A recent Inside Higher Edarticle about the analysis of state performance funding formulas by Seton Hall University researchers Robert Kelchen and Luke Stedrak might unfairly lead readers to believe that such formulas are driving public colleges and universities to intentionally enroll more students from high-income families, displacing much less well-off students. It would be cause for concern if institutions were intentionally responding to performance-based funding policies by shifting their admissions policies in ways that make it harder for students who are eligible to receive Pell Grants to go to college.
Kelchen and Stedrak’s study raises this possibility, but even they acknowledge the data fall woefully short of supporting such a conclusion. These actions would, in fact, be contrary to the policy intent of more recent and thoughtfully designed outcomes-based funding models pursued in states such as Ohio and Tennessee. These formulas were adopted to signal to colleges and universities that increases in attainment that lead to a better-educated society necessarily come from doing a much better job of serving and graduating all students, especially students of color and students from low-income families.
Unfortunately, Kelchen’s study has significant limitations, as has been the case with previous studies of performance-based funding. Most notably, as acknowledged by Kelchen and Stedrak, these studies lump together a wide variety of approaches to performance-based funding, some adopted decades ago, which address a number of challenges not limited to the country’s dire need to increase educational attainment. Such a one-size-fits-all approach fails to give adequate attention to the fact that how funding policies are designed and implemented actually matters.
For example, the researchers’ assertion that institutions could possibly be changing admissions policies to enroll better-prepared, higher-income students does not account for differential effects among states that provide additional financial incentives in their formulas to ensure low-income and minority students’ needs are addressed vs. those states that do nothing in this area. All states are simply lumped together for purposes of the analysis.
In addition, the claim that a decrease in Pell dollars per full-time-equivalent student could possibly be caused by performance-based funding fails to account for changes over time in federal policy related to Pell Grants, different state (and institutional) tuition policies, other state policies adopted or enacted over time, changes in the economy and national and state economic well-being, and changes in student behavior and preferences. For example, Indiana public research and comprehensive universities have become more selective over time because of a policy change requiring four-year institutions to stop offering remedial and developmental education and associate degrees, instead sending these students to community colleges.
If any of these factors have affected states with newer, well-designed outcomes-based funding systems and other states with rudimentary performance-based funding or no such systems at all, as I believe they have, then there is strong potential for a research bias introduced by failing to account for key variables. For example, in states that are offering incentives for students to enroll in community colleges, such as Tennessee, the average value of Pell Grants at public bachelor’s-granting institutions would drop if more low-income, Pell-eligible students were to choose to go to lower-cost, or free, community colleges.
I agree with Kelchen and Stedrak that more evaluation and discussion are needed on all forms of higher education finance formulas to better understand their effects on institutional behavior and student outcomes. Clearly, there are states that had, and in some cases continue to have, funding models designed in a way that could create perverse incentives for institutions to raise admissions standards or to respond in other ways that run contrary to raising attainment for all students, and for students of color in particular. As the Seton Hall researchers point out, priority should be given to understanding the differential effects of various elements that go into the design and implementation of state funding models.
The HCM Strategists’ report referenced in the study was an attempt by us to inform state funding model design and implementation efforts. There needs to be a better understanding of which design elements matter for which students in which contexts -- as well as the implications of these evidence-based findings for policy design and what finance policy approaches result in the best institutional responses for students. There is clear evidence that performance funding can and does prompt institutions to improve student supports and incentives in ways that benefit students.
Analysis under way by Research for Action, an independent, Philadelphia-based research shop, will attempt to account for several of the existing methodological limitations correctly noted by Kelchen and Stedrak. This quantitative and qualitative analysis focuses on the three most robust and longest-tenured outcomes-based funding systems, in Indiana, Ohio and Tennessee.
Factors examined by Research for Action will include the type of outcomes-based funding being implemented, specifics of each state’s formula as applied to both the two- and four-year sectors, the timing of full implementation, changes in state policies over time, differences in the percentages of funding allocated based on outcomes such as program and degree completion, and differences in overall state allocations to public higher education. And, for the first time, Research for Action will move beyond the limitations of analyses based primarily on federal IPEDS data by incorporating state longitudinal data, which give a more complete picture.
As states continue to implement various approaches to funding higher education, it is essential to understand the effects on institutional behavior and student outcomes. Doing so will require more careful analyses than those seen to date and a more detailed understanding of policy design and implementation factors that are likely to affect institutional responses. Broad-brush analyses such as Kelchen and Stedrak’s can help to inform the questions that need to be asked but should not be used to draw any meaningful conclusions about the most effective ways to ensure colleges and universities develop and maintain a laser focus on graduating more students with meaningful credentials that offer real hope for the future.
