The idea of using outcomes—not enrollments—to guide public funding of higher education has so much bipartisan backing that both President Barack Obama and Florida’s Republican Gov. Rick Scott support it. Just last week, the Florida Board of Education approved a performance-funding system for state colleges, adding to its existing system for state universities.
It’s too early to say whether performance-based funding will drive the changes lawmakers want. But the policy so aligns with national concerns about the cost and payoff of a college education that it’s likely here to stay.
The Completion Craze Tennessee started giving state colleges and universities bonus payments for meeting goals in certain categories, such as student performance on national exams, in 1979. In the 1990s, a handful of states set aside a small percent of funding to reward outcomes, such as degree completion. Those programs typically didn’t last long.
Then the Great Recession happened. As the economy tanked, so did state tax revenue.Almost every state cut higher education funding between 2009 and 2014, and many colleges and universities raised tuition to compensate.
College became less affordable even as Obama and governors emphasized how important it was for Americans to go. “Education is an economic issue when nearly eight in 10 new jobs will require workforce training or a higher education by the end of the decade,” Obama said in 2010.
To get the economic benefit of a college degree, the president emphasized, students have to graduate. Fifty-nine percent of first-time college students, studying full time, who started a bachelor’s degree program in 2007 graduated in six years from that institution, according to federal statistics.
The Lumina Foundation and the Bill and Melinda Gates Foundation have added to the sense of urgency over the past few years by spending millions of dollars on developing and promoting strategies for raising graduation rates. One strategy is performance-based funding, also known as outcomes-based funding.
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