State-level performance-based funding (PBF) policies are an increasingly common way to allocate funds to public colleges and universities. While a growing body of research has examined whether these policies are effective in improving student outcomes, little is known about how colleges respond to PBF policies. In this paper, we examine whether two-year and four-year colleges subject to PBF change their patterns and allocations of revenues, expenditures, and financial aid. We find limited evidence that colleges facing PBF receive different levels of revenue or reallocate some funds to different expenditure categories. Notably, colleges subject to PBF receive less Pell Grant revenue than colleges not subject to PBF, suggesting potential strategic behaviors targeting students from higher-income families.

This case traces the involvement of a principal of an Early College High School (ECHS) and her understanding of performance of Latina students attending the school. Latina students are the lowest academic performers in the ECHS, despite the school obtaining high accolades in terms of accountability. To best understand the phenomena of underperformance of Latina students, the principal hires a consultant. The consultant discovers aspects of the ECHS and aspects of schooling as experienced by the Latina students that contribute to underperformance. The case raises important issues for aspiring leaders, making it an excellent example of the complexities embedded in student achievement.

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