Angling for graduates: holes in the retention net.

Melancon, Melissa V. ; Frederick, Lizetta M.

INTRODUCTION

In the highly competitive, rapidly evolving business of education, performance based funding is touted as a means to improve retention among students and the subsequent graduation rates within specified time periods such as four or six year (Sanford & Hunter, 2011; Meisenhelder, 2011; Legislature, 2010). Improving educational attainment has been shown to increase earnings by as much as $2.1 million dollars for graduates as compared to non-graduates and college graduates earn nearly twice as much as those who complete high school only. Additionally, graduates exhibit greater civic involvement and report better health than non-degreed counterparts (Brock, 2010). These societal and economic advances provide an impetus to ensure that students complete degrees. The measure of the success of the programs is the school's six year graduation rate. Although quantifying the success of such programs is important, there is often little or no research into the validity of techniques applied or whether the measure actually represents success or failure of a program. This is especially true when measuring the educational attainment of minority groups such as Hispanics and African Americans.

The social upheaval ushered in by the Civil Rights Act of 1964 and Lyndon Johnson's plan to develop a "Great Society" significantly impacted education during the last fifty years. Many began to suggest that opening education to all was a way to ameliorate the gender and racial inequities in society. More access to education would improve diversity, allow minorities to enter more professional fields and promote a more homogeneous society. The Higher Education Act of 1965 extended need based financial aid to the general population. For the first time, the poor had access to higher education (Johnson, 1965). Federal funding for education rose from almost $65 million to $865 million during the last four decades. This improved access to higher education among all groups especially minority groups.

The 1970 decision by City University of New York to open admissions to all high school graduates regardless of academic preparation gave legitimacy to the idea of "open admissions" for all. Social changes such as the feminist movement and two income families advanced the idea that education be opened to new groups. Technological changes such as video classes, asynchronous learning, and online learning expanded access to other groups. New students attending college tripled during the last five decades (Snyder, Dillow, & Hoffman, 2007). There was also a dramatic shift in the demographics of students. The group of white males between 18 and 22 who went to school full time before 1970 were supplanted by more women and minority groups who tended to be older students, many with families, who attended school part time and held down full or part time jobs (Brock, 2010).

The resources required to meet the needs of the new population of students has strained the financial capabilities of states. Recent economic conditions have added to the financial strain on state run universities. There was no easily quantifiable means to assess the success of the new policies aimed at providing quality higher education to broader groups. What appears to be a very simple metric, "the national graduation rate", has been promoted as a way to make universities and colleges accountable. Recently, this was given added emphasis as part of President Obama's plan to restore U.S. global competitiveness by ensuring that the U.S. produced the highest percentage of college graduation by 2020 (Meisenhelder, 2011).

This paper examines the graduation rates of a small cohort of these students namely Hispanics and African Americans in Texas public universities from 2002 to 2011. This comparison is used as a proxy for success of the initiatives tying graduation rates to state formulas for funding.

This study was conducted to determine if the passage of legislation tying funding of public universities to the six year graduation rate had any impact the graduation rates for black and Hispanic students.

LITERATURE REVIEW

Calling for accountability among institutions of higher education, many state legislatures have tied funding to student learning outcomes. This has been a trend during the last two decades as the demand for educational services has skyrocketed and the costs have risen exponentially. Beginning in the 1980's with outcome assessments, the movement has evolved to performance reporting in the last decade of the twentieth century. By 1999, fifty percent of the states had performance funding or were in the process of adopting a program (Burke & Modarresi, 2000). However, this method while popular with legislatures is quite controversial among academics because of the difficulty in implementing such a program. There is concern that this measure will become synonymous with quality of education

Use of graduation rates as the metric for collegiate success gained acceptance because this measure is easy to calculate, easy to understand, and there are few alternative measures available. Additionally, rankings of graduation rates by prestigious publications such as_U.S. News and World Report have given this measure more weight (Archibald & Feldman, 2008). Improving graduation rates has been a topic of interest among researchers and politicians for years. Engle and Theokas (2010) report that of all minorities who enter college less than half complete requirements for a bachelor's degree. The authors further noted wide variances among institutions in the number of undergraduate degrees earned by underrepresented groups such as Hispanics and African Americans.

Reviewing overall graduation rates, Nguyen, Bibo, and Engle (2012) noted that graduation rates among African Americans were not advancing. Although in 2004, 41.2% of African Americans completed baccalaureate degrees, this fell to 40.6% by 2010. This decline was not statistically significant but did hint at a potential area of concern.

