Accounting For Higher Education Accountability: Political Origins of State Performance Funding for Higher Education
by Kevin J. Dougherty, Rebecca S. Natow, Rachel Hare Bork, Sosanya M. Jones & Blanca E. Vega — 2013
Background/Context: Performance funding finances public higher education institutions based on outcomes such as retention, course and degree completion, and job placement rather than inputs such as enrollments. One of the mysteries of state performance funding for higher education is that despite great interest in it for over 30 years, only half of all states have ever adopted it.
Purpose/Objective/Research Question/Focus of Study: This study examines the political forces that have driven the development of performance funding in some states but not others. To do this, the authors draw on theories of policy origins such as the advocacy coalition framework, the policy entrepreneurship perspective, and policy diffusion theory.
Research Design: This study contrasts the experiences of six states that established performance funding for higher education (Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington) and two that have not (California and Nevada). These states differ considerably in their performance funding programs, higher education governance arrangements, and political and socioeconomic characteristics.
Data Collection and Analysis: Our study is qualitative, drawing on documentary records and extensive interviews with higher education officials, legislators and staff, governors and advisors, business leaders, and other actors.
Findings and Results: Our study finds that many of the actors and motives cited by the prevailing perspective on the origins of performance funding did operate in the six states that have established performance funding, including state legislators (particularly Republicans), governors, and business people pursuing performance funding in the name of greater effectiveness and efficiency for higher education. However, the prevailing perspective misses the major role of state higher education coordinating boards and individual higher education institutions (particularly community colleges) that pursued performance funding to secure new funds in an era of greater tax resistance and criticism of higher education. Our findings further move beyond the prevailing explanation by examining how policy entrepreneurs mobilized support for performance funding by finding ideological common ground among different groups, identifying policies that those groups could support, and taking advantage of political openings to put performance funding onto the decision agenda of state elected officials.
Conclusions and Recommendations: This examination of the origins of performance funding policies sheds light on factors that facilitate and frustrate the development of such policies. For example, our research highlights the important role of higher education opposition and the presence of certain political structures and political values in frustrating the development of performance funding.
Performance funding is a method of financing public education institutions based on outcomes such as retention, course and degree completion, and job placement, not on inputs such as enrollments. The principal rationale for this type of funding has been its ability to prod institutions toward greater effectiveness and efficiency, particularly during a time of increasing demands on higher education and increasingly straitened state finances (Burke, 2002a; Dougherty & Hong, 2006; Layzell, 1999; Ruppert, 1995).
One of the mysteries of state performance funding is that it is not more widespread. Although there has been great interest in it for over 30 years, only half of all states have ever created a performance funding program for higher education (Dougherty & Reid, 2007; McLendon, Hearn, & Deaton, 2006). This reality inspires the question, What forces have driven the development of performance funding in many states but not others? What accounts for these differences?
The variable origins of state performance funding programs are of interest for a number of reasons. First, an analysis of the political sources of performance funding sheds light on its prospects in states that do not have performance funding now but are considering it. From an examination of why performance funding arose in some states but not others, one can glean indications of what might facilitate or frustrate the development of performance funding in states without it. Second, there is evidence that the political origins of programs affect their later success and sustainability (Racine, 2006; Scheirer, 2005; Shediac-Rizkallah & Bone, 1998). An important predictor of the later demise of performance funding is the breadth of the coalition initially supporting it, particularly whether the coalition included higher education institutions (Dougherty, Natow, & Vega, 2012). Moreover, as we explore, it is noteworthy how little concern was expressed in the states we studied about the possible impacts of performance funding on equality of higher education opportunity. The weakness of equity concerns and the lack of involvement of equity-oriented actorsparticularly representatives of the minority and low-income communitiesnot only make it less likely that performance funding will serve egalitarian goals but also weaken performance funding when it comes under fiscal or political pressure (Dougherty et al., 2012).
This article examines both the origins of state performance funding in six states (Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington) and the lack of its development in another two states (California and Nevada). Our analysis of the political origins of state performance funding systems draws on three perspectives on policy origins: the advocacy coalition framework, the policy entrepreneurship perspective, and policy diffusion models. Used together, they powerfully illuminate many features of the politics of performance funding for higher education at the state level.
REASONS FOR THE RISE OF STATE PERFORMANCE FUNDING
THE PREVAILING EXPLANATION
A number of authors have offered explanations for why states have enacted performance accountability (Alexander, 2000; Burke, 2002a; McLendon et al., 2006; Rhoades & Sporn, 2002; Ruppert, 1995; Slaughter & Leslie, 1997; Zumeta, 2001). In the 1990s, state governments faced a revenue and cost squeeze because of the coincidence of an economic slowdown and rapidly rising costs of higher education and other governmental programs. The economic recession caused state government revenues to grow much more slowly than before and in some states even to drop (Alexander; Burke, 2002a; Rhoades & Sporn, 2002; Ruppert; Slaughter & Leslie, 1997; Zumeta, 2001). At the same time, state governments were facing rapidly escalating costs of higher education. Enrollments were growing because of the baby boom echo and a belief that individual and collective economic futures required higher levels of college-going. Moreover, the per capita costs of operating higher education institutions were expanding faster than the general rate of inflation (Alexander, 2000; Rhoades & Sporn, 2002; Ruppert, 1995; Zumeta, 2001). Meanwhile, outside higher education, state governments were facing rapidly rising demands for spending on K12 education, prisons, and health care (Alexander, 2000; Burke, 2002a; Zumeta, 2001; see also Breneman & Finney, 1997; Callan, 2002; Kane, Orszag, & Gunter, 2003).
Even if these factors were not enough, the argument goes, state elected officials also faced strong demands from the general public and business for greater efficiency and lower costs of higher education. In the case of the general public, rapidly rising tuitionscaused by growing costs of college operation and a dropping share of state revenueswere causing great distress to students and their parents (Zumeta, 2001). At the same time, business associations pushed for greater efficiency on the part of higher education to improve the quality of college graduates, to lower the cost of government provision of higher education, and to keep down taxes (Burke, 2002a; Zumeta, 2001).
The translation of these pressures into performance funding demands on higher education was aided by several factors. In the 1990s, Republicans greatly increased their share of state legislative seats, a shift found to be a strong predictor of whether states enacted performance funding, as Republican legislators brought a heightened regard for business interests and a greater interest in market-based solutions to government administration (McLendon et al., 2006).
In addition, higher educations standard operating procedures were increasingly questioned. More and more policy-makers, opinion leaders, and even ordinary citizens were coming to see higher education as inefficient (characterized by out-of-control spending, underworked faculty, and administrative bloat), applying weak admission and academic standards (with affirmative action often targeted as the source), and favoring research at the expense of teaching (Alexander, 2000; Ruppert, 1995; Zumeta, 2001). Finally, traditional approaches to higher education accountability (e.g., accreditation, peer review, student choice) were increasingly considered ineffective (Alexander, 2000).
At the same time, higher education was seen as able to absorb cuts. Colleges could increase class sizes, hire more part-time instructors, and run their operations more efficiently. And they could raise more funds through tuition increases and private fund-raising (Callan, 2002; Zumeta, 2001).
Performance funding also became more feasible because states were much better able to gather data on institutional performance and tie funding to it. State capacity to gather and analyze data had increased greatly because of the revolution in information technology (Zumeta, 2001).
In addition to these dynamic factors was a more stable, structural element. There is evidence that states without consolidated governing boards have been significantly more likely to adopt performance funding than states with other governance arrangements. A possible explanation is that consolidated governing boards tend to be oriented to the desires of administrators and faculty and therefore resist performance funding in favor of less restrictive forms of performance accountability, such as performance budgeting (McLendon et al., 2006).
MOVING PAST THE PREVAILING PERSPECTIVE
As we will show, our findings support but also go beyond the claims of the prevailing explanation of the rise of performance funding. Our analysis of the origins of performance funding in six states and its nondevelopment in two states finds that several factors posited by the prevailing perspective were at work in propelling performance funding. However, we also identify a variety of actors and motivesparticularly in opposition to performance fundingthat the prevailing perspective does not address. Our analysis further uncovers how the extent and form of support for and opposition to performance funding are shaped by a states constitutional structure and basic social-cultural beliefs. Finally, our research points to the importance of policy learning and political opportunities (policy windows or external shocks) in fostering the rise of performance funding. We come to all these findings by applying theoretical approaches to policy origins that have typically not been used by the prevailing studies of the origins of performance funding.
Treated as complementary rather than mutually exclusive explanations, the advocacy coalition framework, policy entrepreneurship perspective, and policy diffusion analysis together powerfully illuminate different facets of the origins of performance funding policies. As we show next, each of these perspectives illuminates different facets of the origins of policies and addresses limitations in the other theories.1
THE ADVOCACY COALITION FRAMEWORK
According to the advocacy coalition framework (ACF), policy change takes place within a policy subsystem of individuals, interest groups, and government agencies that interact regularly over a long period of time (at least a decade) to formulate and implement policies within a particular policy domain. These actors regard this domain as a major area of interest and have specialized subunits dealing with that domain (Sabatier, 1993; Sabatier & Jenkins-Smith, 1999; Sabatier & Weible, 2007). Within a policy subsystem, various advocacy coalitions promote different issues and solutions to problems. The coalitions are broad in membership and may include elected officials, government agency personnel, interest group members, and researchers who focus on a particular policy area (Sabatier, 1993; Sabatier & Jenkins-Smith, 1999; Sabatier & Weible, 2007).
