tc columbia

Performance Funding for Higher Education

By: Kevin Dougherty, Sosanya Jones, Hana Lahr, Rebecca Natow, Lara Pheatt & Vikash Reddy

Abstract

Performance Funding for Higher Education

This book is the most extensive study to date of the implementation and impacts of performance funding, which ties state financial support of colleges and universities to institutional performance and has been adopted by more than 30 states. Performance Funding for Higher Education reports findings from a three-year study of three leading states: Indiana, Ohio, and Tennessee. Based on extensive interviews with state officials and staff at 18 public institutions, findings include:

  • Policy instruments: States used performance funding to spur better student outcomes by offering financial incentives for higher graduation numbers and communicating to institutions the intended goals and methods of performance funding and how well institutions were doing on state performance metrics. However, institutional respondents reported little state effort to build up college resources to respond to performance funding.

  • Institutional changes: Performance funding led institutions to improve student outcomes through changes such as revamped remedial education and advising systems. However, respondents found it difficult to gauge the role of performance funding in these changes, since it was only one of several state initiatives to improve student outcomes.

  • Student outcomes: Multivariate statistical studies have failed to consistently find that states with performance funding enjoy significant improvements in student outcomes.

  • Obstacles: Institutions face obstacles to responding to performance funding demands, including enrolling many students who face academic, social, and economic hurdles to graduating, insufficient institutional resources, and inappropriate performance funding metrics.

  • Unintended impacts: Performance funding provides an unintended incentive to weaken academic quality and to restrict the admission of less prepared and less advantaged students, who are less likely to finish college and thus less likely to pay off for institutions.

Performance Funding for Higher Education is available from Johns Hopkins University Press.