In thinking about traditional funding models that give public tax dollars to colleges based solely on enrollment, Choi Halladay is reminded of a famous quote from the legendary college basketball coach John Wooden: “Never mistake activity for achievement.”
Halladay, who is the deputy executive director of business operations for the Washington State Board for Community and Technical Colleges, believes funding colleges based partly on their performance is a better approach because it incentivizes colleges to create opportunities for students and rewards their success.
This excerpt comes from the current issue of the Community College Journal, pubished bimonthly by the American Association of Community Colleges.
Washington has awarded a small percentage of funding to its public colleges based on performance measures for more than a decade, and Halladay credits this model with helping to increase the percentage of students in the state who complete a two-year degree.
“Our colleges were certainly focused on student success before,” he notes. “This isn’t a radical departure for them.”
But performance-based funding serves to align the funding that colleges receive with this operational priority, he says.
Growing in popularity
Performance-based funding has become quite popular over the last few decades, and some form of this model is now in place in a majority of states.
Earlier this year, the Texas legislature approved a bill that would dramatically change how the state funds its 50 community colleges, awarding funds based primarily on how many of their students graduate with a degree or certificate or transfer to a four-year university. Oregon also recently adopted a performance-based funding mechanism, which begins during the 2024-25 academic year.
Performance-based funding is seen by many people as a way to improve student outcomes. However, there is still some debate over how effective this model has been in achieving that goal.
Comparing models
States’ approaches to performance-based funding vary widely. Some states award only a small percentage of funding based on key performance indicators. (In Washington, just 5% of state appropriations for higher education are distributed based on performance.) Others, like Ohio and Tennessee, award 100% of funding for public colleges and universities based on performance.
It’s not only the percentage of state funding given for performance that varies. How states define their performance indicators, and which measures are weighted more heavily, also differs from one state to another.
While performance-based funding models vary, most states give additional weight to the achievement of historically underrepresented students as an incentive for colleges to focus on the success of those students in particular.
A look at Ohio
Ohio has distributed at least some college funding based on student success indicators since 2009, says Laura Rittner, executive director of the Ohio Association of Community Colleges’ Success Center. During the 2014-15 school year, the state transitioned to a 100% performance-based model.
Half of the funding for the state’s colleges is distributed based on the number of courses that students have completed, with STEM-based courses, hands-on career and technical education courses, and other classes that require advanced equipment earning more funding than courses in the humanities.
The remaining funds are distributed according to student success metrics that reward community colleges for the number of students who transfer to a four-year institution, earn a degree or certificate or reach certain milestones in their education — such as completing college-level English or math and reaching 12, 24 or 36 credit hours.
Minority, low-income, adult and academically underprepared students who complete college courses and milestones — in other words, those students who reflect the mission of community colleges in meeting the needs of traditionally underserved populations — are given more weight in the state’s formula.
“It’s very complicated when you look under the hood,” Rittner says.
