Tennessee higher education officials are debating a change to the way colleges earn state funding, and a new method could bring financial repercussions to some struggling schools.
"We want to have the finances reflect school behavior and support schools that are doing what they should be doing," said Russ Deaton, director of fiscal policy and facilities analysis at the Tennessee Higher Education Commission. "There will be more financial consequences."
The current amount of state funding received by a college or university is based mostly on the number and mixture of students it enrolls, Mr. Deaton said. However, officials are considering a revamped funding formula that divvies out state dollars based mostly on graduation rates.
Although graduation and retention rates would be a larger part of a new funding model, Mr. Deaton said, some incentives already are embedded in the current formula.
For instance, schools are paid more for retaining students from freshman to senior year, and campuses can add about 5 percent onto their appropriations for improved graduation rates, he said.
Also, schools can increase their funding by enrolling certain types of students. It costs more to train a doctoral degree candidate in physics or an undergraduate student in engineering, Mr. Deaton said, so students enrolled in many of the science, technology and health-related fields are weighted more than a freshman student studying English, he said.
Funding also is affected by the physical size of the campus and utility usage, Mr. Deaton said.
Richard Brown, vice chancellor for finance and operations at UTC, said he is unsure how the Chattanooga campus will fare if the THEC funding model is changed. He said it is too early to say whether it would positively or negatively affect the university's state appropriations.
"It is all too tentative," he said.
This year, the University of Tennessee at Chattanooga received $47.7 million in state appropriations, or 43.8 percent of its budget, documents show.
The school has grown enrollment by 18 percent to nearly 10,000 in the last eight years, but its graduation rate -- 42 percent -- is lowest in the UT system.
THEC will convene a formula review committee that will meet over the next six months to retool the existing funding model and the results will likely be presented in January when the commission releases its new master plan for higher education, Mr. Deaton said.
"The schools who will do well (with the new funding formula) are schools that are graduating more people, who are retaining their students, who are going after adult students, who are doing the things that state wants them to do," he said. "Enrollments are an important component, but over time you have seen Tennessee move further toward outcome-based (funding)."
With the national economy in freefall, Tennessee has fewer dollars to pass on to colleges and universities. So Gov. Phil Bredesen and some legislators are pushing for smarter spending.
At the same time, Gov. Bredesen and lawmakers on the state Senate Education Committee want higher education officials to be accountable for the money the state can contribute to colleges, especially when it comes to graduation rates.
Tennessee now is ranked as having the 44th worst average graduation rate in the nation -- 45 percent.
"This is something that we have been studying for several years," Mr. Deaton said. "But the fact that the governor and legislators are interested in it is a good thing. ... We would be doing this anyway, because it is a right thing from a policy standpoint."
The state's new higher education funding model could more closely resemble those in states such as Ohio and Washington, he said, which weigh performance heavily in the funding equation.
"This is something that is en vogue right now," he said.
Joan Garrett McClane has been a staff writer for the Times Free Press since August 2007. Before becoming a general assignment writer for the paper, she wrote about business, higher education and the court systems. She grew up the oldest of five sisters near Birmingham, Ala., and graduated with a master's and bachelor's degrees in journalism from the University of Alabama. Before landing her first full-time job as a reporter at the Times Free Press, ...