IBHE Presentation 1 Illinois Higher Education Performance Funding Model IBHE Board Meeting February 5, 2013 Dr. Alan Phillips

IBHE Presentation 1

Illinois Higher EducationPerformance Funding Model

IBHE Board MeetingFebruary 5, 2013

Dr. Alan Phillips

Purpose

The purpose of this presentation is to propose a

performance funding model that will allocate funding

based on performance as a part of the FY 2014 IBHE

Higher Education budget submission, in accordance

with the intent of Public Act 97-320 (HB 1503), the

Performance Funding legislation, and that supports

the goals of the Illinois Public Agenda.

IBHE Presentation 2

Topics to be Covered

• Performance Funding Brief Overview

• Refinement Committee Effort

• Performance Funding Model Refinements

• Performance Funding Model (FY14)

• FY14 Budget Recommendations

IBHE Presentation 3

Brief Overview

IBHE Presentation 4

Performance Funding Objective

• 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

5IBHE Presentation

• Performance Metrics Shall:– 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.

– Focus on the fundamental goal of increasing completion.– Maintain the quality of degrees, certificates, courses, and

programs.– Recognize the unique and broad mission of public

community colleges.

IBHE Presentation 6

Public Act 97-320 (HB 1503)

Performance Funding Model

Community Colleges

IBHE Presentation 7

IBHE Presentation 8

Performance Funding Model(Community Colleges)

• There are thirty-nine community college districts.

• The community college model contains six separate measures.

• Each measure is allocated an equal portion of the total performance funding amount.

• Each college competes for a portion of the funding for each measure.

• Those colleges that show a decrease in performance receive no funds based on performance.

• Those colleges that show an increase in performance receive a pro-rata share of the funding allocation for that measure based on the increase in their performance.

IBHE Presentation 9

Performance Funding Measures(Community Colleges)

1. Degree and Certificate Completion.

2. Degree and Certificate Completion of “At Risk” students.

3. Transfer to a four year institution.

4. Remedial and Adult Education Advancement.

5. Momentum Points.

6. Transfer to a community college.

IBHE Presentation 10

Performance Funding Model

4-Year Public Universities

Performance Funding Model(4-Year Universities)

• All steps are identical at each university• The model accounts for each institution’s unique mission by

adding a weight to each measure.• Each institution’s formula calculation is independent.• The formula calculation for each institution will change each

year based on annually updated data.• The funding allocation is competitive.• Funds are distributed on a pro rata basis according to each

institution’s formula calculation.• The model is not prescriptive in how to achieve excellence

and success (what, not how).


Refinement Effort


Four Refinement Goals• Refine the existing measures and sub-categories to the extent

possible or find replacement measures that capture what we are trying to measure in a better way (i.e. Research Expenditures, Low Income Students, Cost per FTE, etc.).

1. Identify additional measures and sub-categories to add to the model.

2. Identify better and more current sources of data.

3. See if there is a better way to scale (normalize) the data.

4. Discuss ways to account for other factors (i.e. Hospitals, Medical Schools, Dental Schools, etc.)


Measures

• Deleted: Education and General Spending per Completion (RAMP)

• Added:– Cost per Credit Hour. (Cost Study)– Cost per Completion. (Cost Study)– Credit Hour Accumulation. (Institutional Data)– Time to Degree. (Institutional Data)


Sub-Categories

• Did not change the sub-categories.• Sub-Categories are:

– Low Income (Pell/MAP Eligible) – Institutional Data– Adult (Age 25 and Older) – CCA/ILDS – Hispanic - IPEDS– Black, non-Hispanic - IPEDS– STEM & Health Care (By CIP Code) – HLS + CIP 51


General Refinement Issues• Data continues to be an issue.

– Although we have received our first ILDS submission, the quality of the data is not sufficient to use at this time.

– The timeliness of data also continues to be a problem.– Some of the data we had to request from the universities

• Quality– We still have significant challenges addressing the issue of

“maintaining” quality of degrees, certificates, courses, and programs.

• Sub-Categories– First Generation (Definition/Data issues)– Geographic Area



Performance Funding Model (FY14)

4-Year Public Universities

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 that reflects the priority of the Measure and 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.


Performance Measures


Measure Source• 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• Education and General Spending per Completion (FY09-11) RAMP• Research and Public Service Expenditures (FY10-12) RAMP• Grad Rates 100%/150%/200% of Time (Fall 02-04 Cohort) Institutional Data• Retention (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

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)

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

Step 3 – Award an additional premium for the production of certain desired outcomes such as completions by underserved or underrepresented populations

Scaling Factors

• 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.


Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

Scaling Factors


Step 4 – Normalize (scale) the data, if necessary, so it is comparable across variables.

Measure Universities 1-12 (Avg) Scaling Factor Adjusted 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) • Retention (Completed 24 Semester Hours) (FY07-09)• Retention (Completed 48 Semester Hours) (FY07-09)• Retention (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)

2,8221,042

22725274650

1,6441,4531,350

34636,566

112,914,667

1.02.7

12.4112.6104.4

60.957.0

1.71.92.18.1

.1.00002

112

200505050

222

-8-.050

.00005

Performance Measure Weights


Step 5 – Weight each of the Performance Measures that reflects the priority of the Measure and the mission of the institution.

Doctoral/ Research-Very High Research-High Research

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 • Retention (Completed 24 Semester Hours) • Retention (Completed 48 Semester Hours) • Retention (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion• Research and Public Service Expenditures

UIUC UIC NIU SIUC ISU17.0% 18.0% 28.0% 28.0% 33.0%14.0% 15.0% 15.0% 14.0% 23.0%13.0% 14.0% 10.0% 8.0% 6.0%

4.0% 4.0% 11.0% 13.0% 12.0%1.5% 1.5% 1.5% 1.5% 2.0%1.0% 1.0% 1.0% 1.0% 1.5%0.5% 0.5% 0.5% 0.5% 0.5%0.5% 0.5% 0.5% 0.5% 0.5%1.0% 1.0% 1.0% 1.0% 1.5%1.5% 1.5% 1.5% 1.5% 2.0%0.5% 0.5% 1.0% 0.5% 1.5%0.5% 0.5% 1.0% 0.5% 1.5%

45.0% 42.0% 28.0% 30.0% 15.0%100.0% 100.0% 100.0% 100.0% 100.0%

Performance Measure Weights


Step 5 – Weight each of the Performance Measures that reflects the priority of the Measure and the mission of the institution.

Masters Colleges & Universities (Large)

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 • Retention (Completed 24 Semester Hours) • Retention (Completed 48 Semester Hours) • Retention (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion• Research & Public Svc Expenditures

SIUE WIU EIU NEIU CSU GSU UIS42.0% 40.0% 40.0% 40.0% 40.0% 45.0% 43.0%28.0% 25.0% 26.0% 26.0% 25.0% 27.0% 27.0%

2.5% 1.0% 0.0% 0.0% 1.0% 1.0% 1.0%12.0% 13.0% 13.0% 13.0% 13.0% 5.0% 8.0%

2.0% 2.5% 2.5% 2.5% 2.5% 0.0% 2.5%1.5% 2.0% 2.0% 2.0% 2.0% 0.0% 2.0%1.0% 1.0% 1.0% 1.0% 1.0% 0.0% 1.0%1.0% 1.0% 1.0% 1.0% 1.0% 5.0% 1.0%1.5% 2.0% 2.0% 2.0% 2.0% 7.0% 2.0%2.0% 2.5% 2.5% 2.5% 2.5% 0.0% 2.5%1.5% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%1.5% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%3.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%

100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Performance Value Calculation


Step 6 – Multiply and Sum the Scaled Data times the Weight to produce the Performance Value for each 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 • Retention (Completed 24 Semester Hours) • Retention (Completed 48 Semester Hours) • Retention (Completed 72 Semester Hours) • Cost per Credit Hour • Cost per Completion• Research & Public Svc Expenditures

2,8221,042

22725274650

1,6441,4531,350

34636,566

$112,914,667

3,5221,454

240 25274650

1,6441,4531,350

34536,566

$112,914,667

Data Data + Premium112

200505050

222

-8-.050

.00005

(Data+Premium)x Scale3,5221,454

4805,0001,3502,3002,5003,2882,9062,700

-2,760-1,8285,646

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%

Total PerformanceValue

1,057 364

24 500

20 23 13 33 44 54

-41 -18

1,1293,200

xWeight = Scale

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 give you 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


Percentages for Distribution

Total Performance Value 10,840 4,435 3,200 17,302Percentage of Total 58.7% 24.0% 17.3% 100%

Distribution: Pro Rata $587,000 $240,000 $173,000 $1,000,000

University 1 University 2 University 3 Total

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.

