Lawmakers revive performance-based funding for universities, with new metrics

DES MOINES — More than a decade after the Iowa Legislature rejected a Board of Regents proposal to link state appropriations with performance metrics, lawmakers have revived the concept of “performance-based funding” in a new bill that would direct regents to reevaluate the incentive-driven funding formula.

House Study Bill 541 doesn’t itself establish performance-based funding but rather requires regents to submit a report to the General Assembly and governor by November describing how it could create an incentivized funding model for the University of Iowa, Iowa State University and University of Northern Iowa.

Although the bill — sponsored by Rep. Taylor Collins, R-Mediapolis — doesn’t mandate all the performance metrics lawmakers want investigated, it does ask regents at a minimum to include the following factors:

Background

Those metrics differ from performance measures the Board of Regents proposed in 2014 when it debuted an inaugural performance-based funding model meant to provide funding equity across the universities; compel them to meet state needs; and show lawmakers a commitment to use appropriations in Iowa’s best interest.

Those original metrics weighted heavily toward resident enrollment — tying 60 percent of funding to in-state student numbers. The remaining 40 percent was tied to outcome metrics like graduate numbers, sponsored research and “access.”

“Regent universities should have a diverse student body as measured by low-income students, minorities, Iowa community college transfers, and veterans,” according to an explanation of the 10-percent access metric.

Prior to the regents’ performance-based funding proposal, the legislature for decades considered incremental funding increases for the public universities on an equal-percentage basis — even as base funding starting points differed by campus, meaning UI annually received more money than Iowa State and UNI.

By 1981, state general education funds appropriated to the regent universities were split 47 percent to UI, 37 percent to ISU, and 16 percent to UNI. And those allocations stayed mostly unchanged for decades — even as enrollment dominance shifted from UI to ISU.

After the board approved its performance-based funding metrics in 2014, it recalculated its total $509.8 million in general university state appropriations using the performance percentages — math that would have pulled $46.5 million from UI and redistributed it, giving $22.8 million to Iowa State and $23.7 million to UNI.

Under the redistribution, Iowa State would have had the majority at 41 percent, followed by UI at 37 percent and UNI at 22 percent.

But, given a cap the board imposed on how much could be redistributed annually, regents planned in that first year to reallocate $13 million from UI — with $6.4 million going to ISU and $6.6 million to UNI.

Regents asked lawmakers to provide that $13 million as part of its appropriations for fiscal 2016 — allowing UI to remain whole while ISU and UNI got increases. But lawmakers rejected the funding model.

Although then-board President Bruce Rastetter promised regents would reexamine performance-based funding before making its budget ask the following year, regents haven’t mentioned it in any of their subsequent appropriations requests.

New proposal

During a first subcommittee discussion Wednesday on the new performance-based funding legislation, a lobbyist for the Board of Regents said they “do have some concerns” — including whether the metrics would actually align with state needs.

“For example, postgraduation income,” said lobbyist Jillian Carlson. “Our universities make a big effort to help the workforce needs in rural areas, where wages tend to be lower.”

Rep. Heather Matson, D-Ankeny, said her concerns are connected to her questions — which went unanswered Wednesday — including, “what exactly is a performance-based funding model.”

“What does that mean?” she asked Rep. Taylor Collins, R-Mediapolis, who sponsored the bill and heads the House’s Higher Education Committee. “You wrote the bill.”

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Collins said the basics are spelled out in the bill, which he said is not that complicated.

“It’s not that complicated?” Matson said in response to Collins. “Switching how the universities are funded to a totally different model is not that complicated? Is that a serious answer?”

In explaining why she wouldn’t be signing off on the bill, Matson said many aspects of the metrics listed are out of the universities’ control.

“People move. That's just a fact of life,” she said. “You graduate from somewhere, you can have every intention of staying in that community or in the state, but life happens and you go somewhere else.

“And in my reading of this, that means that it is possible that a university is going to be penalized in how they are funded because a student after graduation makes a decision that may or may not be best for them and their families.”

Rep. John Wills, R-Spirit Lake, said Wednesday he was disappointed that more people were not present at the 8 a.m. subcommittee meeting to talk about the proposal.

“I don't even think there's anybody online right now, which is disturbing,” he said. “This is the time for the public to participate in this process, and they're not participating at this point in time.”

But Wills — speaking to the merits of the proposal — said Iowa can’t maintain the status quo and keep doing something a certain way because of how it’s always been done.

“Things change, and we need to evolve as a state,” he said. “We need to look into and research other opportunities and other ways of doing business, because sometimes the status quo — the way we’ve always done it — isn’t enough.”

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Collins, in joining Wills to advance the measure out of subcommittee, said the legislation doesn’t impose performance-based funding — but rather requires regents to study it.

“They shouldn’t be afraid of simply a report,” Collins said, telling reporters that other states are following this route.

“And honestly, this isn't the first time that Iowa has considered a performance-based funding model,” he said. “You might remember over a decade ago, the regents rolled out their own performance based funding model, and they just didn’t get it over the finish line. So we are revisiting the issue.”

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Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com