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Regents Consider Performance Funding Model; STEM Runs Rampant

The South Dakota Board of Regents rounds out its Wednesday afternoon agenda with discussion of its proposed "performance funding model." In a way, the performance funding model is merit pay... not for individuals, but for entire campuses.

The short version: our six public universities will kick a total of $3 million into a "pool of recaptured dollars." The state will match that amount, making the pool for the pilot year of the program $6 million. The Regents will then divvy that money up among the campuses based on how many degrees they've churned out over three prior years (e.g.: SDBOR will calculate FY2013 performance funding from graduate numbers from FY2009, 2010, and 2011). The more advanced the degrees, and the more of those degrees in "premium" fields, the more points the campus gets in the funding formula.

What are the "premium" fields?

Premium fields represent key workforce development priorities for the State of South Dakota.... [A] graduate from a premium field &ndash such as engineering &ndash will be valued at an amount 3.00 times higher than an analogous graduate from a regular field (such as general studies).... Broadly, premium fields include accounting, computers and information technology, health professions, and STEM and STEM teaching areas [South Dakota Board of Regents, "SDBOR Performance Funding Model," Agenda Item 21, 2012.03.28-29, p. 6].

Ah, STEM. Science, technology, engineering, math. In other words, the Regents will consider campuses graduating more English, history, and art majors to be performing worse than those graduating lots of computer whizzes and physics teachers. In the eyes of the Regents, a biology teacher is worth three times as much as a special education teacher. A software engineer is three times more important than an economist. Humanities students, welcome to your official designation as second-class scholars.

The campuses compete in two groups: DSU vs. BHSU vs. NSU, and SDSU vs. USD vs. SDSMT. Here's how the universities would come out under this formula based on this year's budget:

Institution Contribution n Points % Allocation Gain Relative Return
BHSU $307,654 $3,004 39.1% $609,272 $301,618 98.04%
DSU $226,899 $2,774 36.1% $562,721 $335,822 148.01%
NSU $244,189 $1,901 24.8% $385,492 $141,302 57.87%
(Subtotal) $778,742 $7,679 100.0% $1,557,484 $778,742 100.00%
SDSMT $270,504 $4,265 11.4% $505,336 $234,832 86.81%
SDSU $1,056,128 $19,311 51.5% $2,287,887 $1,231,759 116.63%
USD $894,626 $13,921 37.1% $1,649,294 $754,667 84.36%
(Subtotal) $2,221,258 $37,497 100.0% $4,442,516 $2,221,258 100.00%
Total $3,000,000 $45,176 0.0% $6,000,000 $3,000,000 100.00%

Every campus comes out ahead on this deal, but some come out aheader than others. In the "masters" pool, DSU with all of its computerized graduates essentially gets a 148% match from the state. (My 2010 master's degree will help DSU pull in those bucks. You're welcome.) In the "doctoral" pool, SDSU gets a 117% match. The other schools get less than a dollar back on top of each dollar they place in the pool.

Now in general, rewarding performance seems reasonable. But we're going to be giving universities varying amounts of money based on what they did in three previous years. Might there not be a disconnect between performance in past years and needs in the current year? Suppose a campus is starting a new program to produce more graduates in "premium" areas. The fact that they didn't produce many "premium" graduates four years ago seems a paltry reason not to say, "Here's the money you need to serve your students now."

The performance funding model seems just one more effort by state government to turn everything it touches, including our public education system, into an affirmation of its free-market fundamentalism. Placing our campuses in competition with each other based on their production of graduates in specific fields seems counterproductive to providing all South Dakota students of all academic interests the opportunity for a quality public university education.


  1. tonyamert 2012.03.27

    This seems entirely pointless. The people that do the work are so far from the funding source that they won't complete the feedback loop naturally to make the "market" work. Also, these numbers are comically small from a campus prospective. My research group alone brings in more money than would be allocated to the entire SDSMT campus through that funding formula.

    Also, a natural conclusion to a "market" model is the elimination of players that are ill suited. Do they really want to kill off university campuses?

  2. D.E. Bishop 2012.03.27

    Yeah, I agree with you Cory. Trying to cram education into the same mold as a factory is crap.

  3. David Newquist 2012.03.27

    When those who think that education can and should be run like a business speak of "market driven," they apparently are referring to the New Orleans Slave Market. They tradition of placing a marketable value on humans and treating them accordingly flourished there, and this scheme sees a revival of that value system.

  4. caheidelberger Post author | 2012.03.28

    Excellent point, Tony. The chain is too long for the incentive to make sense. It's thus more of a philosophical affirmation than good policy.

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