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Massachusetts Department of Higher Education: - PowerPoint Presentation

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Massachusetts Department of Higher Education: - PPT Presentation

Community College PerformanceBased Funding Model Sean P Nelson Deputy Commissioner for Administration and Finance Jonathan Keller Senior Associate Commissioner for Research Planning and Information Systems ID: 776452

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Slide1

Massachusetts Department of Higher Education: Community College Performance-Based Funding Model

Sean P. NelsonDeputy Commissioner for Administration and FinanceJonathan KellerSenior Associate Commissioner for Research, Planning and Information Systems

DRAFT for discussion purposes only

Slide2

Presentation Topics

I. Background

The

Charge

The

Principles

The

Process

The

Funding

II. Formula

The

Basics of the Formula

The

Dashboard Detail

The

FY15 Budget and Next Steps

Slide3

Background

Slide4

Community College Funding Formula: Legislative Charge

Section 171 of the FY13 General Appropriations Act (GAA) states:

“The commissioner of higher education, in consultation with the presidents of the community colleges and representatives of the Massachusetts Teachers Association, shall

develop a funding formula

for the community colleges which incorporates the allocation of appropriations to the individual community colleges

based, in part, on performance

. “

Additionally, MGL, Chapter 15A, Section 15B stipulates that:

“ Boards of trustees in each segment of the higher education system shall prepare their budget request in accordance with funding formulas. The board of higher education shall develop the formulas for the institutions within the state university and community college segments in consultation with the boards and trustees and the secretary.”

Slide5

Community College Funding Formula: Why?

The funding formula was implemented to address three essential issues:

The large inequities in per student funding that have developed among the colleges over time as their annual appropriations have risen by identical percentages while their growth rates have varied significantly

Lack

of a mechanism for allocating funds in relation to aspects of institutional performance that reflect statewide higher education

goals

Governor/Legislature emphasis on the role of Community Colleges in preparing students for jobs in the state’s rapidly evolving economy

Slide6

Community College Funding Formula: Establishing a Task Force

Immediately following the passage of the FY13 budget, Commissioner Freeland established a Task Force on the Community College Funding Formula

To aid in the analysis and development of the formula, the Department of Higher Education retained

the

National

Center for Higher Education Management Systems (NCHEMS) to assist the Taskforce in the design and development of the

funding

f

ormula

.

Task

Force held

four meetings between July and

December 2012

to confer

on the elements of the Formula including

:

Base

and Performance funding metrics

Proportion/Share

allocated to Base

vs

Funding

Weights

to be applied to each individual metric

Limits

regarding annual institutional funding losses or

gains

After the Task Force reached a general consensus on a formula, DHE drafted the Task Force Report and submitted it to each campus president for comment. The Task Force Report was also shared with other key stakeholders including: EOE, Governor’s Office, Labor and Workforce Development, Housing and Economic Development, the chairs of Senate and House Committees on Ways and Means, and the co-chairs of the Joint Committee on Higher Education.

Slide7

Community College Funding Formula: Source of Funding

The formula reallocated the total amount appropriated to the campuses through the individual line-items in the FY13 state budgetA total of $208.2MThe FY14 collective bargaining costs that were added to the campus line-items were not subject to the formulaIn FY14, an additional $20M of funding was appropriated in a new line-item for the community collegesThis funding was in addition to the individual campus line-item appropriationAll amounts were determined by the formula and communicated to the legislature by the DHE. All Funds were earmarked, by campus, in the appropriation and transferred to the institutions

In FY14, a total of $228.2M was reallocated using the formula methodology

Slide8

FY14 Funding Mechanics

Line-itemInstitutionBase Appropriation$20M Allocated through 7100-4000Total FY14 Allocation7502-0100Berkshire Community College $ 8,569,374 $ 1,094,424 $ 9,663,798 7503-0100Bristol Community College $ 15,224,011 $ 2,940,286 $ 18,164,297 7518-0100Bunker Hill Community College $ 19,194,201 $ 2,282,913 $ 21,477,114 7504-0100Cape Cod Community College $ 10,536,601 $ 343,833 $ 10,880,434 7100-4000Massachusetts Community Colleges $ 20,000,000

