Performance funding is a method of funding public institutions based on outcomes, such as retention, degree completion, and job placement. The idea behind performance funding is that it will prod institutions to be more effective and efficient, particularly in a time of increasingly straitened state finances. Critics have warned, however, that it could both provide state officials with an excuse to cut back on regular state funding and create an incentive for college officials to become more selective in their admissions.
This report examines in detail the origins of state performance funding in six states: Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington. These states were chosen for analysis because they have considerably different state performance funding systems and histories as well as higher education governance arrangements, political systems, political cultures, and social characteristics.
The analysis yields some important lessons for policymakers, which are discussed at the conclusion of the paper.
A brief of this paper, The Political Origins of Higher Education Performance Funding in Six States, is available for download.
