TribBlog: The Paredes Plan

Higher Education Commissioner Raymund Paredes wants to change the way public universities and colleges are funded in Texas to encourage schools to graduate students quicker. His first plan to do that wasn't so popular, but today, at a meeting of the Texas Higher Education Coordinating Board, he will lay out his latest attempt.

The current formula funds institutions based on their enrollment on the 12th day of class, but Paredes wants schools to get money based on how many students graduate. He says this would align the funding more closely with the state's goals of improving rates of student achievement in higher education. Earlier this year, in an effort to make an easily understood shift, he proposed linking university funding to enrollment at the end of the semester. But, it was met with, at best, a lack of enthusiasm in the Legislature. Many lawmakers pointed to a lack of correlation between completing a course and completing a degree.

“They said, 'Why don’t you actually go all the way on this and actually fund on results,'” Paredes says, noting that a course is merely a “throughput” but a degree is an actual “output.”

After a trip back to the drawing board, Paredes has returned with a more modest proposal that would only allocate 10 percent of universities' base funding based on performance. That portion of funds would be doled out based on factors used for current performance funding: the total bachelor’s degrees awarded, total bachelor’s degrees awarded in critical fields like nursing and engineering and total bachelor’s degrees awarded to at-risk students. Paredes' proposal also adds a new “Expected Graduation Factor,” which would allocate money based on how an institution’s actual six-year graduation rate stacks up against one predicted on the basis of the makeup of its student body.

“The model that we are now recommending is what we wanted to do from the very beginning,” Paredes says. “We thought we’d have to take some intermediate steps before we got there.” 

The remaining 90 percent of base funding would be distributed as it currently is, based on attempted course hours. Paredes says he’d like to see the percentage dedicated to performance-based funding increase, but that can’t happen in one fell swoop. “We don’t want to make draconian changes,” he says. “We discovered that it’s in the 10 percent range where you actually affect institutional behavior.”

Only time will tell if the Legislature goes for this formula. Some lawmakers have expressed concern about making major changes to formula funding in the midst of a serious budget shortfall.

Paredes says the need to shift to outcomes-based funding is too urgent to wait for the budget situation to improve. For the state to have a shot at reaching it's goal of having students achievement on par with the 10 largest states by 2015, Texas needs to increase the number of credentials it awards annually by at least 46,000.  “We want to make sure, in a tough budgetary environment, that the things institutions focus on preserving most are those programs and activities that directly lead to student success,” Paredes says.