Dear Friend of Indiana University,

By now, you have likely seen media accounts designating some of the more obvious “winners” and “losers” in the just completed legislative session.

I am pleased that higher education escaped being designated a loser. Any fair-minded person would have to conclude that the overall level of funding our legislators targeted for this purpose was relatively generous, given the difficult economic circumstances from which our state is just now starting to recover. I am very appreciative of their efforts.

However, I would not go so far as to declare higher education a winner, either. The new two-year spending plan contains a well-intended but deeply flawed mechanism for distributing some of those funds that will have a serious, negative impact on our Bloomington campus and schools of medicine, dentistry, nursing, and rehabilitative sciences on the IUPUI campus.

A primary goal of this new mechanism is to reward college and university campuses that increase enrollment or graduation rates. The intent is laudable. Indiana ranks relatively low in adult residents with college degrees, and I agree with those who argue that more would increase economic growth. Encouraging our public colleges and universities to enroll and graduate more students only makes sense.

That is why I have endorsed the concept of performance-based funding from the very start. But, I believe this first attempt was put together too hastily and will fail to achieve its intended purposes.

Under the incentive formula, all publicly funded institutions will see their operating budgets cut by 5 percent to create a pool of $61 million. Half of that money is to be allocated on the basis of each campus' increase in undergraduate degrees earned by Indiana residents.

For IU Bloomington, whose 71 percent graduation rate is the highest of any public institution in the state, the result is extremely harmful. Its operating appropriation is reduced by $10.4 million. This is because the new funding formula primarily rewards growth, and IU Bloomington's enrollment is essentially capped.

Likewise, our highly regarded schools of medicine and dentistry, which clearly serve a critical state need, have no chance at competing for most of this funding other than the research credit, as they enroll few undergraduate students and have very different missions.

Imagine, for a moment, if the state were to apportion funding to a community college largely on the basis of how many doctors it produced. That would be an unfair system since a community college has no medical students.  Yet the state is now judging our schools of medicine and dentistry in part based on measures that best fit community colleges.

To be truly effective, a performance funding plan for higher education should measure and reward outcomes at each public institution that are appropriate to its mission. IU proposed such a plan during the legislative session, and we will continue to make the case for this approach to higher education funding in Indiana.

In coming months, I intend to continue to work closely with lawmakers and the Commission for Higher Education to develop a performance funding formula that truly moves Indiana closer to its goal of increasing the number of college graduates in the workforce. I am pleased that the General Assembly did agree to include language in the budget that requires a review of these performance measures before the next budget is drafted. We will be very actively involved in this review process.

The stakes are very high. If these flaws are not addressed and corrected, the long-term result will be a system of higher education in Indiana that cannot compete nationally and internationally. Incentivizing quantity—at the expense of quality—can only lead to a downward spiral in educational opportunities for all our citizens.

In my view, maintaining and improving educational quality are just as important as increasing the number of college graduates.

This is why Indiana University is laying the foundation for some far-reaching and exciting changes in the way we will teach future generations of IU students. Over the past year, I have had expert committees conducting detailed examinations of our academic programs, processes, and infrastructure to determine what changes and improvements are needed to better meet the needs of students preparing to join the 21st century workforce.

These committees have identified a number of recommendations that will result in a wide variety of changes for the better, including restructuring of some academic programs, improving the quality of our online course offerings, and returning some of our most historic buildings in Bloomington to their originally intended purposes—vibrant centers of academic life.

More information about these committees and their proposals can be found at

We are also working with a management consulting firm to benchmark our administrative costs against those of some of the nation's most efficient corporate organizations. In its first report, the Hackett Group found that IU's human resources organization is already on par with top private corporations. The consultants have also identified some potentially significant cost savings in student services and marketing that we are moving quickly to pursue.

These changes will strengthen Indiana University and enable it to provide Hoosiers with world-class educational opportunities for years to come. I hope you will join with me in supporting and endorsing these efforts.

Thank you for your dedication to Indiana University.

Yours sincerely,

Michael A. McRobbie