Outcome-based funding may increase from 10 percent to 25 percent

Alexa Ura

More state funding for UT will be tied to measures of student success if a bill filed for the upcoming legislative session passes.

The Texas Higher Education Coordinating Board recommends how much funding the Legislature should give each public institution of higher education before each biennial legislative session. The bill, authored by Rep. Dan Branch, R-Dallas, would increase the amount of funding tied to student success measures from 10 to 25 percent.

State general revenue has decreased from 24 percent of UT’s operating budget in 2000 to 13 percent this year.

The Legislature awarded UT $295 million in general revenue appropriations for the 2012-2013 academic year. The University’s operating budget totaled $2.3 billion for the same year.

In the past, all state funding was based on student enrollment. During the upcoming legislative session, 10 percent of state general funding for higher education will be tied to measures of student success, and Branch’s bill would increase the percentage tied to outcomes to 25 percent in future sessions. A spokesperson for the Texas Higher Education Coordinating Board said the percentage tied to outcome-based funding could continue to increase.

UT would stand to benefit from increased outcome-based funding. During his 2012 State of the University address, UT President William Powers Jr. said UT produced the most bachelor’s degrees in the state during 2011, with 9,000 degrees conferred.

Powers supports outcome-based funding, UT spokesperson Gary Susswein recently told The Daily Texan.

“He spoke extensively about this a year or so ago when President Barack Obama introduced that into the national dialogue,” Susswein said last month. “The key, obviously, is to find the most effective and proper measurements to determine outcome and performance.”

Dominic Chavez, spokesperson for the Texas Higher Education Coordinating Board, said the board believed tying outcome-based funding to 10 percent of a university’s budget was a sufficient amount to designate in relation to an institution’s behavior without disrupting funding, but the board supports Branch’s bill to increase that amount.

“Increasing outcome-based funding to 25 percent of appropriations an institution receives is a gradual transition the Coordinating Board doesn’t disagree with,” Chavez said. “Rep. Branch is looking forward, and it is an appropriate first step as we move forward with outcome-based funding.”

Efforts to reach Branch to discuss the bill were unsuccessful.

Outcome-based funding, whether it remains at 10 percent or increases to 25 percent, will be determined by three-year rolling averages of specific measures, including total undergraduate degrees conferred, degrees completed by non-traditional and at-risk students and degree costs, among others, according to the board’s recommendation.

“Unlike the last session, we have reached broad consensus with universities on both a methodology and metrics,” Chavez said. “The metrics were designed by universities for universities and account for those student outcomes that university leaders believe are most consistent with their mission.”

The outcome-based model is also spreading across other states. Indiana, Pennsylvania and Ohio have adopted outcome-based funding models, and Tennessee already awards all funding based on performance, according to a report by the Center for American Progress. Various other states have proposed similar models.

State general revenue appropriations are part of UT’s academic core budget, which funds employee salaries and benefits, scholarships, and maintenance and operations, among other things.

UT System Chancellor Francisco Cigarroa recently told The Daily Texan that adequate formula funding to make up for increased enrollment is part of System-wide priorities.

“We’re all for it,” he said. “It takes into consideration that not one campus is alike. Even in health care more funding is being directed toward outcome-based success rather than just clinical volume. It’s an important policy decision.”

Cigarroa said chancellors for Texas’ other five university systems also support the idea of outcome-based funding.

The increase in outcome-based funding will take effect immediately if the bill receives a vote of two-thirds of all members in the House, according to the text of the bill. If the bill is passed with less than the vote necessary for immediate effect, it will take effect Sept. 1, 2013.

Printed on Monday, Dec. 3, 2012 as: UT funding's dependence on success may increase