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Illinois Higher Education Performance Funding Model

This presentation discusses the current situation of the Illinois Higher Education Performance Funding Model and explores possible revisions and refinements for future implementation. Topics include sub-category weighting, university president concerns, and refinement committee recommendations.

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Illinois Higher Education Performance Funding Model

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  1. Illinois Higher Education Performance Funding Model Steering Committee Meeting November 20, 2014 Dr. Alan Phillips IBHE Presentation

  2. Topics of Discussion Current Situation Where Do We Go From Here? Sub-Category Weighting Issue Steering Committee Issues NCHEMS Performance Funding Guidelines University President Concerns Timelines IBHE Presentation

  3. Current Situation IBHE Presentation

  4. Current Situation A revised Performance Funding Model was developed for FY15. Colleges and universities received essentially level funding for FY15 (-$2.8M)(-.2%). However, the FY15 Performance Funding Model was not actually used to allocate funding for FY15 based on performance. Instead, the FY 15 Appropriations carried over the FY14 Performance Funding allocations. IBHE Presentation

  5. ActualFY15 PerformanceFunding Allocation IBHE Presentation

  6. Where Do We Go From Here? Do we stay with the original FY15 recommendation for FY16? Do we need to further revise the FY15 model, and if so, how? Do we work to address Steering Committee comments/concerns, and if so, which ones? How do we address the likely increase in the performance funding set-aside for FY16? IBHE Presentation

  7. Refinement Committee Recommendations • Do we stay with the original FY15 recommendation for FY16? • Yes. • However, In light of the board's recent progress on the Public Agenda that showed significant gaps of achievement for African-Americans, Hispanics and adult learners, Professor Karnes proposed that we double those premiums. • His view is that we need to send a strong signal to our universities that they need to commit resources to reduce and eliminate the gaps. IBHE Presentation

  8. FY15 Performance Measures • MeasuresSource • Bachelor’s Degrees (FY10-12) IPEDS • Master’s Degrees (FY10-12) IPEDS • Doctoral and Professional Degrees (FY10-12) IPEDS • Undergraduate Degrees per 100 FTE (FY10-12) IPEDS • Research and Public Service Expenditures (FY11-13) RAMP • Graduation Rate - 150% of Time (Fall 05-07 Cohort)* Inst Data • Persistence- 24 Credit Hours Completed in 1 Year (FY10-12) Inst Data • Cost per Credit Hour (FY10-12) Cost Study • Cost per Completion (FY10-12) Cost Study *Incorporate transfers per the CCA transfer category definitions (i.e. 30 or fewer credits, 31 to 59 credits, or 60 or more credits). IBHE Presentation

  9. FY15 Sub-Categories • Sub-Category Weight • Low Income (Pell/Map Eligible) 40% - Institutional Data • Adult (Age 25 and Older) 40% • Hispanic 40% • Black, non-Hispanic 40% • STEM & Health Care (by CIP Code) 40% - HLS* + CIP 51** *HLS – Homeland Security **CIP 51 – Health Professions & Related Programs IBHE Presentation

  10. Sub-Category Weighting Issue IBHE Presentation

  11. PreliminaryFY15 PerformanceFunding Allocation IBHE Presentation

  12. PreliminaryFY15 PerformanceFunding Allocation IBHE Presentation

  13. PreliminaryFY15 PerformanceFunding Allocation IBHE Presentation

  14. PreliminaryFY15 PerformanceFunding Allocation IBHE Presentation

  15. PerformanceFunding Allocation At Different Sub-Category Weights Sub-Category Wt - .02 Sub-Category Wt - .04 Sub-Category Wt - .06 Sub-Category Wt - .08 -.09% -.05% .32% .02% .02% .05% .10% .08% .21% .19% .17% .03% UIUC UIC NIU SIUC ISU SIUE WIU EIU NEIU CSU GSU UIS $230.0 $28.0 - $61.1 - $105.7 - $23.1 - $32.3 - $15.9 $11.5 $14.3 - $67.1 $30.1 - $4.4 .07% .01% -.07% -.07% -.03% - .05% - .03% .03% .04% -.18% .12% -.04% $110.3 -$31.5 $46.0 - $93.3 - $16.6 - $19.5 $4.0 $26.5 $46.0 - $39.4 $45.8 - $4.1 .03% -.01% .12% -.06% -.02% - .03% .01% .06% .12% -.11% .19% -.02% $8.2 -$82.3 $72.9 - $82.8 - $11.0 - $8.7 $21.0 $39.2 $72.9 - $15.9 $59.2 - $.1 .00% -.03% .19% -.06% -.01% - .01% .04% .09% .19% -.04% .24% -.00% -$79.7 -$126.0 $96.2 - $73.8 - $6.2 - $.6 $35.6 $50.3 $96.2 $4.4 $70.7 - $3.3 -.02% -.04% .25% -.05% -.01% - .00% .07% .11% .25% .01% .29% -.01% IBHE Presentation

