Improving higher education results through performance-based funding: An anlysis of initial outcomes and leader perceptions of the 2012 Ohio 100 percent performance-based funding policy

Public universities face significant funding challenges as states continue to look for efficiencies or outright cuts. In addition, the call for accountability in higher education continues to grow as state lawmakers, policy analysts, and researchers voice concern that degree attainment has stagnated, is too low to support economic growth, and takes too long. Business and political leaders are also increasingly interested in developing higher education accountability in response to concerns by students and families over the rising cost of a degree. Together, these themes of accountability and cost control have resulted in dramatically different policy innovations in the form of performance-based funding in a growing number of states. However, these policies have thus far produced scant evidence of success. Furthermore, the potential unintended consequences of these policies seem large, including the risk of increased selectivity resulting in increased class-based inequality and the risk of decreased educational quality. Thus, the shift from basing state support on inputs to outputs could be much more than a simple accounting change. By stressing different priorities, the shift may ultimately alter the historic access mission of public higher education. Ohio created a new policy in 2012 that funds 100 percent of undergraduate higher education state appropriations to public universities on the basis of outcomes, the most aggressive policy of its kind in the nation. This study investigated the perceptions of 24 Ohio higher education leaders regarding this policy innovation and combined those responses with related performance metrics in order to synthesize a more comprehensive understanding of early impacts and implications, particularly as it pertains to outcomes, access, and education quality. The results of the investigation suggest that that retention has improved, access has decreased, and quality has been unaffected. University leaders were largely in favor of the policy and supported increased selectivity even in the face of declining enrollments. Although concerns remain regarding at-risk student support, the study suggests that a 100 percent performance-based policy may have positive benefits and achieve the intended objectives. It may also alter our conception of the broad access mission of higher education as access is traded for student success