At the State System of Higher Education, performance counts.
Now, it also pays.
The Board of Governors took several actions today that will encourage and reward the 14 state-owned universities for developing programs that respond specifically to the Commonwealth’s workforce needs, for meeting System goals and for producing positive results in the areas of student advancement, finances and diversity.
The Board approved new performance outcomes plans for each of the universities that include specific objectives the institutions plan to strive toward over the next three years. To help encourage the universities to meet their goals, the Board will allocate a total of $4 million in “performance enhancement funding,” which will help support improvement initiatives included in their plans.
The Board also approved the distribution of $2 million in “performance results funding,” which will be allocated on the basis of how each university actually has performed on a series of indicators, including student retention and graduation rates, employment rates of graduates and instructional cost per credit hour, over the last three years. Each university’s allocation will be determined on the basis of both its performance in relation to the System average and improvement it has made in the indicators.
The program will be continued in the future, with the amount of funding available expected to gradually increase.
“The performance indicators we have had in place for the last three years have been used to encourage improvement in important areas of university operations,” said Chancellor James H. McCormick. “By providing financial rewards for improving performance, we hope to produce even better results and better institutions.”
The System uses 24 indicators in three broad areas to gauge university performance. Initially, four indicators from each area will be used to determine how the performance results funding will be distributed among the universities.
They are:
Student advancement indicators – Transfer student ratio, second-year persistence rates, six-year graduation rates and employment rate of graduates.
Financial indicators – Undergraduate instructional cost per credit hour, graduate instructional cost per credit hour, fundraising/student ratio and budgetary flexibility.
Diversity indicators – Underrepresented groups enrollment, underrepresented groups six-year graduation rates, employment and retention of underrepresented groups faculty and employment and retention of female faculty.
In another action, the Board agreed to allocate $5.8 million for a variety of initiatives designed to encourage the “creation, expansion and strengthening of programs that will keep Pennsylvania strong,” including the Venture Capital Loan Program and Corporate Alliance. Venture capital funds are used by the universities to develop programs in high-demand fields, especially those involved in science and technology. The Office of Corporate Alliances was created to help forge relationships among the universities and Pennsylvania businesses.
The nearly $12 million for the three programs will come from a special, one-time appropriation of $19.3 million the System will receive as part of the 2000-01 state budget.
Another $6 million was designated in the budget language for the development of a planned shared integrated information system and central data repository and to help the System make the transition to the Commonwealth’s new telecommunications network. In addition, some of the special funding will be used to help support the System’s Labor Education Institute and the expansion of the highly successful Partnership Program.
The move to performance-based funding will have a direct effect on the System’s approximately 1,250 managers, including the 14 university presidents. Management pay adjustments will be based in large part on whether a university meets the goals established in its performance outcomes plan. All raises will be merit based.
“The criteria used to judge performance will be weighted heavily to the objective side,” said Edward P. Kelley Jr., vice chancellor for employee and labor relations.
The Board established a 5 percent merit pool for managers’ compensation, an amount similar to what university faculty will receive this year in automatic increases through the terms of a collective bargaining agreement between the State System and Association of Pennsylvania State College and University Faculties (APSCUF). Most managers will be eligible for adjustments ranging from zero to 8 percent, based on a merit review.
The State System of Higher Education is the largest provider of higher education in the Commonwealth. Its 14 universities offer more than 250 degree and certificate programs in more than 120 areas of study. Nearly 350,000 System alumni live and work in Pennsylvania.
The state-owned universities are Bloomsburg, California, Cheyney, Clarion, East Stroudsburg, Edinboro, Indiana, Kutztown, Lock Haven, Mansfield, Millersville, Shippensburg, Slippery Rock and West Chester Universities of Pennsylvania. The System also operates branch campuses in Clearfield, Kittanning, Oil City and Punxsutawney and several regional centers, including the Dixon University Center in Harrisburg and the University Center for Southwest Pennsylvania in Pittsburgh. The regional centers are part of the Educational Resources Group, which is responsible for coordinating statewide programming.