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Board of Regents

The Montana Board of Regents meets at Montana Tech in this file photo.

If a university doesn't graduate as many students as it could, it might not get all the money that's on the table.

It's called "performance funding," and its creation in the Montana Legislature caused consternation among some educators and lawmakers. This week, the Montana Board of Regents talked about how it's been working out for the Montana University System to date.

"I think there will be years under this model not everyone gets full funding," said Commissioner Clay Christian. "I'm almost assured of that, but it still drives us the direction we need to go."

In a presentation, deputy commissioner for planning and analysis Tyler Trevor said the goal is to increase the number of degrees the system produces and raise the percentage of the population in Montana that has higher education.

In the past, from 1972 to 2014, enrollment was the only factor used to determine the amount of money going to each campus, he said.

The university system first instituted the performance model in 2015 and has tweaked it since, Trevor said. This fiscal year and next, he said, an estimated 8 percent of the state appropriation to higher education is based on performance, or some $15 million a year.

One major change is campuses no longer compete against each other for the pot of money, they compete against themselves, he said. In the past, if one campus didn't get all its money, the ones making progress would get those dollars.

Now, the university system holds onto the money from a campus that didn't make the grade in the hopes it will make a plan to improve and earn the money back, Trevor said.

"You can apply for a portion of these funds if you can give us an explanation and a plan of what you're going to do to increase these metrics," he said.

Campuses that succeed with the right mix of degrees, retention and, for the flagships, research expenditures, get the full amount of money they're eligible for based on their share of the average resident enrollment over three years.

This year, nearly every campus got 100 percent of the money for which it was eligible, with the University of Montana getting all of its $4.07 million and Montana State University in Bozeman getting its full $4.59 million, he said.

"I don't believe that's always going to be the case," Trevor said.

According to his presentation, Montana Tech in Butte is eligible for 85 percent of its allocation in 2017, and MSU-Billings earned back $760,706 from an earlier withholding. The regents met in Dillon, and the Montana University System provides live video-streaming of their meetings.

Regent Fran Albrecht of Missoula said campuses originally were worried about the model, and it's important for the public to know the metrics came out of much engagement with educators and discussion with faculty. Now that the model has been in place for a couple of years, she's interested in seeing the outcomes.

Albrecht herself wondered if the formula was too lenient in allowing campuses to earn back money they'd lost: "Are we really giving it the incentive that it needs to make sure we're making an impact in those areas?"

Trevor said he has considered the same question. The university system clearly doesn't want to harm institutions, he said, and he believes the metrics set a stringent enough standard and also put more focus on outcomes.

"If it's done anything, it's elevated the amount we talk about retention and completion," he said.

So far, feedback from legislators has been positive in that performance funding is helping public education serve the needs of Montanans, Commissioner Christian said. And he said Montana is focusing on student success with a model that may need tweaking, but other systems are still only studying the idea.

"There tends to be a great appreciation for the fact it's in place (here)," Christian said.

However, Christian said one valid concern raised by Chancellor Mark Nook of MSU-Billings is that withholding money could send campuses into a "death spiral."

According to MSU President Waded Cruzado, the best measure of the model's effectiveness is that department heads provide data about how well they're doing in terms of initiatives for student success. She said the model is an investment in the future.

"It's important to allow it some time to mature before we rush to tweak it or to implement additional changes," Cruzado said.

Regent Martha Sheehy also noted that any adjustments should be done carefully so the university system can compare numbers from year to year.

However, Sheehy said the model is critical for the regents. It demonstrates to the legislature that the university system is willing to be performance-driven, and it forces the board to commit to metrics and be held accountable, she said.

"I think this is one of our most important tools," Sheehy said.

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University of Montana, higher education