Running head: performance based funding 1

Impact of Performance Based Funding in Public Education

Marcus Benton
Concordia University Texas - DFW Center

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Abstract

In this paper I will discuss what is performance-based funding and how performance-based
funding is used in most schools that have implemented the model. I will also identify what is the
purpose of performance based funding, and how is performance-based funding beneficial in
producing student achievement. I will end my paper addressing the pros and cons of
performance-based funding, mainly focusing on the negative concerns of the approach.

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Impact of Performance Based Funding in Public Education

The question that many people have in education is, what is performance based funding
and what is the purpose of performance based funding in public education? The purpose of
performance based funding is to better align funding of schools with student outcomes and
incentives in hopes of improving schools individually and systematically (Mesecar & Soifer,
2013). It provides schools with the opportunity to provide funding in hopes of positive desired
results. Performance based funding rewards schools for both achievement and improvement
which in turn has the potential in promoting competition and student performance. Educational
specialist like Doug Mesecar believe that aligning funding and performance is an incentive that
should be applied equally to all schools (Mesecar & Soifer, 2013).
Initially outcome-performance based incentives were developed for charter schools that
measured academic growth of individual students over time. As we will learn these same
components that were used by charter schools will begin to be utilized in traditional public
schools as well as being implemented in higher education and adult education. Whats ironic is
that only a few K-12 schools have experimented with performance based funding. For example,
The Florida Virtual School which is a state operated online school that provides school districts
with online learning options for students in grades K-12 (Merecar & Soifer, 2013). The Florida
Virtual School is a results based model school that provides funding for students who
successfully completes required courses. Merecar and Soifer states that this approach takes the
International Association for K-12 online learning definition of competency-based education one
step further. The goal is at least at the secondary level once competency-based education is
implemented to tie funding to mastery.

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Dating back to 1984 there have been efforts by many governors and states to implement
PBF statewide into all public schools (Merecar & Soifer, 2013). As early as 2011 and 2013
states like Michigan and Arizona signed bills into law that allocated $2 million for PBF as a pilot
incentive program for a few districts and charter schools. The issue with the incentive programs
was a current practice that rewarded schools almost exclusively on attendance instead of being
based on academic growth.
How can performance based funding be utilized to benefit student growth and
achievement in the classroom? The first process that has been proven to yield successful results
is merit incentive pay for teachers with outcomes for students. Merit pay, which is increasingly
being implemented across the country is beginning to yield substantial benefits for student
achievement (Merecar & Soifer, 2013). There are many questions and concerns of how to
implement PBF into schools and does PBF work for all schools or just certain types of schools.
Merecar and Soifer believe that the key to implementing and scaling school based PBF models is
policy change in education. Policy change is the most disruptive innovation in a system that is
regulated by governmental entities (Merecar & Soifer, 2013). There are many important issues
to address when considering the PBF model at the school building level. To highlight a few of
these issues; merit pay for teachers, determining which outcomes and data are used, how much
and which funding in in the PBF model is considered, and which type of schools would benefit.
When it comes to addressing these issues you must always keep students in mind first
and make sure that incentives are aligned with sustained student achievement while making sure
that the correct processes for implementation are in place. There are states like Massachusetts
that are having great success with performance based funding due to over-hauling their entire

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educational system. Massachusetts combined strong standards, assessment, and accountability

with increased funding (Hanushek & Lindseth, 2009).
On the other hand, the million dollar question is, what is the best approach when it comes
to funding the performance based model? Hanushek & Linkseth have developed a performance
based funding system that addresses school failure. Their approach has five interlocking
components to educational objectives which are similar to Massachusetts approach. In their first
step they provided clear and strong standards, assessment, and accountability. They implemented
a value-added assessment system for schools and personnel, so that the contribution of schools to
student outcomes would be the focal point of policy (Hanushek & Lindseth, 2009). In their
second step, their system empowered local decision making as key because the states attempt to
run schools has contributed to the inability to translate higher funding into higher achievement.
They also believe that local decision making should involve local citizens in setting funding
levels and having effective options. Their third step is the direct reward performance which is,
whoever contribute to higher student achievement should be rewarded. This would reward
teachers, administrators, and personnel. The key in mind is student performance with individual
and group rewards as being a factor in order to turn around failing schools. Hanushek &
Lindseth, 2009 stressed without individual rewards it would be impossible to get good people to
bad schools and without this type of participation it would be difficult to turnaround failing
schools. The fifth and final step is providing accurate information for continuous improvement
where schools are accurately assessing the value added by schools on a routine basis. This
information is important to parents in helping them make sound decisions on what is best for
their kids and press for better performance without this information (Hanushek & Lindseth,
2009).

