Negative Consequences of Performance Funding

Texas and 34 other states tie some level of funding for public colleges to metrics such as graduation rates or degree production. And the Higher Education Act rewrite the GOP is advancing in the U.S. House of Representatives also includes aspects of performance funding by requiring that 25 percent of students at minority-serving institutions must complete in order for those colleges to be eligible for some federal funding streams, according to Paul Fain, in Inside Higher Ed.

However, a couple of new studies add to a growing amount of research that indicates the policies “may not work or have unintended consequences, with some of those problems being linked to design flaws.”

One paper found that more aggressive forms of state-based formulas can increase public colleges’ production of short-term certificates while reducing the number of associate degrees students earn. Presumably if schools can get more funding by offering less (in terms of time) rather than more, they will do it. But an associates degree, while taking longer, is worth more in terms of earning power. There are probably exceptions in certain fields.

Also recently published, by American Behavioral Scientist, is a new paper on state-based performance funding by Nick Hillman, an associate professor of education at the University of Wisconsin at Madison, who has published several papers on the issue. The paper said minority-serving institutions in states with performance formulas on average lose “significant funding” on a per-student basis compared with other colleges in those states or with minority-serving ones in states without performance funding, according to the IHE article.

Here is information on Texas community college funding from the Texas Association of Community Colleges.