As the outcomes-based funding formula undergoes its five-year review, there is an opportunity to replace the existing high-need premium, also known as the workforce investment premium, with a tiered impact credential bonus grounded in actual labor-market outcomes.
In this memo, we outline the data and recommendations behind this approach and why it will better incentivize postsecondary institutions to support students to earn credentials with strong economic returns. This approach would:
- Send clearer signals to institutions and students about workforce priorities
- Align state investment with credentials tied to high-wage, in-demand jobs
- Increase the number of Tennesseans earning credentials that enable long-term economic independence
- Reward institutions for supporting students facing greater barriers to success
Our full analysis of the outcomes-based funding formula is outlined in an earlier memo, Driving Workforce Opportunity Through the Outcomes-Based Funding Formula.