An Exploration of Performance-Based Funding at Four-Year Public Colleges in the North Central Association of Colleges and Schools

Performance-based funding has been used to help alleviate state and public calls for higher education accountability and more states have adopted this type of funding model (Tandberg & Hillman, 2014; Dougherty, Natow, & Vega, 2012). The purpose of this study was to explore performance-based funding and examine the relationship between types of funding and performance indicators in the North Central Association of Colleges and Schools (NCA). The state funding trends were examined for all of the states in the NCA. The correlations for state funding and four performance outcomes for all four-year higher education institutions were compared for three states with performance-based funding and three states with incremental funding. The study also created regression equations within each type of funding to predict full-time retention rate and four-year graduation rate. This study found statistically significant correlations between state appropriations and all four performance outcomes examined regardless of funding model utilized