Book Description

There has been considerable discussion about the need for educational reform in higher education. The public's concerns about the quality of undergraduate education, affordability, inefficiencies within the higher education system, and poor performance outcomes of colleges and universities have spurred a new accountability movement. Since the early 1990s, states have increasingly used performance funding models to improve colleges and universities' performance outcomes. Yet little empirical research has been conducted to see how effective performance based funding models are in increasing levels of institutional performance outcomes and state appropriation levels. The purpose of this study is to examine patterns of resource allocation among public research universities, to determine which performance factors have a significant relationship with receiving state appropriations and to examine how effective performance based funding models are in improving institutional outcomes compared to non-performance funding models. The significance of the study is that state resources affect public research universities in a number of critical ways both internally and externally, so explaining the variance between state funding levels of public research universities is a vital topic of research. The research design for this study involved using quantitative methods, including multivariate regression analysis. The dependent factor was state appropriations per full-time equivalent student and the independent factors were categorized into four specific areas of performance: economic development, academic quality, institutional efficiency, and access and affordability. Some of the most widely used performance factors were chosen, including: graduation rates, degrees conferred, and instructional cost. The study used multi-years of data collection from fiscal year 2002 to fiscal year 2005. A total of 102 public research universities were included in the national study. The findings showed that at least nine institutional performance factors are significant determinants of state appropriation, both positively and negatively affecting public research universities' state funding. Furthermore, the results show that performance factors may be used to predict state funding levels. Over 42.9% of the variation can be explained by the regression model using only performance factors to predict state appropriations. The findings also suggest that non-performance funded public research universities outperformed performance funded public research universities on several factors and received greater state appropriations from their states than their performance based counterparts.