Performance-Based Funding: History, Origins, Outcomes, and Obstacles

Abstract

This paper aims at shedding more light on performance-based funding. It offers a historical background and discusses a couple of important theories underpinning the adoption of this policy. It finds that there are diverse motives and reasons causing the implementation of performance-based funding, proportionally supported and enacted by a particular partisan group. Performance based-funding appears to have weak to modest statistical significance in regards to institutional outcomes, such as degree completion, graduation rate, and attainment of certain credit hours. This is attributed to many hindrances and obstacles encountered by such a policy. A number of implications for this policy to be effective and efficient are proposed.