Competency-based education has attracted attention as a “disruptive innovation” that could remake American schools. Under this model, students move through the curriculum at their own speed by demonstrating competency as determined by the instructor or other assessment tools. At a high-school level, competency can replace the traditional “seat time” method of bestowing credit, a policy that New Hampshire has adopted. Competency-based education allows students of any age to accelerate their learning progress once they master a topic, while enabling them to slow down in an area where they need more work.
Funding based on competency is widely seen as a way to finance e-schools or online course access programs. It could also be used to fund schools that focus on dropout recovery—whether online or brick-and-mortar. Competency-based funding would offer schools (or course providers) incentives to focus on student learning. It would also fit well with the flexible nature of online or dropout recovery programs. But if Ohio policy makers consider the competency-based funding route, what are the design alternatives? A good starting point is to examine the models other states have already piloted. This article offers an overview of what four states have done—Utah, New Hampshire, Florida, and Minnesota—in the hopes of stirring thought about the pathways Ohio might take.
Nota bene: In some cases, the state’s funding model is probably more accurately described as “completion-based”—funding premised on course completion, not necessarily a demonstration of competency (which, as we’ll see in the case of New Hampshire, can be split into competencies within a course). Together, competency- and completion-based funding are sometimes called “performance based” funding. For an excellent review of these distinctions and other policy considerations, see iNACOL’s Performance-Based Funding & Online Learning report.
Utah
The interesting features of Utah’s approach are its differentiation of course-level funding based on the subject matter, and a payment schedule based on three milestones during a student’s course enrollment. Applying only to online courses for students in grades 9–12, Utah allocates funds based on the number and types of courses that students choose. The amount of funding tied to each course depends on its “cost category.” These range from up to $200 per half-credit for health, fitness, and computer literacy to $350 per half-credit for courses such as English language arts, math, and science. (These amounts may be adjusted annually.) Utah disburses funds in the following manner: Confirmation of enrollment accounts for 25 percent of the course allocation; continuation or “active participation” as determined by the provider (either the student’s school district or charter school) releases another 25 percent; and 50 percent of the funding is awarded upon course completion, which hinges on students’ passage of the course as determined by their instructor.
New Hampshire
New Hampshire focuses on competency in its funding of online education. Funding is determined by the number of competencies, or discrete topics, that a course’s students master, as verified by an online instructor. Each one-credit high school course students complete through the state’s online school, known as the Virtual Learning Academy Charter School (VLACS), includes eight competencies that students must master before they pass the entire course. This benchmarking of progress allows for partial funding at the course level. If students master all the competencies in a course, VLACS receives the full appropriation. If not, VLACS receives partial payment based on the fraction of competencies the student achieved. Each half-credit, semester-long course was worth a maximum of $454 in 2014–15.
To illustrate this approach, the table below displays a hypothetical example. George reaches the end of the year meeting only 25 percent competency in the course, so VLACS receives just $113.50. Sam, however, met all the required competencies, releasing the entire per-course allotment.
Table 1. Example of VLAC’s Funding Formula for a half-credit (or semester-length) course
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Florida
Unlike Utah and New Hampshire, which allocate partial payments, the Florida Virtual School (FLVS) only receives funds upon course completion, as determined by the teacher and passage of a statewide end-of-course assessment, if applicable. Course funding for FLVS is determined in the following way: The state’s weighted per-pupil amount is divided by six—the number of credits equal to a full load. If only one credit is completed online, the virtual school receives a one-sixth share of the per-pupil allocation (contingent upon course completion). FLVS submits five enrollment estimates throughout the year and receives twice-monthly payments based on these estimates, assuming full course completion. The final enrollment calculation occurs at year’s end, and adjustments are determined based on confirmation of course completion.
Minnesota
Minnesota’s online-learning program also provides funding based on course completion. But unlike Utah, Florida, and New Hampshire—which created single, statewide online education providers—Minnesota certifies multiple, independent entities to serve either as fulltime online schools or as providers of supplemental courses (to students primarily enrolled in a traditional district or charter school). Currently, thirty-two online schools have been approved by the state. Each of them sets its own definitions for course completion, and the Minnesota Department of Education is responsible for verifying the completion of courses. Minnesota’s use of many providers is more akin to Ohio’s online learning environment, with its many e-schools, and could serve as a model, especially if Buckeye policy makers consider making individual online courses available to Ohio students.
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Competency-based funding holds much potential, but it represents a very different financing arrangement vis-à-vis traditional funding models typically predicated on headcounts. Sensibly, a few states have piloted this approach in online-learning environments. The design and implementation details are, as always, critical, and the nascent efforts of four other states offer models that Ohio policy makers could look toward. In so doing, they should weigh several questions: At what dollar amount should each course be funded, and should they be funded differently by content area? Should the state provide partial payments throughout the duration of the course, a lump-sum payment after a student completes the course, or “business as usual” payments that assume full completion and then require repayment if a student fails to complete the course? How does a state verify that a student has achieved “competency” or successfully completed a course—by instructor verification, a state-approved end-of-course exam, or some combination of both? (Caveat emptor: Pure instructor verification appears to create a conflict of interest. If teachers know that their school’s funding hinges on the grades they award, they might inappropriately pass undeserving pupils.) These—and many more—are questions that policy makers ought to wrestle with. Fortunately, Ohio lawmakers can look to a few other states that are blazing new trails in competency-based education and funding models that align to it.
