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Raymund Paredes Proposes New Funding Formula

Texas Higher Education Coordinating Board Commissioner Raymund Paredes speaks at the podium during the Generation Adelante college fair.

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 make-up of its student body.

“The model that we are now recommending is what we wanted to do from the very beginning,” says Paredes. “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 that 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,” says Paredes.


Faculty groups have expressed reservations with these changes.

Even without specifics about which institutions would win and lose, the Texas Faculty Association is concerned about the plan, arguing that the elite institutions will end up getting more money at the expense of colleges educating students from low-income families.

“I think this is horrible,” said Mary Aldridge Dean, the group’s executive director. “We have students who are very poor, especially if you get into the lower Rio Grande valley. This competitive funding will hurt them and their institutions. They may go to school for a semester and then have to take off to go to work and then come back, in and out multiple times. Whether you talk about students graduating in four years or six years, many of our students don’t do that not because they’re remiss but because they’re poor.”

Not only does Dean believe this funding model would disproportionately hurt state institutions serving low-income students, she also worries it would affect classroom standards all over the state.

“I guarantee you the minute that they start talking about funding being tied to graduation rates, there will be tremendous pressure placed on faculty to pass people,” Dean said. “When they talk about this, they say, ‘Oh, we’ll keep up our standards.’ Well, no they won’t. … I’ve sat in meetings with deans who’ve told me, ‘You will pass 65 percent of your students.’ And the answer is the same regardless of what happens. They weren’t even doing [performance-based funding] then, and that was still happening. If they start trying to fund completion, everyone knows what the outcomes will be. It’ll lower all our standards.”

Dean particularly dislikes the idea that colleges would be rewarded for having more STEM graduates. She argued that this amounts to the system determining the “worth” of a faculty member and his discipline to an institution.

Paredes said that the rationale for using the number of STEM graduates in allocating funding was simply to encourage job and economic growth in Texas, which in his view is the job of all public institutions in the state. Dean had a different take.

“If you view higher education as a business and a moneymaking venture, then that makes sense,” Dean said. “It all depends on how important we feel the humanities are and having well-rounded, well-educated folks. We as faculty don’t see ourselves as running a business.”

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