How Performance-Based Funding Could Impact Wisconsin's Public Universities

May 24, 2017

Wisconsin lawmakers are deciding whether to reward UW System schools based on how they perform. And experts say the idea has its share of pros and cons.

The concept of “performance-based funding” is pretty self-explanatory. As Gov. Scott Walker conceived of the idea in his biennial budget, it would award $42 million extra to UW schools…with strings attached.

In order to get that money, a campus would have to meet certain standards. The more marks a school hits, the bigger its share of the $42 million.

“That will include criteria like the number of graduates, the length of time to graduate, how many graduates are employed, and how many are in high-demand areas within the state,” Walker told members of the state legislature, during his 2017 budget address. “We want student success to help fuel the growth of the Wisconsin economy.”

Walker has already initiated a performance-based funding structure in the state’s technical college system. In short, each school is evaluated on seven out of 10 criteria. Each campus decides which seven, based on its particular priorities.

WTCS implemented its model three years ago, so it’s still in the early stages. But already, Executive Vice President Jim Zylstra reports benefits.

He says, for example, the performance metrics have encouraged collaboration among schools.

“We have certain colleges that maybe excel at one of the criteria over another one, and they have come in to meet with the other institutions, share what they’re doing well, share why they’re so good at that particular thing,” Zylstra explains. “That’s been a very positive outcome to all of this.”

Yet there are concerns about a new incentive system for the state’s universities.

For instance, Rep. Travis Tranel (R-Cuba City) worries that financial rewards could drive UW schools to raise their standards for admission -- in turn, lowering access for some students.

"Any outcomes-based funding model needs to ensure it reflects the mission and roles various types of institutions plays in meeting the needs of the state."

Tranel’s district is home to UW-Platteville, where 30 to 40 percent of incoming students need remedial math.

“Do you think that we need to do a better job of saying who is prepared to get into some of these schools in the first place, or should we just be accepting everyone and then catching them up?” Tranel asked during a public hearing on performance-based funding, in late April. “If UW-Platteville wants to improve their retention rate, their graduation rate, all they have to do is accept brighter students, right?”

Another sticking point in Wisconsin’s debate over funding is deciding which criteria to use to evaluate UW schools.

Martha Snyder, a Washington D.C.-based education policy specialist, says the best models take into account individual school differences.

“Any outcomes-based funding model needs to ensure it reflects the mission and roles various types of institutions plays in meeting the needs of the state,” she explains. “The particulars of any funding models need to reflect this differentiation.”

In other words, funding models that encourage all universities to hit the same performance targets won’t be as successful. Rather, Snyder says, goals should be tailored to each individual school, because for instance, UW-Madison offers something different than UW-Milwaukee, than UW-Oshkosh.

The legislature’s Joint Finance Committee didn't vote on the performance-based funding proposal as expected Tuesday, but it's something they'll need to address moving forward. If state leaders advance Gov. Walker’s reward system, they will need to decide whether to stick with his predetermined list of metrics or differentiate the options for each campus.

Wisconsin would be joining the majority of states. Nearly two-thirds have incentive-based funding models in place, for their public universities. Some of the most successful include Indiana, Tennessee and Ohio.