Holding Higher Education Accountable in Federal-State Partnerships

In the early 2000s, Colorado policymakers invented a new accountability concept for their higher education institutions called the performance contract. Performance contracts were supposed to refresh the relationship between institutions and the state. In return for state funding from the new College Opportunity Fund (COF)—a first-of-its-kind voucher system for higher education—institutions would agree to improve performance based on carefully selected metrics defined in the contracts. Although it was a creative replacement for an older accountability system, the contracts suffered design flaws and were not realized to their full potential. As a result, the original contracts existed for less than a decade, and subsequent versions have since been phased out. The concept of a performance contract, however, deserves a second look in a new context. As federal policymakers take on the task of addressing underfunding and poor outcomes in public higher education, Colorado’s experiment with performance contracts offers insights into how to achieve accountability for institutions in federal-state funding partnerships.

Many experts agree that a federal-state funding partnership is needed to make higher education live up to its potential to build a more equitable and prosperous society.¹ In such a partnership, states willing to pitch in more support to institutions would receive a significant increase in federal funding. Infusing federal and state funding into public colleges—as well as private historically Black colleges and universities (HBCUs) and other minority-serving institutions (MSIs)—would make college more affordable for low-income students and would allow institutions to bolster support services to improve student success.

Several bills introduced in the U.S. Congress in 2021 proposed using federal-state partnerships to make college free and improve student outcomes, which shows there is strong interest in the federal-state partnership idea.² As higher education advocates continue to consider how to craft federal-state partnerships, it is important they take a closer look not just at funding mechanisms but also at the accountability mechanisms needed to ensure that colleges effectively use their new public funding. Although college tuition may become free for more students, without accountability, students will continue to risk facing the low retention, transfer, and graduation rates that are all too common at American institutions.

At the same time, the colleges that have the most ground to make up in student outcomes are often those that state and local governments have continually underfunded. This is precisely the problem federal-state partnerships aim to correct. Setting the accountability bar too high at the outset could set these colleges up for failure. An accountability system must give institutions the flexibility to set reasonable performance goals that the government can monitor as proof of effective use of public funding.

One way to address this problem is to establish performance contracts, which are written agreements that bind institutions to their commitments to improve student outcomes in exchange for additional funding. In the 2018 report “Beyond Tuition,” the Center for American Progress put forward a federal-state partnership proposal that included performance contracts but did not explore in detail how to design them.³ This report takes a more in-depth look at how performance contracts could work in future federal-state partnership proposals and what challenges policymakers would face in implementing them. The report uses the performance contracts that were first used in Colorado’s COF as a case study.⁴

In 2004, Colorado policymakers devised the performance contract concept during their overhaul of state higher education financing, which led to the creation of the COF. To participate in the COF, institutions had to agree to performance contracts, which they negotiated individually with the Colorado Department of Higher Education.

Conditions of the Colorado contracts were written as performance goals and metrics, which included increasing retention and graduation rates by a specified percentage; adopting a common general education curriculum among public colleges; boosting programs that served state needs, such as teacher and nurse training; and more. The contracts were designed both to push institutions to improve student outcomes and to hold them accountable to the state. However, it did not exactly work that way.

This report finds that government officials and college leaders, looking back more than a decade later, generally conclude that the contracts were not as effective as they could have been. The following five critical weaknesses in design and implementation undermined their effectiveness:

1. Once institutions had signed their contract and gained access to the COF, the law gave them no incentives to meet their goals.
2. Colorado’s higher education agency conducted minimal compliance oversight of institutional performance.
3. There were too many customized goals in the contracts for the agency to monitor.
4. The goals in the contracts were not connected to a coherent statewide master plan for higher education.
5. Differences in resources and power between institutions led to disparate outcomes during contract negotiations with the state.

These findings offer lessons into how the performance contract concept can be improved and scaled up for use in federal-state partnerships. For example, the COF experiment demonstrates how important consequences are to incentivize institutions to make changes. Federal lawmakers must consider how to reward institutions for meeting or exceeding student success goals and how to hold them accountable for falling short. Otherwise, some institutions will take their new money and continue the status quo.

