Educators and lawmakers are searching for a metric to measure the performance of a university or college in large part based on the success of its graduates and if it should be tied to funding.
The Missouri General Assembly Joint Committee on Education heard testimony Wednesday from members of the higher education community about funding higher education based on student outcomes.
Outcome-based funding is a formula for allocating funds to higher education institutions based on student success, which can be measured in a number of ways, such as graduation rates or student income after graduation.
Discussion centered on Senate Bill 585, which legislators considered last year, and what factors should be considered for determining how much funding higher education institutions in Missouri receive. SB 585 would have created a system in which funding could be allocated based on a school's graduate earnings.
Sen. Cindy O'Laughlin, R-Shelbina, questioned the use of income as a metric for measuring school performance: "If you graduate a lot of doctors, they'll have a higher salary, and if you graduate a lot of teachers, it's going to be a lower salary but you have to have both."
Zora Mulligan, Missouri's commissioner of higher education, who represented the Missouri Department of Higher Education and Workforce Development, listed a few examples of outcomes she'd prefer to measure by: graduation rates, successful transfer from a two- to four-year school or successful progress from freshman to sophomore year, success of Pell Grant students and success on licensure exams such as accountancy or nursing exams.
Mulligan said many other states use such "outcome-based formulas" and include at-risk students as a factor in determining funding, but the earnings metric is not common in other states.
"It's also worth noting though that it can create a vicious cycle, and so schools that are already struggling, if they don't have the additional investment that is represented by performance funding, they will do everything they can to improve, but often those kind of changes require resources," Mulligan said. "And so there's also a lot of thought about outcome-based funding and whether we can achieve fair results in something where the winners are consistently rewarded and the people who are struggling to perform are consistently penalized in terms of the financial resources they need to solve their problems."
Ryan Rapp, MU executive vice president of finance and operations, said the priority of the different student outcomes is a key component in determining any funding plan.
Rapp said it's also important to consider all the factors in creating a funding formula.
"It can't solely be earnings-based, you're going to have to say, 'OK, well, there's other types of degrees that are important to us, and they may not have the highest earning potential.'"
He also said there needs to be weighting in the funding for institutions that allow Pell students to enroll. A Pell Grant is a subsidy the federal government provides for students who need it to pay for college.
Rep. Doug Richey, R-Excelsior Springs, suggested university reputation may be a factor in job recruitment and income after graduation because more prestigious schools may benefit students in the hiring process. He asked whether that factor could also be captured in a outcome-based model.
Rapp said while that is certainly a factor, he was unsure how it could be captured.
Paul Wagner, executive director of the Council of Public Higher Education in Missouri, encouraged lawmakers to consider their goals for the funding model. When he had talked to different people in the past, they had mentioned things like fairness of distribution of funds, performance of students, and efficiency and cost.
Rather than, "What's a good measure, what's a bad measure?" Wagner said it was more about, "How does it align with whatever your goal is for the overall project?"
Wagner said COPHE would like to see measures that include student success, and the measures be things schools can actually control.
"Many things that happen when students cease to be students and become citizens in society, we no longer have an ability to control that," Wagner said, giving examples of job choices or life decisions.
Funding outcomes should not interfere with those decisions, Wagner said.
"We don't want to be in the position of trying to direct people's choices in life," he said.
Wagner suggested the number of degrees awarded by an institution could be a good metric to consider in funding, but Sen. O'Laughlin questioned whether this could incentivize schools to lower their standards and make it easier to obtain a degree.
"If institutions didn't care about quality, we'd have 100 percent graduation rates. No one would ever drop out. No one would ever get a bad grade," Wagner said. The temptation to lower standards exists now without funding in the equation, he said, yet schools still have standards.