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Report: Outcomes-Based Funding Models Need to be Made More Equitable

Report: Outcomes-Based Funding Models Need to be Made More Equitable

Diverse Issues in Higher Education

Sara Weissman
April 2, 2021
More than 30 states have outcomes-based funding models, which allocate money to colleges and universities at least partly based on various metrics for student success. But a new report by The Education Trust – examining outcomes-based funding formulas across the country from 2017 to 2020 – argues that these models perpetuate inequities in the ways they’re currently designed.
For one thing, these formulas often penalize underresourced institutions, creating a cyclical “self-fulfilling prophecy,” noted co-author Dr. Kalya C. Elliott, the Education Trust’s interim director for higher education policy.
“…Institutions that do the lion’s share of serving students of color and low-income students – and already have fewer resources – continue to receive fewer resources and smaller allocations through the outcomes-based funding model, giving them less and forcing them to do more with less,” Elliott said.
In particular, research shows minority serving institutions, like historically Black colleges and universities, “tended to lose more money” in states using these models, compared to their predominantly White counterparts, said Dr. Nicholas Hillman, associate professor of educational leadership and policy analysis and director of the Student Success Through Applied Research Lab at University of Wisconsin. He co-authored a 2018 study called “The Equity Implications of Paying for Performance in Higher Education.”
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