The Effect of Large-scale Performance-Based Funding in Higher Education

Jason Ward () and Ben Ost ()
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Jason Ward: RAND Corporation Santa Monica, CA 90401
Ben Ost: Department of Economics University of Illinois at Chicago Chicago, IL 60607

Education Finance and Policy, 2021, vol. 16, issue 1, 92-124

Abstract: The use of performance-based funding that ties state higher education appropriations to performance metrics has increased dramatically in recent years, but most programs place at stake a small percent of overall funding. We analyze the effect of two notable exceptions—Ohio and Tennessee—where nearly all state funding is tied to performance measures. Using a difference-in-differences identification strategy along with a synthetic control approach, we find no evidence that these programs improve key academic outcomes.

Date: 2021
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