State Auditor Nicole Galloway says an audit of the Department of Higher Education’s performance funding shows the department does not confirm information used to determine school performance funding results. The program is intended to create incentives for improvement or sustainment of excellence by awarding additional funding based on specific performance measures. Galloway says colleges and universities operate on an honor system that allows them to self-report the information that shows whether they are meeting necessary goals to receive additional funding.

Missouri Auditor Nicole Galloway

The state’s public colleges and universities receive a set amount of core funding each year, with additional performance funding awarded based on success in certain areas, including student academic progress, graduation rates, quality of learning, and financial efficiency. The amount available for performance funding is determined by the General Assembly and is generally 1 to 5% of each college or university’s core higher education funding.

In many cases success is measured against a comparable peer group, or group of similar institutions. Galloway says the department hasn’t offered adequate guidelines for selecting a peer group, which means colleges and universities could potentially select different peer groups than those already established for other purposes, or even downgrade to a lower-performing peer group in order to meet established benchmarks.

The audit also says the department does not provide overall adequate guidance and oversight on the incentives program’s operations or measurements. Galloway says incomplete guidelines and unclear definitions leave colleges and universities on their own to figure out how to best measure their success, allowing them to interpret results differently when reporting information to the department.

“True performance funding should be an accurate reflection of how well a public college or university accomplishes its core purpose of educating students,” says Galloway. “The legislature and the Department of Higher Education must take responsibility for creating appropriate guidelines and improving program management and oversight. Without that commitment, it is difficult to determine whether the program provides any real benefits or if it simply creates another bureaucratic task that leads to more paperwork, but fails to improve educational outcomes.”

The audit includes a series of corrective actions the Department of Higher Education can take to improve management operations and oversight of the program. A complete copy of the report is available online here.