When states make higher education decisions despite the evidence
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Skyrocketing tuition and cratering state funding in public colleges and universities is not new news in the world of higher education finance. Historically black colleges and universities (HBCUs) and other minority serving institutions (MSIs) have traditionally been underfunded and under-resourced. The new finance normal is more of the same. This is why the rapid spread of statewide interest in performance-based funding (PBF) has raised the hackles of public colleges and universities across the country, especially HBCUs and other MSIs.

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PBF is the walking dead of public higher education finance policies. It first arose in Tennessee in 1979. Not many states caught the virus until the 1990s. Given high costs (financially and politically) and low returns (scant change in outcomes), most states that experimented with PBF abandoned it by 2000. Called to action by a nationwide narrative emphasizing college completion and degree attainment, many states once again began trying on some form of PBF beginning around 2010. To date, 32 states have implemented some version of PBF.

State interest in PBF (also called outcomes-based funding) corresponds with the post-2008 recession disinvestment in public higher education. Most experts argue that state appropriations will not return to pre-recession levels. With states tightening their budget belts, a focus on efficiency has encouraged policymakers to pursue measures that link a percentage of funding to demonstrable output.

The amount of funding varies between states, with some offering a bonus on top of an appropriation and others tying a portion of base funding to outcome achievements. Outcomes include college degree or certificate completion and intermediary measures (retention and credit accumulation).

Institutions that provide access to some students who may not have performed as well in high school (such as many HBCUs and other MSIs) are particularly vulnerable to a PBF finance policy.

State policymakers attempt to incentivize these institutions to increase their completion rates by making a portion of state funding contingent on an increase in these rates. Yet these institutions are expected to continue enrolling some students who are less likely to complete their education. As the research increasingly demonstrates, PBF has had minimal impact on completion. Many researchers have conducted rigorous quantitative studies on PBF. They have mostly found no causal relationship between the introduction of PBF and a significant increase in the measures PBF is designed to affect.

That's not to say PBF has had no impact. Some HBCUs have argued that performance funding strains already dire financial conditions at their institutions. Another common argument is that performance funding heightens competition between HBCUs and PWIs (predominantly white institutions), primarily over STEM (science, technology, engineering and mathematics) students.

HBCUs also feel that they were intentionally barred from the rule-making process when such policies were formulated. Above all, many believe their institutions are forced to compromise their mission by focusing on more selective applicants who are more likely to attain a degree. As one HBCU leader noted:

"Institutions get more selective. They hope for that high yield, low acceptance rate, which is diametrically opposed to the true mission of public HBCUs, which is more open access. Selectivity comes at a cost. Schools must spend more to compete and then the harder-to-reach students, those who wouldn't be going to college otherwise, they lose out."

You don't need statistical software to see the lack of impact on degree completion of PBF. Let's look specifically at the three states with the longest-running PBF policies and home to public HBCUs: Tennessee, Louisiana and Pennsylvania. According to the Integrated Postsecondary Education Data System (IPEDS), Tennessee's lone public four-year HBCU, Tennessee State University, produced 718 bachelor's degree recipients in 1995. This would waver, declining some years, and rising in others. In 2014, 807 students graduated with a B.A. (down from a high of 1,013 in 2006). Public four-year HBCUs (and other public institutions) in Louisiana and Pennsylvania all declined following peaks in the early 2000s.

Despite the accumulating mountain of empirical evidence that PBF doesn't work as intended, policymakers continue to employ it. Policymakers tend to like easy logic and hard numbers. So it's surprising when they ignore both — or perhaps not so surprising. In their monograph, Nick Hillman, David Tandberg and Brian Sponsler point to the prevalence of policymakers preferring research that confirms their views over evidence-based research. This may explain why — despite substantial evidence to the contrary — PBF continues to attract popularity amongst policymakers. HBCUs, MSIs and other public institutions suffer the consequences of policymaking conducted with little regard for empirical research.

Two of the three states with the most MSIs — Texas and Florida — now allocate some portion of state funds based on outcomes. Texas requires its community colleges to meet performance metrics, while in Florida, all public institutions are required. It's too early to determine the outcome of how institutions will respond. Yet the experiences of HBCUs and other MSIs in other states should be cause for concern amongst those in Texas and Florida, especially given the decline in state and local funding for public colleges in both states.

Higher education finance continues to evolve away from the fierce political pork partisanship of the mid-20th century. Other traditional state funding mechanisms based on enrollment and prior year spending are far from perfect.

While PBF is the finance policy du jour, it has not been proven to provide an attractive alternative. No one benefits if it's politics as usual, with lawmakers willfully neglecting the results of empirical research and instead blindly following gut instincts.

Boland is a Ph.D. candidate at the University of Pennsylvania's Graduate School of Education and a research assistant at the Penn Center for Minority Serving Institutions. Gasman is professor of higher education at the University of Pennsylvania and director of the Penn Center for Minority Serving Institutions.


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