According to the ACF, advocacy coalitions cohere primarily around the belief structures of their members. The most basic or deep core beliefs concern the nature of society and humanity, fundamental social values, the appropriate role of government, and the importance of different social groups. Not as powerful but particularly important to coalition formation are policy core beliefs, which reflect coalition members deep core beliefs as applied to specific policy areas. Policy core beliefs typically involve views about how serious a problem is, what has caused it, and what the most appropriate solutions to the problem are. Finally, coalition members have certain secondary aspects to their beliefs, which concern their preferences for the specific forms that policies should take, such as the amount of state spending on a particular program (Sabatier, 1993; Sabatier & Jenkins-Smith, 1999; Sabatier & Weible, 2007).
Policy evolution occurs in a variety of contexts, some of which are relatively stable and others of which are dynamic (Sabatier, 1993; Sabatier & Jenkins-Smith, 1999; Sabatier & Weible, 2007). The more stable contexts include the constitutional provisions under which a subsystem operates, the fundamental social-cultural beliefs of a polity, and the long-term resources available to a society. These characteristics shape the types of advocacy coalitions likely to form and the political resources they can deploy. Dynamic contexts include economic swings, changes in partisan control of government, big changes in public sentiment, and significant policy events taking place in other, similar subsystems. Such dynamic contexts provide a shock that may provoke a policy change by causing the dominant coalition to lose political resources or to change its beliefs (Sabatier, 1993; Sabatier & Jenkins-Smith, 1999; Sabatier & Weible, 2007). Another mechanism through which policy change takes place is policy learning: Advocacy coalition members gain increased knowledge about policies and surrounding contexts, which causes them to modify some of their beliefs, typically their secondary beliefs (Jenkins-Smith & Sabatier, 1993; Sabatier & Jenkins-Smith, 1999; Sabatier & Weible, 2007).
Although the ACF provides a very useful lens through which to view the evolution of performance funding policies, the framework lacks a detailed analysis of how and why advocacy coalitions arise and develop their policy stances. It also lacks sufficient analysis of how the shocks described earlier result in policy change. Moreover, the analysis of policy learning is focused on internal influences; it ignores the role of external influences highlighted by policy diffusion theory. Complementing the ACF with the policy entrepreneurship perspective and policy diffusion theory can resolve these shortcomings.
THE POLICY ENTREPRENEURSHIP PERSPECTIVE
The policy entrepreneurship perspective (Kingdon, 1995; Mintrom & Norman, 2009; Mintrom & Vergari, 1996; Roberts & King, 1996)2 sheds light on the details of the political dynamics among policy actors that the ACF does not fully address (Mintrom & Vergari, 1996). At the forefront of this perspective is the policy entrepreneur, who takes the initiative to promote particular policy problems, identify solutions, and assemble a coalition of advocates for these solutions.
The policy entrepreneurship perspective fills a theoretical weakness of the ACF by clarifying how advocacy coalitions are created. The policy entrepreneurship perspective draws attention to the role of policy entrepreneurs who identify and mobilize political supporters by investigating their beliefs and trying to find points of agreement (Mintrom & Norman, 2009; see also Mintrom & Vergari, 1996).
The policy entrepreneurship perspective also addresses another shortcoming of the ACF: a lack of clarity on how political events (what the ACF refers to as shocks) advance policy change. According to policy entrepreneurship theory, policy entrepreneurs provide the key mediation. External shocks in and of themselves do not necessarily cause political change. For political events to create policy change, they must be observed and interpreted by policy entrepreneurs who see the shocks as an opening to draw attention to particular problems and possible policy solutions (Kingdon, 1995; Mintrom & Norman, 2009; Mintrom & Vergari, 1996).
Policy entrepreneurs also play an important role in identifying and promoting public policy proposals. To be politically viable, policy proposals need to be technically effective, fiscally realistic, ideologically acceptable, and unlikely to provoke a backlash (Kingdon, 1995; Mintrom & Norman, 2009; Mintrom & Vergari, 1996). Policy entrepreneurs play an important role in winnowing down possible solutions to a short list of politically viable policy proposals that they can try to insert into the political process.
But where do these policy ideas come from? Policy entrepreneurship theory points to the role of policy networks spanning political jurisdictions (Mintrom & Norman, 2009). This point is powerfully amplified by policy diffusion theory.
THE POLICY DIFFUSION PERSPECTIVE
The policy diffusion perspective has long emphasized that state policy makers often get policy ideas from other states. States copy policy innovations from each other under the impetus of learning from each other about what works, competing with each other for economic advantage, or conforming to national or regional cultural standards of what marks a progressive state government (F. S. Berry & Berry, 2007; McLendon, Heller, & Young, 2005; Walker, 1969).3 This aspect of policy diffusion theory buttresses the ACF and the policy entrepreneurship perspective by providing an explanation of the sources of particular policy designs. Specifically, policy diffusion theory suggests that policy learning often occurs across state boundaries, with state policy makers often designing policies based on what other states have already done.
The main focus of the policy diffusion perspective has been on the example of neighboring states (F. S. Berry & Berry, 2007; McLendon et al., 2005, 2006). However, there is increasing attention to the role of national professional and state government associations that can diffuse policy understandings among states that are not geographically contiguous (Balla, 2001; F. S. Berry & Berry, 2007; McLendon et al., 2005; see also Walker, 1969).
Together, these three perspectives illuminate different facets of the development of performance funding for higher education at the state level and lead us to findings that are significantly at variance with those of the prevailing perspective. The ACF explains how performance funding policies are supported and opposed by advocacy coalitions that form within policy subsystems around common beliefs, how policy subsystems are shaped by fundamental features of state polities, and how policy change occurs through policy learning and external shocks to policy subsystems. The policy entrepreneurship perspective fills a theoretical weakness of the ACF by clarifying how advocacy coalitions are created, drawing attention to the role of policy entrepreneurs who identify and mobilize political supporters by analyzing their beliefs and finding points of agreement, identifying policy solutions, and taking advantage of external shocks. Policy diffusion theory further explains where ideas for policy solutions come from, pointing to the example of other states and the role of cross-state policy organizations and policy networks.
To explore the political factors that led to the development of performance funding in some states but not in others, this study examined six states that established performance funding (Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington) and two that did not (California and Nevada). Our analysis is based on interviews in each state and examination of public agency reports, newspaper articles, and the academic research literature on those states.
THE CHOICE OF THE STATES THAT DEVELOPED PERFORMANCE FUNDING
About half of all U.S. states have established performance funding for higher education, since Tennessee led the way in 1979 (Burke & Minassians, 2003; Dougherty & Reid, 2007; McLendon et al., 2006). Because this is an intensive qualitative study, we could not study all of them. Thus, we selected six states that established performance funding and fit a number of selection criteria (see Table 1). First, we wanted states that differ on a wide variety of measures to capture a broad range of possible forces at work in the origins of performance funding. More specifically, we sought states that differ considerably in their performance funding systems (date of establishment, duration of existence, higher education sectors covered, amount of funds involved), higher education governance arrangements, and political and socioeconomic characteristics (political culture, gubernatorial powers, legislative professionalism, degree of party competition, population, wealth, and level of education). Second, we wanted the states to be dispersed across the country, given the powerful effect that regionalism has on state political processes and policy-making in the United States (Gray, 2004).4 Third, the states should be dispersed temporally, in terms of when they started their performance funding systems. We did not want to have our sample too concentrated in any one period and therefore subject to the same period effects.5 Temporal variation should allow for differences in economic and ideological circumstances that might affect which groups, motives, and political openings led to the establishment of performance funding. Finally, we wanted states that had established broad-based performance funding programs rather than narrow ones that did not represent the variety of outcomes that have been sought by performance funding.6
The application of these principles resulted in our selection of these six states: Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington. Tennessee was of interest because it was the first state to establish performance funding and did so in the 1970s. Florida and Missouri enacted performance funding in the early 1990s. We selected Florida because it established two different performance funding systems, which promised to give us a particularly wide window on the factors giving rise to performance funding. We chose Missouri because it developed a performance funding system that attracted national attention for its careful design. Consequently, the demise of Missouris system in 2002 surprised many observers. South Carolina, Washington, and Illinois established their systems in the late 1990s. We selected South Carolina because it was the first to legislate that 100% of state appropriations to public higher education institutions be based on their performance.7 Washington afforded us the opportunity to examine the development of performance funding systems in two different decades: It established one system in 1997, relinquished it two years later, and then established a new one in 2007. Finally, Illinois provided a Midwestern counterpoint to Florida. Its performance funding program also applied only to community colleges but differed from Floridas in when it was established. Moreover, Illinois differs from Florida in its higher education governance and political and socioeconomic characteristics. As Table 1 makes clear, our six states vary systematically in the characteristics of their performance funding systems, their state governance arrangements, and political and socioeconomic characteristics.
