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Lessons from Ohio’s Performance-Based Funding Strategy

By Heather Boerner

The state’s new community college association head discusses the shift in funding from full-time enrollment to performance.

When Jack Hershey took over as president of the Ohio Association of Community Colleges on July 1, he walked into a funding landscape that was different from what had existed just two days earlier.

On July 2, Ohio became the latest state to officially tie public community college funding to student achievement.

Where the state’s two-year career and technical colleges used to receive tax dollars according to full-time enrollment, the new system, which is already in use at the state’s four-year colleges and universities, calls for community colleges to receive money when students complete a course, successfully transfer to a four-year college, or graduate with an associate degree, among other performance measures.

The decision comes as several states are considering implementing similar funding rules for community colleges.

Wondering what a performance-based funding formula could mean for your college? Hershey, who formerly helped Ohio State University transition to a similar approach, spoke with us about the process, working with community colleges, and what to expect going forward.

Ohio already uses a similar approach with its four-year colleges and universities. What makes this funding model successful? I’ve heard you say buy-in from faculty and staff is important.

I think that’s right. A lot of the actual specifics in [our plan] are influenced by the thinking of presidents and provosts, and a lot of the leading research is embedded into our formula.

Which is what exactly?

Half the money is earmarked for course completion for some sort of credential — either a certificate, a degree or transfer to a university. There are also some momentum points in there, based on research. When students reach 15 hours, that’s a good sign that they’re going to move on to completion, so campuses get rewarded for that.

Any other keys to success?

The formula is fairly simple. If you get students through classes and then through a credential, you win. A lot of funding formulas try to solve 50 different problems, and they don’t work because states don’t generally give us enough money to solve all those problems.

Can you talk a little about the process? About changing the culture?

A good process requires more than just CFOs sitting around the table. Their perspective is valuable, but I might argue that academic officers’perspectives are far more valuable. At the end of the day, a good process is not really about numbers on a spreadsheet.It’s about, “Can you put the right incentives in place to encourage the right kind of academic behaviors on campus?”

The other thing I always tell states is that this is not new anymore. Ten years ago, performance funding was a scary thing to have thrown on your plate. But there’s a lot of experience and a lot of research behind it now. And there are a lot of experts out there who can come in and help guide you in how to do this the right way. If you can find these people, it can take away a lot of the fears we used to have surrounding performance funding.

So what does this new funding formula mean for student success?

In the state of Ohio, the funding model jumpstarts the conversation. It’s the reality of the world we live in. When public policy has money behind it, it’s much more likely to be implemented. We’re all asked to do a million things by our staff, our faculties, our boards of trustees, our public officials. This is taking, depending on the college, 20 percent to 30 percent of their funding. That’s the president saying, “I’m willing to make a giant commitment to student success. We’re willing to put our money on the line.” That’s a pretty powerful statement.

It puts you in a strong position.

It certainly puts you in a position where you can’t not pay attention to student success. It has to be one of your top strategies now because of the formula.

So it’s a risk? Have there been any stumbling blocks along the way?

Oh sure. Everything in our formula is based on data, but the state of Ohio didn’t have the right data at first. There were things that we talked about adding into our formula but we just weren’t ready to because the data wasn’t there. The feeling was that everyone has to know the playing field. It has to be fair. Everyone has to know the ground rules. And then the formula can work.

You can’t ignore the fact that access will always be a core responsibility and mission for community colleges. So if you take people from more at-risk populations and you get them to complete classes, academic programs, you get more money for them. Because you probably are going to have to wrap more services around those students in order to get them across the finish line.

Is there anything you would tell other states considering a similar approach?

I’d say, find some of those people who are national experts and talk to them. There are ways to implement performance funding that don’t lead to massive funding swings in the first year. In the first year, the kids who get there were already on that path. There’s not much the school can do immediately to move you in that first semester. So you need a little bit of a funding transition. You need time to let campuses adjust their policies so they can succeed in the new system. If you do that, then they shouldn’t be scared of performance-based funding.

Is your state considering implementing a performance-based funding formula? Tell us in the comments.

Heather Boerner

is a contributor to the 21st-Century Center.

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