Date Approved
2024
Degree Type
Open Access Dissertation
Degree Name
Doctor of Philosophy (PhD)
Department or School
Leadership and Counseling
Committee Member
David Anderson PhD
Committee Member
Phillip Caldwell PhD
Committee Member
Robert Carpenter PhD
Committee Member
Carmen McCallum, PhD
Abstract
This dissertation examines the impact of performance-based funding (PBF) policies on institutional financial priorities at 2-and 4-year colleges and universities. PBF is a policy mechanism used by states to incentivize higher education institutions to achieve specific performance outcomes, such as increased graduation and retention rates, by tying a portion of institutional funding to these outcomes. This research aims to determine the efficacy of PBF policies on institutional change and outcomes. More specifically, this research seeks to find the extent to which colleges and universities subjected to PBF policies change their financial priorities and how, if at all, these changes impact graduation and retention rates. Data for this analysis was collected utilizing multiple secondary sources such as Integrated Postsecondary Data System and state-level policy documents. The sample size includes 368 institutions across the national landscape, representing a broad cross-section of higher education institutions in the United States. Data was analyzed using structural equation modeling, allowing an in-depth examination of the relationships between policy implementation, financial priorities, and institutional outcomes. Data was averaged 5 years pre-and post-policy implementation, providing a robust pre-and post-analysis of the policy's influence. Key findings from this study revealed the implementation of PBF had no direct impact on how institutions reallocated resources across the expense categories analyzed. Secondly, the implementation of PBF policies had no direct impact on graduation or retention rates, suggesting that the policy itself did not lead to measurable improvements in these key outcomes. However, changes in specific areas of institutional spending did have adverse effects. Increased expenditures on student services and institutional/administrative support were found to negatively affect graduation rates, while increased spending on instruction negatively impacted retention rates. The implications of these findings are significant, as they challenge prevailing industry assumptions that increases in certain expenditure categories such as instruction and student support services have a positive correlation with improving student outcomes such as graduation and retention. This study contributes to the ongoing conversation about the efficacy of performance-based funding in higher education and raises important questions about the role of financial incentives in driving institutional change.
Recommended Citation
Spearman, Ebony T., "The impact of performance based funding on institutional financial priorities in public two-year and four-year institutions" (2024). Master's Theses and Doctoral Dissertations. 1265.
https://commons.emich.edu/theses/1265
