Magazine article Times Higher Education

Poorly Performing Institutions Told: The Bucks Stop with You

Magazine article Times Higher Education

Poorly Performing Institutions Told: The Bucks Stop with You

Article excerpt

Jon Marcus examines the trend for basing US university budgets on outcomes, not enrolments.

Public universities in the US are suddenly finding themselves pressed to operate like almost every other institution in society: by getting paid for how well they do their jobs rather than how many seats they fill in classrooms.

The idea of tying money to performance comes not only from Barack Obama - who in his State of the Union address last month called for billions of dollars in federal aid to be held back from universities that raise their tuition fees too quickly - but also via the state level through direct control of public higher education budgets.

State politicians and policymakers have been racing to impose what is described as "performance funding", under which universities are given all or part of their budget allocations based on outcomes - graduation rates, for instance - and not solely on enrolments, as has previously been the case.

Some university administrators and faculty are unhappy about this trend of applying market principles to academia.

They warn that universities judged on their success rates may hesitate to risk admitting borderline applicants, no matter how much potential they have, or will lower standards to ensure that more students graduate more quickly.

"You're taking a university, which is a very complex enterprise, and you're attempting to boil it down into a few quantifiable metrics," said Thomas Harnisch, a policy analyst at the American Association of State Colleges and Universities. "To some, that might be objectionable."

But Mr Harnisch added that the momentum behind such ideas was unstoppable: "This is coming whether people like it or not."

Performance funding has been in vogue before, most notably in the mid- 1990s when states were flush with cash and offered bonuses to universities to improve their graduation and retention rates, time to completion, job placements, contributions to the state economy and so on.

In all, 26 of the 50 US states have tried performance funding at one time or another, with 14 subsequently abandoning it.

Those that ditched the system did so because universities resisted the idea, funding for bonuses dried up again and the means available to measure progress were not entirely reliable, researchers from Teachers College at Columbia University found.

Doing more with less

Now the states are strapped for cash and performance funding is seen as a way of marshalling diminished resources more effectively.

One state, Indiana, has taken the unusual step of basing $150 million (Pounds 94 million) in budget cuts partly on performance, penalising campuses where per-student costs are high and completion rates low. …

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