1. South Carolina Commission on Higher Education: Mike Raley, FIPSE Grant Project Director Tajuana Massie, FIPSE Coordinator Tajuana Massie, FIPSE Coordinator Lynn Metcalf, Director, Finance Lynn Metcalf, Director, Finance Accountability & Cost Containment in Higher Education

2. BEST PRACTICE DEFINITION  Direct Linkage to Mission, Strategic Plan, and Policy Goals: The perfect indicators should incorporate and reinforce institutional missions and strategic plans, as well as broad state policy goals.  Broad Stakeholder Involvement and Consensus: The performance indicators should be developed through negotiation and consensus among key internal and external stakeholders at all steps in the process.  Simplicity in Presentation: The performance indicators should be simple to convey and broadly understood.  Reliant on Valid, Consistent, and Existing Information: The performance indicators should be based on data that are valid and consistent and that can be verified by third parties when necessary. The indicators should also be based on established data sources, where possible, in order to maximize credibility and minimize additional workload.  Avoidance of “False Precision” in Measurement: The performance indicators should be established with wide recognition that there are certain unavoidable ranges of error in any measurement activity; imposing a false sense of “precision” is counter- productive.

3.  Adaptable to Special Situations: The system of performance indicators should accommodate special circumstances (e.g., unique institutional missions) where possible.  Avoidance of Indicator “Proliferation”: The performance indicators chosen should be kept to the smallest number possible in order to minimize conflicting interactions among the indicators and to maximize the importance of each indicator.  Reflects Industry Standards: The performance indicators chosen should reflect “industry” norms and standards, where possible, in order to allow for benchmarking and peer comparisons.  Incorporates Input Process, Output, and Outcomes Measures: The performance indicator system developed should have a balance of measures related to inputs, processes, outputs, and outcomes, with some emphasis on outputs and outcomes.  Incorporates Quantitative and Quality Measures: The performance indicator system developed should incorporate both quantitative and qualitative measures in order to present the most complete picture of performance possible.

4. ATTRIBUTES OF EFFECTIVE INDICATORS  Appear clear credible  Exhibit validity and reliability  Show internal consistency  Seem fair and equitable to all institutions  Evaluate only performance influenced by institutional efforts  Rely more on outcomes and outputs than on inputs or processes  Produce measurable and auditable data, not subject to manipulation  Use available, or economically collectable, data  Relate to planning goals and strategies  Allow differences in institutional missions and types  Remain stable long enough to give institutions time to respond * Joseph C. Burke and Associates (2002). Funding Public Colleges and Universities for Performance: Popularity, Problems, and Prospects. The Rockefeller Institute Press: Albany, New York: 40- 41.

5. COST CONTAINMENT DEFINITION Cost containment is the systematic process of continuously exploring and implementing opportunities to efficiently manage the cost of institutional operations within the context of the institutional mission. It is not a “cutting back management” (e.g., any strategy intended by officials to freeze hiring or reduce the frequency or quality of services simply to save money during a budget crisis). Cost containment strives to maintain and increase the quality of academic programs, student outcomes, and services provided while eliminating unnecessary or avoidable costs.

6. PROJECT STRATEGIES  Document analysis of policy and practices  Ethnographic analysis of focus groups and interviews  Data analysis of state level information to determine data most vital to monitor for a particular best practice  Survey analysis

7. DOCUMENT ANALYSIS  Accountability reports developed by state agencies and institutions of higher learning  Reports and studies developed by other national organizations  Scholarly publications pertaining to the issues of cost containment and accountability in higher education

8. FOCUS GROUPS Participants (Five Groups) Three: Institutional Effectiveness Three: Institutional Effectiveness One: Financial Officers One: Financial Officers One: Public Affairs One: Public Affairs

9. RESULTS OF FOCUS GROUPS Cost Containment Strategies:  Deploying technology to reduce paper  Reviewing the curriculum for relevance and efficiency, leading to elimination of nonessential programs efficiency, leading to elimination of nonessential programs Improvement Opportunities for Cost Containment:  Enhanced institutional cooperation and collaboration  Deregulation of operations

10. INTERVIEWSRespondents:  Four sectors of higher education  State government (legislators and administrators)  Private sector (represented by the South Carolina Chamber of Commerce)  Lobbyists responsible for liaison with elements of the higher education system  Institutional presidents who are participating in the revision of the state’s higher education accountability system

11. INTERVIEW DEMOGRAPHICS GroupPotential Completed Research Universities 10 10 Teaching Universities 9 8 USC Regional Campuses 3 3 Technical Colleges 11 11 State Government 9 9 Private Sector 2 2 Liaison 5 4 Totals 49 47

12. RESULTS OF INTERVIEWS  Single “system-wide” model vs. “Sector- specific” model  Return on Investment  Cost Effectiveness/Cost Containment/Cost Reduction

13. NATIONAL SURVEY Respondents:  SHEEOs  SHEFOs Sample:  Fifty State sample  Forty states responded Methods:  Mailed survey with return envelope  E-mail and telephone follow-up *Administered by The University of South Carolina Institute for Public Service and Policy Research, (Director: Dr. Robert Oldendick).

