COMPARISON OF FORMULA FINANCING AND PERFORMANCE-BASED FINANCING METHODS: THE SAMPLE OF HIGHER EDUCATION

Abstract

When the financing of higher education service with public resources is examined, it is understood that there are two main allocation methods as traditional and modern. While input criteria are given importance in traditional methods, output and results criteria have precedence in modern methods. Formula financing examined in this study is evaluated among traditional financing methods. On the contrary, performance-based financing is also among modern financing methods. The formulas and various indicators are used in the context of both practices. So the related methods are sometimes confused and perceived as expressing a similar logical framework. However, the two methods differ significantly from each other. In this study, the similar and dissimilar aspects of them are analyzed. Thus, examples are given from higher education service in order to concretize the subject. In this direction, the aim of study is to compare to formula financing and performance-based financing and to comprehensively examine the common features and their differentiating aspects of the related allocation methods.