Dive Brief:
- A new report on performance-based state funding of public colleges and universities, sponsored by the Bill and Melinda Gates Foundation, advises that the funding initiatives are most effective when larger amounts of money are at stake — amounts big enough to get the attention of schools and influence their actions.
- Thirty-five states either tie their higher education institution funding to student performance measures, such as completion rates, or they are developing such funding measures.
- The report by HMC Strategists shows that the funding formulas in those states vary widely, with performance funding averaging more than $4,000 per student in Tennessee and Ohio, $377 in Texas, and $23 in Washington.
Dive Insight:
Inside Higher Ed reports that critics of performance-based funding will likely dispute the report's conclusions that support the approach because the report was paid for by the Gates Foundation, which is an advocate of the model.
The report classifies performance-based funding programs in four categories, based on their sophistication. Type I programs include early approaches, which affect less than 5% of public college budgets, while Type IV programs have at least 25% of their funding tied to performance, including outcomes for underrepresented students. Only five of the 26 states that currently have performance-based spending are linking more than half of their public college and university spending to performance: North Dakota, Nevada, Ohio, Tennessee, and Mississippi.