7100-4000 Massachusetts Community Colleges For funding to community college campuses in the Commonwealth; provided, that funds shall be expended for the continued implementation of community college reform, for continued initiatives to strengthen the connections between the colleges, local businesses and regional workforce investment boards and to improve workforce training at the colleges; provided further, that funding shall be allocated among the campuses using the formula developed by the commissioner of higher education in consultation with the secretaries of education, labor and workforce development and housing and economic development; provided further, that the allocation of funds shall be approved by the board of higher education; provided further, that in developing the allocation among campuses, the commissioner shall ensure that no campus receives less in fiscal year 2014 than in fiscal year 2013; and provided further, not less than the following amounts shall be made available to the respective institutions named herein: (a) $1,091,424 to Berkshire Community College; (b) $2,940,286 to Bristol Community College; (c) $2,282,913 to Bunker Hill Community College; (d) $343,833 to Cape Cod Community College; (e) $1,150,565 to Greenfield Community College; (f) $1,086,747 to Holyoke Community College; (g) $1,937,548 to Massachusetts Bay Community College; (h) $608,165 to Massasoit Community College; (i) $1,862,410 to Middlesex Community College; (j) $1,076,995 to Mount Wachusett Community College; (k) $617,047 to North Shore Community College; (l) $570,697 to Northern Essex Community College; (m) $3,353,379 to Quinsigamond Community College; (n) $340,527 to Roxbury Community College; and (o) $737,464 to Springfield Technical Community College

Slide9

Formula

Slide10

Funding Formula Dashboard

Stage One: Set Funding AllocationsNew Funding Allocations FY14Allocate new money directly to Performance?NoMassachusetts Public Community CollegesPast AmountsNew Funding Level - No Stop LossNew Funding Level - With Stop LossTotal State and Local Appropriations$208,154,311Base Allocation ($)Performance Allocation ($)Cost of Operation Subsidy ($)Total Allocation % Difference in Funding 2013 Total Allocation After Stop Loss Adjustment Difference $ (+/-) between Stop Loss and FY13 GAA Percentage Difference in Funding from FY13 Base Funding Allocation50%Amount Allocated:$80,327,156FY13 Funding AmountPerformance Funding Allocation50%Amount Allocated:$80,327,156Berkshire Community College$7,988,207 $ 2,112,318 $ 3,330,594 $ 4,500,000 $ 9,942,912 24.5% $ 9,207,281 $ 1,219,074 15.3%Ancillary Budget AmountAmount Allocated:$20,000,000Bristol Community College$13,885,391 $ 6,820,622 $ 7,076,763 $ 4,500,000 $ 18,397,385 32.5% $ 16,699,347 $ 2,813,956 20.3%Stage Two: Define Weight and Multiplier Values for Performance AllocationsBunker Hill Community College$17,496,631 $ 8,912,763 $ 7,603,525 $ 4,500,000 $ 21,016,288 20.1% $ 19,691,704 $ 2,195,073 12.5%College Enrollment VariablesCollege Completion Variables Alignment VariablesCape Cod Community College$9,823,796 $ 3,224,452 $ 2,444,272 $ 4,500,000 $ 10,168,724 3.5% $ 10,167,629 $ 343,833 3.5%Liberal Arts1.0Certificate Completion Weight10% Greenfield Community College$7,805,889 $ 2,151,049 $ 3,146,823 $ 4,500,000 $ 9,797,872 25.5% $ 9,048,211 $ 1,242,322 15.9%Physical, Bio, Social Science1.5Associate Completion Weight15%At-Risk Multiplier: Pell1.50Holyoke Community College$16,074,594 $ 5,969,313 $ 7,197,649 $ 4,500,000 $ 17,666,962 9.9% $ 17,067,692 $ 993,098 6.2%Math and Computer Science2.0Transfers Above 24 SCH Weight5%Priority Certificate Multiplier1.30 Massachusetts Bay Community College$11,859,106 $ 4,470,668 $ 6,223,780 $ 4,500,000 $ 15,194,448 28.1% $ 13,939,229 $ 2,080,123 17.5%Visual & Performing Arts1.530 Credits Hours Weight5%Priority Associate Multiplier1.30 Massasoit Community College$17,376,154 $ 6,702,109 $ 5,341,321 $ 4,500,000 $ 16,543,430 -4.8% $ 17,984,319 $ 608,165 3.5%Pre-Education1.5Completions: English Weight7%Define Stop-Loss / Alt. MinimumMiddlesex Community College$17,121,183 $ 8,213,614 $ 7,471,748 $ 4,500,000 $ 20,185,362 17.9% $ 19,032,193 $ 1,911,010 11.2%Engineering / Architecture2.0Completions: Math Weight8%3.5%Mount Wachusett Community College$11,007,508 $ 4,743,484 $ 3,445,542 $ 4,500,000 $ 12,689,027 15.3% $ 12,056,206 $ 1,048,698 9.5%Developmental Education1.5Awards per 100 FTE5%Define Stop-Gain / Alt. MaximumNorth Shore Community College$17,629,906 $ 6,369,881 $ 6,444,258 $ 4,500,000 $ 17,314,139 -1.8% $ 18,246,953 $ 617,047 3.5%Trades2.5ATD Success Rate (3 Year Average)45%100.0%Northern Essex Community College$16,305,635 $ 5,380,009 $ 6,239,967 $ 4,500,000 $ 16,119,976 -1.1% $ 16,876,332 $ 570,697 3.5%Technologies2.0All weight percentages must equal 100%100%    Quinsigamond Community College$12,980,557 $ 7,331,544 $ 6,406,535 $ 4,500,000 $ 18,238,079 40.5% $ 16,259,469 $ 3,278,912 25.3%Health/Allied Health2.0Optional: Cost of Operation Subsidy    Roxbury Community College$9,729,356 $ 2,178,260 $ 1,079,715 $ 4,500,000 $ 7,757,974 -20.3% $ 10,069,883 $ 340,527 3.5%Business1.0$4,500,000   2.7Springfield Community College$21,070,398 $ 5,747,069 $ 6,874,664 $ 4,500,000 $ 17,121,733 -18.7% $ 21,807,862 $ 737,464 3.5%Services1.5Designed by NCHEMS, 2013SYSTEM TOTAL$208,154,311 $ 80,327,156 $ 80,327,156 $ 67,500,000 $ 228,154,311 9.6% $ 228,154,311 $ 20,000,000 9.6%Non-Credit Workforce Development1.0             

