Recently, I have written about the performance-based funding model that the State of Texas has recently adopted for its community colleges. The model puts nearly all of a community college’s state funding at risk, so failing to perform is failing to get funded. Other states have shown interest in this, largely – I think – as a way to justify cutting community college funding.
The Texas Legislature didn’t adopt this model blindly, however. They have been studying it in practice for about a decade. I recently ran across an article about the Texas State Technical College, and how it not only embraced performance-based funding, but also bet the house payment on its ability to put its students into high-wage, high demand jobs. TSTC volunteered to test the concept during the height of the Great Recession, and worked with other agencies and institutions in Texas to formulate a model that would consider the factors its leadership felt were most important in identifying “performance.”
The model works for TSTC and essentially leverages its students (all of them – not just those who graduate) to generate funding for the institution. According to the College Scorecard, TSTC has a graduation rate of 34% and reports median earnings of $37,000 for its students. In the College Scorecard environment, TSTC doesn’t stand out. Its graduation rate is slightly higher than average, as is its average annual cost. Its median earnings are slightly lower than the national average. TSTC is also designated as a Hispanic-Serving Institution.
One element of determining how well the model works includes intensive data analysis and cooperation with a number of state agencies who maintain data on employment and unemployment, educational attainment, earnings, and other factors. Aside from these externals, TSTC also uses data internally to determine which programs to keep and which ones to cut.
Performance-based funding requires a culture shift
TSTC doesn’t hesitate to cut poor-performing programs. It can afford to do that, since its funding is based on student performance rather than student headcount. For example, the data showed that among TSTC’s poorest-performing programs were those in agriculture, computer maintenance, dental assisting, and pharmacy technology.
Without hesitation, TSTC cut those programs because their graduates were not earning enough in the workforce. Cutting those programs meant losing students – as much as 25% of TSTC’s enrollment at the time. But cutting the programs also meant freeing resources to dedicate to the creation of programs that had a higher workforce demand and paid their graduates better. To date, TSTC has cut more than a dozen programs due to their low economic returns.
The end result is that TSTC has been able to increase the starting wages of its graduates, simply by closing the programs that put their students into low-wage work. It also generated a higher appropriation from the Texas State Legislature.
More money for the students equals more money for the school and lower unemployment.
It’s hard to know whether other states’ interpretations of performance-based funding will lead to significant increases in the incomes of community college graduates. It seems like there’s a lot of room for misinterpretation of what constitutes actual performance.
But there is real value in making honest evaluations of academic programs, and canceling those that fail to put people in economically viable positions. Unfortunately, most schools won’t adopt this approach willingly because it places the risks of higher education right where it should be: on the school administration.
Photo Credit: Sheila Scarborough
