The first blog in this series examined why Texas is considering performance-based funding for public universities and how other states have approached it.
The next question is more concrete: What would Texas actually pay universities to achieve?
At its core, the proposal would give universities additional state funding based on how well they help students make progress and earn valuable degrees.
The proposed model is built around two categories of outcomes:
- Attainment of a credential of value (60%)
- Progression and persistence toward earning a credential (40%)
The split describes how the committee proposes dividing the performance-based funding pool, not how large that pool would be. The Legislature has not yet determined the total amount of funding that would be available through the model and the committee did not make specific recommendations on amounts.
This is the second part in a three-part blog series (read Part 1 here) that discusses performance-based funding, the precedent set by community colleges, and the recommendations set forth by the THECB Executive Committee.
Credential of Value Attainment: 60%
The committee recommends directing approximately 60% of performance-based funding toward credential of value attainment.
A “credential of value” is a degree that provides students with a reasonable return on their investment. For bachelor’s degrees, THECB would examine whether a typical graduate earns enough within 10 years to recover the cost of the education and earn more than the cumulative earnings of a high school graduate over the same period.
The Committee’s initial model assumes that all master’s and doctoral degrees meet the credential-of-value threshold. As the state develops more specific definitions, it should make sure funding is focused on credentials that lead to strong workforce outcomes, rather than assuming every graduate degree has the same value.
Universities could receive more funding for degrees in high-demand fields, partial credit when a student transfers from their institution and later earns a degree elsewhere, and additional funding for helping students complete their degrees without taking unnecessary courses. Master’s and doctoral degrees would receive higher rates to reflect their additional costs and their importance to Texas’ workforce, research and higher education systems.
Rewarding Progression and Persistence (40%)
The remaining 40% of the proposed funding would reward universities when students continue making progress toward a degree.
Universities would receive funding when students complete major credit-hour milestones at 30, 60 and 90 semester credit hours. These milestones roughly represent the first, second and third years of a bachelor’s degree and would allow the state to recognize student progress before graduation.
The first milestone would receive the most funding, on the rationale that students need the greatest academic and advising support early in college. Students who successfully complete their first year are also more likely to eventually earn a degree.
The report also identifies persistence as an important measure of success. Persistence measures whether students remain enrolled and continue working toward a degree from one academic period to the next. This recognizes that staying in college is an important step toward graduation, particularly for students who attend part time or take longer to reach the next credit-hour milestone.
Recognizing the students universities serve
The proposal would also provide additional funding when universities help students who have historically faced greater barriers to college completion.
These students include adult learners; students returning to college after a break; students from low-income backgrounds and students who begin college needing additional academic support.
The goal is to avoid rewarding universities simply for enrolling students who are already the most likely to graduate. Instead, the proposed weights would recognize institutions that successfully support students with different needs and circumstances.
What comes next
The committee’s recommendations are an early step toward a possible new university funding model. Any final approach would need to balance a stronger focus on student outcomes with the different missions, costs and student populations of Texas’ public universities.
The recommendations give lawmakers a framework to consider as they decide whether and how to add performance-based funding to the university finance system. As that discussion continues, the design details will determine whether a new model changes how universities operate or mainly redistributes dollars they already receive.
