The news is disappointing for those who have fixed their hopes on performance funding (in Texas it is known as outcomes-based funding) as a strategy to improve graduation rates in higher education.
A new book, to be released in October 2016, is the most extensive study to date of the implementation and impact of performance funding. Performance Funding for Higher Education presents findings from a three-year study of leading states in the movement: Indiana, Ohio, and Tennessee. Here is a link providing a preview from the highly regarded Community College Research Center at Teachers College, Columbia University.
When you read the summary bullet points it's clear that performance funding has not achieved its objectives, or at least it's difficult to measure whether the model has driven any positive outcomes. In other words, since colleges and universities are engaged in a host of strategies to improve graduation rates, we can't be certain about cause and effect with any single variable. Please have a look at the summary.
For faculty members the most disturbing item on the list is this:
Unintended impacts: Performance funding provides an unintended incentive to weaken academic quality and to restrict the admission of less-prepared and less advantaged students who are less likely to finish college and thus less likely to pay off for institutions.
It is one thing to experiment and fail to achieve objectives, and quite another to cause harm. It's too early to make sweeping judgments on performance funding, especially here in Texas, but so far the evidence is not promising.