Mississippi lawmakers confront broken higher education funding as federal pressure mounts

Mississippi’s eight public universities operate under a funding system that state legislators acknowledged this week is fundamentally broken, with some institutions receiving nearly three times more per student than others despite serving populations with greater needs.

In a joint hearing of the Senate and House Universities and Colleges committees, lawmakers heard stark testimony that the state’s “base plus” funding model—frozen in various forms since the 1990s—has created dramatic disparities while failing to reward institutions for student success or align degree production with workforce demands.

“We’ve got one university receiving $4,400 per student, whereas another receives $12,574 per student,” said Sen. Josh Harkins, who expressed frustration with the current system. “This is a huge difference in those levels of what the universities are receiving for students.”

The Dec. 10, 2025, hearing was held as Mississippi faces converging challenges: a looming enrollment cliff as high school graduating classes shrink; new federal accountability measures that could strip Title IV funding from low-performing programs; and mounting evidence that the state’s higher education system is producing outcomes disconnected from economic needs.

A system frozen by history

The origins of Mississippi’s current funding dysfunction trace directly to the Ayers desegregation lawsuit. In the 1990s, as that litigation challenged funding levels at the state’s historically Black universities, the Institutions of Higher Learning board froze its existing formula to avoid “supplanting” funds during settlement negotiations.

“The IHL leadership froze the existing formula in order to facilitate the lawsuit’s conclusion,” LeeAnne Robinson, director of the Legislative Budget Office, told lawmakers. “Settlement complications led to constant percentage allocation.”

That freeze essentially locked in place funding patterns from decades ago. While the board has made subsequent attempts to modernize—most notably, a 2012-2014 effort by the National Center for Higher Education Management Systems that was never implemented—the system has remained largely static.

The proposed NCHEMS formula from that era would have caused dramatic shifts: Some regional universities faced cuts of more than 20 percent, while Mississippi State University stood to gain $165 million and the University of Mississippi $119 million. The University of Southern Mississippi would have lost $156 million.

The legislature froze that formula before implementation.

Since 2016, the state has operated under what IHL calls a “base plus” model—one that differs significantly from true base-plus systems used elsewhere. Mississippi’s version makes no adjustments for enrollment changes, and instead simply applies equal percentage increases or decreases across all institutions regardless of growth, performance or mission.

The student outcome crisis

Patrick Sullivan, chair of the state Workforce Investment Board, presented lawmakers with troubling data on what happens to Mississippi high school graduates who attempt to enroll in college.

Examining the high school class of 2013—students who have now been in the workforce for more than a decade—Sullivan found that only 15-20 percent of the 27,000-person class entered the workforce through what he termed “high-value pipelines.”

The annual median wages tell a sobering story:

• Students who went straight to work after high school: $35,000

• Students who attended college but dropped out: $32,000

• Community college graduates: $43,000

• Bachelor’s degree holders: $49,000

“We’re turning out over 3,000 graduates a year” in fields like general psychology, English literature, performing arts and interdisciplinary studies, Sullivan said, adding that, “There’s not nearly that level of demand for those types” of positions.

Sullivan cited one small institution that graduated 44 psychology students between 2010 and 2014. Today, only 16 show up on Mississippi payrolls, with a median wage after 10-15 years of just $42,000.

“The wage outcomes of all that category—we’re talking about 6,000 students of the 10,000 that actually earned a degree, their average wage outcomes are the same as if they just would have gone straight to work right out of high school,” Sullivan said. “That’s not what they want. And I don’t think that’s what we want as a state.”

The metrics problem

Current graduation rate measurements, IHL Commissioner Dr. Alfred Rankin explained, systematically undercount success at institutions serving non-traditional students.

The federal standard—six-year cohort graduation rates for first-time, full-time freshmen—excludes both part-time students and transfers. At Mississippi Valley State University, 44 percent of students attend parttime and 8 percent are transfers, meaning more than half of any graduates wouldn’t appear in the official rate. At Mississippi University for Women, the figure exceeds 50 percent.

“A student that starts out at one of our community colleges and comes to one of our four-year universities, that student can come and graduate,” Rankin said. “They may graduate within four or six years, but they’re not counted in anybody’s six-year cohort graduation rate.”

The disconnect creates perverse incentives. MUW’s six-year graduation rate stands at 47 percent, but the institution awards 37 degrees per 100 students, the highest rate in the system, because it serves so many transfer and part-time students who aren’t counted in traditional metrics.

The variation in student populations is dramatic. Pell Grant recipients—a proxy for low-income students—range from 21 percent at Ole Miss to 71 percent at Jackson State. Yet the current funding system makes no systematic adjustments for the higher costs of serving disadvantaged populations.

