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Governor Asa Hutchinson announces 21st Century Funding Formula for State’s Higher Education Institutions

LITTLE ROCK – Today Governor Asa Hutchinson announced support of a plan to fundamentally change the funding formula for the state’s higher education institutions. The proposed Higher Education Productivity Funding Model follows an outcomes-based approach, which will place a higher priority on program completion than the previous formula. The Arkansas Department of Higher Education Coordinating Board approved the proposal in a unanimous vote Friday morning. The proposal will now go before the legislature during the 2017 general session. If the measure is adopted, Arkansas will become only the fifth state to make significant progress toward funding higher education based on outcomes – joining Tennessee, Indiana, Ohio, and Oregon.

Governor Hutchinson issued the following statement:

“I am pleased to announce my support of the productivity funding model for Arkansas’s higher education institutions. At my direction, the Arkansas Department of Higher Education began to look at potential changes to our current funding formula that would emphasize accountability, student success, and degree completion. These changes will promote efficiency of operations, encourage on-time completion, and encourage allocation of resources to areas which directly impact student success, such as faculty salaries and academic support services.

“My priority continues to be increasing the percentage of Arkansans that are career-ready, equipped with degrees and industry-recognized certificates, and this new revolutionary funding model will help us achieve just that.”

Dr. Brett Powell, Director of the Arkansas Department of Higher Education, issued the following statement:

“Outcomes-based funding represents a fundamental shift in the way we think about how the state invests in higher education. Instead of an enrollment-centered formula, this model focuses on program completions and, as a result, it emphasizes success and incentivizes institutional leaders to prioritize the types of activities that lead to successful students. I am pleased that we are considering this important change, particularly considering the opportunity it gives us to connect funding to Governor Hutchinson’s priority of increasing post-secondary attainment in Arkansas.”

Ann Clemmer, interim Director of the Arkansas Department of Higher Education, issued the following statement:

“The proposed funding formula will be a great tool to bring about more equitable funding in Arkansas higher education. It puts funding incentives in place to reward schools for their students’ success.”

Colleges and universities in the state have been funded based on a needs-based model that is driven by enrollments and emphasizes access to higher education in its approach. The proposed model follows an outcomes-based approach, representing a fundamental shift in the way we think about funding by moving us from an enrollment focus to a completion focus and from focusing only on access to emphasizing both access and student success.

Outcomes-based funding can be used to align institutional funding with statewide priorities for higher education by encouraging programs and services focused on student success and 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. Any new funding model must be built around a set of shared principles embraced by institutions, employing appropriate outcomes metrics, and aligned with goals and objectives for post-secondary attainment in our state and encouraging accountability to stakeholders.

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