Performance-Based Funding for Higher Education

Performance-Based Funding for Higher Education





Question 1

Performance-based funding is one of the essential funding techniques among others that are used for higher education in most nations globally once very popular in the 1980s.  By the start of the twenty-first century, most of the states in the western countries had adopted the performance-based funding for the allocation of the state resources to the schools. The funding is based on nothing but the performance criteria of higher education universities and college who are obliged to get state funds. The funding links various state funds directly and formulaically based on the performance of the individual schools depending on different indicators. The best-performing school will automatically get funds from the state government for improvement of the structures and other things (Hicks, 2012).

 Ideally, the process is very efficient, and the budgeting is directive, thereby allowing the state officials to consider the performance indicators of the institutions before giving out funds. History outlays that most of the universities were not able to get the funds through some bias criteria based on the relationship between the school and the state government. This medium led to some universities which were doing well in terms of students admission and performance to struggle so much due to lack of finance. On the other, the universities with poor performance were the one being given and this led to the identification that the state funds were being used inappropriately.

The interesting bit in the funding is that the performance is based on the number of admissions that the college brings every year and the also on the number of students completing the course at the end of the studies (Dougherty, Natow, Pheatt & Reddy, 2016). I think that performance should be evaluated by grades that the completing students can get at the end of the year and on the ability to understand and apply the knowledge and skills obtained from the school. However, the opposite is done, and yet it is still called performance based funding. Moreover, there are a lot of misuses that is experienced by the state government when the more developed universities continue to get more funds while the other developing ones are left hence discouraging decentralization of the universities.

Due to the developing and advancement in technology, most of the university with high affinity to get the funds will try much to qualify for the funds. The future will hold a competitive structure where the schools with even create some interesting features like building to attract the parents and students to get the number of admissions that is better than the others. Most of them will even an extra mile to forge the completing degrees through a creation of a secure channel for all students to perform for the sake of getting numbers (Miao, 2012). On the other hand, the future will have a good performance based funding that is concerned with the real performance and not the superficial one. The funding will have a survey body that will be responsible for analysis to ensure that equality and honest is applied all through the process. The performance indicators will have a mechanical analyzer within the organization who will be ensuring that the admission of the students is taking place based on the structure and the capacity of the university and not on greed to have many students. Ideally, the future will require an improvement of the past performance based funding for the sake of the growing society.


Hicks, D. (2012). Performance-based university research funding systems. Research Policy, 41(2), 251-261.

Dougherty, K. J., Natow, R. S., Pheatt, L., & Reddy, V. (2016). Performance funding for higher education. JHU Press.

Miao, K. (2012). Performance-Based Funding of Higher Education: A Detailed Look at Best Practices in 6 States. Center for American Progress.

Question 2

Based on the issue of revenue of the higher education, is it possible for the state government to adopt a policy that will manage all the revenues collected by the universities for effective management? (Brown, Bull & Pendlebury, 2013).And again does the government allow the institutions to invest outside like opening a pub in the name of the schools to increase the revenue of the school? Moreover, based on the expenditure, I would like to ask whether the universities especially the public ones are instructed through a policy to provide an audit to the state that is responsible for education for analysis? And if so at what policy allow them to do so? In case the university has spent more than what was budgeted for, are the accounts authorized to increase the fees of the students and how to meet up with the deficit (Barr & McClellan, 2011).

On the topic of fundraising, I would like to know how many times in a year is a public university allowed to do a fundraiser.  Moreover, is there a limit on the amount that they should collect from the public? In the case an institution have performed a fundraiser and the amount raised is twice the one they expected, where does the surplus go to and who is responsible for that money. Based on appropriation, I would like to ask whether it is mandatory for the university to secure some money or asset doe special purposes in the future (Horngren, 2009). And what happens in case the amount is not kept?


Barr, M. J. & McClellan, G. S. (2011). Budgets and Financial Management in Higher Education. San Francisco, CA: Jossey-Bass. (ISBN 978-0-470-61620-8).

Brown, G. A., Bull, J., & Pendlebury, M. (2013). Assessing student learning in higher education. Routledge.

Horngren, C. T. (2009). Cost accounting: A managerial emphasis, 13/e. Pearson Education India.

All Rights Reserved,