Academic journal article Community College Review

The Legislative Evolution of Performance Funding in the North Carolina Community College System

Academic journal article Community College Review

The Legislative Evolution of Performance Funding in the North Carolina Community College System

Article excerpt


The use of performance-based allocations in higher education has increased dramatically over the past five years (Burke & Minassians, 2001). In 1997, 24 states considered institutional performance when making allocations to colleges and universities. By 2001, 36 states had adopted this funding practice (Burke & Minassians, 2001). Following this trend, in June 1999, the North Carolina General Assembly passed House Bill 168, a general appropriations bill that mandated the implementation of performance funding for the 58 colleges in the North Carolina Community College System (NCCCS) (H.B. 168, 1999 N.C. Sess. Laws 237 (N.C. 1999)). This provision was codified in the North Carolina General Statutes (N.C. Gen. Stat. [section] 115D-31.3). Although the statute was amended the following year, the substance of the law remained the same (H.B. 1840, 2000 Sess. Laws 67 (2000)). Under [section] 115D-31.3, each community college's performance is reported on 12 specific measures. Performance on 6 of these measures determines if a college is eligible for special budget flexibility and a supplemental allocation (N.C. Gen. Stat. [section] 115D-31.3).

The North Carolina program evolved out of three legislatively mandated initiatives: a NCCCS accountability program, a NCCCS formula funding study, and a state government performance audit. This legislative evolution also occurred, however, in an environment influenced by a variety of factors including coordinating, governing, and budgetary conditions. The purpose of this article is to describe, analyze, and interpret this evolutionary process and to show how selected environmental factors affected the adoption of performance funding for community colleges. Although practitioners in North Carolina will have a particular interest in this subject, college leaders in other states may observe similarities between the North Carolina program and performance-based allocations in their states. To the extent that these similarities point to common issues and challenges, the author's analysis and interpretation may have application in other jurisdictions.

Literature Review

The literature on performance-based appropriations has followed the evolution of its subject matter. Early publications focused on the implementation of new programs (e.g., Banta & Fisher, 1984; Eyler, 1984) and highlighted programmatic issues and barriers (e.g., Peterson, Erwin, & Wilson, 1977; Peterson & Stakenas, 1981). As performance-based appropriations became more common in the late 1980s and 1990s, scholars explained their role in the accountability and quality improvement movements (e.g., Bogue, 1998; Bogue & Aper, 2000; Burke, 1998a; Carnevale, Johnson, Ruffner, & Edwards, 1998; Serban, 1998a; Stein & Fajen, 1995).

Along with these programmatic and policy analyses, researchers have recently developed a taxonomy of performance-based appropriations (Burke & Minassians, 2001; Burke, Rosen, Minassians, & Lessard, 2000; Burke & Modarresi, 1999). Burke and his colleagues have identified two kinds of performance-based appropriations: performance budgeting and performance funding (e.g., Burke, et. al., 2000, p. 3). Under performance budgeting, however, satisfactory performance is only one of several factors in determining allocations (Burke, et. al., 2000, p. 3). In the case of performance funding, the link is direct, clear, and fixed. For performance budgeting, the link between funding and performance is indirect, ambiguous, and flexible (Burke, et. al., 2000, p. 3).

Serban (1998b) claims that performance funding programs are characterized by six major components: goals, performance indicators, success criteria, indicator weights, allocation methods, and funding levels (p. 61). The selection of performance indicators has been described as the most critical and controversial task in establishing a performance-based program (Burke, 1998b). …

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