Abstract
This study examines how performance-based funding (PBF) for public four-year institutions in the U.S. is associated with the production of short-term certificates. Results indicate that high-dosage PBF is associated with increases in both the number of short-term certificate programs offered and the number of short-term certificates awarded, even though PBF’s incentives for the four-year sector typically focus on bachelor’s degree attainment. Given the challenges of improving performance on bachelor’s degrees, particularly in the midst of insufficient resources and support, institutions may be turning to certificates as alternative sources of revenue to address the financial uncertainty induced by PBF. The findings shed light on the broader impact of PBF on institutional behavior, beyond those directly relating to formalized performance metrics.
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Notes
Utah adopted PBF beginning in 2013, but because it rewards four-year institutions for certificate completion, institutions in Utah were excluded from the study’s sample.
For some states in some years, PBF was active, but not funded by the state legislature. Since it is difficult for institutions to accurately predict whether or not the policy would be funded, and the mere presence of PBF could produce fiscal uncertainty, the treatment variable equals 1 irrespective of actual policy funding status. Alternate estimates produced by analyses where treatment status only refers to funded PBF are not significantly different from those of the main analyses, and results are available upon request.
To test the robustness of the main findings, an alternative measure of dosage, representing the share of institutional revenue received via PBF for each institution, was used to estimate the difference-in-differences model. Estimates obtained using this alternative measure of dosage was similar to the main results and are available upon request.
CIP codes are comprised of two-digit, four-digit, and six-digit codes. Six-digit codes are the most detailed and represent specific academic programs.
Although Maine and Massachusetts stopped PBF in 2018, because this was only one year prior to the last year of the data, institutions in those two states were not excluded.
The Goodman-Bacon decomposition requires panel data to be strongly balanced, meaning that variable values must be non-missing for all units. Also, it does not allow for treatment status to turn off once it is on. Hence, only institutions that meet these criteria were included in the decomposition.
States that meet this criterion are Colorado, Nevada, Maine, Louisiana, Oregon, Mississippi, Tennessee, Kentucky, Ohio, and North Dakota. However, Colorado, Kentucky, and Mississippi were excluded due to having stopped the policy at some point during the duration of the data for more than one year, and Tennessee was excluded because it adopted PBF prior to 1997 and thus its treatment status was always on in the data. Maine had PBF in place from 2014 to 2018, but was not excluded because the policy stopped just one year prior to the last year of the data.
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Choi, J. Performance-Based Funding and Certificates at Public Four-Year Institutions. Res High Educ (2024). https://doi.org/10.1007/s11162-024-09781-y
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DOI: https://doi.org/10.1007/s11162-024-09781-y