Veterans)

15. Performance Funding PrinciplesEight (8) Complex Issues • What qualifies as an Underserved or Underrepresented Student? • For the purposes of Performance Funding, underrepresented and underserved students will be defined as: • Race/ethnicity for students traditionally underserved in higher education (e.g., African American, Hispanic) • Students who are receiving needs-based financial aid – lower quartile, Pell, MAP, and Veterans • Students requiring developmental courses

16. Performance Funding PrinciplesEight (8) Complex Issues • How do we address affordability? • Affordability is a very critical issue and concern for student completion in higher education • Colleges and Universities must develop degree pathways and advising to reduce the time to degree, engage in financial advising, and other support programs • Issue critical for legislature to address and continued funding for Pell and MAP is critical to support performance funding

17. Performance Funding PrinciplesEight (8) Complex Issues • How do we ensure that quality is not compromised? • Performance funding can and should support quality improvement. • To address quality, colleges and universities must approach institutional changes through shared governance processes, including contributions by faculty senates and curriculum committees. • Implementing metrics that incentivize completion must be done without reducing standards for learning outcomes and must be complemented by intervention and support programs for struggling students. • Measures of employment data, licensure and certification, and matriculation to graduate school can be used to monitor quality.

18. Performance Funding PrinciplesEight (8) Complex Issues • How do we incorporate contributions to economic development (Public Agenda Goal 4)? • Higher education is a significant contributor to the creation of a vibrant economy in Illinois. • Performance funding models should allow each institution to justify its role in the creation of both the programs and the human resources necessary for economic recovery and productivity. • In addition to the number and quality of college graduates and employer-recognized certificate holders, it is important to also recognize the significant contributions from research and resulting patents, licenses, and business start-up generated by colleges and universities.

19. Performance Funding Principles Questions/Comments?