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Earlier in my writing I discussed how states like and Arizona and Michigan had begun
implementing PBF programs in their states, and I would like to expound on how other states are
beginning to experiment with PBF in their states in regards to bettering student achievement. In
2013 Arizona implemented a statewide program called Student Success Funding which was
expanded in 2014. Arizona has also implemented a new approach that focuses more on using an
achievement school district model (Merecar & Miller, 2015). You have states like Michigan that
have implemented the PBF model since 2012 and states like Pennsylvania are providing
flexibility funding in exchange for performance based outcomes (Merecar & Miller, 2015).
States like Florida, Wisconsin, and Oregon have begun exploring PBF models with Colorado
being the latest to implement a PBF model.
In Colorado the governor John Hickenlooper signed a bill into law that focused on the
notion for paying for success known as the Social Impact Bond. This new law allowed the state
to partner with service providers and private sector investors to fund and provide interventions in
order to provide economic opportunities (Merecar & Miller, 2015). The Colorado approach is
different than other states while it focuses on supporting healthy futures and promoting child and
youth development as well as altering the delivery of funding to a system that is based on results
(Merecar & Miller, 2015). The greatest achievement of these PBF approaches by the states
mentioned is that they ensure that education funding is focused on key outcomes and a system
that provides continuous improvement.
While there is an extraordinary push by some states to adopt strategies that focus on PBF
there is also a concern for the need of federal educational funding as well. Merecar and Miller

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feels that lawmakers need to consider key design principals that would apply to any PBF
approach at the federal level (Merecar & Miller, 2015).
I have discussed a lot of the positive aspects of implementing a performance based model
in most schools, but I would also like to explain some of the concerns over PBF. Two scholars
by the name of Lewis C. Solomon and Michael Podgursky conducted profound research on the
pros and cons of PBF, but with emphasis on the negative aspects by interviewing some of the
most accomplished educators in the country. These educators provided the scholars with some of
the common criticisms of performance based compensation. The first criticism that was
discussed was performance based compensation programs encourage competition rather than
collaboration among teachers. (Solomon & Podgursky, 2001) They believe that such programs
would pit teachers against each other by being in search of a more lucrative paycheck. The
conflict between teachers in search of a higher paycheck could have a major effect on student
learning.
Next, the second criticism that discussed, there is no clear definition of what constitutes a
good teacher, so what would merit be based on? (Solomon & Podgursky, 2001) Most of the
teachers interviewed believed that it is nearly impossible to measure a teachers value to the
educational process. They feel that clear targets to measure performance must be developed and
they cant rely solely on standardize testing. When it comes to the third and final criticism the
educators focused on when you reward teachers for student achievement, few want to teach
certain kids in certain communities. (Solomon & Podgursky, 2001). A great point was posed in
relation to this concern and that is, how can students at different levels of learning be compared?
For example, you have some teachers like myself who have difficult classes where you may see
growth but not necessarily all students being academically successful. While you have some

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teachers who have self-motivated bright students who grow and succeed academically. Some
teachers fill that most of the low performing students would be placed in new teacher classrooms
and some teachers may even try to game the system like we have seen in Atlanta, Georgia.
Overall, when it comes to performance based funding there has been a slight push in
effort by some states implementing models that reflect a performance based model. The most
difficult approach when developing a PBF model is how it will be funded and how it will
enhance overall student achievement.

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References

Hanushek, E. A., Lindseth, A.A. (2009). Performance-Based Funding, Pages 101-105.

Mesecar, D., Miller, C. (2015). Showing Up is Not Enough: Performance-Based Funding in
Federal Education Policy. americanactionforum.org/research/.
Mesecar, D. Soifer, D. (2013). Applying Performance-Based Funding To Public Education.
lexingtoninstitute.org/wp-content/
Solomon, L.C., Podgrusky, M. (2001). The Pros and Cons of Performance-Based Compensation.
faculty.missouri.edu/~podgursky/wp-content/

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