Performance-Based Funding | MCC

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Performance-Based Funding

The Kentucky General Assembly implemented a performance-based funding model with the passage of SB 153 in the 2017 Regular Session. The legislature determined that a need existed for a funding model that would align the Commonwealth’s investment in postsecondary education with state policy goals and objectives. The model focuses on student completion and ensuring that Kentucky’s educational attainment level for adults increases from 45% to 60% by the year 2030.

Additional aims of the model are to increase student persistence, increase the number of credentials awarded to all students (especially low-income and underrepresented), and to increase the number of credentials awarded in STEM+H field and those deemed high-wage and high-demand.

The passage of SB 135 in the 2021 session of the Kentucky General Assembly established a new funding floor for colleges and universities based on the current state appropriation. Moving forward, new funding will move into the performance-based funding model that would reward institutions for their performance in key metrics that emphasize the student completion of credentials, student progressions, successful transfer, and completion of courses. Additional metrics in the model recognize institutional space dedicated to student learning and spending in key student and academic affairs areas.

Components of the model are discussed in additional detail below.

Student Completion (Semester Credit Hours) - 35%

  • Total semester credit hours completed by students at the delivering college in the prior academic year, weighted to account for cost differences in academic disciplines. Course completion is defined as receiving an A, B, C, D, or P.

Student Success - 35%

  • 3-Year Average Credentials (10%): Average number of credentials awarded (certificates, diplomas, and associate degrees) by awarding college for the previous 3 completed academic years. Weighting for credentials uses IPEDS categories with underlying data being reported to CPE.
  • Progression (12%): Number of students reaching or surpassing 15, 30, or 45 cumulative earned credits in a given academic year by home college.
  • Underrepresented Minority (URM) Credentials (2%): Number of credentials awarded to URM students (American Indian or Alaska Native, Black or African American, Hispanic or Latino, Native Hawaiian or Other Pacific Islander, and Two or more races).
  • Low-Income Credentials (2%): Number of credentials awarded to low-income students (Pell recipient at any KCTCS college in any academic year (AY) between 2005-06 and the AY the credential(s) was awarded).
  • Underprepared Credentials (2%): Number of credentials awarded to underprepared students (students who tested into developmental English, math, or reading as a first-time, credential-seeking student/transfer since 2010-11).
  • STEM+H Credentials (2%): Number of credentials awarded in STEM+H disciplines (as defined by CPE). STEM+H includes the fields of science, technology, engineering, mathematics, and healthcare.
  • Targeted Industry Credentials (2%): Number of credentials awarded in academic plans that crosswalk to occupations with education requirements of an associate degree or less in targeted industry sectors (Healthcare; Manufacturing; Transportation, Distribution, & Logistics; Information Technology, Business, & Finance; and Construction).
  • High-Wage, High-Demand Credentials (1%): Number of credentials awarded (with the required credential level) tied to occupations that are high-wage, high-demand. High-wage is defined as a median annual wage that is greater than or equal to the wage at the 75th percentile for all occupations in the state of Kentucky; high-demand is defined as growth greater than or equal to the projected percent change for all Kentucky occupations or 100+ average annual job openings.
  • Transfers (2%): Transfers in an academic year are calculated based on a cohort of students enrolled at KCTCS in the prior academic year who enrolled at a four-year institution between the term end date of their maximum KCTCS enrollment term in the prior academic year through June 30th of the following academic year.

Campus Operations - 30%

  • Maintenance & Operations (10%): Distributed based on each institution’s share of Category I (Instructional) and Category II (Non-Instructional) square feet as reported to CPE.
  • Institutional Support (10%): Distributed based on each institution’s share of direct instructional costs per fiscal year (as reported to the Integrated Postsecondary Education Data System [IPEDS]).
  • Academic Support (10%): Distributed based on each delivering institution’s share of total Full-Time Equivalent student enrollment. Full-Time Equivalent calculation: Sum of the total credit hours taken by a student divided by 30.