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Public Tuition on the Rise: Estimating the Effects of Louisiana’s Performance-Based Funding Policy on Institutional Tuition Levels

  • Xiaodan Hu
  • Pedro VillarrealIII
Article

Abstract

Louisiana’s performance-based funding (PBF) policy is one of the most recent implementations of performance funding established by a state for accountability purposes. Instead of examining direct academic outcomes, this study focuses on tuition increase as an (un)intended outcome of PBF implementation. We use data from multiple sources to create a panel dataset of public postsecondary institutions across the United States from 2005 to 2013. Applying Difference-in-Differences and propensity score analyses procedures to estimate the causal relationship between PBF implementation and tuition levels at public institutions in Louisiana, our results indicate that treated community colleges responded to PBF by increasing tuition levels statistically significantly above that of their counterfactual institutions. While in-state tuition and fees rose statistically significantly faster at public universities in Louisiana after PBF implementation, out-of-state tuition and fees charged by the treated 4-year institutions did not significantly differ from the increases experienced at counterfactual institutions in non-PBF states. We explore possible explanations for the findings and provide implications for practices and future research.

Keywords

Performance-based funding Tuition-setting authority Difference-in-differences 

Notes

Acknowledgements

The authors would like to thank Laura Perna for her critical feedback and support of our work at the 2017 ASHE Conference as well as the reviewers of Research in Higher Education for their helpful suggestions that have led to the improvement of the final manuscript. The authors also would like to thank Benjamin Todd Gindhart, an undergraduate work-study at the University of Miami, for his assistance on earlier versions of tables. All errors and omissions are our own.

Funding

The researchers received no research funding for purposes of completing this project.

Compliance with Ethical Standards

Conflict of interest

The authors declare that they have no conflict of interest.

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Authors and Affiliations

  1. 1.Adult and Higher EducationNorthern Illinois UniversityDeKalbUSA
  2. 2.Graduate School of EducationUniversity of PennsylvaniaPhiladelphiaUSA

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