One set of policy decisions that higher education advocates are calling into question is how state leaders allocate resources and funds. A new report by The Education Trust analyzes how well existing state policies address equity concerns and makes recommendations for designing and implementing outcomes-based funding (OBF) policies that better advance equity.

Outcomes-based funding, in which some states link a portion of their funding for public colleges to a performance formula emphasizing metrics on completion, equity, employment, or other measures,  is a high-stakes, complex policy.

This brief tells the story of Indiana’s efforts to develop and implement outcomes-based funding (OBF) for public postsecondary education. Indiana’s story is supplemented by a briefer description of efforts in Tennessee.

Concerned with low on-time graduation rates, some state lawmakers are turning to outcomes-based funding as one policy approach to support postsecondary degree attainment and workforce goals.

Lumina releases the third and final round of papers exploring how public colleges and universities are responding to moves nationally by state policymakers toward the use of outcomes-based funding and away from enrollment-based funding.

Policymakers are moving to outcomes-based funding in an effort to inspire public higher education institutions to drive the transformative change required to expand access, increase graduation rates and contain costs. For outcomes-based funding to have a significant effect on student outcomes, system and institutional leaders must successfully translate these policies into action. In an effort to inform the design, development and implementation of future outcomes-based funding policies, this paper presents a real-time account of how the prospect of outcomes-based funding, and the financial incentives that have been put in place by the state of California and the California State University system, have provided a frame for California State University, Fullerton to engage and mobilize its campus community to improve student outcomes, advance the institution’s mission and achieve its strategic goals.

State governments serve as a key-funding source for public higher education. Outcomes-based funding is an alternative to other methods of state allocations to institutions, such as base-plus funding, enrollment-based funding, and early performance-centered funding.

A new series of reports argue for tying public funding to student outcomes.

No state has done more than Tennessee to shift state higher education funding to reflect outcomes rather than inputs. In other states, most of the core funding for higher education, including tuition and state appropriations, flows to colleges based on student enrollment.

Recent years have seen rapid increases in both the need and demand for higher education, just as the economic downturn has placed increasing pressure on state higher education budgets. These trends and others have converged to inspire state policy- makers, the coordinating and governing boards for higher education, and other stakeholders to consider ways to better align institutional priorities and activities with state goals, create incentives for quality, and more ef ciently prioritize dwindling state resources for higher education.