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Although datasets such as the Integrated Postsecondary Data System are available as inputs to higher education funding formulas, these datasets can be unreliable, incomplete, or unresponsive to criteria identified by state education officials. State formulas do not always match the state's economic and human capital goals. This article analyzes the Kentucky benchmark approach in light of priorities and goals that state funding for higher education should optimally achieve. The findings indicate that the formula does not directly produce the set of incentives it was designed to achieve, nor, at least in one example, does it assign institutions appropriate peer groups.

Although datasets such as the Integrated Postsecondary Data System are available as inputs to higher education funding formulas, these datasets can be unreliable, incomplete, or unresponsive to criteria identified by state education officials. State formulas do not always match the state's economic and human capital goals. This article analyzes the Kentucky benchmark approach in light of priorities and goals that state funding for higher education should optimally achieve. The findings indicate that the formula does not directly produce the set of incentives it was designed to achieve, nor, at least in one example, does it assign institutions appropriate peer groups.