A paper session at AERA explored the design and impact of state financial incentives for colleges to increase student persistence and completion. The current systems mostly pay for full time enrollment , not any student outcomes. Performance or outcome based funding declined from 29 state 20 years ago to 14 now. A very small amount of funding is provided for performance -often 2 % of total state aid to colleges. Republican legislators championed this idea ,but colleges were unenthusiastic. Business support for performance funding is weak, and it cannot be sustained when political champions leave state office. College teachers are rarely aware of performance incentives. Universities felt there was a lot of data requirements and uncertainty for very little money.
In sum, performamce funding is gaining support from the Gates foundation and Obama, but new designs are needed if it is to succeed. For papers go to http://ccrc.tc.columbia.edu