More than 30 states have outcomes-based funding models, which allocate money to colleges and universities at least partly based on various metrics for student success. But a new report by The Education Trust – examining outcomes-based funding formulas across the country from 2017 to 2020 – argues that these models perpetuate inequities in the ways they’re currently designed.
For one thing, these formulas often penalize underresourced institutions, creating a cyclical “self-fulfilling prophecy,” noted co-author Dr. Kalya C. Elliott, the Education Trust’s interim director for higher education policy.
“…Institutions that do the lion’s share of serving students of color and low-income students – and already have fewer resources – continue to receive fewer resources and smaller allocations through the outcomes-based funding model, giving them less and forcing them to do more with less,” Elliott said.
In particular, research shows minority serving institutions, like historically Black colleges and universities, “tended to lose more money” in states using these models, compared to their predominantly White counterparts, said Dr. Nicholas Hillman, associate professor of educational leadership and policy analysis and director of the Student Success Through Applied Research Lab at University of Wisconsin. He co-authored a 2018 study called “The Equity Implications of Paying for Performance in Higher Education.”
In Tennessee, for example, he found that Tennessee State University, the state’s only HBCU, gained virtually no new funding since a performance-based funding model was put in place, while other campuses made significant gains.
“That was, I guess, on some level, not at all surprising because a lot of these formulas at the time didn’t try to make any adjustments for students’ race or ethnicity or the profile of students served by colleges,” Hillman said.
The Education Trust report suggests that, overall, performance-based funding models still neglect to sufficiently measure and incentivize positive outcomes for low-income students and students of color.
