Texas lawmakers, university leaders consider performance-based funding in hearing

In a legislative hearing Wednesday, Texas university presidents praised a possible new funding practice that’s lately grown more popular around the nation: Having the state give campuses bonus money based on the number of students they graduate.

A so-called performance-based funding system would also give the colleges and universities extra dollars if they graduate low-income students or students who were not prepared academically when they first entered college.

This idea was one of several elements to Texas’ higher education funding system that lawmakers and university leaders considered Wednesday in a joint hearing, which follows a contentious legislative session in which higher education advocates feared significant slashes to their state funding.

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Many large research universities were spared by the state budget, but some smaller schools saw 10 percent cuts, and lawmakers expressed frustration with the formula the state uses to finance its universities. The committee of state senators and representatives that met Wednesday was tasked with examining how public universities are funded before the next legislative session begins in 2019.

The state’s higher education coordinating board has long advocated for performance-based funding, a model in place in more than half of U.S. states and some of Texas’ community and technical colleges.

University presidents and some lawmakers appeared to agree on Wednesday, praising the system as a good incentive for universities to focus on getting students diplomas and into the workforce.

John Sharp, chancellor of the Texas A&M University System, said universities are like private companies and “will do whatever necessary to get money,” therefore leading to better student outcomes.

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Campus presidents and lawmakers also discussed funding disparities between the University of Texas and Texas A&M Systems and other state schools.

The Texas Constitution requires that the multibillion-dollar Permanent University Fund solely finance the Texas A&M and University of Texas Systems, drawing the ire of the University of Houston and other universities that want access to that money.

Brian McCall, who leads the Texas State University System, said that the Permanent University Fund distributes about $1,220 per student each year. The Higher Education Fund, which backs dozens of other universities – gives about $440 annually per student.

“We have to do more than just dream big,” said University of Houston System Chancellor Renu Khator. “It takes a lot of investment.”

Lindsay Ellis writes about higher education for the Chronicle. You can follow her on Twitter and send her tips at [email protected]