Questions of college performance in the United States are inevitably answered in terms of numbers rather than performance. A Tennessee policy links two percent of state funding to outcomes rather than size. The policy has major implications for funding and performance in colleges and other service-oriented institutions. (Author/MLW)

A performance funding policy adopted in Tennessee in 1979, which recognizes and rewards instructional performance through the state funding formula, is described. The schedule permits institutions to earn an additional 2 percent of their educational and general appropriations based on an evaluation of institutional instructional performance on…