Dive Brief:
- Research for Action, an independent research organization, has been looking for several years at the impacts of outcomes-based funding (OBF), finding that it enhanced outcomes for full-time students, full-time Pell recipients and full-time students of color in Tennessee and Ohio, The Indianapolis Star reports.
- There were negative impacts for for part-time students, however, and the study didn't mention outcomes for students in Indiana, though The Indy Star noted that gaps by race and ethnicity remained the same in the state.
- Observations of 14 OBF institutions across all three states showed institutional policies and practices were improved and revised to strategically prioritize outcomes in both student services and academic affairs, and a broad range of faculty and administrators reported buying into OBF goals, showing that even small amounts of funding for outcomes generally encouraged institutions to approach retention and graduation policies more effectively — though some reported unintended consequences of faculty layoffs or vacancies due to funding reallocations.
Dive Insight:
The data on whether outcomebased funding improves metrics like retention and graduation for enrollees, particularly full-time students, is generally positive, but not uniformly. The same goes for institutional practices and policies. Thus, the idea that outcome-based funding proposals actually do result in positive change is still not completely binary.
But significantly, this reality means keeping data — especially from minority-serving institutions — on the effects of outcomes based funding is especially critical, as more success in outcomes could not only lead to more funding for these institutions, but also better models for improving upon student retention and graduation policies.
The research shows that even if institutions were not able to see incredible changes in outcomes, they still made steps in the right direction toward improving upon current strategies. This is an important move for all higher ed institutions to make anyway. Tracking and leveraging the data, particularly in states that already have or are considering implementing OBF policies, could ultimately lead to more resources for the institutions that need them.
And beyond that, a new report from Third Way shows that the industry as a whole could do more to improve return-on-investment for students. The emphasis on accountability, even marginally, is key as higher ed leaders try to close racial and socioeconomic educational gaps. For instance, even though private, four-year institutions have the strongest rates of graduation, 40% didn't finish their degree at the first institution in which they enrolled. And those institutions don't enroll as many students as public institutions, which take in greater numbers of low-income, high risk students.
OBF policies for public institutions provide a chance to make the case for the funding they need, by pushing them to improve their strategies and encouraging them to excel overall, while also generally emphasizing the need for all parts of the education spectrum — including private institutions — to focus more on ROI and accountability.