Research in Higher Education

, Volume 58, Issue 7, pp 746–771 | Cite as

Covet Thy Neighbor or “Reverse Policy Diffusion”? State Adoption of Performance Funding 2.0

  • Amy Y. LiEmail author


Performance funding has become an increasingly prevalent state policy to incentivize student retention and degree completion at public colleges. Using a Cox proportional hazards model on state-level data from years 2000 to 2013, this study analyzes the latest wave of policies that embed base appropriations into the state budget to fund student outcomes. Results indicate that having a greater proportion of bordering performance funding states diminishes the likelihood of policy adoption, capturing a “reverse policy diffusion” effect. States with Republican-controlled legislatures, more professionalized legislatures, and rapid growth in unemployment rates are more likely to adopt the policy, while those with higher educational attainment levels and more bachelor’s degrees awarded per student are less likely. Implications include the surprising finding of reverse policy diffusion, which suggests that states are delaying adoption until after they can observe the political consequences and impacts of the policy in neighboring states. Findings point to a policy learning effect—by observing other state’s experiences, policymakers can make more informed decisions about whether to pursue performance funding as an accountability tool.


Performance funding Higher education finance Policy diffusion Policy learning State policy adoption Survival analysis 



This research was supported by a Dissertation Grant from the American Educational Research Association which receives funds for its “AERA Grants Program” from the National Science Foundation under Grant #DRL-0941014. Opinions reflect those of the author and do not necessarily reflect those of the granting agencies. This research was supported in part by a research grant from the TIAA Institute, Grant #63-0151 and by the Department of Education, Institute of Education Sciences, Grant #R-305-B-090012. This study is the first of three dissertation papers on performance funding. An earlier version of this paper was presented at the 2015 conference of the Association for the Study of Higher Education in Denver, CO. The author thanks William Zumeta, Chris Adolph, Nick Hillman, Maresi Nerad, and Justin Marlowe for comments on earlier versions of this paper. The author also thanks discussant Jennifer Delaney for her comments at ASHE, as well as the feedback of two anonymous reviewers.

Supplementary material

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Supplementary material 1 (PDF 22 kb)


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Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Department of Leadership, Policy and Development, College of Education and Behavioral SciencesUniversity of Northern ColoradoGreeleyUSA

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