A growing number of states -- 35 so far -- have created performance-based funding models that tie portions of appropriations for public colleges to outcome measures such as degree production or student graduation rates. A new research paper examines results of performance-funding formulas in Ohio and Tennessee, which are home to two of the most established of such policies. Advocates also cite the two states has having particularly sound approaches to performance funding.
Production of bachelor's degrees at four-year public institutions did not increase in either state after the funding formulas were enacted, according to the study, which was published by the American Education Research Journal. Associate-degree production also was relatively flat during the decade between 2005-15, as the policies came into effect.
"In both states, community colleges produce significantly fewer associate’s degrees than community colleges in other performance-funding states," wrote the study's co-authors, Nick Hillman, an associate professor of educational leadership and policy analysis at the University of Wisconsin at Madison, Alisa Hicklin Fryar, an associate professor of political science at the University of Oklahoma, and Valerie Crespín-Trujillo, a graduate student researcher at the University of Wisconsin at Madison.
A sole positive effect on credential production found by the study was a substantial increase in certificate production by Tennessee's community colleges.
"The evidence presented here suggests the exemplar performance-funding states have not yet outperformed other states except with respect to certificate programs," the researchers wrote. "Considering the low returns to certificate programs, where graduates’ earnings are often not higher than high school graduates’, this outcome may work against other state policy goals related to economic mobility and work-force development."
The study cited three limitations: that the two states were phasing in their funding incentives during the examined time period; that both states introduced dual-enrollment policies at the same time, which could have muddied the findings; and that the study did not examine other student success-related outcomes, such as retention rates.