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Illinois Higher Education Performance Funding Model

Illinois Higher Education Performance Funding Model. Steering Committee Meeting November 13, 2013 Dr. Alan Phillips. Topics of Discussion. Update on National Trends – Lumina Conference Metrics Review FY15 Performance Funding Recommendations Funding Model Amount Allocated to Performance.

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Illinois Higher Education Performance Funding Model

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  1. Illinois Higher Education Performance Funding Model Steering Committee Meeting November 13, 2013 Dr. Alan Phillips IBHE Presentation

  2. Topics of Discussion • Update on National Trends – Lumina Conference • Metrics Review • FY15 Performance Funding Recommendations • Funding Model • Amount Allocated to Performance IBHE Presentation

  3. Update on National Trends IBHE Presentation

  4. Lumina Performance Funding Conference • Tennessee • Wisconsin • Lumina Foundation • HCM Strategists • Purpose of the Conference was to compare and contrast performance funding models across different states. • Conference was attended by representatives from: • Arizona • Illinois • Indiana • Kentucky • Ohio IBHE Presentation

  5. Performance Funding Conference(Discussion Points) Indiana • In Indiana, higher education funding to the institutions is in support of the state’s goals. • One model that applies to all institutions with variations in metrics for Research Campuses, Non-Research Campuses, and 2-Year Institutions. • Degree Completion (55%), Progression Points (15%), and Productivity Metrics (30%) • Six-years of Data • The University School of Medicine and Dentistry is Excluded • Set-Aside is 5% in FY13, 6% in FY14, and 7% in FY15 IBHE Presentation

  6. Performance Funding Conference(Discussion Points) Tennessee Tennessee has had had various iterations of performance funding models since 1979 (Enrollment Plus). Current Outcomes Based model in place since 2011 with a three year phase-in. Separate models for two and four-year institutions tied to the state Master Plan. Rational Allocation Model - 100% Allocation (includes Fixed Cost Allocation (20%) and QA Score (5%)) Every dollar they receive for next year will be based on what they do this year. If state funding is level, the institutional variation from year to year can be as high as +/- 5%. IBHE Presentation

  7. Performance Funding Conference(Discussion Points) Although there are many similarities, every state’s situation is different. Most states that transitioned to a performance funding model started with an enrollment model. The availability and quality of data (to include definitional and personnel turnover issues) is a challenge for all of the states. Some states incorporate workforce data into their model from either an alumni survey or existing workforce database. Only certificates approved by the Board of Regents are counted, and they only count the highest level achieved. IBHE Presentation

  8. Performance Funding Conference(Quality) • Even though a few states have incorporated a quality component into their model, the effective assessment of quality continues to be a major challenge. • The concern is that to increase performance, the institutions will lower quality, but this does not seem to be the case. • None of the states see a reduction in quality at any of their institutions, and the college and university presidents say that it is not a problem for reasons listed below: • Oversight (State, Administration, Faculty) • Accreditation • Perception of the institution (Want to be viewed as a quality institution). IBHE Presentation

  9. Performance Funding Conference(Performance and Funding) How much funding should be allocated to institutions based on performance? It depends – Performance funding forces changes in business processes to achieve desired outcomes, and you want to allocate enough to change behavior, but every state’s situation is different. It is very difficult, if not impossible, to tie any overall improvement in performance solely to the implementation of performance funding. You can, however, identify programs and initiatives that have been put into place to improve outcomes as a result of performance funding. IBHE Presentation

  10. Metric Review IBHE Presentation

  11. Metric Review(Bachelors Degrees) University* FY13FY14 FY15Change UIUC 7,249 7,388 7,497 139 / 109 UIC 3,329 3,417 3,561 88 / 144 NIU 3,921 4,064 4,029 143 / -35 SIUC 4,240 3,977 3,881 -263 / -96 ISU 4,203 4,276 4,388 73 / 112 SIUE 2,125 2,176 2,201 51 / 25 WIU 2,501 2,433 2,378 -68 / -55 EIU 2,322 2,290 2,243 -32 / -47 NEIU 1,494 1,606 1,649 112 / 43 CSU 656 750 762 94 / 12 GSU 851 844 905 -7 / 61 UIS 638 643 661 5 / 18 * School order based on Carnegie Classification and Enrollment. IBHE Presentation

