Report on Performance-Based Funding in Europe

A report from the European University Association released on Wednesday analyzes the impacts of performance-based funding systems in which universities are rewarded for producing certain outputs included in funding formulas or meeting targets agreed upon in performance contracts. The report finds that performance-based university funding can increase transparency and accountability in public spending and can support the strategic positioning of universities. But it also finds that "its effects are hard to control and are highly dependent on other factors such as the regulatory framework of a specific higher education system, the funding system and the share of funding allocated on the basis of performance as well as the institutional profile, income structure and internal management and governance." The report also warns of unintended adverse effects of performance funding tied to teaching or research-related outputs, such as the risk of professors "slicing" their research into multiple papers to boost their publication numbers.