While accountability in higher education has been a topic of debate for decades, in recent years the discussions have shifted to emphasize efficiency and economic measures of success. A prominent example of this accountability movement is the increase in popularity of performance funding policies. These policies connect specific outcomes on state selected metrics to increased state funding (Goldstein, 2012). Performance funding policies purport to increase efficiency by rewarding reductions in cost and increases in specific economic outcomes. However, many of these policies neglect a similar emphasis on maintaining access, which may lead to undesirable consequences including reducing the enrollment of traditionally underserved students (students from low socioeconomic status (SES) families and historically underserved students of color) (Dougherty et al., 2014). Therefore, this study explored whether performance funding policies have an effect on underrepresented students' enrollment. Through a fixed effects panel analysis covering the years 2000 to 2014, this study explored any changes in enrollment of underserved minority students and Pell Grant receiving students in public four-year institutions. Findings from this study demonstrate that performance funding does have the potential to influence enrollment profiles at U.S. public four-year institutions. Specifically, this study found it changed the enrollment of underserved minority students. Further, these influences may not be equitable across all institutions, and instead may effect lower status institutions in a different manner than higher status institutions. Specifically, those with more flexibility in their enrollment profile may be more likely to change their enrollment of both Pell Grant students and underserved minority students. These findings have profound implications for higher education institutions, policy formation, and social equity.
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