Northeastern Illinois University is among the Illinois universities that will be affected by Public Act 097-0320, House Bill 1503, passed by the Board of Higher Education. This action puts into place performance-based institutional funding for colleges and universities beginning in 2013. Performance-based funding gives more funding to institutions that meet the state goals of increased educational attainment, ensuring college affordability, addressing workforce needs and enhancing economic growth. The more successful an institution is, the more funding or monetary aid it receive. This creates an incentive to boost performance and is being implemented because Illinois currently is not producing enough college graduates to meet the state’s future employment needs. However, a university cannot lose more than percent percent of its previous funding if its performance is found to be poor.
The Illinois House and Senate passed performance-based funding legislation in April 2011. This means that Illinois has joined Complete College America’s alliance of 29 other states with the goal of significantly increasing the number of adults with a college degree. Illinois’ Complete College Goal is 60 percent of all adults, age 25 to 64, earning a college degree or certificate by 2025. In order to do this, Illinois must graduate 4,400 more students each year, which started in 2009 or a total of 600,000 additional graduates in 17 years.
The Higher Education Finance Study Commission has established core principles that the commission feels are necessary for the development and success of performance-based funding. The first core principle is to encourage at-risk students, low-income students, first-generation students and working adults. These students enter higher education institutions with different needs and levels of preparation, which must be addressed in order to complete certificates and degrees. The second core principle is to distinguish the difference between institutional missions. This means that performance funding must adapt to community college, masters and research institutions and the different measures of success appropriate to each. The third core principle states that the funds should be tied to completion and degree obtainment rather than course enrollment. In addition to the last core principle for the success and development of performance funding, there has been a need identified to maintain the quality of degrees, certificates, courses and programs.
Illinois is not alone, as other states are participating in performance-based funding as well. The Pennsylvania State System of Higher Education (PSSHE) has been cited as a national leader in performance-based funding by the Lumina Foundation for Education, which is a private, independent foundation that is committed to enrolling and graduating more students from college. PSSHE has experienced massive changes in its campuses’ attitudes toward performance. In Pennsylvania, graduation rates have risen, there is more campus diversity and there has been an increase in faculty productivity. Earlier this year the PSSHE approved a new performance-based system that replaced the performance structure that had been in place since 2000. Texas has also passed a performance-based funding bill and has also developed a plan that would set aside ten percent of institution funding according to performance outcomes.
Officials around the nation have viewed performance-based funding as an investment. It is a state policy solution aimed at creating greater institutional productivity, liability and greater educational attainment.