Arkansas Administrative Code › Agency 008 - Department of Higher Education › Division 03 - Coordination & Planning for Colleges & Universities, State Supported › Rule 008.03.17-002 - Productivity Funding Model Policy - Universities

Current through Register Vol. 49, No. 6, June, 2024
Background
Act 148 of 2017 repealed the needs-based and outcome-centered
				funding formulas as prescribed in Arkansas Code §
								6-61-210, Arkansas
				Code §
								6-61-224, Arkansas
				Code §
								6-61-228, Arkansas
				Code §
								6-61-229, Arkansas
				Code §
								6-61-230, and Arkansas
				Code § 6-61 -233, and amended Arkansas Code § 6-61 -234. The Act
				directs the Arkansas Higher Education Coordinating Board to adopt policies
				developed by the Department of Higher Education (ADHE) necessary to implement a
				productivity-based funding model for state-supported institutions of higher
				education.
Productivity-based funding is a mechanism to align
				institutional funding with statewide priorities for higher education by
				incentivizing progress toward statewide goals. At the same time, such models
				encourage accountability to students and policymakers by focusing on the
				success of students through the achievement of their educational goals. The new
				funding model is built around a set of shared principles developed by
				institutions and aligned with goals and objectives for post-secondary
				attainment in our state.
A set of guiding principles, which is described below, is
				important to orient the design of a new funding model for public higher
				education institutions. These guiding principles allow the development of a
				productivity-based funding model which is student-centered and responsive to
				post-secondary attainment goals, while creating a funding context which enables
				innovation, increased efficiency and enhanced affordability.
Guiding Principles
Student-centered:
The model should place at its center students and students'
				needs including both access to and completion of meaningful and quality
				post-secondary learning.
Outcomes:
The model should focus on completion, and particularly on
				completions of under-served and at-risk students and completions in areas of
				need by the state and industry. This structure should recognize differences in
				investment associated with meeting the evolving needs of students, the
				workforce, and the state.
Collaboration:
The model should provide incentives for cross-institutional
				collaboration and reward the successful transition of students across
				institutions.
Supporting institutional mission:
The model should respect and be responsive to the diverse set
				of missions represented by each public institution of higher education.
Formula structure:
The model should maintain clarity and simplicity.
Flexibility:
The model should be adaptable in the face of a dynamic
				institutional and external environment.
Stability and transition:
The model should support short-, mid- and long-term financial
				stability of the public institutions of higher education, while focusing
				attention on outcomes and the goals of the state. The transition from the
				current funding formula to a productivity-based funding formula should allow
				for a managed and intentional transition process which mitigates negative
				impact at any one or group of institutions.
Measures
In addition to incorporating the guiding principles above,
				measures adopted in the productivity-based funding model should acknowledge the
				following priorities:
* Differences in institutional missions are recognized and
				encouraged.
* Completion of students' educational goals should be the most
				important priority of every institution.
* Progression toward completion recognizes that funding must
				follow the student.
* Affordability is encouraged through on-time completion,
				limiting excess credits, and efficient resource allocation.
* Collaboration is rewarded by encouraging successful transfer
				of students and reducing barriers to student success.
* Potential unintended consequence of raising academic
				requirements or lowering academic quality to increase completions must be
				discouraged.
The measures adopted relate to Effectiveness, Affordability and
				Efficiency. In addition, some adjustments to the model are necessary to respond
				to the unique missions of some institutions which cannot be captured in the
				productivity metrics.
Measures will be reviewed every five years to ensure that the
				model continues to respond to the needs and priorities of the state. A review
				more frequently than five years is impractical as institutions would not have
				opportunity to respond in a timely fashion. However, if it is determined that
				the measures adopted have created unintended consequences, those measures will
				be reviewed immediately.
Productivity Measures
Summary of
				Measures
The productivity funding formula consists of four categories:
				Effectiveness (80% of formula), Affordability (20% of formula), Adjustments,
				and Efficiency
(+1/-2%
of formula). The metrics of the four
				categories are broken down below.
