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                      PERFORMANCE FUNDING
                  SECTOR COMMITTEE GUIDELINES

I. The Task

The task involves three steps: 

     1) determining the weight of the indicator

     2) establishing the benchmark or level of performance 

     3) applying the benchmark to institutions in the sector

These three steps are explained in greater detail below, with examples and 
recommended processes. 

II. Background

Following approval of Act 359 in the 1996 legislative session, planning for 
performance funding began in July and August of 1996.  The Commission named a 
Steering Committee for the process, which is the Committee on Planning and Assessment,
a standing committee of the Commission.  The Commission chair named three task 
forces (Academics, Planning/Institutional Effectiveness, and Administrative Management) 
to develop measurers for the 37 indicators and report their recommendations back 
to the Steering Committee..

The task forces completed their work on September 18, 1996, and the Steering 
Committee approved the task force recommendations, with only minor changes, at 
its meeting on September 24.  The Commission approved the Steering Committee's 
recommendations on October 3, with the exception of referring the measure for 
indicator VII. A, graduation rate, to the staff for further analysis and subsequent 
action by the Steering Committee at its meeting on October 17, 1996. One other 
indicator,  VI. C, post-secondary non-academic achievement of student body, was 
not acted on by the task force and will also be considered by the Steering Committee 
on October 17..

The second phase of the planning process involves developing benchmarks and 
applications for the measures. The Commission chair has named four "sector 
committees" to do this work and report to the Steering Committee in December.  
There is one committee for each of the four sectors or types of higher education 
institutions identified in Act 359:
     Research universities
     Four-year colleges and universities
     Two-year institutions--branches of USC
     State technical and comprehensive education system

The sector committees are to report to the steering committee on December 3, 1996. 


The legislation provides for a phase-in period in 1997-98 and 1998-99 before 
performance funding is fully implemented in 1999-2000.  During the phase-in period, 
institutions are "held harmless"; their funding will not decrease below the 1996-97 
level as a result of implementing performance funding. Data will be available to 
implement 15 of the measures in 1997-98.  Other measures will require more time 
before data can be obtained.


III. Explanation of the Task

The three steps in the process are explained below, with examples:

1) Determining the weight of the indicator

This task involves assigning relative values to each of the indi cators.  The              
question is, How much should this indicator count, compared with others?  The 
answer to this question should be expressed in a percentage, so that the value of 
all the indicators for that sector  will total 100%.  The committee should keep in 
mind that the nine critical success factors are listed in priority order in the 
legislation, with the first one, mission focus, having the highest priority.
          
Examples:

Example 1, Indicator VII. A (Graduation rate).  What weight should this indicator
carry for institutions within the sector?  Another way to phrase the question is, On
a scale from 0 to 100, how important is this indicator in assessing the overall 
quality of the institutions within the sector?
     
Example 2,  Indicator IX. A (Financial support for reform in teacher education).
What weight should this indicator carry for institutions within the sector?  This 
indicator would seem to apply only to institutions which have teacher education 
programs, so a weighting of 0% might be appropriate for some sectors.

Recommended process:

The committee might wish t  o proceed by first   looking briefly  at all the measures 
and the relevant materials in the   notebooks and then determining, as a starting 
point, the relative wei  ght of each by categorizing each one as having a high, 
medium, or low relative weight compared to the other measures. After all the other 
work of the committee is completed, it should return to the question of weighting 
and assign a specific percentage for each of the indicators, totaling 100%.  Use 
the form provided for each indicator to record the recommended percentage of weight 
and the rationale.



2) Establishing the benchmark or level of performance

After the initial determination of relative weight has been completed,with a 
tentative assignment of "high," "medium," or "low" to each indicator, then the 
committee should determine for each indicator the benchmark or level of  performance 
that will result in a designated percentage of funding.   The question is, what 
level of performance results in what percentage of funding?  This task will vary 
from one indicator to another, as the examples below indicate.  This is because 
some measures are a simple "yes/no," while others involve a degree of meeting or 
exceeding a level, and still others involve a comparative ranking of institutions 
within the sector.