  12. Metric Review(Masters Degrees) UniversityFY13FY14FY15Change UIUC 2,638 2,950 3,131 312 / 181 UIC 1,786 1,982 2,052 196 / 70 NIU 1,552 1,568 1,582 16 / 14 SIUC 933 970 962 37 / -8 ISU 682 752 800 70 / 48 SIUE 687 720 737 33 / 17 WIU 633 677 677 44 / 0 EIU 590 622 590 32 / -32 NEIU 568 541 539 -27 / -2 CSU 308 278 249 -30 / -29 GSU 999 905 795 -94 /-110 UIS 597 537 563 -60 / 26 IBHE Presentation

  13. Metric Review(Doctoral and Prof Degrees) UniversityFY13FY14FY15Change UIUC 1,055 1,084 1,127 29 / 43 UIC 862 910 930 48 / 20 NIU 209 200 195 -9 / -5 SIUC 325 331 345 6 / 14 ISU 50 51 53 1 / 2 SIUE 74 122 121 48 / -1 WIU 8 9 6 1 / -3 EIU 0 0 0 0 NEIU 0 0 0 0 CSU 1 2 25 1 / 23 GSU 0 10 23 10 / 13 UIS 3 3 1 0 / -2 IBHE Presentation

  14. Metric Review(Undergrad Degrees Per 100 FTE) UniversityFY13FY14FY15Change UIUC 22.4 22.3 22.5 -0.15 / 0.20 UIC 22.2 21.7 22.2 -0.57 / 0.50 NIU 23.2 24.9 25.4 1.70 / 0.50 SIUC 32.8 32.0 31.7 -0.84 / -0.30 ISU 24.9 24.8 25.2 -0.17 / 0.40 SIUE 21.6 21.1 21.1 -0.50 / 0.00 WIU 24.1 24.5 24.1 0.35 / -0.40 EIU 23.7 24.1 24.3 0.37 / 0.20 NEIU 22.0 22.8 23.0 0.80 / 0.20 CSU 16.5 17.4 17.5 0.88 / 0.10 GSU 45.7 39.5 39.7 -6.20 / 0.20 UIS 28.0 25.7 25.8 -2.28 / 0.10 IBHE Presentation

  15. Metric Review(Performance Values)* University FY13FY14FY15ChangeNet $ Change UIUC 14,815 17,402 18,194 2,587/ 792 $71,400 / $110,257 UIC 11,565 15,493 11,888 3,928 /-3,605 $25,600 / -$31,548 NIU 3,870 4,086 4,620 216 / 534 -$57,600 / -$27,977 SIUC 4,789 6,199 4,636 1,410 /-1,563 -$105,000 / -$93,349 ISU 3,435 3,762 3,723 327 / -39 $6,800 / -$16,605 SIUE 2,438 2,914 2,685 476 / -229 -$4,700 / -$19,544 WIU 2,287 2,703 2,818 416 / 115 $7,300 / $3,997 EIU 2,206 2,565 2,598 359 / 33 $37,000 / $26,471 NEIU 1,941 2,282 2,476 342 / 194 $39,800 / $45,960 CSU 1,180 1,434 1,546 254 / 112 -$42,800 / -$39,409 GSU 1,079 1,473 1,780 394 / 307 $24,500 / $45,806 UIS 566 1,131 1,199 566 / 68 -$2,300 / -$4,058 It is possible to improve your overall performance from year to year, and still lose funding based on performance. IBHE Presentation

  16. Performance Funding Model (FY15)4-Year Public Universities IBHE Presentation

  17. Performance Funding Model Steps(4-Year Public University) Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures. Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. Step 5– Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results. Step 7 – Use the final Weighted results (or Total Performance Value) - excluding high cost entities - to distribute performance funding. Step 8 – Add an adjustment factor (Carve-out) for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools). IBHE Presentation

