2Center or American Progress | Perormance-Based Funding o Higher Education
Develop dieren unding ormulas or communiy colleges and universiies or usehe same ormula bu weigh i dierenly depending on he ype o insiuion andcharacerisics o he suden populaion.
Inegrae all merics and provisions ino he sae higher-educaion-unding ormula,as his makes i more durable when saes are aced wih budge cus.
Use indicaors ha measure boh progress (course compleion, momenum, crediatainmen) and compleion (degrees conerred, program compleion), wih anemphasis on progress.
Incorporae sop-loss provisions ha preven insiuions rom losing more han acerain level o unding each year.
Implemen a year o learning during he rs year ha he policy is in eec, a period in which sae spending does no change bu colleges receive repors deailing how heirunding would have been impaced under he new measures; and/or gradually phase inover a muliyear period he percenage o oal unding allocaed based on perormance.
Subjec he sysem o requen evaluaion and make adjusmens where needed. As higher educaion spending coninues o decline, saes ace growing pressure o dem-onsrae ha hey are ully invesed in he long-erm success o heir sudens. Goingorward, i is imperaive ha saes and he ederal governmen coninue o exploreperormance-based unding opions, paricularly in he conex o a series o oucomes-ocused higher educaion reorms.Te ollowing issue brie will summarize he hisory o perormance-based unding inhigher educaion a he sae level, ouline in urher deail a subse o sae experiences,and recommend ha saes coninue o explore perormance-based unding opions inheir higher educaion sysems.
A brief history of performance-based funding
Beween 1979 and 2007, 26 saes experimened wih measures ha atemped o incor-porae insiuional perormance as a deerminan o higher educaion unding. Duringhis period 14 saes ha had enaced perormance-based unding programs evenually disconinued hem, alhough wo o he disconinuing saes laer re-esablished new programs.
Te saes’ dissaisacion semmed rom he ac ha hese early undingmodels were plagued by a number o aal design aws.
In paricular, many programs were inexible o insiuional dierences, resuling in rigid and seemingly arbirary requiremens ha ocused oo heavily on degree compleion and ailed o reward iner-mediae progress. Furhermore, many models ailed o allocae enough unding o creaegenuine incenives or colleges o improve. Afer ha iniial wave o ineecive models, perormance-based unding has onceagain begun o gain populariy. Careul o avoid he misakes o he pas, proponens o