As the nation’s colleges and universities struggle with limited budgets and demands for increased degree completions, states are once again looking at performance-based funding as a way to increase efficiency and reward institutions for access and success. Earlier models of performance-based funding encountered both resistance and criticism and were often short-lived. But newer models are attempting to tackle these challenges and are gaining increased attention in today’s economic climate.
This brief examines concerns that have arisen about performance-based funding and summarizes the ways that states are addressing, or could address, the concerns. It is intended to inform discussions for states that are considering changes to postsecondary education funding models.