  16. Refinement Committee Recommendations • Do we need to further revise the FY15 model, and if so, how? • Other than possible minor adjustments to the FY15 performance funding model for FY16, we should start with the performance funding baseline we have established and not make any further changes in the existing model for at least three years. • There is concern that additional changes at this time will only serve to move funding, not based on performance, from one set of institutions to another set of institutions. IBHE Presentation

  17. Refinement Committee Recommendations • Do we work to address Steering Committee comments/concerns, and if so, which ones? • At this point in time we should start work on version 2.0 of the performance funding model for implementation in the future (i.e. after 3 years). • This would provide time for ILDS to come on line and for the data to mature. • This would give us time to address performance funding issues such as first generation students, the inclusion of other high value programs to the STEM sub-category, quality, institutional capacity, geographical differences, efficiency measures, and assess the effectiveness of performance based funding on the institutions. IBHE Presentation

  18. Steering Committee Comments The committee should look at what is being done in other states to see if there is a simpler or better way to do this. (Done) We should look at providing a premium to other “High Value” programs in addition to the Homeland Security (HLS) and CIP Code 51 (STEM) programs. (PBF 2.0) We should take into account the institutional capacity to produce degrees. Geographical differences – are these the same people that are counted as “low income” (PBF 2.0) We need to increase the dollar amounts allocated to performance. (FY16?) We need to reduce the number of measures in the model. (PBF 2.0) We need to include a measure of quality in the performance funding model. (PBF 2.0) We need to look at each institution to see where they need to improve. (PBF 2.0) We should significantly increase the weighting factor for efficiency measures (as much as 25%-30%) (PBF 2.0) IBHE Presentation

  19. Steering Committee Comments • Is the percentage devoted to performance funding high enough to make a difference? (FY16?) • Discussion on the driving force behind performance funding in other states.  (Governor, legislature, etc.) (Done) • Would performance funding hurt admission practices and cause some public universities to be more selective? (Addressed in Existing Model) • Increased success should be tied to increased funding. (FY16) • We should identify 3-4 of the greatest shortcomings of each institution and apply performance funding to that. (PBF 2.0) • We should see what else is going on in the other states. (Done) • We should ensure that we are following best practices as outlined by NCHEMS in their performance funding paper – “Performance Funding; From Idea to Action” IBHE Presentation

  20. NCHEMS Performance Funding Guidelines Design Principles • Get agreement on goals before putting performance funding in place. • Tailored to the needs of the state. • Focused on the needs of the state, not the institutions of Higher Education. • Do not construct performance metrics too narrowly. • It is important that all institutions have an opportunity (not a guarantee) to benefit by excelling at their different missions. • Design the funding model to promote mission differentiation, not mission creep. • Use different metrics for different kinds of institutions. • Create different pools of resources for different kinds of institutions (i.e. different funding models for Community Colleges and Public Universities). IBHE Presentation

  21. NCHEMS Performance Funding Guidelines Design Principles • Include provisions that reward success with underserved populations (i.e. African-American, Hispanic, low income, adult, and academically at-risk). • Include provisions that reward progress as well as ultimate success (i.e. degree completion). • Limit the categories of outcomes to be rewarded. • Use metrics that are unambiguous and difficult to game (i.e. numbers of graduates as opposed to graduation rates). • Reward continuous improvement, not attainment of a fixed goal. • Make the performance funding pool large enough to command attention. • Ensure that the incentives in all parts of the funding model align with state goals. IBHE Presentation