Hispanic graduation rates during this same period improved slightly moving from 43.7% of all Hispanic students to 47.2% by 2010. This 3.5% improvement is consistent with the overall increase in graduation rates reported at 3.3% (Nguyen, Bibo, & Engle, 2012) There appear to be divergent beliefs between legislators and academics as to the efficacy of funding in educational attainment

Pike et al. (2011) studied higher education spending as it related to student engagement and self-reported learning outcomes. The authors concluded that there is some slight relationship between money spent and student outcomes; however, the results did not establish any causal relationships between spending and positive student outcomes. There was no clear evidence that additional funding led to improved engagement. An earlier study by Ryan (2004) of institutional expenditures and resulting graduation rates for 363 Carnegie level I & II baccalaureate granting schools showed a positive relationship between academic support and instruction and graduation rates.

While much research has been done on the economic and societal improvements offered by increased levels of education, there is little evidence from Texas public universities. This study examines six year graduation rates in Texas public universities and colleges from 2002 through 2011 for African Americans and Hispanics.

A second issue to be investigated is the impact of performance funding for the state of Texas. Texas implemented a performance based funding plan in 2004 under executive order RP 31 (Accountability History, 2013). This was implemented to require institutions to provide information about the effectiveness of institutions and as a means of measuring the success of the Closing the Gaps by 2015. The Closing the Gaps program is an initiative instituted in 2000 to improve the number of educated Texans. As a means to achieve this goal, one objective of the plan is to increase the number of graduates from Texas universities by 50 percent by 2015. (Closing the Gaps, 2000).

RESEARCH HYPOTHESES

This study tests two hypotheses.

The first hypothesis is that there is no statistically significant difference in six year graduation rates for Hispanic students attending public universities in Texas when funding is tied to graduation rates.

The second hypothesis is that there is no statistically significant difference in six year graduation rates for black students attending public universities in Texas when funding is tied to graduation rates.

DATA ANALYSIS AND METHODOLOGY

The data for this study were derived from the National Center for Education Statistics (NCES). The graduation data for all public universities and colleges in Texas was gathered for the period 2002 to 2011. The initial sample contained 44 institutions listed as public four year degree granting universities or colleges. Thirteen institutions had no data or incomplete data for the period. These were removed from the sample leaving 31schools for the study. Graduation rates for each year were calculated as the percentage of Whites, Hispanics, and African Americans who received bachelor's degrees within 150% of the normal time. This six-year graduation rate from 2002 is compared to the six year rate for 2011 to determine if there is a statistically significant difference in the rates for African Americans and Hispanics. Regressions of the graduation rates for each group were compared over time to estimate whether a statistically significant linear relationship exists. There should be a positive significant relationship if graduation rates have risen for the targeted samples of students.

The universities that are included in this study are listed in Table 1.

RESULTS AND CONCLUSIONS

The six year graduation rates for African Americans, Hispanics, and Whites at Texas public universities and colleges over the period studied are reported in Table 2.

The graduation rate for African Americans rose from 8.10% to 8.61 a .51% increase over the ten year period. This is reported in Figure 1.

In contrast, the Hispanic graduation rates have increased by almost 6.8 percent See Figure 2

The results of the regression of graduation rates against time are shown in Table 3. The regression for the African American group had a coefficient of .0003 and a p value of 0.368. The implication is that there is no statistically significant difference in graduation rates over the ten year period. The conclusion is that African American graduation rates have not improved over this period. This is consistent with Nguyen, Engle, and Bobo (2012a)'s finding that African American graduation rates have not improved over this period.

The regression of Hispanic graduation rates over time indicates that there is a 0.8% annual compounded growth rate during the same period. This is a statistically significant positive relationship over time as indicated by a p-value of .000. See the regression results in Table 3. The conclusion that can be drawn is that there has been significant progress in college graduation rates among Hispanics in Texas public universities. This is further support for Nguyen, Bobo, and Engle (2012b) which found about a 3.5% increase in graduation rates for Hispanics throughout the United States.

Why there has been no progress in African American graduation is an area of concern. This may be investigated as part of retention and engagement programs.

The second issue investigated in this study was whether the implementation of performance based funding impacted graduation rates. An indicator variable was added to the regression model for performance funding. In this model, the variable had a value of zero before the implementation of performance funding and a value of one after implementation of performance funding. If performance based funding has been an effective incentive to improve graduation, this variable should be statistically significant.

