Performance-based funding council hears experts, flags data gaps and design risks for Pitt, Penn State and Temple

The Performance Based Funding Council met in Harrisburg to gather data and expert advice as it develops a performance-based funding process for the three state-related universities: the University of Pittsburgh, Pennsylvania State University and Temple University. Chair Jesse Topper called the hearing to order and said the council’s work flows from Act 90 of 2024 and the legislature’s budget action last year.

The panel of state officials and national experts told the council that Pennsylvania lacks the data infrastructure it needs to track many post‑graduation outcomes that states often use in performance formulas. Andrew Armagost, special adviser to the budget secretary in the Office of the Budget, told the council that “these institutions receive approximately $552,000,000 annually since the 2019–20 fiscal year.” He also said the three institutions enrolled roughly 152,000 full‑time‑equivalent students in 2023–24, of whom about 116,000 received some financial aid and about 93,000 were Pennsylvania residents.

Why it matters: the formula the council recommends must be feasible to measure and defend to taxpayers. Council members and witnesses emphasized that metric choice, the proportion of funding tied to performance, and transitional safeguards will determine whether a formula improves completion, preserves access, or inadvertently shifts resources away from students and institutions that need them most.

State agency testimony and data limitations

Officials from the Pennsylvania Department of Education, the Office of the Budget and the Pennsylvania Higher Education Assistance Agency (PHEAA) described existing datasets and limits. Jessica Seitz, director of the Bureau of Budget and Fiscal Management at PDE, said her office collects invoices and makes monthly payments to the state-related universities under the school code. Andrew Armagost presented high‑level appropriation and per‑student figures: roughly $3,728 per full‑time‑equivalent student or $5,793 per in‑state student based on the 2023–24 year.

Nathan Hench, senior vice president of public affairs at PHEAA, and Elizabeth McLeod, vice president of state grants and special programs at PHEAA, told the council that PHEAA tracks outcomes for cohorts of Pennsylvania State Grant recipients and for smaller programs such as PA-TIP, which links certain associate-level programs to employment with the Department of Labor and Industry. Hench said PHEAA has “a wealth of FAFSA data,” but he and others cautioned that federal rules and recent FAFSA changes restrict how that data can be used outside state grant packaging.

PHEAA also identified missing data elements that institutions do not currently report to the agency for all undergraduates. Both PHEAA and PDE said institution-level reporting generally drops off after graduation: the agencies can follow persistence and completion for grant recipients while students are enrolled, but they have limited ability to track where graduates live or work afterward.

Expert panels: what other states do and the risks to watch

Three national experts briefed the council on state practice and research results. Andrew Smalley of the National Conference of State Legislatures summarized design choices states make (metrics, funding dosage, hold‑harmless floors) and noted that more than 30 states use some form of performance funding, with wide variation in how much money is tied to outcomes.

Justin Ortegas, associate professor of higher education at the University of Florida, summarized empirical research showing mixed results: many studies find performance funding has no effect or a modest positive effect on retention and graduation overall, but some high‑dosage models have produced negative impacts for certain subgroups. “Performance funding is often a signal rather than a panacea,” Ortegas said, urging the council to align design with state goals and to include safeguards for underserved students and institutions.

Charles Ansell of Complete College America urged the council to begin by defining how many graduates Pennsylvania needs to meet workforce demand and to treat that adequacy goal as a baseline for funding and investments. He recommended providing up‑front funding for proven student‑success reforms, tracking process metrics (for example, credit accumulation and advising actions) and phasing in performance incentives so institutions can implement reforms before funds are at risk.

Design choices and common safeguards discussed

Witnesses and council members discussed several design elements the council should consider:

- Scope and comparability: several witnesses recommended measuring the three state‑related research universities within a framework that recognizes differences among 2‑year, regional 4‑year and research institutions, rather than comparing dissimilar campuses directly.

- Hold‑harmless or phased rollouts: expert witnesses noted many states phase in formulas, keeping base funding intact during early years and increasing the share tied to performance over time.

- Bonus/targeted metrics: to avoid widening disparities, states commonly add targeted metrics (for example, low‑income, adult, first‑generation or racially minoritized student completions) to mitigate unintended consequences.

- Adequacy and process metrics: several witnesses urged combining an adequacy (cost‑per‑graduate) baseline with performance incentives and monitoring implementation outputs so reforms are actually carried out.

Numbers and data points discussed

- Annual state appropriations to the three institutions were said to total about $552 million (since 2019–20). - Reported per‑student figures: ~$3,728 per FTE and ~$5,793 per in‑state student (2023–24 figures cited by the budget office). - PHEAA expects about 108,000 state grant award recipients this year; total FAFSA submissions collected annually were described as roughly 500,000.

Council next steps and scheduling

The council closed by scheduling three campus hearings to continue gathering evidence: Jan. 21 at Penn State University (State College), Jan. 30 at Temple University, and Feb. 19 at the University of Pittsburgh. Several panelists volunteered to share state examples and data with council staff for follow‑up.

Ending

Council members and witnesses stressed that Pennsylvania can learn from other states’ designs and mistakes but should adapt approaches to its own policy goals and student population. They urged the council to prioritize measurable goals, transparent transition rules and safeguards that protect access for under‑resourced students and institutions.