The motto in Louisiana’s higher education circles the past few years goes something like: You have to make the grade in order to get paid.

A quirk in higher-education policy discourages colleges from being too ambitious and makes it more lucrative for schools to aim low.

Schools do a lot of fretting over reaching student retention and graduation rates spelled out in the 2010 LA GRAD Act. The law ties 15 percent of state funding to schools that meet performance targets, and also gives campuses permission to raise tuition by up to 10 percent each year.

Colleges signed six-year GRAD Act agreements in 2010 in which they set performance goals for themselves. The state’s higher education board, the Louisiana Board of Regents, had to certify the targets were neither too easy to reach nor unrealistically high.

So millions are at stake every spring when the Regents are looking over the data to determine who made the grade and who fell short.

The first-ever casualties of the GRAD Act were released in late June when the Regents announced LSU at Eunice and Southern University at Shreveport had not met their targets and stand to lose a large chunk of revenue.

Southern-Shreveport is appealing its GRAD Act designation.

The irony is that both schools are two of the better-performing schools in the state.

LSU-E, which is not appealing its designation, stands to lose out on nearly $1.5 million, according to the Regents.

LSU-E consistently has a higher graduation rate than its peers around the state.

LSU-E Chancellor Bill Nunez admits his school was ambitious in its GRAD Act goals, but also blames the failure to meet its targets on a combination of factors. One of those factors is cutbacks to helpful tutorial programs because of state budget cuts. The state has stripped about $420 million in funding from higher education since 2008.

Nunez also said his school is judged as a community college, when it should be looked at as a junior college. LSU-E students generally use the school as a steppingstone to transfer to a four-year college and baccalaureate degrees.

When those students leave early, it ends up hurting the school’s retention rate, he said.

“You can look at it as if we’re being punished for aiming high,” Nunez said.

“A good school is getting hurt. We’ve had no audit problems, and we’ve got a good track record,” Nunez said. “There are campuses that had lesser graduation rates and they passed. Now, what’s fair about that?”

State Commissioner of Higher Education Jim Purcell said schools have little room for self-pity. “They established their targets,” Purcell said. “If they perform, they get rewarded. That’s how contracts work.”

Former House Speaker Jim Tucker, R-Terrytown, who pushed the legislation that became the GRAD Act, applauded LSU-E for aiming high even if it didn’t meet its target.

Years ago when the schools and the Regents negotiated GRAD Act targets, was there really a discernible incentive for Louisiana’s colleges and universities to set the bar high?

Barry Erwin, president of the Council for a Better Louisiana, said the issue isn’t about aiming low or aiming high, but rather that schools originally thought the tuition increasing authority would be on top of the money they get from the state.

The way it has turned out is that the Louisiana Legislature banks on schools meeting the GRAD Act, even building those assumed tuition hikes into the budget before the results are announced, as a way to offset the money stripped from higher education, he said.

“The problem is nobody foresaw the level of cuts, so the need for tuition increases is almost a need for survival,” Erwin said.

“Nobody saw the environment we’re in right now. It’s hard to function and support students, and to perform well when you’re making budget decisions and laying off staff.”

Koran Addo covers higher education for The Advocate’s Capitol news bureau. His email address