Beware performance funding schemes for teaching

by Andrew Norton


The government proposes paying a small proportion of university teaching funding only to universities that meet performance indicator targets. These targets could include employment outcomes, student satisfaction, and enrolments from equity groups.

This submission argues that performance funding schemes for teaching rarely work well.

University performance is difficult to measure. It is hard to distinguish the contribution of universities from the original attributes of the students. Graduate employment outcomes are more affected by the economy than university performance. Apparent year-to-year changes in performance indicators can just reflect measurement difficulties, not any real improvement or deterioration in performance.

In addition to the inherent problems of performance funding, the government’s scheme gives universities little incentive to change their policies. The amount of money on offer is low and it is not a bonus payment – it is just a promise to pay universities slightly more of what they should have been paid under demand driven funding. Universities with shrinking enrolments would not receive any money, even if they meet their targets.

The submission advises universities not do to anything they were not already planning on doing.