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Business and Policy Areas
Business and Policy Areas

Report Examines Outcomes-Based Funding Models

February 20, 2015

Approximately three dozen states are currently developing or implementing policies that link desired outcomes to the allocation of funds to public institutions, according to a report just issued by HCM Strategists, with funding from the Bill & Melinda Gates Foundation.

Driving Better Outcomes: Typology and Principles to Inform Outcomes-Based Funding Models outlines the typical characteristics of four types of systems. It also identifies outcomes-based funding (OBF) as a form of performance-based funding (PBF), following the lead of Complete College America and its 2013 report titled Outcomes-Based Funding: The Wave of Implementation.

Despite an apparent divergence in terminology, PBF is a management tool states use to hold public higher education systems and institutions accountable to the policy prerogatives of elected officials. A detailed summary of PBF/OBF appears in Performance-Based Funding for Higher Education, authored by the National Conference of State Legislatures. Another useful resource—which provides the perspective of a state budget officer—is Improving Postsecondary Education Through the Budget Process: Challenges & Opportunities, a report issued by the National Association of State Budget Officers.


Bob Shea
Senior Fellow, Finance and Campus Management