Effectiveness
Affordability
Adjustment
Efficiency
* Credentials
* Progression
* Transfer Success
* Gateway Course Success
* Time to Degree
* Credits at Completion
* Research (4-year only)
* Core Expense Ratio
* Faculty to Administrator Salary Ratio
At this time, Non-credit Workforce Training and Post-Completion
				Success metrics are not included in the formula but will be when adequate data
				is available. Other future technical modifications, such as an addition of an
				inflationary index and refining of existing metrics, will be considered in the
				future as necessary.
Each metric is calculated using a three-year average based on
				the most recent academic year data that is available. Institutions will receive
				points in the productivity model according to the requirements of each metric.
				Points for each institution will be totaled and applied according to the
				weighting assigned to each metric in the effectiveness and affordability
				categories. Once the points for the effectiveness and affordability measures
				are totaled, adjustments based on research activities be applied. Finally, the
				efficiency category will be applied against the adjusted total. The final total
				of points will become the institution's Productivity Index.
Effectiveness
				Category
Credentials
The primary measure of effectiveness emphasizes students
				completing credentials that meet their educational goals and meet workforce
				needs of the state. The importance of credentials at each educational level are
				recognized. In addition, the unique characteristics of students are measured to
				recognize the additional resource needs of institutions which serve students'
				needs. Characteristics include underserved race and ethnicity, underserved
				income, age, and underserved academic.
The Credentials metric is weighted at forty percent (40%) of
				the effectiveness category. This metric includes the average of the number of
				credentials awarded over the most recent three academic years, with
				consideration given to credentials earned by students who contribute to closing
				the attainment gap of underserved populations in Arkansas, as well as
				credentials that will help meet state workforce needs.
The Credentials metric includes the number of credentials
				earned in all degree levels: Certificate of Proficiency, Technical Certificate,
				Associate Degree, Advanced Certificate, Bachelor's Degree, Post-Baccalaureate
				Certificate, Master's Degree, Post-Master's Certificate, Specialist, and
				Doctoral Degree. Designated weights are applied to each level of credential.
				All credentials earned in Science, Technology, Engineering and Math (STEM) and
				High Demand fields receive additional weights. Credentials earned by students
				who are underserved in the areas of race/ethnicity, income, academic
				preparedness and age will receive additional weight. Degrees and certificates
				above the Bachelor's level will only receive additional weight for underserved
				race/ethnicity.
Weighting Specifications - Degree
				Level
Certificate of Proficiency
0. 5
Technical Certificate
1. 0
Advanced Certificate, Post-Baccalaureate Certificate,
						  Post-Master's Certificate, Specialist, or Post-First Professional Certificate
						  or Degree
1. 0
Associate Degree
2. 0
Bachelor Degree
4. 0
Master Degree
5. 0
Doctoral Degree
6. 0
Weighting Specifications - Degree
				Type
STEM Credentials
3. 0
High Demand Credentials
1. 5
All Other Credentials
1. 0
Weighting Specifications - Student Characteristics
Undergrad Level
Graduate Level
All Students
1.00
1.00
Underserved Race/Ethnicity
0. 29
0. 29
Underserved Income
0. 29
N/A
Underserved Academic
0. 29
N/A
Adult (25 to 54)
0. 29
N/A
Progression
For programs requiring more than one semester to complete,
				progression toward a credential must be measured. A student's progression
				towards a degree will be recognized. In addition, the unique characteristics of
				students should be measured to recognize the additional resource needs of
				institutions which serve students' needs. Characteristics include underserved
				race and ethnicity, underserved income, age, and underserved academic.
The Progression Metric is weighted at thirty percent (30%) of
				the effectiveness category. The metric includes the average number of
				progression goals met by concurrent and undergraduate students at the
				accumulation of 15 hours, 30 hours, 45 hours, 60 hours, and 90 hours over the
				most recent three academic years. Consideration is given to progression goals
				met by students who contribute to closing the attainment gap of underserved
				populations in Arkansas.