The results of the hypothesis that performance funding should have had a positive impact on graduation rates for African Americans and Hispanics is available in Table 4.

The coefficients for the performance funding variable were -0.00026 for African Americans and for Hispanics the coefficient of the model was -0.0087. Neither of the variables was statistically significant at the .05 level. However, the variable was significant for Hispanic graduation rates at the .10 level. Tying funding to performance has apparently had no impact on graduation rates among African Americans in Texas. There appears to be some evidence that tying graduation rates to funding did improve graduation rates among Hispanic students.

LIMITATIONS

This work has several limitations that may make generalizations more difficult. The sample of 31 meets the minimum sample size needed to generalize the data; however this ignores other public universities in Texas that may have an impact.

A second limitation of this paper is that the entrance requirements are not consistent among all schools. Therefore, who is admitted cannot be controlled for in the study. The result may be that some schools have improved graduation rates by limiting the students who enter their undergraduate programs.

A third limitation is the data itself. The IPEDS data is self-reported data. Since there was some vagueness in what data was to be reported in the beginning, the accuracy of the data relies upon the care with which each university collected its data.

FUTURE RESEARCH

One area of future research would be to compare the graduation rates for Hispanics and African Americans among all of the universities, public and private, in Texas. Further, the research could easily be expanded to include graduation rates for the southern region of the United States. Another logical study would be to compare graduation rates between Texas and it neighbor Louisiana. Another possible extension would be to separate the minority groups by gender and add variables representing retention and engagement efforts by school. This would probably require addition of a survey instrument to gather data on engagement and retention. This would enrich the research by encompassing weightier variables in the model. One other modification would be to look at the age groupings of graduates. There may be a difference in persistence according to the age of the students.

REFERENCES

Closing the Gaps. (2000). Retrieved April 29, 2013, from Closing the Gaps in Hiogher Education: http://www.thecb.state.tx.us/index.cfm?objectid=858D2E7C-F5C8-97E9 0CDEB3037C1C2CA3

Accountability History. (April 29, 2013). Retrieved from Texas Higher Education Accountability System: http://www.txhighereddata. org/Interactive/Accountability/

Archibald, R. B., & Feldman, D. H. (2008). Graduation rates and accountability: Regressions versus production frontiers. Research in Higher Education, 49, 80-100.

Brock, T. (Spring, 2010). Young adults and higher education: Barriers and breakthroughs to success. Future of Children, 20(1), 109-132.

Burke, J. C., & Modarresi, S. (July-August, 2000). To keep or not to keep performance funding: Signals from stakeholders. The Journal of Higher Education, 71(4), 432-453. Retrieved April 16, 2013

Engle, J., & Theokas, C. (January, 2010). Top Gainers: Some public four-year colleges and universities make big improvements in minority graduation rates. Retrieved April 4, 2013, from The Education Trust: http://www.eric.ed.gov/PDFS/ED511868.pdf

Johnson, L. B. (November 8, 1965). Remarks on Signing the Higher Education Act of 1965. Retrieved March 25, 2013, from Texas State Uniuversity at San Marcos: http://www.txstate.edu/commonexperience/pastsitearchives/20082009/lbjresources/higheredact.html

Legislature, L. (2010). Act 741. Retrieved March 15, 2013, from Board of Regents State of Louisiana: http://regents.louisiana.gov/assets/GRADACTLegislation.pdf

Meisenhelder, S. (March 2, 2011). Higher Education at the Crossroads: The Graduation Rate Craze. Retrieved March 18, 2013, from Huffington Post: http://www.huffingtonpost.com/susan-meisenhelder/higher-education-crossroadsgraduation-rate_b_829787.html

Nguyen, M., Bibo, E. W., & Engle, J. (September, 2012). Advancing to completion: Increasing degree attainment by improving graduation rates and closing gaps for Hispanic students. Retrieved April 4, 2013, from The Education Trust: http://www.eric.ed.gov/PDFS/ED535510.pdf

Nguyen, M., Bibo, E. W., & Engle, J. (September, 2012). Advancing to completion: Increasing degree attainment b improving graduation rates and closing gaps for African American students. Retrieved April 4, 2013, from The Education Trust: http://www.eric.ed.gov/PDFS/ED535504.pdf

Pike, G. R., Kuh, G. D., McCormick, A. C., Ethington, C. A., & Smart, J. C. (February, 2011). If and when money matters: The relationships among educational expenditures, student engagement, and students' learning outcome. Research in Higher Education, 52(1), 81106. Retrieved March 29, 2013

Ryan, J. P. (2004). The relationship between educational expenditures and degree attainment at baccalaureate colleges. Research in Higher Education, 45, 97-114.

