A new American study of research on performance-based funding (PBF) in the post-secondary education sector concludes that the policy has very little impact on institutional outcomes. The report examined over 50 studies on PBF published between 1998 and 2020 in the United States where 41 states have adopted varied PBF funding policies. The researchers found that tied funding “typically yields modest or null effects in institutional outcomes.”

They also concluded that PBF had negative effects, encouraging colleges to be more selective with enrolment in order to boost their metrics and receive more public funding than less selective institutions, nondoctoral universities and rural institutions. The report points out that this “threatens to further widen the resource gap between colleges and universities that enroll larger numbers of racial minority and low income students.”