Washington, D.C. — Today, the Center for American Progress released a new report and fact sheet that outline how performance contracts can be used to hold colleges and universities accountable in federal-state funding partnerships. Widely viewed as the best strategy to make college more affordable and equitable, these funding partnerships must be paired with an accountability mechanism that ensures colleges are using federal dollars effectively and students are receiving a high-quality education that does not lead to low retention, transfer, and graduation rates. Performance contracts—written agreements that bind institutions to their commitments to improve student outcomes in exchange for additional funding—are one option to address this need.
Drawing from interviews and an analysis of data from state documents, the report offers key insights from Colorado’s experiment using performance contracts during its 2004 overhaul of state higher education financing. Colorado’s contracts were designed to push institutions to improve student outcomes and hold them accountable to the state. Unfortunately, the contracts exhibited several key weaknesses in design and implementation that undermined their effectiveness, from a lack of incentives and minimum compliance oversight to overly customized goals and resource inequity among institutions.
If scaled up and improved in the following ways, however, the performance contract concept has the potential to work as an accountability mechanism in a federal-state funding partnership:
- Incentivize institutions to make improvements by including rewards and/or consequences for performance.
- Proactively and consistently monitor colleges’ goals and progress.
- Streamline data and accountability reporting.
- Mitigate power dynamics between institutions and state agencies.
“If colleges and universities receive an influx of public funding, they should be expected to use that money effectively to improve student outcomes,” said Bradley D. Custer, senior policy analyst for Higher Education at the Center for American Progress and author of the report. “A fair system of incentives helps to give these performance contracts teeth, making them a viable option for many lawmakers.”
Read the report: “Holding Higher Education Accountable in Federal-State Partnerships: Lessons Learned From Colorado Performance Contracts” by Bradley D. Custer
See also: “Fact Sheet: Holding Higher Education Accountable in Federal-State Partnerships” by Bradley D. Custer
For more information or to speak with an expert on the topic, please contact Tricia Woodcome at [email protected].