The national spotlight on improving college completion has never been stronger. The United States needs more college graduates to keep the economy healthy and expand opportunity for those struggling in America today, as nearly any educator and lawmaker will tell you. Campaigns to improve student completion are particularly concerned about the performance of our nation’s community colleges, which paradoxically serve as a major pathway to upward mobility in our society, while simultaneously generating stubbornly low graduation rates.

Seeking to test policy levers that can change individual and institutional behaviors, a growing number of states are turning to the power of the purse. Believing that student success outcomes will not improve dramatically until we reward colleges for completion rather than enrollment, states are experimenting with new performance-based funding models. Dubbed “Performance Funding 2.0” because they are trying to improve upon the limited success of higher education performance funding models of earlier periods, these new models allocate some percentage of state support on the basis of institutions’ progress on improving student retention, progression, or completion of credentials, not just on enrollment levels.

The jury is out on whether performance-based funding can move the needle on student completion, but it is a popular topic in policy circles today and I believe—when designed and implemented right—it holds great promise.

My Jobs for the Future colleagues and I, who have been working closely with community college systems and associations in 15 states, have dug deeply into this new policy trend. We have produced a new toolkit to help states design performance-based funding systems that can influence students’ and institutions’ behavior, avoid unintended consequences, and withstand shifts in political and economic climates.

This toolkit and set of resources for state leaders, titled Tying Funding to Community College Outcomes, includes:

• A first-hand reflection on the design and rollout of Ohio’s performance-based funding system, written by former Ohio Board of Regents Chancellor Eric Fingerhut, with a description of the system contributed by David Altstadt;
• An exploration of key performance funding design issues and recommendations, which I authored in response to a request from the Campaign for College Opportunity in California; and
• A comparison of key design elements of performance funding systems now in place or in development in 11 states involved in Achieving the Dream and the Developmental Education Initiative.

We invite you to download Tying Funding... and weigh in with your thoughts on the potential of performance-based funding to improve community college outcomes. There is much to be learned still about the design and delivery of powerful, sustainable performance-based funding systems. We encourage your views: We’d like to hear from you.