Fitch: Performance Metrics May Impact US College Appropriations

The increased use of performance metrics could affect the base funding of U.S. colleges and universities, Fitch says. President Obama's proposed rating system, which is metric driven, is under development and slated to be in place by the 2015-2016 academic year. Fitch will continue to monitor the potential impact of such systems on credit quality.

The Florida Board of Governors of the State University System revealed its plan in a January 16 announcement. The state's performance funding model is designed to "reward university excellence and improvement and maximize the return on investment for Florida students." The model includes a number of specific metrics, such as the six-year graduation rate, the cost per undergraduate degree, the average wage of employed baccalaureate graduates and the university access rate. The State University System of Florida consists of 12 universities and over 335,000 students.

Each metric will be evaluated and assigned a score. Institutions achieving a specified score will receive their base funding. Those that do not meet the requirement will receive a cut in their base appropriation. The savings associated with the reduced appropriation will be reallocated for strategic initiatives at higher performing universities.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

Fitch Ratings
Joanne Ferrigan, [phone]
Director
U.S. Public Finance
33 Whitehall Street
New York, NY
or
Colin Walsh, [phone]
Director
U.S. Public Finance
or
Rob Rowan, [phone]
Senior Director
Fitch Wire
1 State Street Plaza
New York, NY
or
Media Relations
Elizabeth Fogerty, [phone]
[e-mail]