Characteristics of the performance funding programs. The first six dimensions involved characteristics of the performance funding programs established. First, the states differed in when the policy was first established. Tennessee initiated its program in 1979, Missouri and Florida in the early 1990s (1993 and 1994), and the other three states in the late 1990s (South Carolina in 1996, Washington in 1997, and Illinois in 1998). However, Washington also affords us a look at forces at work in the 2000s: After letting its performance funding program lapse in 1999, it created a new one in 2007.
The states also differ in how long performance funding operated. Tennessee and Florida have retained performance funding to this day.8 Missouri kept its performance funding system for 9 years and South Carolina for 7 years before relinquishing it. However, Illinois and Washington dropped theirs after 4 years and 2 years, respectively.9 States that have retained performance funding for a long time may well have different constellations of support and opposition to performance funding than states whose performance funding did not last long.
The states also differ in terms of which sectors of public higher education were subject to performance funding. The systems in Florida, Illinois, and Washington (post-2007) applied only to community colleges. However, those in Missouri, South Carolina, Tennessee, and Washington (19971999) applied to all of public higher education. Given the differing social roles and political resources of community colleges and state universities, this difference should produce different patterns of support and opposition from higher education institutions.
In addition, the states vary considerably in the proportion of state higher education appropriations consisting of performance funding. It accounted for a much larger share of the state appropriation for higher education in South Carolina, Florida, and Tennessee than in Illinois, Missouri, and Washington. In fact, South Carolinas system had aimed originally at having 100% of state funding for higher education institutions be allocated on a performance basis (authors interviews; Burke, 2002b).
Higher education governance. The six states also differ in their higher education governance arrangements. State governance structures for higher education have been found to affect a range of state higher education policy-making initiatives (McLendon, 2003; McLendon et al., 2006). Our six states differ considerably in the higher education governance structures they had in place at the time they adopted performance funding. Tennessees system was rather strongly centralized, with a strong statewide coordinating board, a governing board for the University of Tennessees five campuses, and a governing board for all other public universities and public two-year colleges. Missouris system was at the other pole in degree of centralization: It did not have any governing boards or coordinating boards covering all public universities or public community colleges and only a weak coordinating board for all public higher education. Meanwhile, the other four states with performance funding fell somewhere in between in their degree of centralization (McGuinness, 1994, 2003).
Characteristics of the political and socioeconomic systems. Our six states also differ considerably on a variety of characteristics of the political system that have been shown to affect state policy-making, including what policies are favored in states and which political groups get mobilized (Gray, 2004). First, the six states differ greatly in state political ideology. Tennessee and South Carolina have considerably more conservative electorates than do Illinois and Washington, with the other states falling in between (Erikson et al., 2005).
The differences in political culture are accompanied by variations in political structure and functioning. Illinois and Tennessee are above average in the institutional powers of the governor, whereas the other four states are a little below average (Beyle, 2004). On legislative professionalism, Illinois, Florida, Washington, and Missouri are above average, whereas South Carolina and Tennessee are below average (Hamm & Moncrief, 2004). The states also differ in degree of party competition. Florida is much less competitive than the other states (Bibby & Holbrook, 2004).10
Finally, the states differ considerably in their social characteristics: population, income, and education. For example, among our six states, Illinois and South Carolina are the polar opposites in population size, per capita income, and proportion of adults with a baccalaureate degree or higher. Illinois is well above the U.S. average in population size per state, per capita income, and proportion of college-educated adults, whereas South Carolina is well below (U.S. Bureau of the Census, 2005). A long-standing finding in the state policy literature is that state socioeconomic characteristics are strongly associated with differences in public policy (F. S. Berry & Berry, 2007; McLendon et al., 2005).
THE CHOICE OF THE STATES THAT DID NOT DEVELOP PERFORMANCE FUNDING
To better understand the sociopolitical forces behind the development of performance funding, we also analyzed two states that have not adopted this type of funding. They provide an important counterpoint to the cases in which performance funding was established, giving us greater confidence that we are actually isolating the factors that led to the establishment of performance funding.
The two states we examined are California and Nevada. We chose two states where some effort was made to establish performance funding, because it is much harder to determine the causes of lack of a policy when there has been no apparent effort whatsoever to create it. California interested us because a very clear effort was made to establish performance funding. In summer 2010, the state legislature considered and failed to pass a proposal to establish performance funding for community colleges on the basis of course completions, an up-and-coming form of performance funding that is receiving a lot of attention.11
Nevada is of interest for two reasons. First, it provides a quieter case of performance funding absence than California. Although the idea of performance funding has been raised in Nevada, it was never brought to formal legislative consideration. The state is of additional interest because it has a consolidated governing board for all public higher education institutions (McGuinness, 2003), a feature that has been identified in multivariate analyses as a significant predictor of why states do not enact performance funding (McLendon et al., 2006). We wished to examine how having such a board might have been a factor in why Nevadaas with several other states with consolidated governing boards (Alaska, Hawaii, Montana, North Dakota, Rhode Island, and Utah; McGuinness, 2003)has not developed performance funding.
Beyond differing in their higher education governance arrangements,12 California and Nevada differ greatly in their governmental systems, state political culture, and social characteristics. Californias governor is more powerful and its legislature more professionalized than Nevadas. Californias population is much larger and more politically liberal, educated, and wealthy (see Table 1). These differences should allow us to capture a variety of forces at work in leading these two states to not adopt performance funding.
DATA GATHERING AND ANALYSIS
For purposes of data triangulation, our analysis is based on extensive interviews with a wide variety of actors in each state and a thorough examination of other data sources. These sources include public agency reports, newspaper articles, and academic research studies in the form of books, journal articles, and doctoral dissertations.
Table 2 presents the number and types of interviews that we conducted with various types of political actors: state and local higher education officials, state legislators and their staff, governors and their advisors, business leaders, academics, consultants, and other observers of policy-making on performance funding in these eight states.13
State governors, legislators, and their advisors were chosen because of their central position in state government. Even if performance funding was initiated by a state higher education board, it would still require gubernatorial and legislative acquiescence to having state appropriations be distributed on the basis of performance indicators.
State and local higher education officials were chosen because they would have an immediate interest in performance funding either as initiators or implementers, or both. The state higher education officials we interviewed were top administrators of state governing or coordinating boards for higher education. The local higher education officials were presidents and senior administrators of public universities and community colleges.
Business officials were of interest because of business longstanding advocacy of greater use of business methods in government operations and its increasing demand in the 1980s and 1990s for more emphasis on performance accountability in education (Business Roundtable, 1999; Fosler, 1990; Waddock, 1994). These concerns would make them likely supporters of state performance funding. In each state, we interviewed a number of top business people, typically including the president, top lobbyist, or chair of the education commission for the main business association in the state.
The interviews were semistructured. We used a standard protocol but adapted it to the circumstances of a particular interviewee and to content that emerged in the course of the interview. All interviewees spoke with the understanding of confidentiality.
Almost all the interviews were transcribed,14 entered into the NVivo qualitative data analysis software system, and coded within the NVivo program. We also entered into NVivo and coded our documentary materials if they were in a format that allowed it. We had developed an initial list of codes focused on the content of performance funding systems, actors, beliefs, and motives supportive of or opposed to performance funding, events expected to affect the likelihood of performance funding agenda setting and adoption, and properties of the sociopolitical system that would affect the formation and actions of political groups. However, we added and altered codes as necessary as we proceeded with data collection and analysis.
To analyze the data, we ran inquiries in NVivo to find references in the data to key coding categories, such as actors, beliefs, and contextual events. Based on these references, we constructed analytic tables comparing perceptions of the same actor, motive, event, or context by different interviewees or data sources. When we found major discrepancies, we conducted additional interviews to resolve these differences.
SUPPORT AND OPPOSITION IN STATES WITH PERFORMANCE FUNDING
In this section, we analyze the advocacy coalitions supporting and opposing the establishment of performance funding in six states.15 As the advocacy coalition framework holds, these coalitions can span actors both inside and outside government, and they can be fruitfully described in terms of the beliefs that unite a coalition and separate it from others.
Performance funding varied considerably in its breadth of support across our six states that established it (see Table 3). Florida had the broadest support, with three different advocacy coalitionsencompassing the governor, legislative leaders, state higher education board officials, business, and community college presidentsthat supported performance funding. Narrower bases of support were present in Missouri, South Carolina, and Washington in 1997: legislators, the governor (weakly), and either the state coordinating board or business. Illinois, Tennessee, and Washington (in 2007) had the narrowest coalitions: the state community college or higher education board and the heads of individual colleges.
In all six states that established performance funding, state officials were the main proponents. In Florida, South Carolina, and Washington (1997), state legislators, particularly Republicans, were the leaders.16 Meanwhile, officials of a state higher education coordinating board played the leading role in Illinois, Missouri, Tennessee, and Washington (2007) and a major supporting role in Florida. Governors were openly supportive in four states (Florida, Missouri, South Carolina, and Washington), but played a significant role in only the first two states.