Martha Snyder is a director at HCM Strategists, a public policy advocacy and consulting firm.
A coalition of consumer groups, legal aid organizations and unions object to the state of New York joining an agreement that would change how colleges offering distance education courses in the state would be regulated. As coalition members asserted in an Inside Higher Ed article, the state would be ceding its authority to other states. Students would be left with no protection from predatory colleges, and it would make it easier for “bad actors to take advantage of students and harder for states to crack down on them.”
That all sounds ominous. It would be, if it were true.
Even in the digital era, the regulation of educational institutions is left to each state. The resulting array of requirements confuses both students and institutional faculty and staff. The State Authorization Reciprocity Agreement (SARA) was created to apply consistent review standards across the states. An institution approved in its home state is eligible to enroll students (within limits) in any other SARA member state. As of this writing, 36 states have joined in a little over two years. That number may approach 45 by the end of 2016.
SARA means now there is a consistently applied set of regulations over distance education when students from one state take courses from an institution in another SARA state. Chief critic Robert Shireman, a senior fellow at the Century Foundation and former official at the U.S. Department of Education, cites Iowa as proof that “some states have discovered they can’t add more qualifications,” as if that were a surprise. Reciprocity agreements depend upon consistency. If Iowa wishes to change a policy, there is a process for regulators in the state to suggest a change. States enter into the agreement openly knowing that consistency is a requirement.
Currently, many states -- notably including New York -- have no regulations in place to protect their in-state students who enroll in courses from many out-of-state colleges. SARA’s critics depict New York as “a national leader in protecting its citizens from unfair business practices.” If a college has no other physical presence in New York other than enrolling students in an online course, it is not regulated and those students are not protected. The state has not allocated any funds to regulate the estimated hundreds of colleges from throughout the country currently serving online students in the state. Asking each state to regulate the institutions headquartered in their state regardless of where they serve students is a much more reasonable solution. Put another way, SARA increases the amount of regulatory oversight of distance education, but does it in a manner more relevant to today’s economy.
To be fair, New York has been aggressive in pursuing bad actors in the for-profit education sector, as evidenced by its $10.25 million settlement with Career Education Corporation. It is worth noting, however, that the lawsuit was largely based on brick-and-mortar schools that have nothing to do with SARA. In addition, this action was brought by the New York attorney general’s office and was not the result of education-based regulation. There is a relevant section in the SARA policy stating that nothing precludes “a state from using its laws of general application to pursue action against an institution that violates those laws” and another stating that “nothing precludes the state in which the complaining person is located from also working to resolve the complaint.”
The reality of SARA hardly qualifies as “ceding the ability to guard its citizens against abusive practices,” as a Century Foundation letter objecting to New York signing the SARA agreement claims.
What would be lost if New York were not to sign the SARA agreement? There is certainly a downside for institutions offering distance education courses and programs for out-of-state students. It might surprise readers of the letter, but fully 70 percent of students who take all of their courses at a distance do so from public and nonprofit institutions. Institutions like Empire State College, a longtime leader in distance education that is part of the SUNY system. Furthermore, the large for-profit institutions referenced in the article have the budget and history of obtaining state-by-state approval already. It is the smaller-profile nonprofits that have the most difficulty in obtaining authorization to serve students in different states.
A reciprocity agreement between Massachusetts and Connecticut is cited as an alternative. As best we can tell, it allows each state to continue using its own current regulations. This is not reciprocity and does not improve the consumer protection landscape for students or institutions.
Were New York to avoid signing the agreement, students who live in the state would end up with fewer choices, primarily from fewer nonprofit institutions that can operate there. Under SARA, New York students actually would have more consumer protection than currently exists as well as regulatory support for any complaint process, including from in-state agencies. Additionally, states systematically working in concert through SARA will more quickly find and deal with institutions that treat students poorly. This is far better than hypothetical, unfunded regulatory oversight by New York trying to operate independently from any other state.
New York has the opportunity to sign an agreement that would expand the regulatory oversight of distance education programs, would leave the state with the same ability to go after bad actors as they have done in the past and would increase choices for resident students -- particularly working adults -- seeking to get a valuable degree that is only enabled by distance education. It would be a mistake to let a complaint based on hypotheticals and misrepresentations of reality derail this progress.
Phil Hill is co-publisher of the e-Literate blog, co-producer of e-Literate TV and partner at MindWires Consulting. Russ Poulin is director of policy and analysis at WCET (WICHE Cooperative for Educational Technologies), which is a division of the Western Interstate Commission for Higher Education.