Performance-Based Revenue Task Force meeting

Access, affordability and accountability across higher education all come into play in performance-based funding.


The Iowa Board of Regents appointed the Performance-Based Revenue Model Task Force to look into performance-based funding for the regent institutions.

The task force was created in April 2013 by former board President Craig Lang, who directed the charge to, “[examine] the existing model for general university appropriations to ensure that the needs of the universities are met, to recognize their distinct missions and to identify the right set of metrics to review performance,” an earlier release from the board said.

Janice Friedel, associate professor in education, and Zoe Mercedes Thornton, doctoral candidate in higher education, traveled to the board office in Urbandale to give a presentation on performance-based funding on a national landscape. The two were part of an in-depth study of performance-based funding with the University of Alabama Education Center.

Performance-based funding “is a system based on allocating a portion of a state’s higher education budget according to specific performance measures”, they said in the presentation.

According to the study, there are currently 25 states with performance-based funding in place, five transitioning to performance-based funding, 10 states formally discussing setting up this method and 10 states with no formal activity found.

Iowa has moved from no formal activity into formal discussions, but Friedel said she doesn’t think Iowa is behind.

There are different criteria and success or progress measures for different types of institution.

Strategic goals included in another presentation, given by Martha Snyder from Lumina Strategy Labs, were increased distance education opportunities, increased efficiency and productivity, diversifying the economy and increased four-year graduation rates.

Friedel said there is no research that supports a linkage between performance-based funding and higher graduation rates.

“No one-size fits all,” Friedel said. “It varies case by case, state by state and institution by institution.”

The presentation discussed three models of performance-based funding: output-based funding, performance set-asides and performance contracts.

In an output-based funding formula, institutions don’t compete against each other, Thornton said. Thornton said this is the most commonly used form, where there are monetary motivations for positive improvement in specific areas in the institution, such as graduation rates, number of degrees/certificates awarded and job placement rates.

Performance set-asides involves a percentage of state funding being reserved to be awarded to high performing institutions, where institutions may compete with each other for the set-aside funding by reaching a certain performance measure for the year, Friedel and Thornton said in their presentation.

A performance contract is a contract between a state and the institution where funding is awarded if the institution meets the agreed upon performance goals set and is the least common method used.

Thornton and Friedel included policy recommendations in their presentation based on research. They suggest aligning the institution measures with the state agenda and allowing the different institutions to have different missions.

Friedel left the board with a word of caution.

“Performance-based funding is not a solution to the issue of insufficient state support for our higher education institutions,” Friedel said. “It cannot fill that budget gap.”

This was the third meeting of the task force. The force is comprised of five members, including three representatives from the three regent universities. The next meeting is Feb. 24, where each regent institution president will give a presentation.

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