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Implementation and Impact of Outcomes-Based Funding in Three States: High-Level Findings

Outcomes-based funding (OBF) is a term used to describe state and system-level higher education funding policies linking public dollars to key student outcomes such as credit completion, retention and graduation. Outcomes-based funding models are a significant shift away from traditional approaches to funding public higher education based on enrollment or previous levels of funding. Within the past decade, OBF policies have become increasingly prevalent and are now present in a majority of states. When taken together, these policies determine how hundreds of millions of dollars are distributed to public colleges and universities across the country.

At the same time, outcomes-based funding policies vary widely across states. For this reason, generalizations are not particularly helpful to policymakers. It is much more useful to examine these policies within each state’s context to answer the question of who these policies affect, how, and under what circumstances. Providing this type of more practical analysis to guide state policymakers who are considering adopting or refining OBF, Research for Action (RFA) has compared the implementation and impact of OBF in three states—Indiana, Ohio, and Tennessee.