The proposal to overhaul the way Ohio spends $3.5 billion of taxpayer money on higher education will position the state as a national leader in performance-based funding and better train students for the jobs of tomorrow, local lawmakers say.
Ohio Gov. John Kasich will propose an entirely redesigned funding formula for colleges and universities in the two-year budget he will unveil in February. The plan will borrow from the findings by a commission led by Ohio State University President E. Gordon Gee, which
recommended that half of the state aid to universities be tied to whether their students graduate.
More than 1.3 million working-age Ohioans have gone to college, but did not earned a degree. That means they have wasted their money, according to Jim Petro, the state's top education official. And if they attended a public college, they've wasted taxpayer money too, he has said.
"What happens with a lot of students is they recognize that going to college and graduating is economically smart for them. But once they're there, the cost becomes very difficult. And whether we like it or not, in many cases, they just can't continue through to graduation," said Rep. Tim Derickson, R-Oxford, who serves on the House Finance and Appropriations Committee.
Ohio is considered a "high-debt state," and the average student's debt at graduation is now estimated at $28,683, according to the Project on Student Loan Debt.
State Sen. Bill Beagle, R-Tipp City, said the formula should encourage colleges and universities to more closely align their program offerings to the jobs that are going unfilled because companies say they can't find skilled workers.
"Does the formula encourage institutions to be graduating kids with the skills and the degrees that are in demand by our employers?" Beagle said. "That's something I would look for."
Ohio's skills gap
Legislators also believe Ohio will be able to attract more businesses if its population holds more credentials. Currently, just 36 percent of working-age Ohioans have a college degree -- which is 2 percent below the national average and ranks Ohio 35th among states. Ohio faces a skills gap because 57 percent of new jobs in the state through 2018 will require that education, according to the Lumina Foundation, the nation's largest nonprofit dedicated to higher education.
"This is a monumental shift in the way higher education is funded," said state Sen. Chris Widener, R-Springfield, chair of the Senate Finance Committee.
The recommended changes to higher education funding included increasing the amount of state funding tied to degree completion to 50 percent from its current 18 percent for universities. And tying less money to course completion, down to 30 percent from 61 percent.
Community college for one year would see the portion of their funding tied to enrollment fall to 50 percent from 78 percent. Course completion, which previously did not count, would make up a quarter of the funding, and success points would represent another quarter, up from 9 percent. Community colleges would be able to make changes to their funding formula in the second year.
Lawmakers have not yet publicly vetted the recommendations, and no dollar amounts have been attached, so it remains unclear which colleges and universities might receive more state funding than past years and which ones would get less.
"Whenever you change a funding formula, typically there are going to be some winners and some losers. That could be an obstacle when the details are fleshed out. We don't know who is going to win and who is going to lose. That could be a problem," Beagle said.
Still, he said the new formula recommendations feel "like a step forward."
Already a leader
Ohio has already been considered a leader in the nation for previously tying a small, but growing amount of funding tied to performance. The recommendation to base 50 percent of university funding on degree completion is uncommon, with most states linking about 10 percent of funding to graduation, said Kevin Corcoran, of the Lumina Foundation.
The set of new funding recommendations represent a compromise by colleges and universities, which every public president in the state signed onto, Gee said in unveiling the commission's report on Nov. 30.
"I think it's remarkable that the presidents could come together and come up with a plan that doesn't benefit them all. Some of them were willing to make sacrifices for the good of the university system and the students of Ohio," said state Sen. Peggy Lehner, R-Kettering, who chairs the Senate education committee.
"The university system recognizes that as taxpayers, we're going to be getting a much better deal," she said. "We can be assured we're not wasting a lot of money."
The report also suggests removing the historic setasides, which have redistributed funding from high performing schools to prevent funding losses at other schools, first for universities and then for community colleges.
It is not expected to affect the $12 million funding supplement that goes to Central State University, a historically black school, according to the university.
The commission also recommended giving credit to universities for their out-of-state students only if those students stay in Ohio after they graduate. That will mean less for schools like Miami University, where one-third of students are from outside Ohio. Miami President David Hodge said those out-of-state students at Miami spend $220 million a year in Ohio while they attend school.
"Not only do they bring resources to the state, but they learn about the state, they get connected to the state and, even if they go elsewhere, they may come back to the state and bring their business back," he said.
Still, Hodge said he does support the recommendations out of the commission, on which he served.
"We all agree that we're moving in the right direction," he said, adding the new funding formula will be "more focused on outcomes. And that's definitely a move in the right direction."
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