Performance Funding of State Public Higher Education;Has It Delivered the Desired External Accountability and Institutional Improvement?

In today\u27s economic climate, state public institutions of higher education face challenges on multiple fronts. This applies particularly to state funding as it relates to the financing of the mission of the institutions. The purpose of this quantitative study was to examine the effectiveness of allocating state resources to state public institutions of higher education by comparing results from performance funding states to non-performance funding states. The focus was to determine whether the change to the performance funding methodology delivered the desired external accountability and institutional improvement in state public higher education. The research question guiding this study was: To what extent does the method of funding state public higher education, either performance or non-performance funding, predict the improvement in key higher education performance funding indicators between the years 2002 through 2009? Data collection and analysis investigated the rate of change in key higher education performance funding indicators at state public institutions of higher education in five performance funding states (Tennessee, Florida, Ohio, Connecticut, and South Carolina) in comparison to five states that do not employ performance funding (Michigan, Georgia, Arizona, Massachusetts, and Maryland). The general hypothesis tested was: State public institutions of higher education in states that employ a performance funding methodology will experience a statistically significant increase in performance funding indicators that is greater than in states that employ a non-performance funding methodology. Data were analyzed using the Hierarchical Linear Model (HLM) with a focus on individual change over time. The findings revealed that method of funding was not a statistically significant predictor of either the initial status or the rate of change of graduation rate or retention rate over the eight-year period, although institution type and enrollment were. The study recommends further research of performance fun