Business Group, Higher Ed Leaders Want More College Funding Based on Graduation Rates

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Bill Hammond, president and CEO of the Texas Association of Business
Texas Association of Business President Bill Hammond.

Backed by representatives from business and higher education, Dallas Republican Rep. Dan Branch held court at the Capitol this morning to promote a new approach to funding Texas’ colleges and universities—based not just on enrollment, but on how many students finish their degrees.

The Legislature balked at putting so-called “outcomes-based funding” proposals into place last session, but did approve a measure authorizing the Texas Higher Education Coordinating Board to develop an outcomes-based funding model that could be used for 10 percent of its funding request for this session.

Branch said today that Texas “desperately needs more incentive” to up the number of graduates each year. He said that per year, an estimated 90,000 non-Texans are filling jobs that could be filled by Texans with the right credentials. “We need to do a better job of organically creating graduates in this state,” Branch said. “Texas needs stories that begin, have a middle and have an ending. … Taxpayers are looking to fund a story that has a completion.”

This session, Branch has introduced another bill that could tie up to 25 percent of higher ed funding to outcomes.

“We are not producing enough graduates to meet the needs of the employers of the future,” Texas Association of Business President Bill Hammond said this morning. He quoted a report by Complete College America—a Washington-based group backed in part by the Gates Foundation—only 7 percent of public school students graduate in four years and only 31 percent of Texas adults have an associate degree or higher. “That does not work for the future of Texas,” Hammond said. “If we are not able to create an educated workforce the jobs will not be here in Texas.”

Robert Wood with TAB told the Observer that as long as some amount of money is tied to graduation and other outcomes, they’ll back any percentage Branch suggests.

Performance-based funding plans have been instituted or proposed in 25 states, according to Tom Sugar with Complete College America. (The National Conference of State Legislatures counts only 12 have beenn implemented.) Sugar told the Observer that in most states, universities and lawmakers have worked well together to establish those outcomes-based funding models.

Hammond, though, hinted at a looming fight with university leaders if Texas gets serious about funding based on performance and graduation rates.

“If there’s any risk to them whatsoever of them having to increase their productivity—which is a key issue here—then they’re expresssing concern to legislators,” Hammond said. “I think that it’s bad public policy and they need to get in the game.”