Weighting Specifications - Student Characteristics
All Students
1.00
Underserved Race
0. 29
Underserved Income
0. 29
Underserved Academic
0. 29
Adult (25 to 54)
0. 29
Transfer
Many students begin their post-secondary work at a community
				college before transferring to a university to complete a bachelor's degree.
				The efficient and effective transfer of these students should be measured to
				encourage collaboration among institutions.
The Transfer Metric is weighted at fifteen percent (15%) of the
				effectiveness category. The metric includes the average of the number of
				undergraduate students over the most recent three academic years who earn a
				Bachelor's degree that transferred from a 2-year to a 4-year institutions in an
				effort to encourage student success and institutional collaboration.
Weighting Specifications - Transfer
				Students
Completed Bachelor's Degree
1. 0
Gateway Course Success
Gateway courses in math, English and reading-intensive courses
				in the humanities and social sciences are a first indicator of likely student
				success. This is particularly important for students who are underprepared for
				college-level course work. In addition, the unique characteristics of students
				should be measured to recognize the additional resource needs of institutions
				which serve these students. The designated characteristic for this metric
				includes underserved academic.
The Gateway Course Success Metric is weighted at fifteen
				percent (15%) of the effectiveness category. The metric includes the average of
				the number of successfully completed gateway courses by academically prepared
				and academically underserved undergraduate students over the most recent three
				academic years. The metric recognizes the completion of math, English and
				reading gateway courses by students with a grade of A, B, or C. Gateway courses
				completed by academically underserved students will receive additional
				weighting.
Weighting Specifications - Gateway Course
				Success
Placement in Remedial Course
3.00
No Placement in Remedial Course
1.00
Affordability
				Category
Time to Degree
Affordability of a credential is impacted by the length of time
				it takes a student to earn a credential. Measures should encourage students to
				complete credentials on time; generally, two years for an associate's degree
				and four years for a bachelor's degree.
The Time to Degree metric is weighted at fifty percent (50%) of
				the affordability category. The metric incudes the average of the number of
				students who graduated within the recommended timeframe for Associate and
				Bachelor's degrees over the most recent three academic years. On time is
				defined as 24 months for Associate degrees and 48 months for Bachelors-degrees.
				The metric also recognizes students who complete their degree within
				twenty-five percent (25%) of on-time completion (up to 30 months for Associate
				degrees; up to 60 months for Bachelor degrees) and within fifty percent (50%)
				of on-time completion (up to 36 months for Associate degrees; up to 72 months
				for Bachelor degrees). Allowances will be made for degree programs that require
				more than 24 months for an Associate degree and 48 months for a Bachelor degree
				to complete due to external accreditation, professional licensure requirements
				or statewide articulation agreements. ADHE will review and approve the request
				for allowances.
Weighting Specifications - Time to Degree
On-Time Completion
1.0
Within 25% of On-Time Completion
0.875
Within 50% of On-Time Completion
0.4
Credits at Completion
Similar to time to degree, measuring the affordability of a
				credential also includes measuring the number of credit hours a student
				completes toward that credential. Students whose credit hour accumulation is at
				or near the minimum number required for a credential pay less in tuition and
				fees; thus, making the credential more affordable.
The Credits at Completion metric is weighted at fifty percent
				(50%) of the affordability category. The metric incudes the average of the
				number of students who graduated within the scheduled number of credits
				completed for Associate and Bachelor degrees over the most recent three
				academic years. On Schedule is defined as 60 credit hours for Associate degrees
				and 120 credit hours for Bachelor degrees. The metric also recognizes students
				who complete their degree within ten percent (10%) of on schedule completion
				(up to 66 credit hours for Associate degrees; up to 132 credit hours for
				Bachelor degrees) and within twenty-five percent (25%) of on schedule
				completion (up to 75 credit hours for Associate degrees; up to 150 credit hours
				for Bachelor degrees). Allowances will be made for degree programs that require
				more than 60 credit hours for an Associate degree and 120 credit hours for a
				Bachelor degree to complete due to external accreditation, professional
				licensure requirements or statewide articulation agreements. ADHE will review
				and approve the request for allowances.
