Two high-ranking members of the state Legislature are proposing legislation that would more closely link the amount of money colleges and universities get from the state with a school’s graduation rate.

In such an outcome-based model, schools would have to meet the average graduation rate of their peer institutions in the South in order to receive their full share of state funding.

Louisiana institutions get about 40 percent of their funding from the state and the remaining 60 percent from students in the form of tuition.

State Sen. Conrad Appel, R-Metairie, said Wednesday that Louisiana has a problem when it comes to funding colleges and universities.

But what no one talks about, he said, is the state’s “performance problem.”

“Our graduation rates and our retention rates aren’t where they should be,” Appel said. “We want to move to a more progressive, more modern performance mechanism.”

Under his plan with state Rep. Steve Carter, R-Baton Rouge, Appel said each college in the state would be divided into about five tiers and then compared with similar schools in other states.

For instance, LSU’s Baton Rouge campus would be in the “flagship” tier, Appel said, and would be judged against other flagships in the South.

LSU’s state funding would then be based on whether it meets or exceeds the average graduation rate of other flagships schools in the South, he explained.

Appel added that state funding to schools would be broken into two parts — an “expense” category for maintenance and utilities and an “outcomes” category for academic performance.

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The “outcomes” category would make up a roughly 25 percent to 40 percent share of a school’s total state funding, Appel said, while the “expense” category — 60 percent to 75 percent — would stay the same, allowing schools “to keep the lights on.”

“We want a simple formula with just a handful of variables that everyone can easily understand, but also something with some teeth in it,” Appel said.

“If you underperform, you are penalized. If you overperform, I’d like to say that you get a bonus, but that would depend on what the state budget looks like,” he said.

If such an outcome-based bill were to pass in the legislative session beginning April 8, Appel said he could support a “tuition freedom” bill giving colleges and universities control over how much they charge students.

Louisiana is also the only state in the nation that requires two-thirds legislative approval on tuition and fee increases.

Tuition hikes are only allowed through the 2010 LA GRAD Act law that lets colleges raise tuition up to 10 percent each year if they meet certain performance goals, including improved graduation and retention rates.

Carter, chairman of the House Education Committee, said the dozens of performance measures in the GRAD Act make it easy for schools to manipulate the results.

An outcomes-based bill would hold “colleges’ feet to the fire,” Carter said.

“We want each youngster to have an opportunity to get a quality education for all the money they are spending,” he said.