The Effect of Large-scale Performance-Based Funding in Higher Education

Published in: Education Finance and Policy, Volume 16 , Issue 1, pages 92–124 (Winter 2021). doi: 10.1162/edfp_a_00300

Posted on on January 26, 2021

by Jason M. Ward, Ben Ost

The use of performance-based funding that ties state higher education appropriations to performance metrics has increased dramatically in recent years, but most programs place at stake a small percent of overall funding. We analyze the effect of two notable exceptions—Ohio and Tennessee—where nearly all state funding is tied to performance measures. Using a difference-in-differences identification strategy along with a synthetic control approach, we find no evidence that these programs improve key academic outcomes.

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