Critique of Performance-Based Funding

May 25, 2016

The Century Foundation on Wednesday published a report that is critical of state policies that link funding of public colleges with measures of their performance, such as graduation rates and degree production numbers. Roughly 35 states are either developing or using some form of performance-based funding for higher education.

The new report's author, Nicholas Hillman, an assistant professor of education at the University of Wisconsin at Madison who has studied such state-based formulas, argues that performance-based funding is rarely effective.

"While pay for performance is a compelling concept in theory, it has consistently failed to bear fruit in actual implementation, whether in the higher education context or in other public services," Hillman wrote. "Performance-based funding regimes are most likely to work in noncomplex situations where performance is easily measured, tasks are simple and routine, goals are unambiguous, employees have direct control over the production process, and there are not multiple people involved in producing the outcome."

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