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Outcomes Based
Funding and Race
in Higher Education
Can Equity be Bought?
Tiffany Jones Sosanya Jones
The Education Trust Southern Illinois
Washington, District of Columbia, University-Carbondale
USA Carbondale, Illinois, USA
v
vi CONTENTS
Index 161
LIST OF FIGURES
vii
LIST OF TABLES
ix
PART I
Over the last decade, concerns about the cost and value of college have
saturated the media. Less than 24 hours after HBO aired an episode about
the student loan crisis on its VICE documentary series, presidential candi-
date Hillary Clinton released a proposal to provide student loan forgiveness
to entrepreneurs. Higher education sessions and national education policy
forums are dominated by topics like “how to measure the value of college,”
“college affordability,” and “free community college.” These movements
represent the growing concern over the costs of college, students’ reliance
on student loans to pay for college, and, ultimately, whether or not it is all
worth it.
With less than half of all students in the United States completing a college
degree within six years, and student loan debt reaching $1 trillion, policy-
makers have become entrenched in a movement to hold colleges and uni-
versities more accountable to their supporters. Similar to K-12 accountability,
and reward campuses that enroll and hire desired student and faculty popula-
tions. For instance, the state of Virginia measures increases in the enrollment
of in-state undergraduate students from underrepresented populations,
including low-income, first-generation, and racial and ethnic minority stu-
dents. Progress metrics includes variables like credit accumulation and reten-
tion that demonstrate colleges’ progress toward degree completion and
other outputs. Progress metrics are paired with process metrics that capture
institutional efforts to increase their capacity in ways that could increase
their institutional effectiveness. For example, in Arkansas, progress is mea-
sured at four-year institutions based on the percentage of students who earn
18 or more credit hours over two academic years. The output metrics
represent states’ goals for public higher education, which most often
means overall degree completion for targeted student populations. For
instance, the state of Nevada rewards campuses based on the number of
bachelor’s degrees conferred during an academic year. States also use POBF
metrics designed to meet state equity and diversity goals by rewarding
campuses for the enrollment and success of students that they have char-
acterized as academically “at risk” or underprepared, including adult, low-
income, underrepresented racial minority, transfer, and first-generation col-
lege students. In Oklahoma, POBF is awarded based on the retention of
Pell Grant recipients and other factors.
Since states use different definitions and metrics to define and measure
performance, models vary considerably across state lines. HCM strategists
(Snyder, 2015) have identified four different types of models to classify the
policies based on their level of sophistication and adherence to promising
practices. HCM’s typology classified Type I systems as those that are rudi-
mentary, do not involve high levels of funding, and represent a minimal
alignment between completion and attainment goals and the state’s finance
policy. Types II and III represent increasing degrees of development and
adherence to promising practices, while Type IV systems are the most robust,
with significant and stable funding, full institutional participation, differentia-
tion of metrics by sector, and prioritization of both degree/credential com-
pletion and outcomes for underrepresented students.
studied the impact of these funding formulas have found that some
policies limited or even negatively impacted student outcomes like reten-
tion and graduation rates (Tandberg and Hillman, 2013). In some cases,
policies have even resulted in unexpected outcomes like increased selec-
tivity and increased certificate rather than degree attainment to reach
completion goals at community colleges (Dougherty et al., 2015;
Hillman et al., 2015). What remains is a limited understanding about
the implications of these policies for achieving equity in higher educa-
tion. It is also necessary to consider what POBF policies mean for
students of color–many of whom are first-generation college students
from low-income households–and the colleges and universities that pri-
marily serve these student populations, such as Minority-Serving
Institutions1 (MSIs).