Examples:

Example 1: Indicator I. C  (Approval of a mission statement).  The measure is the
approval by the Commission of a mission statement.  This is clearly a "yes/no," 
and presumably approval would result in 100% of the funding available for that one 
indicator.

Example 2: Indicator V. A (Percentage of administrative costs as compared to 
academic costs).  In this case, there is a numerical measure. The question is, what 
ratios would result in what percentage of funding?

Example 3: Indicator II. C (Post-tenure review for tenured faculty).  The measure 
here is a ranking of institutions within the sector, based on the extent of their 
compliance with provisions in a "best practices document" approved by the task force.
The question is, what ranking would result in what percentage of the funding available 
for this indicator.


Recommended process:

Again, materials in the notebooks may serve as a useful starting point in
addressing this task.  The committee's job, then,  is two-fold.  It is to determine 
the appropriate level of performance and to determine the percentage of the available 
funding for this one measure that would result from that performance. In some cases,
this means that one level of performance results in one level of the available 
funding.  In others, several different levels may result in a number of different 
percentages of funding. The committee should assume that the same benchmark applies 
to all institutions in the sector, unless there is clear and compelling reason for 
exceptions.  Exceptions will be handled in the next task, the application of the 
benchmark.


3. Applying the benchmark to institutions within the sector

The final step is to apply the benchmarks to the institutions withi n the sector.
The question is, given this measure and benchmark, how should it apply to 
institutions within the sector? In most cases the application will already have been 
accomplished in the bench marking process in step 2, and no action will be required.
In some cases, the benchmark may not apply to some institutions, may apply in 
different ways to some institutions, or may need refinement in order to be applied.
          
     
Examples:

Example 1: Indicator VII. F (Credit hours earned of graduates).  The measure and 
benchmark are numerical and might apply equally to all institutions in the sector, 
in which case there would be no further issues of application.

Example 2: Indicator VIII. A (Transferability of credits to and from the 
institution).  The measure and benchmark require a number of sub-measures to
determine the extent of compliance with "best practices," and some of these 
sub-measures may not apply to some institutions or to some sectors, in which case 
the committee will need to make a recommendation regarding application.

Example 3: Indicator VI. A (SAT and ACT scores of student body).  This is a 
numerical measure and benchmark which will not apply to all sectors. 


Recommended process:

The assumption should be that benchmarks will apply equally to all institutions
across the sector, unless there is clear and compelling justification to differentiate 
among institutions. The committee should identify the benchmarks which might not 
apply equally, and then hold any exceptions up to careful scrutiny.  


III. General guidelines

The steps outlined above will take the committees through a complicated process of 
analysis which must be completed  within a short time frame so that the Commission 
can report to the General Assembly in January.  The committees should keep in mind 
the following guidelines as they proceeds in their work:


                                
                                
                           GUIDELINES

1. Work within the allotted time frame, meeting as often as needed to complete 
the work on schedule.

2. Provide opportunities for input from institutions and other constituents.

3. Share draft materials with institutional representatives and others who attend 
the meetings.

4. Keep the language simple and straight forward in establishing benchmarks.

5. If the benchmarks apply differently to institutions within the sector, be sure 
there is a clear and compelling reason.



IV. The Commission staff's role

The Commission's staff, headed by four directors,  will support the work of the 
committees. Michael Smith and his staff will coordinate the overall process and 
support the Steering Committee.  Gail Morrison and her staff will support the work 
of two committees:  the research universities and two-year branch campuses.  Alan 
Krech and his staff will support the state technical and comprehensive education 
system committee.  John Smalls and his staff will support the work of the four year 
colleges and universities committee. The staff will support this work by

     - scheduling meetings
     - conducting research
     - drafting documents
     - raising questions
     - analyzing materials
     - refining phrasing
     - distributing materials
     - taking minutes
     - putting information on the web page
     - providing logistical support

Committee members should feel free to contact the staff for support.  The Commission's 
phone number is 803-737-2260.