During a meeting of the Budget Conference Committee on March 21, Kentucky senators and representatives started the debate over the use of performance-based metrics outlined by the Senate to determine the amount of state funding universities will receive.

The budgets proposed by both Gov. Matt Bevin and the Senate included performance-based funding; however, the House has remained adamant that performance-based metrics not be included in the budget.

Sen. David Givens said the use of performance-based metrics to determine funding would help increase the percentage of Kentucky residents who have a bachelor’s degree.

“If Kentucky could be at the national average with regard to degree holders, postsecondary degree holders, economists estimate that we’d have $500 million of additional tax revenue,” Givens said during a committee meeting. “These metrics all drive us, in my opinion, in that direction.”

The first step of the performance-based funding plan is to put 25 percent of each institution’s baseline state appropriations into a performance pool. To ensure a fair playing field, the public universities will be grouped into three competitive sectors.

Sector one contains the University of Kentucky and the University of Louisville. Sector two consists of WKU, Northern Kentucky University, Eastern Kentucky University, Morehead State University and Murray State University. Sector three includes all of the schools in the Kentucky Community and Technical College system. 

Universities will only compete against the schools in their sectors to determine their base-level funding. A combination of a school’s historical performance over the past four years and its gain over the last two years will be used to determine the school’s score.

Each score will be compared to the other scores in the sector to determine how much funding a university will receive.

In the Senate’s proposal, 25 percent of the state funding would be determined by performance-based metrics.

House Democrats have criticized the plan because it includes both Bevin’s original 4.5 and 9 percent budget cuts and performance-based funding.

Rep. Sannie Overly said she disagrees with the Senate’s refusal to allow the universities and their presidents to have a voice in the discussion.

“I’ve talked, as I said, to a number of the presidents, and not that they’ve all been in lock-step , but as a group … in my office, they haven’t been resistant to performance-based [funding],” Overly said. “I think they understand it’s coming. I think they just want to be a part of the conversation.”

Givens said performance-based funding is needed in part because of the wide range of results from each university over the past several years. Givens said some schools have shown a 9 percent gain while others have shown a negative result of 4.8 percent.

Rep. Jody Richards said such a plan will only harm the universities.

“You undoubtably are setting up the universities for failure,” Richards said during the meeting.

He said he would be willing to consider performance-based funding if all of the additional budget cuts were removed.

“I think certainly performance funding ought to be a part of it going forward, and if we can restore all the cuts, then I’m certainly willing to add performance funding in a more aggressive way than we’ve laid out,” Richards said.

Rep. Arnold Simpson said he has studied performance-based funding for several years, and he has yet to see a state implement such large cuts in such a short amount of time.

Simpson said he believes that instead of immediately making 25 percent of the funding performance-based, the state should gradually increase the percentage of funding that is based on performance metrics.

He cited Arkansas as an example of using a step process to gradually increase the funding from performance metrics. “That affords universities a chance to better adjust to this process,” Simpson said.

The Republicans and Democrats have remained grid-locked for several days with neither side agreeing to any of the proposed compromises. The legislative session ends on April 12, and a budget must be approved before then.