Performance-linked funding

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Last updated 26 March 2018
Last updated 26 March 2018

Performance-linked funding promotes continuous improvement in educational performance, which improves outcomes for learners and increases the value of taxpayers’ investment in education. This section explains how performance-linked funding works.

Performance-linked funding (PLF) encourages all Student Achievement Component (SAC) funded tertiary education organisations (TEOs) to reach an acceptable standard of educational performance.

  • Some important changes have been made to PLF:
    • No PLF adjustments will be made to funding in 2018
    • There are new level groupings to reflect the new cohort-based EPIs
    • Full-time and part-time provision will now be calculated separately
    • A new ‘best of’ approach will be applied to the EPIs

Key features of performance-linked funding

A maximum of 5% of a TEO's funding, at each of the grouped qualification levels, is based on the TEO's performance in the previous year(s) against up to four of the following educational performance indicators (EPIs)

  1. Qualification completion rate: measures the successful the proportion of students in a starting cohort who go on to complete a qualification at the same level at the same TEO.
  2. Course completion rate: measures the proportion of course enrolments (based on EFTS delivered) ending in a given year that have been successfully completed.
  3. First Year Retention: measures the proportion of students who are retained in study after their first year of study by enrolling in a qualification at the same level in the year after they enter the cohort.
  4. Progression: measures the proportion of students who complete a qualification at one TEO and within 12 months of completion enrol in a higher-level qualification at the same or a different TEO within New Zealand.  

These performance indicators reflect a TEO’s performance in relation to the educational achievement of its students. 

Key changes to PLF from 2018

No PLF adjustments will be made to 2018 funding

There will be no PLF funding adjustments in 2018 (based on 2017 educational performance data). This is because no thresholds were set for educational delivery in 2017 as the new EPI methodologies were under development and consultation. EPI data for 2017 delivery will still be published.

There are new level groupings to reflect the new EPIs

From 2018, PLF is measured at three grouped New Zealand Qualifications Framework (NZQF) levels: Level 1-3, Level 4-7 non-degree, and Level 7-8 degree. In order to create a level playing field, performance-linked funding treats all TEOs in each grouped qualification level the same. Level 9-10 continues to be excluded from PLF.

Under the new design of PLF, performance of full-time and part-time provision is calculated and treated separately.

For Qualification Completion and First-Year Retention, the difference between full-time and part-time is built-in to the existing methodology.

A new methodology (PDF, 517 Kb) is being used to identify full-time and part-time performance for Course Completion and Progression. This methodology uses the full-time and part-time flags from the Qualification Completion EPI and applies the result to these EPIs for the relevant performance year.

We then use the Course Completion EPI full-time/part-time data to calculate the value of delivery. The separate PLF calculations are then applied to those values. 

A new ‘best of’ approach will be applied to the EPIs

TEOs will have a “best of” choice between a calculation that uses two lead indicators (Course Completion and First Year Retention) or all four indicators (Course Completion, First Year Retention, Qualification Completion and Progression).

This ‘best of’ approach will ensure that TEOs will not be penalised for performance issues in earlier years that they have addressed. TEOs will be advised of the two different calculations before any funding adjustments occur.

This replaces the previous ‘best of’ approach in the transition between the old EFTS based qualification completion rate and the new cohort-based qualification completion rate measure.

International students

International students are included in published EPIs but are not included in PLF calculations.