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Education

Study: Performance Funding Doesn't Improve Outcomes In Higher Ed

President Obama wants to make two years of public community college free for many students. But institutions like Miami Dade College, pictured here, could only participate if they also have a performance funding program.
President Obama wants to make two years of public community college free for many students. But institutions like Miami Dade College, pictured here, could only participate if they also have a performance funding program.
President Obama wants to make two years of public community college free for many students. But institutions like Miami Dade College, pictured here, could only participate if they also have a performance funding program.
Credit mcd.edu
President Obama wants to make two years of public community college free for many students. But institutions like Miami Dade College, pictured here, could only participate if they also have a performance funding program.

Performance funding in public higher education is a way for states to hold institutions accountable for certain outcomes. But new research shows it doesn’t do much to keep students enrolled or boost graduation rates.

A study co-authored by Dr. David Tandberg, Florida State University assistant professor of higher education, shows little difference in outcomes between institutions that receive performance funding and those that don’t.

The latest report examined community colleges in Washington State, but the research is part of a series of studies measuring outcomes nationally.

Florida currently has no performance-funding model for state colleges. But its program for state universities considers a long list of metrics including how many bachelor’s recipients are employed or furthering their education one year after graduation, their salaries and the six-year graduation rate. 

Tandberg says it’s difficult for institutions to boost their performance to earn the added funding without having additional resources to begin with. He says these programs have even been shown to have negative consequences, like colleges boosting enrollment criteria to keep lower achieving students out.

Read an edited version of our interview with Tandberg below.

Give us a brief synopsis of your performance-funding study.

Overall, we found very little impact on associate’s degree completions or on retention rates or on long-term certificates. But we did find a significant positive impact on short-term certificates. A short-term certificate can be completed in less than a year, and it’s not a degree, it’s a certificate. On average in Washington, they generally don’t lead to a salary that’s significantly greater than what a high school graduate would receive. If institutions are ramping up those kinds of short-term certificates, that’s probably a behavior that the student achievement initiative didn’t want to incentivize.

You’re talking about how there are some unintended consequences, outcomes that happen in unanticipated ways. Can you just elaborate on some of these unanticipated issues?

We’ve seen that institutions will consider things like enrolling higher-achieving students in order to improve graduation rates. When we implement a performance-funding program, we’re asking them to do something different and improve their outcomes. Those things quite often require additional resources. Performance funding may provide an additional incentive, but without additional resources, you can’t expect significant differences in things like graduation rates or completions.

President Barack Obama has proposed making community colleges free for the first two years for what he calls “responsible” students. What can you tell us about how performance funding would play into the president’s proposal?

For states to participate in the program, they must have a performance-funding program. There are multiple reasons to implement a performance-funding program. One is to improve performance – that’s the most obvious. Another is simply to use it as an accountability mechanism, so at least it’s a way of holding institutions accountable. In that sense, it kind of makes sense because that’s a lot of new federal and state dollars going to community colleges. Now, if the assumption is that the performance-funding program is going to actually improve performance, well that’s very questionable.

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