Performance contracts in a federal-state partnership, however, would be considerably more complicated than those used in Colorado. Whereas Colorado had two-party contracts between the state and institutions, a federal-state partnership would bind together the federal government, state governments, and institutions; CAP’s 2018 proposal also added accreditors. Even more daunting is the sheer number of institutions across the country that the federal and state governments would have to negotiate contracts with and monitor for progress, as well as for which they would need to enforce contract terms. Whether they have the capacity to manage these tasks is an open question considered in this report.

For future federal-state partnership proposals, one thing remains clear: If institutions are to get a giant influx of federal and state money, they should be held to higher expectations on improving student outcomes.

This report begins with background on Colorado’s COF. The author then discusses performance contracts in detail, including their purpose and contents; how they were negotiated, implemented, and enforced; and their outcomes. The report then presents key lessons learned from the Colorado case study with implications for using performance contracts as the accountability mechanism in federal-state partnerships. The report concludes with unanswered questions for policy experts to weigh.

The story of the College Opportunity Fund begins with the Taxpayer’s Bill of Rights (TABOR), which is a constitutional amendment passed by Colorado voters in 1992.¹⁰ TABOR restricts the growth of all levels of state government by placing limits on spending and revenue; chiefly, it requires voters to approve tax increases. In addition, when revenue exceeds the TABOR limit—the level of growth expected as a result of inflation and population growth—the state must refund the surplus to taxpayers.¹¹ TABOR also enshrined in the constitution an existing law that restricted growth in the general fund beyond 6 percent of the previous year’s funding levels.¹² When revenue fell due to recessions, the revenue limit ratcheted down and prevented the state budget from collecting enough revenue to recover to pre-recession levels. This is known as the “ratchet effect.”¹³ Revenue collected by public colleges—including tuition—is considered subject to TABOR and the ratchet effect. Therefore, “when higher education tuition revenue increases [due to enrollment growth or tuition price hikes], the state would have to reduce revenue in other areas during a year when state revenues would be in excess of TABOR limits.”¹⁴ These conditions seriously constrained institutions and lawmakers, pushing Colorado to near the bottom rank of all states on higher education funding.¹⁵

The crafters of the COF—beginning with Gov. Bill Owens’ (R) blue-ribbon panel of legislators, state officials, and others—sought to free colleges and universities from TABOR’s grip so they could collect more tuition revenue without causing a ripple effect across the state budget.¹⁶ To do so, higher education institutions had to become “enterprises,” which are entities that receive less than 10 percent of their funding directly from the state and are therefore exempt from TABOR. Thus, the state created “a fiction,” as one college president described it, that allowed institutions to get their state appropriation, albeit indirectly.¹⁷

Passed in May 2004, the College Opportunity Fund Act changed how the Colorado state government funded its public higher education institutions.¹⁸ In lieu of receiving direct appropriations for operations and instruction, institutions now received state funding through student vouchers called stipends. State resident students could bring their stipends of $2,400 to any public institution,¹⁹ and the sum of those stipends equaled roughly the direct appropriations that colleges and universities previously received.²⁰ With the majority of state funding going directly to students instead of colleges, the COF released all of Colorado’s public institutions from TABOR’s restrictions.

The COF also had other espoused purposes. Officials in Gov. Owens’ administration suggested that the stipends would introduce market forces into Colorado’s higher education environment.²¹ Where student consumers chose to spend their stipend was viewed as a measure of institutional quality. Colleges within the state would compete with one another for students and their accompanying state funding vouchers. This approach was also thought to increase access to Colorado’s underserved students—especially “low-income Coloradans, males, and minorities,” as outlined in statute.²² By making the state’s investment of $2,400 in each student transparent and tangible, policymakers theorized that more of these underserved students would take up the offer to enroll in college. The underlying goal was to lift the state out of the so-called Colorado paradox, which described the concurrence of Colorado’s highly educated population—due to the migration of college-educated people into Colorado from out of state—and its large percentage of residents who did not go to college after high school.²³

There is universal agreement that the COF’s biggest success was freeing higher education institutions from TABOR, but according to its statutorily mandated evaluation in 2009, the fund failed to meet its subsidiary goals of increasing college attainment through a market-based approach.²⁴ However, the COF in its original form did not last long. While the student stipend still exists today, Colorado legislators have since changed how higher education is funded by adopting new performance-based funding models.

