Amends TCA Title 49, Chapter 7.

Present law requires the Tennessee higher education commission (THEC) to develop and utilize an outcomes-based funding formula model to ensure the equitable distribution and use of public funds among state higher education institutions (institutions). The funding formula model must emphasize outcomes across a range of variables that must be weighted to reinforce each institution's mission and provide incentives for productivity improvements consistent with the state's higher education master plan. The funding formula model must also consider the impact of tuition, maintenance fees, and other charges assessed by each institution in determining the fair and equitable distribution of public funds. Present law requires THEC to also consider capital outlay programs and operating expenses, which are utilized to determine the higher education appropriations recommendation.<br /> <br /> This bill additionally requires THEC to develop and implement a quality assurance funding program that will allow institutions to earn a percentage of funds, in addition to the institution's outcomes-based funding formula model recommendation, that is based on the quality of programs and student success beyond graduation. This bill specifies that quality assurance funding must incentivize high quality institutional performance and provide a means of assessing the progress of student learning at public community colleges and universities.<br /> <br /> This bill authorizes THEC to collaborate with institutional staff and faculty and governing boards of the state's public community colleges and universities to establish the quality standards and metrics used to award funding through the quality assurance funding program. The quality assurance funding program must operate in five-year cycles with standards and metrics designed to ensure alignment with the state's higher education master plan and with other determined higher education priorities.<br /> <br /> This bill provides that the quality assurance funding standards adopted by THEC may be structured to recognize sector differences between the public community colleges and universities. In developing the quality assurance funding standards for public universities, this bill requires THEC to include at least one component of quality assurance funding, valued at not less than 10 percent of the overall potential funding amount, that is weighted to recognize the performance outcomes of the institution's teacher training program. The performance scores of the teacher training program must be based in full, or in part, on the Tennessee Value-Added Assessment System (TVAAS) scores of each respective program's completers. This bill authorizes THEC to utilize additional performance data or measures for completers with no personal TVAAS scores, or additional performance data or measures outlined in the state board of education's report card.<br /> <br />