Chronology

• In early 1996, DBP worked closely with SCHEV and representatives from each institution (including presidents, vice-presidents, provosts, and institutional research staff) to develop seven core performance measures for higher education:
  • Graduation and Retention Rates
  • Transfer Rates
  • Graduates Employed in Program-Related Work or Pursuing Further Study
  • Classroom Utilization
  • Expenditures on Instruction, Libraries and Academic Computing as a Percent of Total E&G Expenditures
  • Percent of Management Standards Successfully Met
  • Faculty Productivity

• In June 1996, Council adopts measures.

• In December 1996, performance measures baselines and targets are reported in budget document.

• In early 1997, DPB, the Secretary of Education's office, SCHEV, the money committee's staff, and representatives from each institution revised the peer selection process and selected new national peer groups for each institution.

• In 1997, DBP and SCHEV met with a group of institutional researchers to determine the best data sources for comparing Virginia institutions to their national peers.

• Based on the data availability, DPB recommended using six measures in a performance funding model.

Performance Model Measures Comparison Type and Data Sources

• Graduate rates
  • Comparison to National Peers
  • Common Core Data Set

• Retention Rates
  • Comparison to National Peers
  • Common Core Data Set

• Instructional and library expenditures as a percent of E&G expenditures
  • Comparison to National Peers
  • IPEDS Finance Survey

• Credit hours generated per full-time instructional faculty
  • Comparison to National Peers
  • IPEDS Fall Enrollment Survey and Full-Time Instructional Faculty Survey

• Space Utilization
  • Comparison to other Virginia institutions
  • SCHEV's April 1997 Space Utilization Report

• Research and public service expenditures per full-time faculty (for doctoral universities only)
  • Comparison to National Peers
  • IPEDS Finance Survey and Fall Staff Survey

Components of the Model

• Performance for each measure is based on the percentile rank of the Virginia institution relative to its national peers, or in the case of space utilization, relative to other Virginia institutions.

• All measures are weighted equally. For doctoral institutions, each measure receives a weight of 16.67%. For comprehensive institutions, each measure receives a weight of 20%.

• Monetary rewards are weighted by institutional size - number of in-state full-time equivalent (FTE) students.

• Based on the percentage of Virginia students served, doctoral institutions receive 69%, or 34.6 million, of the $50 million performance fund.*

• Comprehensive institutions receive 31%, or $15.4 million of the performance fund. *

  * Note: This fund was proposed in Governor Allen's outgoing budget but was not acted upon by Governor Gilmore or the General Assembly. They deferred the plan for further study.

Institutional Example

Using this plan, James Madison University (JMU) would have compiled the following score.

• Graduation Rate: JMU's six-year graduation rate was 82% and fell at the 91.60 percentile of its national peer group. Given a weight of 20%, JMU's measure score was 18.32.

• Retention Rate: JMU's retention rate is 91% and fell at the 87.50 percentile of its national peer group. Given a weight of 20%, JMU's measure score was 17.5.

• Library and Instructional Expenditures as a Percent of Total E&G Expenditures: JMU's library and instructional expenditures were 62.46% of its E&G total and fell at the 91.60 percentile of its national peer group. Given a weight of 20%, JMU's measure score was 18.32.

• Credit Hour Per Full-Time Instructional Faculty: JMU's average was 625.84 credit hours and fell at the 54.10 percentile of its national peer group. Given a weight of 20%, JMU's measure score was 10.82.

• Space Utilization: JMU's classroom space is occupied an average of 23 hours per week and fell at the 92.80 percentile when compared to other Virginia four-year public institutions. Given a weight of 20%, JMU's measure score was 18.56.

  When these scores are added, JMU's total performance score is 83.52. Once a performance score is obtained, each institution's performance is adjusted to reflect the number Virginia students it serves. This new "Indexed Score" is used as the basis for allocating funds.

• Indexed Score = Total Performance Score x 1997-98 In-State FTEs

• JMU's Indexed Score = 83.52 x 9,737 = 813,234

  To determine the award, index score for JMU was divided by the summed indexed scores for comprehensive institutions. 813,234/2,039,447 = 39.87%. Then, JMU would be awarded 39.87% of the incentive fund for comprehensive colleges or 37.87% of $15,442,367 = $6,158,080.

Uses of Performance Funds

• For institutions' highest priorities
• Incentives to attract and retain quality faculty
• Instructional technology
• Curriculum development
• Instructional improvements
• Continued progress in attaining the highest level of academic quality

• Plan required before release of funds on July 1, 1998 and 1999.

Strengths of the DPB Performance Funding Model

• Broad agreement was reached on the selection of core performance measures - institutions, SCHEV, DPB

• Peer group selection process took place before the funding model was announced - possible manipulation of peer groups was avoided

• Comparisons are made to national peers using objective data

• Funding based on a limited number of measures (six) that focus on key outcomes and institutional efficiency

• Institutions allowed to decide how their performance awards are spent

• Funding plan received support from college presidents of a wide range of institutions

Back to the Main Page

Posted: June 10, 1999
By The Educational Policy Institute of Virginia Tech
sjanosik@vt.edu