Over the last decade many states have adopted performance-based funding practices in an effort to hold colleges and universities accountable for student graduation rates.  A performance-based model incorporates enrollment and performance metrics as requirements for government funding versus the traditional method which was based on student enrollment numbers and mere trust.

As with any type of major change, there are those who are opposed to a performance-based methodology for determining which schools receive funding.  Some of the arguments against performance-based school funding are as follows:

  • There is not a significant amount of empirical data supporting its effectiveness  in creating positive change in higher education institutions.
  • It provides incentives for more restrictive admissions criteria which would unfairly target vulnerable populations.
  • It narrows the institutional mission, may produce grade inflation; weakens academic standards; further diminishes faculty voice in academic governance; and provides opportunities to game the system.

Data on college graduation rates would suggest that using enrollment as a determination for an institution’s performance is flawed.  According the “Four Year Myth,”  a report done by the nonprofit group Complete College America in 2014, more than 50% of students enrolled in both 4 year and 2 year institutions do not graduate on time.  Actually, the average rate of graduation for American college students is six years for 4 year programs and three for 2 year programs.  Obviously, as the number of years it takes a student to graduate increases, so does the cost of their education.

Is graduation not the ultimate goal?  While many will say their college years were the best years of their life, whether or not they graduated, you will be hard pressed to find an individual that did not envision themselves walking to receive their degree on graduation day.  The traditional college funding model, which incents schools to enroll more students, does not hold colleges and universities accountable for ensuring students successfully make it to graduation day…let alone graduate in 4 years.

According to the National Conference of State Legislatures, thirty-two states currently have some kind of performance based funding system in place and five states are in the process of transitioning to performance-based funding programs.  In other words, thirty-seven out of fifty-two states or 64% of all the states are taking steps towards a system that holds institutions to a new standard.  Only time will tell whether or not this is right direction for our higher education system. However, as old adage goes…insanity is doing the same thing over and over again and expecting different results.  This being said, we believe the willingness to explore new options is a step in the right direction.