Performance funding without measurement integrity is a procurement scandal waiting to happen

I am a finance professor at Lincoln University, currently in litigation over a specific allegation: that failing grades I entered for plagiarism were later altered through the learning management system without my consent. I have an obvious stake in how that dispute resolves — but it pointed me toward a policy problem that exists entirely independent of my case.

In February, the Missouri Senate Education Committee debated  Senate Bill 1121, legislation that would align the money Missouri spends on higher education with the outcomes lawmakers want to see. That’s a familiar bargain in public finance: pay more when agencies deliver measurable results.

But state finance has a rule older than any formula: you don’t pay for deliverables you can’t verify. If the measurement layer that produces “outcomes” is not governed with audit‑grade controls, performance funding stops being accountability and starts looking like an improper‑payment machine — a procurement scandal waiting to happen.

Missouri is already moving this direction. The Department of Higher Education and Workforce Development’s performance funding model is used to allocate the majority of higher‑education funding increases based on performance measures.

SB 1121 would require the department to develop and test a cost‑based funding model with a performance component — and, if approved by the General Assembly, make appropriations for public higher education conform to the new model beginning in fiscal year 2028–29.

Once the state pays for “outcomes,” it is effectively procuring deliverables — credits earned, degrees completed, and the performance measures derived from those records. Procurement has a first question: what is the receipt? In higher education, the receipt is the academic record: transcripts, final grades, and the controlled workflow that turns a course result into a state‑funded metric.

To be clear, I’m not alleging that Missouri’s public colleges and universities are falsifying results. The point is simpler: if the state ties new dollars to “outcomes,” it must be able to audit the records and controls that produce those outcomes.

Most models talk about completions and progress, not grade books. But grade books and transcript workflows are the unit of account behind the pipeline: course completion produces credits; credits produce degree progress; progress produces completion rates; completion rates justify dollars. Legitimate post‑term corrections exist. The risk is not that changes can happen; the risk is that they can happen without preserved originals, documented reasons, independent approval, and a tamper‑evident trail.

I’ve seen the stakes up close at Lincoln University in Jefferson City. In my pending dispute, I allege that failing grades I entered for plagiarism‑related work were later changed to passing grades through the back end of the learning management system — without my consent.

However that dispute resolves, it illustrates why “pay for outcomes” must be built on auditable controls, not trust.

Missouri’s own rules show how costly record integrity failures can be. State law sets a formal dispute process when transfer credit is denied — including written notice and a 45‑day window before escalation to the commissioner of higher education. And for some professions, Missouri regulations require an official final transcript that clearly shows the degree awarded and graduation date before an applicant can sit for a licensure exam. These are everyday examples of the same principle: when records are the receipt, controls matter.

Auditors don’t audit aspirations; they audit evidence. The GAO’s Government Auditing Standards (“Yellow Book”) were revised in 2024 and apply to performance audits beginning on or after Dec. 15, 2025. Missouri’s State Auditor, reviewing higher‑education performance funding in 2017, warned that oversight and verification were weak — including insufficient review procedures and a lack of comprehensive standards, rules, and guidelines for performance‑funding data.

The incentive trap is structural. WICHE projects U.S. high school graduates peak in 2025 and then decline through 2041. Under stress, enrollment and retention become revenue variables; layer performance funding on top, and institutions face a double incentive to keep students enrolled and show better outcomes. If controls are weak, “outcome management” becomes predictable.

Missouri does not need to micromanage campuses. It needs minimum internal controls that make the academic record a reliable receipt: standardized reason codes for every post‑submission change; separation of duties so no one person can initiate and finalize end‑to‑end; preserved originals plus a log (original value, new value, timestamp, identity/role, and reason code); documentation retention sufficient for audit sampling; and independent monitoring with periodic sampling.

Missouri already has a statutory hook to govern performance measures. Under state law, the coordinating board evaluates and can revise institutional performance measures on a recurring schedule. Add one guardrail: no institution should receive performance‑based increases unless it can certify annually — with board‑level attestation — that minimum controls exist for academic‑record changes that affect reported measures, with periodic sampling and disclosure of any material control deficiencies before performance dollars are paid.

Missouri can debate the right funding model — cost‑based, performance‑based, or hybrid. But before it pays for “outcomes,” it should demand the procurement prerequisite: auditable receipts. Otherwise, performance funding won’t be accountability. It will be a procurement scandal waiting to happen.