JEFFERSON CITY — Missouri lawmakers scrapped a proposal that would penalize university budgets for failing to meet certain performance goals and instead are planning to reward them for good performance during years the state can afford to increase higher education funding.
Under the legislation released last week, a university would work with the Department of Higher Education to develop its own goals, such as graduation rates and research projects, that would then be used to determine how much it gets if the Legislature appropriates a year-to-year funding increase.
"We are going to reward those universities for doing things that we as a state and they themselves feel are important," said Sen. David Pearce, R-Warrensburg, the bill's sponsor and chairman of the Senate Education Committee.
The funding model proposed by Pearce was used informally last year when Gov. Jay Nixon called for a $25 million increase for higher education. And it likely will set funding levels for colleges for the fiscal year beginning in July, if the Legislature goes along with the governor's plan for a $36.7 million funding boost.
Pearce said his bill would put existing practice into state law to ensure it continues after Nixon leaves office in 2016. Nixon has also urged the four-year schools to freeze tuition for Missouri undergraduates for the 2014-2015 academic year.
The state's past approach for higher education allotted money based largely upon how much colleges and universities received in the past and how much Missouri has available for the future. When a state law passed in 2012 requiring the state to change that practice and develop a funding formula for colleges, lawmakers rolled out an ambitious proposal.
Their plan would have tied 20 percent of a university's core state funding to performance goals — 10 percent of which would have been determined by how well graduating students found work.
But the plan faced opposition from universities who did not want their existing state dollars tied to new goals. Opponents also were concerned the state's historically black colleges would lose funding because their mission is to admit high-risk students, making it harder to meet academic criteria.
"There were some winners and some losers and their core funding was at risk," Pearce said.
This year the universities are on board, although they would like to see less new money tied to performance and more go toward correcting historic funding imbalances among the universities.
"All of our institutions signed on to performance funding and they are supportive. They had a role in choosing the measures they are being evaluated on and I think they are comfortable with the system as it is," said Paul Wagner, director of the Council of Public Higher Education, which represents Missouri's 13 public four-year universities.
Pearce's plan ties 90 percent of funding increases to performance with the remaining dollars going toward the "equity" issues. Wagner said he would like to see at least an 80-20 split.
Twelve other states have performance-based formulas in place for their colleges, and four others are in the process of transitioning to the financing model, according to the National Conference of State Legislatures.
Arkansas is in the second year of its plan to phase in performance funding with the goal of making one-quarter of a college's finances based on performance. Indiana ties a portion of its universities' budgets to degree and credit-hour completion rates.