  22. NCHEMS Performance Funding Guidelines Implementation Principles • Don’t wait for new money. • Include a phase-in provision. • Employ stop-loss, not hold harmless, provisions. • Continue performance funding in both good times and bad. IBHE Presentation

  23. Refinement Committee Recommendations • How do we address the potential increase in the performance funding set-aside for FY16? • Any increase in the performance funding allocation, assuming that there will be no additional funds allocated for performance funding, should be gradual and on the order of no more than 1% per year. • There is great concern regarding the impact of lower tax rates on higher education funding along with the potential impact of a pension cost transfer. IBHE Presentation

  24. University President Concerns • The continued implementation of performance funding in an increasingly difficult fiscal environment. • Continued decline in State higher education funding. • The resolution of the tax and pension issues and the potential impact on the universities. • The impact of a minimum wage increase. • Declining enrollment. • Declining financial aid. • Unfunded mandates. • The ability to actually improve performance beyond what is already taking place. • Improving performance and still losing funding. • The potential increase in the performance funding set-aside. IBHE Presentation

  25. Timelines IBHE Presentation

  26. Next Steps 21 Aug 14 - Refinement Committee Meeting (IBHE) 15 Sep 14 - Steering Committee Meeting (ISU) 7 Oct 14 - IBHE Board Meeting (Loyola) 30 Oct 14 - Refinement Committee Meeting (IBHE) Mid-Nov 14 - First Draft of FY16 Performance Funding Recommendations 20 Nov 14 - Steering Committee Meeting (Heartland Community College) 2 Dec 14 - IBHE Board Meeting TBD - Refinement Committee Meeting  TBD - Steering Committee Meeting 3 Feb 14 (T) - IBHE Board Meeting (IBHE Higher Education Budget/Performance Funding Recommendations to Board) IBHE Presentation

  27. Questions? IBHE Presentation

  28. Back-Up IBHE Presentation

  29. Performance Funding Objectives/Mandate IBHE Presentation

  30. Performance Funding Objectives • To develop performance funding models for public universities and community colleges that are… • Linked directly to the Goals of the Illinois Public Agenda and the principles of Public Act 97-320 • Equipped to recognize and account for each university’s mission and set of circumstances • Adjustable to account for changes in policy and priorities • Not prescriptive in how to achieve excellence and success IBHE Presentation

  31. Public Act 97-320 (HB 1503) • Performance Metrics Shall: • Focus on the fundamental goal of increasing completion. • Reward performance of institutions in advancing the success of students who are: • Academically or financially at risk. • First generation students. • Low-income students. • Students traditionally underrepresented in higher education. • Recognize and account for the differentiated missions of institutions of higher education. • Maintain the quality of degrees, certificates, courses, and programs. • Recognize the unique and broad mission of public community colleges. IBHE Presentation

  32. Performance Funding Model (FY14)4-Year Public Universities IBHE Presentation

  33. Performance Funding Model Steps(4-Year Public University) Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures Step 3 – Award an additional premium (i.e. 40%) for the production of certain desired outcomes such as completions by underserved or underrepresented populations Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. Step 5– Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results. Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools). Step 8 – Use the final Weighted results (or Total Performance Value) to distribute performance funding. IBHE Presentation

  34. Performance Measures Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures (3-year averages) • MeasureSource • Bachelors Degrees (FY09-11) IPEDS • Masters Degrees (FY09-11) IPEDS • Doctoral and Professional Degrees (FY09-11) IPEDS • Undergraduate Degrees per 100 FTE (FY09-11) IPEDS • Research and Public Service Expenditures (FY10-12) RAMP • Grad Rates 100%/150%/200% of Time (Fall 02-04 Cohort) Institutional Data • Persistence (Completed 24/48/72 Semester Hours) (FY07-09) Institutional Data • Cost per Credit Hour (FY09-11) Cost Study • Cost per Completion (FY09-11) Cost Study IBHE Presentation

  35. Sub-Categories Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations • Sub-CategoryWeight • Low Income (Pell/Map Eligible) 40% - Institutional Data • Adult (Age 25 and Older) 40% • Hispanic 40% • Black, non-Hispanic 40% • STEM & Health Care (by CIP Code) 40% - HLS + CIP 51 IBHE Presentation

