Performance Funding at MSIs:

2014 – The aim of this policy report is to discuss the considerations for Minority Serving Institutions (MSIs) in state Performance Funding policy development.  The report provides policy makers with a typology of metrics including those that have been used in previous and existing state Performance Funding policies to address issues of equity and diversity and specific institutional types like MSIs, Community Colleges, and Research Universities.  The report provides a framework for policy makers developing Performance Funding formulas.  Performance Funding policies are challenged by limitations of available data, difficulty identifying appropriate metrics for such a diverse set of organizations, and the challenges with defining and measuring educational value and success.  Therefore, many state policy makers should move cautiously in adopting these funding models and carefully consider the nation’s most vulnerable institutions that are often serving the most neglected student populations, public MSIs.

Key Considerations:

1. Include Minority Serving Institution (MSI) Leaders/Experts in Policy Development.  Consider the perspective of those working closely with MSIs when developing Performance Funding policies. Solicit input from MSI leaders/experts on Performance Funding policies during policy development and implementation and also to assess policy impact.  Strategies for soliciting policy input and feedback include distributing surveys and holding town hall style meetings where all institutional members have an opportunity to offer feedback.

2. Reconsider the Utility of Commonly Used Metrics.  Commonly used metrics, like graduation and job placement rates, can pose challenges to accurately capturing the performance of MSIs, and in their current conceptualization are problematic overall.  Specifically, the inability of higher education data systems to track students that attend/transfer to multiple institutions makes it difficult to determine how to fairly credit institutions for students’ completion. States are also encouraged to think beyond graduation rates to consider non-traditional ways of defining college “success,” for example, the development of engaged citizens.

3. Metrics should be Responsive to Input Factors.  Institutions that have diverse “inputs” or student populations should not be subjected to uniform evaluations of outcomes or performance.  If an institution has an open-admissions policy that encourages the acceptance of academically under-prepared students, then applicable output indicators should focus on how effective the institution is in educating that particular population of students.  Time that it takes to progress from developmental education course to credit-bearing course completion and an eight-year graduation rate are examples of metrics that can report the effectiveness of open-access institutions more accurately.

4. Address Data Capacity before Implementing Policy.  Higher education institutions operate with varying levels of resources and capacity that, in addition to the population of students they serve, drive outcomes.  The effectiveness of Performance Funding policies depends on campuses’ ability to accurately report data to state higher education governing bodies, thus states should assess their campuses’ capacity to collect and report data before states begin using Performance Funding metrics.  States can conduct surveys and site visits to assess campus data capacity and needs prior to policy implementation, thus taking steps to ensure that all campuses in the state have equitable opportunities to obtain Performance Funding.