Two weeks ago, Gov. Asa Hutchinson of Arkansas unveiled a new performance-based funding model for higher education. The proposal will go before the Legislature in 2017. Most states have some element of performance incorporated in to funding formulas. If the proposal is passed, Arkansas would become the fifth state to have a funding formula based exclusively on outcomes. Universities and community colleges would receive their funding not based on enrollment, but rather on measures of their productivity, such as degree completion.

CSG Midwest
Minnesotans struggling with high student debt and monthly payments can now get some assistance from their state government. Launched in January, the Self Refi program is the result of legislation (HF 3172) passed in 2014. That law gave Minnesota’s Office of Higher Education the authority to refinance student loans through the sale of revenue bonds.
CSG Midwest

The idea of providing tuition-free community college got a major boost in early 2015, when President Barack Obama included it in his State of the Union speech. The America’s College Promise Actwas subsequently introduced this past summer in the U.S. House and U.S. Senate. If signed into law, the act would create a new state-federal partnership to waive student tuition and fees at community colleges, with the federal government providing $3 for every $1 invested by a state.

CSG Midwest logo

During the first half of 2013, state legislators crafted and passed budgets under much improved fiscal conditions. Later in the year, college students and their parents got a bit of relief of their own: The average cost of tuition and fees at the nation’s public four-year schools had risen by the lowest rate (2.9 percent) in more than 30 years, according to the College Board’s “Trends in College Pricing 2013.” It is a pattern seen time and again: Increases in state higher-education spending (the result, in many cases, of improved fiscal conditions) lead to smaller, or even no, hikes in tuition.

It is no secret that state funding to universities has been declining over the last several years, and universities are trying to find ways to make up the loss. One of the more popular ideas is increasing the number of foreign students, who generally pay higher tuition rates than in-state or other US students, even preferring them to higher-achieving US students. 

So, how much is a college education worth? The U.S. Bureau of Labor Statistics reports individuals with just a high school diploma are almost twice as likely to be unemployed as those with a bachelor’s degree. Furthermore, those with four-year degrees earn, on average, more than one-third as much as adults with no college degree or certificate. That amounts to more than $400 per week, or, looked at another way, approximately $900,000 more over a lifetime in today’s dollars.

Stateline Midwest ~ June 2013

Improved state budget conditions and continuing concerns about the cost of higher education have resulted in plans across the Midwest to freeze tuition.

Stateline Midwest ~ June 2013

Ever since he joined the legislature more than a decade ago, North Dakota Sen. Tim Flakoll says, lawmakers have been looking to change how the state funds its higher-education system.

This year, he says, “We were finally able to crack the code.”

Policymakers know America’s educational system must transform to significantly increase the academic achievement of all students. A high-quality education, including content mastery and real world application, is critical to prepare students for college and careers. In order to ensure student success, leaders must tackle these top 5 issues facing states this year.

As states seek to maximize the return on their investment for higher education and continue to seek a more educated and skilled workforce, they likely will turn increasingly to outcome-based funding formulas as a mechanism to accomplish these goals.