  18. Performance Measures Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures (3-year averages) • MeasureSource • Bachelors Degrees (FY10-12) IPEDS • Masters Degrees (FY10-12) IPEDS • Doctoral and Professional Degrees (FY10-12) IPEDS • Undergraduate Degrees per 100 FTE (FY10-12) IPEDS • Research and Public Service Expenditures (FY11-13) RAMP • Graduation Rate - 150% of Time (Fall 05-07 Cohort)* Institutional Data • Persistence-Completed 24 Semester Hours in One Year (FY10-12)* Institutional Data • Cost per Credit Hour (FY10-12) Cost Study • Cost per Completion (FY10-12) Cost Study *Incorporate transfers per the CCA transfer category definitions (i.e. 30 or fewer credits, 31 to 59 credits, or 60 or more credits). IBHE Presentation

  19. Sub-Categories Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations • Sub-Category Weight* • Low Income (Pell/Map Eligible) 40% - Institutional Data • Adult (Age 25 and Older) 40% • Hispanic 40% • Black, non-Hispanic 40% • STEM & Health Care (by CIP Code) 40% - HLS + CIP 51 IBHE Presentation

  20. Sub-Categories Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations • Only weighted Bachelors, Masters and Doctorate and Professional Degrees • Did not weight Undergraduate Degrees per 100 FTE • - To avoid overweighting sub-populations throughout the model, the percentage weight given to the subcategories would have to be reduced from the current 40%.  Otherwise, schools with high numbers of Master and Doctoral students graduating from the subpopulations would be negatively impacted, as credit given to these populations is reduced.  • - The change would benefit smaller masters degree schools but would disproportionately harm research institutions. • Did not weight Cost per Completion • - It is only possible to weight the completion portion of the ratio, a weighted cost is unavailable.  Weighting completions without weighting cost does not provide an accurate measure of differential costs to educate particular sub groups. IBHE Presentation

  21. Scaling Factors Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. • Averaged the measures across all of the institutions. • The average number of bachelors degrees will serve as the base value. • Determine a scaling factor that will normalize the rest of the averages to the average number of bachelors degrees. • Adjust the scaling factors as appropriate (i.e. Masters & Doctorates). • Multiply all of the initial data by the scaling factor to normalize the data. IBHE Presentation

  22. Scaling Factors Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. • MeasureUniversities 1-12 (Avg)Scaling FactorAdjusted Scaling Factor • Bachelors Degrees (FY10-12) • Masters Degrees (FY10-12) • Doctoral and Professional Degrees (FY10-12) • Undergraduate Degrees per 100 FTE (FY10-12) • Grad Rates 150% of Time (Fall 05-07 Cohort) • Persistence (Completed 24 Semester Hours) (FY10-12) • Cost per Credit Hour (FY10-12) • Cost per Completion (FY10-12) • Research and Public Service Expenditures (FY11-13) 2,846 1,056 23625 46 1,511 353 37,129 124,059,383 1.0 2.7 12.1 113.0 60.3 1.8 8.1 .07 .00002 1 1 2 200 50 2 -8 -.05 .00005 IBHE Presentation

  23. Performance Measure Weights Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. • Measure • Bachelors Degrees (FY10-12) • Masters Degrees (FY10-12) • Doctoral and Professional Degrees (FY10-12) • Undergraduate Degrees per 100 FTE (FY10-12) • Grad Rates 150% of Time (Fall 05-07 Cohort) • Persistence (Completed 24 Semester Hrs) (FY 10-12) • Cost per Credit Hour (FY10-12) • Cost per Completion (FY10-12) • Research /Public Service Expenditures (FY11-13) IBHE Presentation

  24. Performance Measure Weights Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 150% of Time • Persistence (Completed 24 Semester Hours) • Cost per Credit Hour • Cost per Completion • Research & Public Svc Expenditures IBHE Presentation

