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Illinois Higher Education Performance Funding Model

Illinois Higher Education Performance Funding Model. Performance Funding Steering Committee Meeting January 14, 2013 Dr. Alan Phillips. Purpose.

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Illinois Higher Education Performance Funding Model

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  1. Illinois Higher Education Performance Funding Model Performance Funding Steering Committee Meeting January 14, 2013 Dr. Alan Phillips IBHE Presentation

  2. Purpose The purpose of this presentation is to propose a performance funding model that will allocate funding based on performance as a part of the FY 2014 IBHE Higher Education budget submission, in accordance with the intent of Public Act 97-320 (HB 1503), the Performance Funding legislation, and that supports the goals of the Illinois Public Agenda. IBHE Presentation

  3. Topics to be Covered • Performance Funding Background • Performance Funding (FY2013) • Refinement Committee Effort • Performance Funding Model Refinements • FY14 Budget Considerations IBHE Presentation

  4. Background IBHE Presentation

  5. Higher Education Landscape 33 States have expressed interest or are currently implementing performance-based funding systems, up from fewer than 10 states just two years ago. States are now turning their attention to how – rather than how much state funding is distributed to public colleges and universities. As states have less money to spend, they also want to ensure that they are getting a better return on investment for the money they do have. IBHE Presentation

  6. Principles of a Good Performance Funding Model • There is agreement on the goals before performance funding is put into place. • Consensus around a “Public Agenda” for the state which contains goals that are tailored to the needs of the state. • The model contains performance metrics that are constructed broadly. • The design of the model promotes mission differentiation. • The model includes provisions that reward success with underserved populations. • The model includes provisions that reward progress as well as ultimate success (i.e. degree completion). IBHE Presentation

  7. Principles of a Good Performance Funding Model The categories of outcomes to be rewarded are limited. The measures/metrics are unambiguous and difficult to game. Continuous improvement is rewarded, not attainment of a fixed goal. Incentives in all parts of the funding model align with state goals. The performance funding pool is large enough to command attention. IBHE Presentation

  8. Performance Funding Objective • To develop performance funding models for public universities and community colleges that are… • Linked directly to the Goals of the Illinois Public Agenda and the principles of Public Act 97-320 • Equipped to recognize and account for each university’s mission and set of circumstances • Adjustable to account for changes in policy and priorities • Not prescriptive in how to achieve excellence and success IBHE Presentation

  9. Public Agenda Goals Increase Educational Attainment. Ensure college affordability for students, families, and taxpayers. Increase the number of high-quality post-secondary credentials. Better integrate Illinois’ education, research, and innovation assets to meet economic needs of the state. IBHE Presentation

  10. Public Act 97-320 (HB 1503) • Performance Metrics Shall: • Reward performance of institutions in advancing the success of students who are: • Academically or financially at risk. • First generation students. • Low-income students. • Students traditionally underrepresented in higher education. • Recognize and account for the differentiated missions of institutions of higher education. • Focus on the fundamental goal of increasing completion. • Recognize the unique and broad mission of public community colleges. • Maintain the quality of degrees, certificates, courses, and programs. IBHE Presentation

  11. Performance Funding Model (FY13)4-Year Public Universities IBHE Presentation

  12. Performance Funding Model(4-Year Universities) All steps are identical at each university The model accounts for each institution’s unique mission by adding a weight to each measure. Each institution’s formula calculation is independent. The formula calculation for each institution will change each year based on annually updated data. The funding allocation is competitive. Funds are distributed on a pro rata basis according to each institution’s formula calculation. The model is not prescriptive in how to achieve excellence and success (what, not how). IBHE Presentation

  13. Performance Funding Model (FY13)Community Colleges IBHE Presentation

  14. Performance Funding Model(Community Colleges) All steps are identical for each measure. Each community college district competes independently for funding associated with each measure. Funds are distributed on a pro rata basis according to each institution’s increase in performance. No funds are allocated for a decrease in performance. The formula calculation for each institution will change each year based on annually updated data. The model can be scaled relative to the amount of funds allocated to performance funding. IBHE Presentation

  15. Did We Accomplish the Objective? Developed workable performance funding models. Model and budget recommendations approved by both the Steering Committee and the IBHE Board. A performance funding component was included in the FY 2013 Higher Education Budget Submission. The IBHE funding recommendation was included in the Governor’s Budget without change. The GA allocated funding based on performance consistent with the IBHE performance funding recommendation. On this basis, we accomplished the objective. IBHE Presentation

