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Columbia Missourian

UM System, others give feedback on performance-funding model

By Allison Prang
February 18, 2013 | 6:00 a.m. CST

COLUMBIA — Key players in higher education are expressing concern about the possibility that performance goals will factor into state calculations of not only new but also base funding for Missouri's public colleges and universities.

That concern was one of many addressed in a summary of public comments the General Assembly's Joint Committee on Education received in response to a new draft of a proposed funding model for higher education.

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The committee summarized the input it received and offered notes in response. The Missourian obtained copies of the comments submitted by the Missouri Department of Higher Education, the Council on Public Higher Education and the University of Missouri System.

A few of the suggestions were echoed by multiple schools and higher education organizations. One recommendation was that only new funding for higher education be allocated based on performance. That's what Gov. Jay Nixon has proposed in his budget for fiscal 2014.

State Rep. Mike Lair, R-Chillicothe, vice chairman of the joint committee, said the goal is to have the new funding model approved and in place by the time the budget process for fiscal 2015 begins.

The joint committee's model proposes that 10 percent of a school's total state appropriation be based on performance. House Bill 1731 called on the committee to develop a new funding model by Dec. 31 and "requires the General Assembly to implement the funding formula beginning July 1, 2014."

Bob Mullen, director of institutional research and planning for the UM System, wrote a letter to the committee expressing the concerns of UM administrators.

"A formula could allocate performance funding first as a percent of the total new funding," he wrote. "If performance funding is treated as part of the base, in a year in which state support is reduced relative to the prior year, an institution that does not reach its performance goals will suffer not only the overall reduction in state support but also a reduction due to performance."

The agreement between Nixon and the state's colleges and universities was that only new funding would be based on performance, said Nikki Krawitz, UM System vice president of finance and administration.

Krawitz said in a follow-up email that the Missouri Department of Higher Education worked with two- and four-year schools to come up with a model for performance funding. The Coordinating Board for Higher Education recommended to the governor that the model solely apply to new funding.

The goals that the institutions identified were "stretch goals," given administrators'  belief that only new appropriations — and not base funding — would be affected by performance, Krawitz said.

For schools to change their goals, Krawitz said, the model adopted by the Coordinating Board for Higher Education would have to be changed.

Lair said the problem with that idea is that the performance funding model wouldn't be used in years when the state has no new money to give to higher education.

The Department of Higher Education submitted two pages of comments to the committee, expressing serious concern over a simulation that estimates Missouri colleges and universities are being underfunded by about $389 million.

“The spreadsheets that were released with the revised model show how an additional $389 million above the current appropriation would be distributed among the institutions,” the letter states. “However, the state is obviously not likely to have that amount of money to invest in the next fiscal year, or over the course of the next several fiscal years. Thus it is both necessary and crucial for the model to provide a mechanism for distributing whatever amount of money is actually available.”

“In other words, how will the model actually function in real life? This fundamental question remains unanswered and the appropriateness and viability of the model simply cannot be fully evaluated without an answer,” the letter continues.

One topic that received a lot of attention at a Thursday hearing on the model was funding for community colleges. Unlike four-year institutions, community colleges have the ability to tax area residents, which is an extra source of revenue that other schools don't have.

"We're trying to do it for the good of the state," Lair said of the performance model. "The entire state. All of the four years and all of the two years. And that's what really creates the hassle."

Another recommendation from the Council on Public Higher Education was to "consider not incorporating the funding model into statute," or not actually putting the model into legislation.

"It's been eight months of really hard work, a lot of data, a lot of meetings around the state, trying to do the right thing and it would really be a shame not to use it," Lair said.

Supervising editor is Scott Swafford.