Performance Based Funding in Higher Education

Daniel Cohen's picture
 By | oktober 20, 2016
oktober 20, 2016

Most people are well aware of the benefits of a college degree. Not only do degree holders earn more money than non-degree holders, but research shows that people with postsecondary credentials are more engaged citizens, give more to philanthropic causes, are healthier, live longer, are more involved in their children’s education, are less likely to be involved in crime, and are less dependent on social welfare programs.[1] In addition to these personal and societal benefits, campuses are economic engines in their own right that generate millions of dollars in tax revenues, employ millions of people around the country, perform pioneering research  and innovation, and incubate many spinoff businesses.

Clearly higher education is an economic and civic engine, but how do you tune and optimize that engine to move society forward? How do you ensure that the goals of publicly funded higher education institutions are aligned with the needs of students, the public, and local employers?

Historically, colleges and universities have received funding from states based on how many full-time equivalent (FTE) students are enrolled at the beginning of each semester. While this funding rubric provides an incentive for colleges to enroll students (and thus provide access to postsecondary education programs), it doesn’t necessarily incent institutions to help students complete degree programs, or ensure that employers are supplied with the skilled workers they need. As a result, many states are rethinking their enrollment-based funding models and priorities.

To ensure that they are getting the most out of their education dollars, 33 out of 50 states have embarked on performance-based funding (PBF) initiatives.[2] These initititives incent colleges to award degrees and credentials that are in high demand (such as credentials in STEM courses), improve transfer rates from two-year to four-year institutions, lower overall costs, and improve graduation and placement rates. In addition, these institutions are incented to focus on under-served and under-represented cohorts such as minority graduates, “non-traditional” students (adults going back to school to enrich their careers), and student performance in developmental and remedial courses.

To be successful and maximize performance based funding, where rubrics and formulas are complex and malleable, institutions need flexible analytic tools, not rigid packaged solutions. WebFOCUS is well suited for this kind of application for a number of reasons, including its ability to embed business rules into reports, dashboards, and analytic InfoApps. For example, to complete a major and earn a credential, a student needs to satisfactorily complete courses A and B, and then go on to complete either C and D, or E and F, in a certain period of time. This type of logic is easy to implement with WebFOCUS.

Florida Atlantic University (FAU), an institution of higher education and research that serves more than 30,000 students in southeast Florida, is one of many Florida colleges that rely on public funding. When the Florida State Legislature adopted a PBF funding rubric, traditional FTE metrics were replaced by outcome metrics including graduation rate, employment, and student success in the classroom. FAU, and every other publicly funded higher education institution in Florida, had to find ways to improve and document student outcomes and measures.

To tackle this issue, FAU called on its BI Center of Excellence, where WebFOCUS had already been adopted as the enterprise BI and analytics standard. The results? While most schools try to maximize enrollment in order to maximize revenues, FAU’s revenues have actually grown while its enrollment has shrunk! In fact, FAU was ranked as the top scoring institution in Florida—and they credit Information Builders’ technology for that success.[3] Not only is FAU using WebFOCUS to automate the complex compliance reporting scenarios that are necessary for performance-based funding, but they are also using their versatile BI tools to operationalize their PBF strategy. FAU’s BI and analytics system enables instructors, advisors, faculty, and other staff members to identify “at risk” students and intervene while there is still time to get them on the right track. Further, they  are mapping “Acedemic Pathways”—the sequence of courses a student must complete to earn a degree or credential. These pathways ensure that students registrer for the right classes to complete their degrees and alert advisors and faculity if students get “off track.”

The outcomes have been impressive:

This year, FAU ranked 1st in the state in the percent of bachelor’s graduates employed full-time or continuing their education one year from graduation.

  • Over the last two years, FAU’s six-year graduation rate increased by 8 percent.
  • FAU increased its academic progress rate by 6 percent.
  • FAU consistently ranks in the top two for median average full-time wages of undergraduates employed in Florida one year after graduation. 

To learn how FAU became Florida’s top performer in this arena, please join us for an informative webcast presented by Mehran Basiratmand, FAU’s Chief Innovation and Performance Officer on November 8. During the webinar Mehran will explore FAU’s journey to define and map new metrics, develop dashboards, and implement BI apps that allow the institution to comply with Florida’s new performance based funding formulas. 

If you are interested in other sase study presentations, join us for a webcast on November 1 featuring Connecticut College.