incentive-based strategies

Tennessee Higher Education Commission

Incentive-Based Strategies

for driving the college completion agenda

David L Wright, chief policy officer


Higher Education Government Relations Conference

November 30, 2012


Tennessee public higher ed structure


State context prior to 2010

• Little linkage between funding and state goals

• Long-standgin Performance Funding program

allocated 5% of budget on measures tied to

Master Plan

o Two studies showed no significant impact

• Geography/demography drove campus growth

• Enrollment-based funding rewarded growth

o Not fully funded since mid 1990s

o “Hold harmless” provision hurt growing campuses


TN higher ed fiscal realities

• Fewer state dollars for institutional

operations

o > 20% cuts over the last 5 years

• Cost inflation

• Robust merit scholarship program

• Enrollment growth

• Tuition spiral

• Exacerbated by recent recession

5


5

TN higher ed operating revenues

6


6


-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

Total Revenue per FTE4 Year Institutions

Inflation Adjusted - 2011 Dollars

State Appropriations Student Fees Less Grant Aid (TSAA, TELS, Pell) Grant Aid7


7


8


8



NEEDED:

A new vision to

transform TN higher ed

State context


Transformation: complete college TN act of 2010

• New, singular focus for state planning

• Outcomes-based Funding Formula

• Institutional mission Differentiation

• Articulation & Transfer

• Remedial & Developmental Education

• Community College System

• Research


2010-15 TN higher ed public agenda

• The priority = increasing educational attainment

• From “master plan” to “public agenda”

• Narrowly focused on CCTA implementation

• Accountability enforced in two ways:

o New funding formula based entirely on outcomes

o Re-engineered the Performance Funding program to

be quality control mechanism


Performance Funding

Standard I

Quality of Student

Learning & Engagement

75%

Institutional performance measured by achievement

of student learning, program evaluation and

satisfaction studies

Standard II

Quality of Student

Access and Student

Success

25%

Institutional performance measured by achievement

of credentials earned for selected student

sub-populations

2010-15 Performance Funding Cycle Two Quality Assurance Standards

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

2019

-20

2020

-21

2021

-22

2022

-23

2023

-24

2024

-25

An

nu

al D

egr

ee

Pro

du

ctio

n

Additional Cumulative Degrees Needed by 2015:

26,000

Current Projection2009-2015

Cumulative Degree Production: 281,000

Current Projection2009-2025 Cumulative Degree Production: 711,000

Annual Degree Production (Current Projection)

Required Annual Degree Production

The Big Goal

14


Tennessee’s Outcomes-Based

Funding Formula

15


• TN retired its enrollment based model and built

a funding formula that is entirely a function of

outcomes.

• The TN design, utilizing outcomes and an

institution-specific weighting structure, is unique

in state higher education finance policy in the

U.S.

Funding Formula Policy

16


TN Funding Formula Evolution

17


TN Funding Formula Evolution

18


• Rather than counting enrollments, the TN

model simply counts outcomes such as

degrees.

• There are no state-imposed targets or pre-

determined goals.

• The outcomes are weighted to reflect

institutional mission.

TN Outcomes-Based Model

19


TN Outcomes-Based Formula

Outcome

Student Progression: 24 Credit Hours



Bachelors Degrees

Masters Degrees

Doctoral/Law Degrees

Research/Grant Funding

Student Transfers

Degrees per 100 FTE

Graduation Rate

Universities

20



Outcome

Students Accumulating 12 hrs



Dual Enrollment

Associates

Certificates

Job Placements

Remedial & Developmental Success

Transfers Out with 12 hrs

Workforce Training (Contact Hours)

Awards per 100 FTE

Community Colleges



Bachelors degrees; little

research/doctoral degrees

Extensive doctoral degrees

and emphasis on research

Weights Based on Institutional Mission APSU UTM TTU UTC MTSU ETSU TSU UM UTK

Student Progression: 24 Credit Hours 3% 3% 3% 3% 3% 3% 3% 2% 2%



Bachelors Degrees 30% 30% 25% 25% 25% 25% 25% 25% 15%

Masters Degrees 15% 15% 15% 15% 15% 15% 15% 15% 15%

Doctoral/Law Degrees 0% 0% 5% 5% 5% 7.5% 7.5% 10% 10%

Research/Grant Funding 10% 10% 10% 10% 10% 12.5% 12.5% 12.5% 15%

Student Transfers 10% 10% 10% 10% 10% 5% 5% 5% 5%

Degrees per 100 FTE 15% 15% 10% 10% 10% 10% 10% 10% 10%

Graduation Rate 5% 5% 10% 10% 10% 10% 10% 12.5% 20%

100% 100% 100% 100% 100% 100% 100% 100% 100%

22


• Outcomes model utilized for 2011-12 and

2012-13 state budget cycles.

