Smith, Mark F.

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Journal of Collective Bargaining in the Academy
Volume 0 National Center Proceedings 2015 Article 15
April 2015
Performance Based Funding in Higher Education
Mark F. Smith
National Education Association
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Recommended Citation
Smith, Mark F. (2015) "Performance Based Funding in Higher Education," Journal of Collective Bargaining in the Academy: Vol. 0 ,
Article 15.
Available at: http://thekeep.eiu.edu/jcba/vol0/iss10/15
Performance Based 
Funding in Higher 
Education 
Mark F. Smith 
Senior Policy Analyst - Higher Education 
National Education Association 
marksmith@nea.org  
NCSCBHEP Conference 
April 20, 2015 
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Smith: Performance Based Funding in Higher Education
Published by The Keep, 2015
The Birth of the Modern Era  
in Higher Education 
•         Our colleges need to see clearly what it is 
they are trying to accomplish. The efforts of 
individual institutions, local communities, the 
several States, the educational foundations and 
associations, and the Federal Government will all 
be more effective if they are directed toward the 
same general ends.  
        … educational leaders should try to agree 
on certain common objectives that can serve as 
a stimulus and guide to individual decision and 
action.  
• The Truman Commission Report, 1947 
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What’s Behind  These  
Proposals? 
• Desire of policymakers to justify policies at 
state and federal levels - Accountability. 
• Desire to improve education outcomes for 
students. 
• Desire to control policies and practices. 
• Desire to implement ideological commitment 
to business practices. 
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Smith: Performance Based Funding in Higher Education
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Recent History of PBF 
• In 1990s many states adopted Performance 
Based Funding which involved bonus funding 
for institutions and individuals where 
performance metrics were met.  Now known 
as PBF 1.0. 
• Tennessee was the first in higher education, 
and still has its PBF 1.0 system in place. 
• Many states dropped their systems largely for 
financial reasons. 
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Recent History of PBF 
• In the 2000s several states instituted PBF 2.0 
where the funding becomes part of the base 
funding for IHEs.   
• Most states that developed their PBF 2.0 
system dropped the PBF 1.0 system.  
However, Tennessee kept the old system in 
addition to implementing the new.  It now 
utilizes both systems. 
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Smith: Performance Based Funding in Higher Education
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Characteristics of 
Performance Based Funding 
• Ties institution funding to some measure(s) of 
performance outcomes or output. 
• Proponents of such systems originally argued 
that this would empower colleges to fund 
what really works.   
• Systems vary in terms of percentage of budget 
tied to performance funding, and the quantity 
and quality of measures used to determine 
“scores.” 
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Early Pitfalls of  
Performance Based Funding  
• [In the throes of economic downturn of early 
2000s.]  
• “State governments were too broke to 
financially reward public colleges for 
performing well, and were politically unwilling 
to cut institutions' budgets based on poor 
performance, the institute said.” 
Nelson A. Rockefeller Institute of Government 
Chronicle of Higher Education, January 17, 2003 
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Smith: Performance Based Funding in Higher Education
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Early Pitfalls of  
Performance Based Funding 
• Of 26 states that have adopted performance-based college-
financing systems since 1979, 12 have scrapped them….  
[These] systems had little buy-in from public colleges and 
were vulnerable to shifting political winds that caused the 
lawmakers or board members who championed them to lose 
power….   The authors suggest that advocates of 
performance-based financing need to find ways to insulate it 
from ups and downs in the state revenue cycle and to better 
secure the support of key politicians. 
Peter Schmidt, “States Fail in their  
Attempts to Pay Colleges to Perform”   
Chronicle of Higher Education, April 24, 2009 
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More Recent Research 
• A November 2014 study by Kevin Dougherty 
and associates at the Community College 
Research Center of Columbia’s Teachers 
College explored PBF programs in 3 states in 
depth and identified levels of success in 
student outcomes, obstacles to success, and 
unintended consequences of performance 
based funding. 
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Student Learning 
Outcomes 
• Despite widespread enthusiasm 
and implementation of these 
programs, there is no research 
that shows any improvement in 
student learning outcomes due 
to PBF 1.0 or 2.0. 
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Obstacles to Success 
• Study identified 6 main obstacles to success: 
– Disadvantageous student composition 
– Inappropriate performance measures 
– Insufficient institutional capacity 
– Institutional resistance 
– Insufficient state funding to allow program 
innovation 
– Insufficient knowledge of and responsibility for 
responding to PBF on the part of college 
administrators and faculty. 
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Smith: Performance Based Funding in Higher Education
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Unintended Consequenes 
• More restrictive admission standards 
• Weakening of Academic standards 
• Compliance Costs 
• Lessening of Institutional Morale 
• Reduced emphasis on missions not rewarded 
by performance based funding  
• Decrease in staff morale 
• Weakening of faculty voice in academic 
governance. 12
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Conclusions 
• Study Found that states clearly deployed 3 
policy instruments to deal with obstacles and 
unintended consequences: 
– Financial incentives 
– Dissemination of information on the goals and intended 
methods 
– Communication to institutions about their performance on 
the state metrics. 
• They did not build up capacity of institutions 
to respond effectively to performance 
funding. 13
Smith: Performance Based Funding in Higher Education
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NEA on the Pitfalls of 
Performance Based Funding 
• Insufficient Institutional Capacity 
–Lack of State Funding 
–Lack of Adequate Staffing Levels 
• Inability to agree on metrics 
• Lack of evidence that this improves 
student learning, retention, or 
completion. 
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NEA’s Major Concern 
• States funding this approach precludes 
funding more important student services  
–  Enough faculty to teach courses 
– Support for faculty to advise and mentor students 
– not simply providing contingents only paid for 
work in the classroom. 
– Counselors to advise and guide students on their 
academic journey. 
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Smith: Performance Based Funding in Higher Education
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NEA Policy 
• The Association … believes that performance pay 
schedules, such as merit pay or any other system of 
compensation based on an evaluation of an 
education employee’s performance, are 
inappropriate.  
From the NEA Resolution on Salaries and Other Compensation 
• In addition, NEA addresses general questions of 
accountability and assessment in policy resolutions 
and our Legislative Program.  The Resolution on 
Student Assessment Programs in Higher Education 
was adopted in 1995, and updated in 2001. 
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Individual Learning, Growth,  
and Development 
 