Results for FY14

• Performance funding values increased for all 12 of the four-year public universities from FY13 to FY14.

• Based on their performance, public universities earned back most or all of their performance funding set-aside.


Refinement Issues for FY15

• What is the best way to account for the difficulty of getting underrepresented students through to completion throughout the model?

• What is the best way to account for less prepared students in the model?

• Are there differences in the cost per completion for different sub-categories of students (i.e. is cost for completion for an adult student different than that of a STEM student)? Should that be integrated in the model?

• What is the best way to address the issue of transfer students and part-time students?


Refinement Issues for FY15

• Are there other high value degrees and programs, in addition to the STEM programs, that we should add to the model?

• Are we giving enough priority to measures of efficiency?

• What is the best way to account for high cost entities (i.e. Hospitals and Medical, Dental, and Veterinary schools)?

• Are we adequately accounting for institutional improvement from year to year?


FY14 Budget Recommendations


Performance FundingBudget Recommendations

• Performance funding should be implemented slowly starting with small funding amounts

• Additional funding should be allocated to performance if there are increases in higher education appropriations.

• If there is no additional funding available to be allocated based on performance, the amount reallocated from the base level of funding should be small.

• The amount allocated to performance should increase over time, but only when better data is available and only when the performance model is stable and to a point where it can be locked in for a period of time (i.e. 3-5 years).


Recommendation

33IBHE Presentation

• If additional funding for performance is not available, 0.5% of the FY 2014 Higher Education appropriation for the 4-year public universities should be allocated based on performance (approximately $6.1M at current levels of funding).

• For the Community Colleges, the amount of $360K be allocated based on performance.

• Both of these recommendations are consistent with the IBHE performance funding recommendation for FY2013.

Questions/Comments?


Back-Up Charts


Performance Funding Model (FY13)

Community Colleges


Performance Funding Model (Community College Example)

• Measure 1 – Students who completed a degree or certificate• Model (Part 1) = Percentage change in number of associate degrees

awarded from FY08-FY09.


District1District 2District 3District 4….District 39

FY 2009 Number ofAssociate Degrees

Awarded%

Change

GreaterthanZero Allocation

5751,803

2701,484

…..329

25,130

5332,361

2431,630

….350

26,460

-7.3%30.9%

-10.0%9.8%

….6.4%

-- .309

--.098

…..064

2.585

--$9,579

--$3.045

….$1,976

$80,000

FY 2008 Number ofAssociate Degrees

Awarded

• Pro Rata Share = $80,000/2.585 = $30,951• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .309 X 30,951 = $9,579)

Degree & Certificate Completion

• Measure 1 – Students who completed a degree or certificate• Model (Part 1) = Percentage change in number of associate degrees

awarded from FY08-FY09.• Range of Results = - 14.3% to +30.9%• Number of districts receiving funding – 26 • Range of Increase = (.2%-30.9%) or (.002 to .309)• Funding Allocation = $80,000• Total of increase for all 26 schools = 2.585• Pro Rata Share = $80,000/2.585 = $30,951 (i.e. 1 share = $30,951)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .002 X $30,951 = $74)

• Range of Allocation = $74 to $9,579


Degree & Certificate Completion• Measure 1 – Students who completed a degree or certificate• Model (Part 2) = Percentage change in number of certificates awarded from

FY08-FY09.• Range of Results = - 49.6% to +103.8%• Number of colleges receiving funding – 24 • Range of Increase = (.9%-103.8%) or (.009 to 1.038)• Funding Allocation = $40,000• Total of increase for all 24 schools = 5.324• Pro Rata Share = $40,000/5.324 = $7,512 (i.e. 1 share = $7,512)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .009 X $7,512 = $64)



• Total Allocation for Measure 1 = $120,000• Total Number of colleges receiving funding = 35• Range of Allocation = $331 to $9,579

Measure 1

Degree Production of At-Risk Students

• Measure 2 – At-risk students who completed a degree or certificate (i.e. students with Pell or taking remedial courses)

• Model = Percentage change (number of Pell recipients + number of students who have taken remedial courses) from FY08-FY09.