Weighting Specifications - Credits at
				Completion
On Schedule
1.00
Within 10% of On Schedule Completion
0.875
Within 25% of On Schedule Completion
0.4
Research
				Adjustment
Research
One unique mission of some public universities that is not
				adequately captured in productivity measures is research and should be included
				as an adjustment to appropriate institutions. Research is essential to the
				discovery of new knowledge, innovation, entre preneurism, and societal, health,
				and economic development advancements.
The research adjustment will be recognized by adjusting the
				productivity index score of an institution by the three-year average percentage
				of expenditures on research. This applies only to institutions with a research
				mission that spend more than 5% of all expenditures on research activities.
Weighting Specifications - Research Adjustment
Research Expenditures/Total Expenditures
Adjustment %
For institutions whose research expenditures exceed 5%
						  of total expenditures. (Based on 3-year average)
Actual % of Research Expenditures
Efficiency
				Category
Core Expense Ratio
This measure is intended to encourage resource allocations
				which maximize spending in areas that directly impact student success and
				achievement of institutional mission.
The Core Expenses Ratio is weighted at fifty percent (50%) of
				the efficiency category. The ratio measures the expenditures on the core
				functions of an institution compared to the expenditures for institutional
				support and how the ratio compares to an institution's Southern Regional
				Education Board (SREB) institution peer group.
The Core Expense Ratio is equal to the sum of Instruction
				Expenditures, Academic Support Expenditures, Student Services Expenditures,
				Public Service Expenditures and Research Expenditures on a per full-time
				equivalent (FTE) basis divided by the Institutional Support Expenditures per
				FTE. Data for these expenditure elements are reported to and published by the
				Integrated Postsecondary Education Data System (IPEDS).
The adjustment for each institution is calculated by finding
				the percentage deviation of the Core Expense Ratio of each institution compared
				to the SREB Average Core Expense Ratio for their peer group. The resulting
				percentage is assigned an efficiency adjustment as described in the chart
				below.
Weighting Specifications - Core Expense
				Ratio
% Deviation of ration from SREB Peer Group
% Change to Productivity Index score
Below -20%
-2. 0%
-15. 01% to-20%
-1. 5%
-10. 01% to-15%
-1. 0%
-5. 01% to-10%
-0. 5%
-5% to 5%
0. 0%
5. 01% to 10%
0. 5%
10. 01% to 15%
1. 0%
15. 01% to 20%
1. 5%
Above 20%
2. 0%
Faculty to Administrator Salary Ratio
This measure is intended to encourage efficient use of
				administrative positions to support institutional mission.
The Faculty to Administrator Salary Ratio is weighted at fifty
				percent (50%) of the efficiency category. The ratio measures the expenditures
				on faculty salaries compared to the expenditures on institutional support
				salaries and how the ratio compares to an institution's Southern Regional
				Education Board (SREB) institution peer group.
The Faculty to Administrator Salary Ratio is equal to
				Instruction Salaries & Wages per FTE divided by the Institutional Support
				Salaries & Wages per FTE. Data for these expenditure elements are reported
				to and published by the Integrated Postsecondary Education Data System (IPEDS).
The adjustment for each institution is calculated by finding
				the percentage deviation of the Faculty to Administrator Salary Ratio of each
				institution compared to the SREB Average Faculty to Administrator Salary Ratio
				for their peer group. The resulting percentage is assigned an efficiency
				adjustment as described in the chart below.
Weighting Specifications - Faculty to Administrator Salary
				Ratio
% Deviation of ration from SREB Peer Group
% Change to Productivity Index score
Below -20%
-2. 0%
-15. 01% to-20%
-1. 5%
-10. 01% to-15%
-1. 0%
-5. 01% to-10%
-0. 5%
-5% to 5%
0. 0%
5. 01% to 10%
0. 5%
10. 01% to 15%
1. 0%
15. 01% to 20%
1. 5%
Above 20%
2. 0%