New funding structure equals more incentive

The University might have more incentive to improve on graduation rates or other performance-based outcomes in the coming years.

The Illinois Board of Higher Education, or IBHE, is considering recommending a funding structure in which the state will allocate money to public universities based on a criteria set forth by the board. The money on the table could be tied to the base budget or might be available as additional funds that the state offers, said Robert Rich, director of the Institute of Government and Public Affairs.

Randy Kangas, associate vice president for planning and budgeting, said he expects the University to meet standards set by the board.

“Every parameter I look at, the Urbana campus performs well,” Kangas said. “I still think the best dollar invested in the state is invested in the University of Illinois.”

Rich said the rationale behind the proposal is to increase accountability and transparency with institutions.

The faculty advisory council of IBHE recommends to the steering committee that performance-based outcomes should be tied to additional funds, as the state needs to invest more in higher education.

This recommendation addresses two concerns: “push institutions to increase efficiency and bolster their case for additional state funds at the same time,” said Abbas Aminmansour, chair of the council, in a Sept. 26 letter to George Reid, the chair of the steering committee.

However, Rich said performance-based funding would have to be based on a percentage of the base budget as there are no additional funds readily available.

Aminmansour said while the council recommends the use of additional funds, the percentage tied to the funding should be minimized, he said. Most states, who have implemented this funding structure, have funding tied to only 1 to 5 percent of an institution’s budget.

“The goal is to make sure the percentage is small,” he said in an interview. “We don’t want to establish standards and expectations that would lead to unexpected outcomes.”

Such “unexpected outcomes” include institutions, which badly need these additional funds, altering their quality of education in order to meet these outcomes.

However, State Rep. Chapin Rose, R-110, said while the percentage is small, it is a relatively large number of dollars when one talks about the full budget for the University. He is not as concerned with the percentage as he is with the process.

“We need a plan. I’m sick and tired of not (having) funding with a cohesive and comprehensive (plan),” Rose said. “If you don’t do this right, (performance-based funding) will be useless.”

One of the concerns has been on how the interpretations of the criteria will apply to different institutions. Rich said he thinks there are a lot of faculty who are concerned about how to interpret such differences.

“Does the graduation rate in Urbana-Champaign mean the same thing as it does at Chicago State University?” he said.

The steering committee’s goal is to develop reasonable metrics in time for fiscal year 2013’s budget recommendation to the General Assembly, which would be at the end of January or early February.

The Board of Trustees approved the University’s proposed budget for fiscal year 2013 at its September meeting. The proposed budget calls for $5.1 billion – an additional $83 million in state funding from fiscal year 2012. In addition, the state still owes the University $233 million from fiscal year 2011, which ended on June 30.

“I think this will not do anything to solve the state’s budget crisis. What it may do is be able to look at priorities in a better way,” Kangas said.