The Texas Tribune: Colleges Rewarded for Outcomes, but Which Ones?

A financing system that includes more “outcomes-based funding” has strong support, including that of Raymund Paredes, the Texas higher-education commissioner, and business leaders like Woody Hunt. But policy makers cannot agree on what outcomes to measure and how to encourage them.

Representative Dan Branch, Republican of Dallas and chairman of the House Higher Education Committee, passed a major bill on the subject this session. The final version approved by the full Legislature, however, stops short of actually implementing an outcomes-based system, and instead provides guidelines for the Texas Higher Education Coordinating Board and instructs the board to return next session with new proposals.

With the session over, the Senate Higher Education Committee chairwoman, Judith Zaffirini, Democrat of Laredo, said the question was still “if, not when,” Texas might adopt such a system. The state’s current financing formula is based on course enrollment.

Even getting to this point has been difficult. Lawmakers rebuffed Mr. Paredes’s initial proposals for failing to target the right outcomes. His plan focused on course completions instead of graduations. After a new proposal was drawn, Mr. Branch had to convince House leaders that the approach was not related to controversial strategies pushed by Mr. Perry and the Texas Public Policy Foundation, a conservative research group.

The Coordinating Board’s last proposal would tie financing to total degrees awarded, as well as to degrees awarded to at-risk students and in critical fields. It would also reward institutions for surpassing predicted graduation levels or penalize them for falling short. Under this proposal, some of the schools that produce the greatest number of graduates, including the University of Texas at Austin and Texas A&M , appear to lose financing.

“How is it that an outcomes-based approach ends up diverting money away from the two most productive institutions in the state? That’s a puzzle,” said U.T.’s president, William Powers Jr.

The proposal was part of the House budget legislation but was omitted from the final product. Representative Scott Hochberg, Democrat of Houston, who heads a key subcommittee, said it was included to express support for the idea, not for the methodology. “It’s such a mess — it’s sort of a black box,” he said. “I know the equations have been all laid out, but it’s hard to know what they all mean.”

Senator Kirk Watson, Democrat of Austin, concerned about pitting universities against one another in a “zero-sum game,” was among those who pushed for taking more time to find a better formula. “We want to do the appropriate, correct, visionary things to increase positive outcomes,” he said.

Still, Mr. Paredes considers passage of the bill a success and looks forward to strengthening his case for the most recent proposal over the next two years. “We’ve essentially come to a concurrence that outcomes-based funding is something that we ought to do,” he said.

Catherine Frazier, a spokeswoman for Mr. Perry, said, “If it doesn’t accomplish what he wanted to, he’ll look forward to continuing to pursue that in the future.”