  16. Refinement Effort IBHE Presentation

  17. Four Refinement Goals • Refine the existing measures and sub-categories to the extent possible or find replacement measures that capture what we are trying to measure in a better way (i.e. Research Expenditures, Low Income Students, Cost per FTE, etc.). • Identify additional measures and sub-categories to add to the model. • Identify better and more current sources of data. • See if there is a better way to scale (normalize) the data. • Discuss ways to account for other factors (i.e. Hospitals, Medical Schools, Dental Schools, etc.) IBHE Presentation

  18. Goal 1 • Identify additional measures and sub-categories to add to the model. • The Committee considered which existing measures should be revised. • Want to keep the additional measures and sub-categories to a minimum. • The Committee also reviewed a number of additional measures and sub-categories for addition to the model. • Many of the measures had significant drawbacks. • Data still does not exist for many of the measures. IBHE Presentation

  19. Current Measures and Sub-Categories Measure • Bachelors Degrees (IPEDS) • Masters Degrees (IPEDS) • Doctoral and Professional Degrees (IPEDS) • Undergraduate Degrees per 100 FTE (IPEDS) • Education and General Spending per Completion (RAMP) - Replace • Research and Public Service Expenditures (RAMP) Sub-Category • Low Income (Pell/Map Eligible) (ISAC) – Find Better Data • Adult (Age 25 and Older) (CCA) • Hispanic (IPEDS) • Black, non-Hispanic (IPEDS) • STEM & Health Care (by CIP Code) (IPEDS) – Better Define CIP Codes IBHE Presentation

  20. Possible Measures to Add • Input measures • SAT/ACT Scores - ILDS • Students Requiring Remediation - ILDS • Transfer Students (Articulation) - ILDS • Transfers with Associates Degree • Transfers with partial credit • Process measures (Persistence) • Credit Hour Accumulation (24/48/72) - ILDS • Retention by Cohort – ILDS • Retention after transfer - ILDS • Completion measures • Bachelors Degrees - IPEDS • Masters Degrees - IPEDS • Doctoral and Professional Degrees - IPEDS • Time to Completion (within 100%, 150%, or 200%) - ILDS • # of graduates working in jobs related to their education - ? IBHE Presentation

  21. Possible Measures to Add • Efficiency measures (Affordability) • Undergraduate Degrees per FTE – IPEDS • Education and General Spending per Completion - RAMP • Tuition and Fees – Tuition & Fee Report • Cost per Completion – Cost Study • Cost per FTE (?) – IBHE/IPEDS • Unit Cost – Unit Cost Report • Instructional Cost per Credit Hour – Cost Study • Faculty Productivity - ? • Institutional measures • Research and Public Service Expenditures - RAMP • Success in generating additional funding from contract activities (i.e. research, teaching, etc.) - ? • Private Support – RAMP/IPEDS • Investment in Facilities – RAMP • Cost Structure (i.e. Hospital, Medical School, Dental School, etc) - ? • Quality measures • Ratio of Tenured to Non-Tenured faculty - IBHE • Ratio of Full-Time to Part-Time faculty - IBHE • Alumni, enrolled students, or employer survey results - ? • National Survey of Student Engagement – College Board • Satisfaction Assessment - ? • Diversity Measures • Faculty/Staff Diversity - IPEDS • Student Characteristics and Student Diversity - ILDS IBHE Presentation

  22. Changes to the Measures • Deleted Education and General Spending per Completion (RAMP) • Added: • Cost per Credit Hour. (Cost Study) • Cost per Completion. (Cost Study) • Credit Hour Accumulation. (Survey) • Time to Completion. (Survey) IBHE Presentation

  23. Changes to Sub-Categories • Did not change the sub-categories. • Low Income (Pell/MAP Eligible) – ISAC/ILDS • Adult (Age 25 and Older) – CCA/ILDS • Hispanic - IPEDS • Black, non-Hispanic - IPEDS • STEM & Health Care (By CIP Code) – IPEDS • Part-Time - ILDS • Disabled - ILDS • Veterans - ILDS • First Generation - ILDS • English Language Learners (?) • Residents of Underserved Counties - ILDS • Additional Ethnic Categories – ILDS/IPEDS IBHE Presentation