The left side of the dashboard (“input side”) can be changed, enabling a dynamic scenario-building assessment and development tool.

The right side of the dashboard (“output side”) reflects the funding outcomes

Slide11

Stage One: Set Funding AllocationsAllocate new money directly to Performance?NoTotal State and Local Appropriations$208,154,311Base Funding Allocation50%Amount Allocated:$70,327,156Performance Funding Allocation50%Amount Allocated:$70,327,156Ancillary Budget AmountAmount Allocated:$20,000,000Stage Two: Define Weight and Multiplier Values for Performance AllocationsCollege Enrollment VariablesCollege Completion Variables Alignment VariablesLiberal Arts1.0Certificate Completion Weight10% Physical, Bio, Social Science1.5Associate Completion Weight15%At-Risk Multiplier: Pell1.50Math and Computer Science2.0Transfers Above 24 SCH Weight5%Priority Certificate Multiplier1.30 Visual & Performing Arts1.530 Credits Hours Weight5%Priority Associate Multiplier1.30 Pre-Education1.5Completions: English Weight7%Define Stop-Loss / Alt. MinimumEngineering / Architecture2.0Completions: Math Weight8%3.5%Developmental Education1.5Awards per 100 FTE5%Define Stop-Gain / Alt. MaximumTrades2.5ATD Success Rate (3 Year Average)45%100.0%Technologies2.0All weight percentages must equal 100%100%    Health/Allied Health2.0Optional: Cost of Operation Subsidy    Business1.0$4,500,000   2.7Services1.5Designed by NCHEMS, 2013Non-Credit Workforce Development1.0

The “Input” side of the funding formula includes all of the component variables, weights, and multipliers

The Funding

Formula Visualization Tool

:

The “input” side of the dashboard

Slide12

Stage One: Set Funding AllocationsAllocate new money directly to Performance?NoTotal State Appropriations for Community Colleges$208,154,311Base Funding Allocation50%Amount Allocated:$70,327,156Performance Funding Allocation50%Amount Allocated:$70,327,156Ancillary Budget AmountAmount Allocated:$20,000,000Cost of Operation Subsidy: $67,500,000

The Funding Formula Visualization Tool : The “input” side of the dashboard for funding amounts

* In FY14 collective bargaining costs for all community college campuses were added to the campus base appropriations directly and were not subject to reallocation by the formula

FY14 total available to be allocated through the funding formula: $228,154,311*

Slide13

Community College Funding FormulaBasics of the Formula: Cost of Operation Subsidy

The Task Force recommended that every institution receive a “

cost of operation subsidy

” reflective of the

minimal requirement for operating a community college

without regard to scale

$4.5M was recommended as the per-institution subsidy, based an analyses conducted by NCHEMS

The amount allocated to the Cost of Operation subsidy in FY14: $67.5M, or approximately 30% of the total available funding. This amount was deducted from the total available to be allocated through the Base and Performance funding metrics.

