Does performance-based funding work?

Some question if metrics promote the right behavior

Performance-based funding for higher education is gaining popularity nationwide, but some critics question whether the push for accountability is actually producing results.

The landscape of outcome-based funding

According to the National Conference of State Legislatures, 30 states use performance metrics to determine funding levels for public institutions. Approaches vary by state. For example, Arizona uses the number of degrees awarded and credits earned, while Indiana uses the number of STEM graduates and on-time graduation.

Organizations like Complete College America call performance-based funding a "game changer" that is essential to helping to develop more qualified individuals for the workforce.

However, critics question whether performance-based funding standards are rigorous enough or promote the right types of best practices.

Measuring success

Some experts worry that performance-based funding limits access for some students. Dennis Jones, from the National Center for Higher Education Management Systems, notes that rewarding completion can push some schools away from an open-access mission.

Some states try to avoid perverse incentives by rewarding institutions that educate more at-risk students, but not all do.

Study: Performance-based funding may threaten open access

Another group of critics express concern that performance-based goals are too lax.

In 2012, Missouri shifted to a partial performance-based funding system that allows schools to choose 5 metrics from a list of 11. Last year, only one of the state's four-year institutions did not meet its goals in all five categories.

Missouri State Sen. Kurt Schaefer (R) says the system is too soft on schools. "We need to take a broader look at the value of each institution, not just (their) self-imposed criteria," he argues.

Kenneth Dobbins, president of Southeast Missouri State University, counters that schools should not be punished for performing well. University of Missouri, St. Louis Chancellor Thomas George agrees, noting that schools have long been paying attention how they perform. "The system president holds the chancellors accountable. We really haven't had to do anything differently," he says (Mathewson, Education Dive, 3/4; Addo, St. Louis Post-Dispatch/eCampus News, 3/3).

The takeaway: Advocates say performance-based funding is a vital tool to promote accountability and better serve students, but critics worry performance metrics can promote perverse behaviors or lack rigor.

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