Performance Based Funding: Not A Partnership


The Governor, picking up on a budget request by the Chancellor and the Board of Governors (BOG) for the California Community Colleges, has proposed funding part of the system's budget on an incentive, or performance basis. Taking their proposal one step further, the Governor established the outcomes: degrees, certificates, course completion, transfer and transfer ready students, persistence and retention rates, specialized training, earnings after education, movement from remedial to college level work. Clearly, the Governor upped the ante: not only were the indicators defined, statewide performance goals and measures would now be determined by consensus of the Chancellor, the Department of Finance, the Legislative Analyst, the Office of Child Development and Education, and the California Post Secondary Education Commission (CPEC). The increasingly centralized definition of productivity and efficiency embodied in this proposal flies in the face of the local nature and character of the community college movement in California.

The Chancellor claimed that the proposal, dubbed "Academic Excellence" and later, "Partnership for Excellence," was needed to convince the Governor to re-invest in the system. Often referring to the proposal as a "quid pro quo," the Chancellor asserted that the Department of Finance and legislators in general were looking for assurances that the taxpayers' money was well spent. Key staff members in the Chancellor's office also asserted that the system needed something that would "sell," that was "sexy," in order to compete with K-12 reduced class size in the allocation of scarce Proposition 98 dollars. The Chancellor was asking for some $100 million per year over ten years to boost system funding to within $1500 per FTES compared to other states (we're now at $3500, well below the national average of $6000); in exchange he offered a departure from the historic, enrollment-based funding system. Moving to a districtspecific payout mechanism on the basis of performance on selected indicators of student achievement, the Chancellor argued, would assure the state that the community colleges were serious about accountability.

While $100 million more per year would be most welcome, the Chancellor and the Board have found opposition to the idea of district-specific pay out to be uniform among members of the consultation council and an ongoing task force considering the approach as well as among the various institutional and organizational players within the system. The Master Plan crystallized the central tenet embodied in the community colleges: that all citizens who have the ability to benefit from instruction would have access to affordable, quality educational opportunity. If one considers the cumulative impact of $1 billion differentially awarded to districts over a 10 year period, it's easy to see that such an approach could undermine the very foundation of our system. Differential payouts on the basis of specified student achievement would clearly reward the "haves" in our college communities over the "have nots." While there has been recognition by the Chancellor's office of the need to level the playing field, it has not been built into the proposal.

The Chancellor has gone farther than working with the Governor to put performance funding in budget language. Nussbaum has proposed to the Board of Governors "A Strategic Response" document which would enshrine this approach as policy. Already, legislation drawn up by the Chancellor's office and carried by Migdin (AB2005) would put into law state indicators and a performance funding mechanism. And performance funding for a portion of the budget is among the recommendations made by G. Hayward for revision of the Education Code.
In a previous Rostrum, (September 1997) we noted some of the ethical and methodological concerns with the performance based funding approach. The general incentive funding approach has been marked with predictable problems with goal displacement: the tendency to promote cosmetic improvement in indicators rather than solid advancement in institutional objectives. Furthermore, the use of redundant measures (in this case the overlapping variables of high completion, transfer and graduation rates) will exaggerate the benefits accruing to colleges whose student profiles fit the underlying, interrelated causal factors of higher socioeconomic status, parental education and access to superior high school instruction.

Evidence against the utility of performance based funding approaches in higher education continues to surface. A RAND sponsored study examined in depth the experience of four states that were early implementers of the 1990 Carl Perkins Vocational and Applied Technology Act that mandated use of state performance-based accountability systems. RAND found that while substantial progress has been made in designing and implementing the measures and standards, as of 1994, little attention had actually been paid to translating the resulting data into improvements in programs or services to students. (Stecher, Hanser, & Hallmark, Improving Perkins, 1994)

According to a study released by the Association for the Study of Higher Education (ASHE), a harbinger of the future of performance funding can be found in Europe where such efforts have been ongoing in higher education for a longer time. There "the role of performance indicators and funding is declining" amid "growing doubts about the validity of measures in evaluating and rewarding quality-this has lead to a retrenchment in such countries as the Netherlands and the United Kingdom." More focus is being placed on "national and institutional experiments with assessment techniques like peer reviews and quality audits, relegating performance indicators to the role of supporting tools in such efforts." (Gaither, Nedweck & Neal, Measuring Up, 1994)

The California community college system should profit from the international experience; it should avoid the pitfalls which have clearly attended hasty, and ill-conceived efforts at performance funding in Texas and South Carolina. The state simply cannot afford to waste funds in chasing chimera-even if wrapped in the appealing rhetoric of accountability. Such simple solutions to complex problems have proven short lived and expensive. A recent Crosstalk article characterized South Carolina's performancebased budgeting plan as "mired in detail and confusion." The plan utilizes some 37 variables for the entire budgets of all higher educational institutions in the state. As one university official put it, "This is costing the state a fortune... Higher education is in such tough shape in this state, the situation is growing more and more desperate, and we're spending all this time and effort on this exercise." (Trombley, Crosstalk 1998)

The California community colleges have indeed done much with decreasing shares of state revenue. The Chancellor and the Board are right that the state needs to reinvest in the success of our students. But, it needs to do so without gimmicks, and without costly and unproven funding mechanisms. Utilizing UI wage data, Friedlander (1996) has shown that degrees and certificates, as well as individual courses, quite literally "pay off" for our students. The Chancellor's office already tracks some 60 accountability variables in the state MIS system, as mandated by AB1725. The system may be ready to commit to generally agreedupon system goals-but trying to induce certain behaviors by penalizing the communities and students at schools which do not make acceptable progress on improving such measures as completion rates will serve only to further disadvantage districts already in need of more, not less, support. Punishing students and whole regions of the state for not making arbitrary performance gains in serving areas having a higher percentage of underprepared students, and/or students who must work while in school, hardly sounds like promising ground for enhanced academic excellence or for a partnership in the state.

While the Chancellor and the Board proposed the Partnership for Excellence to increase funding, already that hope is problematic. In exchange for improved performance on the selected indicators, we are told, we will receive significant increased investment in the system. But the system has no means to guarantee that the funds will be delivered as the proposal makes its way through the Department of Finance and the legislature. The governor has already halved the amount by earmarking $50, not $100, million for the Partnership. Furthermore, recent recalculations of Proposition 98 revenue indicate that the Governor's original budget may have been based on faulty projections. If so, it is conceivable that the overall amount proposed for the community colleges in the Governor's budget might be revised downward. In that case, it may be that the Partnership would be funded while other system needs go wanting. Many organizations, like the Community College League of California (CCLC) and the Academic Senate, have insisted that the Partnership should not be funded at the expense of other budget priorities, especially growth.

If we look at the budget requests which were not funded in the Governor's budget, we can see what has been displaced by the funds earmarked for the Partnership. Augmentations to the Puente Program, disabled student programs and services, and matriculation were not funded. Nor was the hiring of more full-time faculty, or an ongoing investment in the management information system (which presumably will be used to report and track district and college performance). One-time requests totaling almost $150 million were given a one-time block grant of only $40 million. These included requests for such essentials as instructional equipment and library materials, maintenance and repairs, ADA architectural barrier removal, and student support services equipment.

To date, economic development and CalWORKS, important additions to our historic mission, have been largely funded out of redirected Proposition 98 funds. The California community colleges face increasing demands to meet state priorities; we need a corresponding state commitment to help us meet these expectations. However, efforts to secure increased investment in the community colleges must be grounded in sound educational policy, not political maneuvers such as "performance payouts."

The Academic Senate has already gone on record with some five resolutions at the Fall 1997 plenary session opposing performance-based funding. The Senate intends to make these concerns clear in testimony before the legislature; legislators need to hear from us the likely educational implications of such a funding approach. Local senates should educate their faculty, boards and administrators of the problems and dangers of moving toward district specific payouts as a means of distributing state educational resources.

No one constituency or organization by itself will be able to counter performance based funding. We can and should come together with other affected groups-DSPS, Puente, Matriculation directors and staff-to sound the alarm over the direction our system is taking. We need to work with local trustees and administrators, staff and students to raise public concern over this policy direction.

The Academic Senate, professional faculty and collective bargaining organizations, along with organizations representing administrators, CEO's, trustees and students have all registered opposition with the Board of Governors-now we must go on record with our local assembly persons and state senators. If we act now, together we can more effectively show the growing opposition to the reduction of accountability to crass payout schemes, while building a critical mass ready to defend student access and educational quality from those willing to compromise it. In the long run, access and educational quality are the prizes upon which we must keep our eyes focused.