Models from other states

Nathan Akeley of ExcelinEd presented examples of outcomes-based funding from Texas, Tennessee and Florida—states that have moved substantial portions of their appropriations to formulas rewarding post-graduation success.

Tennessee, which implemented performance-based funding in 2010, now bases 39 percent of community college funding on outcomes. The state provides an 80 percent funding premium for graduating adult learners, academically underprepared students, and low-income students.

“The four-year graduation rate for our institutions has doubled in the last 15 years,” Tennessee Higher Education Commissioner Stephen Gentile told Mississippi lawmakers via video conference. “I can’t put that all at the foot of the outcomes-based funding formula. There have been other initiatives. But at the very least, we’re rewarding our institutions for making that possible.”

Tennessee measures what it calls the “three E’s”—employment, enrollment in further education, and military enlistment—and compares institution performance not against peers but against their own prior years. An institution improving from a 40 percent to 42 percent graduation rate scores better than one declining from 70 percent to 68 percent.

The model requires sophisticated data infrastructure and consistent stakeholder engagement. Tennessee’s formula includes a required annual review committee with legislative leaders, the state comptroller, the governor’s administration and university presidents, with comprehensive five-year reviews.

New federal pressure

The urgency has increased with passage of the “One Big Beautiful Bill” act earlier this year, which establishes new federal accountability standards for higher education programs.

Under the legislation, the U.S. Department of Education will calculate median annual earnings for program graduates four years after completion and compare those to median earnings of workers with similar lower education levels. Programs failing to meet earnings benchmarks for two out of three consecutive years will lose access to Title IV student loans.

The analysis occurs at both the institution and individual program level.

“Low graduate wages equals loss of student loans,” Akeley summarized.

Arkansas has already begun conducting this type of return-on-investment analysis for all associate and bachelor’s degree programs, tracking cumulative earnings over time and identifying the point at which degree costs are recovered through higher wages.

None of Mississippi’s universities are currently flagged under the new federal standards, Rankin said, though most flagged institutions nationally are for-profits. “But this is something that we’re going to have to monitor because we don’t want that designation for any of our institutions moving forward.”

The workforce disconnect

The hearing repeatedly returned to the misalignment between what universities produce and what the economy demands.

Sullivan noted that Mississippi lacks even basic real-time data on enrollment in critical programs. “By October, we ought to be able to see what enrollment is in some of these critical classrooms,” he said, pointing to industrial maintenance technicians, electricians, and advanced manufacturing programs where demand far exceeds supply.

The state’s career coach program, funded by the legislature to guide high school students toward high-value pathways, lacks accountability mechanisms to ensure it’s actually changing enrollment patterns at postsecondary institutions.

A fundamental challenge emerged in discussions of trade and technical programs: Institutions struggle to hire instructors in high-demand fields because industry wages far exceed academic salaries. An electrician making $80,000-$100,000 has little incentive to teach for $40,000-$50,000.

“Some common-sense solutions,” Sullivan argued, include paying market rates for instructors in critical shortage areas rather than applying uniform salary scales. “I don’t care what the history professor makes. It’s irrelevant to meeting the demand of electricians in the Jackson metro area.”

What happens next

Multiple lawmakers pressed for urgency in addressing the system’s deficiencies.

“I hope that we can see something that is very student-focused, that is focused on the outcomes of the student so that we can have better results for our citizens,” said committee leadership.

The Educational Achievement Council, established in 2010 to coordinate education and workforce policy but acknowledged as largely ineffective, is undergoing review for potential restructuring. Jay Allen, president of Itawamba Community College and the council’s chair, said a subcommittee is working to “reimagine the purpose of the EAC as we move forward.”

The state has adopted an “Ascent to 55” goal, aiming for 55 percent of working-age Mississippians to hold postsecondary credentials by 2030. Current trajectory makes that target unlikely without significant intervention.

State Treasurer David McRae offered one bright spot in the hearing: Mississippi’s college savings programs, once underwater at 72 percent funded, now stand at over 100 percent funded for the legacy program and 140 percent for the newer Horizon plan. “There are only 11 open state prepaid programs in the country,” McRae said. “I believe we are the most successful.”

But savings programs only matter if students complete degrees and enter careers that justify the investment.

“If we fail, they don’t get to go to college,” McRae said of subscribers to the savings plan. “If I fail, I have let them down.”

The same logic applies to the broader system. Mississippi invests more than $1 billion annually in higher education appropriations. Whether that investment produces returns for students, institutions, and the state economy may soon depend on whether lawmakers can navigate the complex politics of formula reform—balancing performance incentives, mission differentiation, historical obligations, and equitable access.

The 2026 session will reveal whether the legislature is able to address decades of policy paralysis—at a time when the Trump administration has moved to rescind student loan forgiveness and has proposed eliminating the federal Department of Education altogether.