Other states have tried to buy college results

Tying higher education funding to graduation rates, or even to certain types of degrees, may sound radical to Michigan policy-makers, but it’s been discussed and tried for years in other places. Here are some examples:

Indiana: In 2007, our southern neighbor tied a portion of its higher education funding to degree completion, on-time graduation and two- and four-year transfer activity. For example, each institution gets an extra $5,000 for each additional bachelor’s degree over a base level and an extra $3,500 for each associate’s degree.

Ohio: The Buckeye State rewards institutions with public money for course and degree completion, with bonus bucks for at-risk students. The outcome-based funding structure has a future goal of encouraging a 2-plus-2 program in which students attend low-cost community colleges for two years and then transfer to a public university, such as Ohio State, for the completion of a bachelor’s degree. Nearly 10 percent of Ohio’s higher education funding is in performance-based subsidies -- a larger proportion than in most other states.

Texas: Earlier this year, Texas implemented a funding system that rewards universities for graduating students, not just enrolling them. To meet the state’s goals, Texas public universities must graduate 46,000 more students per year by 2015.

Oklahoma: There’s only $2.2 million a year handed out in performance-based funding, distributed by the Oklahoma State Regents for Higher Education. The emphasis is on student retention and degree completion.

Tennessee: The state ties about 5 percent of its higher education budget to student performance, including money for students who took remedial classes who completed college-level courses a year later.

Washington: Two-year colleges compete against each other for money based on student achievement.

Missouri and South Carolina: These states abandoned performance-based funding. Missouri did so as a cost-saving measure, while frustration with the complexity of the funding system derailed the work in South Carolina.

Norway: Funding for higher education factors in Norway include the number of credits accumulated by students, foreign student exchanges and research indicators.

Spain: Funding in Spain is based on first-year students, total enrollment, cost per student and fields of study, among other factors.

Sources: Midwestern Higher Education Compact/Texas Tribune/University System of Ohio Board of Regents

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Scott Peters
Mon, 09/19/2011 - 10:37am
I wonder why the incentive money is not going back to the students, who are the ones actually earning the degree (as opposed to the institution), and who could best use it for paying off the loans and expenses. If there are economic incentives to be handed out, give them to the people choosing to receive their education here in the state and have selected a college or university of their choice based on programs they offer. If the incentive money goes to the institutions, the institutions run more of a risk of becoming diploma mills, which is not the direction we need to go and sets a bad precedent. The Michigan Promise was taken away from students and it time to restore it or an equivalent. Reward merit if it deserves it.