Test Vehicles for Accountability: State Developments

However, while the federal government failed to boost accountability, state governments have embarked on an ambitious, albeit controversial, effort to hold public institutions accountable through performance- or outcomes-based funding (OBF) mechanisms. At least 29 states had such policies in place last year, with several more actively considering, transitioning to, or adopting this approach.¹ This is significant in light of the fact that almost three out of four students (73 percent) attend public institutions.² While there is considerable debate about the impact of such efforts, both intended and unintended, their adoption signals the recognition for greater accountability at the state level. Moreover, given the historical role of states in education policy as laboratories of reform and innovation, this trend merits attention and could help contribute to accountability at the federal level by yielding insights and suggestions about the priorities and overall direction of an accountability system.

The growth of such policies reflects the ongoing search for higher education outcomes-driven accountability at the state level. In 2010, the National Governors Association (NGA) and Complete College America (CCA) announced a core set of metrics of college completion, including progress and outcomes data (see Table 2), which expanded on measures already required by the U.S. Department of Education for financial aid eligibility.³ The metrics are now reflected in the accountability reporting systems of 33 states⁴ and NGA recommended that states disaggregate performance data according to academic preparation, income, age, and race/ethnicity.

Table 2: Governors’ Task Force on College Completion (NGA/CCA) Metrics (2011)

The states’ focus on completion is certainly reflected in OBF policies. Two recent analyses by Third Way and HCM Strategists (see Table 3) found that completion is the most prevalent outcome measured by states, followed closely by equity, with priority populations defined primarily as low-income students. Completion metrics are used in the OBF systems of almost all states that employ such a policy. Interestingly, labor market outcomes (such as wages and job placement) are not widely used, not even at the two-year college level; this could be in large part because of challenges in accessing the data necessary to accurately measure labor market success.

Table 3: Metrics Categories in State Outcome-Based Funding Models (2018)

Overall, while the specifics vary widely among states implementing OBF policies, it is nonetheless quite significant that completion and equity are the top metrics used, reflecting the policy priorities for accountability. As we examine next the appropriate federal accountability framework and metrics, it is helpful to take into consideration the direction states have taken in choosing their categories of metrics and the priority areas chosen by state policymakers, as a significant portion of public colleges and universities operate under such OBF policies.