Performance-Based Appropriations May Not Sway Student Outcomes

President Obama has suggested that the federal government start awarding money to colleges based on their academic performance. But national policy makers should  keep in mind that such a system hasn’t completely worked at the state level, according to the recommendations of a new report.

States have been experimenting with allotting small percentages of their higher-education appropriations based on performance since Tennessee started the practice, in 1978, notes the report, from the Education Policy Center at the University of Alabama at Tuscaloosa.

Since then, 21 states have joined Tennessee in tying at least some higher-education funds to colleges’ performance. The Volunteer State now appropriates all of its money for higher education based on student outcomes.

More recently, seven states are in the process of developing or enacting a performance-based model, while 10 others are formally considering such a system, the report says. A dozen states are not engaged in any activity to create such a system.

The performance measures that states use and the amounts of money they allot on a performance basis have changed significantly over the years, but there is still no compelling evidence that awarding state money based on outcomes has a big effect on student performance, the researchers conclude.

And performance-based support measures are unlikely to bring about much improvement in college outcomes unless states follow Tennessee’s example and dedicate a much larger share of tax dollars to rewarding student success, the report advises.

The report also recommends aligning the performance measures with the state’s work-force and economic goals and allowing different sectors of higher education to meet different standards based on their missions.

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