• The National Education Association believes 
that learners grow and develop at different 
rates and in different ways. Individual learning 
progresses in a highly complex manner that 
includes periods of rapid growth and periods 
of intellectual consolidation. 
• From NEA Resolution on Individual  
Learning, Growth, and Development  
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Assessment of  
Student Learning 
 
• The National Education Association 
supports ongoing comprehensive 
assessment of student growth. A 
student’s level of performance is best 
assessed with authentic measures 
directly linked to the lessons taught and 
materials used by teachers.  
• From NEA Resolution on Assessment of Student Learning  
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Student Assessment Programs in 
Higher Education 
• Student assessment programs in higher 
education, properly designed and 
administered, can be crucial tools for 
diagnosing student and institutional 
needs, improving instruction and 
counseling services, and designing long-
range plans. 
• From NEA Resolution on Student Assessment  
Programs in Higher Education 
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Smith: Performance Based Funding in Higher Education
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Student Assessment Programs in 
Higher Education should—  
a. Be designed institutionally rather than by the 
state  
b. Be planned, designed, implemented, and 
evaluated by faculty  
c. Be implemented in accordance with collective 
bargaining contracts where such contracts 
exist  
• From NEA Resolution on Student Assessment  
Programs in Higher Education 
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Student Assessment Programs in 
Higher Education should—  
d. Be sufficiently flexible to accommodate the 
cultural, economic, and linguistic diversity 
among students  
e. Provide tests appropriate for students with 
identified learning disabilities  
f. Provide faculty with information to improve 
individual student learning styles and 
aptitude. 
• From NEA Resolution on Student Assessment  
Programs in Higher Education 
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Smith: Performance Based Funding in Higher Education
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NEA supports student assessment 
programs in higher education only if— 
a. They are accompanied by adequate funding for 
remedial programs and advisement  
b. Remedial programs are designed and provided to 
meet the deficiencies identified through 
assessment 
c. Advisement is designed and provided to link the 
remediation of individual students to the 
completion of their degrees, certificates, or 
other appropriate courses of study. 
• From NEA Resolution on Student Assessment  
Programs in Higher Education 
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NEA Strongly Opposes –  
a. The use of student assessment programs to 
deny access to, or exclude students from, 
educational opportunities.  
b. The use of any single test to deny access to 
regular credit classes.  
c. The use of student assessment programs for 
the purpose of evaluating faculty, academic 
programs, or institutions. 
• From NEA Resolution on Student Assessment  
Programs in Higher Education 
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Smith: Performance Based Funding in Higher Education
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Post-Secondary Education Issues 
from NEA Legislative Program  
NEA supports  
• federal programs, including provision of resources 
for instruction, research, and library materials, that 
enhance effectiveness of and advance excellence in 
two- and four-year postsecondary education 
institutions;  
• federal programs to enhance educational programs 
and improve student performance in all curricular 
areas;  
• promotion of research and development of 
knowledge, including access by students to advanced 
technological resources and teaching;  
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Journal of Collective Bargaining in the Academy, Vol. 0, Iss. 10 [2015], Art. 15
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Post-Secondary Education Issues 
from NEA Legislative Program 
NEA supports  
• the promotion of articulation agreements between 
secondary and post-secondary institutions (as well as 
between different post-secondary institutions) when 
the content of those agreements has been 
determined by educators from both sectors; 
NEA opposes  
• use of dropout rates or completion rates in 
accountability measures used to qualify institutions 
for public financial support.  
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Smith: Performance Based Funding in Higher Education
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Additional Risks of 
Inappropriate Systems 
• Distorts Education, dumbs down curriculum 
and substitutes bureaucratic-administrative 
decision-making for educational process. 
• Violates Academic Freedom by telling faculty 
what and how to teach. 
• Destroys the purpose of higher education.  
You cannot build a knowledge base for the 
future if you only fund current 
preoccupations. 
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Journal of Collective Bargaining in the Academy, Vol. 0, Iss. 10 [2015], Art. 15
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What do we want to see in  
Accountability Systems?  
• Institution based programs, planned, designed, 
implemented, and evaluated by faculty, in 
accordance with collective bargaining contracts 
where such contracts exist  
• Be sufficiently flexible to accommodate the 
cultural, economic, and linguistic diversity among 
students, and provide faculty with information to 
improve individual student learning styles and 
aptitude. 
• Adequately funded, and staffed. 
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Smith: Performance Based Funding in Higher Education
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Where do we go  
from here? 
• As with all aspects of building support 
for higher education we need to engage 
the public in these discussions.  Our 
objections to ill-advised accountability 
proposals are not to evade 
responsibility.  They are to prevent 
inappropriate measures distorting the 
process of education. 
• Engage in the public conversation 
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Journal of Collective Bargaining in the Academy, Vol. 0, Iss. 10 [2015], Art. 15
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Bargaining the Issue 
– Implementing assessment, accountability, or 
learning outcomes procedures takes time, affects 
workload. 
– When states and/or accrediting agencies impose 
these things, faculty unions have to bargain the 
implementation. 
– How are procedures structured and used to 
assess student learning? 
– How are procedures structured and used to 
evaluate faculty and staff? 
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Smith: Performance Based Funding in Higher Education
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An Early Critic of Business Style 
Accountability in Higher Education 
• The underlying business-like presumption 
accordingly appears to be that learning is a 
merchantable commodity, to be produced on a 
piece-rate plan, rated, bought, and sold by standard 
units, measured, counted and reduced to staple 
equivalence by impersonal, mechanical tests. In all 
its bearings the work is hereby reduced to a 
mechanistic, statistical consistency, with numerical 
standards and units; which conduces to perfunctory 
and mediocre work throughout, and acts to deter 
both students and teachers from a free pursuit of 
knowledge, as contrasted with pursuit of academic 
credits. 
Thorstein Veblen 
The Higher Learning in America, 1918 
 
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Highly Selective References 
• Kevin Dougherty and Vikash Reddy, Performance 
Funding for Higher Education: What are the 
Mechanisms? What are the Impacts? ASHE Higher 
Education Report, 2013. 
• Janice Nahra Friedel, Zoë Mercedes Thornton, Mark 
M. D’Amico, Stephen G. Katsinas.  Performance 
Based Funding: The National Landscape.  The 
Education Policy Center  Issue Brief, University of 
Alabama.  September 2013. 
http://uaedpolicy.ua.edu/uploads/2/1/3/2/2132628
2/pbf_9-17_web.pdf  
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Smith: Performance Based Funding in Higher Education
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Highly Selective 
Resources 
• Kevin J. Dougherty, Sosanya M. Jones, Hana Lahr, 
Rebecca S. Natow, Lara Pheatt, and Vikash Reddy, 
Implementing Performance Funding in Three 
Leading States: Instruments, Outcomes, Obstacles, 
and Unintended Impacts.  CCRC Working Paper No. 
74.  Community College Research Center, 
Teachers’ College, Columbia University.  November 
2014.  
http://ccrc.tc.columbia.edu/media/k2/attachments/i
mplementing-performance-funding-three-leading-
states.pdf  
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Performance Based Funding in Higher Education

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Performance Based Funding in Higher Education

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