The Coordinating Board for Higher Education in Missouri approved a plan on Tuesday that links 10 percent of all state funding for publicly-funded colleges to their performance. This performance-based portion of the funding will be determined by metrics such as degree completion, budget practices, and job-placement rates.
Missouri joins a growing list of states that are either developing or using formulas that tie their support to these key performance indicators. Thirty-five states have attempted performance-based funding. Missouri’s higher education board believes that the formula would help schools demonstrate their stewardship of state funds at a time when public trust in higher education is quickly diminishing.
Academic skepticism has been such a pain point for colleges and universities that it emerged as a dominant theme at the Association of American Colleges and Universities’ annual meeting. Lynn Pasquerella, president of the AAC&U, tried to blame the trend on “political jockeying” and a lack of “rational inquiry” on the matter. However, she also admitted that academia needs to demonstrate how it is “teaching students 21st-century skills ... within the context of the workforce, not apart from it.”
They have their work cut out for them.
For too long, state funding in many cases has been based on how many full-time equivalent students are enrolled at the start of each academic term. This broken system incentivizes mass enrollment but provides no incentive for boosting completion rates or the number of workforce-ready graduates. The National Student Clearinghouse, an education non-profit, measured the six-year graduation rate for U.S. college students at less than 53 percent — an alarming figure considering the exorbitant cost of higher education.
While the success of the performance-based model varies among the 35 states that have introduced it, so do their formulas. In 2015, the Bill and Melinda Gates Foundation funded a study that classified the types of formulas and highlighted the key components of the most successful ones. Unsurprisingly, the level of state support that is tied to performance has a direct correlation with overall success.
The model has its critics, most notably academics who would prefer to remain unaccountable for student achievement. Meanwhile, the lack of any performance metric allows college presidents to get off scot-free as they line their pockets.
When it’s done right, performance-based funding works. It works to eliminate wasteful spending on education and to improve prospects for college graduates by making career training a priority. Colleges are forced to shape up when money is on the line.
Brendan Pringle (@BrendanPringle) is a freelance journalist in California. He is a National Journalism Center graduate and formerly served as a development officer for Young America's Foundation at the Reagan Ranch.