Sanford, T., & Hunter, J. M. (November 30, 2011). Impact of Performance-funding on Retention and Graduation Rates. Education Policy Analysis Archives, 19(33), 1-30. Retrieved March 15, 2013, from http://epaa.asu.edu/ojs/article/view/949

Selingo, J. (March 9, 2012). The rise and fall of the graduation rate. Chronicle of Higher Education, 58(27).

Snyder, T. D., Dillow, S. A., & Hoffman, C. M. (2007). Digest of Eucation Statistics. Wasghinton: National Center for Educaton Statistics, Institute of Edcuation Sciences, U.S. Department of Education, 200. Retrieved March 28, 2013, from http://www.eric.ed.gov/contentdelivery/servlet/ERICServlet?accno=ED518987

Melissa V. Melancon

University of Louisiana at Monroe

Lizetta M. Frederick

University of Houston

Melissa V. Melancon is an assistant professor of finance. She pursues research in education and corporate finance.

Lizetta Frederick is a Program Director in the College of Education at the University Houston. Ms. Frederick holds a Master's degree in Englsih Teachinbg from the University of New Orleans and a Master's degree in Counseling from Nicholls State University. She is currently an Ed. D. candidate in Educational Leadership at Sam Houston State University.

Table 1
Texas Public Colleges and Universities included in the Study

Unit ID   Institution Name

222831    Angelo State University
226091    Lamar University
226833    Midwestern State University
227526    Prairie View A & M University
227881    Sam Houston State University
228431    Stephen F Austin State University
228501    Sul Ross State University
228529    Tarleton State University
226152    Texas A & M International University
228723    Texas A & M University-College Station
224554    Texas A & M University-Commerce
224147    Texas A & M University-Corpus Christi
228714    Texas A & M University-Galveston
228705    Texas A & M University-Kingsville
229063    Texas Southern University
228459    Texas State University-San Marcos
229115    Texas Tech University
229179    Texas Woman's University
228769    The University of Texas at Arlington
228778    The University of Texas at Austin
227377    The University of Texas at Brownsville
228787    The University of Texas at Dallas
228796    The University of Texas at El Paso
229027    The University of Texas at San Antonio
228802    The University of Texas at Tyler
229018    The University of Texas of the Permian Basin
227368    The University of Texas-Pan American
225511    University of Houston
225432    University of Houston-Downtown
227216    University of North Texas
229814    West Texas A & M University

Table 2
Graduation Rates over Time

Summary Year   Grad Rate Black   Grad Rate Hispanic   Grad Rate White

2002                    8.10%               14.42%            67.76%
2003                    8.44%               14.48%            67.25%
2004                    8.52%               15.01%            66.72%
2005                    8.00%               16.17%            66.48%
2006                    7.81%               16.17%            64.76%
2007                    8.70%               17.29%            62.79%
2008                    8.00%               18.58%            62.52%
2009                    8.05%               19.30%            61.96%
2010                    8.84%               20.36%            59.59%
2011                    8.61%               21.24%            58.84%

Table 3
Regression Results Graduation Rates Against Time

Group              Coefficient   T-Value   P-Value

African American   .00036        0.9177    0.3856
Hispanic           .00801        16.7824   0.0000 ***

***--Statistically significant at the .005 level

Table 4
Graduation Rates and Performance Funding Against Time

Group                 Coefficient   T-value   P-value

African American      .0006         1.0722    0.3192
Performance Funding   -.00026       -0.6303   0.5485

Hispanic              .00886        16.2364   0.0000 ***
Performance Funding   -.00870       -2.2226   0.0616

Figure 1
Graduation Rates for African American Students in Texas Public
Universities

# Institutions   Black Six Year   Black Six Year         Change
                 Graduation       Graduation Rate 2011
                 Rate 2002

31                   8.10%               8.61%           0.51%

Figure 2
Graduation Rates for Hispanic Students in Texas Public Universities

# Institutions   Hispanic Graduation   Hispanic Graduation   Change
                 Rates 2002            Rates 2011
                 (150% of completion   (150% of completion

31                     14.42%                21.24%          6.82%