Evaluating the Impacts of “New” Performance Funding in Higher Education

Abstract

In 2007, Washington adopted the Student Achievement Initiative, a statewide performance accountability system designed to improve retention rates and degree productivity among community colleges. Using difference-in-differences analysis, we found that the policy change has had little immediate effect on retention rates or associate’s degree productivity. However, community colleges produced more short-term certificates after the policy reform. These results are robust across many alternative comparison groups. Considering that certificates yield less value in the labor market than associate’s degrees but are easier for colleges to produce, we discuss the unintended consequences of rewarding colleges based on the number of credentials they produce.