Driving Better Outcomes: Aligning State Investments with Completion Needs

The current economic climate and need for expanded access and completion for all students, especially underserved populations, in higher education have sparked renewed interest in outcomes-based funding (OBF) policies, which tie a portion of state funding to institutional performance metrics. The report, Driving Better Outcomes: Typology and Principles to Inform Outcomes-Based Funding Models, provides a history of these policies by state, noting that most adopt outcomes-based funding policies to supplement or replace historic, enrollment-based allocation methods to better leverage existing resources and improve student outcomes and institutional efficiency.

The report also evaluates OBF policies based on key elements they address and the level of funding they command. Although many states have embraced some aspect of OBF policies, only a few states have developed and implemented fully aligned state finance policies with objectives to increase student attainment and close student equity gaps, and several have not considered these policies as an option.