Although the enrollment of students of color in higher education has
increased over time, gaps in completion rates have increased (Eberle-Sudre
et al., 2015). MSIs have fewer resources than non-MSIs, but are responsible
for enrolling two of every five students of color in higher education; in fact,
public MSIs enroll over half of all students of color in public higher educa-
tion (Cunningham et al., 2014; Jones, 2014). As higher education becomes
increasingly stratified, where students attend college, the resources pos-
sessed by those institutions, and the outcomes institutions are able to
achieve all matter. Indeed, such is critical, as students of color and low-
income students are often educated at the least-resourced institutions across
the educational pipeline. Therefore, the approaches policymakers use to
determine resources at colleges and universities that educate large propor-
tions of such students are of the utmost importance. Consequently, the aim
of this book is to examine the implications of POBF for racial equity in
higher education. More specifically, the book will:
1. Discuss how states have addressed equity in their POBF policies, and
the possibilities and limitations of these approaches;
2. Discuss the specific implications and outcomes of POBF for MSIs,
which are most likely to serve the populations who experience
significant inequities in higher education;
3. Provide policymakers and higher education scholars with recom-
mendations and strategies for using POBF to advance racial equity
in higher education; and
4. Encourage communication between those engaged in higher edu-
cation policy and the issues thereof.
1 SHOW ME THE OUTCOMES! THE EMERGENCE OF PERFORMANCE . . . 5
BOOK OVERVIEW
Theoretical Framing
Educational policy research is often disconnected from the political and
historical contexts that shape the policy being studied (Halpin and
Troyna, 1994). As Bensimon and Bishop (2012) explain, “The scho-
larship and policy frames that are familiar to decision makers and
practitioners too often fail to ask the ‘race’ question critically and
knowledgeably” (p. 2). We sought to address this gap by employing
throughout the book critical frameworks that center issues of race and
inequality, such as intersectionality, Critical Race Theory (CRT), and
Critical Discourse Analysis. We most commonly used CRT, which
challenges assumptions of objectivity and embraces the understanding
that seemingly neutral laws and policies often have consequences and
outcomes that either sustain or exacerbate existing structural and
institutional racial inequities (Bell, 1980; Solorzano and Yasso,
2002). In particular, we applied the CRT tenets of the permanence of
racism and interest convergence to understand the implications of
POBF policies for students who have been historically underrepre-
sented and for the campuses that primarily enroll them.
Methods
The methods used vary across each chapter, but involve either one or more
of the following strategies: (1) a comparative analysis of publicly available
POBF allocations by institutional type (the state allocation data were cre-
ated and made publically available by each state’s respective higher educa-
tion agency); (2) an analysis of publicly available data on state POBF policy
descriptions, which was conducted through a systematic review and evalua-
tion of documents, including print, electronic, and digital media records,
and artifacts for the purpose of uncovering new knowledge (document
analysis supports our goals to employ a critical framework because this
method provides context, highlights gaps, poses questions that need to be
asked, and verifies or corroborates claims) (Creswell and Plano Clark,
2007); (3) the use of publicly available data trends from sources like The
National Center for Education Statistics, which were used to provide demo-
graphic, enrollment, and completion information for the campuses in each
state; and (4) the use of data from semistructured participant interviews
6 OUTCOMES BASED FUNDING AND RACE IN HIGHER EDUCATION
Chapter Descriptions
The book begins with three studies examining the impact of POBF on
racial equity in four states. Impact is measured in multiple ways, but each
chapter addresses funding allocations to campuses enrolling students of
color and how equity is rewarded in those systems. The second half of the
book focuses on POBF design in existing and proposed policies, and how
states are attempting to account for and reward racial and other types of
equity. The book also addresses policy influencers’ perspectives on how
POBF impacts equity, and how those perspectives impact policy design
and adoption. Finally, the book closes with recommendations for rede-
signing POBF to advance racial equity.
