Performance-Based Funding: Equity Analysis of Funding Distribution among State Universities

Abstract

How to finance higher education remains controversial among policy makers and constituencies across the United States. Texas is not exempt from the controversy. With increasingly strained state finances, institutions of higher education and the Texas Higher Education Coordinating Board (THECB) have come under pressure to increase performance accountability, efficiency, and competitiveness. In Texas, House Bill 9 (H.B. 9) was enacted in 2011 to dedicate a portion of state funding to public colleges and universities that meet specific performance-based standards. Although H.B. 9 has been passed and signed into law, it still has not been determined how funding will be distributed or how effective it will be. This paper analyzes data from several states with similar performance-based funding standards to help bring to light to the possible effects H.B. 9 will have on Texas’ public four-year universities.