The State Board of Education is calling for major changes to the way Idaho’s colleges and universities are funded.

On Thursday, the State Board voted unanimously to waive its traditional funding model and begin phasing in a new outcomes-based funding model. Under the outcomes-based model, colleges and universities would receive funding based on the number of graduates the institutions produce, as opposed to the number and type of credit hours the students take.

The State Board will ask the 2019 Legislature to put $16 million into outcomes-based funding — for the first installment of a three-year phase-in. If lawmakers sign on, the change would shake up how Idaho’s higher education institutions have been funded for the past 30 years.

The outcomes-based funding model was one of the 12 recommendations issued by Gov. Butch Otter’s Higher Education Task Force in the fall of 2017. Otter convened the task force at a time when the state has continued to struggle to reach its signature education goal — to have 60 percent of Idaho’s young adults possess a postsecondary degree or certificate.

State Board members say the funding plan is their top legislative priority and it promotes a return on investment. The idea is to incentivize graduations and results in the form of certificates, associate’s degrees and bachelor’s degrees.

“We as a board see outcomes-based funding as a practical step we can take to help our colleges and universities contribute even more to our entire higher education system success, and more importantly, to the success of our students,” State Board member Emma Atchley said in a written statement.

At the four-year college and university level, the state would incentivize three outcomes with equally weighted funding multipliers:

• On-time graduations.
• Completion of a degree or certificate by low-income, at-risk students.
• Completion of a degree or certificate in high-impact areas such as STEM fields, education, health or business.

The State Board also approved outcomes-based funding models for community colleges and the career-technical education program.

Although the State Board approved the funding change unanimously, there was some concern about the “stackable” nature of the funding multipliers. Members did not want to incentivize higher education institutions to start awarding superfluous new certificates and associate’s degree programs to capitalize on the new state funding incentives.

One hypothetical example that caused concern involved a four-year university deciding to report to the state that its bachelor’s degree recipients has also earned meaningless new certificates and associate’s degrees while studying for a bachelor’s degree — thus allowing the university to get credit for three awards (a certificate, an associate’s degree and the bachelor’s degree) rather than just the bachelor’s degree the students were legitimately seeking.

“There has been a concern expressed rather publicly that this model would lead to our institutions becoming degree factories,” State Board President Linda Clark said during preliminary discussions Wednesday.

Idaho State University President Kevin Satterlee was blunt when discussing how universities should treat the incentives.

“If I do that on my campus, fire me,” Satterlee said. “That’s not the goal.”

In the end, State Board member Richard Westerberg asked a subcommittee to review the stackable nature of the awards to ensure fidelity and transparency.

The State Board will look to phase the outcomes-based funding model in over three years, starting with about $16 million in new state funding for the 2020 budget year.