Explaining State Adoption of Performance Funding in Higher Education, 1990 - 2020: A Comparative State Policy Study

Abstract

In the past 40 years, performance funding has become a state policy reaction for the demand of transparency for public higher education institutions. State legislatures have adopted performance funding as a mechanism to hold public higher education accountable for student outcomes. States vary in the metrics they implement, the funding allocation methods, and the amount of state appropriations used for performance funding. The most common metrics used by states to measure student outcomes are retention rates, graduation rates and state aligned labor market outcomes. Recent research estimates that over 40 states have adopted performance funding for higher education. This research analyzed the adoption of performance funding policy with a longitudinal dataset utilizing important political, education, and economic indicators for the states. Data was collected over a thirty-year period to predict the probability of adopting performance funding for state higher education institutions. The model results indicated that the primary drivers of state adoption of performance funding for higher education are partisanship strength and higher education governance structures.