New funding formula favorable for Delta universities, but presents challenges for the future
The Institutions of Higher Learning (IHL) Board of Trustees has changed the way that funding will be allocated to eight public state universities that puts more emphasis on positive outcomes, not just enrollment.
“The new allocation model focuses on credit hour completion, with courses weighted for the costs of providing the courses, and the university’s progress made in areas deemed as priorities by the board,” says Commissioner of Higher Education. Dr. Hank M. Bounds. “Those include attainment outcomes, such as degrees awarded, intermediate outcomes, such as completing a specified number of credit hours, and productivity outcomes, such as the number of degrees awarded per enrollment and revenue.”
How will the new funding formula impact the universities in the Delta? Bounds says as population shifts continue to impact the Delta, universities in that region must work harder to attract students from a wider region.
“However, by shifting the focus from enrollment to retention and completion, the model provides resources necessary to help all students succeed,” Bounds says. “By implementing the new formula, the Board of Trustees has given the universities very clear direction that underscores its priority of assisting students in achieving their graduation goals. It also gives taxpayers the confirmation that the universities are providing an excellent return on investment.”
As the number of Mississippi citizens with post-secondary degrees increases, Bounds predicts the state economy will improve, which will result in an improved quality of life for all citizens and a better future. “That is the best kind of investment we can make,” he says.
Greg Redlin, vice president for finance and administration, Delta State University (DSU), says the new formula is an improvement over a previous formula known as the Texas model adopted by IHL in 2009 that would have cost DSU $5.2 million over a six-year period of time.
“That formula was put on the shelf and not implemented,” Redlin says. “The board intended all along to reexamine the formula, which they have done, replacing it with a new funding formula. This formula has significantly better outcomes. We will still lose some money over time but losses over time won’t be as significant.”
Also, this year there was a “hold harmless” provision that makes up the amount the colleges would lose under the new formula, with the legislature making up the difference. For DSU, that amounts to about $399,000 this year.
“We think hold harmless funding will be appropriated again next year,” Redlin says. “That is good news, because we have no immediate reductions in funding, preventing the almost catastrophic decreases contemplated a few years ago from becoming a reality. It gives us time to address enrollment issues and hopefully grow our enrollments to the point our losses in funding will be minimized in the future. Without enrollment increases, we will sustain losses.”
Other institutions that would have lost money include Jackson State, Southern Mississippi and Mississippi Valley State University (MVSU). MVSU Acting President Dr. Alfred Rankins Jr. says overall, the formula is fair and the performance metrics reward student access to and success at state universities. But it could present special challenges for the Delta.
“Because we draw a large percentage of our students from the Mississippi Delta and the population within the Delta is declining, we will be challenged more so than some other universities to receive additional funding based on growth,” Rankins says. “The new funding model will benefit our university if we grow our enrollment and award more degrees, so we are aggressively recruiting students and enhancing our academic support services.”
Rankins says funding based on completed student credit hours is a positive change because it encourages universities to pay more attention to students successfully matriculating through their coursework and completing their degrees in a timely manner.
“Based on average ACT scores, we do have a significant number of at-risk students,” Rankins says. “However, these students can be successful and it is incumbent upon our university to provide effective academic support programs to assist these students.
Rankins says they do not anticipate a reduction in the quality of the education that they provide at their institution.
The new allocation model replaces one in use since the mid-1990s.
That allocation model had been locked in place since 2009 by language in the university appropriations bill requiring funds to be distributed in the same manner as the previous year. The Mississippi Legislature removed the restriction in the legislative session earlier this year, which IHL took as an opportunity to implement a performance-based allocation model designed to distribute funds equitably and reward universities for operating efficiently and achieving attainment outcomes.
The new allocation model developed with the assistance of the National Center for Higher Education Management Systems (NCHEMS), follows a national trend in higher education.
“This allocation model is the product of a very careful and rigorous study designed to understand and evaluate the numerous and varying factors that make each university unique in its financial profile,” says Trustee Alan Perry, Chair of the Finance Committee. “While no model will ever be perfect, and while it is likely that no university will agree with all aspects of the model, we believe that this model produces an overall result that is fair and equitable to all of the universities. Moreover, because this new model is based on completed courses, instead of merely enrollment, it provides an incentive for each university to become more effective and efficient.”
Research has shown that Pell Grant recipients, students with ACT scores of less than 19 and those who are 25 years of age or older, have a greater risk than others for not persisting to graduation. IHL is encouraging universities to put additional supports in place to break down the barriers to graduation faced by these students. The formula recognizes that additional resources are necessary to help students stay on track to graduation when there are many other demands on their time and attention. DBJ