Performance Funding Is Only Increasing the Problems That It Is Ostensibly Supposed to Solve

The Community College Research Center at the Columbia University Teachers College has released a report on “Unintended Impacts of Performance Funding on Community Colleges and Universities in Three States.” The full text of this CCRC Working Paper No. 78 is available at The report’s authors are Hana Lahr, Lara Pheatt, Kevin J. Dougherty, Sosanya Jones, Rebecca S. Natow, and Vikash Reddy.

The authors interviewed administrators and faculty at three community colleges and three universities in each of three states: Indiana, Ohio, and Tennessee. In all, they interviewed 222 administrators and faculty, asking “how tying a significant portion of higher education funding to student performance impacts institutions.” Ohio and Tennessee tie 80% of the state funding to performance measures, while Indiana ties just 6% of state funding to such measures.

The authors interviewed 79 administrators and faculty at the six Ohio institutions, and they discovered that all of those institutions have significantly shifted their strategies in response to the increased emphasis on degree completion in the calculation of the state subsidy. Specifically, the institutions are focusing on recruiting potential students who are more likely to complete degrees. They are shifting the allocation of financial aid from need-based to merit-based scholarships. They are offering more services to students to increase the likelihood that they will complete degrees. And they are engaging faculty on the necessity of facilitating student success.

The report only reinforces the concerns that many of us have had about performance-based funding.

The performance measures in Ohio do take into account the number of financially disadvantaged and academically under-prepared students that a college or a university serves. So, those universities that, like most of the community colleges, have missions that emphasize open admission are not necessarily being heavily penalized because of the performance measures. At least not immediately. But the phasing out of state funding to support developmental courses at Ohio universities, in combination with the emphasis on degree completion, means that all universities are, in effect, being strongly encouraged to become more selective. Even the open-admission universities are encouraging students who need any significant level of developmental coursework to enroll initially at the community colleges.

Ultimately, however, these strategies don’t make any real sense, at least in Ohio, where the much-publicized policy aim has been to attract high-end employers by increasing the number of state residents with degrees along with the value of the degrees being awarded. The college-age population in most of the state is gradually shrinking, and the percentage of each institution’s revenue provided by the state subsidy has been shrinking more rapidly than the pool of students. So, most of the universities cannot really afford to turn away any students. Moreover, overall, the community colleges already have significantly lower degree-completion rates than the universities. So, although the universities may increase their degree-completion rates by turning away marginally qualified students, the enrollment of larger numbers of those students in the community colleges is not likely to increase degree-completion rates at those colleges. The problems with retention and degree-completion are, in effect, simply being shifted increasingly to—or concentrated in–the community colleges.

Unlike other states, Ohio does not allow community colleges to offer baccalaureate degrees, though most of the community colleges already have agreements with private universities to offer selected baccalaureate degrees to their students, whether on-site, just off-site, or online. So it is not far-fetched that Ohio might eventually follow the national trend and begin to allow community colleges to offer baccalaureate degrees. But, most community colleges in the state have very small full-time faculties who already teach five to seven courses each semester, along with directing programs and supervising the adjunct faculty who constitute as much as 70% to 85% of the total faculty. So it is difficult to see how the community colleges could so expand their offerings without a tremendous infusion of additional funding from the state, and even then, their retention and degree-completion rates would likely become much. much lower since marginally prepared students would be enrolled in even larger classes taught by even fewer full-time faculty than what are available at the universities.

Of course, the other alternative is that the value of the degrees can be sacrificed to increase degree completion.

And that is the problem with what is already occurring at the colleges and universities in the state, where faculty are directly or indirectly being encouraged to inflate grades in order to increase retention and degree-completion rates. At some of the community colleges, those rates are already being calculated on a section-by-section basis, ostensibly just to make the faculty “more aware” of the statistics on which the colleges’ funding is being based.

In effect, Ohio is like most of those states that have been dramatically reducing support for higher education—for public education at all levels—even as they have been trying to maximize the economic value of their colleges and universities. There is no real respect for the value of higher education. Instead, there is only an interest in exploiting higher education as if it were a liability that can be managed at an ever-reduced cost. That this is a very ideologically skewed “business” model is evidenced in the scant attention being paid to the administrative bloat that now accounts for a larger share—in many cases, a much larger share—of our college and university budgets than instructional costs.

Worse, given the socio-economic factors that are increasingly determining where students enroll, what is already being created is an increasingly tiered system of higher education in which economic mobility is reduced along with the access to degrees with real value. Students at the bottom end will be paying proportionately higher percentages of their future earnings for degrees that are worth considerably less to employers.


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