Performance contracts

At the same time institutions sought freedom from TABOR, they also sought freedom from Colorado’s existing accountability system—the Quality Indicator System (QIS). Created in 1999, QIS required institutions to report annual data to the state on 21 indicators of institutional quality, including graduation rates, faculty teaching workload, freshmen retention rates, support and success of minority students, institutional expenditures per student, the number of credits for a degree program, and more.²⁵ Institutional leaders viewed QIS as “unnecessarily burdensome.”²⁶ In response, the COF’s designers created performance contracts, a novel feature in state higher education accountability policy. For institutions to participate in the COF, they first had to agree to enter into performance contracts with the Colorado Department of Higher Education. All public colleges and three private colleges did so, and as a result, they no longer had to report data through the QIS or needed the department’s approval to add or make changes to academic programs.

Legislators outlined the basic structure of the contracts in the COF statute, making the Colorado Department of Higher Education responsible for negotiating contracts and establishing performance goals that were “measurable and tailored to the role and mission of each institution.”²⁷ The department was required to align the goals with four broad priorities: improving access, improving quality and success, improving efficiency of operations, and addressing the needs of the state. The rest was left to the department and institutions to figure out. According to one former department official, “We actually designed [the performance contracts] from the ground up. We were inventing a contract. Nobody had ever done what we were doing.”²⁸

Over the course of about seven months, the department created a draft contract with baseline principles and then met with leaders from each institution to negotiate the details.²⁹ For example, all contracts were to include a goal on increasing the fall-to-fall retention rate of first-time, full-time students, but the exact percentage increase had to be negotiated with individual institutions. Overall, interview participants described the negotiations as “pretty smooth” and “collegial,”³⁰ with most institutions quickly agreeing to their contracts. Institutional leaders interviewed in the 2009 evaluation—as well as for this study—commented that the negotiations presented a fruitful opportunity to engage in strategic planning on student success. In an interview with the author, a college president commented that at the time, colleges were largely focused on enrollment growth, but the “exercise” of the performance contract negotiations “forced institutions to at least think about things like retention and graduation.”³¹

But interview participants also remembered some of the negotiations as “tense” at times³² and “incredibly time consuming, incredibly challenging.”³³ A select few institutions were “absolutely, mind-bogglingly recalcitrant,”³⁴ resulting in negotiations that were “knockdown, drag out, went for weeks.”³⁵ Power was a key dynamic in these meetings. As many participants recalled, the well-resourced institutions—such as the University of Colorado system—had the staff, lawyers, and lobbyists to strongarm the department. They also had the institutional research staff capacity to carefully model retention and graduation metrics that were feasibly achievable, a tactic described by several participants as “gaming the system,” which allowed those institutions to avoid selecting ambitious goals for improving outcomes.

Leaders from the 13 public and private institutions and systems involved signed the contracts in spring 2005, ranging in length from about nine to 12 pages.³⁶ Much of the language was boilerplate, including statutory text and uniform mandates for all institutions. Yet there were four sections where institutions committed to individually tailored goals on improving retention and graduation rates, increasing enrollment of underserved students, and expanding programs that lead to employment in high-demand career fields.

The goals

Each performance contract contained the following five goal categories and sections under which the individually tailored goals or uniform requirements were written.

