Despite the popularity of performance funding among policymakers and policy advocates, only half of all states have ever created a performance funding system for higher education. State performance funding systems have also been surprisingly unstable. Nearly half of those states that established performance funding systems for higher education eventually discontinued these systems. This report examines the political forces that shaped performance funding policies in eight states. The report begins by analyzing the origins of performance funding, contrasting the experiences of six states that established performance funding systems for higher education (Florida, Illinois, Missouri, South Carolina, Tennessee, and Washington) and two states that did not establish such a system, although they considered it (California and Nevada). Second, the report analyzes the forces behind the demise of performance funding in four states that ended their systems at different times: Washington, Illinois, Missouri, and Florida (its Workforce Development Education Fund). Next, the report examines how and why two performance funding systems that have lasted to this day--Tennessee's Performance Funding system and Florida's Performance Based Budgeting system--have changed over time in funding levels and performance indicators. Finally, the report draws evidence-based recommendations for policymakers. (Contains 8 tables and 61 footnotes.)