Study Finds Higher Ed’s Performance Based Funding Formula Can Bring Along Some Unintended Effects

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Earlier this year, the funding formula for Ohio’s community colleges and four-year institutions changed.Now, schools earn state money based on how many students graduate. In the past, funds were distributed based on campuses’ enrollment size.The shift has caused campuses to respond by figuring out ways to retain current students or reach out to those who may have left before graduation.But aside from those concentrated efforts, a report released earlier this monthpoints out Ohio’s shift to performance based funding has also brought along also some new, unintended changes.Researchers from Columbia University spoke to personnel on the condition of anonymity at community colleges and public universities in Indiana, Ohio, and Tennessee.Woven in with other topics throughout the 70-plus page report, the study points out a handful of unintended effects that respondents say have already happened or have the potential to happen soon due to the funding change. The list includes grade inflations, reducing degree requirements, and an increased workload for administrators.But the most cited impact, the authors said, was the increased selectivity of schools’ admissions policies. Both community colleges and some of their four-year counterparts who have serve low-income and minority students could bear the brunt of this effect, feeling more pressure to admit new students who are on a faster path to graduation than some of their peers.Snippets of a handful of responses from the study’s Ohio contributors are below.A community college dean on the school’s potential to be successful if it didn’t admit struggling students: “I guess if we weeded the students out that really don’t have any plan of being a completer here, that’s helped with our success rates.”A non-academic university administrator on evolving the student body’s academic profile to therefore help the school’s overall performance: “Instead of a graduation rate of 80 percent, we really need to bump that up so that we have a higher graduation rate. And some of that is being achieved by [changing] the type of student that we bring in. If we increase the quality of the student coming in, we anticipate then that completion of courses will go up, and then your retention go up, and then your graduation will go up. It’s kind of like a little domino. So by raising our average ACT score of our incoming class by one point, the question is, “can we anticipate then higher course completions, higher number of degrees awarded?”…So yes, there’s a deliberate approach being made by our enrollment management office.”A senior-level university administrator wonders if the funding formula will encourage more of a conversation about who is enrolling in higher education: “[I]f we’re trying to improve our graduation rate, then we’re going to need to admit more academically qualified individuals and not really look at those individuals who do not meet that standard. It’ll probably shift the conversation, I think, to one where we’re really thinking about who comes to college and should they come to college, because if our funding is tied to graduation rates and you know that you only graduate 35 percent versus an [another institution] at 85 or 95, you’re never going to survive.”