States to Colleges: Prove You’re Worth It

College Hall, New College, Sarasota

College Hall, the former Charles Ringling Mansion, at New College of Florida, Sarasota

By Sophie Quinton, Stateline

New College of Florida doesn't offer pre-professional degrees, like nursing or engineering. Students choose the public liberal arts college because they want an intellectual experience. Many take a year off after graduation to pursue research or community service.

Yet last fall, New College opened a flashy new career center on its Sarasota campus. It needed to prove to the state that it was helping students find jobs and graduate on time, or risk losing $1.1 million in state aid. "That's a big deal for us," David Gulliver, media relations coordinator for New College, said of the money.

This fiscal year, Florida was one of 26 states to fund their two- or four-year college systems (or both) partly based on outcomes such as graduation rates, according to HCM Strategists, a consulting firm. Mississippi, Nevada, North Dakota, Ohio and Tennessee all spent over half their higher education budgets that way.

The idea of using outcomes—not enrollments—to guide public funding of higher education has so much bipartisan backing that both President Barack Obama and Florida's Republican Gov. Rick Scott support it. Just last week, the Florida Board of Education approved a performance-funding system for state colleges, adding to its existing system for state universities.

It’s too early to say whether performance-based funding will drive the changes lawmakers want. But the policy so aligns with national concerns about the cost and payoff of a college education that it’s likely here to stay.

Tennessee started giving state colleges and universities bonus payments for meeting goals in certain categories, such as student performance on national exams, in 1979. In the 1990s, a handful of states set aside a small percent of funding to reward outcomes, such as degree completion. Those programs typically didn't last long.

Then the Great Recession happened. As the economy tanked, so did state tax revenue. Almost every state cut higher education funding between 2009 and 2014, and many colleges and universities raised tuition to compensate.

College became less affordable even as Obama and governors emphasized how important it was for Americans to go. "Education is an economic issue when nearly eight in 10 new jobs will require workforce training or a higher education by the end of the decade," Obama said in 2010.

To get the economic benefit of a college degree, the president emphasized, students have to graduate. Fifty-nine percent of first-time college students, studying full time, who started a bachelor’s degree program in 2007 graduated in six years from that institution, according to federal statistics.

The Lumina Foundation and the Bill and Melinda Gates Foundation have added to the sense of urgency over the past few years by spending millions of dollars on developing and promoting strategies for raising graduation rates. One strategy is performance-based funding, also known as outcomes-based funding.

The men and women who oversee Florida’s 12 state universities started developing a performance funding model in 2012. "We knew we needed to come up with a different approach to get additional state support [for state universities]," said Tim Jones, a vice chancellor for the Florida State University System Board of Governors.

The Florida Legislature wanted more accountability for money spent on higher education. Both lawmakers and the board wanted to push colleges to become more efficient.

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States to Colleges: Prove You’re Worth It

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