Changes proposed on college funding

Higher-ed chief: Reward success

— Arkansas’ higher-education director wants to change the formula the state uses to fund colleges and universities, doling out more public money to campuses that meet goals in areas such as degree production and student retention.

The move would change the current policy, which relies largely on enrollment to determine funding.

Working with college and university leaders to make the policy change would promote more equitable funding at the institutions and give state leaders a way to enforce their goals for increasing college degrees in the state, said Jim Purcell, director of the Arkansas Department of Higher Education.

“There’s enough evidence out there to say how we do higher education in Arkansas needs to change,” he said.

Lawmakers have proposed a variety of higher education issues for the legislative session that starts Jan. 10, including changes in how the state funds and supervises colleges and universities.

Purcell has been involved in forming many of the policies legislators will debate.

“We want to reward institutions for what we want them to do,” he said.

Arkansas exceeds other states in the percentage of high school graduates who go on to college, but it lags in graduating those students within a six-year time frame.

Only 37.6 percent of students who enrolled in a public four-year university in Arkansas in 2004 graduated from the same school by 2009, according to the Department of Higher Education.

The national average is 54.3 percent, including public and private four-year schools.

Policymakers track students, measuring what percentage of them have graduated within six years of their initial enrollments at a college or university to determine the graduation rate. The measure has replaced the four-year rate as a standard of success over time.

U.S. Census data released this month show that Arkansas ranked second from the bottom in degree-holding adults in the latter half of the decade with only 18.9 percent of residents over age 25 holding bachelor’s degrees. That number was well below the 27.5 percent nationally. Only West Virginia had fewer with 17.1 percent.

Linking an institution’s funding to its ability to meet lawmakers’ goals is called performance funding, a trend that has taken root in a handful of states in recent years.

Ohio instituted a policy this year that creates formulas for primary university campuses, satellite campuses and two-year colleges, providing more funding for schools that secure research grants and produce graduates in high-demand fields like science and technology. The formulas provide extra funding for colleges that enroll at-risk students, such as first-generation and low-income college attendees.

“It’s a dramatic shift in funding and a dramatic shift in measures of student success,” said Richard Petrick, vice chancellor for finance with the Ohio board of regents.

Petrick discussed performance funding plans with Arkansas’ incoming college and university trustees at a Dec. 10 workshop.

The funding strategy, popular in the 1980s, has failed in the past because states adopted complex formulas not easily understood by campus leaders and quickly pushed large shares of their appropriations through the policies without phasing them in over time, he said.

Members of the public saw the formulas as a way to shut down or “punish” poorly performing schools, and lawmakers phased the policies out over time, Petrick said.

Most states that have successfully implemented performance funding have added policies limiting the amount a college’s funding level can drop from the previous year when the formula is introduced, he said.

Arkansas lawmakers in 2007 rejected a bill that would have directed the Higher Education Coordinating Board to replace the state’s current formula, adopted in 2005, with one centered on performance measures.

The bill, sponsored by then-Sen. Dave Bisbee, R-Rogers, failed to make it out of committee after college leaders expressed concerns about replacing the existing, relatively new policy.

The coordinating board in 2008 approved a plan to tie a 10th of higher-education funding to the number of students still enrolled in a course on the 11th day of classes. That amount has since increased to 20 percent.

Purcell would like to tie at least 25 percent of funding to how many students a college retains throughout the semester and explore introducing other measures to the formula.

Reconsidering higher education funding has won support from state Rep. Tim Summers, R-Bentonville, who wants to fix an aid discrepancy between the state’s 22 two-year colleges, a plan Purcell supports.

Institutions have increased tuition over the years to compensate for state appropriations that have failed to cover the costs of growing enrollment.

A report by the Arkansas Department of Higher Education showed that state contributions dropped from 62 percent of an Arkansas full-time student’s education in 1998-99 to 49 percent in 2008-09.

Colleges are also funded by student tuition, auxiliary revenue and private gifts.

State appropriations in 2009 covered only about 70 percent of campuses’ needs as assessed under the state formula.

B. Alan Sugg, president of the University of Arkansas System, the state’s largest, cautioned against making too many changes to the four year university funding formula without fully exploring their potential effect.

University leaders have credited the formula with bringing greater funding equity to the state’s 11 public universities.

“I think it could be tweaked a bit,” Sugg said of the formula. “But I don’t think we needto throw the baby out with the bath water.”

Lawmakers’ emphasis should be on degree production, not on six-year graduation rates, he said.

Arkansas’ public universities awarded 10,085 bachelor’s degrees in 2010, a 14 percent increase over 2005, according to data provided by the UA System. In the same time span, Mississippi’s public universities saw a 9.9 percent growth in bachelor’s degrees awarded. Kentucky saw a growth of 11.6 percent.

Arkansas institutions educate large numbers of working and nontraditional students, many of whom switch schools several times or take more than six years to complete a degree, Sugg said.

“To me, it’s not important how long it takes to get a degree,” he said. “It’s important that a person gets a degree.”

Front Section, Pages 1 on 12/30/2010