To Keep or Not to Keep Performance Funding

Signals from Stakeholders Introduction Performance funding for public colleges and universities, which ties state funding to institutional performance, shows the conflicting characteristics of popularity and volatility. By 1999, 16 states had performance funding, and 9 more appeared likely to adopt it, but 4 states had already abandoned their efforts (Burke & Modarresi, 1999). Although increasingly popular in state capitals, performance funding remains highly controversial in academic circles. The former focus on its abstract appeal for encouraging external accountability and institutional improvement; the latter fixate on its perplexing problems of conception and implementation. The mix of popularity and instability of performance funding raises intriguing questions. Why did some states keep while others quit performance funding? And, what characteristics distinguish stable from unstable programs? This study surveys state and campus policymakers for signals that supply some tentative answers to these questions. The purpose of this article is not to argue for or argue against the validity or desirability of performance funding but to identify some of the characteristics that seem to separate stable from unstable programs. Accountability: A Paradigm Shift Performance funding for public colleges and universities is only the latest in a series of efforts by states to ensure accountability for campus performance. Only organizations that are fully self-sufficient can claim complete autonomy and avoid external accountability. Public colleges and universities that receive a majority, or a sizable portion, of their resources from state government must respond to the concerns of state officials and the taxpaying public. Accountability is a challenge, not a choice, for state colleges and universities. The real question with accountability for public higher education is not whether, but for what and how. The goal of accountability changed dramatically in the mid-1980s. It moved from accounting for expenditures to demonstrating performance. The shift came from two sources. First, leaders of public colleges and universities had long argued that the nature of higher education differed dramatically from that of state agencies; it depended on the creativity and initiatives of faculty professionals, who require considerable autonomy to produce desirable achievements. The second source stemmed from the movement to reinvent government. It urged governments to concentrate on results rather than regulations to improve performance. Many states and their campuses struck a tacit bargain: states granted increased autonomy to public colleges and universities in return for credible evidence of improved performance. The method of ensuring the new accountability moved progressively from assessing, to reporting, and--most recently--to funding performance. The methods changed, because state officials thought that public campuses often failed to keep their side of the bargain. Outcomes assessment dominated accountability in the last half of the 1980s. Unfortunately, it produced only external observance on many campuses and did not provide the credible and comparable evidence of institutional performance that governors and legislators desired (Ewell, 1996). In response, many states turned to performance reporting in the late 1980s and early 1990s (Ruppert, 1994). These reports recorded institutional results on a common set of indicators. The national recession in the early 1990s and the resulting decline in state revenues meant that the indicators in performance reporting added efficiency to the quality measures that appeared in assessment plans. Performance reporting relied on information alone to encourage improved efficien cy and effectiveness. It lacked financial consequences for institutions with good or poor performance (Ruppert, 1994). Moving from performance reporting to funding seemed a logical step to state officials, but it represented a large leap to campus leaders. …