At the May 20 meeting, the Board of Regents adopted revised metrics to the performance, or outcomes-based, funding model, adopted in July 2015 as part of the legislature’s instruction via SB 232 passed in the 2015 Legislative Session. SB 232 requires the Board of Regents to maintain performance metrics in five specific areas:
- Degrees and certificates granted
- Services provided to traditionally underserved populations
- Responsiveness to workforce needs
- Institutional efficiency
- Graduate research (University of Utah and Utah State University only)
The original metric for Institutional Efficiency adopted in 2015 measured the graduation rate—the number of students completing their program within 150% of normal time to completion (three-years for associate and six-years for bachelor’s). While this metric provides a comparable measure against similar peer institutions (as defined by the Carnegie Classification of Institutions), it is limited in effectively measuring the efficiency of a Utah System of Higher Education (USHE) institution on an annual basis. The success of specific cohort in graduating can take several years to bear out and does not comport well with year-to-year appropriations.
Legislative intent language passed in the appropriations bill (HB 2) from the 2016 Legislative Session recommends changing the definition of the institutional efficiency metric from 150% graduation rate for first time, full-time students to awards per full-time equivalent student (FTE), beginning July 1, 2016. This change removes peer comparisons in the institutional efficiency metric, graduate research metric, and safe harbor condition, replacing them with five-year rolling averages as currently used in the other three metrics:
The Legislature intends that the State Board of Regents, when allocating Performance Funding, utilize awards per FTE student as the output metric for institutional efficiency (53B-7-101(4)(b)(iv)) rather than 150 percent graduation rate for first-time, full-time students. This change will be effective beginning July 1, 2016.
This direction came as a result of the Commissioner of Higher Education working with USHE presidents, Board of Regents leadership and legislative leaders. Awards per FTE better reflect an institution’s efficiency on an annual basis and support the intent of performance based funding as a whole. Measuring the year-to-year change in the five-year average of degrees awarded in relation to the size of an institution’s student body (FTE students) is more closely tied to the institution’s efficiency or “throughput” on an annual basis.
Background of Performance Funding
Performance funding models have been adopted throughout the country to try and incentivize improvements in higher education. USHE has had performance funding for a short period of time compared with several other states, with legislation formalizing it in 2015. The Board of Regents is committed to being outcomes-driven and accountable for its results to students and taxpayers and will continue fulfilling its statutory obligations, despite a new report that questions the long-term impact of outcomes-driven or performance based funding for higher education.