For Immediate Release
June 17, 2015

Board of Higher Education Approves Performance Funding Plan for State Universities

Nine Universities to Receive Portion of State Funding Based on % of Students Earning Diplomas

BOSTON, MA – June 16, 2015 – In an effort to hold the state’s public colleges and universities more accountable for the number of students who successfully complete degree programs, the Massachusetts Board of Higher Education today approved a new performance-based funding formula for the Commonwealth’s nine state universities, one that will tie a portion of their future state funding to the overall number and type of graduates they produce.

“This funding formula was developed at the direction of the Massachusetts legislature and with the close cooperation of and in consultation with the state university presidents,” said Richard M. Freeland, Commissioner of Higher Education.  “It will reward our public campuses for helping some of our neediest students earn their degrees, and it also will improve our ability to provide graduates who are ready for work in the knowledge-based industries that drive economic growth.”

The state university funding formula will be applied to $5.6 million expected to be allocated to the institutions in a new line item in the FY2016 budget.  The funding, which is separate from the base appropriation for individual campuses, will be distributed to campuses once the new state budget is approved.  It is based on a complex formula of metrics and weights developed by NCHEMS, the National Center for Higher Education Management Systems.  An institution’s share of the funding will be determined in part by its five-year graduation rates, year-over-year increases in degrees awarded, the numbers of students who reach 30 and 60 credit hours each year (with additional points awarded for low-income students who qualify for federal Pell grants), as well as numbers and types of degrees awarded (with additional points awarded for degrees in “priority fields” such as STEM, health, business, and education.)  Campuses are also given points for “degree productivity,” the cost of producing a degree per $100,000 in total revenue.  The metrics used in the formula align closely with the Vision Project, the BHE-approved strategic agenda for higher education.

Three state universities – Massachusetts Maritime Academy, Massachusetts College of Art and Design, and the Massachusetts College of Liberal Arts – will be exempt for those aspects of the formula that do not align with their unique missions, and instead will receive a “carve-out” of 5% of the total funds allocated.

“The state universities provide the best value proposition for a four-year degree in Massachusetts,” said Barry M. Maloney, President of Worcester State University and Chair of the nine-university Council of Presidents.  “Performance-based funding recognizes the state universities’ progress in meeting the Commonwealth’s need for more college graduates and narrowing the achievement gaps certain populations experience.  In these ways and more, we are measuring up.  Recognizing performance well-done is important and can benefit students in the long-run when combined with adequate state appropriations.”

The state universities join the fifteen community colleges, which have been receiving performance-based funding since 2013.  Although the two formulas differ in many ways, both incentivize campuses to close achievement gaps and improve the graduation rates of under-represented minorities and low-income students.

Massachusetts is one of 24 states that has embraced performance or “outcomes-based” funding for one or more segments within its public higher education system.  The move to such funding formulas represents a shift from enrollment-based funding mechanisms, which reward higher education institutions for the number of students they enroll but don’t necessarily graduate.  Performance-based funding is seen as a way to better align system performance with states’ need for graduates, students’ need for credentials, and taxpayers’ need for accountability.

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