Chapter 2, “Double or Nothing: States Betting It All on Performance and
Outcomes-Based Funding and the Implications for Equity,” addresses the
effects of POBF measures on four-year MSIs in states that have made
a significant investment in performance-based funding measures. Two states,
Ohio and Tennessee, serve as the focus of this chapter, and their POBF data
are analyzed in depth. In both states, a significant amount of school funding is
dependent on performance measures, with Historically Black Colleges and
Universities (HBCUs) faring seemingly well. Considering these outcomes, it
is imperative to understand how states account for equity in their policy to
ensure MSIs are not disadvantaged. Thus, this chapter gives a detailed over-
view of factors considered in both Ohio’s and Tennessee’s funding formulas,
and how those factors specifically affect MSIs in those states.
In Chapter 3, “Reparations and Rewards: Performance and Outcomes-
Based Funding and De Jure to De Facto Segregation in Higher Education
Systems,” the authors use the case study method to explore POBF policies in
Florida and how they either depart from or extend to the once legally
segregated South. In order to understand the social implications of these
policies, the authors first review the history of HBCUs in the South, discussing
the once legally enforced segregation these institutions experienced, the
desegregation cases that acted as legal interventions to help create equality,
and the de facto segregation that often resulted from those interventions.
Finally, this chapter explores whether the POBF policies and resulting
resource allocations work to support the mission of the desegregation cases,
or if these policies are simply another example of de jure segregation that
ultimately results in separate and unequal institutions of higher education.
Chapter 4, “Impacting the Whole Community: Two-Year Minority-
Serving Institutions and Performance and Outcomes-Based Funding in
8 OUTCOMES BASED FUNDING AND RACE IN HIGHER EDUCATION
NOTE
1. Minority Serving Institutions (MSIs) include Historically Black Colleges
and Universities (HBCUs), Hispanic Serving Institutions (HSIs), Tribal
Colleges and Universities (TCUs), and Asian American and Native
American/Pacific Islander-Serving Institutions (AANAPISIs).
REFERENCES
Bell, D. (1980). Brown and the interest-convergence dilemma. In D. Bell (Ed.),
Shades of Brown: New perspectives on school desegregation (pp. 90–106). New
York, NY: Teachers College Press.
Bensimon, E. M., & Bishop, R. (2012). Introduction: Why “critical”? The need
for new ways of knowing. The Review of Higher Education, 36(1), 1–7.
Burke, J. C., & Modarresi, S. (2000). To keep or not to keep performance funding:
Signals from stakeholders. The Journal of Higher Education, 71(4), 432–453.
Creswell, J. W., & Plano Clark, V. L. (2007). Designing and conducting mixed
methods research. Thousand Oaks, CA: Sage.
Cunningham, A., Park, E., & Engle, J. (2014). Minority-serving institutions:
Doing more with less. Washington, D.C.: Institute for Higher Education
Policy.
Dougherty, K. J., Natow, R. S., Jones, S. M., Lahr, H., Pheatt, L., & Reddy, V.
(2015). Origins of the second wave of performance funding adoptions. In
K. J. Dougherty & R. S. Natow (Eds.), The politics of performance funding for
higher education: Origins, discontinuations, and transformations. Baltimore,
MD: Johns Hopkins University Press.
Eberle-Sudre, K., Welch, M., & Nichols, A. H. (2015). Rising tide: Do college grad
rate gains benefit all students? Washington, D.C.: The Education Trust.
Halpin, D., & Troyna, B. (Eds.). (1994). Researching education policy: Ethical and
methodological issues. London, UK: Psychology Press.
10 OUTCOMES BASED FUNDING AND RACE IN HIGHER EDUCATION
Hillman, N., Tandberg, D. A., & Fryar, A. (2015). Evaluating the impacts of
“new” performance funding in higher education. Educational Evaluation and
Policy Analysis, 37(4), 1–19.
Jones, T. (2014). Performance funding at MSIs: Considerations and possible mea-
sures for public minority-serving institutions. Atlanta, GA: Southern Education
Foundation.
Maxwell, J. A. (2005). Qualitative research design: An interactive approach
(2nd ed.). Thousand Oaks, CA: Sage.
McLendon, M. K., Hearn, J. C., & Deaton, R. (2006). Called to account:
Analyzing the origins and spread of state performance-accountability policies
for higher education. Educational Evaluation and Policy Analysis, 28(1), 1–24.
