Performance Funding for Higher Education

Abstract

Since the 1970s, federal and state policy-makers have become increasingly concerned with improving higher education performance. In this quest, state performance funding for higher education has become widely used. As of June 2014, twenty-six states were operating performance funding programs and four more have programs awaiting implementation. This article reviews the forms, extent, origins, implementation, impacts (intended and unintended), and policy prospects of performance funding. Performance funding has become quite widespread with formidable political support, yet it has also experienced considerable implementation vicissitudes, with many programs being discontinued and even those that have survived encountering substantial obstacles and unintended impacts. Although evidence suggests that performance funding does stimulate colleges and universities to substantially change their policies and practices, it is yet unclear whether performance funding improves student outcomes. The article concludes by advancing policy recommendations for addressing the implementation obstacles and unintended side effects associated with performance funding.

The creation of performance funding in Michigan: Partnership, promotion and points

“…A few mentioned that they felt the original goal of the policy was the tuition restraint provision and not actually focusing on changing institutional behavior in the realm of the metrics. This finding is different than previous research, which found that performance funding policies resulted in significant intermediate institutional change including academic and student service policies, programs and practices such as closing programs with low graduation rates, changing course content or sequences, increasing advising, changing retention programs and changes in financial aid (Dougherty et al, 2014a;Dougherty & Reddy, 2013). PAT highlights potential decision making processes that could play a role in this finding.…”

“…the governmental relations office, the finance office, or the president). Previous research has found that performance funding policies struggle to be disseminated across institutions, with senior level administrators familiar with the policy but lower level administrators and faculty not aware of the specifics of the policy (Burke, 2005;Dougherty et al, 2014a;Freeman, 2000;Hall, 2000;Schaller, 2004). Therefore, this study focused on senior level administrators and excluded faculty and lower level administrators.…”

“…Beyond Republican state legislators, governors who identify as Republican also seem to favor performance funding policies. Since 2007, nine states with Republican governors have implemented performance funding policies (Dougherty et al, 2014a). Dougherty et al (2014b) examined how political forces influence the adoption of performance funding through a qualitative analysis in three states (Indiana, Ohio, and Tennessee).…”

“…Some research on performance funding shows that higher education institutions change their academic and student service policies, programs and practices when performance funding policies are put in place. For instance, some colleges reported closing programs with low graduation rate or job placement success (Dougherty et al, 2014a). Institutions also reported changing course content and instruction as well as course sequences to try and increase course completion rates (Dougherty & Reddy, 2013).…”

The Higher Education Act and Minority Serving Institutions: Towards a Typology of Title III and V Funded Programs

“…Extensive research has demonstrated how this has influenced policymakers throughout the U.S. at both the state and federal levels [50,73]. A popular state finance approach to incentivizing institutions to increase the number of college completers is performance-based funding [74]. Empirical research mostly finds a null or negative impact of pay-for-performance as it has thus far been implemented towards higher education [75].…”