Governors Call for Linking University Financing to Performance

U.S. governors, who slashed higher- education budgets by $5 billion this fiscal year, say financing for public colleges and universities should be based on graduation rates, “return on investment” of taxpayer dollars and other performance measures.

The National Governors Association recommended that states use metrics, such as the number of degrees per $100,000 appropriated, to set higher-education policy and funding, according to a report released yesterday at a conference in Salt Lake City.

“Education is absolutely key in putting America back to work,” Washington Governor Christine Gregoire, chair of the governors group, said at its opening session. Making sure people are getting the education and training needed to compete in the global economy is “one of the most important things we need to consider as governors,” she said.

Facing the fourth straight year of budget deficits, U.S. governors recommended cuts to colleges and universities that were twice as deep as to public schools, according to a survey from the National Association of State Budget Officers and the NGA.

The California State University and University of California systems, and public institutions in Pennsylvania and New Hampshire, where state funding was slashed almost by half, have recently raised tuition as much as 12 percent to deal with record state funding cuts.

Questions From Taxpayers

Gregoire said governors need to be prepared to answer questions from taxpayers about how colleges are performing and spending public funds. The NGA report highlights performance measures used in Gregoire’s home state of Washington as well as performance funding initiatives in Indiana, Arkansas, Colorado and Ohio, where some public support is tied to benchmarks such as graduation rates and minority achievement.

The report on increasing accountability said higher- education institutions should be evaluated by measures including the number of undergraduate certificate and degree completions per 100 students enrolled and the number of degrees awarded compared with the number of adults in the state without postsecondary certificates.

“While it is unfortunate that governors have had to reduce the budgets for higher education, they also realize they aren’t using the money as well as they could,” John Thomasian, director of the governors’ Washington-based Center for Best Practices, said in a telephone interview earlier this week.

“The post-secondary system is not often accountable to the real world,” he said. “Governors are recognizing we are investing in these systems. We need to make sure they are performing to the level we need them to.”

Funding Return

Thomasian said the NGA is focused on higher education at its meeting in Salt Lake City because governors recognize that state funding will one day return to previous levels. He said current college completion rates are not sufficient to provide the graduates needed for future U.S. economic needs.

Massachusetts Institute of Technology President Susan Hockfield called on governors to make education more affordable, support changes in the U.S. immigration system for highly educated workers, press for federal research funding and support entrepreneurial cultures at their state institutions.

While graduation rates need to be taken into account, governors should also be careful how much financial support they cut, Hockfield said in an interview before her speech.

To contact the reporter on this story: Amanda Crawford in Salt Lake City at acrawford24@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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