Fatal flaws

Institutions set varying deadlines for each goal. Typically, for example, the retention and graduation goals were to be met by the end of fall 2008 or spring 2009, and the general education curriculum overhaul was to be completed between 2006 and 2007. Institutions began submitting required annual reports on their goal progress to the Colorado Department of Higher Education in January 2006, which the department then summarized in an annual report to the legislature.⁴⁵

Unfortunately, there was a fatal flaw in the design of the performance contracts: There were neither rewards for meeting or exceeding the goals, nor consequences for falling short. In other words, if institutions did not meet their student outcomes goals, they saw no changes to their funding. College presidents emphasized this, with one calling the contracts “irrelevant because there was no money associated with it.”⁴⁶ Thus, for some institutions, the contracts were immediately forgotten following their inking. “I know we did the contracts, but I never referred back to them,” remarked another president.⁴⁷

A contributing factor to this was insufficient monitoring of the contracts by the department; one college president described it as “weak … with not much teeth.”⁴⁸ The department apparently did not have the authority or capacity to establish robust enforcement procedures, thereby giving tacit permission to institutions to ignore the goals for student outcomes they previously set. Though institutions had to report data and certify they were complying with the contracts each year, the department did not respond with comments about their progress toward their goals or lack thereof.

Data published by the department revealed mixed results on the extent to which institutions met these goals, with most reaching their 2008 graduation targets but not their first-year retention targets.⁴⁹ Given the limitations of the COF’s design and implementation, however, it is impossible to conclude how much of an institution’s progress or lack thereof can be attributed to the performance contracts, especially knowing that institutional leaders largely ignored them.

In fairness to institutional leaders, some of the performance goals overlapped considerably with what they were already focused on, such as increasing access to underserved students. Most institutions were invested in making improvements in those areas anyway, even if the motivation was not tied to the contract itself.

In addition, one former department official shared success stories from the contracts.⁵⁰ The Colorado Department of Higher Education leveraged the performance contracts to get faculty from public institutions to hammer out a common general education core curriculum, which was called Guaranteed Transfer Pathways, that was transferrable across Colorado.⁵¹ Institutions also made progress on reining in bachelor’s degree programs with excessive credit requirements and bolstering teacher education programs, in part because the department baked these goals into the contracts.

Those interviewed shared a general sentiment that the COF’s performance contracts could have worked better had they been designed and enforced differently. Reflecting on the lessons learned from Colorado’s experiment is necessary before building performance contracts into future proposals.

If Congress invests broadly in better funding for colleges through a federal-state partnership, it should tie that new funding to institutional performance on retention, completion, and equity in order to form a new accountability system for student success. One mechanism for doing so is a performance contract modeled on Colorado’s College Opportunity Fund.

Though the Colorado COF did not meet its student goals overall, the performance contract itself is a concept worth saving. Building on existing recommendations for improvements and commentary from interview participants, policymakers should consider the following lessons from Colorado when planning to adopt performance contracts at the national level.

Incentivize improvement through rewards, consequences, or both

Perhaps the most obvious lesson from the COF performance contracts is that any accountability mechanism must have either rewards, consequences, or both tied to desired outcomes. Without incentives, institutional leaders will find no advantage in prioritizing the goals in a contract over other strategic priorities that have more tangible value.

CAP’s Beyond Tuition proposal anticipated this problem:

Schools that far exceed expectations would receive bonuses. Those that fall short would be given time to improve but would then face a set of consequences that start with public disclosures, move to reduced government funding with continued poor performance, and eventually culminate in the loss of access to federal financial aid if unacceptable results persist.⁶⁰

However, Beyond Tuition does not propose performance-based funding as it is typically designed—offering institutions small increases in funding for meeting performance metrics. Overall, research has shown that such performance-based funding has yielded little of the intended effects on degree completion.⁶¹

Improve performance through monitoring

Related to the lack of rewards and consequences is the Colorado Department of Higher Education’s insufficient monitoring of progress. Remarked one college president in an interview with the author, “I think we send them a report, but I don’t think anybody reads it.”⁶² Surely someone did read them, since a report on performance contract compliance was presented to the governor and state legislature annually.⁶³ But the department’s passive approach to monitoring was ineffective. The evaluators of Colorado’s performance contracts recommended the department have annual conversations with institutional leaders about progress on goals in addition to routine data collection. These conversations—as well as consistent enforcement of consequences and rewards—are necessary in future uses of performance contracts so that institutions do not ignore or forget their obligations.

