Performance Funding: Exam Results, Stakes, and Washback in Danish Schools

High-stakes testing is meant to create a positive washback effect on student learning. Performance funding can raise stakes. However, it is not often used, and its washback is uncertain. The purpose of this paper is to examine performance-funding programs based on students’ exam results. We study principals’ perceptions and interpretations of how this influenced stakes and washback effects of the exit exams. For that purpose, we selected four schools based on theoretical sampling criteria. The empirical data comprise semi-structured interviews with management over the 2-year program and documents describing the performance-funding program. The findings indicate that implementing performance funding increases stakes and has washback effects, but that stakes depend partly on the principal’s choices. Although the consequences were unintended, the program and its effects were mostly perceived as positive. The paper shows how unintended consequences call for careful consideration of the pros and cons of accountability systems when high-stakes test-based funding mechanisms are introduced.