Constructing "winners and losers"
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In recent years, numerous state-level policies intended to improve the efficiency and effectiveness of higher education have emerged and, in some cases, re-emerged. One such policy that has gained traction in states is performance-based funding—a method of tying state funding for public higher education institutions directly to institutions’ performance on pre-specified metrics. This approach represents a departure from the traditional, input-based method of allocating state funds to public colleges and universities, which has historically relied on enrollment counts. Grounded in a theory of policy design that draws attention to the value-laden elements of the policy process, this study examined performance funding policy design, both policy design content and process, in two states: Colorado and Texas. For the analysis, this study employed a multiple case study research design and drew on interviews with 34 policy actors, over a dozen observations of legislative and state higher education agency proceedings, and over 300 documents. Findings from this study indicate that performance funding model designs are overwhelmingly a function of higher education institutions’ self-interest, particularly in contexts where institutional representatives have substantial authority over the model design process. The social construction of certain students (e.g., ethnic minority students) as deserving or undeserving of policy benefits also contributes to model designs. Finally, institutional representatives’ political power resources are directly associated with the distribution of benefits or burdens to their institution. By deconstructing performance funding policy designs to their constituent parts, this study focused on how and why, given myriad options for performance funding policy designs, certain policy elements were chosen instead of others. This analysis of designs is especially critical given evidence that costly failures in some instances of performance funding may be attributed to poor design, including the use of inappropriate metrics. Moreover, by drawing on a theory of policy design previously unintroduced to the higher education literature and extending the performance funding research base, this study made a number of conceptual and practical contributions, including identifying important considerations for performance funding policy evaluations and for funding model design.