Schools with subpar rates could see their funds suffer.
"We hope that we will do the rewarding part rather than the punishing part," he said. "I do think that part of this initiative needs to devise a system whereby institutions that do have high completion rates will be rewarded, and I think that's altogether appropriate because a lot of money is being spent in our institutions, and it does not do us a lot of good if it does not allow those students to complete.
"That's not to say we're going to downgrade the quality of our education. It means we're going to focus on the importance of completion."
Fewer than one out of four students who enter two-year Georgia colleges ever graduate, and just 44 percent of the four-year students get degrees within six years.
Yet, by 2018, more than 60 percent of Georgia jobs will require some type of college degree.
"We also know the problem is fixable," he said.
To tackle the funding formula, Deal issued an executive order to create the Higher Education Financing Commission which will present a proposal for what's known as performance funding by Jan. 1, in time for the Legislature to consider during next year's regular session.
The current formula is based on total enrollment even though more than half of the students won't graduate.
He used the announcement of a $1 million grant from Complete College America as the occasion to announce his initiatives. Georgia was one of 10 states winning a national competition for the grants funded by the Bill and Melinda Gates Foundation.
"Completion numbers are not good. They're not good in Georgia. They're not good across the country," said Stan Jones, president of Complete College America.
But Georgia's winning application for the grant is a positive sign, he said.
"This is also a validation that Georgia is on the right track," Jones said.
Deal is asking companies and foundations to add to the grant. It will go toward developing online remedial courses for students to study at their own pace, modeled on the middle-school dropout-prevention program used by Communities In Schools, according to Ron Jackson, commissioner of the Technical College System of Georgia.
Four colleges and technical schools will test the remedial course before rolling it out statewide.