The Political Origins of Higher Education Performance Funding in Six States

Abstract

Performance funding is a method of funding public institutions based not on inputs such as enrollments but on outcomes such as retention, degree completion, and job placement. While there has been great interest in performance funding for over 30 years, only half of all states have ever created a performance funding system for higher education. Given state interest in performance funding, why are such systems not more widespread? To answer this, it is necessary to look at what forces have driven the development of performance funding and how those forces differ across states. This Brief summarizes a study that examined the origins of state performance funding in six states: Tennessee, Missouri, Florida, South Carolina, Washington, and Illinois. In order to capture a wide range of possible forces at work in the origins of performance funding, we selected states that differed in a variety of ways, including when performance funding was established, how long the system was in place, which sectors of public higher education were affected, the proportion of state higher education funding taken up by performance funding, higher education governance structures, state political culture and government functioning, degree of party competition, and differences in social characteristics such as population, income, and education. The research was based on semistructured interviews in each state with a variety of political actors and on examinations of the documentary record in the form of public agency reports, academic books and articles, doctoral dissertations, and newspaper articles. Our analysis drew on two powerful theories of policy origins: the Advocacy Coalition Framework (Sabatier & Weible, 2007) and the Policy Entrepreneurship perspective (Mintrom & Norman, 2009). The Advocacy Coalition Framework looks at how policy evolves over long periods of time, driven by the efforts of different “advocacy coalitions” that have distinctive sets of beliefs about how society is and should be organized and what form higher education policy should take. The Policy Entrepreneurship perspective highlights the role of policy entrepreneurs who identify public issues, develop policy solutions, bring together political coalitions, and take advantage of timing and political opportunities to promote their policy issues and solutions. Used in conjunction, these two theories help identify important features of the politics of performance funding that are not sufficiently addressed by the prevailing literature on the origins of performance funding. We find that while the prevailing perspective on the rise of performance accountability is correct on a number of points, it overlooks several important elements. Our analysis confirms that the following circumstances favor the establishment of a performance funding system: a revenue/cost squeeze on elected government officials, business demand for greater government efficiency and lower costs, and a rising Republican presence in state legislatures. However, we identify a variety of actors, and their beliefs and motives, that the prevailing perspective does not address, such as advocates of performance funding from within higher education itself and their desire for new sources of public funding. We also draw greater attention to the opponents of performance funding and the long-term effects of such opposition. Finally, our research calls attention to the influence of policy learning and “policy windows” or “external shocks.” In this Brief, we first provide an abbreviated background on the origins of performance funding for each of the six states (see full report for more details). We then examine the supporters and opponents of performance funding, their beliefs and interests, how performance funding came to be identified as a policy option, and the political openings that allowed advocates to place it on the government decision agenda. We conclude by drawing lessons for policymakers.