States Fund Colleges on Performance

by Michelle Massie
July 2, 2014

Missouri Governor Jay Nixon signed legislation two weeks ago that adopts performance-based funding for Missouri's public universities and community colleges which includes a job placement measure.

Senate Bill 492 requires the state’s universities and colleges to develop performance-based measures, in collaboration with the Missouri Department of Higher Education, that would help determine how to allocate funding increases for higher education. Performance measures will include metrics on student retention and graduation rates, and all schools must have  an institutional performance measure to gauge student job placement “in a field or position associated with a student’s degree.”

Missouri used performance standards to determine higher education funding increases in the current year's state operating budget. The legislation seeks to ensure the practice continues.

It should be noted that job placement statistics as a performance measure may not be used during years when the state unemployment rate is higher than the previous calendar year’s rate.

Another issue that will have to be addressed is the approach the state will use to measure job placement. A growing number of states are matching student records with Unemployment Insurance (UI) wage records to track their graduates’ employment outcomes. UI wage records can show whether a person is employed and their earnings, but they do not include occupation, so may not be useful if Missouri wants to measure job placement in specific fields.

WDQC’s policy agenda calls for the assessment of employment outcomes for all education and training programs. Missouri is a step closer to putting this principle into practice.

In addition to Missouri, the National Conference of State Legislatures reports that a few other states use employment outcomes as performance measures for higher education. Five states—Colorado, Georgia, Montana, South Dakota and Virginia—are currently transitioning to some type of performance funding (not necessarily employment outcomes), which means the legislature or governing board has approved a performance funding program and the details are being finalized.