Efficiency for Whom? Varying Impact of Performance-Based Funding on Community Colleges in Louisiana

Abstract

Objective: This study examines whether Louisiana’s performance-based funding (PBF) implementation in 2011 impacts various academic outcomes at community colleges, and whether the impact varies for institutions with higher proportions of underrepresented students. Method: Using institutional-level panel data between 2006 and 2016, I employ difference-in-differences to estimate the average treatment effect of the Granting Resources and Autonomies for Diplomas (GRAD) Act on credential production, retention, and graduation rates of Louisiana’s community colleges. I also examine how this effect differs between minority-serving-institutions (MSI) and non-MSIs, as well as between low-income-student-serving institutions (LSI) and non-LSI by calculating difference-in-difference-in-differences (DDD) estimates. Results: The findings indicate that PBF implementation is positively related to community colleges’ certificate production and graduation rates in Louisiana, but it has no impact on associate degree production or retention rates. Due to PBF implementation, LSIs grant fewer associate degrees than comparable non-LSI institutions. No disparate impact is found between MSIs and comparable non-MSIs. Contributions: Given the prevalence of PBF in the nation, this study examines the overall impact of PBF implementation on academic outcomes of community colleges in Louisiana, and it further disaggregates the community colleges by institutional characteristics, providing evidence for researchers and policymakers to support broad access and student success at MSIs and LSIs under PBF.