KY Policy Blog

How Would the Performance Funding Proposal Impact Low-Income, Minority and Academically Underprepared Students?

By Ashley Spalding
February 20, 2017

We have previously written about how while a performance model could potentially promote success for all Kentucky students, depending on how it is designed, it could instead result in unintended consequences that have a negative impact on low-income, minority, adult and academically underprepared students. The specific funding model proposed in Senate Bill 153 could do more to prevent these unintended outcomes.

Heavily Weighting Metrics for Low-income and Minority Students

A concern is  public universities may be incentivized to restrict admissions to only the most academically prepared students in order to increase performance on metrics in the funding model. Such practices reduce access to higher education for low-income and minority students.

Recent research found restrictions in student admissions reported under performance funding in Indiana, Ohio and Tennessee. Another study found schools subject to performance funding receive less Pell Grant revenue than colleges that do not, suggesting there are potentially strategic behaviors at institutions under performance funding to recruit students from higher-income families. In addition, examples of Historically Black Colleges and Universities (HBCUs) struggling under performance funding are concerning. In response to the introduction of a performance funding system in Florida, FAMU (Florida Agricultural and Mechanical University) the state’s historically black public university, began limiting the number of students admitted conditionally because they did not meet minimum admissions criteria. Historically students who would not be eligible for admission into larger four-year institutions have been able to find a place at HBCUs like FAMU that help bring these students academically up to speed. While at the height of FAMU’s enrollment almost 80 percent were these Access and Opportunity students, in 2015 just 28 percent were.

One way of preventing this unintended consequence is to heavily weight student success outcomes for low-income, underrepresented minority and academically underprepared students. While the proposed model does indicate specific metrics for degree attainment for low-income and minority students, the bill does not specify what shares of the funding they will be — and those described in the Performance Funding Work Group report were quite low.

Another way to address these unintended consequences is to incentivize institutions to serve low-income and minority students in the first place — for instance, by tying some funding specifically to enrolling these students and/or at least weighting course completion more heavily for them. It is more costly to educate and graduate academically underprepared students and the model does not take these additional costs into account.

Building in More Mission Differentiation

A related unintended consequence is the narrowing of institutional missions, where important aspects of mission are dropped or deemphasized because they are not addressed by performance funding metrics.

Such a consequence should be of concern to our state as Kentucky’s Postsecondary Education Improvement Act of 1997 established separate missions for its research universities, regional universities and community colleges. These differing missions would seem to require different measures of performance, but the model has the regional institutions competing in the same performance pool as the research universities and on the same metrics. As noted in a recent article on the negative impacts of performance funding on HBCUs, often under performance funding models “schools do not receive credit for the work of raising up at-risk and under-resourced students; but they get all of the punishment for enrolling students who do not persist and complete due to lack of readiness or lack of funds.”

The mission of the state’s regional universities, to assure statewide access to quality bachelor’s and master’s degrees, involves serving large shares of low-income and academically underprepared students. It would clearly be detrimental if the state adopted a model that reduced access to education for some Kentuckians currently served by these schools by incentivizing these institutions to become more selective or resulting in inadequate funds. The model could also end up putting pressure particularly on the smaller institutions like Morehead State University, that are the most disadvantaged in the model, to raise tuition more than they would have otherwise, which would also reduce access. College affordability is already a barrier for too many students in our state.

Strengthening Evaluation and Addressing Funding Adequacy

The funding model includes an evaluation of its implementation every three years in order to determine if any unintended consequences are occurring and make needed adjustments, which is an important positive aspect of the proposal. However, it would be strengthened by including more details about what the evaluation would involve, what exactly would be measured and what actions should be taken. Transparency should also be built into that process and individuals/groups explicitly representing student and citizen interests should be added to the involved work group outlined in the bill.

In addition, increasing outcomes especially for academically underprepared students requires adequate institutional resources, which is a challenge after so many rounds of state budget cuts to higher education. This context of underfunding makes implementation of the model difficult and could make unintended consequences more likely.

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