90-Day Goal Performance Funding Presented to the Illinois Board of Higher Education April 12, 2011

Performance Funding I. Background and Review II. IBHE Efforts and Activities III. Progress and Outcomes IV. Next Steps 2

Performance Funding I. Background and Review A. Other States  Various states across the country are implementing performance-based funding to incentivize higher education efficiencies and improve performance. B. Higher Education Finance Commission  In Illinois, the Higher Education Finance Commission concluded that performance funding is a viable policy tool for achieving statewide goals. C. 90-Day Goal: Performance Funding  Performance funding is an important component of the 90-day strategic plan and Illinois Public Agenda. 3

Performance Funding I. Background and Review A. Other States – performance funding is not a one-size fits all methodology; each state that utilizes PF offers unique characteristics; they all do share a common goal of increasing the number of graduates.  Ohio: The Ohio model includes a stop-loss provision/99% previous years funding. Each year the stop-loss figure is reduced.  Indiana: One of few states to use performance funding to reward institutions for performance and prioritize budget cuts.  Tennessee: Has utilized performance funding since 1979 that allows institutions to earn additional funding based on performance.  Texas: In 2007, the legislature created a performance incentive fund to provide a pool of funding to institutions based on degrees awarded. The Board is proposing a 4-Year phase-in to encourage completion.  Arkansas: In March 2011, the State Senate approved legislation that would phase in a new funding formula over a 5-year period starting in When fully implemented would base 25% on graduation rates. 4

Performance Funding I. Background and Review B. In Illinois, the Higher Education Finance Study Commission concluded that:  Performance funding models must:  Developed through a consultative process & broad participation  Tailored to each sector of higher education & recognize unique missions  Encourage at-risk students to complete  Tie funds to completion and degree production  Designed to Maintain quality 5

Performance Funding I. Background and Review C. At the February 15 th Board Meeting I presented the Board with the 90 –day goal that I would be concentrating on:  To support the drafting, revising, and passage of legislation that provides a broad framework for integrating performance funding into the higher education budget development process.  To move the goal forward I planned to work with BHE staff, legislative staff, and higher education partners to develop a draft proposal and build advocacy for performance funding.  Today, I will share with you the agency’s efforts and the activities I have conducted since February aimed at meeting this goal, the progress and outcomes of those activities, and the next steps in the process. 6

Performance Funding II. IBHE Efforts & Activities A. Meetings with Legislators & Staff B. Committee Hearings C. Meetings with Higher Education Partners D. Other Efforts & Activities 7

Performance Funding II. IBHE Efforts & Activities A. Meetings with Legislators & Legislative Staff  Senator Ed Maloney  Senate Democratic Staff  Senate Republican Staff  Representative Chapin Rose  House Democratic Staff  Senator Dan Kotowski  House Republican Staff 8

Performance Funding II. IBHE Efforts & Activities B. Committee Hearings  House Committee Hearing (HB 1503) 2/24/11  Senate Committee Hearing (SB 1773) 3/15/11  House Higher Education Appropriation Hearing 3/17/11  Senate Higher Education Appropriation Hearing 5/4/11 9

Performance Funding II. IBHE Efforts & Activities C. Meetings with Higher Education Partners  Staff attended the Complete College America academy to discuss performance funding and other goals  Public Universities  Community College President’s Council Meeting  Federation of Independent Illinois Colleges and Universities 10

Performance Funding II. IBHE Efforts & Activities D. Other Efforts & Activities  Fiscal Note for HB 1503  Developed draft testimony on SB 1773  Developed 1-Page Briefing Document  Met with Senate Republican Staff  Briefed Chief Academic Officers  Met with House Democratic Staff  Met with House Republican Staff  Met with Senate Democratic Staff 11

Performance Funding III. Progress A. Endorsements/Support  In Committee, performance funding has been supported by ISAC, FIICU, and various institutions.  Unanimously supported by the Community College Presidents Council  Senate President has voiced strong support for performance funding  House Higher Education Appropriations Committee Chairman supports performance funding 12

Performance Funding III. Progress B. Outcomes  House Bill 1503 Representative Chapin Rose  Amended to match SB 1773  Passed the House /5/11  Senate Bill 1773 Senator Ed Maloney  Directs IBHE to integrate PF into the FY13 budget process  Passed out of Committee 3/15/11 13

Performance Funding III. Progress B. Outcomes  HB 1503 & SB 1773:  The IBHE is directed to form a broad-based working group to devise a system for allocating resources to achieve state goals  Beginning in FY2013, performance funding must be incorporated into the IBHE Budget Recommendations  Consult with higher education stakeholders  Formula should recognize the needs of students who are academically or financially at-risk  Unique Institutional missions shall be considered  Metrics must be designed to Maintain Quality 14

Performance Funding IV. Next Steps A. Continue to Advocate and Support Performance Funding Legislation B. Implement the Legislation C. Establish Broad-based working groups, develop criteria, create models, etc. D. Incorporate Performance Funding in the FY 2013 Budget Development Process 15