Streamline data and accountability reporting

The performance contracts were supposed to free Colorado institutions from their previous burdensome accountability system, but the new reporting requirements were not much better. The requirements often overlapped or conflicted with other existing mandates and required the use of multiple data systems. On top of that, each institution created customized performance metrics that added new data elements to report. As a result, the department found there were inconsistencies, errors, and overlap in data reporting. In a federal-state partnership that attempts to pull in more than 50 states and jurisdictions, it will be critical to find a common data system that does not create new or overlapping reporting requirements.

Fortunately, a common system already exists, even if it is flawed. With necessary improvements, institutions should be able to use data they already supply to the Integrated Postsecondary Education Data System (IPEDS) to meet any new reporting requirements in a federal-state partnership. To the extent possible, goals that would require data elements that do not exist in IPEDS should be avoided. States should evaluate their data systems and eliminate duplication to ease the transition into the federal partnership. 

Mitigate power dynamics

As described above, several participants commented on the power dynamics at play during the contract negotiations. Negotiating contracts with thousands of colleges will bring several challenges.

Policymakers will need to determine how much power to give individual institutions to select the goals in their contracts. Colleges will surely object if the government dictates the goals without their input because the goals would likely not be well tailored to institutions and may not reflect state or local goals. But giving colleges free rein to select the goals will result in thousands of customized goals that may not be sufficiently ambitious and do not sum to a coherent national or state strategy. The latter is what happened in Colorado. “Do not let the institutions pick their own metrics … Some are going to lowball it, some are going to go crazy high,” advised one former state official.⁶⁴ Another former official agreed and warned that “if you give every institution in this country bargaining power—I think we learned in Colorado if you give [even] 30 institutions bargaining power—it creates a mess. And they take that power.”⁶⁵ Balance must be struck such that the government can lead on the goals but will give sufficient voice to institutions.

There are also power differentials between institutions—for example, between a community college and a research university or between a single institution and a system. As participants pointed out, well-resourced universities had the staff and wherewithal to play hardball with the state officials, whereas other institutions were positioned only to accept the terms the department recommended. Furthermore, the University of Colorado, Colorado State University, and the community colleges negotiated a single contract for each of their systems, but small, rural-serving Adams State University, for example, had to fend for itself.

Equally important is how much power the state has in these negotiations. Whether a state has a weaker coordinating board, such as Colorado does, versus a stronger governing board—or even no statewide higher education authority—will affect the state’s ability to lead contract negotiations.⁶⁶

Establish peer comparisons

Setting goals and measuring progress begs the question: progress compared with what? Is progress measured by an institution’s own history, or are colleges and universities compared with other institutions within the state, in the region, or across the country? Colorado policymakers and institutional leaders wrestled with these questions. The evaluation of the first contracts concluded that a better use of peer institutions was needed as a guidepost for measuring progress.⁶⁷ As two participants warned, however, institutions may try to game the system by selecting peer institutions that will make them look good and will likely object if peer institutions are selected for them by accreditors or the government. The Beyond Tuition proposal offers a solution for this: using the National Center for Education Statistics’ Data Feedback Report to select peer institutions based on similar institutional characteristics and allowing institutions to appeal their categorization.⁶⁸

Consider including private colleges

As policymakers were designing the COF, Colorado’s four nonprofit private colleges and their lobbyists made sure that their students were not left out. Colorado residents who are eligible for Pell Grants and who attended one of the three private colleges that opted into the COF are eligible for a stipend at half the value of the stipend for students at public colleges.⁶⁹ The private colleges also had to sign performance contracts, but theirs contained fewer goals and conditions than the public institutions’ contracts.

In a federal-state funding partnership, should private colleges be included? And will they opt in? The three related bills introduced in the U.S. Congress in 2021 only targeted public colleges, plus nonprofit private HBCUs and MSIs.⁷⁰ Beyond Tuition, however, permits private colleges to participate—albeit with smaller awards—“as long as they abide by the affordability, quality, and accountability promises.”⁷¹ Including nonprofit private colleges in the partnership would ensure that their many historically underserved students also get a boost of support.

