There is a new conversation taking place in public education on creating systemic incentives through school finance to encourage schools to innovate and be rewarded for positive student outcomes and performance. What if education funding was not based on seat-time, but on rewarding student performance? Performance-based funding is a term that captures this new concept. Performance-based funding means that funding is tied to an outcome-a policy outcome. In higher education, institutions seek outcomes tied to degree completion. In K-12 education, the performance-based funding outcomes have historically been tied to course completion (as the outcome). As students successfully develop competencies and complete courses, they would trigger payment and performance-based funding incentives. It is important to protect quality and ensure student performance outcomes are validated through independent assessments and/or end-of-course exams. As interest in online courses grows, many states are looking for guidance regarding costs, models and performance-based funding policies. The research in this report is focused on online learning to focus on the issues of equity and adequacy of funding in the context of performance-based funding models. Appended are: (1) K-12 Education Funding; (2) Examining Costs of Online Learning; (3) Outcomes-Based Measures of Student Performance for Online Schools; (4) Individuals Participating in Research Meetings and Phone Interviews (5) Definitions; and (6) References and Resources.