Amount available to reallocate after cost of operation subsidy: $160.7M

The Cost of Operation subsidy is recognized as one of the key areas of investigation for further refinement of the funding formula

Slide14

Community College Funding FormulaComponents of the Formula: Base Funding

Base and Performance Funding allocations are split 50/50

The amount allocated to base funding in FY14: $80,327,155

Base Funding is 35.4% of total amount allocated ($228M)

Base Funding dollars are to be distributed based on student credit hours completed in the most recent academic year for which data are available (for the FY14 distribution, data from FY11 was used)

By using

Student Credit Hours

the formula acknowledges institutional scale. The formula allocates the total base funding pool to the community colleges based on their percentage of total credit hours completed.

The various credit hours are

assigned individual weights

based on the cost of instruction for the associated course or program. These weights reflect research and analyses conducted by NCHEMS

Slide15

Community College Funding Formula

College Enrollment VariablesLiberal Arts1.0Physical, Bio, Social Science1.5Math and Computer Science2.0Visual & Performing Arts1.5Pre-Education1.5Engineering / Architecture2.0Developmental Education1.5Trades2.5Technologies2.0Health/Allied Health2.0Business1.0Services1.5Non-Credit Workforce Development1.0

Student credit hours completed

The added emphasis on “non-credit workforce” training was

recommended by Labor and Workforce Development and Housing and Economic Development

Components of the Formula: Base Funding, Student Credit Hours Completed

Slide16

Community College Funding FormulaComponents of the Formula: Base Funding, Application of Weights

How are the assigned individual weights applied?

The credits completed in the various discipline clusters are designated to have specific multipliers that range from 1.0 (no increased value) to 2.5 (two and a half times the raw value).

The

sum of the institutional credits (weighted by the discipline cluster multipliers) are divided by the sum of weighted credits for the entire segment to determine the share of base funds that will be allocated to each

institution.

Slide17

Community College Funding FormulaBasics of the Formula: Performance Funding, College Completion

College

Completion Metrics include several measures of institutional effectiveness in encouraging students to achieve successful outcomes.

College Completion VariablesCertificate Completion Weight10%Associate Completion Weight15%Transfers Above 24 SCH Weight5%30 Credits Hours Weight5%Completions: English Weight7%Completions: Math Weight8%Awards per 100 FTE5%ATD Success Rate (3 Year Average)45%All weight percentages must equal 100%100%

# of completed certificates

# complete 30 credits in any given year

# completing a credit-bearing course in English

Degrees and certificates per (FTE) students

# of associates degrees

# who transfer having completed 24 credits

# completing a credit-bearing course in Math

Achieving The Dream “Success Rate”

Slide18

Community College Funding FormulaBasics of the Formula: Performance Funding, Alignment Weights

The Alignment Metrics focus on areas of performance with specific relevance to The Vision Project – the Board of Higher Education's strategic plan – and the Governor’s educational goals. The weights are only applied to completions

Alignment Variables At-Risk Multiplier: Pell2.00Priority Certificate Multiplier1.30 Priority Associate Multiplier1.30

The

first metric

addresses

the goal of closing achievement gaps

. [Weight applied to degree and certificates earned by students who were Pell Eligible]

The

last two metrics

address

the Governor’s

goals of adding credentials in fields of high employer demand.

[Weights applied to certificates and associates in STEM fields, health care, life sciences, and IT]

Slide19

Community College Funding FormulaBasics of the Formula: Stop-Loss/Alternative Minimum Increase

The Task Force determined that full implementation of the formula in year one would likely result in overly burdensome financial disruptions for many of the colleges. (For example, Springfield Tech would have experienced an 18.7% decrease in funds in year one)

The Task Force initially agreed to include a 5% “stop-loss” provision that would prevent any one institution from losing more than 5% of their previous year’s budget. It was ultimately decided that the formula would instead include a 3.5% alternative minimum provision, which ensures that

each campus receives no less than a 3.5% increase.

It was also decided that in subsequent years of funding there would be a transitional step taken annually with the goal of full implementation over 4 years (FY14 – FY17). For FY15, the discussion has focused on reducing the “alternative minimum increase.”

