As part of the effort to increase accountability in higher education, a few states are moving to funding higher education based on performance. Colleges receive more money from the state for a higher graduation rate, and less money if they produce a lot of dropouts

The idea makes sense in theory; in practice it often doesn’t work out very well at all. In July the governor of Louisiana, Bobby Jindal,signed the LA GRAD Act into law. Among other things, the new law rewards schools for improving their graduation rates. Louisiana’s statewide college graduation rate is 42.5 percent, one of the lowest in the country.

But according to an article by Cara Bayles in the Daily Comet:

Joe May, president of the Louisiana Community and Technical College system…said that since community colleges must “keep their doors open” and allow any resident to attend its classes, they draw a larger population of “at-risk” students who are more likely not to complete their studies.

But new models instituted by the amended GRAD Act 2.0 last year mean that schools are only compensated for the cost of educating those who complete their courses. That places a burden on a community colleges, which must accept everyone. May called it an “open-access penalty.”

May does have a point. At least theoretically it’s unjust to hold an institution that lets everyone in to similar standards as those used to evaluate colleges that can be more selective in their admission criteria.

Out on actual college campuses, however, the policy might be pretty effective.

Currently America’s community colleges do a dreadful job actually getting students through their programs. Only about a quarter of those enrolled in community college complete their programs in three years. In part this is because there is no structural incentive to do so. Funding based on graduation rates might compel community colleges to be more effective.

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Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer