Association for Public Policy Analysis & Management

In light of President Obama’s college completion agenda, institutions are trying to increase their college completion rates to meet the national goal. While individual institutions have their own policies and standards to support students’ continuous study on campus, states play an important role in facilitating students’ completion over time. In accordance with this, several states have introduced the performance-based funding mechanism, which is an important policy for boosting college completion rates. This policy impacts institutional behavior in order to increase college effectiveness and efficiency. The purpose of this study is to investigate the policy making process of the funding system based on specific empirical evidence.

There is insufficient research into whether the performance-based funding system is able to meet the goals of the national college completion agenda. While there have been attempts to find a relationship between performance-based funding and completion rate data, existing research does not provide detailed policy-making processes and flows that carry out the funding mechanism. This results in distorted interpretations of statistical results and causes biased perspectives regarding the mechanism. There are some stakeholders who decide the policy process on campus and impact decision-making.

This analysis has four phases. First, this study explains the background of performance-based funding over time. The second section provides a conceptual model for policy-making processes of the funding system using theoretical frameworks and stakeholder analysis. The following section shows empirical evidence for the construction of funding systems, and the final section includes conclusions and discussion.

In order to find policy-making processes and empirical evidence for the evaluation of policy, this paper uses states’ educational reports, education statistics, and other resources. Indicators used to investigate the structure of the funding mechanism include students’ completion on campus and policy regulation of state and institutional behaviors in executing the funding system. This paper finds the specific characteristics of some PBF executing states compared to others. Most variables describe the general political trend of state level of legislative powers based on both parties. According to specific political events, such as presidential elections, senate elections, and changes in majority party, the political stream of each state has changed over time. While the ratio of congress members by party is important for decision-making, the legislative power of governor or independency based on veto can estimate the future bill construction. The national conference of state legislature website (http://www.ncsl.org) categorizes each state into whether or not it has implemented the PBF system. Based on the categorization, this study does the analysis of variance (ANOVA) to find their political/economic characteristics.

Through these measurements, this analysis will provide the decision-making process of the funding system. The results of this study will help the understanding of policy processes for performance-based funding systems. Additionally, the results will provide broad policy implications to institutional leaders and policy makers who are interested in the accomplishment of the college completion agenda.