  36. Scaling Factors Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. • Averaged the measures across all of the institutions. • The average number of bachelors degrees will serve as the base value. • Determine a scaling factor that will normalize the rest of the averages to the average number of bachelors degrees. • Adjust the scaling factors as appropriate (i.e. Masters & Doctorates). • Multiply all of the initial data by the scaling factor to normalize the data. IBHE Presentation

  37. Scaling Factors Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. • MeasureUniversities 1-12 (Avg)Scaling FactorAdjusted Scaling Factor • Bachelors Degrees (FY09-11) • Masters Degrees (FY09-11) • Doctoral and Professional Degrees (FY09-11) • Undergraduate Degrees per 100 FTE (FY09-11) • Grad Rates 100% of Time (Fall 02-04 Cohort) • Grad Rates 150% of Time (Fall 02-04 Cohort) • Grad Rates 200% of Time (Fall 02-04 Cohort) • Persistence (Completed 24 Semester Hours) (FY07-09) • Persistence (Completed 48 Semester Hours) (FY07-09) • Persistence(Completed 72 Semester Hours) (FY07-09) • Cost per Credit Hour (FY09-11) (Cost Study) • Cost per Completion (FY09-11) (Cost Study) • Research and Public Service Expenditures (FY09-11) 2,822 1,042 22725 27 46 50 1,644 1,453 1,350 346 36,566 112,914,667 1.0 2.7 12.4 112.6 104.4 60.9 57.0 1.7 1.9 2.1 8.1 .1 .00002 1 1 2 200 50 50 50 2 2 2 -8 -.050 .00005 IBHE Presentation

  38. Performance Measure Weights Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 100% of Time • Grad Rates 150% of Time • Grad Rates 200% of Time • Persistence (Completed 24 Semester Hours) • Persistence (Completed 48 Semester Hours) • Persistence (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion • Research and Public Service Expenditures IBHE Presentation

  39. Performance Measure Weights Step 5 – Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 100% of Time • Grad Rates 150% of Time • Grad Rates 200% of Time • Persistence (Completed 24 Semester Hours) • Persistence (Completed 48 Semester Hours) • Persistence (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion • Research & Public Svc Expenditures IBHE Presentation

  40. Performance Value Calculation Step 6 – Multiply and Sum the Scaled Data times the Weight to produce the Performance Value for each institution. (Data+Premium) x Scale Total Performance Value • Measure • Bachelors Degrees • Masters Degrees • Doctoral and Professional Degrees • Undergraduate Degrees per 100 FTE • Grad Rates 100% of Time • Grad Rates 150% of Time • Grad Rates 200% of Time • Persistence (Completed 24 Semester Hours) • Persistence (Completed 48 Semester Hours) • Persistence (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion • Research & Public Svc Expenditures Data Data + Premium Scale xWeight = 2,822 1,042 227 25 27 46 50 1,644 1,453 1,350 346 36,566 $112,914,667 3,522 1,454 240 25 27 46 50 1,644 1,453 1,350 345 36,566 $112,914,667 1 1 2 200 50 50 50 2 2 2 -8 -.050 .00005 3,522 1,454 480 5,000 1,350 2,300 2,500 3,288 2,906 2,700 -2,760 -1,828 5,646 30.0% 25.0% 5.0% 10.0% 1.5% 1.0% 0.5% 1.0% 1.5% 2.0% 1.5% 1.0% 20.0% 100.0% 1,057 364 24 500 20 23 13 33 44 54 -41 -18 1,129 3,200 IBHE Presentation

  41. Performance Value Calculation Step 7 – Add an adjustment factor for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools) • Divide the amount of the university GRF appropriation allocated to fund the high cost entity by the total university GRF appropriation. • Multiply this factor by the university performance value and add the result back to the performance value. • This results in a total performance value for institutions with these high cost entities. • Example: $20M/$200M = .10 .10 X 3200 (PV) = 320 320 + 3200 = 3520 = Total Performance Value IBHE Presentation

  42. Funding AllocationBased on Performance Step 8 – Use the Weighted results (or Total Performance Value) to distribute funding based on a Pro Rata Share of the total amount of funds set aside for performance funding. Percentages for Distribution Total Performance Value 10,840 4,435 3,200 17,302 Percentage of Total 58.7% 24.0% 17.3% 100% Distribution: Pro Rata $587,000 $240,000 $173,000 $1,000,000 University 1University 2University 3Total IBHE Presentation

