Proposal would create funding formula for Missouri higher education

JEFFERSON CITY, Mo. -- Ten percent of state funding for Missouri's colleges and universities would depend on whether they can meet performance goals such as improved graduation rates, according to a plan presented Monday to state lawmakers.

It's part of an initiative, required by state law, to develop a funding formula for higher education institutions similar to what exists for public K-12 education. Missouri's current approach allots money based largely on how much the colleges and universities received in the past and how much the state has available for the future.

Gov. Jay Nixon is likely to recommend that performance criteria be used for a funding increase -- perhaps around 1 or 2 percent -- to higher education institutions in the 2014 budget, said deputy higher education commissioner Paul Wagner. But the plan prepared by staff for the legislature's Joint Committee on Education would take a more aggressive approach.

Committee chairman Sen. David Pearce, R-Warrensburg, described the proposed funding model as a "starting point" for continued discussions. He asked higher education officials and others to submit comments by the end of this year. The committee is not mandated by law to develop a funding formula until the end of 2013.

Under Monday's proposal, the state would fund 35 percent of an institution's operating costs. Of that, 90 percent would be automatic and the remaining 10 percent would depend on whether it meets specific performance goals, such as retaining students from their freshmen to sophomore years, graduating students within a certain number of years and achieving success for students on licensure exams or in job placements.

The funding proposal isn't designed to benefit any particular university or category of institutions, nor would it tell institutions how to spend their state money, said Stacey Preis, the committee's executive director.

A year ago, the state Coordinating Board for Higher Education -- which oversees the higher education department -- recommended that Missouri award performance-based funding in the 2014 fiscal year. But that would be on top of an institution's base funding and would not exceed 2 or 3 percent of an institution's total state funding in any given year.

The proposal for a comprehensive funding formula put forth Monday could run into political trouble if the performance criteria are used to help determine a university's base budget, as opposed to serving as a bonus. That's because lawmakers often vote for or against education funding measures based on whether the schools they represent stand to gain or lose money.

"The bottom line is: Are institutions going to be able to lose money?" Wagner said about the proposed higher education funding formula. "If not, then I think it's a lot of unnecessary complications, and I think we should just focus on funding institutions that are doing well."