  24. Goal 2 2. Identify better and more current sources of data. • IPEDS (FY09-11) • Bachelors/Masters/Doctoral and Professional Degrees • Undergraduate Degrees per FTEs • Hispanic • Black, non-Hispanic • STEM & Health Care (By CIP Code) - HLS STEM List + 51 (Health Professions and Related Programs) • Cost Study • Cost per Completion • Cost per Credit Hour • RAMP (FY09-12) • Education and General Spending per Completion - Replaced • Research and Public Service Expenditures • CCA (FY09-10) • Adult Students (Age 25 and older) • ISAC (FY09-11) • Low Income (Pell/Map Eligible) – Used Survey Data from the Universities IBHE Presentation

  25. Possible Additional Sources of Data • ILDS • Age – (Date of Birth) • Ethnicity • Location – (County/Zip) • ACT/SAT • High School GPA/Class Rank (%) • Entry Enrollment (First Time/Transfer) • Enrollment (Part-Time/Full-time) • Remediation (GED/Math/Language Arts) • Credit Hours (Total/by Term) • Income (Pell/MAP Eligible) • First Generation. • ILDS Not ready for Prime-Time IBHE Presentation

  26. Goal 3 The Question: How can you scale the data so that the measures are roughly equivalent, without creating more problems than you solve, while at the same time keeping it simple enough that an individual can understand what you did? Result: For FY14 we will continue with the present approach. 3. Determine if there is a better way to scale (normalize) the data. IBHE Presentation

  27. Goal 4 • Discuss ways to account for other factors (i.e. Hospitals, Medical Schools, Dental Schools, etc.) • The Committee agreed to look at removing these entities from the calculation for spending per completion. • Added a factor to the model to account for these entities based on a proportional share their funding relative to the institution’s total GRF funding. • Used Cost Study data, which does not include most of this information in the calculation of cost data. IBHE Presentation

  28. Refinement Issues • Data continues to be an issue. • Although we have received our first ILDS submission, the quality of the data is not sufficient to use at this time. • The timeliness of data also continues to be a problem. • May have to request the specific data we need from the universities. • Quality • We still have significant challenges in defining quality as it pertains to universities, and determining how best to assess that quality. • Sub-Categories • First Generation (Definition/Data issues) • Geographic Area (IERC – Students from Disadvantaged HS) IBHE Presentation

  29. Performance Funding Model (FY14)4-Year Public Universities IBHE Presentation

  30. 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 (i.e. 40%) 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 that reflects the priority of the Measure and the mission of the institution. Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results. Step 7 – Add an adjustment factor for high cost entities. Step 8 – Use the final Weighted results (or Total Performance Value) to distribute performance funding. IBHE Presentation

  31. 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 (FY09-11) IPEDS • Masters Degrees (FY09-11) IPEDS • Doctoral and Professional Degrees (FY09-11) IPEDS • Undergraduate Degrees per 100 FTE (FY09-11) IPEDS • Education and General Spending per Completion (FY09-11) RAMP • Research and Public Service Expenditures (FY10-12) RAMP • Grad Rates 100%/150%/200% of Time (Fall 02-04 Cohort) Survey • Retention (Completed 24/48/72 Semester Hours) (FY07-09) Survey • Cost per Credit Hour (FY09-11) Cost Study • Cost per Completion (FY09-11) Cost Study IBHE Presentation

  32. Sub-Categories Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations • Sub-CategoryWeight • Low Income (Pell/Map Eligible) 40% - Survey 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

  33. 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

  34. 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 (FY09-11) • Masters Degrees (FY09-11) • Doctoral and Professional Degrees (FY09-11) • Undergraduate Degrees per 100 FTE (FY09-11) • Grad Rates 100%of Time (Fall 02-04 Cohort) • Grad Rates 150% of Time (Fall 02-04 Cohort) • Grad Rates 200% of Time (Fall 02-04 Cohort) • Retention (Completed 24 Semester Hours) (FY07-09) • Retention (Completed 48 Semester Hours) (FY07-09) • Retention (Completed 72 Semester Hours) (FY07-09) • Cost per Credit Hour (FY09-11) (Cost Study) • Cost per Completion (FY09-11) (Cost Study) • Research and Public Service Expenditures (FY09-11) 2,822 1,042 22725 27 46 50 1,644 1,453 1,350 346 36,566 112,914,667 1.0 2.7 12.4 112.6 104.4 60.9 57.0 1.7 1.9 2.1 8.1 .1 .00002 1 1 2 200 50 50 50 2 2 2 -8 -.050 .00005 IBHE Presentation

