Promising college funding plan may lack effectiveness

Increasing bang for the buck in higher education has become a mission for many in the Louisiana Legislature in the past few years, and the latest idea to do so holds both promise and peril to accomplish it.

State Sen. Conrad Appel and state Rep. Steve Carter, heads of their respective chambers’ committee on education, have given notice they plan to file legislation to tie some funding to higher education to performance of schools. Institutions would be divided into five tiers depending on mission, then evaluated and compared to regional peer institutions on a metric such as graduation rate, with funding decisions based upon relative performance. Carter asserts the necessity of this addition due to the GRAD Act standards, which are a series of institution-set goals that must be met to allow an increase of up to 10 percent in tuition without legislative approval, are too easy manipulable by colleges.

To increase flexibility and incentives, the proposed legislation would remove that necessity of Legislative tuition increase approval. Louisiana is the only state where its legislature must otherwise give approval for tuition increases, and by a two-thirds vote of the body no less. This and other restrictions on tuition autonomy exercised by universities have created some perverse incentives to dampen efficiency efforts, but the thinking to date has been against giving universities free hand with tuition without assurances of accountability. The intent behind this legislation signals with this additional accountability measure that there is legislator comfort with giving up its stranglehold.

The concept is sound. Louisiana continues to suffer from relatively low completion rates even as the institution of the GRAD Act and its successor has provided incentive to tick them upwards. This occurs in large part from an endogenous factor – a funding system that historically encouraged more pumping up student credit hours enrolled to gain resources than in ensuring a quality, relevant education – and an exogenous factor – the exceptionally poor quality of elementary and secondary education that has only begun to be addressed in the past 15 years (the first cohort of students whose entire pre-higher education academic career has been in this timeframe only now is entering college, but keep in mind the large portion of the state’s college population is nontraditional students who in part or entirely have been unexposed to the reform environment) that made Louisiana high school graduates/General Equivalency Diploma recipients disproportionately unprepared for work at the level of higher education. By dangling this carrot, greater incentive is placed upon outcomes than on inputs.

It’s the execution that can be tricky. Even as Carter perceives the GRAD Act system as too easily gamed, the same subversion can occur using a metric such as graduation rate compared to peers. It’s the easiest thing in the world in response to this for schools to find surreptitious ways to ease off on quality and/or inflate grade point averages, thereby flunking fewer students, and up goes the rate. (Or even overt prodding, as I and another instructor at another institution learned.) When we speak of using graduation rate as a metric, it’s not that any old kind of graduation can be used, but graduation of quality students from quality instruction.

There are two forces that operate on the higher education environment that can work against a downward draft against standards. Accreditation by regional organizations is not one of them. This merely looks for a certain set of considered best practices present and does not attempt to evaluate quality in terms of things like amount of useful knowledge imparted and level of critical thinking attained, but more whether there ways to measure these things by institutionally-set standards, and is more of a bureaucratic marker than anything else.

One is competition. Private schools have provided some, but traditionally serve a somewhat different marketplace of students. More recently, the advent of for-profit institutions has provided a serious competition even though they typically charge more and graduate at lower rates than public schools, as they have captured 9.5 percent of the total student market (actually down because of the recession/near-recession faced over the past five years). More challengingly, they offer the highest-interest programs, such as in criminal justice or business, that are the most easily tied to defined career opportunities, which attract the greatest attention from students and employers. Thus, the more attractive these schools become by demonstrated placement ability, where employers are motivated to hire quality graduates, the more pressure is placed upon public institutions to respond and replicate.

The other is licensing. Certain professions such as engineering and architecture for holders of these degrees to practice must pass a licensing test. Assuming these professions continue to want to attract competent, if not quality members, they have incentives to keep up standards on the exams, forcing schools to follow along. (By contrast, teaching certificates in most states measure only craft, not subject area knowledge where it is assumed that comes by virtue of curriculum requirements completed.)

So, in keeping up standards, public institutions face more pressure in some areas than in others to maintain standards. In some others, the pressures are reduced but present. For example, in the sciences employers can get a pretty good idea about graduate quality in their vetting processes for employment and subsequent performance of those hired, so market pressures should bear on schools: word gets out among employers and prospective students about program quality, where lower-quality programs would attract fewer students because of reduced employer attention or salary offers. But in others, particularly in the area of arts and humanities, there’s little connection if any to a defined career path and to a substantive knowledge or skill base evaluable by prospective employers. While that does not mean that these graduates are less employable it does mean that it’s more difficult from the outside to assess their quality and thereby decouples program quality from quality demanded in the marketplace.

Thus, it becomes more tempting for an institution to set up an incentive system where weak students get funneled into undemanding programs in a bid to boost graduation rates. That’s the danger these bill authors face, and, on the surface, there’s not much that can be done about that.

At the same time, another trend actually may mitigate this possibility but at the expense of mooting to perhaps a large degree the intent of the law. The latest budget cuts the state’s appropriation into higher education to an all-time low; only 10.58 percent of its appropriation is planned to come from the general fund. While this reduces the pot of money over which gamesmanship may occur, it also reduces the effect of the incentive. Even if somehow all of the statutorily dedicated funds also could be tied into this kind of performance measure, which seems unlikely what they are and from where the money will come, just under 40 percent, this still may not provide much leverage. As the authors say only something around a third of the state share would be up for grabs under their formulation, that means at most just 13 percent or so of the budgeted total would be usable for incentive purposes.

Therefore, the effectiveness of the measure really comes down to how well it will be able to ensure not just graduation, but graduation with quality. Altering this metric, adding others potentially, and/or specifying controls to present subversion of their goal are things that need to find their way into the final version of the bill for it to work as intended.