Shifting from Enrollment- to Performance-Based Funding in Higher Education: What Can We Learn from Washington's Experience?

Abstract

Performance-based funding (PBF) in higher education has grown in recent years as a means of institutional accountability and incentive for improving student success. Although most states have successfully implemented their respective systems, research on early funding models suggests a difficult fiscal environment can introduce tension between theory and practice of the concept. This policy brief uses the case of Washington State's redesign of the Student Achievement Initiative to describe new implications around this tension. The revision focused on using a base reallocation as the funding source in the context of diminished state resources and the importance of college buy-in. Regression analyses tested the alignment between the principles and metrics for awarding funds, which resulted in a funding model that awarded the maximum dollars related to performance versus college characteristics. Policy makers considering new or revised PBF systems can benefit from critical lessons learned from Washington State's comprehensive process and final product.