The Importance Of Performance-Based Funding To Schools

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The awarding of performance-based funding to schools should be measured by the contributions afforded to student learning. Many advocates seeking to increase the number of college graduates in the United States have promoted the idea that states should finance their public universities using a performance-based model (Hillman, N., Tandberg, D., & Gross J. 2014). Colleges and Universities have little incentive to organize their operations around supporting students to graduation (Shulock, N. and Snyder, M., 2013).
According to Shulock and Synder (2013), the appeal of performance-based funding is “intuitive, and is based on the logical belief that tying some funding dollars to results will provide an incentive to pursue those results. Furthermore, …show more content…

The resurgence of performance-based policy is remarkable considering the history of said funding. Two-thirds of all states that experimented with the policy discontinued it at some point in time (Dougherty K. J., Jones S., Lahr H., Natow R., Pheatt L., & Reddy V., 2013). However, despite the compelling logic behind paying for performance in higher education, research comparing states that have and have not adopted the practice has yet to establish a connection between the policy and improved educational outcomes (Dougherty et. al., …show more content…

These are the ultimate outcomes of performance-based funding, yet researchers have also examined intermediate outcomes like retention rates, selectivity, and resource allocation (Hillman, N., et. al, 2014). In their conclusion, Shulock and Snyder (2013) assert that performance funding lacks "a compelling theory of action" to explain how and why it might change institutional behaviors. They contend that the theory of action behind performance funding is simple: financial incentives shape behaviors (Shulock, N., and Synder, M., 2013).
While previous studies on performance funding have focused on the origins of the policies and best practices, a growing number of studies have examined the relationship between performance funding and institutional practices and student outcomes. In their review, Bogue E. G., and Johnson B. D., (2010) and Dougherty K. J., and Reddy V. T., (2013) found evidence that performance funding is associated with changes in campus planning efforts and administrative strategies that may improve academic and student support

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