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Performance based state funding has become a norm everywhere and colleges in Texas are no exception. They are all set to find ways to improve performance even as the alumni salaries and employment rates will now be linked directly to forty five per cent of their annual budget.

As the proposal is still in the development stage, the Texas State Technical College System has been provided with legislative encouragement by the state lawmakers. It was only a year back that the Legislature mandated devising a formula for funding that rewarded not the training time but projections of graduate earning and job placement.

Strongly believing that the system will function efficiently, system officials support this initiative and are planning voluntarily on forging ahead. Taking pride in being the first, system chancellor Michael L. Reeser said that it is inevitable that public higher education must follow methodologies that are based on outcomes.

Coordinating board of the Texas Higher Education is being collaborated with by the system that includes 11 centers and 4 colleges across the states. In Texas, high school degree holders’ earnings baseline is being compared to salaries earned by graduates with the help of the state’s job data. Reeser said that this is a complex and challenging work that will also factor in measures that impact the economy of the state such as overall alumni employment rate.

There will be no new money infused into this plan and if there is a reduction in the employment outcomes, colleges will have to suffer cuts. To account for those who move out of Texas for jobs, through percentage reductions and other discounts will be taken into account.

Instructional portion of the contribution of the state will be determined by the formula even as state contributes three quarters of the overall budget of technical colleges. The final proposal will be considered by the state Legislature next year.

Technical college system relies strongly on the workforce and this is one of the reasons why this funding model will be challenging to implement in most other colleges says experts like Reeser.
In two year colleges, this funding model may work well as the mission is narrower and prospective students are lured by “return on investment” advertising. Reeser says that it will not work for research universities and other comprehensive institutions in Texas.

In the history of American higher education, this funding policy proposal is the most aggressive performance based initiative. National Association of System Heads executive and finance director Jane Wellman says that nothing as sweeping as this has ever been attempted before. She feels that this experiment by Texas technical colleges could actually work. She also says that this is a heavy formula that is outcome based and must not be attempted by most other colleges.

She feels that the problem of reduced state funding for colleges and increasing college costs certainly cannot be solved by performance based funding programs. Higher education finance is a much deeper issue that cannot be fixed by this, according to Wellman.