Gov Deal to Fund Schools Based on Graduation Rates

10/12/2011
Contact: Desmond Dickerson
Phone: 678-891-2723
Fax: 678-891-2966
Author: Laura Diamond

Deal is in the final process of selecting members to serve on a commission that will recommend changes that would allow Georgia to join a growing number of states that have moved away from funding colleges based solely on how many students they enroll. Instead, states are experimenting with tying the money to outcomes such as graduation and retention rates. The idea is to reward colleges for success, not for chasing enrollment.

States further along than Georgia have learned changing the funding formula is a lengthy and difficult process sure to provoke sharp political and emotional debates. While the discussions may start with a committee, it needs buy-in from lawmakers, college presidents and others.

The Tennessee Higher Education Commission has discussed its challenges with officials from the University System of Georgia and the State Board of Regents. Tennessee has used performance funding since 1979, but the amount of incentive money was small and resulted in little improvement in graduation rates. Officials overhauled the program in 2010 and now enrollment plays no role in how much money colleges receive. Colleges earn state money by reaching benchmarks in graduation, retention rates and others areas.

"We've moved away from the entitlement mentality," said Russ Deaton, the commission's associate executive director of fiscal policy. "If you don't do well by your students you will lose money to colleges who are doing well."

Some worry a focus on completion may lead to grade inflation and could punish community colleges, such as Georgia Perimeter College, that enroll more part-time students who start college less prepared. Tennessee and other states tried to solve that problem by designing benchmarks tailored to each college's mission. Research institutions, such as University of Georgia, have different expectations than Georgia Perimeter.

When Deal announced his plans for the commission in August he said the state is spending a lot money on colleges and "it doesn't do a lot of good" if students don't graduate. About 44 percent of university system students graduate within six years. Rates vary widely, with about 80 percent graduating within six years from University of Georgia and Georgia Tech, compared with less than one-third getting a degree on time from Augusta State and Clayton State universities.

The University System will spend about $7 billion this year -- including about $1.7 billion in state money. With that large an investment, Deal and others are calling for more focus on graduation. Specifics about the commission's mission are expected in coming days.

Rep. Ed Rynders, R-Albany, questioned whether a focus on graduation rates would discourage colleges from admitting some students or if they would steer students away from programs because it may be hard for them to graduate on time.

"I commend the governor for taking a bite out of this apple," Rynders said. "It is easier to identify problems than it is to find the solutions. If you're going to do this, everything should be on the table."

He wondered if the commission should address remedial classes and discuss how many students should be admitted if they need this help. The University System spends more than $20 million a year teaching students skills they should have learned in high school. He questioned if people can look beyond campus and geographic agendas and have a larger discussion about who should be in college and what responsibility colleges have to the state's economic needs.

Students raised concerns as well. Elle Creel said it's hard to graduate from Georgia Tech in four years because of the course rigor and the number of credits required for degrees. Creel, president of the student government association, said program quality must be protected and worried a focus on graduation rates would lead officials to weaken lessons.

Hira Mahmood, a member of the activist group Georgia Students for Public Higher Education, agreed funding must be better prioritized but said politicians must stop using a business model approach to higher education and realize colleges are not factories designed to "churn out more student-workers."

"What's more likely -- students will strive to graduate on time and the university will do everything it can to help students to meet that goal?" Mahmood asked. "Or, will the university lower its academic standards and encourage students take easy classes, so the graduation rate will remain high and the university will continue to be rewarded with financial incentives?"

Nancy Shulock, executive director of the Institute for Higher Education Leadership and Policy at California State University at Sacramento, said states can address these concerns by incorporating the targets at the front end and creating a formula that considers enrollment and on other priorities set by leaders. States could work success with low-income students or graduating students in high-need fields into the formula, she said.

Shulock said there is no best program, but several states have gotten creative.

Indiana is using about $120 million in state incentives to encourage colleges to reduce the costs of each degree.

South Carolina is working on a funding formula that would include multiple factors, such as graduation rates, the percentage of in-state students, roles in economic development and job placement.

Ohio is developing a plan that would give universities more freedom in financial and administrative issues. Universities would be measured annually on different metrics, such as affordability and endowment size; graduation and retention rates; degree earned in science, technology, engineering and math; and the percentage of students in internships.

University System Chancellor Hank Huckaby declined to comment on Georgia's formula revision until the commission has begun its work.

The system has put more focus on graduation. The regents ordered each president to develop campus-specific plans to improve in this area, and there's been some talk about tying part of presidents' salaries and colleges' allotments to graduation and retention rates.

Including colleges in the discussions is key for any change to be successful, said Thomas Sanford, director of research for the Tennessee commission. While Tennessee did that, there was still anxiety over the new formulas, he said. But colleges are holding campuswide retreats focused on how to improve student success.

"What we've done is change the way of thinking so there is more focus on helping students succeed and graduate," Sanford said. "Our colleges now know that you have to earn this money. It is a public investment, not an entitlement."

Graduation rates

Below are six-year graduation rates for students in the University System of Georgia who were first-time freshmen in fall 2004.

Research universities

University of Georgia 80%

Georgia Tech 80%

Georgia State 48%

Regional universities

Georgia Southern 45%

Valdosta State 40%

State universities

Kennesaw State 41%

West Georgia 35%

Clayton State 22%

Southern Polytechnic 33%

North Georgia College 49%

Columbus State 33%

Georgia College 59%

Albany State 45%

Savannah State 35%

Fort Valley State 34%

Armstrong Atlantic 28%

Augusta State 25%

Georgia Southwestern 31%

Source: University System of Georgia