Increasingly, states are linking some college funding to performance goals, reports Stateline.
Missouri will link increases in state funding to state goals, such as graduation, retention, performance on professional certification exams and low tuition, after fiscal 2013.
In most states, performance-based funding isn’t big money. Pennsylvania will set aside 2.5 percent of its higher education budget for target-linked funding.
Tennessee is the exception: Eventually, more than 90 percent of higher education funds will be tied to performance. Colleges receive credit when students achieve goals with extra points for at-risk and non-traditional students.
Performance funding isn’t a new concept in higher education. From 1979 to 2007, 26 states — including Missouri, Pennsylvania and Tennessee — implemented the concept in some form, according to a recent report from the American Association of State Colleges and Universities. Many of those programs were established in the 1990s, when states were flush with cash, and then subsequently abandoned. The current climate of fiscal austerity has made lawmakers more receptive to reviving the programs.
Models should be simple and clear, advises Julie Bell, director of the education group at the National Conference of State Legislatures.
States should link performance funding to graduation, rather than relying on internal measures, such as student evaluations of teaching quality.
The state has to offer enough money to give the institution a genuine incentive to change behavior.
Missouri has been cutting funds for colleges and universities, concedes Paul Wagner, deputy commissioner of higher education. “A lot of people are saying, ‘What’s the point of talking about how you’re distributing new money?’ ”
Some fear that performance-based funding will pressure colleges to lower standards to raise graduation rates. Tennessee professors call that “watering the soup.”
Community college funding declined by $488 per student from 2008 to 2009, according to a Delta Cost Project report. Community colleges’ tuition increased $113 per student, while spending declined by $254.