  25. Performance Value Calculation Step 6 – Multiply and Sum the Scaled Data times the Weight to produce the Performance Value for each institution. (Data+Premium) x Scale Total Performance Value • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 150% of Time • Persistence (Completed 24 Semester Hours) • Cost per Credit Hour • Cost per Completion • Research & Public Svc Expenditures Data Data + Premium Scale xWeight = 2,722 1,012 207 25 46 1,511 353 37,129 124,059,383 2,846 1,056 23625 46 1,511 353 37,129 124,059,383 1 1 2 200 50 2 -8 -.05 .00005 2,846 1,056 472 5,000 2,300 3,022 -2,824 -1,856 6,203 30.0% 25.0% 5.0% 10.0% 2.5% 2.5% 2.5% 2.5% 20.0% 100.0% 854 264 24 500 58 76 -71 -46 1,241 2,898 IBHE Presentation

  26. Performance Value Calculation Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools) • Step 1: Allocate performance set-aside funds based on and adjusted state appropriation that removes state funds for high cost entities. • Step 2: Calculate performance funding allocations per funding model using adjusted performance set-aside amount. • Step 3: Add back funds to institutions with high cost entities by applying performance funding set-aside percentage (i.e. .5% for FY14) to the high cost entities state appropriation. • Step 4: Total allocated funds equal performance funding without high cost entities plus set-aside for high cost entities. IBHE Presentation

  27. High Cost Entities Adjustment • Step 1: Allocate performance set-aside funds based on and adjusted state appropriation that removes state funds for high cost entities. • Example: Total State Appropriation – High Cost Entities = Funds Allocated via Performance $2.0 billion – $250 million = $1.75 billion x 0.5% (performance set-aside for FY 14) = $8.75 million • Step 2: Calculate performance funding allocations per funding model using adjusted performance set-aside amount. • Reallocate $8.75 million based on performance to higher education institutions per performance model • Step 3: Add back funds to institutions with high cost entities by applying performance funding set-aside percentage (i.e. .5% for FY14) to the high cost entities state appropriation. • Example: University A – High Cost Entity Appropriation = $100 million x 0.5% = $0.5 million University B – High Cost Entity Appropriation = $150 million x 0.5% = $0.75 million • Step 4: Total allocated funds equal performance funding without high cost entities plus set-aside for high cost entities. • Example: University A - $1.25 M (performance funds) + $0.5 M (high cost add back) = $1.75 M University B - $2.0 M (performance funds) + $.075 M (high cost add back) = $2.75 M University C - $0.75 M (performance funds) IBHE Presentation

  28. Funding AllocationBased on Performance Step 8 – Use the Weighted results (or Total Performance Value) to distribute funding based on a Pro Rata Share of the total amount of funds set aside for performance funding. Percentages for Distribution Total Performance Value 10,840 4,435 3,200 17,302 Percentage of Total 58.7% 24.0% 17.3% 100% Distribution: Pro Rata $587,000 $240,000 $173,000 $1,000,000 University 1University 2University 3Total IBHE Presentation

  29. PreliminaryFY15 PerformanceFunding Allocation IBHE Presentation

  30. PreliminaryFY15 PerformanceFunding Allocation IBHE Presentation

  31. Results for FY15 • Performance funding values increased for eight of the twelve four-year public universities from FY14 to FY15. • Assuming a .5% funding set-aside and level GRF Funding: • Variance in funding allocations due to performance ranged from +.19% to -.11%. • The actual funding amount variance ranged from +$110.3K to -$93.3K. IBHE Presentation

  32. Results for FY15 • Performance funding values increased for eight of the twelve four-year public universities from FY14 to FY15. • Assuming a 2.0% funding increase in addition to level GRF Funding: • Variance in funding allocations due to performance ranged from +1.58% to +2.74%. • The actual funding amount variance ranged from +$.458M to +$6.0M. IBHE Presentation

  33. Timelines IBHE Presentation

  34. Next Steps 10 Dec 13 - IBHE Board Meeting 19 Dec 13    - Refinement Committee Meeting  14 Jan 14 - Steering Committee Meeting 4 Feb 14 - IBHE Board Meeting (IBHE Higher Education Budget/Performance Funding Recommendation to Board) IBHE Presentation

  35. Questions? IBHE Presentation

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