Florida provides a good example of legislators playing a leading role, drawing together a coalition in support of performance funding. When the state enacted two performance funding systems (performance incentive funding in 199617 and the Workforce Education Development Fund in 1997), state senators were in the lead. Two state senatorsa Republican and a Democratdrew together a group of legislative staffers and state and local community college officials to design the states two performance funding systems (authors interviews, FL 1, 7, 9, 10, 19, 20; also see Holcombe, 1997; Tyree & Hellmich, 1995). A community college president noted the leading role played by state Senator George Kirkpatrick (D-Gainesville):
My sense is that without George Kirkpatrick pushing, prodding, pulling, whatever he had to do, [legislative] staff would not have had near the interest in this topic, nor would we . . . it takes the leadership of an individual oftentimes to make that happen, and Senator Kirkpatrick was the individual who really, really challenged us all to stop talking about performance funding and do something about it.
Tennessee, meanwhile, provides a good example of state higher education coordinating boards leading the effort to establish performance funding, often working in concert with heads of individual public colleges and universities (authors interviews, TN 1, 2, 3, 4, 5, 8, 10, 12; see also Bogue, 2002; Folger, 1989). A former state-level higher education official stated, This policy was not shoved down our throats by a legislature. It was not imposed in any way. It was something that [the Tennessee Higher Education Commission] developed from within (authors interview, TN 2). Beginning in 1974, the Tennessee Higher Education Commission (THEC) engaged in a 5-year effort to develop a performance funding system (authors interviews, TN 1, 3, 4, 10; see also Banta, Rudolph, Van Dyke, & Fisher, 1996; Bogue, 1980, 2002; Folger, 1989; Levy, 1986).
As noted, the leading state officials were joined in supporting and even designing performance funding systems by the heads of public colleges and universities in Florida, Illinois, Tennessee, and Washington (in 2007). This support was concentrated in the community colleges.18 Except in Tennessee, the state universities were much less favorable toward and even opposed to performance funding (see the discussion that follows).
Another important group supportive of performance funding was the business community. Business supported performance funding in a direct and organized fashion in South Carolina, Washington, and Florida. For example, in South Carolina, a group of business leaders lobbied hard for performance funding for higher education, working closely with legislative activists to secure and then design the performance funding system. A consultant familiar with South Carolina noted,
the business community was very, very heavily pushing for this. This was very close to the days of TQM [total quality management] and performance management, CQI [continuous quality management]. They thought that this was really a step in the direction of modern management and would result in better data systems and more accountable management. So a lot of it was the business community pushing on that.
In addition to its direct participation, business also played an important indirect role. In South Carolina, Washington, Florida, and Missouri, business concerns about government efficiency strongly shaped the politics of performance funding by making performance funding an attractive policy for higher education in the eyes of state officials insofar as it would seem to please business.19 A prominent state legislator in Missouri noted this indirect power of business:
Youve got [a] group of people looking for money. . . . Youve got this maybe coincidental group of conservative business entities who has a resistance to additional funding . . . they want to talk about things like accountability. . . . So you know, performance-based funding was just kind of brought to us by consultants as a way to pacify various conservative groups.
SUPPORTERS BELIEFS AND MOTIVES
The ACF emphasizes the important role of shared policy core beliefs in uniting the various members of an advocacy coalition (Sabatier & Weible, 2007). The main beliefs tying together the supporters of performance funding were beliefs in the importance of finding new means to secure additional funds for higher education in a time of fiscal stringency and in the importance of increasing the efficiency of government generally and higher education specifically. In addition, there was more scattered belief in the importance of increasing the quality and accountability of higher education, meeting the workforce needs of business, and preventing performance funding from being imposed on higher education without higher education institutions having a hand in designing it.
For legislators, governors, and business, the main belief was in the importance of increasing the efficiency of government and higher education and in the utility of market or business-oriented methods such as performance funding in making government agencies operate more efficiently. This belief can be clearly seen in Florida, Missouri, South Carolina, and Washington. For example, a South Carolina business person who was a prime advocate of performance funding commented,
We were concerned about the spiraling costs of higher education at that time. . . . The ratio of students to faculty was steadily increasing. There was a huge increase in administration and staff as compared to the number of teachers. . . . I remember they [the universities] talked about how they were short of funding, and I went to one institution and took picture of gold flush valves on the toilets. . . . Its a minor thing, but damn it put the money in the classrooms. The students needed computers and the professors needed computers.
However, for state and local higher education officials who supported performance funding, the driving belief was in the importance of finding new means of securing additional funds for higher education institutions in a time of fiscal stringency. Performance funding particularly recommended itself as a means of securing new funds because it couched requests for new funding in terms that resonated with current concerns about limited government revenues and the utility of businesslike methods in government. For example, a state higher education official in Missouri argued,
Its not very dramatic to get up and talk about how many library books you have or the input measurements. A person sitting on the appropriations committee [is interested in] how many are graduating and what kind of citizens that you are producing and things of that type. . . . I just thought [performance funding] was a creative way to try to tell our message in a little more measurable way and put a little meat on the message so it wouldnt just be high rhetoric that tells how wonderful it is if you will support higher education and how much of a difference it will make in our economy and economic development and blah, blah, blah.
There was discernible opposition to performance funding in four of the six states (Florida, Missouri, South Carolina, and Washington) that established performance funding. Opposition came primarily from the state universities (see Table 4) but, except to a degree in Florida and Washington, it was not mobilized. Instead, institutional opposition was primarily expressed by lack of enthusiasm and foot dragging rather than by any sharp attack on performance funding or higher education accountability.
OPPONENTS BELIEFS AND MOTIVES
The main beliefs driving opponents were that performance funding was an excuse to keep down the regular state funding for higher education, that it undercut the autonomy of higher education institutions, and that the performance funding programs proposed did not sufficiently recognize different institutional missions. The first belief was evident in Florida, Missouri, and South Carolina, where institutions expressed a fear that performance funding would provide state officials with an excuse to cut back on the regular state funding of higher education. An official of the university board of regents in Florida explained why the board opposed performance funding: So when you ask, Were the universities looking forward to it? the answer I think is no, because first of all the universities saw it as punitive in nature and as a mechanism whereby there would be excuses to take funding away rather than having funding added.
The belief that performance funding undercut the autonomy of higher education institutions was present in Missouri and Washington. Institutions thought they knew how best to run themselves and resented performance indicators that were perceived as affecting what courses should be offered and how they should be taught. For example, a university official in Missouri observed, Initially, the University of Missouri opposed it mainly on the basis that . . . the funding was based on a general education competency test and on major field exams. . . . A lot of people felt that we should not let politicians and the legislature get involved in what we teach.
Finally, higher education institutions in Missouri and Washington criticized the performance funding programs in those states as failing to tailor performance indicators to institutional missions. Indicators were perceived as not making sufficient distinctions among research universities, other state four-year institutions, and community colleges. According to a former higher education official in Washington State,
Institutions were very diverse, very different, had different missions, for example. Our community college system versus the four-year system, and inside the four-year system, there are the research universities and the state universities. So they didnt see that being a very fair comparison. And that internally, it would not be really of much use for them in helping to manage the institution. So there was much resistance to it.
SUPPORT AND OPPOSITION IN STATES THAT DID NOT ESTABLISH PERFORMANCE FUNDING
The primary reason for the lack of performance funding in California and Nevada has been the absence of the champions that played important roles in the development of performance funding in the other states that we examined: legislators, the governor, the state higher education coordinating or governing board (absent as a supporter in California, though not Nevada), and state higher education institutions (particularly the community colleges).20 Lying behind this absence of support for performance funding were certain fundamental characteristics of the California and Nevada state polities, particularly the constitutional autonomy of the University of California and the Nevada Board of Regents, and state political cultures that value the autonomy of higher education and immunity from strong intervention by state elected officials.
WEAKNESS OF SUPPORT
Nevada. The Nevada Board of Regents raised the idea of performance funding in 2001 and 2004 but was unable to get much support (authors interviews, NV 1, 3, 4, 7, 10; Nevada Committee to Study the Funding of Higher Education, 2000; Nevada Legislative Committee to Evaluate Higher Education Programs, 2004). In 2001, for example, at the suggestion of the board of regents, the interim Nevada Legislative Committee to Study the Funding of Higher Education recommended unanimously that a performance funding pool be created for the state higher education system, amounting to as much as 2% of the regular state appropriation in additional funding (Nevada Committee to Study the Funding of Higher Education, 2001, p. 40). The governor endorsed this recommendation and submitted a request for $3 million in FY 20022003 for performance funding (Nevada Legislative Counsel Bureau, 2001, p. 67). However, this budget proposal got little attention from the legislature and was not enacted (authors interviews). In explaining the lack of legislative support, a leading observer of the states higher education policy-making process noted,
Without doubt this lack of stomach for big change within the legislature was almost certainly affected by Senator William Raggios disinterest in substantially changing the higher education funding formula. Senator Raggio, who was perhaps the most powerful, effective, and highly regarded member of the Nevada legislature during the last decade, was also considered the father of the existing funding formula and remained steadfastly committed to its sustainability.
