Christina Hardesty, Cristina Tellizzon

Newly minted University of Oregon graduates celebrate last year after receiving degrees at Matthew Knight Arena in Eugene. A new "outcome-based" funding system approved by a state commission Thursday will begin allocating money to Oregon's seven public universities according partly to numbers of degrees awarded, instead of students enrolled.

(AP Photo/The Register-Guard, Chris Pietsch)

A state higher-education commission passed sweeping reforms Thursday designed to fund public universities based partly on how many Oregonians they graduate, instead of the number they enroll.

In a unanimous vote in Salem, Oregon's Higher Education Coordinating Commission adopted an innovative "outcome based" approach that will reward access and completion of degrees instead of filling classroom seats.

A complex funding formula, to be phased in during four years, creates incentives for student retention and boosts funding for universities that award degrees to minorities, low-income students, rural residents and veterans. Until now, the state system rewarded universities mainly for enrolling students, regardless of how many dropped out or took more than four years to finish college.

There will be winners and losers among the state's seven public universities. Reformers didn't start by intending to favor Portland State University, for example. Yet the school's funding will increase by a greater percentage than some others partly because of the diverse population it serves.

The boost pleases PSU President Wim Wiewel, who applauded the commission Thursday for summoning the courage to change a system he perceives as unfair. But he believes the changes don't go nearly far enough.

"Portland State has the most poor students, the most under-represented minorities, the most veterans," Wiewel said. "Students who are the most in need get the least money, so we have to charge more in tuition. It's making me feel very passionate and angry about this."

University managers and legislators nationwide will watch Oregon's new system, which takes effect in the 2015-2017 biennium. Its viability depends in part on the Legislature increasing appropriations for public universities. Academics want lawmakers to restore funding to 2007 pre-recession levels, without adjusting for inflation or enrollment that has soared since then.

Oregon's public universities, given autonomy with their own boards of trustees for the first time, are banding together to request $755 million in state funding for the next two years. They face some resistance. The current Ways and Means Committee co-chairs' budget proposes $670 million.

Tobin Klinger, a University of Oregon spokesman, said after Thursday's vote that the new outcome-based model, which UO supports, can only succeed with adequate state funding.

"We hope the Legislature will make that reinvestment in our public universities," Klinger said.

Possibly legislators will prove more generous if they feel the new funding system promises more bang for the buck.

"This system creates incentives and rewards for anything related to student success or completions: scholarships, mentoring, advising," said Ben Cannon, the higher-education commission's executive director.

Under the current model, universities receive public funds largely based on the number of credit hours their students amass.

"They really pushed to enroll as many as possible and had no financial incentive to see students through to success," Cannon said. About 40 percent of students at Oregon's public universities do not complete bachelor's degrees within 6 years.

More public dollars per credit hour have gone to smaller institutions such as Eastern Oregon University, which have fewer economies of scale, and to schools with high-cost programs such as science, technology, engineering and math, such as the Oregon Institute of Technology.

The new system will give universities greater support to offer enough courses so full-time students can get college degrees in four years instead of five or six.

But the new approach will merely make inroads, because only about 20 percent of university revenues - excluding athletics, which are supported by donations and ticket sales - come from the state. Tuition supplies the most revenue. Outcome-based state funding will rise gradually to 60 percent of public funding for universities.

The slow pace frustrates Wiewel, who said PSU has suffered for decades under the credit-hour funding system. "The state has been paying more than twice as much per credit hour at Oregon Tech and Eastern, and 50 percent more per student credit hour at Oregon State University and Southern" Oregon University, he said.

"If we had been funded fairly, our tuition would be lower and we would have had more advisers, faculty and financial aid," Wiewel said.

Student protesters disrupted a March 12 meeting of PSU's Board of Trustees, which voted to increase tuition and fees for resident undergraduates to more than $8,000 a year. Demonstrators also temporarily shut down a University of Oregon board meeting on March 5, when trustees voted to raise tuition by 3.8 percent for Oregon residents and 3.7 percent for out-of-staters.

Along with favoring universities with disadvantaged students, the commission's new formula will boost funds for schools that award so-called high-need degrees. Those include science, technology, engineering and math degrees, as well as certain health-care degrees and programs that prepare teachers for bilingual classrooms.

The reforms are just part of big changes in Oregon's public-university system, which occur as two institutions -- UO and Western Oregon University -- prepare to pick new presidents.

The Higher Education Coordinating Commission, which held its public meeting Thursday in a Salem state office building, is a relatively new player in the system. Oddly named and little-known, the commission most often goes by its acronym, HECC, which is pronounced "heck." Interested parties can sign up for email alerts of the meetings here.

The panel has acquired more influence since 2011, when the Legislature created it as an advisory board. It was re-chartered in 2013 as the Oregon University System's State Board of Higher Education wound down.

HECC's members are appointed by the governor. The commission chairman is Tim Nesbitt, a writer and public-policy consultant, who led Gov. Ted Kulongoski's staff and served as president of the Oregon AFL-CIO.

The panel has nine voting members, who are academic, community and business leaders. All eight of the voting members at Thursday's meeting voted in favor of the new system. One member, David Rives, was unable to attend; he voted for the new system during a previous subcommittee meeting.

Five non-voting members are professors, students and staff members from public universities and community colleges. Three of them were present Thursday.

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