Arizona’s university funding system could switch to a pay-for-performance model as early as 2013.

Arizona would be the first state to base 100 percent of new money received by state universities on performance, a change from the current funding model that is tied to the number of students enrolled.

“It is going to help the long-term goal of increasing the number of bachelor degrees in the state,” said Katie Paquet, an Arizona Board of Regents spokeswoman. “And it will also show accountability to taxpayers by increasing transparency.”

University funding would instead be based on the school’s performance, including the number of degrees earned at each university, the number of successfully completed credit hours and increases in outside research funding.

Talks about an Arizona performance-based model started more than three years ago when the Lumina Foundation gave money to start what is now known as Getting AHEAD (or Getting Access to Higher Education and Degrees), said Paquet.

“In order for Arizona to compete globally, we must ensure that our students are prepared for and have access to a highly effective and efficient postsecondary education system,” said Gov. Jan Brewer in a press release.

Getting AHEAD aims to increase the number of Arizona adults with college degrees, and is a collaborative effort between Arizona’s state universities, community colleges, K-12 districts, local businesses and the Arizona legislative and executive branches, the initiative states on its website.

“Initiatives such as the Getting AHEAD project are helping to provide state policy makers with useful recommendations to consider,” said Brewer in a press release.

Earlier this year as part of the 2011 budget package passed by the state Legislature, ABOR was required to make a recommendation on a performance-based model by Oct. 1.

“This work is the culmination of a year and a half of planning and presents a solid foundation for a funding formula that is aimed at increasing productivity and efficiency among our state’s universities and provide Arizona with the best return on investment,” said Tom Anderes, president of ABOR and co-chair of Getting AHEAD, in a statement.

ABOR is considering a plan that might start in 2013. It would include a base pay equal to the amount universities receive in 2012, and then performance pay would be added to that.

Over the years, this base will fluctuate to allow for changes such as inflation and cost of living adjustments.

From there, the amount will increase or decrease depending on the performance of the school. To reduce the chance of extreme fluctuation from year to year, the plan calls for a three-year “moving average.” Earned performance funding would be added to the base as long as the university does not backtrack on progress made the previous year.

There are a few problems yet to be resolved with the proposal, according to the Getting AHEAD report. It is unclear how the performance model will quantify changes in quality. Also up for discussion is whether the universities would have the same formula, and whether all three universities would be rewarded equally for things like the percentage increase in degrees awarded or courses completed.

ABOR will discuss how to implement the new higher education funding model at their meeting Aug. 4-5 at Arizona State University. A final recommendation will be made at the September meeting at Northern Arizona University, before the Oct. 1 presentation to the Legislature.

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