California. Meanwhile, the California Postsecondary Education Commission and the system governing boards for the University of California, California State University, and community colleges have not supported performance funding (authors interviews, CA 1, 2, 10, 11, 12). In fact, a 2010 bill (SB 1143) to create a performance funding system for the state community colleges was supported primarily by a coalition consisting only of some local chambers of commerce (but not the state chamber), a few community colleges, some legislators, and some researchers (authors interviews, CA 1, 2, 4, 10, 11, 17).
EXPLANATIONS FOR THE WEAK SUPPORT IN CALIFORNIA AND NEVADA
The ACF posits that relatively stable characteristics of a polityincluding the constitutional structure of the government and fundamental socio-cultural values of the societyinfluence the characteristics of policy subsystems and the advocacy coalitions that form within them (Sabatier, 1993, pp. 2022; Sabatier & Jenkins-Smith, 1999, pp. 120122; Sabatier & Weible, 2007, pp. 190193). We can clearly see these two stable contextual factors at work in causing the weaker support for performance funding in California and Nevada compared with the other six states. In explaining the absence of the usual supporters of performance funding in California and Nevada, we note that both states have a state political culture of higher education immunity from strong intervention by state elected officials. Even when state elected officials have the authority to do so, they are reluctant to impose policies on state higher education institutions (authors interviews, CA 12, 14, 15, 18, 19; NV 7, 12; see also Hutchens, 2007). This culture is related in turn to the presence in Nevada of a consolidated governing board, and in California of the University of Californias constitutional autonomy from much state supervision, the states celebrated Master Plan,21 and powerful governing boards for the University of California and the California State University.
California. In California, the Board of Regents of the University of California is constitutionally endowed with full powers of organization and government over the institutions under its control (Hutchens, 2007). A state university faculty leader noted,
Under the California Constitution, the University of California has autonomy, which means that the state legislature cannot tell us to do something. They can request us to do something. They frequently pass legislation that applies to the other segments of public higher education at the California State University System and the community college system. . . . [B]ut they cannot tell the University of California to do something because we are actually an arm of the state and so were an independent body from the legislature, although we depend upon them for part of our budget.
A leading outside observer of Californias higher education policy-making noted,
Many of the legislators love to hate [the University of California], but they cant take it on. Its such an important institution in the state. Its constitutionally autonomous. . . . California State University System is considered to be the peoples university, and its had exceptionally strong leadership. . . . And part of what has prevented the recent performance funding and budgeting discussions from catching on at the state level is that ... they [the presidents of UC and CSU] sort of preempted the state thinking about what it should be doing.
In addition to the preceding reasons, California legislators kept silent on performance funding because of term limits. Term limits encourage elected government officials to pick initiatives that will leave their mark in a short time and that are not conceptually difficult, unlike performance funding. A community college president commented,
Its very difficult to have leadership in the legislature on issues that are as complex as this because of the nature of the legislature and term limits and the turnover that we experience in the legislature. Its very difficult for somebody to have enough knowledge and understanding of how this works to be able to persist in moving something like this to the legislature.
Also deterring legislative interest in performance funding may have been the strong Democratic presence in both the California Senate and House for the past 50 years. Across the nation, Democratic state legislators are typically less supportive of performance funding than are Republicans (Dougherty, Natow, Hare, Jones, & Vega, 2011; McLendon et al., 2006).
Nevada. In Nevada, the State Board of Regents also enjoys a substantial degree of autonomy from the rest of state government (authors interviews, NV 7, 12). A former state executive branch official noted,
Youve got to remember the university system is not part of the executive branch of government except that they are included in our budgeting process. . . . The chancellor is hired by the Board of Regents; the Board of Regents [members] are elected by the public. They can basically tell a governor to pound sand if thats what they intend to do.
Interest in performance funding in Nevada also has been undercut by an economy that is not high skills based and therefore does not demand that higher education play a major role in job preparation and technological innovation (authors interviews, NV 5, 7, 13). As a university official noted, The biggest industries in the state being gaming and mining . . . those are sort of industries that dont require an educated labor force. Moreover, interest in pursuing performance funding has been hampered by the limited professionalization of the Nevada legislature, which restricts its capacity to develop complex new policies (authors interview, NV 4). Nevada has a less professionalized legislature than four of the six states that developed performance funding (see Table 1). A university official observed,
What that really translates to, I think, is a lack of interest on the part of the legislature. Its a really difficult undertaking of the legislative session because it is every two years. And a state that has grown like Topsy and has all kinds of problems that need addressing and there has been a constitutional amendment limiting the length of the biennial session to 120 days, actual days, start to finish. . . . Its a citizens legislature. . . . These are all people who, when the legislative session is over, go back to work wherever they are.
Unlike Nevada, California saw a decided effort to legislatively enact performance funding for community colleges and concerted opposition to this effort. The performance funding provisions of SB 1143 (2010) were vociferously opposed by the California state community college system and the Community College League of California, a group representing community college presidents and trustees; (authors interviews, CA 1, 2, 10, 11).22 This vocal and unified opposition by the community colleges was fateful because the support for performance funding was weak. Moreover, as mentioned, community college officials have been among the more important supporters of performance funding in Florida, Illinois, and Washington State (in 2007).
State community college officials and local community college trustees, senior administrators, and faculty were unified in their opposition by the belief that the performance funding system proposed in SB 1143 was punitive and failed to pay enough attention to the unique missions and populations of different community colleges. The bill was viewed as punitive because of a pervading perception that it would greatly reduce funding for the community colleges. Although proponents denied that claim, several opponents argued that the bill would reduce funding by as much as 20% (authors interviews, CA 1, 2). The second major criticism was that in its original form, SB 1143 would have created incentives for institutions with many disadvantaged students to cut difficult courses and to become more selective in admissions in order to ensure favorable course completion rates (authors interviews, CA 7, 9, 10, 11). A state community college leader noted,
One of the big concerns with performance-based funding is the concept of creaming. You easily can increase rates, transfer rates, graduation rates, if you reduce the denominator. So if you want to go from having a 50% success to a 70% success rate, well you just take fewer of the students that have a statistically lower chance of succeeding. And anybody can tell you exactly who those students are in their campus or colleges.
COALITIONS AND POLICY SOLUTIONS IN THE STATES WITH PERFORMANCE FUNDING
Having described the advocacy coalitions for and against performance funding in our eight states, we turn to an examination of how the supportive coalitions were formed and how they identified performance funding as a policy solution to be pursued. Policy entrepreneurship theory is very helpful here because it highlights the role of policy entrepreneurs who foster awareness of particular policy problems, offer particular solutions to those problems, and assemble coalitions of advocates to secure the adoption of those solutions (Kingdon, 1995; Mintrom & Norman, 2009; Mintrom & Vergari, 1996).
Typically, a well connected and energetic policy entrepreneur catalyzed the formation of an advocacy coalition. In Florida, Senator George Kirkpatrick took the lead in calling meetings in which legislators, state community college officials, and local community college presidents worked out a common understanding of performance funding (authors interviews, FL 1, 7, 9, 10, 19, 20; also see Holcombe, 1997; Tyree & Hellmich, 1995). As a veteran legislative staffer noted,
[Senator] George Kirkpatrick . . . kind of got it going with our committee and the education subcommittee of our appropriations committee. The man who was the executive director of the community college system at that time was a former senator. . . and he worked with Kirkpatrick and we got a group of about five community college presidents to work with us. And we would meet periodically, once a month maybe once every two months. And we would sit down and hammer the process out and how we were going to do it and how it was going to work.
In Tennessee, the THEC created a protracted planning process involving university governing board staff members, staff from colleges and universities, academic and financial specialists, and members of the education and finance committees of the state legislature to work out the details of the performance funding system and in the process arrive at a common understanding of its purposes and content (authors interviews, TN 1, 2, 3, 4, 10; see also Banta et al., 1996; Bogue, 1980, 2002; Bogue & Troutt, 1977; Folger, 1989; Levy, 1986; Serban, 1997). A leading official at the THEC described the process:
We took five years to pilot test and develop allegiance to it. . . . This policy was not shoved down our throats by a legislature. It was not imposed in any way. It was something that we developed from within. . . . We had actually two planning committees, a state committee that had political board and campus representation, and then we had an external committee representative of policy scholars in higher ed around the country . . . we awarded 10 pilot programs to institutions around the state . . . that gave us a chance to watch campuses develop the criteria and finally we settled on five indicators.
Key to creating an effective advocacy coalition was working out a design for performance funding that would secure the support of the higher education institutions. Hence, the THEC invited the states public higher education institutions to submit proposals to develop a set of performance indicators reflecting the identity of an institution and provide at least some very tentative thinking about how performance on indicators might be rewarded through the appropriation process (quoted in Levy, 1986). The commission received proposals from 19 of the 21 public institutions and approved 12 of them. As the pilot projects were implemented, THEC staff visited the campuses to observe and provide advice for the projects (Bogue, 1980; Bogue & Troutt, 1977; Levy). In the process, the commission staff learned of the importance to institutions of performance indicators that were tailored to institutional missions. The commission also found out how important it was to institutions to have a funding system that would not lead institutions to receive, if they performed poorly, less funding than they would on an enrollment basis (Bogue & Troutt).
