Why we did this audit

1. Higher Education Performance-Based Funding Joint Legislative Audit & Review CommitteeApril 23, 2014Lou Adams, CPA, Deputy Director of Performance Audit Tom Furgeson, Senior Performance Auditor

2. Why we did this audit To help inform policy-makers as they consider a performance-based funding system for Washington’s public four-year schools of higher education

3. Audit approach Report on higher education performance funding systems for public four-year schools in other states Create an inventory of policy goals and measures used in other states Determine which of these measures are collected by Washington’s four-year schools Compare Washington data with other states

4. Review of other states National Conference of State Legislatures (NCSL) list of states with active systems at start of audit We researched 11 states that use performance-based funding

5. Review of other states • Policy goals • Increase degrees completed • Increase high-demand degrees and certifications • Increase graduation rates • Encourage student progress • Close access gaps • Close achievement gaps • Improve education quality • Improve institutional efficiency • Promote research and development • Increase private funding • Increase faculty and staff diversity • Improve operations and maintenance We developed an inventory of policy goals and performance measures used by other states with performance-based funding systems

6. Washington schools collect data for most metrics used by other states • Around 70% of all data collected by some or all schools • Around 40% of data we identified is already reported in the Public Centralized Higher Education Enrollment System (PCHEES) All Washington schools have data for the five most common metrics Number of degrees completed Number of students completing degrees on time Student retention rates Number of STEM and high demand degrees completed Student credit hours completed

7. Washington results Washington schools collect data for most metrics used by other states

8. Online materials http://www.sao.wa.gov/state/Pages/HigherEd.aspx

9. Washington results – online materials Goal Metrics Location of data Data elements Washington schools collect data for most metrics

10. State performance systems vary Metrics used Tennessee 15 metrics Illinois 5 metrics Ohio 2 metrics Performance funding Tennessee 100% Ohio 10% Illinois 0.5% Variation between systems in other states No off-the-shelf system

11. Leading practices Pennsylvania uses a core of several mandatory common metrics, schools choose from among optional metrics Indiana measures enrollment at the end of a semester rather than at the beginning Metrics Address education quality Account for differing institutional missions Ensure student access and equity Recognize importance of progress and completion Identify and address unintended consequences

12. Leading Practices Implementation • Keep the model simple • Be aware of time needed to develop, adjust to model • Phase-in model to account for lack of initial data • Encourage and maintain stakeholder participation • Emphasize shared goals and objectives • Dedicate the right amount of funding • Address and communicate technical details of funding South Carolina’s attempt at performance-based funding failed New Mexico developed its model through a task force with members from the state’s public four-year schools as well as state government

13. Contacts • Troy Kelley • State Auditor • (360) 902-0360 • Troy.Kelley@sao.wa.gov • Chuck Pfeil, CPA • Director of Performance Audit • (360) 902-0366 • Chuck.Pfeil@sao.wa.gov • Tom Furgeson • Senior Performance Auditor • (360) 725-9705 • Thomas.Furgeson@sao.wa.gov Website:www.sao.wa.gov