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How Are Public Universities Funded? Higher Education Funding Models in Ohio



Higher Education Funding Models

In order to discuss the rising cost of public higher education, we must first understand their funding mechanisms. To discuss the funding models of public higher education in Ohio, one could go as far back as Ohio University in the early nineteenth century when they collected rent off their land to fund their entire institution.[2] I have chosen to focus on the funding models for higher education since the creation of the Board of Regents in 1963, as this will be more pertinent to the analysis of recent rising costs.


Since the creations of the Ohio Board of Regents there have been four approaches to higher education funding. Dr. Matthew Filipic, the former Vice Chancellor for Administration at the Ohio Board of Regents and the former Senior Vice President for Business and Fiscal Affairs at Wright State University, was utilized to help explain the four models. The first approach to higher education funding was an enrollment-based formula. The Board of Regents calculated “the cost per student on a statewide average and used that information to develop a formula to fund each campus based on the enrollments each campus had based on each category.”[3] The more students an institution brought in, the more money they would receive. This formula was vital to the expansion of access-focused universities in Ohio such as Wright State University or Cleveland State University.


Around 1980 the Ohio Board of Regents hired a state demographer to help decipher upcoming trends in higher education. He concluded that state enrollments would drop by nearly one fourth over the next decade, clearly causing panic across public institutions.[4] The current model would have been unable to sustain public institutions with this dramatic of a decrease in enrollment. Therefore, our second approach to higher education funding was developed. A much more complicated formula was established to control fixed costs even if enrollments declined. According to Filipic, the State would “actually provide more funding for facilities when enrollments fell than when enrollments maintained or grew because the institutions still had buildings to operate but lacked the funding from students.”[5] However, as studies began to show an evolving economy that would require much more knowledge-based labor, it was apparent that the State would need to make changes that incentivized colleges to increase their enrollments.


The third model for higher education funding, really just an adjustment to the second, was implemented to reward campuses that increased enrollments and to incentivize those who had not yet been able to attract new students. This model kept the provisions from the second model but put pressure on institutions to not lie idly by while the changing economy left the workforce without educated workers.[7] The State rewarded the best academic programs and incentivized institutions to provide more successful degree completions. While there were still buffers for enrollment dips, we were beginning to see a move toward completion over enrollment.


Finally, in 2012, Ohio moved toward a performance-based model that relies on successful course and degree completions. The model was developed through the Ohio Higher Education Funding Commission comprised of many of the University Presidents and chaired by Ohio State University President Gordon Gee. The new model now provides that institutions receive roughly fifty percent of their funding based on degree completion, thirty percent based on course completion, and minor additional allocations for access challenges and alternate necessities.[8] With more pressure from policymakers and state taxpayers, institutions now are charged with the responsibility to get their students to the finish line rather than send them through the revolving door. While this model was sound in theory, we were beginning to see data that suggests State universities are “moving resources from financially-needy students to merit students who were more likely to pass classes and graduate and thus generate financial return.”[9] The new funding formula clearly appears to hurt access-focused campuses while benefitting the selective institutions.[10] As the State continues to analyze this new funding model, it will be critical that adjustments are made to ensure greater access and affordability for public higher education.


Next Blog: How Much has the Price of Higher Education Increased?

 

Sources:

[1]http://www.nea.org/home/1602.htm

[2] Knight, History of Higher Education in Ohio, 32.

[3] Filipic. Personal Interview.

[4] Ibid.

[5] Ibid.

[6] https://sundaycritics.com/top-universities-of-pakistan-recognized-by-higher-education-commission-pakistan

[7] Filipic. Personal Interview.

[8] Ibid.

[9] McNay, John, and Kilpatrick, Sara. “2017 Ohio Higher Education Report.” (Ohio Conference AAUP, 2017), 6.

[10] Ibid., 6.

 

About the Author:

Lukas Wenrick spends his days working to develop innovative solutions to the most complex issues universities face. He does so to ensure that the most marginalized students may pursue an alternative trajectory than the one laid out by their zip code. He believes that universities and other educational enterprises have the duty to expand educational opportunity to as many individuals as possible and that excellence should be judged by the students that an institution includes, rather than those that it excludes.


Lukas holds a Master's of Education in Higher Education from the Harvard Graduate School of Education and a Bachelor of Arts in Social Science Education from Wright State University. His experiences at both an open access public university and an elite private institution inform the work he does every day. Currently, Lukas serves as a University Innovation Fellow at Arizona State University where he works to leverage the ASU enterprise to resolve educational and social inequities in the world.


If you'd like to know more about Lukas you can find him on the following sites:


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