Indiana’s colleges and universities won’t see new state incentive dollars this biennium for their performance on pre-set student success goals, but higher education officials said progress on key goals — especially for low-income students — is continuing.
A recent review by the Indiana Commission for Higher Education detailed how public institutions performed under the state’s Outcomes-Based Performance Funding (OBPF) formula, a model to tie a small portion of higher education appropriations to enrollment, degree completion and graduate retention, among other metrics.
But under Indiana’s latest budget, no new outcome-based dollars will be distributed until at least the next budget cycle.
The “Operating Prospective” line item — the pot of money dedicated to outcomes-based performance — was left unfunded in the current 2026–27 biennium. Also on hold are “bonus allocations” that were additionally intended to reward institutions that exceed goals in specific metrics by redistributing portions of funds not initially earned.
The freeze comes amid what state officials have called one of the tightest higher-education budgets in recent years. Lawmakers approved across-the-board 5% reductions to colleges’ operating appropriations and kept funding for debt service and repair-and-rehabilitation flat, meaning campuses will have to absorb rising costs without additional state support.
Brooke Kile, the commission’s senior associate commissioner for business solutions, emphasized during a Sept. 18 meeting in Jasper that even without new dollars, the commission will “continue to look at these metrics, continue to highlight them, showcase them, so that institutions know where they have opportunities to improve.”
Outgoing Commissioner Chris Lowery additionally said CHE staff will keep the outcomes work front-and-center despite budget cuts.
“This was a very challenging budget year,” Lowery said. “In spite of it not receiving specific funding, this staff will not forget that this is one of the chief priorities of this body.”
How schools performed
Indiana adopted the system in 2023 to link a portion of university funding to progress on outcomes such as enrolling and graduating more low-income and adult students, improving on-time degree completion, and increasing retention of graduates in Indiana. Each institution’s targets are different.
“Basically what outcome-based performance funding does is tie a portion of the state appropriation to the higher education institutions’ performance,” Kile said. “It’s a way to incentivize strong performance in areas that are important to the commission and important to the state.”
Despite the lack of funding, commission staff calculated what share of dollars each campus would have earned had incentive dollars been available.
In the previous budget, the prospective incentive pool totaled roughly $34 million statewide.
CHE ultimately distributed more than $11.3 million in incentive funding across the public institutions in fiscal year 2024 — the maximum available — and about $16.7 million from a potential pool of roughly $22.7 million in fiscal year 2025.
In the most recent cycle:
- Indiana University’s campuses earned $3,751,379, or 63% of the $5,931,768 available
- Purdue University’s campuses earned $4,896,277, or 82% of the $5,981,634 available
- Ball State University earned $1,915,358, or 72% of the $2,660,219 available
- Indiana State University earned $1,035,535, or 70% of the $1,489,979 available
- University of Southern Indiana earned $709,429, or 70% of the $1,020,760 available
- Vincennes University earned $711,606, or 80% of the $889,508 available
- Ivy Tech Community College earned $3,722,975, or 79% of the $4,702,207 available
Commission staff did not release dollar equivalents for the new budget cycle, but the latest data reflect what share of funding each institution would have earned if dollars had been available.
Ivy Tech Community College led all systems with 100% of incentive funding earned, meaning it met or exceeded all of its weighted targets. Ivy Tech’s separate formula places more emphasis on workforce-aligned credentials and short-term certificates tied to employer demand.
The University of Southern Indiana followed at 75%, showing steady progress in low-income enrollment and on-time degree completion. Ball State University earned 70%, buoyed by improved retention and increases in low-income student completions.
7.1-OBPF-Metric-Goals-and-Data-2025-Final
Among regional and research systems, the Indiana University system achieved 59%, with campuses like IU Kokomo and IU Southeast outperforming in low-income completions, though Bloomington lagged in adult and STEM-related metrics.
Vincennes University earned 62%, boosted by credential production among adult learners, but held back by slower progress on retention. Indiana State University scored 50%, reflecting modest gains in enrollment but ongoing challenges in completion and graduate retention.
The Purdue University system earned the lowest share, 32%, with its West Lafayette and regional campuses missing benchmarks in adult enrollment and degree completions.
Commission staff said Purdue’s scores partly reflect its already-high baseline of degree attainment and smaller pool of in-state adult learners.
More work ahead
The percentages represent how much of each institution’s weighted goals were achieved across eight categories: low-income youth enrollment; adult enrollment; on-time degree completion; overall degree completion; low-income student completion; adult completion; STEM completion; and overall graduate retention.
Degree completions are top performance goals set for Indiana’s public colleges and universities
Ivy Tech’s separate formula places more emphasis on completion of workforce-aligned credentials and short-term certificates.
Statewide, the strongest results were related to low-income students. According to the latest commission data, institutions met or partially met 80% of targets for low-income youth enrollment and 61% of targets for low-income completion.
But graduate retention remained the weakest area, with just 21% of goals achieved statewide.
“We’re very pleased — not satisfied, but pleased — to see these continue to grow,” Kile said. She added that progress is particularly encouraging given the sharp decline in college-going rates among low-income Hoosiers over the past decade.
Lowery agreed, noting that declining college-going rates were “almost exclusively in low-income students,” and that “to see those areas of progress being made — pleased, not satisfied — is really important.”
Kile emphasized that the commission plans to keep refining its data and targets.
“We want to make sure that institutions have something to stretch toward, reach toward,” she said, “but also understand they need some reliability in planning their operational expenses.”
Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.