14. CATEGORIES OF COST  Affordability  Cost Measures  Resource Utilization  Outputs  Return on Investment

15. AFFORDABILITY  Tuition and fees per undergraduate credit hour  Average loan amount undergraduate students borrow each year  Average loan amount graduate students borrow each year  Percent of income needed to pay for college expenses minus financial aid at community (2-year) colleges  Percent of income needed to pay for undergraduate college expenses minus financial aid at public 4-year colleges/universities

16. AFFORDABILITY (Cont.)  State grant aid targeted to low-income families as a percent of federal Pell Grant aid to low- income families  Share of income the families in the lowest income quartile need to pay for undergraduate tuition at lowest priced colleges  State average tuition and fees compared to the average of regional peer institutions

17. COST MEASURES  Administrative expenditures (not including capital expenditures) per credit hour  Expenditures on sponsored research as a percent of total budget  Percent of state appropriations for higher education  State appropriation per credit hour  Percentage of budget for capital expenditures

18. COST MEASURES (Cont.)  Deferred maintenance liability as a percentage of budget  Energy per cost per square foot  Ratio of institutional capital expenditures to deferred maintenance liability (annual basis)  Instructional cost per undergraduate credit hour

19. RESOURCE UTILIZATION  Average number of hours per week classroom is used for instruction  Percent of classroom stations occupied per week  Number or percent of total of undergraduate students enrolled per major  Number of academic programs terminated in past three years

20. RESOURCE UTILIZATION (Cont.)  Number of new academic programs implemented in past three years  Ratio of newly implemented academic programs to terminated academic programs within the past three years  Energy cost per credit hour  Cost per undergraduate degree (by major)  Cost per graduate degree (by major)

21. OUTPUT MEASURES  College graduation rates (GRS)  Mission specific indicators

22. RETURN ON INVESTMENT (ROI)  Percent of students who remain in state after graduation  Percent of budget appropriated by state  Percent of graduates employed or pursuing further education in state within one year of graduation

23. RETURN ON INVESTMENT (Cont.)  Percent of graduates employed in the state in state-defined critical needs areas within one year of graduation  Economic impact  Quality of life

24. AFFORDABILITY (Essential)  Tuition and fees per undergrad credit hr  Percent of income needed minus aid (4 yr)  Percent of income needed minus aid (2 yr) Share of income needed  State average of tuition and fees  Average loan amount-Undergrad

25. COST MEASURES (Essential)  Percent of state appropriations  Instructional cost – Undergraduate

26. RESOURCE UTILIZATION (Essential)  Cost per undergrad degree

27. OUTPUT MEASURES (Essential)  College graduation rates  Mission specific indicators

28. RETURN ON INVESTMENT (Essential)  Percent budget appropriated by state  Percent students who remain in state  Economic impact  Percent graduates employed  Percent graduates employed-critical need

29. INDICATORS IN RANK ORDER OF IMPORTANCE  Tuition and fees per undergrad credit hr  College graduation rates  Percent of income needed minus aid (4 yr)  Percent budget appropriated by state  Mission specific indicators  Percent of income needed minus aid (2 yr)  Percent of state appropriations  Instructional cost – Undergrad

30. INDICATORS IN RANK ORDER OF IMPORTANCE (Cont.)  Percent students who remain in state  Share of income needed  Economic impact  Percent graduates employed  Percent graduates employed-critical need  Cost per undergrad degree  State average of tuition and fees  Average loan amount-Undergrad

31. OTHER ESSENTIAL MEASURES (AFFORDABILITY)  Net price paid after all forms of aid, separated by income levels  Proportion of undergraduates receiving aid and proportion of state grant aid targeted to low income families  Indebtedness of graduates  Affordability by race (Access)

32. OTHERS – COST MEASURES  Degree production as percent of total public funds, compared to benchmark peer institutions in U.S  Educational cost per FTE student (compared to peers)  Growth in educational cost per FTE compared to inflationary index  Student service cost per FTE

33. OTHERS – RESOURCE UTILIZATION  Faculty Production:  Percent tenure or tenure track over time  Student-faculty ratio  Hours faculty spend in classroom  Credit hour production per full and FTE faculty  Research funds per faculty member  Average class size  Administrative (institutional support) expenditures as percent of total expenditures, compared to peers

34. OTHERS – RESOURCE UTILIZATION (Cont.)  Average credit hours taken to degree  Average classes taught per professor per year  Percent of remedial hours to total undergraduate credit hours  Net square feet to gross square feet ratio  Pattern of use of classrooms (e.g., evening versus day, weekday versus weekend, summer versus fall/winter/spring)

35. OTHERS- OUTPUT MEASURES  Degree production as percent of FTE  Degree production compared to benchmark peers per funding levels  Credit hour production  Sponsored research  Expenditures in sponsored research  Pass rates on professional exams  Total cost per credit hour produced  License and certification exam performance  Employment rate of graduates  Employer satisfaction rates  Retention rates.

36. OTHERS- OUTPUT MEASURES (Cont.)  Retention (persistence) rates  Transfer rates for 2-year schools with a transfer mission  Retention rates and number of graduates in fields addressing the state’s needs  Persistence and graduation rates by ethnicity  Time to degree  Graduation rates for transfer students

37. OTHERS- RETURN ON INVESTMENT  Contracts for applied research  Business startups  Graduate satisfaction  Sponsored research  Sponsored research per capita.  Income of college graduates vs. high school graduates.

38. METHODS OF COMMUNICATING PERFORMANCE Audiences:  Governor/Legislature  Educators  General Public

39. METHODS OF COMMUNICATING PERFORMANCE Strategies: 1. Including in agency reports 2. Posting information on the agency’s website 3. Including information in the agency’s budget request 4. Including information in oral presentations 5. Providing information in a press release 6. Providing information in a separate brochure

40. NEXT STEPS  Selection and/or Definition of Indicators  Pilot-Test  Electronic Survey of Usefulness and Long- term Effects  Publication of Results