Performance Based Funding – What Your Career Center Needs to Know!

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States are adopting funding programs to encourage universities to graduate MORE students!


This is a good news article.  Your career center is about to become the most popular department on campus!

While the primary focus of this article is for state supported universities, private college career center professionals can still use the information to share with management so collectively you can develop and implement strategies your college will need to not only remain competitive, but meet the expectations of your prospective students and their families!

I’ve been watching my alerts and news feeds the past year and I’m starting to see a huge uptick in state and federal administrators talking about the need to switch higher education funding formulas from focusing on enrollment to the number of students graduated.

It’s making most higher education administrators nervous!   With only 1 out of 2 students actually finishing college, even the discussion of a formula change would make any administrator worried!  However, in the states I’ve been following including my own (Ohio), the legislatures,and governors are inviting university administrators to the table and giving them a huge voice in how the funding formulas are being designed and implemented.  I’m getting the impression that universities are being given some ramp up time to develop strategies and implement new ideas to increase graduation rates before they affect their funding.

You hold one of the keys to increasing the graduation rate!

You are probably wondering why legislatures are doing this!  If you believe industry experts, based on the current graduation rate, our country will have 3,000,000 less graduates than are needed by 2018.   I’m somewhat suspect of this claim when we face the reality of today!

  • The Associated Press surveys last year showed approximately 1.5 million, or 53% of graduates 25 or younger are either unemployed or underemployed.
  • The fact is that we still have 8 million underemployed, experienced workers as a result of the 2008 downturn, and another 3 million or so that have dropped out of the workforce because they couldn’t find work.

Be that as it may, states are also moving to this strategy because research conducted by the CEOs for Cities organization cities a higher percentage of graduates who are not only economically better off, but that the average citizen earns more too!   With that extra money circulating through the economy, small businesses benefit, which results in higher sales taxes collected.  I’m sure legislatures like the idea that a worker with a degree will also pay higher state taxes!

So that’s probably the REAL reason!

There is preliminary evidence that performance based funding does works.  Although the effects of an entirely performance-based funding formula are unknown, there is some evidence that it can tip the numbers in the direction of a higher graduation rate.  In Pennsylvania, four-year institutions have received performance-based funding for the last decade. During that time, graduation rates have increased by about 10 percentage points, and retention rates for Hispanic students have increased by 15 percentage points.

Because of this, twelve states, Illinois, Indiana, Louisiana, Michigan, Minnesota, New Mexico, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee and Washington, have already implemented this strategy. Most are tip toeing into the program by setting aside 5%-25% of their higher education funding, but one state, Tennessee, has completely changed gears and is funding 100% of higher education based on their universities’ graduation rates.  Another dozen states like North Carolina are following the legislatures and Governors in the above states and having formal discussions, and or sub-committees working out their formula.  The bottom line is this.  This idea is sweeping the nation FASTER than anything in the history of higher education legislation and your college/university better be prepared!

Now the great news for you is that you can position your career center at the very center of this new strategy.

The latest research by UCLA’s Higher Education Research Institute (HERI) indicates that 88 percent of incoming freshman are going to college because they believe it will help their careers and result in higher lifetime earnings.  You could use this research to remind those you report to that this indicates students would invest more time in career exploration, planning and management if only they were required to.

In my report, Career Centered Culture and Curriculum, I share information about a national organization, the Campus Compact, that 1,200 colleges are members of.  This organization requires the presidents of all colleges to sign a compact that that requires their graduates to put in a minimum of number of hours in community service or volunteer work before they graduate. While I think this is a noble idea, the HERI research mentioned above doesn’t suggest students are going to college to become better citizens – THEY WANT JOBS!

That is the one big problem I have with this movement.  As usual, administrators and legislatures write change-oriented legislation when it benefits their organizations.  This program is designed to get more students to graduate. However, it does NOTHING to ensure they will be employed.  This is a SIGNIFICANT shortcoming as we are asking more students and their families to take on more debt without any guarantee industries will hire them.

Regardless, you need to take advantage of this trend!

This is a perfect opportunity for you to suggest that management REQUIRE students to invest a minimum of X hours a month on career management.

You already have research you can pull from NACE that shows students that invest more time at the career centers not only get internships and jobs, but also receive higher pay.

If this kind of information is shared from the moments students are recruited, and you build rapport with their parents by adopting our CareerParents Online Community, add structure and content with our CareerCourses, and CareerPlan as well as require students to invest a minimum of X hours a month in career exploration, you will increase the odds that more students will stay focused on their studies, as well as their careers, and not only graduate, but graduate on time – WITH JOBS!

But don’t sit back and wait for your managers to talk about this.

You need to be at the front end of these discussions.  Your department is a strategic player in helping the college/university craft a successful strategy to increase the graduation rate.

It’s your opportunity to raise awareness about your department’s need for more:

  • Staffing
  • Resources
  • Funding

…and be sure emphasize the positive effect it will make on the graduation rate, enrollment rate and bonus funding provided under these new funding formulas!

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Don Philabaum
Love to find ways to use technology help more grads and alumni develop successful career strategies.
Don Philabaum
Don Philabaum
Don Philabaum

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