Similarly, in Illinois, the Illinois Community College Board used an advisory committee on a performance-based incentive system as the vehicle to mobilize the support of local community colleges. The committee was composed of local community college officials (presidents and other administrators, faculty members, and students) and several staff members of the Illinois Community College Board (including two vice presidents) and was advised by several prominent national consultants. In 1997, the committee held three hearings across the state and received feedback from community college presidents on its draft report. This feedback shaped the details of the performance funding system that was recommended in the committees final report in May 1998, including what performance indicators should be used, how they should be measured, and what weights should be attached to each (Illinois Community College Board, 1998a).
In Missouri, the Commissioner of Higher Education, Charles McClain (19891995), was the key policy entrepreneur (Serban, 1997; Stein, 2002; Stein & Fajen, 1995). In 1991, McClain testified before the legislature, urging the importance of linking funding with results (Stein, 2002). He also served on the Missouri Business and Education Partnership Commission, which in its 1991 report called for performance funding (Aguillard, 1991a; Missouri Business and Education Partnership Commission, 1991). Finally, McClain led the Missouri Coordinating Board for Higher Education to form in 1992 the Task Force on Critical Choices, composed of chairs of all public college and university boards, to work out the details of a performance funding system (Missouri Coordinating Board for Higher Education, 1992; Naughton, 2004; Serban, 1997; Stein, 2002; Stein & Fajen, 1995).
South Carolina provides a cautionary note on the process of coalition formation and the costs of failing to secure the support of higher education institutions. The states performance funding proposal emerged out of a joint legislative committee (JLC) that was given the task of conducting a comprehensive review of public higher education. The committee comprised eight legislators and four business leaders and was chaired by Senator Nikki Setzler (D-Aiken-Lexington-Saluda Counties), the main advocate for performance funding in the state. Members of the higher education community were not allowed to formally participate; they could attend meetings of the JLC but could not speak unless called on (authors interviews, SC 3, 14, 21; see also Trombley, 1998). The proposal that emerged out of the JLC pleased the legislators and business people involved but not the higher education institutions. Although they were not vocal in their opposition, fearing political backlash, they were quite unhappy with the performance funding plan. This lack of support was a major cause of the later abandonment of performance funding in South Carolina (Dougherty et al., 2011).
IDENTIFICATION OF POLICY SOLUTIONS
Any given problem can be solved in a wide variety of ways. What shapes which potential solutions get careful consideration, whereas others are ignored?
Feasibility and acceptability criteria. Policy entrepreneurship theory stresses that the policy solutions that get serious attention from the policy community typically have to meet conditions of technical feasibility, budgetary reality, values acceptability, and lack of backlash from government officials and the public (Kingdon, 1995). For several of our states, the sense of technical feasibility was secured by the seeming success of other statesparticularly Tennesseewith performance funding. As we discuss next, this points to evidence of the impact of cross-state diffusion of policy ideas.
Budgetary acceptability was secured by keeping the cost of performance funding down. Typically, it involved only a small increment to state funding for higher education, usually about 1%2% percent (see Table 1). Sometimes the performance funding program did not involve any new funds but rather reserved a certain portion of existing funds and subjected their disbursement to performance outcomes. This was the case in South Carolina, Washington (19971999), and Florida (the Workforce Development Education Fund).23
Finally, values acceptability was secured by the fact that performance funding was tied to the neoliberal discourse that government operationsincluding higher educationshould be increasingly subject to market control (Osborne & Gaebler, 1992; Slaughter & Leslie, 1997). Making this connection all the more attractive was the growing ascendancy of Republicans in state legislatures. Compared with Democrats, they typically were stronger supporters of performance funding and other businesslike solutions to government management, and the greater the Republican share of state legislative seats, the greater the likelihood that a state would enact performance funding (McLendon et al., 2006). A state higher education official in Washington described the thinking of leading Republican advocates of performance funding in that state:
They were believers in accountability in general. Not solely in higher education, but across the spectrum of governmental activities, and funding. They were proponents of smaller government, and fiscal restraint. And I think they were also believers in the notion that we tend to get more of what the funding structure responds to, so what is incentivized and measured and funded, we tend to get more of and less of other things. . . . And there was a lot of talk, in the early 90s and going forward, about reinventing and reengineering government and focusing on outcomes and data related to that as opposed to inputs.
Policy diffusion and policy learning. Policy entrepreneurs in our six states drew on a variety of sources for the idea of performance funding and for particular features of it. Table 5 indicates these various sources as they were mentioned in our interviews or cited in state documents. We distinguish between external sources, as highlighted by policy diffusion theory (F. S. Berry & Berry, 2007; McLendon et al., 2005), and internal sources, such as the policy learning highlighted by the Advocacy Coalition Framework (Jenkins-Smith & Sabatier, 1993; Sabatier & Weible, 2007).
One of the key external sources highlighted by policy diffusion theory is the example of other states. We frequently came across references to the experiences of other statesparticularly Tennessee and Floridain interviews or documents (authors interviews, FL 1a, 5, 14; IL 3, 5, 7, 8, 12; SC 2, 3; and WA 17, 22).24 For example, when the idea of performance funding was first broached in Illinois, it was justified by reference to the experiences of other states:
As society calls for greater accountability of the public and private sectors, many states indicate they are studying how to include an element in the budgetary process for performance-based funding. Florida, Tennessee, Missouri, and Ohio already have a component in their funding formulas for performance-based funding. (Illinois Council of Community College Presidents, 1995, pp. 17, 25)
South Carolinas example also influenced developments in Illinois, but in a cautionary way. As a leading Illinois state community college official noted,
South Carolina stands out because [performance funding] was enacted there by their legislature, and they had, I dont remember 26, or 56 [laughter] or so . . . indicators, and you know, many of them, particularly at that time, were just impossible. Many of them were determined, as I recall, by the legislature itself, rather than by the educational system. And so, I think that was one of the driving forces: that we felt that if we stepped forward with it, then we were able to determine what those measures were going to be, and that they were ones that we felt comfortable with having the data, or being able to eventually have the data to be able to support it.
State government associations comprised another external source of policy ideas (McLendon et al., 2005). Interviewees in two states (Florida and South Carolina)25 mentioned that activists were influenced by personal contact with, and publications produced by, organizations such as the Southern Regional Education Board and the National Conference of State Legislatures that held discussions about performance funding or even recommended it (authors interviews, FL 2a, 6b, 8, 14, 18; MO 1a, 10; SC 4, 6, 9, 14; WA 2; also see F. S. Berry & Flowers, 1999).26 A high-ranking state higher education official in Florida noted,
[Southern] legislators get together two or three times a year . . . and then there is a national meeting of state legislators. They share good and bad ideas, so it becomes sort of a copycat thing. So I can remember [in the] late 80s, the Florida legislature coming back from one of these meetings saying we need to put in place a performance funding system.
A third external source consisted of outside consultants, who were influential in at least five of our states. For example, the deliberations of the Illinois Advisory Committee on a Performance Based Incentive System were aided by an outside consultant who worked closely with the director of the advisory committee. A member of that committee noted,
We brought in [a consultant] . . . she was working with several states at the time . . . and she was terrific. . . . We developed a set of principles to start with. . . . I think her experience in other states helped us in formulating those principles.
Furthermore, the National Center for Higher Education Management Systems (NCHEMS) was influential in Missouri. A Missouri state official noted that NCHEMS historically had a consulting relationship on and off in Missouri. NCHEMS consultants evaluated an early proposal for the states performance funding system, helped frame the effort to get state approval, and later did a midcourse evaluation of the system (NCHEMS, 2004; authors interviews, MO 1a, 2, 10; also see FL 8 and WA 2).
In addition to the external sources of ideas mentioned earlier, performance funding programs were also shaped by internal sources of ideas, which is the focus of the policy-oriented learning described by the ACF (Jenkins-Smith & Sabatier, 1993; Sabatier & Weible, 2007). Among the four states where we saw evidence of policy learning,27 Florida is particularly striking for the steady evolution of thinking about accountability on the part of state policy makers (F. S. Berry & Flowers, 1999; Bradley & Flowers, 2001; Easterling, 1999; Office of Program Policy Analysis and Government Accountability, 1997; Wright et al., 2002; Yancey, 2002). In 1977, the legislature mandated (Ch. 77-352, 4) that every budget request include workload and other performance indicators (Easterling, 1999). In the 1980s, Democratic governor Bob Graham and other state officials started calling for public colleges and universities to publicly report their performance (authors interview, FL 14). Moreover, the state passed legislation in 1984 requiring vocational programs to demonstrate a training-related placement rate of 70% in order to ensure continued funding (Pfeiffer, 1998). By 1991, the state developed a performance reporting system (Florida Statutes, 1991, 240.324) that mandated certain specific indicators that later became the core of the performance funding systems established in 1996 and 1997 (Bell, 2005; Florida State Board for Community Colleges, 1998; Wright et al, 2002; Yancey, 2002).
