Home > Educational Leadership, Higher Education > Does Performance Funding Work?

Does Performance Funding Work?

By Doug Lederman

A little performance-based funding doesn’t work. But a lot of it might.

That’s the conclusion of a recently published study examining the impact of formulas that tie state funds for public colleges to various measures of institutional performance. Performance-based funding is a favored tool of the policy makers and foundations that are pushing higher education toward greater efficiency and better outcomes in terms of college retention and completion; only if states change the incentives for colleges and universities, the reformers argue — rewarding them for getting students through college rather than just enrolling them in the first place — will institutions alter their behavior.

Based on that premise, several states — including Ohio and Indiana — have altered their formulas for allocating state funds in recent years, but those programs are too new to offer any evidence of their efficacy. But several other states have had performance-funding programs in place for much longer, and in a paper released this spring at the annual meeting of the Association for Institutional Research, two scholars studied Tennessee’s — the country’s “oldest and most stable performance funding program” — for insights into how such programs affect retention and graduation rates.

Continued at: http://www.insidehighered.com/news/2011/07/25/study_examines_impact_of_state_performance_based_funding_on_graduation_retention

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