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State Higher Education Performance Funding for Community Colleges: Diverse Effects and Policy Implications

by David A. Tandberg, Nicholas Hillman & Mohamed Barakat - 2014

Background/Context: Community colleges are central to the United States’ college completion goals. A popular strategy pushed by a number of influential policy organizations and foundations is a policy of tying state funding to community college completions, otherwise known simply as performance funding. This is happening despite little to no evidence that such a strategy actually increases institutional performance.

Purpose: This study asks, To what extent does the introduction of performance funding programs impact two-year degree completion among participating states?

Population/Participants: We created a unique panel data set for the period 1990 through 2010, using states as our primary unit of analysis. The data set contains 1,050 total observations, drawing from a range of postsecondary data sources.

Research Design: We used a quasi-experimental regression technique called difference-in-differences regression technique. We also included in our model multiple control variables and year and state fixed effects.

Findings/Results: We find that the program had no effect on average and mixed results for the individual states where performance funding was associated with lower completions in six states, greater completions in four states, and inconclusive patterns in nine states.

Conclusions: We conclude that performance funding is no “silver bullet” for improving community college completions; rather, in some cases, it may interfere with national completion goals. We recommend that state policy makers seek out evidence-based alternatives for improving community college completions.

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Cite This Article as: Teachers College Record Volume 116 Number 12, 2014, p. 1-31
https://www.tcrecord.org ID Number: 17691, Date Accessed: 9/24/2021 11:13:00 PM

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About the Author
  • David Tandberg
    Florida State University
    E-mail Author
    DAVID A. TANDBERG is an assistant professor of higher education and associate director of the Center for Postsecondary Success at Florida State University. His research interests focus on state policy and politics for higher education. His most recent publications include “State Higher Education Performance Funding: Data, Outcomes and Policy Implications” in the Journal of Education Finance and “The Conditioning Role of State Higher Education Governance Structures” in The Journal of Higher Education.
  • Nicholas Hillman
    University of Wisconsin-Madison
    E-mail Author
    NICHOLAS HILLMAN is an assistant professor of educational leadership and policy analysis at the University of Wisconsin-Madison. He studies the intersections of higher education finance and policy as they relate to educational access and equity. His most recent publications include “College on Credit: a Multi-level Analysis of Student Loan Default” in Review of Higher Education and “Market-based Education: Does Colorado’s Voucher Model Improve Higher Education Access and Efficiency?” in Research in Higher Education.
  • Mohamed Barakat
    Fordham University
    E-mail Author
    MOHAMED BARAKAT is a resident director at Fordham University and a graduate of the Florida State University higher education program. He is interested in evaluating the impact of institutional and state policies on student success.
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