Policymakers in Kentucky, like other states across the nation, have an opportunity through the adoption of a performance based funding formula to encourage their colleges and universities to not only become more focused on college completion, but to also prioritize equity. In Kentucky, less than a fourth of students enrolled at four-year public universities graduate in four years, and less than half graduate in six years, compared to over a third of students graduating in four years and over half graduating in six-years nationally.

Kentucky also struggles with gaps in completion by both race and income. Only 36 percent of underrepresented minorities and 37 percent of low-income students enrolled in Kentucky public four-year universities graduate within six years, compared to 49 percent of all students. These gaps persist at Kentucky two-year colleges, with only 15 percent of underrepresented minorities and 21 percent of low-income students graduating in three years, compared to 24 percent of all students. Consequently, Kentucky’s Council on Postsecondary Education has adopted a goal to increase Kentucky’s educational attainment to 60 percent by 2030, requiring renewed focus on improving outcomes for all students.

Moreover, like in many states across the nation, Kentucky’s postsecondary education system is stratified, where institutions that enroll the greatest proportion of low-income students and students of color — those who need the most support and for whom completion is most critical — have the least resources and graduate students at lower rates. At Kentucky State University (Kentucky’s lone HBCU), Eastern Kentucky University, and Morehead State University, for example, low-income students routinely make up half or more than half the student population.  But their six-year completion rates are much lower than the University of Kentucky, for instance, where fewer low-income students enroll, and notably, where the endowment is nearly 10 times as much as that of the other three campuses combined.

This means that to increase college completion in Kentucky, policymakers must 1) encourage campuses with greater resources to enroll, support, and graduate more students who are least likely to graduate (i.e., low-income students and students of color) and 2) ensure the campuses enrolling the students least likely to graduate have the resources needed to support their students and improve their graduation rates.

Kentucky lawmakers have taken a first step in adopting Senate Bill 153 which creates a new, comprehensive funding formula for postsecondary education — 70 percent of which would be based on student outcomes. At full implementation, four-year universities would be in direct competition with one another for a pool of funding, and two-year colleges would compete against each other for another pool of funding.

Kentucky Performance Funding Formula

Four-Year Universities Two-Year Colleges
35%-Based on the university’s share of total student success outcomes produced:

  • Bachelor’s degree production
  • Bachelor’s degrees awarded per 100 undergraduate full-time equivalent students
  • Number of students progressing beyond 30, 60, and 90 credit-hour thresholds
  • STEM-H bachelor’s degree production
  • Bachelor’s degrees earned by low income students and underrepresented minority students
35%-Based on each college’s share of total student success outcomes produced:

  • Certificate, diploma, and associate degree production
  • Numbers of students progressing beyond 15, 30, and 45 credit-hour thresholds
  • STEM-H credentials productions
  • Production of high-wage, high-demand industry credentials
  • Production of industry credentials
  • Credentials earned by low income students, underprepared students, and underrepresented minority students
35%-Based on university’s share of sector total student credit hours earned 35%-Based on university’s share of sector total student credit hours earned
30%-Distributed in support of vital campus operations 30%-Distributed in support of vital campus operations

In order to ensure this policy helps increase equity and completion and not exacerbate inequality, we recommend that the funding formula be revised to provide additional weights for institutions enrolling underrepresented students. Also, the weights for priority populations (underrepresented minorities, low income, etc.) should be equal to or higher than those for the types of degree/credentials earned. Experts have recommended that in order for equity metrics to work well in performance and outcomes-based funding policies they must provide enough weight to counteract the incentive for schools to just increase selectivity in order to boost completion rates. Currently the model includes degree completion for low income students and underrepresented minority students as one of five factors to determine student success, if the five factors are applied evenly, equity is only 6% of the funding formula. This means over 90% of the funding formula is determined by factors other than equity, and over half is based on course and overall completion. Equity must be given a greater weight or the policy will likely result in increased selectivity.

Policymakers should take into consideration what Kentucky advocates and performance- and outcomes-based funding experts have recommended as ways to protect and increase equity while also improving college completion. Failing to do so, will make it difficult for policymakers to argue that any inequities resulting from the policy were “unintentional,” but also, and most important, make it difficult to meet their state attainment goal.

More than 30 statesnow have adopted or are in the process of adopting a formula that divvies out funding to public colleges and universities based on their outcomes for students. Called Performance- or Outcomes-Based Funding (POBF), these policies are inconsistent in their design, and in many cases, perpetuate longstanding inequities in our education system. In this series, we explore the current landscape around POBF policies and what states can do to build more equitable policies. This is the fourth post in this series, which draws from the book, “Outcomes-Based Funding and Race in Higher Education: Can Equity Be Bought?

Perry Papka is senior policy director at The Prichard Committee for Academic Excellence.

Read the other parts of our “Can Equity be Bought?” series: