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Are National Ranking Systems Influencing Performance-Based Funding Models in Higher Education?

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Emily Devereux
February 2, 2020

Are national ranking systems influencing performance-based funding models in higher education, and if so, is it really a bad thing? Is this the struggling transitional phase of higher education realigning to serve its mission to meet the public’s interests? Is the public being influenced by other factors such as the national ranking mechanisms so highly regarded in the media? Are our elected officials responding to these external factors embraced by the media that are influencing the public’s perception of higher education, and realigning government support to public institutions as a result?

Performance funding is not a new concept to governmental agencies and public-private partnerships, but it has been garnering a lot of attention in higher education funding due to state budget cuts that have not returned to previous funding levels since the Great Recession. Performance funding for public institutions of higher education is being implemented in states across the nation, shifting from enrollment-based models to outcome-based models. The goal is to better align states’ goals with institutions to increase post-secondary educational attainment. Five years ago, 35 states had already implemented the outcome-based model, and the numbers have continued to rise within the past five years. Over the past three years, it is estimated that 54% of educational revenue across all public institutions of higher education derived from state funding and 46% was generated from net tuition paid by students. Post-recession, state funding has decreased, resulting in a convergence of state and federal funding levels for higher education. Such a decrease in available funding has resulted in models incorporating a redistribution of funding between institutions within the same state. This casts competitive environments between public institutions and raises questions of diversity of missions and efficacy versus equity in resources.

Our inboxes are frequented with articles from credible higher education news sources of reports and studies presenting both positive and negative consequences of the funding policy. This peaks the interest of constituents, including higher education administrators, elected officials, state agency directors of higher education as well as the faculty, staff, students and parents that follow outcomes and ranking mechanisms that report the performance of institutions of higher education. Institutions compete with each other to recruit students due to the countercyclical trend of enrollment numbers versus economy. They also struggle with having to redistribute the already lean resources within institutions to meet the performance goals identified by state lawmakers. We are witnessing institutions merging, folding and fighting to stay open.

External factors such as ranking systems notably identify a diversity of missions that higher education institutions deliver. This diversity should be recognized and not penalized so that it can meet the diverse needs of the public and the workforce, and ensure inclusivity across educational needs and interests. In order for outcome-based funding models to work in the best interests of the whole of the public, and not just for those who have a heavier voice, the diversity of institutional missions should be embraced. Incentive plans within the outcomes-based funding model should reward such a diversity to be all inclusive to our public’s needs, providing motivation to implement promising strategies for better student outcomes whether a small liberal arts college, a professional school or a research intensive institution.

Institutional missions all agree that the more engaged students are in the university’s intellectual life, the more the students recognize and engage in greater measures of success. Missions further define what the unique intellectual life or focus is of that institution and its students. One success of the outcomes-based funding model is that it encourages degree completion. Whatever the mission, students need to have the resources and ability to succeed at the institution for both individual and economic needs. This model speaks to student priority, which can be lost in the shuffle at times during the struggles that the field of higher education faces as it works to serve multiple constituencies. National ranking systems classify institutions by mission and performance compared to peers, and constituents pay more attention to these rankings when making critical choices of where and how to invest in their higher education needs. It is catching the attention of both higher education administrators and elected officials.

Advocacy for how a state’s funding policy is modeled should encourage government officials to make the distribution formula more sensitive to each state and its diverse universities’ missions and student bodies. Advocacy should also encourage solutions on how to improve an institution that is stuck on the wrong side of the funding formula model. Similar to institutional response to national ranking systems, it should mitigate institutional gaming activities or temptations such as excluding challenging students or weakening academic standards to try and increase degree completion rates. Policy needs to be monitored; it should reward high quality teaching and student success, whether it be a research, trade, or teaching institution. It should avoid at all costs the skillful game-playing we witness in rankings systems and other competitive mechanisms that are transitioning the field of higher education.

Author: Emily Devereux is executive director of research and technology transfer at Arkansas State University and is a student in the DPA program at West Chester University in Pennsylvania. She is a certified research administrator, serves as chair of NCURA Region III, and serves on the Arkansas State University’s MPA advisory board. She can be reached at [email protected] and followed on Twitter @EmilyDevo.

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