Impact of Performance Funding on Retention and Graduation Rates

Abstract

As the architect of the oldest and most stable performance funding program, Tennessee provides a unique opportunity to analyze the impact of changes in performance funding policies on changes in institutional retention and six-year graduation rates over time. Utilizing spline linear mixed models, this study examines the impact of changes in Tennessee’s performance funding policies on retention and six-year graduation rates at public four-year institutions from 1995-2009. The results show tying retention and graduation rates to performance funding was unrelated to changes in the performance measures over the fifteen year period examined. Additionally, the doubling of the monetary incentive associated with the retention and six-year graduation rate measures in 2005 was not associated with increases in retention rates. These results suggest that at their current funding levels, states’ adoption of performance funding programs, such as the one in Tennessee, may be insufficient to incentivize changes in institutional behavior as desired by state leaders.

Accountability in Higher Education: Exploring Impacts on State Budgets and Institutional Spending Patterns

“…In recent years, there have been several initiatives, at both the state and federal levels, to directly link performance to funding (Aldeman and Carey 2009a;Burke 2002;Zumeta 2001). While there have been a few attempts to uncover the impacts associated with these higher education performance funding policies (Volkwein and Tandberg 2008), our knowledge about them has thus far largely been based on anecdotal evidence and limited case studies (Banta, Rudolph, Dyke, and Fisher 1996;Doyle and Noland 2006;Sanford and Hunter 2010). As such, there remain serious gaps in our empirical knowledge about the extent to which these policies are having substantive impacts on budgetary processes at the state level and on service delivery at the organizational level.…”

The creation of performance funding in Michigan: Partnership, promotion and points

“…Previous research has found that higher education leaders hold significant reservations regarding the appropriateness of various metrics used in performance funding policies (Dougherty & Reddy, 2013;O'Neal, 2007;Sanford & Hunter, 2011). Almost all participants in this study (both university administrators and state leaders) echoed those findings and discussed concerns with how the data should be measured and analyzed in the policy creation process.…”

“…First, to date, no study has examined Michigan's performance funding policy, whereas numerous studies have examined other common states such as Tennessee (Dougherty et al, 2014b;Dougherty & Natow, 2009;Hall, 2000;Lahr et al, 214;Sanford & Hunter, 2011), Ohio (Dougherty et al, 2014;Lahr et al, 214;O'Neal, 2007;Schaller, 2004), Florida (Bell, 2005;Dougherty & Natow, 2009) and Indiana (Dougherty et al, 2014;Lahr et al, 214;Umbricht, Fernandez, & Ortagus, 2015). Second, at the time of research, it was one of the most recent states to implement a performance funding policy.…”

Performance-Based Funding: Equity Analysis of Funding Distribution among State Universities

“…For most states the majority of funding comes from state allocations other than performance-based formulas. However, institutions have to divert resources from current needs toward compliance with state mandates for performance-based standards (Sanford & Hunter, 2011) with little to show in return (Sanford & Hunter, 2011;Shin, 2010;Volkwein & Tandberg, 2008). "[R]ecent studies have concluded that performance-funding-oriented reforms have had negligible impacts on organizational performance and student outcomes" (Rabovsky, 2014: p. 763).…”