Funding for Results

Purpose

While a commitment to quality teaching and learning is included in the rhetoric of most state-level policymakers, state appropriations for higher education have historically been driven by more easily measurable factors, such as inflation or credit hours generated. As a result, value is placed on growth at the expense of continuous quality improvement. Innovations in teaching and learning are often left to individual faculty initiatives rather than included in budgets. Missouri chose to confront this imbalance by redesigning its funding policies to emphasize results in specific areas with quantifiable goals.

Based on previous planning priorities, Funding for Results (FFR) recognizes institutions for their achievement of quality goals and for their design and implementation of faculty-driven teaching and learning improvement projects. As a statewide initiative, FFR is currently working with 18 public two-year campuses and 13 public four-year campuses. Collectively, there is a potential to eventually affect 8,083 full-time equivalent (FTE) faculty and 131,240 FTE students. Through a collaborative approach, Missouri has started a process that engages faculty, administrators, legislators, and business leaders in a new partnership emphasizing results.

Innovative Features

Missouri's approach to performance funding includes several innovative features designed to break down barriers, overcome resistance, and infuse new understanding, interest, and excitement in the business of quality improvement.

In Missouri, budget requests are designed so that each institution has a core budget that is carried forward each year; new dollars which support major public policy initiatives are requested in addition to the core budget. The FFR dollars earned by an institution in a given year are placed in that institution's core budget and thereby are retained in succeeding years. In this way, although the total amount of money appropriated in any given year is relatively small, i.e., less than two percent of an institution's total budget, its impact is magnified.

Too often a heavy hand from a legislature or a central administration causes a state to design agendas linked to budget policies. For example, headcount formulas may be used to reward institutions for increased numbers of students who meet specific standards, or a particular assessment instrument may be mandated to evaluate student performance regardless of the type of institution involved. These approaches often pit one state institution against another, thus reinforcing undesirable competition for scarce resources and causing fragmentation of the higher education system. In response, faculty and administrators perceive unfair treatment and claim that differences in mission, e.g., clientele served and programmatic mix, have not been acknowledged.

FFR seeks to acknowledge institutional differences and to allow flexibility in the specification of measures while motivating institutions to work toward common state goals. A major component of FFR involves the design and implementation of campus teaching and learning improvement projects at each of Missouri's public colleges and universities. These projects require new partnerships between faculty and administration in the use of performance funding incentives provided by the state. Broad-based parameters, such as use of a database indicator system, extensive faculty ownership, systematic evaluation, and incentive systems, were established for eligibility to participate in this program. Institutions are, however, given great flexibility in the design of particular projects, which range from improving the basic skills of entering students to enhancing the residency experiences of doctoral students.

FFR acknowledges differences in institutional mission while rewarding each institution for its contribution to meeting a state need. Institutions are also being encouraged to become more distinctive. In each case, performance measures are identified so that achievement of institutional mission can be demonstrated and rewarded in the context of a unified plan for public higher education in the state.

Because FFR is using data with common definitions, the state is well positioned to provide annual reports that compare institutions on statewide goals, e.g., six-year graduation rates, as well as to describe some unique contributions from each institution concerning teaching and learning improvements.

The faculty is generally perceived to have primary allegiance to disciplines and departments rather than institutions. While faculty have common interests and concerns regarding student learning, their voices are too often heard only in reaction to, rather than during the creation of, statewide policies. Involving faculty in discussions with state-level policymakers requires the design of new expectations that circumvent traditional hierarchical structures and foster direct lines of communication. In response to these challenges, Missouri chose to create an FFR Committee on Teaching and Learning which consists of faculty only. This group has the major responsibility for providing reactions to state policymakers on FFR and its effect on teaching and learning.

Traditional reward structures associated with teaching and learning improvements are often designed for individuals, e.g., merit pay systems and faculty awards. These approaches to performance funding, as conceived by FFR, are narrow and restrictive. Instead, FFR promotes rewards to departments, colleges, deans' offices, and the campus as a whole by working with the institution to redesign its approach to the flow of money. Rewards for teaching and learning improvements are slowly becoming integrated into the campus culture, as institutions are encouraged to set goals, establish appropriate units of analyses, and then, once goals have been met, to release rewards. As a part of FFR, a competition for the "Best of the Best" campus teaching and learning projects was designed; faculty established the criteria and evaluated the applications; and the winners were acknowledged at a Governor's Conference on Higher Education.

Evaluation

The FFR initiative is inherently linked to institutional assessment programs and the design of statewide performance indicators. Institutions annually submit data for statewide analysis on all FFR elements. Missouri then reports on its progress toward its public policy goals, including those associated with FFR. In addition, institutions submit an annual accountability report concerning FFR dollars linked to campus teaching and learning improvement projects.

During the life of the FIPSE grant, external evaluators made annual site visits to Missouri, met with stakeholders, and submitted a report of their findings. During the second year of the grant, a questionnaire measuring the level of familiarity and support for FFR was distributed to all full-time faculty. Acknowledgments, comments, and inquiries by external audiences concerning FFR are being tracked as an additional source of data.