Beware of political change

A final lesson from the Colorado COF is on political change. Throughout the interviews, participants commonly set the context by describing who was governor and who was leading various state agencies, all of which saw considerable turnover during the COF’s lifespan. These frequent political changes—plus unpredictable events such as recessions—resulted in Colorado bouncing from one funding model to the next. A former state official reflected on the demise of the COF: “There’s lots of turnover in all state agencies, so … something that’s so complex was … probably dead in the water.”⁷² Even turnover in college presidencies was flagged in the COF’s evaluation as a problem: “[N]ew presidents can argue that their tenure should not be tied to contracts negotiated with their predecessors”⁷³; this gives them “a reason to weasel out of bad findings,” according to a researcher involved in the evaluation.⁷⁴ Relatedly, institutions are known to leverage political power to change systems when they no longer work in their favor: “As soon as institutions start feeling the squeeze [of] accountability, they go get the law changed, or they wait until the next election,” warned a former official.⁷⁵

These realities raise the question as to whether a federal-state partnership can withstand the constant political churn of the White House, Congress, the U.S. Department of Education, and the states. New policies need time to be implemented properly, and if not shielded from constant change, they will never fully materialize as designed. Leaders must take a leap of faith by entering into this innovative partnership and commit to carrying it through without making premature changes. A college president offered one recommendation on how to successfully implement performance contracts in a federal-state partnership: “If you appointed somebody who persisted, regardless of administration change, within the Department of Education … someone who was there for a long haul, then I think you could.”⁷⁶ Policymakers will have to find ways to ensure that the partnerships can take full effect.

Questions about designing performance goals

A substantial investment of new federal and state funding warrants a commitment from institutions to work toward achieving performance goals. While this report has focused on the processes for creating, implementing, and enforcing performance contracts, an equally challenging task is selecting the goals themselves. The following questions need answers.

A performance contract in a federal-state partnership is likely to be far more complex than those used in Colorado between one state agency and one institution. Beyond what can be gleaned from Colorado’s experience, additional questions about how performance contracts might work need to be answered.

Is a performance contract necessary in a federal-state partnership?

Interview participants generally agreed that the performance contracts used in the COF could have been a useful accountability tool. This report has considered the ways a performance contract can be improved, but is a contract necessary? So long as the goals and mutual expectations are clear, a contract may not be needed. Colorado lawmakers, for example, rendered the contracts obsolete when they wrote the performance metrics into state statute in the COF’s second iteration.⁸³ It may not be feasible, however, for Congress to build the individual performance goals into federal law.

A contract may also set the wrong tone. According to one college president, “To me, a contract says that we can’t trust you to do what you’re supposed to do, so let’s immortalize it or memorialize it [and] put it in legalese.”⁸⁴ Perhaps using a different term, such as agreement, would sit better with stakeholders. Agreements, in fact, are already in use between the federal government and institutions. All institutions that participate in Title IV financial aid programs sign a program participation agreement that specifies all the laws and regulations with which they must comply.⁸⁵ It is possible that program participation agreements could become the vehicle for performance goals under a federal-state partnership.

Who holds the authority in the contracts?

In Colorado, the parties of the contract were clear: the state higher education agency and an institution or university or college system. A contract in a federal-state partnership, however, would involve more parties, raising the question of who controls the funding and who has the authority to administer rewards and consequences. Beyond Tuition proposed that the contract would hold responsible the federal and state governments for their share of funding, accreditors for assessing quality and outcomes, and institutions for achieving the goals. But as one interview participant asked, “Who shuts the spigot off?”⁸⁶ Does the U.S. Department of Education hold all the power in the contract to issue sanctions against states, accreditors, and institutions for noncompliance? What can a state do if the federal government does not hold up its end of the deal? Does an institution have legal recourse if a state cuts its support, violating the compact? Indeed, the complex array of competing authorities will need to be worked out in a four-way performance contract.

Who has the capacity to monitor institutional performance?

