Commissioner's Corner

Performance Funding Update
April 4, 2013

The Montana University System (MUS) has an opportunity this legislative session to secure $7.5 million in additional state funding to commit to the performance goal of more college degrees and completions. Montana is one of many states where governors and legislatures are focused on increasing educational attainment. A goal of Gov. Steve Bullock is for Montana to grow the percentage of our population with a higher education credential from 40 percent to 60 percent. Legislators support this goal and have worked with MUS leadership on an innovative incentive. The incentive is an additional 5 percent ($7.5 million) on top of the total general fund appropriation to campuses that the MUS will designate for performance funding in the 2014-15 academic year. The $7.5 million allocation to the campuses will be based on progress made toward increasing college completions and other related outcomes. This performance funding incentive is an important piece of the budget package to help campuses cover inflationary costs of education and maintain tuition prices at affordable levels. The plan is subject to further legislative action over the next three weeks, but I want to take this opportunity now to address the basic "what, why, and how" of the MUS performance funding plan.

What is the performance funding concept?

The performance funding approach for higher education has considerable momentum in many states. This is both a challenge and an opportunity for forward-thinking institutions to obtain additional resources that can be used to enhance the educational experience of our students and help ensure they remain in school and graduate on time. The MUS, not the Legislature, will construct the performance metrics and the allocation methodology. The current national focus is on education attainment of the population and the associated encouragement of institutions to increase the numbers of degrees and employer-recognized certificates produced. Of course, our efforts will continue to focus on academic quality as well.

Why implement performance funding?

While the $7.5 million linked to performance funding in the second year of the coming biennium is technically funding to address inflationary cost adjustments, it is NEW funding. In other words, if the MUS had not agreed to the implementation of this modest, phased-in performance funding approach, we would not have an additional $7.5 million to address inflationary cost increases.

How will performance funding be implemented?

The MUS will be developing two performance funding plans simultaneously. One is a short-term approach to meet legislative requirements in fiscal year 2015 (2014-15 academic year). This effort is being led primarily by OCHE staff and selected faculty and administrative representatives from the MUS campuses. In order to meet planning and budgeting timelines for the 2014-15 academic year, the Board of Regents must approve this initial performance funding process at the Board's meeting in May. Follow the progress of this short-term effort here:

The longer-term approach, which will be conducted in parallel with the short-term approach, has a longer lead time for implementation and allows for participation by faculty, staff and students, and other key stakeholders at our colleges and universities throughout Montana. It is anticipated that the longer-term approach will work to design a full performance model to be implemented in 2015-16. Next week a national consultant will be hosting discussion sessions on the campuses of MSU Bozeman and MT Tech to assess faculty and staff input on performance funding.

While increasing completions is a focus for all, the MUS intends to use different metrics for different types of institutions. Research universities might incorporate metrics related to increasing research activity and doctoral degrees, regional four-year campuses might include metrics focused on increasing masters and baccalaureate degrees, and two-year campuses might use metrics related to transferability and remediation. The design also will reward progress and continuous improvement. Campuses will be measured against their own individual progress, not in comparison to other campuses.

It is my intention to be as inclusive as possible as we explore methods for incorporating performance funding into the MUS allocation model. We intend to provide periodic communications to the entire MUS community to help ensure information is readily available and faculty, staff, and students are aware of opportunities to participate.