Outcomes-Based Funding: Overview of Best Practices, Research & State Examples

1. Presented by: Martha J. Snyder, Senior Associate, HCM Strategists, LLC North Carolina Community College Presidents July 25, 2014 Outcomes-Based Funding: Overview of Best Practices, Research & State Examples

2. Agenda Lumina Strategy Labs Network Overview Outcomes-Based Funding Status, Design Principles & Research Ohio Community Colleges Formula Next Steps for Higher Education Finance

3. Lumina Strategy Labs

4. Strategy Labs Lumina State Policy Agenda & Goal 2025 Learning community State and system-leaders, university & college leaders, nonprofit organizations, business leaders Connect peers across states to share, identify and pursue solutions to improve education attainment

5. State Policy Agenda Improve Student Outcomes Align Investments Create Smarter Pathways

6. Rationale, Status, Design Principles & Research Outcomes-Based Funding

7. Policy Rationale for Performance Funding Policy Rationale for 2.0

8. Current Status of Outcomes-Based Funding in States (as of 3/24/14, HCM Strategists) Implementing (as of FY 2014) Developed, not implemented Interest ME WA ND MT VT NH MN OR NY MA ID WI RI SD CT MI WY PA NJ IA NE OH DE NV IN IL WV UT MD CA VA CO KY KS MO NC TN OK AZ SC NM AR GA AL MS LA TX FL AK HI

9. Performance Funding 1.0 Flaws • Multiple, unaligned priorities • Complicated & Burdensome • Lack of institutional consultation • One-size-fits-all • Funding challenges • Competed w/Access Agenda • Original policy supporters left

10. Design Principles for Outcomes-Based Funding

11. Outcomes-Based Funding: Research & Impacts Focused mostly on 1.0 policies; beginning to track impact on 2.0 policies Research is almost entirely focused on intermediate (institutional change) impacts Limited information/ability to understand ultimate impact (scarce research)

12. Research and Impacts • Change in colleges’ awareness of state priorities & own performance • Reported increase in use of data in institutional planning • identify student barriers • align institution policies/investments • Academic program improvements • Academic departments: staffing and structure changes • Academic delivery: program structure (remedial education)

13. Research and Impacts • Student Services • Registration, graduation procedures, financial aid • First-year retention programs • Targeted student advising, tutoring and supplemental services • Job placement services • Concern over: • Quality • Instability of funding • Uneven knowledge of performance funding across and within colleges (not filtering to faculty)

14. Development Steps Step 1: Establish a framework • Goals & Priorities • Timeline for development & implementation • Funding amounts Step 2: Establish Process for Stakeholder Input Step 3: Review Data and Choose Initial Metrics Step 4: Model various formula options Step 5: Implementation/phase-in options Step 6: Finalize recommendations Step 7: Communicate

15. Ohio Community College Formula

16. Background Higher Education Funding Commission report and House Bill 59 study charges:

17. Funding Consultation & Process

18. Guiding Principles of Consultation • Multiple models were reviewed and evaluated based on data, policy implications, and the consultation’s guiding principles: • Hold true to the mission and priorities of community colleges including access, completion, quality, and workforce development. • Incentivize institutions to adopt evidence-based practices to help them succeed. • Align with state priorities and initiatives • Be simple to understand and communicate • Develop a model that is sustainable, consistent, and reliable.

19. Ohio Community College Formula History, 2009-2015

20. Ohio CC: FY 2015 Framework Summary *Access Categories Applied • Adult (age 25 and over at time of enrollment) • Low-Income, Pell Eligible • Minority (African American, Hispanic, Native American) All data averaged over three years

21. Component 1: Cost-Based Completions

22. Component 2: Student Progression

23. Component 3: Cost-Based Completions

24. Access Categories for Course Completions

25. Application of Access Categories Hybrid model selected: • Completed FTE • 15% add-on for students from 1 (or more) access category • Completion Milestones • 25% add-on for students from 1 access category • 66% add-on for students from 2 access categories • 150% add-on for students from 3 access categories

26. Status & Next Steps For Ohio

27. Status of Funding Recommendations • Mid-Biennium Budget: Reflects OACC Recommendations • Course completions • Success Points • Completion milestones • Access Categories • Stability Funding • $3.1 million for 96% stop-loss • If stability funding < amount needed for 96% stop-loss: amounts are proportionally reduced • If stability funding > amount needed for 96% stop-loss: excess reverts to general fund for all community colleges

28. Next Steps • Recommended for inclusion in FY 2016-17: • Short-term certificates and certificates of value • Continue to establish common definitions and data collection processes for short-term certificates (less than 1-year) • Recommend for inclusion in FY 2016-17 funding model • Certificates-of-value need further definition from the Ohio Board of Regents • Academic Preparation Access Category • Establish HEI reporting process for placement scores • Align to Ohio Remediation Free Standards • Develop crosswalks with other measures • Discontinue use of projected data

29. Next Steps for Higher Education Finance

30. 1. Investment Needs • Financial resources necessary to reach attainment needs • Not doing more with less; doing more, differently • Expand capacity of system to serve more students successfully • Combination of state investment and focus on student outcomes • More investment in current model will not allow us to achieve attainment needs • Allocation across sectors • programs and degrees to reflect projected attainment and workforce needs

31. 2. Advance & Support • Data Systems • Expand capacity to include measures such as job placement, certificates, etc. • Quality measures • Institution support • Build capacity to evaluate performance • Share best practices for student support

32. 3. Evaluate & Refine • Understand impact innovative delivery • Remedial Education Redesign • Competency-based education/PLA • Underserved populations • Appropriate “premium” or weight for students • Identifying within context of state attainment needs

33. StrategyLabs.LuminaFoundation.org