2011 Higher Education Government Relations
Conference
Performance-Based Funding (PBF): A Re-Emerging
Approach to Boosting Institutional Outcomes
San Diego, CA
December 1, 2011
Thomas L. Harnisch
Policy Analyst
American Association of State Colleges and Universities
Washington, D.C.

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Performance funding is being revisited
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A mixed history of success, failure
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Approaches vary considerably by state
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Has both promise and pitfalls
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Process and design are key to successful programs

What is Performance-Based Funding ?
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State funding (partially) linked with campus outcomes
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Theories: Resource dependency; incentives
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Models: Output, Contracts, Set Asides
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Components: Goals, Measurements and
Incentives
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Shifts discussions from inputs to outcomes

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Variety of metrics and weights in PBF systems
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Credit milestones (48, 72, etc.); retention rates
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Graduation Rates
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STEM Degrees
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Weights applied toward enrolling nontraditional/underserved populations
• Some systems allow for a “menu” of metrics

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Not a new solution, but popular again
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Lessons learned from previous approaches
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Why now? Workforce requires more graduates + less state money=improved performance required
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Promotion from major players---Lumina &
Gates Foundations, College Board, NGA,
ECS, Obama Administration

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Clarifies, reinforces institutional mission
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A true statement of priorities
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More transparency and accountability
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Potential for productivity gains

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Limited portrait of performance
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Mission distortion/student access concerns
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Threats to quality, objections by faculty
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History of program failure, abandonment

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Establish state goals
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Look for legislative champions
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Earn institutional support
• Stakeholder “Buy In”
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Commit to PBF for up and down budget cycles

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Key Issues: Funds, Measures, Performance
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Consider starting small, yet relevant
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Ensure institutional flexibility to meet goals
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Respect institutional differences
• Anticipate efforts to “game” the system
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Evaluate outcomes, recognize success

• Arthur Hauptman, “Performance-Based Funding in Higher Education,”
Financing Reforms for Tertiary Education in the Knowledge Economy (2005),
• Brenda Norman Albright, “Higher Education Performance Funding 2.0 Tip Sheet,”
Lumina
Foundation for Higher Education (2009),
• Doug Lederman, “Performance Funding 2.0,”
Inside Higher Ed , December 17, 2008, http://www.insidehighered.com/news/2008/12/17/perform (accessed May 9, 2011).
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Joseph Burke and Associates, Funding Public Colleges and Universities for Performance
• Kevin Carey, “Truth without Action: The Myth of Higher Education Accountability,”
Change
Magazine (2007),
• Kevin J. Dougherty and Esther Hong, “Performance Accountability as Imperfect Panacea:
The Community College Experience,”
• Kevin J. Dougherty and Rebecca S. Natow, “The Demise of Higher Education Performance
Funding Systems in Three States,”
Community College Research Center Brief (2009) http://ccrc.tc.columbia.edu/Publication.asp?UID=693 (accessed May 9, 2011).
• 23M. Crellin and others, “Catalyst for Completion: Performance-based Funding in Higher
Education”
New England Board of Higher Education Policy and Research (2011), http://www.nebhe.org/info/pdf/PerformanceFunding_NEBHE.pdf (accessed April 17, 2011)

Thomas L. Harnisch
Policy Analyst
American Association of State Colleges and Universities
Washington, D.C. harnischt@aascu.org ~ 202.478.4660
aascu.org/policy