26 States Apply a Performance-Based Model to Their College and University Funding

In search of greater accountability, 26 states are applying some type of performance-based funding models to their public colleges and universities, according to Stateline, a publication of the Pew Charitable Trusts. These models use metrics like graduation rates, student performance on national exams, and connecting students with jobs instead of enrollment as the basis for receiving some public funding.

As described,

While performance-based funding made up 8.8 percent of Florida’s spending on state universities this year, Tennessee allocates almost 100 percent of its higher education funding—for both community colleges and universities—through an outcomes-based formula.

“For every degree you award, it counts. For every student that accumulates 12 hours, they count. And we just simply count those up, and those are your outcomes for that funding year,” said Crystal Collins, a director at the Tennessee Higher Education Commission. “You don’t have to perform at a higher rate than you did last year; you just have to perform.”

The formula involves multiple calculations (you can check them out on the commission’s website). But basically, the state decides how much it wants to spend on higher education and parcels the money based on certain factors. A big one is whether students are progressing and graduating.

Tennessee’s model also takes into account basic operating costs and adjusts its formula based on each institution’s mission. Research universities are rewarded for spending money on research, for example, while community colleges are rewarded for connecting students with jobs.

For more information, read the whole story from Stateline.

For more information on other performance-based models, see our previous post, Congressman Delaney Calls for Smarter Government on TEDx.