National Conference of State Legislators. (2015). Performance-based funding for
higher education. Retrieved from http://www.ncsl.org/research/education/
performance-funding.aspx
Olson, K. (2011). Essentials of qualitative interviewing. Walnut Creek, CA: Left
Coast Press.
Patton, M. (1990). Purposeful sampling. Qualitative Evaluation and Research
Methods, 2, 169–186.
Ruppert, S. (Ed.). (1994). Charting higher education accountability: A sourcebook
of state-level performance indicators. Denver, CO: Education Commission of
the States.
Shulock, N. (2011). Concerns about performance-based funding and ways that
states are addressing the concerns. Sacramento, CA: Institute for Higher
Education Leadership & Policy.
Snyder, M. (2015). Driving better outcomes: Typology and principles to inform
outcomes-based funding models. Washington, D. C.: HCM Strategists.
Solorzano, D. G., & Yosso, T. J. (2002). Critical race methodology: Counter-
storytelling as an analytical framework for education research. Qualitative
Inquiry, 8(1), 23–44.
Tandberg, D. A., & Hillman, N. W. (2013). State performance funding for higher
education: Silver bullet or Red herring? [WISCAPE Policy brief]. Wisconsin
Center for the Advancement of Postsecondary Education [WISCAPE].
Madison, WI: University of Wisconsin-Madison.
CHAPTER 2
INTRODUCTION
In the discussion of POBF, the effect on MSIs–specifically HBCUs, institu-
tions that generally serve underserved students (students of color, and first-
generation and low-income students)–is a hotly debated issue (Cunningham
et al., 2014). Proponents of POBF argue that funding plans increase
institutional effectiveness, ensuring that these universities better serve under-
served students and guarantee on-time graduations (i.e., within six years).
Detractors note that, in order to compete for funds, institutions with missions
to serve underserved students are abandoning those missions and becoming
more selective in their admissions processes. By neglecting underserved stu-
dents, and instead focusing on admitting students with the highest grades and
test scores, they argue that underserved students are being “creamed” out of
the college experience, and while institutions may not want to abandon these
students, they are forced to do in order to survive (Dougherty et al., 2014).
Others participating in the debate explain that, while POBF may have
some unintended negative consequences, including creaming, there are
examples of specific states that are doing a better job of ensuring equity.
Two states commonly identified for building equity into their outcomes-
based formulas are Ohio and Tennessee. Interviewed researchers note
that these states have been deliberate about addressing equity by creating
premiums in the formula for students who have been identified as at-risk
or high needs. The question that remains is how these premiums trans-
late to outcomes for not only underserved students, but for the colleges
and universities explicitly committed to and already serving a student
body comprised of largely low-income students of color. This chapter is
aimed at understanding whether equity is built into these metrics to
simply send the message that the states care about equity, or whether it
actually ensures equitable outcomes for vulnerable student populations.
THEORETICAL FRAMEWORK
One consistent complaint from stakeholders about POBF is that it is a one-
size-fits-all solution for increasing institutional performance. This is a parti-
cularly important point when considering publicly funded HBCUs, as they
have a distinct mission and history resulting from the communities they were
founded to serve. The survival of these institutions is critical to underserved
communities of color; some of the students they educate would likely not be
accepted into Predominantly White Institutions (PWIs). Thus, these institu-
tions play a critical role in the struggle for racial equity in higher education.
In order to assess the effects of POBF on HBCUs and racial equity, it is
necessary to use a critical race lens when reviewing funding formulas.
