Louisiana may become the first state in the country to institute a new funding structure for its public universities. According to an article by John Pope in the Times-Picayune:

With a statewide [college] graduation rate of 42.5 percent, Louisiana has plenty of room for improvement. Only three states — New Mexico, Nevada and Alaska — rank lower.

In an attempt to raise Louisiana’s abysmal ranking, the Board of Regents, which sets policy for state-run colleges and universities, has approved a program to give more money to schools that increase the number of graduates. The formula is being reworked on recommendation of the Postsecondary Education Review Commission, and the Legislature will have to decide how much money will be available.

It’s unclear how the money is going to be distributed. Currently Louisiana, like other states, ties state funding for universities only to enrollment.

Many policymakers, including U.S. Education Secretary Arne Duncan, have proposed changes to reward colleges for graduating students.

The change isn’t without controversy, however. According to the article, Louisiana’s most selective schools have the highest graduation rates. Their least selective schools have the worst graduation rates. The new bill could have the effect of rewarded Louisiana’s already elite universities and punishing the schools that educate the state’s most vulnerable population.

The new policy could also create a perverse incentive structure. As on commentator pointed out in reference to an article about a similar proposal in Tennessee:

Once universities start pushing people through to pump up graduation rates and state funding, college degrees will be as worthless as a high school diploma is today (in most industries/careers that is). I’m sure there is already some pressure to do this for tuition revenue, and one can already see companies moving towards post-graduate degree requirements for lower level jobs.

That is the worry, that focusing on graduation rates will just lead colleges and universities to make graduation easier. More students would graduate, sure, but their degrees would mean a lot less. [Image via]

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer