Goodbye Performance-Based Funding: Policy Abandonment of Performance Funding for Higher Education in the United States

Between 1997 and 2019, 16 out of 41 performance-based funding (PBF) states discontinued their PBF policies for public colleges and universities. Adapting policy diffusion theory to PBF discontinuation, we investigate whether policy discontinuation in one state is related to discontinuations in other states, and differentiate between the two policy diffusion mechanisms of imitation and emulation. While many prior studies consider diffusion as occurring only between neighboring states and focus exclusively on policy adoption, we conceptualize policy diffusion as occurring across geographically far-apart states and address the rarely-studied event of discontinuation. We employ dyadic survival analysis techniques and find that states are not prone to policy diffusion in a broad sense, irrespective of geographic proximity, but states are more likely to imitate PBF discontinuation in another state when the two are more similar on political conditions represented by party control. In contrast, states do not emulate other states with desirable characteristics, such as being wealthier or more generous towards higher education. PBF discontinuation is also explained by individual state conditions; greater legislative professionalism, stronger governor’s budget powers, and higher unemployment rates increase the likelihood of policy discontinuation.