A critical race lens requires researchers to situate their examinations in a
larger history of the struggle for educational opportunity and equity for
people of color. Government policy and, more specifically, HBCUs have
played a pivotal role in ensuring a move toward equity. Thus, it is crucial to
review policy with a critical consideration of racial disparities and opportunity
2 DOUBLE OR NOTHING, STATES BETTING IT ALL ON PERFORMANCE . . . 15
gaps. CRT points to the necessity to analyze policy, considering the long
history of non-White people’s participation (or denial thereof) in the educa-
tion system, and the need for mandated government policy to ensure
participation in higher education (Harper et al., 2009). Considering the
role HBCUs continue to play in ensuring African-American educational
equity–including producing disproportionally high numbers of graduates in
crucial fields like Science, Technology, Engineering, and Maths (STEM) and
education–it is imperative to analyze government policies that involve funding
students to ensure they are not experiencing deleterious outcomes. In this
examination, we explicitly counter the concept of racelessness, addressing the
role White supremacy and racism have played in disadvantaging people of
color, and specifically African-Americans, in higher education (Patton, 2016).
METHODS
This research is a content analysis of POBF data from Ohio and Tennessee,
as well as semi-constructed interviews with POBF stakeholders throughout
the U.S. Data reviewed in this study include higher education expert inter-
view transcripts; state POBF formulas; institution metrics, including state
funding and per-student allocation; student success metrics, including com-
pletion rates and retention rates; and institution demographics, including
endowment, percentage of students of color, undergraduate enrollment,
and Pell student enrollment. Interview transcripts were analyzed from inter-
views conducted with higher education professionals who were actively
involved in the national debate on POBF.
A content analysis is a research method concerned with analyzing
written, verbal, or visual communication messages, and making inferences
about them within their context (Krippendorff, 1980). This content
analysis goes beyond the immediately observed to first analyze the historic
and symbolic qualities of communication, and then make inferences from
the data, deriving themes, concepts, and categories. Content analysis is a
nonlinear process; all data are given the same consideration whether
entered at the beginning or end of the analysis. This analysis is an inductive
process that allows the researcher to develop concepts based on the actual
POBF data, as well as enabling the researcher to detect trends, patterns,
and differences that are not readily seen by users (Krippendorff, 1980).
The first step required in content analysis is design. The design of the
analysis is where researchers introduced the context of the research and valid
criteria for making inferences. Next, the researchers identified sampling units
16 OUTCOMES BASED FUNDING AND RACE IN HIGHER EDUCATION
for the study. After coding sample data, they created categories drawn from
the research. Codes were then used to draw inferences from the data to the
overall themes of the research questions.
Note: All data were retrieved from the Ohio Board of Regents
POBF Outcomes
Under POBF from 2013 to 2014, Central State University suffered a
2.10% decrease in allocation, and per-student funding was reduced from
$3,095.59 to $3,031.76, both below the per-student allocation average
for public universities. Though equity measures that would benefit the
university are now in place, they were not in 2014 (see Table 2.2).
Ohio State University, with students of color comprising just 18% of the
total student body, boasts the highest per-student allocation in the state,
and saw a 3.10% increase from 2013 to 2014. These statistics illustrate that
diversity was neither encouraged nor rewarded in this formula; thus, equity–
and specifically racial equity–was not supported.
So, while Ohio has funded POBF as a way to encourage universities to
increase outputs based on formula objectives, the formula would need a
significant focus on equity in order to encourage universities that fare well
with the current output metrics based on degree and course completion
and doctoral and medical set-asides to risk lowering completion rates by
enrolling and putting significant funding behind educating at-risk stu-
dents. There is not currently an incentive for PWIs, particularly the larger
state universities, to educate underserved students, as they would risk
lowering their completion rates. With additional weighting awarded for
enrolling at-risk students in 2015, there was an increase in Central State
University’s funding; however, because there is not a specific equity out-
put being considered in a percentage of the formula, institutions that do
not serve a diverse student body, or that serve their diverse students well,
will not necessarily see a decrease in funding.
