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Performance Funding and Certificate and Degree Production

October 8, 2018

State performance-funding policies that link a relatively high percentage of base funding for community colleges to student outcomes on average lead to more short-term certificate (instructional time of a year or less) completions and fewer associate-degree completions, according to a new study. These results suggest potentially damaging consequences for students, because short-term certificates tend to lead to negative or minimal wage gains, while associate degrees offer substantial wage gains.

The findings were described in a policy brief from the Wisconsin Center for the Advancement of Postsecondary Education. The study's authors are Amy Li, an assistant professor at the University of Northern Colorado, Alec Kennedy, a doctoral student at the University of Washington, and Margaret Sebastian, a doctoral student at Northern Colorado.

Performance funding policies are on the books in roughly 35 states. Policies that allocate at least 5 percent of base funding to outcomes produce increases in short-term certificate completions, the study found. Those that allocate at least a quarter of community colleges' base funding to outcomes and are active for at least two years produce increases in short-term certificates and declines in associate degrees.

"Many performance-funding policies offer equivalent funding allocations for completions of short-term certificates, medium-term certificates, and associate degrees. When designing performance-funding policies, policy makers may not have anticipated that this would encourage colleges to direct students into short-term certificate programs. Our research supports the notion that colleges focus on graduating more students from short-term certificate programs in pursuit of short-term funding rewards," the paper said. "We caution policy makers to consider whether increasing graduates of short-term programs is an intended higher education attainment goal."

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Paul Fain

Paul Fain, Contributing Editor, came to Inside Higher Ed in September 2011, after a six-year stint covering leadership and finance for The Chronicle of Higher Education. Paul has also worked in higher ed P.R., with Widmeyer Communications, but couldn't stay away from reporting. A former staff writer for C-VILLE Weekly, a newspaper in Charlottesville, Va., Paul has written for The New York Times, Washington City Paper and Mother Jones. He's won a few journalism awards, including one for beat reporting from the Education Writers Association and the Dick Schaap Excellence in Sports Journalism Award. Paul got hooked on journalism while working too many hours at The Review, the student newspaper at the University of Delaware, where he earned a degree in political science in 1996. A native of Dayton, Ohio, and a long-suffering fan of the Cincinnati Bengals, Fain plays guitar in a band with more possible names than polished songs.

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