A Systematic Review of the Impact of Performance-Based Funding in the US

This study synthesized the effect of performance-based funding (hereafter, PBF) through multi-stages of a systematic literature review based on 36 articles. In addition, this study analyzes how policy design relates to the effectiveness of PBF in individual states. Similar to other meta-analyses, this study found that PBF policy is not effective in improving completion and equity of higher education institutions in the US. Further, this study assumed that there might be some positive effects of PBF on institutional performance in the states that maintained it for more than seven consecutive years. Specifically, this study assumed that some policy details such as institutional types, funding method (baseline or bonus), share of funding linked to institutional performance, and funding metrics were related to policy effects. However, this systematic review found that a majority of evaluative studies arrived at inconclusive results across different types of policy designs. One notable finding is that 2-year institutions show more positive results than 4-year institutions. In addition, this study found that statistically significant effects are both positive and negative. Based on the findings of the selected evaluative studies, this review concluded that PBF policy is not very successful in improving institutional performance across different types of policy designs in each state.