Auditor identifies concerns with higher education incentive program

(From State Auditor Nicole Galloway)

Missouri State Auditor Nicole Galloway has released a review of performance funding for Missouri public higher education. The program is intended to create incentives for improvement or sustainment of excellence by awarding additional funding based on specific performance measures.

The audit found the Department of Higher Education does not provide adequate guidance and oversight on program operations or measurements. 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," Auditor Galloway said. "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 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 percent of each college or university's core higher education funding.

In addition to concerns related to program management and oversight, the audit found the department does not verify data used to determine performance funding results. The 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.

In many cases success is measured against a comparable peer group, or group of similar institutions. 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 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.

This is the third in a series of four higher education audits. Audits of the Department of Higher Education and Higher Education Funding and Affordability were released last year. An Audit of the University of Missouri System Administration is ongoing.