In January 2015, the Board of Regents and co-chairs of the Higher Education Appropriations Subcommittee Senator Stephen Urquhart and Representative Keith Grover, established performance metrics for a portion of the new funds appropriated for the Utah System of Higher Education by the 2015 Legislature. This year USHE’s 2016-2017 budget priorities includes $15,000,000 for Performance Funding, using the model adopted by the Board of Regents on July 31, 2015, and based on SB 232 (passed in 2015). Under the provisions of SB 232, institutions may receive new funding for outputs in the following areas:

1. Degrees and certificates granted – Total certificates and degrees as reported to the Integrated Postsecondary Education Data System (IPEDS), with weightings reviewed by the Higher Education Appropriations Committee.
2. Services provided to traditionally underserved populations – Total number of students receiving Pell grant assistance according to the IPEDS Financial Aid Survey. USHE is exploring additional data to be collected from institutions to improve this definition by focusing on first-generation students served.
3. Responsiveness to workforce needs – Correlate classification of instructional program (CIP) codes to the corresponding top 10 “5-star” occupations requiring a college degree or certificate (as defined by the Utah Department of Workforce Services) & STEM degrees.
4. Graduation efficiency – This metric has been updated as of the 2016 Legislative session. It will now be measured by “awards per FTE student,” which is a more inclusive output measure. This will replace the previous metric of 150% graduation rate for first-time, full-time students. This change will be effective beginning fiscal year 2016-17.
5. Graduate research (University of Utah and Utah State University only) – Data compiled by the Center for Measuring University Performance (MUP) provides the total federal research dollars (x1000) for each of the research colleges and universities in the United States.

Additional descriptions of the metrics, methodology, funding and implementation are available in the meeting materials of the Board of Regents.

Performance Funding Background

Over half of the states have adopted some kind of outcomes-based model of funding higher education in recent years, many touting their higher education budgets are “100%” funded on performance outcomes, or all “new funds” are tied to performance outcomes. In reality, of all state performance models currently in place, performance based funds – actual funds tied to the success or failure of meeting specific goals – make up no more than 5% of higher education base budgets. While few studies have been done on the effectiveness of this type of funding, early indications demonstrate that funding tied to performance, if implemented correctly, can drive improved performance in key areas in higher education.

In 2013 the Utah Legislature provided $1 million in one-time funds to incent Utah System of Higher Education (USHE) institutions to meet specific performance metrics that aid college completion.  These metrics were subsequently adopted by the Board of Regents, and funding was awarded to institutions based on their performance on the metrics.  Similarly, in 2014, the Legislature provided $1.5 million in one-time money for performance funding.