Project Impact

Missouri's public colleges and universities are working together to ensure access, quality, efficiency, and an overall improvement in the state's system of higher education. While FFR is still in its infancy and financial support continues to change, the state has reaffirmed its commitment to performance funding as a strategy for change, and FFR has become more coherent as a major public policy initiative.

To date, positive results associated with FFR include increases in the assessment scores of graduates, both in general education (72 percent to 76 percent for baccalaureate degree students; 19 percent to 81 percent for associate degree students) and in the major (63 percent to 83 percent for baccalaureate degree students). There have been increases in pass scores for baccalaureate students on licensure, certification, or registration examinations (83 percent to 87 percent for baccalaureate degree students, 82 to 96 percent for associate degree students); increases in the six-year graduation rate for public four-year institutions from 47 percent to 48 percent; and increases in minority graduation as a percentage of the graduating class for baccalaureate students from seven percent to ten percent. The number of community college students transferring successfully to four-year institutions has increased 16 percent, and community college vocational job placements have increased from 69 percent to 76 percent. While the causal relationship between FFR and these achievements is not conclusive, FFR is clearly responsible for the identification of priorities for funding, for the establishment of assessment measures, and for helping institutions to accept that part of their state allocation is linked to results.

In addition, as a result of FFR, all 31 public campuses have chosen to participate in the design and implementation of faculty-driven teaching and learning improvement projects.

While the long-term effect of this initiative is not known, initial results indicate an increased interest and enthusiasm from faculty for this effort (at one university, during the first year alone 69 proposals outlining new teaching and learning initiatives were submitted). Institutions' accountability reports suggest some preliminary findings. For example, greater retention, higher GPAs, and increased satisfaction result when students are involved in learning communities; at-risk students experience higher completion rates and increased retention (from 68 to 82 percent) when participating in specialized instruction that emphasizes subject matter and individual needs; and mean ACT composite scores increase for students involved in critical thinking projects.

Between FY 1994 and FY 1999, Missouri's public four-year institutions received an addition to their base budget of $42,098,768 from FFR, representing 16.7 percent of new money allocated. Included in this amount is a $2.7 million annual allocation for teaching and learning improvement projects. Public two-year institutions began to receive FFR money in FY 1995. Through FY 1999, their total of $7,174,671 represents 13.4 percent of new money, of which $1.4 million is dedicated annually to teaching and learning improvement projects. Presidents and chancellors of Missouri's public institutions have expressed their support for allocating one percent of each institution's operating budget to these projects.

Initially, the concept of performance funding was widely questioned. Some educational leaders believed that increased financial support should be considered an entitlement associated with inflation. FFR was also resisted as an intrusion into the operation, management, and structure of each institution. These perceptions changed during the project. In its second year 32 percent of Missouri's faculty at public institutions returned a survey on FFR. More than a third of those responding indicated that they were familiar with FFR and, after reading a fact sheet, over 67 percent indicated support for its goals.

Lessons Learned

Initially, several administrative representatives were critical of the FFR initiative and suggested that it not be officially launched until all questions could be answered and problems resolved to greater satisfaction. However, by maintaining its commitment to move ahead with performance funding even without a perfect model in place, Missouri was able to make substantial progress in a short time. The fact that FFR started with low financial stakes further helped to reduce anxiety and increase ownership.

Making participation in the teaching and learning improvement aspect of FFR voluntary removed institutional defensiveness. The reward for participation was large enough to get the attention of all public campuses within the state, yet small enough to avoid criticism that FFR would be taking money away from other important agendas. By establishing broadly defined eligibility criteria, the common goal of teaching and learning improvement was promoted while, at the same time, flexibility was allowed in the design and implementation of particular teaching and learning improvement projects.

Maintaining commitment in the face of adversity requires constant communication. Identifying and addressing myths associated with performance funding early in the process by, for example, helping faculty and administrators see FFR as a strategy to promote and acknowledge results rather than as a bureaucratic demand reduced misunderstandings. Commitment to a common vision and the use of consistent language helped to increase support across diverse groups. By initially building identification with the overall goals and benefits of a performance funding system related to institutional missions and goals, different opinions about choice and definition of data elements and allocation structures could be explored without threatening to collapse the initiative.

Perceptions of a new initiative are inherently linked with images of additional work and time commitments which will compete with established agendas. FFR was often viewed as an add-on to existing initiatives and, as a result, was initially pushed aside with a promise to be given attention at a later time. Promotion of FFR as a new approach that should be integrated into planning initiatives rather than as a new activity helped to shift the emphasis to a redesign of existing activities.

In systemic statewide change efforts, faculty voices are often not heard early enough in the process. By identifying improvement in teaching and learning as a central tenet of statewide policy reform, designing a structure that requires faculty participation, and fostering communication among faculty across departmental, college, and institutional boundaries, FFR captured faculty interest, excitement, and involvement early in the change process.

