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After a blue-ribbon panel was formed to study how Alberta would be able to balance its budget over the next three years, an education funding process was recommended. This is something that had rarely ever been applied in Canada. The panel suggested that they use a performance-based funding program for post–secondary institutions, such as U of A. Alberta has 26 post secondary institutions without any requirements for training students in the labour market needs. There are no rewards for schools that commercialize discoveries they have made. The report also mentioned a K-12 school funding formula that doesn’t have any incentives for performance, innovation, or efficiencies.

There are places, such as the U.S. and many European countries with more experience using performance-based funding. The programs use financial incentives that help encourage schools to meet specific goals that the government makes. This means that not all of the public funding has to be based on enrollment, or basing the funding of a university on funding from the previous years, which is what is now done in Alberta. With a performance-based funding program, government funding is based on certain conditions.

There are thirty-five of 50 U.S. states with some type of financial rewards program for post-secondary schools that meet the goals of the government. This varies between the states and might also include the number of credits that students complete, the amount of degrees granted, types of degrees, how many students graduate on time, the number of graduates who will receive job placements, research grants received from external funding agencies, and the number of studiers who will receive special licenses. There are some instances where financial rewards are directly linked to the enrollment, adult learners, visible minorities, and success of low-income students.

Ontario is exploring this model for post-secondary schools. They are pledging to provide 60% of public funding to colleges and universities by 2025. During the mid-90s, Alberta also considered adopting this method, using 2% of college and universities funding to nine measures of a students success and research. Unfortunately, the government eventually abandoned it after realizing that the incentive wasn’t enough to initiate a significant change.

Professor Kevin McQuillan of the University of Calgary said that it was reasonable to want assurances that post-secondary education funding will be well spent. Governments should select indicators that give them insight into whether there is any improvement in education. There is always the chance the possibility of some institutions trying to take advantage of the system, making it appear that improvements have been made, when in actuality, they have not.

The incentives that are offered should be enough to motivate change. Currently, 54% of Alberta’s post-secondary institutions funding comes through provincial government. In light of Ontario’s proposed incentives program, there are questions about the government withholding some of the public funding if the post-secondary institutions don’t meet their goal. Its success of performance-based funding will depend on the performance of the institutions it is funding.