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SPRINGFIELD, Mo. -- It's a drop in the bucket, but educators say they would take it.  Gov. Jay Nixon unveiled his plan to fund higher education at a news conference at Missouri State University on Wednesday morning.

Nixon's proposal calls for an additional $34 million in funding for the state’s public universities and colleges.  It's all based on performance: the better a school does, the more money it would get.

“The best economic development tool we have in Missouri is education,” said Nixon.

The proposal is based on five performance benchmarks: student retention and progress; graduation rate and degree completion; quality of student learning; financial responsibility and efficiency; and a goal specific to each institution.

“We want more students to stay in school past their freshman year,” said Nixon.

For each benchmark, the school is rewarded.  MSU meets each standard and would get a proposed $3 million additional.

“I think it focuses on things we need to be focused on,” said MSU President Clif Smart.

MSU representatives consider it catch-up cash.

“When inflation over a four-year period is eight percent and we are able to only do a four-percent raise, it's like everyone is taking a four-percent pay cut.  So we want to use some of this money to at least catch up and do some second raises this year,” said Smart.

A committee made up of lawmakers finds Missouri's higher education to be underfunded by nearly $400 million.  

MSU leaders say every little bit helps.  A good chunk of that money will go towards making up for inflation and some recent budget cuts.

“I'm not going to debate any recent studies as to what's underfunded and what's not,” Nixon said.

When asked about the lack of funding, the governor says it's about investing wisely.

“We are working at investing our dollars as smart as we can.  I don't see this as ‘how much can you spend’ mentality.  We live in a low tax state and we are going to keep it that way,” the governor said.

MSU leaders want some of the money to go toward starting an Occupational Therapy program.

With a focus on more math, science, and health care related degrees.

What makes this proposed performance standard stand out from others is there's not a punishment.  If the school does not reach a benchmark, it doesn't lose money.  The school is simply rewarded if it achieves a certain standard.  Some educators support it because it helps them plan their budgets accordingly.

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Edited news release from the Governor’s Office:

SPRINGFIELD, Mo. – Gov. Jay Nixon visited Missouri State University to discuss how his plans to provide Missouri’s colleges and universities with additional performance-based funding will expand opportunities for students and ensure taxpayer investments yield the best possible returns.

“As a result of our continued focus on fiscal discipline and job creation, Missouri’s economy is gaining ground and we now have the opportunity to make strategic investments higher education that will expand opportunities for students and further strengthen our economy in years to come,” Nixon said. “But instead of funding colleges and universities based merely on what they have received in the past, my budget proposal ties new funding to specific performance goals. Moving forward with this new funding model, developed in collaboration with Missouri’s public two- and four-year universities, will mean better opportunities for students and better returns for taxpayers.”

Two years ago, Nixon convened a Higher Education Summit and challenged the leaders of Missouri’s public two- and four-year institutions to develop a new funding model based on specific performance goals.

As a result, Missouri’s academic leaders and Nixon’s administration worked together to develop the Performance Based Funding Model for Higher Education. This model provides for funding increases to Missouri’s colleges and universities based on specific performance measures including student retention, graduation rates, student achievement and efficiency.

For Fiscal Year 2014, the governor’s budget includes an increase of $34 million for higher education through the performance-based funding model, in addition to the $849.9 million in core funding also included for Missouri’s colleges and universities.

The performance benchmarks under the Performance Based Funding Model for Higher Education include:

• Student Retention and Progress: This benchmark can be met by achieving a strong freshman to sophomore retention rate or by improving the number of full-time students completing 24 credit hours within their first academic year.
• Graduation Rate and Degree Completion: This benchmark can be met by increasing the total degrees awarded or by improving the six-year graduation rate.
• Quality of Student Learning: This benchmark can be met by students achieving better test scores in their fields of study or by students earning more professional licenses in their trade.
• Financial Responsibility and Efficiency: This benchmark can be met by colleges and universities making sure a higher percentage of their dollars make it into the classroom or by institutions contributing more to the total revenue make-up of their budget.
• Institution-specific goal: This benchmark can be met by achieving a goal specific to the institution’s mission.

Under this model, MSU has achieved all five performance benchmarks. As a result, Nixon’s budget proposes more than $3.3 million in additional funding for MSU.

These funding increases were included in the governor’s recommended balanced budget for Fiscal Year 2014, which has been presented to the General Assembly.