While the lack of explicit assumptions in the first year of FFR created some discomfort, this had the unintended effect of allowing differences of opinion to coexist as faculty and institutions gained experience with this new approach. As the tension increased between opposing positions, e.g., evaluation of student outcomes vs. program performance as an appropriate unit of analysis, differences of opinion were resolved by the adoption of explicit assumptions. As FFR continues to evolve, these assumptions will help to guide the review and revision of this initiative.

Colleges and universities often initiate strategic planning, design assessment programs, and recommend budgets without understanding the importance of integrating these three activities. FFR has been used as a unifying concept by which each of these activities becomes interdependent. Funding of higher education should not exist in a vacuum; it should be driven by previous planning priorities and assessment results. By aligning these three activities, requests for additional resources do not emerge sporadically but are directly linked to planning priorities and results.

Inherent in FFR is a commitment to systematic measurement. At first, many of the FFR elements placed an emphasis on demonstrating increased activity, e.g., increasing the number of students participating in assessments. The introduction of quality measures has helped to shift the emphasis. For example, institutions no longer are rewarded for merely doing assessment but for how students perform on particular assessments.

FFR uses a finite list of measurements to determine particular budget recommendations based on performance. The difficulty of identifying key performance indicators and then prioritizing funding elements was not anticipated. Measurement sends a powerful message about what is perceived as important. Suddenly, colleges and universities were no longer criticizing measurement systems by citing imperfections and limitations but, rather, were calling for a massive data system to ensure that every activity of importance was measured and potentially rewarded. One challenge to FFR is to help institutions understand that massive data systems have limited use in informing policy discussions.

The ability to bring about systemic change requires more than genuine interest and conceptual commitment. The magnitude of effort required when working with total systems can become overwhelming. Designing an open process in support of new policy formulation and development, mediating different perspectives among diverse groups, and maintaining an appropriate balance between discussion and action demand a keen sense of timing, an ability to take risks, and an appreciation of traditions.

Organizational decisions are often made without the internal staff's full understanding or support. Time was allotted during the first year of the project to make site visits to campuses throughout the state, but project staff failed to anticipate the amount of time required to explain and to build support with key internal staff in the agency. The importance of horizontal communication with peers and of building a solid support base from within cannot be overstated.

Higher education faculty and administrators tend to spend inordinate amounts of time dissecting and evaluating ideas through extensive examination, explanation, and critique. To capture the attention and maintain the interest and support of the public, legislators, and the governor, on the other hand, requires consistent, concise, and convincing messages. Project staff initially underestimated the importance of redesigning communication styles and presenting content clearly for external audiences.

Missouri's commitment to redesign budget policies to include FFR raised the stakes associated with data reports. In the early years of the project, interest in accountability directed overwhelming attention to external audiences, at the expense of internal audiences. This imbalance reinforced compliance, especially at heavily regulated institutions. Missouri is expending greater effort than was originally anticipated at integrating accountability and improvement initiatives to increase faculty involvement, interest, and responsibility.

Changes that withstand the test of time inevitably face challenges from emerging leaders who are motivated to establish credibility, influence, and impact. When administrations turn over, the tendency to associate programs with individuals rather than with systems can harm existing initiatives. To ensure that reform efforts remain apolitical, bipartisan support must be garnered, nurtured, and maintained.

Project Continuation and Recognition

Recent discussions by presidents and chancellors from public two- and four-year institutions indicate general agreement that, while FFR should be reviewed and improved, the basic approach is working. In February 1998, the Missouri Coordinating Board for Higher Education reaffirmed its support for FFR and established a set of guiding principles to help shape any future revisions to its performance funding policy.

External consultants identified several strengths of FFR and indicated that Missouri's emphasis on teaching and learning could provide a national model for good practice. The state's successes in continuing to build campus ownership, in promoting networking to improve teaching and learning, and in using FFR as a catalyst for change were considered noteworthy.

Missouri has been challenged to improve its communication with a larger group of legislators, to develop a more rigorous and standardized assessment of teaching and learning improvement projects, to create a better alignment with new state initiatives, and to monitor the long-term effect of FFR on institutional budgets.

FFR was featured as a case study during the 1997 Education Commission of the States' National Conference. It was also referenced in "Grading Colleges Requires More Than Math," an article in the November 9, 1997, "Week in Review" section of the New York Times. According to one national expert on performance funding, Missouri's program is evolving so that it ". . . can show the country how to make performance funding not just a passing phenomenon but a lasting success."

Available Information

This project has generated a number of articles, brochures and reports. General information about the project and copies of published materials may be secured by writing or calling:

Robert B. Stein
Assistant Commissioner
Missouri Coordinating Board for Higher Education
3515 Amazonas Drive
Jefferson City, Missouri 65109
Telephone: 573-751-1794
Fax: 573-526-5431

[VIII. Performance Funding and Reporting In Colleges and Universities] [ Table of Contents ] [Prairie View A&M University]

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