  35. Performance Measure Weights Step 5 – Weight each of the Performance Measures that reflects the priority of the Measure and the mission of the institution. • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 100%of Time • Grad Rates 150% of Time • Grad Rates 200% of Time • Retention (Completed 24 Semester Hours) • Retention (Completed 48 Semester Hours) • Retention (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion • Research and Public Service Expenditures IBHE Presentation

  36. Performance Measure Weights Step 5 – Weight each of the Performance Measures that reflects the priority of the Measure and the mission of the institution. • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 100%of Time • Grad Rates 150% of Time • Grad Rates 200% of Time • Retention (Completed 24 SemHrs) • Retention (Completed 48 SemHrs) • Retention (Completed 72 SemHrs) • Cost per Credit Hour • Cost per Completion • Research & Public Svc Expenditures IBHE Presentation

  37. 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 100%of Time • Grad Rates 150% of Time • Grad Rates 200% of Time • Retention (Completed 24 SemHrs) • Retention (Completed 48 SemHrs) • Retention (Completed 72 SemHrs) • Cost per Credit Hour • Cost per Completion • Research & Public Svc Expenditures Data Data + Premium Scale xWeight = 2,822 1,042 227 25 27 46 50 1,644 1,453 1,350 346 36,566 $112,914,667 3,522 1,454 240 25 27 46 50 1,644 1,453 1,350 345 36,566 $112,914,667 1 1 2 200 50 50 50 2 2 2 -8 -.050 .00005 3,522 1,454 480 5,000 1,350 2,300 2,500 3,288 2,906 2,700 -2,760 -1,828 5,646 30.0% 25.0% 5.0% 10.0% 1.5% 1.0% 0.5% 1.0% 1.5% 2.0% 1.5% 1.0% 20.0% 100.0% 1,057 364 24 500 20 23 13 33 44 54 -41 -18 1,129 3,200 IBHE Presentation

  38. Performance Value Calculation Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools) • Divide the amount of the university GRF appropriation allocated to fund the high cost entity by the total university GRF appropriation. • Multiply this factor by the university performance value and add the result back to the performance value. • This give you a total performance value for institutions with these high cost entities. • Example: $20M/$200M = .10 • .10 X 3200 (PV) = 320 • 320 + 3200 = 3550 = Total Performance Value IBHE Presentation

  39. 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

  40. Budget Considerations IBHE Presentation

  41. Budget Considerations The State budget situation is not stable and declines in State funding for colleges and universities may continue. The pension cost transfer continues to be a concern. Colleges and universities continue to address unfunded state mandates and regulatory requirements. The availability of financial aid continues to be a problem and funding levels for both MAP and Pell are declining. Enrollment declines continue to create significant challenges for colleges and universities. The performance funding model needs to be more fully developed in order to refine the measures and sub-categories and we need better sources of data to support the model (ILDS) Colleges and universities have not been able to impact their performance as the current model is based on performance prior to the implementation of performance funding. IBHE Presentation

  42. Way Ahead • Present final performance funding model recommendations to the IBHE Board February 5th along with the FY2014 higher education budget submission, which will include our performance funding recommendation. • Continue work to refine the performance funding model and acquire more accurate and comprehensive data in preparation for the FY 2015 budget submission and performance funding recommendation. IBHE Presentation

  43. Questions/Comments? IBHE Presentation

  44. Back-Up Charts IBHE Presentation

  45. Performance Funding Model (FY13)4-Year Public Universities IBHE Presentation

  46. 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 (i.e. 40%) 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 that reflects the priority of the Measure and 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 Weighted results (or Total Performance Value) to distribute performance funding. IBHE Presentation

  47. 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 (FY07-09) IPEDS • Masters Degrees (FY07-09) IPEDS • Doctoral and Professional Degrees (FY07-09) IPEDS • Undergraduate Degrees per 100 FTE (FY07-09) IPEDS • Education and General Spending per Completion (FY09-11) RAMP • Research and Public Service Expenditures (FY09-11) RAMP IBHE Presentation

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

  49. 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 (FY07-09) 4,445 1.00 1.00 • Masters Degrees (FY07-09) 1,152 3.86 1.00 • Doctoral and Professional Degrees (FY07-09) 796 16.25 2.00 • Undergraduate Degrees per 100 FTE FY(07-09) 26 173.64 200.00 • Education and General Spending per Completion (FY09-11) 4,639 -.96 -1.00 • Research and Public Service Expenditures (FY09-11) 10,803,117 .0004115 .0005000 • 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

  50. Performance Measure Weights Step 5 – Weight each of the Performance Measures that reflects the priority of the Measure and the mission of the institution. IBHE Presentation

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