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. This study considers the ways that performance funding systems in states with long-lasting systems have changed over time and what political and social conditions explain the changes. We analyze the experiences of two states: Tennessee, which pioneered performance funding in 1979; and Florida, which launched it in 1994. Funding for Tennessee's system has steadily increased over the years, whereas Florida's funding history has been more volatile and now provides much fewer dollars than when it was at its peak. Both Tennessee and Florida have changed their performance indicators substantially. But Florida added nine and dropped two in 12 years, while Tennessee added only six and dropped four over 31 years. Moreover, in Tennessee, performance indicators are added at the end of a regular five-year review, whereas in Florida they have been added irregularly, with no tie to a cyclical process of program reappraisal. Overall, Tennessee's performance funding system has been considerably more stable than Florida's because its initial policy design delineated much more clearly how the system was to be governed and changed over time, and provided for regular and systematic evaluation. Moreover, Tennessee's state legislature has played a smaller role in the ongoing development of performance funding than Florida's. These differences in policy process carry important implications. A system where funding levels do not oscillate greatly and indicators change more gradually and systematically is more likely to allow institutions to plan effectively. Further, such a system will have a more secure base of consent from institutions if it comes under attack.
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