Building governmental capacity to manage performance contracts with every public and private institution will be a challenge at both the federal and state levels. Beyond Tuition assigned the role of creating, monitoring, and enforcing the performance contracts to the U.S. Department of Education. The findings of this study on Colorado call into question that proposal. The sheer number of institutions alone likely makes this unfeasible. It would take a significant boost in federal capacity and funding to take on performance contract management, which seems unlikely to happen. A federal-to-institution contractual relationship would also cut out the state, which several interview participants thought was unwise given the historical state role in administering higher education. Instead, the federal role—in addition to providing funding—would be to develop the broad goals for the federal-state partnership as a framework for states to create and enforce contracts with institutions.

In Colorado, the state Department of Higher Education was best suited to negotiate contracts and collect data from institutions on goal progress, but as described above, it still lacked the capacity to properly monitor institutions and enforce compliance. Nonetheless, state higher education agencies—rather than the U.S. Department of Education—are probably the best option for creating and enforcing performance contracts nationwide. One college president agreed: “I think it’s not unfair for the feds to say to the states, if we’re going to make an investment in the operations of your institution for the achievement of goals that we mutually agree upon … then you have a responsibility to provide monitoring for that.”⁸⁷ However, in states with weaker or no state higher education agency, capacity to uphold the state’s responsibilities in the partnership will be a challenge. In such cases, additional funding from the federal and state governments will be needed to build capacity. As another college president suggested, “A lot of departments will say we don’t have the staff to do it, and so they’ll ask for more money to do it.”⁸⁸

What role should accreditors play?

Colorado lawmakers did not create new expectations for accreditors in the COF, so direct insights into this cannot be gleaned from this case study. But as a key prong of the higher education accountability triad, CAP included accreditors in Beyond Tuition:

The accreditor role in a performance contract is to evaluate educational quality and to conduct deeper dives when institutional outcomes are not up to par … If institutions struggle on federal performance measures such as graduation or retention, accreditors would conduct in-depth reviews to identify why a school is missing the mark and would offer recommendations to fix the problem.⁸⁹

Some interview participants said it could be helpful if accreditors have a monitoring role with the performance contracts. For example, one president thought the accreditation process could be “a very effective tool” to leverage good institutional performance, adding that “[if] there’s one thing that institutions pay attention to, its accreditation.”⁹⁰

Others, however, were skeptical. One president questioned whether accreditors had the “manpower” to perform performance contract oversight and highlighted how the accrediting bodies “don’t even have the same accreditation standards.”⁹¹ Another president was firm in his stance on the basic foundation for making a federal-state partnership work: “First things first, you’d have to get rid of the regional accrediting bodies. You just do away with them. They waste time, money, and energy.”⁹² And, as mentioned above, adding accreditors into the mix muddies the water as to whom institutions are directly accountable for performance. Thus, the verdict is mixed on whether accreditors should be involved in performance contract management in a federal-state partnership and needs additional exploration.

Colorado policymakers devised performance contracts as an innovative tool for holding institutions accountable in the College Opportunity Fund system. This analysis of interviews and documents demonstrates how similar performance contracts could work in federal-state funding partnerships that offer significant new resources to colleges to improve their quality. Contracts between the government and institutions would contain performance goals—carefully negotiated and individually tailored—thereby ensuring that colleges and universities make improvements in student outcomes in return for a historic investment of federal and state funding. Importantly, a fair system of incentives is also necessary to give the contracts teeth. But as this report outlined, these contracts would be considerably more difficult to manage than those used in Colorado. It would require an unprecedented level of coordination between the federal and state governments, accreditors, and institutions to select the goals, monitor progress, and administer incentives. Questions remain as to whether federal and state governments have the capacity to oversee institutional performance and whether some states or institutions would balk at the new accountability expectations that come with them. Despite their complexities, performance contracts remain a viable option for ensuring institutional accountability in future federal-state partnership proposals.

This project would not have been possible without the cooperation of many people. The author thanks Megan McDermott and other staff at the Colorado Department of Higher Education for providing information and documents; the 10 interview participants who shared insights and their assistants for scheduling the interviews; and Iris Palmer and Brian Prescott for reviewing the report before publication.