• The outcomes model is not for the

allocation of new state funding, but for all

state funding ($750 million).

• The model works with flat, increasing or

decreasing state appropriations.

TN Outcomes-Based Model

23


1) Choose the metrics

2) Weight metrics to reflect campus mission

3) Collect and scale the data (3-yr avg)

4) 40% premium applied to 2 sub-populations

o Adults and low-income students

5) Account for fixed costs

6) Monetize the outcomes

TN outcomes-based formula: how it works

24



• All state funding up for grabs every year.

• “Hold harmless” provision removed

• State appropriations earned anew each year.

• TN model engineered such that productivity

changes generate state appropriations

changes within a range of +/- 2%.

25



Hold Harmless Policy Phase-out Begins

45.0%

50.0%

55.0%

60.0%

65.0%

70.0%

75.0%

2010-11 2011-12 2012-13 Est. 2013-14

Austin Peay

East Tennessee

Middle Tennessee

Tennessee State

Tennessee Tech

University of Memphis

UT Chattanooga

UT Knoxville

UT Martin

Chattanooga

Cleveland

Columbia

Dyersburg

Jackson

Motlow

Nashville

Northeast

Pellissippi

Roane

Southwest

Volunteer

Walters

25

26


-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2010-11 2011-12 2012-13 2013-14

APSU ETSU

MTSU TSU

TTU UM

UTC UTK

UTM Total Funding

Cumulative Change in Appropriations at

Universities Due to the Formula

26

27


Outcomes Based

Model Advantages

• The structure (outcomes & weights) of the

outcomes-based model is the key innovation.

• The specific outcomes and weights that TN

chose fit our state’s context and current needs.

• Model adaptable to any state’s context and

needs.

28


Other uses of financial incentives

in TN to drive completion

• Accessible eligibility criteria: 3.0 HS GPA or

an ACT composite of 21 or better

• Pays for summer enrollment

• Capped at 120 hours

• Problem: 12 hours still considered full-time

Lottery scholarship

29




• Historically underfunded

o For every student funded, four more

eligible applicants are unfunded

• Has grown since the lottery scholarship

o Some interest off the lottery reserve goes to

TSAA

TSAA: the state need-based aid program

30




• Operating in 30 counties

• Private and county support

• Students identified by HS counselors

• Mentors and “intrusive advising”

• Last-dollar scholarship to community college

tnAchieves: a new need-based model


Public Undergraduate Awards 2007-08 through 2011-12

2007-2008 2010-2011 2011-2012 1 Year

Change

5 Year

Change 5 Year CAGR

Undergraduate Awards

Public Institution Total 25,770 30,580 38,126 24.7% 47.9% 10.3%

Certificate <1 Year 1,050 2,185 6,000 174.6% 471.4% 54.6%

*Funding Formula Certificate <1 Year 892 1,274 1,468 15.2% 64.6% 13.3%

Certificate 1-2 Years 468 622 2,703 334.6% 477.6% 55.0%

*Funding Formula Certificate 1-2 Year 468 619 777 25.5% 66.0% 13.5%

Associate 6,974 8,652 9,467 9.4% 35.7% 7.9%

Bachelors 17,278 19,121 19,956 4.4% 15.5% 3.7%

Technology Centers 5,982 8,140

Includes TBR CC’s, TBR Universities, & UT Universities

2011-2012 TTC Completers are not available until January. Prior years include Certificates and Diplomas awarded, but exclude Supplemental

Certificates and Sufficient Credentials

Includes non-formula awards and awards granted by non-formula units

EARLY RESULTS


Adult Undergraduate Completers 5 Year Trend



42.9% 42.0%

42.4%

43.1%

44.3%

11,029 11,340

11,985

13,190

16,889

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

UT Universities

TBR Universities

TBR Community

Colleges

Grand Total

% is the

Share of

Total

Completers

EARLY RESULTS


Low-Income Undergraduate Completers 5 Year Trend

44.0%

45.3%

48.0%

50.8%

54.7%

11,315

12,224

13,571

15,548

20,871

2007-2008 2008-2009 2009-2010 2010-2011 2011-2012

UT Universities

TBR Universities

TBR Community

Colleges

Grand Total



% is the

Share of

Total

Completers

EARLY RESULTS


Contact Information

David L Wright

Chief Policy Officer

[email protected]

615-509-6020

Russ Deaton

Chief Fiscal Officer

[email protected]

615-532-3860

www.tn.gov/thec

http://www.tn.gov/thec

incentive-based strategies

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