Four years after first introducing performance-based funding for public colleges in the state, Indiana's Higher Education Commission is upping the ante.
Indiana's public colleges and universities will now be asked to double the number of degrees they award, cut costs, improve on-time graduation rates, use assessments to track learning, and create a common general education curriculum as part of a new strategic plan that keeps an emphasis on performance-based funding.
Approved unanimously Friday by the state’s Commission of Higher Education with the blessing of Republican Gov. Mitch Daniels, the ambitious plan expands on similar goals created in 2008 with the hope of improving Indiana’s college attainment rates and student loan burden, both of which rank among the nation’s worst.
• Increase the overall completion of degree or certificate programs.
• Increase the percentage of remedial students who move on to general education courses.
• Increase student persistence, measured by the number of students who complete set numbers of credit hours.
• Increase the on-time completion of degree or certificate programs.
• Reduce the cost per degree.
• Reduce student debt.
• Assess learning outcomes.
• Make transferring easier by creating a statewide core general education curriculum.
• Track the return on students’ investments by looking at job placement rates, licensure rates and annual earnings.
Even as state money for colleges has decreased in recent years, Indiana has remained steadfast  in its use of performance-based funds to encourage reforms at both two- and four-year institutions. State leaders frame those funds as a way to reward public colleges that meet goals such as increasing graduation rates or helping students complete remedial courses.
The plan’s goals are sweeping, calling for Indiana colleges to award 120,000 degrees and certificates by 2025 -- up from 60,000 today -- so that 60 percent of adults have some sort of postsecondary credential. Four-year institutions should have a 50 percent on-time graduation rate by then, almost two times the current rate. At two-year colleges, achieving goal of a 25 percent on-time graduation rate will require an almost sextupling of today’s numbers.
While doing that, said Indiana Higher Education Commissioner Teresa Lubbers, colleges should be looking at ways to decrease their cost per degree, use assessments to track learning and offer better instruction. The goals might seem ambitious, but Lubbers said they're necessary.
“We’ve had some people say you can’t really focus on completion, productivity and quality,” she said. “My answer is, ‘Which one would you leave out?’ Those kinds of goals may seem aspirational, but we see them as imperative.”
The Indiana University System’s faculty council supports much of the new plan, said its co-secretary, L. Jack Windsor, but has misgivings about how some of the performance-based funds are now awarded. By focusing on how much a campus’s graduation rate increases, the metric can disadvantage high-achieving institutions with limited room to grow, said Windsor, an associate professor of oral biology at Indiana University Purdue University at Indianapolis who is also president of that campus’s faculty council.
But Windsor said faculty members generally aren’t opposed to performance-based funding in principle and agree that universities need to increase student performance while controlling their costs.
“We’re all for performance-based if the metrics are the correct ones and they treat everybody fairly,” he said. “We believe in assessment, evaluation.”
Indiana's 2008 strategic plan started the focus on increasing the number of degree recipients, as the realities of a shifting economy made it clear that the state’s once-plentiful blue-collar jobs were disappearing or requiring more technical expertise. The updated measures establish benchmarks for 2018 and aim to double the state’s public higher education capacity by 2025.
That’s not to say that everyone needs a four-year liberal arts degree, Lubbers said. For some, a one-year vocational program or a community college degree might be sufficient.
“We were a Midwestern manufacturing state, and we’re still a manufacturing state,” she said. “But even in manufacturing, you need fewer people to do those jobs and those people need higher skill levels.
“We need more of all kinds of degrees in order to fill the pipeline with the type of knowledge-based workers we need to have.”
While higher education has become a dirty phrase in some factions of the Republican party -- take presidential candidate Rick Santorum’s recent remarks  as evidence -- Indiana’s plan to produce 60,000 more degrees in 13 years comes with a Republican governor and Lubbers, a Daniels appointee and former Republican state senator, as higher education commissioner.
Daniels also supported last year's creation of Western Governors University Indiana , a local version of the online nonprofit that caters to adult learners and allows students to earn credit through assessment of accumulated competencies.
The fact that higher education has become such a salient issue in Indiana speaks to the changing times and the urgency of increasing credentials in a state that ranks 42nd in educational attainment and 41st in income per capita, Lubbers said.
“When you look at a knowledge-based economy,” Lubbers said, “it’s very difficult to believe you don’t need more students in your state to have higher education.”
The state will rely on performance-based funding to hasten some of the changes. Five percent of state allocations are now based on those measures, and a current budget proposal would up that one percentage point in each of the next two years.
“Performance funding is just now getting to the point where it’s at a level where these people need to consider it very seriously,” Lubbers said.
Those discretionary funds will give campuses incentives for working within the new strategic plan, which asks for a set of common core courses to be in place statewide by next year and for limiting degree requirements to 120 hours. The plan also calls for campuses to calculate and reduce the cost for each degree, but Lubbers acknowledged that’s hard to do while accounting for differences in institutional missions.
Still, Daniels said in a news release that the ambitious changes are needed if Indianans are going to be competitive for new jobs that almost always require some sort of higher education.
“The Commission’s strategic plan outlines a clear path to what has always been our number-one goal: increasing the personal income of Hoosiers,” the governor said. “To do that, we need a highly trained workforce, and that means our higher education system must be affordable, high quality and purposeful in its efforts to dramatically increase the percentage of Hoosiers with a college degree or certificate.”