SCORE memo notes need to update state higher-ed funding formula
A new memo from the State Collaborative on Reforming Education (SCORE) highlights the need to revise Tennessee’s outcomes-based postsecondary funding formula to better prepare students for career success after graduation.
According to the memo’s key insights, Tennessee’s current postsecondary outcomes-based funding formula, which was first adopted in 2010 to fund colleges and universities based on student performance, has had a “small positive impact on student success” but has “not yet driven improvements for all outcomes or all students.”
The memo also noted that the 2025 formula review cycle is an opportunity for Tennessee to prioritize student success by aligning the funding formula with measures indicating whether students are on pathways to careers that pay well. It added that officials should consider a new formula to appropriately “incentivize student opportunity in postsecondary education and hold postsecondary institutions sufficiently accountable for driving student success from classroom to career.”
About 30 states have some type of outcomes-based funding policy, with Tennessee being one of only five to allocate more than 80 percent of state funds based on student outcomes across two- and four-year institutions.
“Research indicates the state’s funding formula has driven some improvements in student outcomes, yet data continue to show that too few students are successfully completing credentials and degrees,” the memo read. “Underwhelming graduation rates alongside misalignment between education and careers suggest a clear opportunity for improving the formula to support an expanded vision of lifelong success for every Tennessean.”
According to the memo, the current formula has “not sufficiently prioritized career outcomes.” It said that of the more than 20 current metrics and premiums used in the current formula, three have connections to careers: the job placement metric, the workforce training metric and the high-need premium, with job placement and workforce training metrics considered for community colleges only. The high-need premium provides a larger award for students who earn a credential in certain high-demand science, technology, engineering and math (STEM)-related fields but excludes in-demand fields such as management, legal, and architecture, which have some of the highest earnings in the state.
The memo added that the current formula has not translated to significant improvements in student success at postsecondary institutions either. While researchers from Georgetown’s Center on Education and the Workforce estimate that over 60 percent of Tennessee jobs will soon require some sort of postsecondary training beyond high school, the memo noted that Tennessee’s job attainment rate is only at 47.9 percent.
“As the original leader of outcomes-based funding, our state has the foundations in place to once again lead the way with an updated formula that more effectively and comprehensively drives improvement,” the memo said. “We do not have sufficient information to discern if the credentials earned are preparing graduates for careers that enable economic independence, but there are several metrics indicating that not all credentials are equally preparing students for careers.”
