Each year, Pennsylvania gives roughly $552 million dollars to three state related universities—Penn State, University of Pittsburgh, and Temple University.

A new law passed last summer requires that funding go through a performance based formula starting in 2025.

To put that requirement to action, a new council is listening to expert testimony before they write the formula in time for an April deadline.

“I believe we need to show the public how those resources are used and why, why we invest in higher education,” Rep. Jesse Topper (R) said, chair of the council. There are two Republican lawmakers, two Democrat lawmakers, and the acting secretary of education on the council as voting members. There are also one non voting member from each of the state related schools who will be impacted by the final formula.

Most of today’s public hearing focused on how performance based funding has been implemented across the country. Over 30 states have performance based funding for higher education, but there is wide variety in how the policy is enforced.

Most performance based formulas set standards— such as graduation rates or how many adult students are getting degrees— and then pay colleges more or less depending on how well they meet those standards.

Variation can come with what standards a state prioritizes, along with how much of the money they give to schools is pushed through a performance based formula.

Justin Ortagus, a researcher from the University of Florida, cautioned that these policies help students who are already set up for success, but hurt students who need help the most.

“Analyzing the outcomes of performance based funding,” Ortagus said, “We see it advantages the advantaged and disadvantages the disadvantaged."

Lawmakers expounded on those concerns, Rep. Pete Schweyer (D-Lehigh) offering a scenario for reference.

“Poor kids live in poor communities, poor communities tend to have school districts that their academic success rates aren’t as high as affluent ones. So then you have a college that will recruit a kid, take a chance on a kid, that maybe isn’t at a literacy level they need or at mathematics [level], then they drop out of college,” Schweyer said.

“It seems like some of these performance based budgets will incentivize institutions of higher education to ignore the kid from the poor district, because they get paid based on their students graduating in four years,” Schweyer said. “Making sure that we're not…  incentivizing cherry picking the 1500 SAT score over [students] that might be smart but might have not had enough, I don't know, science teachers— is probably important."

Ortagus said in testimony that newer policies that let a college compete against itself, instead of statewide results, could avoid negative outcomes.

Performance based funding has existed in higher education for decades— Tennessee the first state to pass legislation in 1979. Experts today said states that adopt the policy often adjust their standards as trial and error reveals ways to improve.

As public opinion of higher education tanks, some lawmakers see performance based funding as the accountability to make colleges better for students.

According to Pew Research, 49% of Americans say it is less important to have a college degree now than it was 20 years ago. 47% say going to college is worth it only if a student can avoid taking out loans. 29% say it’s not worth it at all.

Yet the need for a college educated workforce is growing.

Charles Ansell, vice president of policy for the group Complete College America, said that by 2031, 65% of jobs in Pennsylvania will require some college education. That is an 11% increase from the current statistic of 54%.

The National Conference of State Legislatures (NCSL) recently published a study on what students value in a college degree.

“Students need to be able to complete programs on time. The degree offerings need to lead to desirable life and career outcomes,” Andrew Smalley said, a higher education policy expert for the NCSL, "and that the tuition price students pay for that those outcomes need to be in line with their earning outcomes and potential career success.”