Performance Funding for Higher Education
reviewed by Monica Kerrigan & Stephanie Lezotte - June 06, 2017
Title: Performance Funding for Higher Education
Author(s): Kevin J. Dougherty, Sosanya M. Jones, Hana Lahr, Rebecca S. Natow, Lara Pheatt, & Vikash Reddy
Publisher: Johns Hopkins University Press, Baltimore
ISBN: 1421420821, Pages: 276, Year: 2016
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Performance funding has been the subject of much debate amongst policy makers, scholars, and practitioners for the past decade. Originally framed as a remedy to tensions between public accountability and institutional outcomes, its current adoption and critique is more realistic and nuanced but no less important in the context of continuing fiscal constraints for public higher education. Dougherty et al.s (2016) Performance Funding for Higher Education is a needed overview of the extant literature and a timely analysis of the authors own extensive empirical research on performance funding in three states that have served as national exemplars.
Dougherty et al. provide a thorough overview of the state of performance funding policy today, delineating the difference between performance funding 1.0 and 2.0 and carefully exploring the theories of action on which performance funding is based. By drawing upon multiple theoretical frameworks and making explicit these underlying theories of action, the authors highlight how the extant literature is insufficient. Subsequently, they craft an integrated conceptual framework including aspects of policy implementation theory, organizational learning, and principal-agent theory to analyze the processes, impacts, and outcomes of performance funding policies in 18 community colleges and universities in Tennessee, Ohio, and Indiana.
After a thorough introduction to the topic in Chapter One, readers will find a detailed discussion of methods, theory, and research questions in Chapter Two. Although of less interest to practitioners, academics and students in particular will benefit from the clear description of why particular literatures were explored, why they were necessary, and how they were integrated to inform the research and findings. The specific challenges of exploring the impacts of complex state policy are further detailed in Chapter Six, when the authors review relevant descriptive data and multivariate analysis, which reveal the mixed evidence on the effects of performance funding on student outcomes. Studies that controlled for key variables found no change, negative change, and positive change in graduate rates as a result of performance funding. Not surprisingly, researchers also found evidence of lagged effects. The authors use of primary and secondary data and interviews with 261 state officials, policymakers, college administrators, and faculty to answer six questions about the process and impacts of performance funding results in detailed discussions of the instruments, impacts, obstacles, and outcomes that are well documented and enlivened with quotations from participants.
Chapter Three provides an in-depth look at policy instruments used in higher education performance funding including financial incentives, communication of state goals and methods, and communication of institutional progress on performance indicators. The authors sought to understand how policy creators and implementers transmit and receive messages about performance funding; this discussion should prove useful to policymakers and practitioners grappling with how to implement performance funding and the organizational routines that support it. Although the existing empirical research raises questions about the impact of performance funding on outcomes, Dougherty concludes that performance funding does prompt institutions to change policies and procedures to meet performance indicators, yet communication mechanisms and their effectiveness are uncertain. Their research suggests that information on policies, performance indicators, and progress updates were not consistently received by college administrators and even less often by faculty. Although these findings are not unexpected, and are in fact consistent with the literature, the authors insights suggest ways of addressing the persistent concern about reaching administrators and faculty.
In Chapter Five, the authors focus on using theories of organizational learning and data-driven decision-making to help readers understand how institutions adapt to meet performance indicators. This attention to process is important given the prevalence of descriptive and outcomes focused research. Organizational learning, in particular, provides a way for the authors to instantiate the ideas of organizational capacity and the obstacles to capacity. Consistent with other studies, this research suggests that low-capacity institutions are disadvantaged when it comes to meeting performance indicators. This perpetuates a cycle of low-resource, low-capacity institutions that often serve high proportions of at-risk students. Remarkably, the authors find little evidence of state-led efforts, or even interest, to help build institutional capacity.
Chapter Seven examines how obstacles differ among high- and low-capacity institutions. Institutional administrators at high-capacity universities, particularly in Indiana, were frustrated with PBF because they felt their institutions had little room to improve. This suggests performance indicators may be poorly aligned with institutional purpose, a concern echoed by low-capacity institutions. Low-capacity institutions felt they were unable to successfully compete for funds due to performance metrics that were not well aligned with their missions. Yet as the authors note, prior research also suggests that capacity and student body composition are not related to changes in institutional performance.
The book contributes to our understanding of performance funding across different institutional types and the scant research on performance funding 2.0. However, because Tennessee, Ohio, and Indiana participated in both 1.0 and 2.0, it is often hard to differentiate between results from a combination of both programs, or of those just from 2.0. In some cases, results from 1.0 were specifically identified, but in other cases the data were not so clear. The muddling of results is consistent with the complications of performance funding research overall, and the authors fully acknowledge this limitation. Notably, the book also collates the remaining questions about performance funding and provides a useful roadmap to scholars still grappling with the direction of the research.
In summary, the book delivers a thorough examination of the complexity of performance funding research, and together with Dougherty and Natows (2015) earlier book on the origins of performance funding, represents a uniquely complete exploration of performance funding that will prove useful to higher education, policy, and finance courses.
Dougherty, K.J. & Natow, R.S. (2015). The politics of performance funding for higher education: Origins, discontinuities, and transformations. Baltimore, MD: Johns Hopkins University Press.