Four Decades of Performance Funding and Counting

Abstract

Performance funding policies for higher education tie a portion of state revenue to public colleges according to student outcomes. This chapter is a comprehensive literature review of research studies on performance funding, highlighting the conceptual frameworks employed by authors and focusing on three areas of the policy: development, adoption, and design; campus implementation and responses; and ultimate impacts on retention and completion, access, student enrollment demographics, and institutional finances. This chapter pays attention to equity considerations of performance funding and discusses the policy’s impacts on colleges with different levels of resource capacity, selectivity, and student characteristics. The chapter concludes with considerations for future research on the policy.

Policy Diffusion of Performance Funding Equity Metrics: Traditional Neighbor and Dyadic Survival Analyses

“…As of Fiscal Year 2020, 32 states were operating a performance funding policy for at least some public colleges (Ortagus et al, 2020). Despite the prevalence of PF, research suggests that the policy has had limited success to this point in achieving its targeted goal of improving college completion (e.g., Bell et al, 2018; Hillman et al, 2015; Kelchen, 2018b; Li, 2021; Ortagus et al, 2020; Rutherford & Rabovsky, 2014; Tandberg & Hillman, 2014; Tandberg et al, 2014; Umbricht et al, 2017).…”

“…This provided a strong incentive for colleges to change their admissions and financial aid practices to recruit students with a higher likelihood of success (Dougherty et al, 2016). These actions disproportionally limited access for historically marginalized populations, such as students of color, first-generation students, and low-income students (Kelchen & Stedrak, 2016; Li, 2021; Umbricht et al, 2017).…”