Slide20

New Funding Allocations FY14Massachusetts Public Community CollegesPast AmountsNew Funding Level - No Stop LossNew Funding Level - With Stop LossBase Allocation ($)Performance Allocation ($)Cost of Operation Subsidy ($)Total Allocation % Difference in Funding 2013 Total Allocation After Stop Loss Adjustment Difference $ (+/-) between Stop Loss and FY13 GAA Percentag Difference in Funding from FY13 FY13 Funding AmountBerkshire Community College$7,988,207 $ 2,112,318 $ 3,330,594 $ 4,500,000 $ 9,942,912 24.5% $ 9,207,281 $ 1,219,074 15.3%Bristol Community College$13,885,391 $ 6,820,622 $ 7,076,763 $ 4,500,000 $ 18,397,385 32.5% $ 16,699,347 $ 2,813,956 20.3%Bunker Hill Community College$17,496,631 $ 8,912,763 $ 7,603,525 $ 4,500,000 $ 21,016,288 20.1% $ 19,691,704 $ 2,195,073 12.5%Cape Cod Community College$9,823,796 $ 3,224,452 $ 2,444,272 $ 4,500,000 $ 10,168,724 3.5% $ 10,167,629 $ 343,833 3.5%Greenfield Community College$7,805,889 $ 2,151,049 $ 3,146,823 $ 4,500,000 $ 9,797,872 25.5% $ 9,048,211 $ 1,242,322 15.9%Holyoke Community College$16,074,594 $ 5,969,313 $ 7,197,649 $ 4,500,000 $ 17,666,962 9.9% $ 17,067,692 $ 993,098 6.2%Massachusetts Bay Community College$11,859,106 $ 4,470,668 $ 6,223,780 $ 4,500,000 $ 15,194,448 28.1% $ 13,939,229 $ 2,080,123 17.5%Massasoit Community College$17,376,154 $ 6,702,109 $ 5,341,321 $ 4,500,000 $ 16,543,430 -4.8% $ 17,984,319 $ 608,165 3.5%Middlesex Community College$17,121,183 $ 8,213,614 $ 7,471,748 $ 4,500,000 $ 20,185,362 17.9% $ 19,032,193 $ 1,911,010 11.2%Mount Wachusett Community College$11,007,508 $ 4,743,484 $ 3,445,542 $ 4,500,000 $ 12,689,027 15.3% $ 12,056,206 $ 1,048,698 9.5%North Shore Community College$17,629,906 $ 6,369,881 $ 6,444,258 $ 4,500,000 $ 17,314,139 -1.8% $ 18,246,953 $ 617,047 3.5%Northern Essex Community College$16,305,635 $ 5,380,009 $ 6,239,967 $ 4,500,000 $ 16,119,976 -1.1% $ 16,876,332 $ 570,697 3.5%Quinsigamond Community College$12,980,557 $ 7,331,544 $ 6,406,535 $ 4,500,000 $ 18,238,079 40.5% $ 16,259,469 $ 3,278,912 25.3%Roxbury Community College$9,729,356 $ 2,178,260 $ 1,079,715 $ 4,500,000 $ 7,757,974 -20.3% $ 10,069,883 $ 340,527 3.5%Springfield Community College$21,070,398 $ 5,747,069 $ 6,874,664 $ 4,500,000 $ 17,121,733 -18.7% $ 21,807,862 $ 737,464 3.5%SYSTEM TOTAL$208,154,311 $ 80,327,156 $ 80,327,156 $ 67,500,000 $ 228,154,311 9.6% $ 228,154,311 $ 20,000,000 9.6%

The Funding Formula Visualization Tool : The “output” side of the dashboard

FY14 GAA allocated the additional $20M via earmarks in line-item 7100-4000

Slide21

FY15 Budget Recommendation and Next Steps

Roll $20M of FY14 earmarked funds into base appropriations of campus

Recommend an additional $20M to be allocated using the same metrics in FY14

Hire a Data Auditor to test integrity and quality of data; ensuring uniform standards and definitions

Discussion now underway to review minimum gain in FY15 with a goal of reaching a “no fee” consensus amongst all campuses

Reconvene Formula Task Force to review and possibly refine elements of formula for FY16

Slide22

Keys to Implementation in FY14

Strategic plan at the system level that outlined specific long-term measurable goals, including meeting projected workforce demand.Appealed to legislative interest in linking academic performance to funding. To that end, the Department of Higher Education was granted the statutory authority in FY12 to “develop a funding formula for the community colleges which incorporates the allocation of appropriations based, in part, on performance.”Established task force of community college presidents to determine overall approach and methodology. Critical to build consensus amongst campuses.Third-party formula development and validation. Clear communication of data standards, definitions, and measures.Incorporated a “hold harmless” feature that prevented any campus from receiving less than a 3.5% increase in year one.Pledge to not increase fees if funding formula is implemented with an additional $20M allocated over FY13.Commitment by Commissioner Freeland to both the Task Force and the Council of Presidents that the individual metrics, weights, multipliers, allocation balances, subsidy, etc were still open to review and enhancement in future funding cycles. A plan to establish an enhanced audit function to provide a greater assurance that formula is based on solid, reliable and appropriate representations of institutional accomplishments.

Slide23

Additional Questions?