Tennessee and Florida: Continuity and Change in Long-Lasting State Performance Funding Systems for Higher Education

One of the key ways that state governments pursue better higher education performance is through performance funding. It ties state funding directly to specific indicators of institutional performance — such as rates of graduation and job placement — in order to induce colleges and universities to be more efficient (Burke, 2002; Dougherty & Hong, 2006). Continuity and change with respect to performance funding levels and indicators are important to consider for reasons of both theory and practice. Theoretically, an analysis of the policy implementation process is integral to the full analysis of the politics of public policy making because the operation of political forces is not exhausted by the passage of legislation. Those forces continue to shape policy as it is being implemented (Honig, 2006; Matland, 1995). Practically, stability and change in performance funding levels and indicators may be a source of either ineffective performance or of program adaptation and survival. If changes are too frequent and large, performance funding systems may not work very effectively because higher education leaders find it hard to decide where to focus the efforts of their institutions. Conversely, if funding levels and performance indicators change in a regular and systematic way, performance funding systems may be better able to adapt to changing circumstances, retain supporters, and survive. The study reported here analyzes changes over time in long-lasting state performance funding systems for higher education. It addresses two research questions: First, in what ways have long-lasting systems changed over time in funding levels, indicators used to allocate funds, and measures used for those indicators? Second, what political actors, actions, and sociopolitical conditions explain those changes? Our analysis draws on two theoretical perspectives: policy implementation theory and program sustainability theory. Policy implementation theory focuses on how policies change after they have been enacted, focusing on the interaction between higher-level officials who design and authorize policies and lower-level or “street level” officials who ultimately implement the policies. We particularly draw on the “bottom up” perspective, which focuses on how the interests, beliefs, knowledge schema, and experiences of lower-level implementers shape their views of a policy and thus their willingness to support it and in what form (Honig, 2006; Matland, 1995). Program sustainability theory addresses the factors that promote program continuation and the maintenance of effectiveness. Key clusters of factors that have been identified as influencing program continuation are ones pertaining to the design of the program, the organizational setting in which it housed, and the wider community environment in which it is operating (Scheirer, 2005). To answer these questions we investigated the experiences of two states with long-lasting performance funding systems: Tennessee, which pioneered performance funding in 1979; and Florida, which launched it in 1994 (Bogue & Dandridge Johnson, 2009; Wright, Dallet, & Copa, 2002). For both states, we analyzed publications issued by state agencies and independent researchers, and conducted interviews with top executive branch officials and staff, state legislators and staff, officials of state higher education boards, presidents and other top officials of several colleges, and state business leaders.