• Range of Results = - 28.1% to +26.5%• Number of colleges receiving funding – 20 • Range of Increase = (2.3%-26.5%) or (.023 to .265)• Funding Allocation = $120,000• Total of increase for all 20 schools = 2.913• Pro Rata Share = $120,000/2.913 = $41,201 (i.e. 1 share = $41,201)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .023 X $41,201 = $938)



Transfer to a Four Year Institution

• Measure 3 – Students who transfer to a four year institution within 3 years• Model = Percentage of Fall 2006 entrants who transferred to 4-year

institutions by Fall 2010.• Range of Results = 12.3% to 35.8%• Number of colleges receiving funding – 39 • Range of Increase = (12.3%-35.8%) or (.123 to .358)• Funding Allocation = $120,000• Total of increase for all 39 schools = 10.778• Pro Rata Share = $120,000/10.72 = $11,134 (i.e. 1 share = $11,134)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .123 X $11,134 = $1,375)

• Range of Allocation = $1,375 to $3,988


Remedial and Adult Education Advancement

• Measure 4 – Remedial students who advance to college level work.• Model = Percentage of FY 2009 remedial students who advanced to college

level courses.• Range of Results = 43.8% to 100%• Number of colleges receiving funding – 39 • Range of Increase = (43.8%-100%) or (.438 to 1.0)• Funding Allocation = $120,000• Total of increase for all 39 schools = 23.82• Pro Rata Share = $120,000/23.82 = $5,039 (i.e. 1 share = $5,039)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .438 X $5,039 = $2,207)



Momentum Points• Measure 5 – 1st time/PT students completing 12 credit hours w/in the first year,

1st time/PT students completing 24 credit hours w/in the first year, and Adult Education and Family Literacy level (AEFL) gains.

• Model = % change (number of students completing 12 CR + number of students completing 24 CR + number of students with an AEFL level gain) from FY08-FY09).

• Range of Results = -53.9% to 69.6%• Number of colleges receiving funding – 22 • Range of Increase = (.9% to 69.6%) or (.009 to .696)• Funding Allocation = $120,000• Total of increase for all 22 schools = 6.478• Pro Rata Share = $120,000/6.478 = $18,529 (i.e. 1 share = $18,529)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. ..009 X $18,529 = $171)



Transfer to Another Community College

• Measure 6 – Community college students that transfer to other community colleges.

• Model = Percentage change (students transferring from one community college to another community college) from (FY06-FY09) to (FY07-FY10).

• Range of Results = 53.7% to 155.4%• Number of colleges receiving funding – 39 • Range of Increase = (53.7%-155.4%) or (.537 to 1.554)• Funding Allocation = $120,000• Total of increase for all 39 schools = 37.01• Pro Rata Share = $120,000/37.01 = $3,242 (i.e. 1 share = $3,242)• Funding Allocation = Amount of Increase X Pro Rata Share

– (i.e. .537 X $3,242 = $1,741)



Proposed Performance Funding

• Step 1 – Flat or Level Budget from FY 13 Funding.– 4-Year Universities - Flat funding with no more than 0.5% of the

budget reallocated for Performance Funding (approx $6.15M).– 2-Year Colleges – Flat funding with $360K reallocated based on the six

community college performance measures.

• Step 2 – Overall funding is a 2.5% increase over FY 13.– 4-Year Universities – Total increase of $24.6M (2.0%). Of the total,

$12.3M (1.0%) is allocated for performance funding.– 2-Year Colleges – Total increase of $5.8M (2.0%), including a one-time

$1.2M reallocation for legislative initiatives, with $360K reallocated based on the six community college performance measures.


Step Budget Recommendation

Proposed Performance Funding

• Step 3 – A 4.5 % increase above the FY 13 Funding Level– 4-Year Universities – The total increase is $49.2M (4.0%), $24.6M (2.0%) to

Performance Funding, $24.6M (2.0%) to core institutional support.– 2-Year Colleges – The total increase is $11.6M (4.0%), including $1.2M

reallocation, $360K to Performance Funding, $8.1M to Base Operating Grants, and $3.8M to Equalization Grants.

• Step 4 – An 8.3% increase above the FY 13 Funding Level (Restoration to roughly FY 12 funding levels).– 4-Year Universities – The total increase is $79.6M (6.5%), $24.6M to

Performance Funding, $30.4M to Deferred Maintenance, and $24.6M to Institutional support.

– 2-Year Colleges – The total increase is $20.8M (7.2%), including $1.2M reallocation, $360K to Performance Funding, $13.0M to Base Operating Grants, and $7.7M to Equalization Grants.


Step Budget Recommendation

Documents

IBHE Presentation 1 Illinois Higher Education Performance Funding Model IBHE Board Meeting February 5, 2013 Dr. Alan Phillips