A bill that would change the way university funding is awarded, from a student enrollment-based to performance-based system, is making its way through the Arizona Legislature after university and Board of Regents officials met with the responsible committee.
The House Committee on Government and Higher Education approved an amended version of House Bill 2364 on Thursday. Regents President Eileen Klein said it would create a better environment for students.
“We need to change the model of funding to a system where we fund our universities based on their performance instead of how many students they have,” Klein said during her presentation.
The current model rewards funds or cuts to universities based on the number of students enrolled in their systems. HB 2364 revises the model to allocate funds based on the performance levels of the universities.
The bill would require performance levels to be measured in each university by the increases in degrees awarded, the number of student credit-hours completed and the amount of research and public service efforts independently produced by the universities.
During his presentation, ASU President Michael Crow focused on the responsibility universities have to produce and retain graduates for the health of the Arizona economy.
“The development of mechanisms, programs and activities that produce or attract more college graduates in Arizona will allow this economy to perform at a higher level,” Crow said.
Prior to his presentation, Crow said higher-performing economies have a high population of college graduates.
Momentum for the bill comes after Gov. Doug Ducey proposed his fiscal 2016 budget, which includes a $75 million funding cut to the public university system, in January.
Dennis Hoffman, director of the L. William Seidman Research Institute at the W. P. Carey School of Business, said higher education brings tremendous value to the economy.
Investments in higher education are ultimately investments in economic development, Hoffman said.
“In an era of tight budgets, funds need to be used in the most efficient way,” he said. “Performance-based funding of the universities is a step towards efficiency.”
Hoffman said performance-based funding would reward universities based on the success of their students. Each university needs to make sure it is providing the most competitive tools necessary to ensure its students perform at top levels.
“Students have to be here, enrolled and succeeding in order for the university to be funded,” Hoffman said.
Under the proposed model, universities that fall behind in producing successful students will be the ones that will feel harsher repercussions of the governor’s advised budget cuts, Hoffman said.
If the bill passes, student’s direct achievements would help move state funding to their universities, he said.
“It’s always great to have the faculty and the students know that it’s their success that is at the root of the success of their universities,” said Hoffman.
During her presentation, Klein said she was hopeful that performance-based funding would make Arizona universities more appealing to households within the state and beyond.
“We need to create a college-going culture where our state rallies for post-secondary credentials,” Klein said.
HB 2364 is pending approval from the House Appropriations Committee, which has yet to schedule a hearing.
Reach the reporter at mcasti18@asu.edu
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