Dear Partner-
One of the Prosperity Partnership's primary policy objectives in working to grow 10,000 new bachelor's degrees by 2020 is the adoption of performance contracts between state government and our institutions of higher education, an issue Representatives Fred Jarrett, Skip Priest and others have been leaders on for a number of years. I am thrilled to report that this year, their bill, HB 2641, was approved by the Legislature and signed by Governor Gregoire. It establishes performance agreement pilot projects, and is a great win. Rep. Jarrett has graciously authored the below piece at our request in order to share the good news with us all. Please read and enjoy.

Sincerely,

Bob Drewel, PSRC
Executive Director

HB 2641 to Provide Performance Agreements to Align Higher Education Goals and Accountability Measures
By Representative Fred Jarrett, 41st District

For some decades, Washington has developed a ten year plan for higher education, updated every four years. Some years ago, we decided the legislature should adopt the updated plan and during this past session we did just that. The master plan encourages the state to think about where higher education should go, but there is no connection between the plan and the enacted biennial budget. And no commitment from individual universities to support the plan's implementation.

HB 2641, a version of an idea Skip Priest and I have worked on for six years, provides a linkage through the biennial budget process. The Higher Education Coordinating Board (HECB) develops the master plan and under HB 2641 would partner with the universities and the state's Office of Financial Management during the development of the biennial budget. In reality this is a pilot-test of performance agreements. These will be developed between policymakers, including the Legislature, the Governor, and individual institutions of higher education. This is a major step towards fiscal responsiveness for Washington's higher education system.

Under the bill, higher education institutions will seek agreement from the state for innovative six-year plans that would result in specific research, educational or public service outcomes. These agreements could break the traditional state pattern of providing money for higher education based exclusively on a set funding level for each additional undergraduate full-time student for a single academic year.

In agreeing to desired outcomes, the state may commit to waivers from state rules and try to deliver certain state funding levels. A successful program will create a whole new pattern for state funding and a new system for accountability.

The agreements would contain written accountability measures that could actually be negotiated between legislators and institutions and could be referenced over the six-year period. As legislative committee chairs change, there would still be a written agreement of the original direction that the state and the institution chose.

Rather than be directed to increase enrollment for a given year, an institution could agree to a minimum number of graduates in a program in the future. For instance, an institution could agree to provide a certain number of engineering graduates at the end of a six-year period provided there is a corresponding increase in funding in each of the six years. Sufficient funding levels could be agreed to expand programs, build the necessary facilities, and provide the supports interested students need to succeed.

These contracts are useful for a research institution because they allow for seemingly unrelated issues to be connected. For instance, it is unlikely the Legislature would ordinarily create a new research program or tutoring program to get more engineering graduates. Yet, it is quite true that a newly-created state research program could generate federal grants and contracts, attract a specialized group of faculty and graduate students, and therefore create new graduates in a high-demand engineering field.

A special tutoring program that helps students through difficult freshmen math and science courses may result in many more students pursuing study in engineering. The proposed performance contract allowed under Engrossed House Bill 2641 could make those kinds of links that state budgets rarely attempt. It could give both the state and the institutions a clear understanding of their role in accomplishing specific higher education goals.

With difficult financial times ahead, institutions and the state may seek to allow for reduced outcomes if funding is reduced. There could also be escalator clauses that provide better results with enhanced funding.

Under the bill, negotiators for state government would include representatives from the governor's budget office, the Higher Education Coordinating Board, the Office of the Superintendent of Public Instruction, two members of the Senate, and two members of the House of Representatives.

Institutions will appoint members to their respective performance agreement negotiating teams with faculty representatives. The state committee and institutions collaboratively develop revised drafts and submit them by September 1, 2008. The state committee and institutions develop final agreements that are submitted to the Governor by November 1, 2008, for consideration in the 2009-11 budget.

For all of my time in the legislature, we have talked about the problems of higher education. That we have too few students choosing to go on to get baccalaureate degrees, that with the most educated technical work force in the nation we produce the fewest technical degrees, etc. Each year we each blame some one else for why these statistics don't improve: The legislature doesn't appropriate the money, the kids don't want to get technical degrees, the universities don't admit qualified students, etc.

HB 2641 provides the first chance to measure our accountability for our intentions.

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