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Original Article:
Performance-Based Budgeting (winter 1998)


Interest in Performance-Based
Budgeting Has Faded

March 2008

TEN YEARS AFTER adopting a detailed performance-based budgeting plan for higher education, South Carolina essentially has abandoned the effort.

“We still collect performance-based data but we do not use it for budgeting,” said Julie Carullo, director of government affairs for the South Carolina Commission on Higher Education.

“The state has backed off from performance-based funding, in the face of prodigious budget cuts,” said Debra Jackson, vice provost and assistant to the president at Clemson, one of the state’s three research universities.

The plan established performance indicators for South Carolina’s 33 public campuses. (The original 37 indicators swelled to more than 70.) Those that met or exceeded the criteria were to receive additional state funding; those that failed to meet the standards were to be punished financially.

“Those institutions receiving the highest scores were to receive extra money,” Jackson said, “but that never happened, there was no extra money.” Instead, state appropriations for public higher education were reduced by more than 25 percent from 2002 to 2005.

There were other problems with the performance-based funding approach.

“You have to take money away from one school and give it to another, something that is politically very difficult,” said one education official. “How do you improve a low-performing school by cutting the budget? How is that supposed to work? You wind up with a school that is worse off than before.”

Thomas Higerd, associate provost at the Medical University of South Carolina, said the state higher education commission, which was charged with implementing the plan, took a “one size fits all” approach.

“They treated all institutions the same, from a rural two-year school to the medical university,” Higerd said. “But we all had different missions. They didn’t take into account local situations. Lumping us together didn’t make any sense.”

There were conflicts between the state higher education commission, which implemented the plan, and administrators at many of the state’s 33 public campuses.

“There was a considerable gap between the institutional culture of academe and the values of government bureaucrats,” top officials of Clemson, the University of South Carolina and the Medical University of South Carolina wrote in a 2004 paper published by the National Association of College and University Business Officers.

The South Carolina Commission on Higher Education still collects performance data but no longer uses it to determine campus budget recommendations. Although the commission’s publications and website continue to say that performance funding is state policy, there is little evidence that this is so.

A decade ago there was a flurry of interest in performance-based budgeting around the country, but it has faded, experts say, because the programs were underfunded, they were the first thing dropped when budgets became tight, and they were poorly administered.

—William Trombley

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