Envisioning Performance Funding Impacts: The Espoused Theories of Action for State Higher Education Performance Funding in Three States

This study reviews the theories of action espoused by state-level performance funding advocates and implementers in Indiana, Ohio, and Tennessee. The study found that these espoused theories of action are incompletely articulated, with significant gaps in the specification of policy instruments, desired institutional changes, and possible obstacles and unintended impacts that need to be countered. Performance funding is conceived largely as stimulating changes in institutional behavior and student outcomes by providing financial inducements and securing institutional buy-in. Less attention is paid to other policy instruments, such as providing information on institutional performance to the colleges and building up the capacity of institutions to engage in organizational learning and change. The states’ espoused theories of action for performance funding are, thus, narrower than those for state and federal K-12 accountability programs, which put much more emphasis on information provision and capacity building. Moreover, the espoused theories of action for performance funding in the three states miss important possible obstacles to and unintended impacts of performance funding. This report argues that insufficiently articulating the theories of action for performance funding makes it less likely that it will be successful and avoid undue harm