Performance Based Funding and Its Impacts On US Colleges

When resources are getting smaller, one will expect many changes will happen in an industry or an organization.  This is exactly what has happened in the US higher education industry.  Three years ago, the Association has reminded all players to be prepared for what are coming their ways.  Perhaps only a handful is listening or even believe what the Association has tried to convey.  An obvious adjustment that has been taken place on college funding at the state level is the new state funding model known by many as Performance Based Funding.  In this model the pie will be divided based on college rankings.  More and more states in the country have applied such an approach to allocate the budget among state colleges.  Most states will use several measures and then use these yardsticks to rank colleges or universities in the state.  Institution with higher rank will be awarded more money than those in the lower one. The impacts are significant, especially on institutions which are ranked lower and got their budget cut.  Staff layout or salary freeze are the most common impacts of such application of this new funding.  How can an institution survive the new game of state funding?