Posts Tagged ‘Credentials of Value’

Making the Most of Outcomes-based Funding: Aligning Postsecondary Funding with Labor Market Needs

Tuesday, August 14th, 2018

One of the smartest investments state policymakers can make is in postsecondary education. As the economy moves towards more specialized, technology-based industries, learners will need education and training beyond high school to fill the jobs of tomorrow. Today, the ticket to the middle class, and the key ingredient for a thriving state economy, is a strong system of higher education.

Yet, this system is not as efficient as it could be. Three out of every four students who enroll in a public, two-year college do not graduate with a degree or certificate within three years. Whether due to financial or family circumstances, lack of clarity about future career goals, or poor academic preparation, too many students are getting saddled with debt and nothing to show for it.

In recent years states have led renewed efforts to improve student outcomes by restructuring postsecondary funding formulas. This approach, known as performance-based or outcomes-based funding, aims to align state dollars with outcomes that support learner success and economic growth, including progress toward and attainment of a postsecondary credential.

As of Fiscal Year 2016, 30 states were either implementing or developing outcomes-based funding formulas for postsecondary education, though two-year institutions were included in the funding formula in only 22 states. While the widespread enthusiasm for accountability and alignment in higher education funding is remarkable, states vary considerably in their degree of commitment. According to HCM strategies, which published a national scan of outcomes-based funding formulas, only four states (OH, NV, ND and TN) in FY2016 distributed more than 20 percent of state funds to postsecondary institutions based on outcomes.

In 2017, the State Higher Education Executive Officers Association (SHEEO) reported that a little more than half of the revenues for postsecondary institutions came from state appropriations (the remaining funding came from local appropriations (6.4 percent) and tuition revenues (43.3 percent)). This gives state policymakers a powerful lever to incentivize change in institutions of higher education.

And, while evidence in support of outcomes-based funding is mixed, positive results have been documented in states with more sophisticated funding systems:

Many states have learned from these lessons and either modified existing or adopted new outcomes-based funding formulas to apply best practices. Arkansas is one such state. In 2016, the state legislature passed HB1209, directing the Higher Education Coordinating Board to design a productivity-based funding formula for state colleges and universities. The formula, which will be used to determine how the Higher Education Coordinating Board distributes general revenue for two-year and four-year institutions,  includes three dimensions:

What is notable about Arkansas’ approach is the use of best practices to incentivize credentials with labor market value and encourage equitable access.

The points an institution receives in the formula for credential attainment are multiplied if the credentials are in Science, Technology, Engineering and Mathematics (STEM) or state-defined “high-demand” fields. Qualifying fields are designated by the the Arkansas Department of Higher Education and the Department of Workforce Services. The multiplier for STEM degrees is 3 points; the multiplier for degrees in high-demand fields is 1.5 points.

The formula also includes adjustments for historically underserved students by race, income, age and academic proficiency. For certain elements of the formula — such as credential attainment or progression — the point value is increase by 29 percent for each student meeting these criteria.

While it is too early to tell the impact of these changes, Arkansas’ productivity index aims to improve postsecondary outcomes by aligning state funding with labor market needs and encouraging institutions to support historically underserved populations.

Austin Estes, Senior Policy Associate

By Austin Estes in Research
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More Evidence Demonstrates How Postsecondary Credentials Can Help Learners Unlock Career Opportunities

Monday, June 11th, 2018

Earning a credential of value is still the surest path to success for American workers. A recent New America poll released last month finds that 80 percent of American adults believe there are more opportunities for those who pursue education after high school, compared to 14 percent who think it is better to enter the workforce right away.

For adult learners, the connection between education and careers is even more important. According to Public Agenda, 71 percent of adult prospective students — those who are actively working to go back to school — say that their primary motivation is either to get ahead in their current career or to get the skills they need to start a new career.

Studying the return on investment for credential earners can be quite an undertaking, however, considering the vast number and types of credentials on the market today. Credential Engine, a nonprofit dedicated to counting and cataloging every credential, estimated in April that there are more than 330,000 individual credentials available in the United States today, and only a fraction of them are available at four-year institutions. That count includes nearly 67,000 postsecondary certificates, 13,600 Registered Apprenticeships and 5,400 certifications.

It is well understood that a university education can improve career opportunities. But where to start? Does major matter? And what is the return on investment for other sub-baccalaureate credentials like associate degrees, postsecondary certificates and industry certifications?

More Advanced Credentials Lead to Higher Earnings, but Field of Study Matters

With so many credentials on the market, how can learners navigate the education marketplace and find the credential that best suits their career interests and economic goals?

