Amy Y. Li
Performance funding for higher education has experienced a renaissance in recent years. More states have adopted or are in the process of adopting performance funding models, an accountability tool that allocates state appropriations based on college performance on predefined metrics. This paper provides a comprehensive literature review of past and current topics in performance funding, such as performance metrics, policy design, institutional knowledge, and institutional responses. Specific state examples, including Tennessee, Pennsylvania, and Washington, illustrate main points about policy implementation and impacts. Unintended consequences of performance-based funding are also discussed by exploring troublesome examples of policy “side effects”. This paper concludes with major policy and practice recommendations from the literature.

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