AGENDA SETTING: POLICY WINDOWS AND EXTERNAL SHOCKS
The policy entrepreneurship perspective stresses that a primary role of policy entrepreneurs is seizing political openings to get policy solutions onto the governments decision agenda (Kingdon, 1995; Mintrom & Norman, 2009; Mintrom & Vergari, 1996). These political openingsknown as policy windows for the policy entrepreneurship approach (Kingdon, 1995) and external shocks for the ACF (Sabatier & Weible, 2007)take such forms as changes in which party controls government, spillovers from other policy subsystems, major shifts in popular opinion, or dramatic intensification of problems. But external shocks do not necessarily cause political change. They must be recognized and interpreted by policy entrepreneurs who then frame them for policy makers in such a way as to draw attention to problems and policies of concern to the policy entrepreneurs. Table 6 indicates the incidence of political openings across our six states.
CHANGE IN PARTY CONTROL OF GOVERNMENT
In all the states except Tennessee, a change in control of the government, principally involving Republican capture of another house of the legislature or of the governorship, provided an important opening for advancing the idea of performance funding. For example, in Washington state, the 1996 elections brought Republican control of the House of Representatives. The new Republican majority in the state legislature (like the Republican majority that came to power in the U.S. Congress in 1994) favored less government spending, lower taxes, and greater government accountability (authors interviews, WA 5, 9, 23; also see Modie, 1996; Shukovsky, 1997). A higher education insider described the Republican controlled legislature of the mid-1990s: [We] . . . had a lot of conversation at the time in the state about how government should run like a business and a lot of businesses were embracing these kinds of performance metrics.
CHANGES IN POPULAR OPINION
Another political opening involved the spread of an antitax mood in Florida, Missouri, Tennessee, and Washington that made it expedient to defend more spending for higher education by tying it to increased accountability. For example, in Missouri, a constitutional amendment passed by referendum in 1980 (the Hancock Amendment) put a limit on how much the state can raise taxes (Hembree, 2004). This antitax mood was then underscored by the failure of a referendum proposal (Proposition B) in 1991 to sharply increase spending on both higher education and K12 education by raising taxes (Aguillard, 1991b, 1991c, 1991d; Serban, 1997; Stein, 2002; Stein & Fajen, 1995). The failure of Proposition B by a 2-to-1 margin of the general electorate led state officials and many higher education officials to conclude that higher education could not expect to get additional state funding unless it could strikingly demonstrate that it was improving its efficiency and effectiveness. The interim chancellor of St. Louis Community College and a former supervisor of St. Louis County argued,
Missouri citizens are convinced that they are not getting full value for their educational tax dollars; and until Missouri education gets its act together and our citizens become convinced that we are doing our job efficiently and effectively, we will not work our way out of our present predicament, as I see it. (cited in Thomson, 1991)
This perception provided a political opening for performance funding proposals.
A third political opening was provided by spillover from other policy subsystems. In Tennessee and Washington, accountability efforts in K12 provided a rationale for performance funding in higher education. For example, a former Tennessee state-level higher education official explained, State legislators were starting to impose required assessments and measurements on the [elementary and secondary] schools with very little involvement and engagement from people on the firing line, teachers. We didnt want that to happen [to higher education]. Thus, the Higher Education Commission took it upon itself to develop an accountability system that would be acceptable to the higher education community.
SUMMARY AND CONCLUSIONS
This article examines what forces have driven the development of performance funding and how those forces differ across states. This question has been prompted by the fact that, despite the great interest in performance funding over the last 30 years, only half of all states have enacted performance funding for higher education. The article examined both the origins of state performance funding in six states (Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington) and the lack of such development in another two (California and Nevada).
Our explanation for the rise of performance funding in six states (and its lack in another two) agrees with several elements of the prevailing perspective on the origins of performance funding, but we also provide new findings. We did find that many of the actors and motives cited by the prevailing perspective operated in our six states, including state legislators (particularly Republicans), governors, and business people pursuing performance funding in the name of greater effectiveness and efficiency for higher education. However, we also found that the prevailing perspective misses the key advocacy role of state higher education coordinating boards and individual higher education institutions (particularly community colleges) that pursued performance funding to secure new funds in an era of greater tax resistance and criticism of the effectiveness and efficiency of higher education. And it misses the opposition of state universities to performance funding, which was the case in four states.
We further move beyond the prevailing explanation by identifying features of the politics of performance funding that the prevailing perspective missed but are highlighted by the application of the ACF, policy entrepreneurship perspective, and policy diffusion theory. One feature is how the supporters of performance funding constituted advocacy coalitions that shared common beliefs and acted in concert. Another is that those coalitions were constructed by policy entrepreneurs who found ideological common ground among different groups, identified policies that those groups could support, and took advantage of political openings to put performance funding onto the decision agenda of state elected officials. Ideas for these policies came from both policy learning based on previous policy-making in a state and external sources such as programs in other states, 28 discussions by cross-state professional associations, and suggestions from circuit-riding external consultants. Finally, we point to the role of basic social-cultural values and state governments constitutional and legal framework in explaining the absence of performance funding in California and Nevada.
Our research indicates that performance funding is most likely to be established when it secures the support not only of state elected officials and, less so, of the business community, but also of higher education officials. In five of the six states where it was established, higher education officials (particularly state board officials) were important supporters (and in four cases, the main policy entrepreneurs). Moreover, in one of the two states where performance funding was not established, state and local higher education officials were key opponents. Furthermore, even when performance funding did pass but higher education institutions were opposed, as in Washington and South Carolina, this opposition later proved fateful. The opposition of higher education officials is a major reason that these states later abandoned performance funding (Dougherty et al., 2011, 2012). This finding indicates that advocates of performance funding have to think about carefully cultivating the support of higher education officials at both the state and local levels. Their participation in designing a proposed performance funding program can greatly aid its odds of being established and partially immunize it against later criticism by higher education institutions.
One of the surprising features of the politics of performance funding in the states examined is how little concern has been expressed about the possible impacts of performance funding on equality of higher education opportunity. Except in California, we saw little discussion in our case study states about how performance funding might enhance (or damage) access to and success in higher education for underserved populations, whether low-income students, students of color, or older students. Performance accountability systems could enhance the prospects of such students by making access to and success in college for disadvantaged students important performance indicators (Dougherty, Hare, & Natow, 2009). Conversely, performance funding could damage the prospects of these students to the degree that it rewards higher course completion and graduation rates but does not bar colleges from raising both rates simply by becoming more selective in admissions (Dougherty & Hong, 2006; Dougherty & Reddy, 2011). We are struck that this danger was brought up only in California because it carries an important policy implication. Performance funding advocates should be making every possible effort to enlist the support of equity oriented actorsparticularly representatives of the minority and low-income communitiesto ensure that performance funding reflects their concerns in its mission and its measures. Doing so will not only make performance funding more likely to serve egalitarian goals but also provide an important source of support when it comes under fiscal or political pressure (Dougherty et al., 2012).
An important issue that may arise in the future politics of performance funding is the question of its effectiveness. Until now, much of the state-level discussion about the impacts of performance funding has been largely favorable and surprisingly unmarked by extensive consideration of research evidence on the impacts of performance funding.29 At it happens, the still quite limited research literature on these impacts raises questions about whether performance funding does indeed lead to significant changes in institutional performance, and, even if it does, whether it also causes significant unintended consequences such as weakened academic standards and lesser institutional commitment to access for disadvantaged students (Dougherty & Hong, 2006; Dougherty & Reddy, 2011). These issues have not been prominently raised in state-level political decision-making on performance funding (with the notable exception of California). However, one wonders whether attention to and controversy over the effectiveness and unintended impacts of performance funding may arise in the future. Such discussion might strongly affect the likelihood of enacting performance funding and, in any case, the shape it will take.30
Our case studies allowed us to examine, in depth and across a wide variety of states, the actors, motives, and political forces involved in state enactment of performance funding. Yet there is room for more research. We excluded from our analysis states with performance funding programs that are quite narrow, using only one performance indicator. It would be useful to have studies of the political origins of those programs to determine if they are substantially different from those of the states we studied. In addition, as new states enact performance funding programs, it will be important to analyze whether their political origins involve advocacy coalitions, motives, and agenda-setting conditions somewhat different from the ones we found. The bad economic times that states face now may well spell different political origins for performance funding.