  43. Results for FY14 • Performance funding values increased for all twelve of the four-year public universities from FY13 to FY14. • Assuming a .5% funding set-aside: • Variance in funding allocations due to performance ranged from +.11% to -.11%. • The actual funding amount variance ranged from +$71K to -$105K. IBHE Presentation

  44. Performance Funding Model (FY15)4-Year Public Universities IBHE Presentation

  45. Performance Funding Model Steps(4-Year Public University) Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures. Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. Step 5– Weight each of the Performance Measures to reflect the priority of the Measure to the mission of the institution. Step 6 – Multiply and sum the Scaled Data times the Weight to produce the Weighted results. Step 7 – Use the final Weighted results (or Total Performance Value) - excluding high cost entities - to distribute performance funding. Step 8 – Add an adjustment factor (Carve-out) for high cost entities (i.e. Hospitals, Medical, Dental, and Veterinary Schools). IBHE Presentation

  46. Performance Measures Step 1 – Identify the performance measures or metrics that support the achievement of the state goals. Step 2 – Collect the data on the selected performance measures (3-year averages) • MeasureSource • Bachelors Degrees (FY10-12) IPEDS • Masters Degrees (FY10-12) IPEDS • Doctoral and Professional Degrees (FY10-12) IPEDS • Undergraduate Degrees per 100 FTE (FY10-12) IPEDS • Research and Public Service Expenditures (FY11-13) RAMP • Graduation Rate - 150% of Time (Fall 05-07 Cohort)* Institutional Data • Persistence-Completed 24 Semester Hours in One Year (FY10-12)* Institutional Data • Cost per Credit Hour (FY10-12) Cost Study • Cost per Completion (FY10-12) Cost Study *Incorporate transfers per the CCA transfer category definitions (i.e. 30 or fewer credits, 31 to 59 credits, or 60 or more credits). IBHE Presentation

  47. Sub-Categories Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations • Sub-Category Weight* • Low Income (Pell/Map Eligible) 40% - Institutional Data • Adult (Age 25 and Older) 40% • Hispanic 40% • Black, non-Hispanic 40% • STEM & Health Care (by CIP Code) 40% - HLS + CIP 51 IBHE Presentation

  48. Sub-Categories Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations • Only weighted Bachelors, Masters and Doctorate and Professional Degrees • Did not weight Undergraduate Degrees per 100 FTE • - To avoid overweighting sub-populations throughout the model, the percentage weight given to the subcategories would have to be reduced from the current 40%.  Otherwise, schools with high numbers of Master and Doctoral students graduating from the subpopulations would be negatively impacted, as credit given to these populations is reduced.  • - The change would benefit smaller masters degree schools but would disproportionately harm research institutions. • Did not weight Cost per Completion • - It is only possible to weight the completion portion of the ratio, a weighted cost is unavailable.  Weighting completions without weighting cost does not provide an accurate measure of differential costs to educate particular sub groups. IBHE Presentation

  49. Scaling Factors Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. • Averaged the measures across all of the institutions. • The average number of bachelors degrees will serve as the base value. • Determine a scaling factor that will normalize the rest of the averages to the average number of bachelors degrees. • Adjust the scaling factors as appropriate (i.e. Masters & Doctorates). • Multiply all of the initial data by the scaling factor to normalize the data. IBHE Presentation

  50. Scaling Factors Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables. • MeasureUniversities 1-12 (Avg)Scaling FactorAdjusted Scaling Factor • Bachelors Degrees (FY10-12) • Masters Degrees (FY10-12) • Doctoral and Professional Degrees (FY10-12) • Undergraduate Degrees per 100 FTE (FY10-12) • Grad Rates 150% of Time (Fall 05-07 Cohort) • Persistence (Completed 24 Semester Hours) (FY10-12) • Cost per Credit Hour (FY10-12) • Cost per Completion (FY10-12) • Research and Public Service Expenditures (FY11-13) 2,846 1,056 23625 46 1,511 353 37,129 124,059,383 1.0 2.7 12.1 113.0 60.3 1.8 8.1 .07 .00002 1 1 2 200 50 2 -8 -.05 .00005 IBHE Presentation

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