The Politics of Performance Funding for Higher Education: Origins, Discontinuations, and Transformations

THE POLITICS OF PERFORMANCE FUNDING FOR HIGHER EDUCATION: ORIGINS, DISCONTINUATIONS, AND TRANSFORMATIONS DOUGHERTY, K.J., AND R. S. NATOW. 2015. BALTIMORE, MD: JOHNS HOPKINS UNIVERSITY PRESS. 260 PP. Reviewed by Matthew Fifolt, Ph.D.In The Politics of Performance Funding for Higher Education, Dougherty and Natow address the emergent trend of performance funding of public higher education institutions in the United States. Hie authors define the practice as "tying state funding directly to performance on specific indicators of institutional outcomes," (p. 1) such as rates of student persistence, course completion, degree completion, and job placement. Hie authors note that, as of September 2014,38 states have established performance funding programs; 30 states are actively using performance funding mechanisms as part of their financial allocation process (p.3).Using an exploratory case study design, Dougherty and Natow investigate eight states that either currently use performance funding or have used it in the past and discontinued it. These states include Florida, Illinois, Indiana, Missouri, Ohio, South Carolina, Tennessee, and Washington. The authors also explore programs within this cohort that have experienced long-term operational changes. Dougherty and Natow base their investigation on the following five questions:* What are the sociopolitical origins of performance funding for higher education?* Why have so many states that have established performance funding-if only for a while-later discontinued it?* How has performance funding evolved in states where it has been retained over a long period of time ?* Why have states replaced longstanding performance funding programs (pf i.o) with programs (pf 2.0) that are quite different in design and funding levels?* What is the likely future of performance funding given the political forces resulting in frequent adoption but also frequent discontinuation? (pp.4-5)In addition to conducting an extensive review of relevant reports, articles, and studies, the authors interviewed more than 200 political actors, including state- and locallevel higher education officials, state legislative representatives, governors, and more to gather firsthand accounts of performance funding in these targeted states (p.7).Overview of Performance FundingAccording to the authors, state allocations for higher education typically are calculated using a funding formula based on workload factors (eg, enrollment or size of physical plant) or a base plus/minus system based on the previous years funding and such factors as inflation, salary increases, program improvements, and productivity gains (p. 15). In addition to these input and process measures, many states have added student outcome indicators (i.e., performance measures) to inform decisions regarding state budgets.The authors describe two "waves" ofperformance funding adoption in higher education. In the first wave, performance funding (pf i.o) was envisioned as a bonus (on top of regular state appropriations for public higher education expenditures) based on progress toward meeting student outcome indicators; however, since 2006, performance funding in a number of states (pf 2.0) increasingly has become an integral part of base funding calculations. In fact, Dougherty and Natow note that 80 to 90 percent of state funding for public higher education in Tennessee and Ohio is based solely on performance funding measures (p. 16). In addition, states increasingly have shifted performance indicators from ultimate achievement measures {eg, graduation and job placement rates) to intermediate achievement outcomes {eg, completion of developmental education and mathematics courses).Stages of Performance FundingDougherty and Natow identify four stages ofperformance funding: program adoption, persistence, discontinuation, and re-adoption. The authors use this continuum to describe the various trajectories ofperformance funding and to demonstrate the ways in which the eight selected states either exhibit a high degree of institutionalization {eg, IN, OH, tn) or follow patterns of discontinuation and readoption {eg, sc, mo, il, fl, wa). …