Alabama legislature considers performance-based funding model

by News Editor Anna Brown

As complications with the state education budget sparks interest within the legislature, talk about alternative higher education funding models runs among legislators.

Rep. Terri Collins, R-Decatur, said the legislature is looking at a performance-based allocations model for universities in Alabama. Rep. Collins chairs the education policy committee and serves on the education wage and means committee.

“We’re looking at other states and how they’ve been successful,” she said. “You have to find a model that fits for how you do things or it makes it harder to implement. We want to make sure we don’t hurt something we’re trying to help.”

A performance-based funding model looks at metrics such as graduation rate, retention rate and the number of students with Pell grants and determines the university’s performance based on these numbers, said Vice President for Business and Financial Affairs Clinton Carter.

Carter said Alabama legislature currently decides how much money goes to each university each year based on the amount the university received the previous year. He called it a “modified budget model.”

“In essence, they don’t really have a ‘model,’” he said. “This is problematic.”

Last year, UNA ranked 13th out of the 14 state-funded universities in Alabama. Carter said this low ranking was the result of UNA’s distance from — and lack of university presence in — Montgomery.

“When you were previously in 13th place out of 14, any sort of change in a funding model is positive,” Carter said.

A report from the National Conference of State Legislatures found 32 states currently use a performance-based funding model. The report also indicated Alabama’s four neighboring states use, or are transitioning into, a performance-based funding model for their community and 4-year institutions.

Collins said the state of Alabama does not give universities enough money for the state to prescribe how the money is used.

“This (performance-based funding) is a way to require schools to give measurements back to us to see if the school is moving in a good direction,” she said. “It will hold everyone accountable to what their mission statement and goals are.”

Alabama legislature approved a $6 million education bill this spring. $1.5 million of those dollars went to higher education and $4.1 million to K-12 education.

UNA saw a $1 million increase in state appropriations for the 2016 fiscal year following the latest legislative session, moving UNA to third out of the 14 public universities in Alabama, Carter said.

Carter said this was a 4.3 percent increase in funding for UNA compared to 2015.

Carter said a number of different metrics are used to determine which universities perform best. He said basing performance solely on graduation rate is too isolated to determine how well the university is doing.

He said the graduation rate metric does not consider students who transferred to other universities, causing the freshman cohort to be skewed.

“In some ways, UNA serves as a two-year school for many local students who then transfer to larger universities like Alabama or Auburn,” Carter said. “The same goes for students who transfer to UNA from other public 4-year schools in Alabama.”

Carter said he thinks schools should be given credit for the students who graduate in six years, but transferred to another university before graduation. He said this is a problem because it appears the university did not contribute to the student’s degree.

“I think the transfer students should be subtracted from the freshman cohort or both universities should get credit for that student when he or she graduates,” he said.

Carter also said that the amount of students on Pell grants should be considered if Alabama moved to a performance-based funding model.