Details of performance linked funding confirmed

Tertiary Education Minister Steven Joyce has today confirmed details of performance linked funding - a new model which will see tertiary education providers receive a proportion of their funding based on performance.

From 2012, 5 per cent of providers' funding will based on their performance against some or all of the following indicators in the previous year:

• course completion
• qualification completion,
• progression to higher study
• the number of students retained in study

Mr Joyce says this approach will provide financial incentives for providers to continually work to improve the educational performance of their students.

"Initially, performance linked funding is about targeting the outliers - those institutions that stand out as poor performers in certain areas."

The importance of the performance measures will differ depending on the level of study - the levels will be grouped as followed: levels 1-2, 3-4, 5-6, 7-8 qualifications.

"For example, progression to higher level qualifications will be given a heavier weighting at lower levels," says Mr Joyce.

"This is because research shows that both public and private returns from tertiary education are greater at higher levels. However, progression is only one of the measures. Course and qualification completions will be the most important across all levels.

"Over time, I expect to see the performance of the entire sector improve as a result of this model.  Providers will know upfront what their targets are and the Tertiary Education Commission will work with them to improve performance."

The Tertiary Education Commission will be discussing details of the model with tertiary providers this month.