Education funding should be performance-based

The state of Alabama faces a seemingly intractable problem with its system of higher education. Public colleges and universities across the state do not receive sufficient funding to do the job that is expected of them, and research institutions, which are a key factor in a state's economic competitiveness, are not receiving the resources to compete with comparable institutions in other states.

In spite of the funding inadequacy, Gov. Fob James wants to subtract another $100 million out of the higher education budget.

Even when made with the best of intentions, the idea of cutting the state's investment in higher education is unwise. Alabama is trying to catch up with the rest of the South in economic development, and the most important factors in the state's ability to compete will be our educated workforce and our intellectual resources. We in Alabama do not need to handicap ourselves any further in a race that will influence the future of our children and grandchildren.

In some recent analyses we conducted for the Auburn University Board of Trustees, we found that at no time during the past 15 years did Auburn's state appropriation per student come anywhere close to the average for comparable universities in the Southern Region. In fact, the cumulative difference - competitive disadvantage - was more than $330 million dollars.

In effect, the state of Alabama has given each of its neighboring states a competitive advantage in economic development just by failing to maintain adequate appropriations. It is not hard to spot one major reason why Alabama is not keeping pace with its neighbors.

The state has yet to see the impact these funding shortfalls have on nationally competitive institutions such as Auburn, but that situation can change quickly. If we don't address the funding dilemma, our best faculty are going to leave and we won't be able to replace them with comparably qualified people. The quality of our academic programs will decline, and the state of Alabama will witness the deterioration of one of its most valuable assets. What do we need to do? Here is what I recommend.

• Gov. James needs to appoint a blue-ribbon Commission on the Future of Higher Education. We need to take this issue out of the political arena and let our most thoughtful and effective leaders -- from industry, education and government -- recommend what needs to be done, with a commitment from the governor and legislature to initiate legislation to implement what is proposed.
• The Alabama Legislature needs to adopt appropriate accountability measures to assure that the state is getting the results it needs and should expect for the investment of tax dollars it makes. This accountability should be in the form of objective effectiveness measurements of the educational programs and other services that are offered by each institution. In each case the assessment should be determined by the purposes and goals of the educational program involved.

The accountability approach is founded on two basic principles:

• As a purchaser of educational services provided by the educational institutions, the State of Alabama should establish standards or specifications that those services are expected to meet.
• Educational institutions should be expected to identify clearly what the goals or purposes of a particular educational program or activity are and should be able to measure whether or not those goals or purposes have been achieved.

Each institution should receive a base budget that would be based on its enrollment and the number of full-time educational programs offered. There are objective data that can be obtained as to the cost associated with any program. Given the mix of programs that an institution has and the enrollment in each program, a base budget can be derived. This base budget will vary on an annual basis as there are changes in total enrollment and in the distribution of enrollment across the various programs.

Any money allocated beyond the base budget should be on the basis of performance - i.e., the success achieved in each of the programs or activities in which state funds are invested.

The measurement of success in any educational program should occur at two levels. The first is the effectiveness of the school in getting a student through the educational program successfully, and the second is the success that the student has in achieving his or her objectives after having pursued the educational program. For most, those objectives are to position the individual for career advancement; for others, the objective is to advance to the next level of education.

If adequate funds were allocated on a performance basis, the institutions would be highly motivated to work more effectively with their students to help them complete their educational programs and assist them in achieving their career or educational advancement goals. This would be of tremendous benefit to the students who participated in the process, and to the state because it would likely produce better trained students at lower cost. Equally important, the institutions that are most effective in delivering their educational programs and in working with their customers (the employers of their graduates) should be those that are rewarded.

The state would ultimately benefit by getting a better return on its investment in higher education. The weak or ineffective programs or institutions would not be able to compete, as students would gravitate toward those programs that have the highest degree of success and where they would have higher probability of benefiting.

Alabama has too many institutions of higher education. But this state will never be able to close institutions through political action. Yet, the state should expect and require institutions that receive tax dollars to meet certain standards of performance as a basis for receiving an appropriation. If the state would establish such standards and allocate its money on the basis of performance, the market would determine - as it does in industry - who would survive and prosper.