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In this working paper, our research team leveraged new data created from thousands of financial documents to explore the different types of local tax sources appropriated to community colleges. While property taxes are the most common local tax source for community colleges, we outline a variety of additional local funding sources for community colleges, local sales tax, gambling tax, hotel tax, tobacco or cigarette tax, alcohol tax, fuel or gas tax, entertainment tax, and more.  

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We compiled the first longitudinal dataset with detailed state funding information to examine whether different funding strategies for public higher education affect college access and completion, with a focus on outcomes among racially minoritized students. We found no relationships between funding mechanisms and student outcomes at community colleges. However, at public universities, we found that funding strategies with a base-plus component that provide across-the-board increases or decreases to colleges may reinforce already-existing funding inequities. This leads to a system in which racially minoritized students, particularly Black students, face challenges to completing a degree.

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State funding for public higher education institutions is crucial in supporting college access and completion, particularly among students from historically underrepresented groups, yet little is known about these mechanisms and how they are affected by financial challenges. This paper provides the first detailed longitudinal typology of state funding strategies, focusing particularly on formula volatility and equity. We find a gradual shift toward funding models that include a combination of base-adjusted and enrollment and performance metrics, along with a growing focus on equity. During recessions, states frequently revert to across-the-board funding cuts, further disadvantaging underresourced institutions.

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We compiled the first longitudinal dataset with detailed state funding information to examine whether different funding strategies for public higher education correlate with college access and completion, with a focus on outcomes among racially minoritized students. We found no relationships between funding mechanisms and student outcomes at public universities. However, at community colleges, we found that funding strategies that combine base adjustments and enrollment or performance components may increase enrollment but not completions.

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The majority of research on the role and influence of financial grant aid typically focuses on federal aid, even though a substantial portion comes from states. State policymakers typically determine how much of a state’s financial aid allocations will be distributed based on students’ financial need, academic merit, or a combination of need and merit. We examined how need-, merit-, and combo-based state-level financial aid policies relate to students’ enrollment and completion using detailed data on states’ financial aid programs available for first-time entering college students for fiscal years 2004-2020. We found little consistent evidence of a relationship between student outcomes and the amount of aid per recipient, though, we did find practically significant correlations with aid eligibility criteria. Among institutions located in states with combo-based aid, requiring a college entrance exam for eligibility was associated with smaller enrollments and lower graduation rates compared to institutions that did not require the exams (though, this finding was not replicated when investigating requiring exams for merit-based aid).

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Administrative burden, or the frictions individuals experience in accessing public programs, has implications for whether and which eligible individuals receive aid. While prior research documents barriers to accessing federal financial aid, less is known about the extent to which state aid programs impose administrative burden, nor how administrative burden varies across aid programs or how it relates to target populations. This study examines administrative burden in 19 state aid programs in Tennessee. We find programs targeting less-advantaged students (technical and community college students) have lower burdens than those targeting more-advantaged students (merit-aid programs, programs available across sectors). The state’s only program explicitly targeting racially minoritized students had the highest burden. We discuss implications for designing more equitable and effective state aid programs.

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In this paper, we explore the relationship between community colleges’ reliance on local funding and their total institutional revenue. We find that community colleges’ level of reliance on local funding is negatively related to their total institutional revenue for rural community colleges and community colleges serving an above-average share of low-income students.

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This study examines the impact of various types of performance-based funding (PBF) policies on institutional resources across postsecondary institution types. Although 41 states have implemented PBF over time, the design and dosage of PBF policies look very different across PBF-adopting states. We leverage multiple quasi-experimental approaches and find that high-dosage PBF policies had a negative impact on state funding for four-year historically Black colleges and universities (HBCUs) and four-year institutions serving an above-average share of racially minoritized students. We also show that sporadic positive effects of PBF policies on state funding are concentrated primarily among non-minority serving institutions (non-MSIs) and institutions serving below-average shares of racially minoritized or low-income students. Taken together, our findings reveal the unequal impacts of PBF policies and suggest that PBF policy design is an important consideration with critical implications for under-resourced institutions and the underserved students they serve.

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Performance-based funding (PBF) policies are an increasingly common way for states to tie funding for public colleges and universities to student outcomes. Yet amid growing concerns about student debt, the potential exists for PBF to affect student debt and ability to repay loans in both intended and unintended ways. In this paper, we use the first comprehensive dataset of PBF policies to examine the effects of PBF on debt and repayment outcomes. We find evidence that PBF policies increased the debt burdens of students who left college without a degree while not affecting the debt of completers.

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This study draws upon the first detailed longitudinal dataset on performance-based funding (PBF) to document the evolution and current landscape of PBF in American higher education. We show that while PBF has become increasingly common, states have experimented with adopting, abandoning, and re-adopting PBF over time. We also find a new wave of PBF adoption occurring in the 2010s following the Great Recession. However, PBF remains a relatively weak policy lever with a small share of funds at stake in most states and some states not funding PBF even when it exists in legislation. Equity considerations vary in the student groups they include and less than half of two-year and three-quarters of four-year PBF systems include race when allocating performance funds. Our findings complicate some common characterizations of PBF and offer new insight for researchers examining how PBF policy design shapes student and institutional outcomes.

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