State Board of Education may look to performance-based funding to fix higher education equity problem

In December, the Office of Performance Evaluations (OPE) presented a report to the Joint Legislative Oversight Committe (JLOC) concerning higher education funding for the four-year institutions in the state. The report determined that there was no clear definition of equity funding levels and it needed to be fixed.

Mike Rush, executive director of the state Board of Education, said during the hearing that “it is certainly the board’s job to get this done.” Rush, in an interview with IdahoReporter about this issue, said in the future “forward-thinking” is needed to solve this problem. This may include performance-based funding.

Rush said that the board has begun working on performance-based funding. “The thing we’re working on now is performance-based funding. That goes to that forward-thinking thing, how do you incentivize institutions, how do you want them to invest new money, and/or money from existing budgets so that we can incentivize folks and make it worth their while to do things like improve their completion rates and graduation rates, reduce costs and all those sorts of things.”

The higher education funding formula, which is weighted based on program type and course level, attempts to equalize funding among the schools. According to Rep. Maxine Bell, R-Jerome, if a possible answer to the problem is more money appropriated from the state, that is simply not going to happen. She said steps to resolve this issue should have been taken care of in 2005 when the state agreed on equity funding. “It has nothing to do with funding,” she said. “If they’d have done what they said they would do in the ensuing years since 2005, there would be a plan and some equity.”

Bell also said that in 2005 some additional funding was provided, but that no additional funding would be coming. “I can tell you right now that there will be no additional money to put in as there was at one time from this effort, so it’s going to have to come from the existing funds.”

Under the formula, the University Idaho receives approximately $3,500 in state appropriations for a full-time student, Lewis-Clark State College receives about $3,000, while Idaho State University and Boise State University each receive less than $2,500.

According to Rush, as well as the board’s chief fiscal office, Matt Freeman, the equity funding plan is in its beginning stages, but is in motion.

So, how exactly would performance-based funding work?

Freeman said the specifics are still in the design stage, but progress is being made. “The metrics haven’t been determined yet. That’s the thing the board has directed staff to do: assemble a panel of stakeholders to the whole performance funding initiative, which would include identifying which metrics they want to measure. Certainly, graduation rates, course completion rates … those are very, very common measures across the country, so it wouldn’t be unreasonable to expect that those could be some of the metrics included in the initiative.”

The OPE report said that in order to truly gauge where funding levels are in relation to each respective school, a clear definition must be determined. Rush said it could be tweaks or an overhaul, depending on what the definition shows once it has been established. “It kind of depends on, once we get that definition and we look at how far off the mark we are. If we’re a long way off then it’s going to look more like an overhaul. If we’re not that far off, it will look more like tweaks.”

Rush also praised the OPE report in stating that a funding definition needs to be established. “I think we do need to correct the issue and I think the board is going to have to tackle that and come up with a definition and I think they will. But the other thing is that there are a lot of activities in that instructional budget that are not directly related to instruction. In that equity discussion what we have to do is No. 1, make a decision whether we want those activities to occur. And if we do, then somehow you have to take those out of the equation so you don’t distort the apples for apples analysis. I think the key to making an equity definition is first, getting the instructional budget refined a little more in terms of definition and make sure that non-instructional things aren’t in there. And then, using something like a weighted credit hour … have that be the tool where you measure the difference in costs amongst the programs.”

During testimony at the hearing, all four-year institutions were represented. BSU president Bob Kustra was the most vocal, saying that over the last few years his institution has accounted for over 71 percent of growth in students among the four-year institutions, but he has not seen a corresponding growth in funding.

“We’re not here to ask for any more than I think what we rightfully deserve. The Legislature did not fund the formula,” he said, adding that BSU funding based on the state’s existing formula has fallen nearly one-third over the last decade.

Rush said that one thing entering the conversation about equity deals with the cost of funding certain programs. Kustra believes more attention should be given to rising enrollments. ISU president Art Vailas, at a school with a strong health and engineering focus, points to the costs of health and engineering programs as rising faster than inflation for humanities programs. The UI argues funding is fairly weighted toward expensive research and graduate programs, a strength at the Moscow school. Anthony Fernandez, president of LCSC, feels his school suffers because the formula puts his teacher-oriented school at a disadvantage.

“Another element to this that we really haven’t talked about that we have to figure out is, that while it’s cheaper to do communications majors, you may not need that many,” said Rush. “As a social policy, the state might want to incentivize engineering or something. And so, how do you figure that into equity? That’s a more progressive issue. In other words, it’s a more forward-thinking issue. It’s not just looking at what you have and how you want to balance that out, but where you want to go and how you incentivize that. That’s a separate topic, but it enters into the conversation.”