Legislation will be introduced this week in the Alabama Legislature to tie some new higher education funding to school performance markers, the education budget committee chairmen told Alabama Daily News.
Sen. Arthur Orr, R-Decatur, said last week that the goal of outcomes-based funding is to improve educational results across the state’s four- and two-year colleges, including graduation rates and the number of graduates ready for in-demand jobs.
“This is an important first step, and it will take time, to elevate our institutions to do more and do better, “ Orr said. “But that takes money.”
In 2024, performance-based funding was distributed to two-year colleges in 28 states and in four-year colleges in 21 states, according to the State Higher Education Executive Officers Association. Orr and Garrett last year led meetings on how a model could work in Alabama.
“This is our attempt to look at what we can do to address and incentivize the outcomes at the institution of higher education,” Garrett told ADN.
Alabama has one of the lowest labor participation rates in the country, 57.2% in December compared to a national rate of 62.4%.
“It’s critical that we correct that,” Garrett said.
The U.S. Department of Education recently began displaying on the Free Application for Federal Student Aid public institutions’ graduates’ median earnings four years after graduation. If a school’s median earnings for graduates fall below the median of high school graduates, the FAFSA form will show a “lower earnings” warning.
The Legislature’s annual session begins Tuesday and the bill could be filed as soon as then.
An initial funding amount hasn’t been decided yet, Garrett said over the weekend. There are still discussions with education budget committee members and college officials to be had.
“This (bill) will be a basis for us to begin discussions,” Garrett said.
The lawmakers have compared this initiative to the 2025 RAISE Act. This year, it targets $166 million in additional funding toward K-12 students with greater needs, including larger numbers of students with disabilities or in poverty.
In meetings last year, it was repeatedly said that lawmakers don’t want to make schools compete against each other and performance metrics could be tailored to each school.
Orr said lawmakers would talk to school leaders about their greatest needs in student retention and achievement.
“Maybe they have a lot of first-generation students,” Orr said. “So, how do we give them additional resources for those students?”
There will be a category in the bill for innovation, he said.
“What are they doing online, what are they doing after hours, what are they doing for adult learners?” he said.
Orr has advocated tying some higher ed funding to performance markers for years, but COVID-19 derailed some of the conversations.
Garrett said lawmakers want to encourage universities to consider how their programs can better respond to the state’s needs and retain graduates in Alabama after they receive their degrees.
Broadening their pool of students is another goal.
“We want to make sure that we offer opportunities for students that we are not yet reaching in the higher education community,” Garrett said.