This document explores how well the four conditions necessary for implementation of performance-based policies in vocational education can be met in postsecondary education. The four conditions require that: (1) it must be possible to specify the desired outcomes precisely and unambiguously; (2) these outcomes must be easily, accurately, and fairly measured; (3) performance must be tied directly to funding so that success is rewarded or failure penalized; and (4) information on outcomes must be disclosed to consumers and policy makers to improve choices and decision making. The first of the report's five chapters explains why performance-based policy seems desirable at this time. The second chapter addresses issues surrounding definition and measurement of performance in postsecondary vocational education, covering labor market outcomes, learning outcomes, and access to education outcomes. Chapter 3 concerns how performance can be linked to funding, discussing performance contracting, performance-based funds allocation formulas, and performance-based student financial aid, and offering guidelines for federal vocational education policy. Chapter 4 explains information disclosure for potential consumers of postsecondary education, including the benefits and costs of disclosing more information, the necessary conditions for effective disclosure, and Arizona's experience with disclosure. Chapter 5 considers how to introduce performance funding into the Carl D. Perkins Vocational Education Act and discusses several objections that proponents of the changes are likely to confront. (CML)