The Oklahoma State Regents for Higher Education are scheduled to consider a revised performance funding formula today that would change how a portion of state higher education dollars are allocated to colleges and universities.
The proposal, listed as Agenda Item 14 for the May 29 meeting, would revise State Regents’ policy 4.2.2 governing the Performance Funding Formula. Staff recommends approval of the revised methodology beginning with the fiscal year 2027 allocation process.
The plan follows a formal review launched in February 2024, when the State Regents created a Performance Funding Formula Committee to evaluate the existing model and consider changes that better align appropriations with Oklahoma’s higher education priorities, workforce needs and student success goals.
As part of that process, the Regents worked with HCM Strategists, a national higher education policy and finance consulting firm. According to agenda materials, the committee and Regents reviewed national best practices in higher education finance, performance funding models used in other states, institutional mission differences, workforce alignment and outcome-based funding metrics.
The proposed formula is built around four major components: enrollment, retention and success, opportunity, and workforce.
Enrollment would account for 25% of the formula and would include undergraduate and graduate enrollment, adult learners, Pell-eligible students and academically underprepared students. Retention and success would account for 30% and would measure student progression and completion, including retention, credit-hour accumulation, transfer success, on-time undergraduate completions, total completions and graduate completions.
Opportunity would account for 20% of the formula and would place additional emphasis on completion outcomes for adult learners, Pell-eligible students and academically underprepared students. Workforce would account for 25% and would include STEM completions, completions tied to Oklahoma’s Top 100 Critical Occupations, graduate employment and wage outcomes.
The workforce component is one of the most direct links between the proposed formula and Oklahoma’s broader economic priorities. Under the plan, 40% of the workforce category would be based on STEM completions, 40% would be based on completions in programs aligned with Oklahoma’s Top 100 Critical Occupations, and the remaining 20% would be split across graduate employment and wage measures one year and five years after graduation.
The revised methodology would use a peer-sector allocation model, meaning institutions would compete for a share of funding within their own institutional tier. Agenda materials say that approach is intended to recognize differences among research universities, regional universities and two-year institutions.
The proposal also includes a phased implementation schedule. In FY27, 5% of institutional base funding would be allocated through the performance model. That share would increase by 5 percentage points each year until reaching 25%. The formula would be fully implemented by fiscal year 2031.
The plan includes guardrails for institutions during the transition. A stop-loss provision would limit reductions in an institution’s prior-year base allocation to no more than 2% in a single fiscal year. For FY27 only, all institutions would receive at least their FY26 base funding level, meaning any institution that would otherwise see a reduction under the formula would be restored to its FY26 base amount.
Several constituent agencies would not be included in the performance formula because of their unique functions, including the OSU Center for Health Sciences, OSU School of Veterinary Medicine, OSU Agricultural Experiment Station, OSU Cooperative Extension, OSU Tulsa, OU Health Sciences Center, OU Law School and OU Tulsa.
The formula would be reviewed annually by the performance funding committee for possible revisions under Regents’ direction.
The proposal comes as Regents also consider FY27 state appropriated operating funds totaling $1.114 billion. Agenda materials say the implementation of the revised performance funding model would be effective for the first time with the FY27 allocations.