Our research also carries important implications for the policy theories on which it draws. When used together, the advocacy coalition, policy entrepreneurship, and policy diffusion perspectives powerfully illuminate key features of the political origins (or nonorigins) of performance funding in our eight states. However, our research also points to certain limitations in these perspectives and suggests ways in which they can be further developed. The ACF and the policy entrepreneurship perspective focus on the direct exercise of political power by government officials and mobilized interest groups and ignore indirect, nonparticipatory exercises of power (Dougherty, 1994; Gaventa, 1980; Lukes, 2005; Murphy, 1982). Yet, as we have seen, even when business has not directly called for performance funding for higher education, it has nonetheless exerted considerable indirect influence over its development by advocating greater accountability of government agencies through the application of market controls and business methods. Even when higher education and performance funding have not been the objects of business attention, this business call for greater government accountability has provided an ideological context that makes performance funding for higher education an attractive option for government officials.31 In addition, our findings suggest that policy diffusion theory should focus not just on the influence of other states, particularly adjacent states. Policy entrepreneurs and policy makers clearly attend to the examples of distant states, not just neighboring states, as demonstrated by the impact on Illinoiss policy-making of the example of performance funding in Florida, Tennessee, and South Carolina. Moreover, policy entrepreneurs and policy makers are also shaped by their involvement in cross-state and national professional associations and policy organizations (Balla, 2001; McLendon et al., 2005).32
We thank the Lumina Foundation for its financial support of this research. The views expressed here are solely the authors. Thanks to the following for their comments on various parts of this work: Brenda Albright, Trudy Bers, E. Grady Bogue, Steven Brint, Patrick Callan, L. Fred Carter, Edward Cisek, Stephen DesJardins, William Doyle, Peter Ewell, Charles Fitzsimons, David Longanecker, Virginia McMillan, Jane Nichols, Michael Shealy, Nancy Shulock, Dorothy Shipps, Robert B. Stein, Beth Stevens, Patricia Windham, and Jan Yoshiwara. We also wish to thank the anonymous reviewers for Teachers College Record. Needless to say, all remaining errors are the responsibility of the authors. We also are grateful to Wendy Schwartz, Betsy Yoon, and Amy Mazzariello for their able editing of this paper and its antecedents.
1. See Mintrom and Vergari (1996), Meijerink (2005), and Dougherty, Nienhusser, and Vega (2010) for other examples of analyses that combine these theories, particularly the advocacy coalition framework and the policy entrepreneurship perspective.
2. This perspective has its foundation in Kingdons (1995) multiple streams theory and Roberts and Kings (1996) policy entrepreneurship approach. Though drawing heavily on Kingdon, Mintrom did not follow him in stressing the independence of the three streams of problems (recognition of problems as public issues), policies (generation of solutions that are politically acceptable), and politics (political opportunities for action). Mintrom analyzed how policy entrepreneurs often sit astride these streams, simultaneously promoting particular problems, offering certain solutions to them, and watching for and even creating political openings to set the agenda for governmental action on those problems and solutions (compare Mintrom & Vergari, 1996, with Kingdon, 1995, and Zahariadis, 2007).
3. These mechanisms resemble the mimetic, coercive, and normative forms of isomorphism identified by DiMaggio and Powell (1983/1991) in their study of the dynamics of organizational change within organizational fields.
4. We excluded a number of states in order to have a good regional dispersion among our cases. For example, we did not select North Carolina because we did not want to overbalance our analysis with states from the Southeast. We selected Florida and South Carolina instead for reasons stated in the main text. Similarly, we excluded Arkansas because we had a greater interest in two other nearby states (Missouri and Illinois) and omitted Oregon because we had selected Washington. The main text provides our reasons for selecting Missouri, Illinois, and Washington.
5. We excluded several states in order to have a good dispersion among our cases in the timing of performance funding enactment. For example, Arkansas and Colorado began their performance funding systems in the early 1990s, but we already had good representation for that period (Florida and Missouri). Minnesota and New Jersey established their systems in the late 1990s, but we had good representation at that time as well (Illinois, South Carolina, and Washington).
6. We excluded a number of states because their performance funding systems were quite narrow: Kentucky (whose 20002006 system focused only on retention); Ohio (whose Success Challenge system, established in 1995, only rewarded universities for the number of students graduating in four years); and Texas (whose system, established in 2007, only rewards universities for baccalaureate graduates) (authors interviews; Kentucky Council on Postsecondary Education, 2002; Moden & Williford, 2002).
7. This is now becoming more common. In 2009 and 2010, respectively, Ohio and Tennessee moved to put their entire state formula-based funding for higher education on a performance basis (Petrick, 2010; Tennessee Higher Education Commission, 2011; see also Dougherty & Natow, 2011).
8. Florida established two performance funding systems: Performance-Based Budgeting, which was suspended in 2008, and the Workforce Development Education Fund, which ended in 2002 (Dougherty et al., 2012).
9. Washington dropped performance funding in 1999 but then reestablished it for community colleges alone 8 years later in 2007 (Dougherty et al., 2011).
10. These are all variables that have been found to be associated with differences in state policy-making (Berry & Berry, 2007; McLendon et al., 2006). However, we should note that McLendon et al. (2006) found that these factors do not help predict interstate differences in adoption of performance funding.
11. SB 1143 originally included a provision for performance funding on the basis of course completions. However, the version of the bill that finally passed did not have any provisions for performance funding and only called for the board of governors of the California community colleges to adopt a plan for promoting and improving student success within the California Community Colleges and . . . establish a taskforce to examine best practices within the community colleges and effective models throughout the nation for accomplishing student success (California Legislative Counsel, 2010).
12. California has a much less centralized governance system, with three system boards for the University of California, California State University, and community colleges, and a weak state coordinating board (McGuinness, 2003).
13. Some of our interviews in Florida and Illinois were conducted as part of a study funded by the Sloan Foundation (Dougherty & Hong, 2006). We thank the foundation for its support of that research.
14. A few were not transcribed because either the interviewee asked to not be recorded, or our tape recorder failed. In these cases, we relied on handwritten notes.
15. Our discussion here is synoptic, focusing on general patterns across the states case studied. For full detail on each of the cases discussed, see Dougherty et al. (2011).
16. Conservative Democrats also tended to support performance funding, but on the whole, Republicans were more supportive (see McLendon et al., 2006).
17. The performance incentive funding system was later folded into the performance-based budgeting system established in 1994 (Wright, Dallet, & Copa, 2002).
18. The three states in which community colleges actively supported the enactment of performance funding (Florida, Illinois, and Washington in 2007) are also characterized by more liberal state political cultures, more professionalized state legislatures, larger populations, and higher incomes. It is possible that all these factors predispose community colleges to be more active politically and to be better able to get the ear of state legislators.
19. For more on this indirect, nonparticipatory form of business power, see Dougherty (1994).
20. For a more comprehensive discussion of California and Nevada, see Dougherty et al. (2011).
21. Issued in 1960, the Master Plan for Higher Education assigned distinct roles to the University of California, the California State University system, and the community colleges (Douglass, 2010).
22. This may be changing. There is evidence that California state and local community college leaders are considering the development of a performance funding system, although one less sweeping than that proposed in SB 1143 (authors interviews, CA 10, 11).
23. Ironically, although this hold back feature made it easier to enact performance programs in those states, it also played an important role in the later repudiation of those programs (Dougherty et al., 2012).
24. The four states where references were made to the experiences of other states (Florida, Illinois, South Carolina, and Washington in 2007) tended to have, with the exception of South Carolina, more professionalized legislatures than the other states in our sample.
25. It is noteworthy that both states were the top two among our six states in the proportion of state funding for higher education that is allocated on the basis of performance. Their ranking raises the questions of whether the influence of national policy organizations emboldens states to adopt more radical forms of performance funding.
26. This finding accords with the suggestion of McLendon et al. (2005) that state governmental associations may be important conduits of interstate communication about the acceptability, desirability, and feasibility of new policy ideas ( p. 388; see also Balla, 2001).
27. Among our sample of six states, these four states tend to be higher in the proportion of state higher education funds allocated on the basis of performance and lower in the degree of party competition and of centralized higher education governance structures.
28. Our respondents were mentioning not just neighboring states but states across the country. Hence, our finding does not necessarily disagree with the finding of McLendon et al. (2006) about the lack of significant impact of policy developments in neighboring states on adoption of performance funding.
29. In that sense, the politics of performance funding has involved a very strong aspect of symbolic element in which expressive goals may be as important as instrumental goals (Edelman, 1964; Yanow, 1996).
30. The current recession might provoke an increase in performance funding enactments as states try to cope with declining revenues by securing greater efficiencies from higher education. Certainly, this announced aim has accompanied recent efforts in various states to establish performance funding (Harnisch, 2011). However, the recession may also impede the establishment of performance funding insofar as higher education institutions oppose it as coming at the expense of regular state funding. This sentiment played an important role in the demise of several performance funding programs during the recession of the early 2000s (Dougherty et al., 2012).
31. The advocacy coalition framework does have the makings of an analysis of this nonparticipatory, third-dimensional power in its acknowledgement of the powerful role of basic sociocultural values in shaping political subsystems. However, this possibility is hamstrung by the fact that the ACF does not acknowledge that those sociocultural values may not be consensually held or in the general interest, but rather may enshrine the values of particular sociopolitical groups and therefore advance their interests.
32. It would be very useful to have the policy diffusion literature enriched by many studies on the policy positions and political influence of national educational policy organizations such as the National Conference of State Legislatures, National Governors Association, Education Commission of the States, Southern Regional Education Board, Western Interstate Commission on Higher Education, National Center of Higher Education Management Systems, State Higher Education Executive Officers, and Council of Chief State School Officers.
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