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Switch to Outcomes-Based Higher Ed Funding Taking Time

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During the regular session, Gov. Rick Perry’s top legislative priority for higher education was the implementation of a new funding system that rewards universities for graduating more students, not just for getting students into classes. To reach its 2015 goals, Texas needs to increase the number of degrees awarded by 46,000 each year.

A financing system that includes more “outcomes-based funding” has strong support, including from Raymund Paredes, the Texas Higher Education Commissioner, and business leaders such as Woody Hunt of El Paso, who chairs the Governor’s Business Council. But policy makers have struggled to agree on which outcomes to measure, how to encourage them and if they should alter the funding formulas while budgets are being slashed.

House Higher Education Chairman Dan Branch, R-Dallas, passed a major bill on the subject this session. The final version approved by the full Legislature, however, stops short of actually implementing an outcomes-based system, and instead provides guidelines for the Texas Higher Education Coordinating Board and instructs the board to return next session with new proposals.

With the session over, Senate Higher Education Chairwoman Judith Zaffirini, D-Laredo, said the question was still “if, not when,” Texas might adopt such a system. The state’s current financing formula is based on course enrollment.

Even getting to this point has been difficult. Lawmakers rebuffed Paredes’ initial proposals for failing to target the right outcomes. His plan focused on course completions instead of graduations. After a new proposal was drawn, Branch had to convince House leaders that the approach was not related to controversial strategies pushed by Perry and the Texas Public Policy Foundation, a conservative research group.

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