- Development of a new performance-based funding model is up for discussion as lawmakers and IHL consider ways to improve degree outcomes and workforce needs.
How Mississippi funds its institutions of higher learning was a topic of discussion during the first day of the Senate Committee on Universities and Colleges.
Committee members also heard updates on the status of the college savings programs as well as an update on recent graduation rates.
University Funding
How universities are funded with state monies was covered by LeAnne Robinson, Director of the Legislative Budget Office. Her presentation looked back over decades and described how a performance-based funding model was considered in the recent past.
After development of that model some 10 years ago, it was put on hold by the Board at the Institutions of Higher Learning (IHL) due to perceived negative impacts on the state’s public universities.
That funding budget was based on weights, performance standards and other factors. It was formed by the IHL’s Board of Trustees with the assistance of the National Center for Higher Education Management Systems in 2014-2015.
“They were adjusting for tuition revenue at the institutions and also wanted to ensure that fair treatment would be considered for all public funds, including tuition when determining the allocation of state dollars,” Robinson described. “The resulting formula was based on weights and it used completed credit hour production weights for non-resident students and then also a hold harmless provision.”
Weights focused on the number of students by course type and level, among other metrics.
Concerns with the huge swings in funding levels under that formula led to a hold harmless provision being put into effect a decade ago. As such, from 2016 onward, the IHL Board resumed the base plus funding model used previously for the state’s universities.
Another factor in that decision was a 5 percent decrease in general funding at the time, and subsequent cuts across the board by former Governor Phil Bryant in response.
Currently, the IHL Board is utilizing an across-the-board approach to funding, where for example if there is a 2 percent increase in state funding, each university gets a 2 percent increase.
A new funding formula is being formulated by IHL with assistance from NCHEMS. The two are considering a formula based on enrollment and tuition revenue in preparation for the anticipated enrollment cliff that is due to declining high school enrollment numbers caused by population declines in the state.
NCHEMS is considering base-plus funding, the current model, a per full time enrollment model, and a model focused on performance.
Senators also heard from experts on how other states fund their institutions of higher learning. The focus was on how outcomes relate to funding, such as if a meaningful portion of funding is based on student success six months after graduation.
“Practically speaking, the state could look at employment that pays at least 90 percent of the median wage,” Senior Policy Director for Excel In Ed Dr. Nathan Oakley said.
Success could also be measured by whether a student enrolls in a four-year university or community college or enlists in the military.
Oakley said it is important to ensure people are trained to enter the workforce.
Additionally, new federal regulations from the One Big Beautiful Bill Act will look at outcomes in higher education. These new federal regulations will create triggers if degrees do not generate the expected outcome, which could then lead to loses in federal student loan resources.
“So, low graduate wages equals the loss of student loans,” Oakley described.
States like Arkansas, Texas, Tennessee and Florida are implementing methods to compare wages from high school graduates to those from community college and university graduates while considering other outcome statistics to determine funding levels.
Oakley suggested Mississippi consider the demands of the workforce and which jobs offer higher wages. Some states put weights on whether students are high needs, which include adult learners or underprepared students and the economically disadvantaged.
Steven Gentile, Executive Director of the Tennessee Higher Education Commission, described how his state puts an emphasis on performance of each institution when allocating funding. Prior to 2010, Tennessee operated much like Mississippi, utilizing a hold harmless provision that protected institutions when enrollment numbers declined.
“So, really we had no fiscal policy, and really it was a base-plus from one year to the next,” Gentile explained. “Nothing was really informing the state funding of our institutions.”
That changed in 2010 when Tennessee implemented a new funding formula that focused on student retention, degree completion time and research needs, and outcomes for applicable institutions. Job placement also played a part in the funding and weights were added for categories like adult students, those with low incomes, and the academically underprepared.
While graduation rates were considered, they are not the driving factor. Rather, Gentile said the focus is on whether the institution is improving graduation rates year-over-year.
“We find focusing on outcomes still incentivizes institutions to grow and meet the growing base here in Tennessee, and our high school senior classes are growing right now. We want our institutions to be serving more and more students, but we want them to be completing them, so we don’t focus just on rates. We focus on overall outcome counts,” Gentile added.
Over the past 15 years, the state has seen four-year graduation rates double.
College Savings Programs
State Treasurer David McRae gave lawmakers an overview of how his office has worked to strengthen the solvency of the state’s college savings programs in an effort to help families prepare to send children to college.
When he took over as State Treasurer nearly six years ago, he noticed the savings programs were not fully funded.
“When I inherited the state treasury, we noticed the MPACT program was at 72 percent funded. Within a year we had gotten that up to 80 percent funded, within two years we had gotten it to 90 percent funded and today I am proud to say that within five years we have gotten it to over 100 percent funded,” McRae explained.
He added the Horizon program is now funded at 140 percent.
These achievements were made in part due a modernization of investments through legislative approval, McRae said.
Today, the membership in the state’s college savings programs has grown. The MACS program, a non-prepaid program, has 23,214 members. The MPACT legacy program is at 7,817 members but is not accepting new members due to it being phased out. The program is being replaced by MPACT Horizon, which is taking new members. Its membership currently totals just over 3,000.
College Graduation Rates
In terms of graduation rates within Mississippi, Commissioner of Higher Learning Dr. Alfred Rankins said the state focuses on six-year graduation rates, which is the national standard.
Degree programs are reviewed on a regular basis to ensure they are meeting the demands of the students and are meeting minimum graduate levels. Programs that do not meet those standards are put on review and later deleted if proper standards continue to fall short.
Under the six-year graduation rates recorded by the IHL, Mississippi Valley State University reported the lowest at 27 percent, while the University of Mississippi reported the highest at 72 percent.
Rankins explained that MVSU’s rate is skewed due to 44 percent of the student body attending classes part-time, the highest in the state. Additionally, 8 percent of the student body is comprised of transfers, which do not count toward graduation rates at any university. Those two rates combined mean that more than 50 percent of the student body is not recorded in the six-year graduation rate. Transfers include students who move from a community college to a university.
Rankins also pointed to the ACT scores of MVSU students, which came in at an average of 16, the lowest in the state. Mississippi State University had the highest ACT average at 25.
The work of the Senate committee will continue as they prepare for the 2026 legislative session.
Jeremy Pittari
