MONTGOMERY, Ala. — Alabama lawmakers are weighing a major shift in how the state funds its public colleges and universities, exploring whether to tie a portion of state dollars to student success outcomes such as graduation, job placement and performance in high demand fields.
A legislative task force studying potential changes met again this week to review models used in other states and hear from higher education leaders about how a performance-based system might work in Alabama.
Sen. Arthur Orr, R-Decatur, who co-chairs the committee, said the state has room to improve how it measures the effectiveness of its colleges.
“We’re not challenging our institutions of higher education to improve their outputs in any way. So we hope through this process the legislature will help them with additional resources or additional funding to improve their outcome.”
Lawmakers said any plan would take time to develop and would require input from universities and community colleges across the state.
Rep. Danny Garrett, R-Trussville, said the committee intends to move cautiously and avoid an overly complicated approach.
“Probably not going to have a list of twenty outcomes that we’re going to look at. We’re going to be looking, you know, stepping into this slowly and measuring it, making sure that it’s targeted and it’s constructive and it’s working. But we welcome your thoughts on some of these things, ideas we floated this morning.”
The task force heard from Excel in Ed, a national education policy organization that has assisted states such as Kentucky, Tennessee, and Texas in creating outcome driven funding formulas. Their models often reward institutions for graduating students, improving transfer rates, placing students in the workforce, and helping high needs populations succeed.
Excel in Ed funding expert Matthew Joseph told lawmakers that Alabama’s new Department of Workforce could play a key role in identifying which occupations and wage levels should factor into a future formula.
“This is something that the workforce department can be doing, is helping figure out what are those in demand wages, in demand occupations, and are they going to change, and give people a little bit of a heads up, and figure out. I feel like that’s very specific to implementation and your design.”
University leaders also weighed in. Auburn University at Montgomery Chancellor Carl A. Stockton said institutions differ significantly in mission and student demographics, and that any funding metrics should reflect those differences.
“I’m glad to hear the committee talking about the differences between the different universities. We’re a regional campus, and we serve a different set of population. A lot of first-generation students that stay in the community versus the metrics they’re talking about using for your R1 institutions. So I’m encouraged to hear that.”
Under the proposal lawmakers are considering, new dollars for performance-based funding would come from the Education Opportunity Reserve Fund, which currently holds about $1.1 billion. Community colleges in Alabama already operate under a performance-based model adopted in 2019, though that formula is also under review.
The task force plans to continue meeting with higher education officials and could draft legislation ahead of the 2026 legislative session, which begins in January.
Follow Us