Accountability in Higher Education: Exploring Impacts on State Budgets and Institutional Spending Patterns

In recent years, performance-based accountability regimes have become increasingly prevalent throughout government. One area where this has received considerable attention in recent years is higher education, where many states have adopted funding policies that seek to tie institutional funding to objective measures of performance. To what extent have these policies been effective tools for restructuring financial incentives and exerting influence over administrative behavior? Using data from the Integrated Postsecondary Education Data System, this article finds that performance-funding policies have not had substantial impacts on state budgets but that they have had some limited influence on institutional spending priorities. Furthermore, effects on institutional spending were found to be greater on public research universities than other public colleges.