New research out of the Georgetown Center for Education and the Workforce helps us begin to demystify the credential marketplace.

The report finds that, while median income rises with more advanced credentials, the field of study matters a lot. A bachelor’s degree in architecture and engineering, for example, will land you a median salary of $85,000, far above the $46,000 median salary for education majors. Further, less education can even lead to higher earnings, depending on the field of study. Associate degree holders who study science, technology, mathematics and engineering (STEM) earn a median salary $13,000 higher than workers with bachelor’s degrees in psychology & social work. Certainly, credentials help learners unlock career success and earn a family sustaining wage, but field of study is far more important than level of education.  

A separate Georgetown study puts a magnifying glass up to one particular type of credential,  postsecondary certifications, examining earnings for individuals who earned a certification at an Oregon community college. The study finds that, on average, certification earners experienced a 19 percent increase in earnings. And Pell students experience an even larger premium, more than 50 percent of their wages prior to enrollment, further demonstrating the power of short-term certifications to provide an on-ramp to a sustainable career.

How Can States Help Learners Navigate the Credential Environment?

As the universe of postsecondary credentials continues to grow, learners will need support and guidance to help determine which credentials to pursue and where to pursue them. Already, a number of states have developed protocols to review, verify and publish a list of high-quality, industry-recognized credentials for secondary and postsecondary students. A new 50-state scan from the Workforce Data Quality Campaign finds that 30 states identify or plan to identify credentials of value at the state level. However, only 23 states report that they analyze employment and earnings outcomes and only 21 seek regular employer input.

If credentials are going to deliver on their promise, the credentialing system must be transparent and learners must be able to know which credentials are valued in the marketplace and recognized by employers. It is important for states to set up systems to regularly gather and put to use employer input. The evidence is encouraging, but there is still a lot of work to do to help demystify the credentialing marketplace and empower learners to achieve their career goals.

To learn more about credentials of value or state strategies to promote high-quality credentials, visit the Learning that Works Resource Center.

Austin Estes, Senior Policy Associate

By Austin Estes in Research, Resources
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How Do States Identify and Endorse Industry-Recognized Credentials?

Friday, October 7th, 2016

Credentials_of_Value_2016Latest Advance CTE Brief Explores Promising Strategies

One of the core components of a high-quality Career Technical Education (CTE) program is that it culminates in a credential of value. But with more than 4,000 credentialing organizations in the United States today, states are grappling with the challenge of narrowing down the field.

Advance CTE today released a policy brief to help states get started in this work. The paper, titled “Credentials of Value: State Strategies for Identifying and Endorsing Industry-Recognized Credentials,” highlights promising practices from Florida, Kansas and Louisiana, which have each made considerable progress developing a system for students and employers to navigate the tangled universe of credentials. The brief further describes how each state tackles the challenge in a different way, building a system that suits their local economy and context, and highlights a few common strategies.

For one, these states engage business and industry leaders early on in the process to verify that credentials are recognized and accepted in the labor market. This helps ensure that students are only pursuing — and states are only incentivizing — those credentials that have value. One example that the brief explores is in Louisiana, where regional teams are required to submit letters of endorsement from businesses in the state whenever they propose a new credential for the statewide list.

From there, the process of vetting high-quality credentials often involves a concerted effort from a variety of different institutions. The brief describes how, in Florida, the state-approved credential list at the secondary level is developed with input from the Department of Economic Opportunity, the Agency for Workforce Innovation, the state’s workforce development board (an independent non-profit called CareerSource Florida) and the Department of Education. This ensures that the state can leverage the expertise of each agency to approve only those credentials that are valuable to students and to the economy.

Another challenge the brief explores is that credentials available on the market today range in value, quality and the effort required to earn them. Thus, states have begun to recognize this difference and classify credentials based on their rigor and utility in the labor market. Kansas, for example, is examining a framework that categorizes credentials into three tiers: those required by law or regulation, those mandated by industry, and those preferred by industry.

Even then, states should be prepared to adapt to fluctuations in the labor market or unforeseen problems with the credential review process. Take Florida’s Career and Professional Education Act (CAPE) for example. CAPE provided additional funding for teachers and school districts whose students earn state-approved credentials, but the state soon realized that the program was not structured appropriately to eliminate some gaming of the funding incentive. Over the years, Florida has gradually adjusted the funding formula to address these concerns and align incentives to encourage more students to earn high-quality credentials.

With two-thirds of all new jobs projected to require some postsecondary education and training by 2020, there is a growing need for states to play a larger role in identifying and endorsing credentials of value.

Austin Estes, Policy Associate

By Austin Estes in Public Policy, Publications, Resources
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