Thus, while the incentive to increase racial equity is not demonstrated in
the funding outcomes, there is an incentive for Central State University to
mission drift, and either avoid enrolling or “cream” out students who are least
likely to complete their education in order to survive. With 100% of their
funding determined by output metrics, it is critical for Central State to
increase completion rates to avoid continuous decreases in funding and
possibly attempt to increase per-student allocation to compete with other
public universities for enrollment. As one HBCU administrator noted:
So we have taken on a mission drift in some ways; that’s how it really hurts
equity: it allows institutions to take on a mission drift to…the purpose of
majority institutions, which in some ways is the intention of the state
legislature in doing it. But, you know, it’s hard to maintain your original
mission and maintain enrollment and all those things if you start to drift over
to a different standard.
It still doesn’t apply resources, and resources are much broader. It’s also
[about whether] you have the right mix of programs . . . How can you
compete in a model that says that you have to have degrees for strategic
emphasis? For example, a lot of states are doing that, where you have to
have all these STEMS, but you won’t give me STEM programs . . . So
thinking about resources is not just monetary, you know? The resources
are also . . . buildings. The resources are also about what programs can I
offer; can I offer graduate degrees? All those are included in resources . . .
more than any other university in the system. It is also being encouraged
to shift its focus in order to increase degree and course completion and
meet POBF metric demands rather than putting resources behind ser-
vices for their most-difficult-to-serve students (as outlined in the institu-
tion’s mission). On the other hand, the funding formula does not
strongly encourage PWIs to diversify their student base and educate
poor students of color. Thus, the formula’s underlying message is that
these underserved students simply do not matter enough.
POBF Outcomes
Unlike Central State University in Ohio, Tennessee State University
experienced a 2.66% increase in allocation between 2011 and 2012.
With the introduction of POBF metrics in 2012, Tennessee State
University’s per-student funding was increased from $4,037.16 to
$4,147.48. The University has seen an increase in allocation each year
since the introduction of POBF metrics, and the per-student allocation is
the third highest in the state, exceeded only by the University of
Tennessee-Knoxville and the University of Memphis (Tennessee Higher
Education Commission, 2015; College Results, 2015).
that decisively supports underserved students. Though the state does not
have specific considerations for race in its metrics, many experts note that
its additional funding allocations for older (over 25 years old) and low-
income students, and its consideration for institutional missions establish a
system that rewards and supports universities serving high-needs students.
As one HBCU administrator noted, “I think I like Tennessee’s model,
especially looking at . . . the core value of the state, and if the core value of
the state is [that] we believe that we want students to have access to higher
education and we want those students to be a priority in graduation . . . I
think you have to have an equity minded performance metrics model.”
While Tennessee’s introduction of POBF can be understood as an
effort to right both historic and ongoing wrongs in higher education
funding, there are a few similarities between states in terms of flagship
comparisons to smaller state universities. The University of Tennessee-
Knoxville, the state’s flagship, and the University of Memphis, a strong
state institution, boast endowments more than quadruple the amount of
Tennessee State University, and maintain significantly higher per-student
allocations. The University of Tennessee-Knoxville was granted a per-
student allocation of $7,908.76 in 2014, while the University of
Memphis received one of $5,219.14 (Table 2.4).
Consequently, there are a few important considerations in reviewing the
effects of POBF on Tennessee State University, and, ultimately, racial equity
in Tennessee’s higher education system. First, Tennessee has a history of
underfunding Tennessee State University, including a denial of programs
and resources needed to attract students and maintain adequate enrollment.
Second, though Tennessee awards additional weight for older and low-
income students, the University of Tennessee-Knoxville has increased its
funding each year since the introduction of POBF, maintaining a signifi-
cantly higher per-student allocation than Tennessee State University,
though UT serves a drastically less diverse student body, with only 16%
students of color, and a Pell population of approximately 19%.
It seems that the POBF design team addressed historical imbalances in
funding by making equity goals explicit in POBF priorities; however, while
the state addressed class discrimination, they shied away from tying any
equity goals to race. In discussions of metric design for the state, one
administrator explained:
Tennessee institutions get rewarded for students who progress and graduate,
and institutions get an extra bonus or what we call a premium for those
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