The Indiana Commission for Higher Education is seeking to restore outcomes-based performance funding for the state’s public colleges and universities in the next biennial budget.
The formula rewards additional funding to colleges and universities for positive outcomes like on-time degree completion and graduate retention.
The commission approved a new performance formula Thursday prioritizing on-time or early degree completion, affordable tuition, stackable credentials and alignment with workforce needs.
The revision is in response to criticisms that the old formula, which included 13 metrics ranging from low-income youth and adult enrollment to research investment and student retention, was too confusing and poorly aligned with outcomes.
While required by statute, lawmakers have the final say over how much of the state’s higher education budget should be allotted to performance funding, which typically ranges from 1% to 9% of the higher education budget.
Lawmakers reduced performance funding to zero in the last biennial budget in response to a poor financial forecast. Now, the state’s budget reserves are nearing $4 billion.
Education Secretary Katie Jenner said industry leaders and lawmakers alike are expressing interest in outcomes-based performance funding: “We should expect that to go up.”
Cody Robison, deputy chief financial officer for the Commission for Higher Education, said the latest formula rewards practices that balance costs, quality and return on investment for students.
“We can encourage the reduction of barriers with industry and completion in a timely manner,” he said. “We can hold institutions and the state accountable for delivering high-quality academic and work-based experiences that lead to completions and real results for students. And we can reinforce the vital role that higher education plays in preparing students for high-demand careers and opportunities here in the state of Indiana.”
The new formula prioritizes credential and degree completion.
Financial awards increased based on the types of degrees completed, ranging from sub-associate credentials at the bottom to in-demand master degrees at the top.
Institutions that keep tuition and fees below the commission’s recommended rates can see additional funding. So can schools conferring credentials to high school students and financial aid recipients — a metric designed to boost accessibility.
The formula also prioritizes degree alignment with industry and workforce needs, with additional funding available for schools that offer work-based learning opportunities.
Gov. Mike Braun praised the simplified formula in a news release Thursday.
“This approach reflects our state’s commitment to delivering stronger outcomes in higher education,” he said. “It prioritizes efficiency, accountability and measurable performance, ensuring Hoosier tax dollars are directed toward programs that demonstrate clear, long-term ROI. This model reinforces responsible stewardship and aligns funding with proven results and market demand.”
The formula will go before State Budget Committee for final approval ahead of the next legislative session.
Originally published on indianacapitalchronicle.com, part of the BLOX Digital Content Exchange.
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