This report by The Education Trust argues that higher education institutions are using an outcomes-based funding (OBF) model that creates inequities for students of color and students from low-income families. The report used qualitative analysis to identify 33 states that have allocated funding to 2- or 4-year public institutions through at least one OBF policy. In the results of this analysis, it is noted that the current OBF models do little to improve resource equity or boost student success overall. To combat this issue, the report suggests that OBF policies should be shifted to include the following:

• Recognize the long-standing limitations placed on students of color and students from low-income backgrounds, and on the institutions that enroll the majority of them.
• Consider an institution’s context and award more funding to institutions that have less, so they will be better equipped to support their students.
• Disaggregate metrics by race and ethnicity to highlight inequities.

Hold institutions accountable for what happens between enrollment and graduation (and, in some cases, thereafter).