Atlanta — October 12, 2005

The number of students graduating and retained annually by University System of Georgia (USG) institutions soon will take on even greater significance, as part of a proposed change in the way the state’s public colleges and universities are funded.

The new “performance-based funding model” was unveiled to the Board of Regents today as part of the System’s response to Gov. Sonny Perdue’s charge to all state agencies to increase accountability.

In the presentation to the regents, Senior Vice Chancellor for Academics and Fiscal Affairs Daniel S. Papp and Vice Chancellor for Fiscal Affairs William R. Bowes outlined the principles, process and method by which a percentage of the System’s annual budget request will be determined on the proposed performance model.

The model looks at the three core functions of the University System - teaching, research, and service - and sets annual targets for performance on a yearly basis through 2015. Using current University System performance as a baseline measure, the proposed model calls for significant improvements in retention, progression, and graduation rates for all System institutions, as well as increases in externally funded research and continuing education enrollment.

“This process will be a means of providing financial incentives to increase measurable performance by our institutions,” said USG Interim Chancellor Corlis P. Cummings. “We have worked closely with the Governor’s office to develop a model that addresses the complexity of the University System as well as the needs of the state. We anticipate very positive outcomes.”

Under the proposed model, a goal has been set to increase retention rates (the number of students who progress from the freshman to sophomore year) from the current rate of 75.3 percent to 85 percent. Goals also include increasing the pass rate on the Regents’ Test from 78.4 percent to 88 percent, and the University System’s institutional six-year graduation rate from 46.7 percent to 57 percent. These targets equate to annual improvement rates of one percent in each of the three categories.

“One percent per year initially may not sound like much,” said Papp. “But over the past seven years, national graduation rates have not changed by more than 1 percent to 1.5 percent. We are setting very ambitious goals for the University System.” Meeting the goals on six-year graduation rates would move Georgia from 42nd to 18th nationally, Papp noted.

In addition to improved retention, progression and graduation goals, the performance-driven funding model also calls for improvements in the pass rate on key licensing exams. Teacher certification pass rates, currently 89.1 percent, and nursing exam pass rates, currently 87.2 percent, are both targeted to improve to 95 percent by 2015. Research funding also is targeted to increase from the current level of $980.6 million annually to $1.2 billion in 2015. Continuing education participation is targeted to increase by 8,000 students a year to 500,000 participants by 2015.

Under the new model, University System officials propose aligning approximately $3 million in funds earned through student enrollment increases to annual targets in these key performance measures. Should the institutions meet 81 to 85 percent of the annual targets, the System would earn the $3 million in its annual allocations from the General Assembly. Should it fall below or surpass the target goals, the System would receive less or more than the $3 million.

“For example, if we failed to meet at least 70 percent of our annual targets, we would lose $3 million; but if we hit 100 percent of our goals, we could potentially earn a total of $6 million according to this model,” said Bowes. “This proposal offers a strong incentive for our institutions to concentrate on student success and other key performance factors. If adopted, this model could lead to more significant changes in the way the University System is funded in the future.”

Increasing the System’s retention and graduation rates have been priorities for the regents since last year, when initial work began with a graduation task force. Board Chair J. Timothy Shelnut has made improving retention and graduation rates a key goal of his chairmanship.

Following today’s presentation to the regents, the proposed performance funding model will be presented to the Governor’s Office of Planning and Budget and the General Assembly for further discussion and finalization. Papp said current plans are to implement the new model with the Fiscal Year 2007 budget.

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