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Perf. Fund. History in SC

Perf. Fund. History in SC

South Carolina Commission on Higher Education

The History and Development of Performance Funding 

in South Carolina



Additional Preliminary Work in Performance Funding

Task Force Reports, 1996

Sector Committee Reports,1996

Planning & Assessment Steering Committee Reports



Performance Funding in South Carolina for Higher Education

Act 359 of 1996 , commonly referred to as “Performance Funding,” dramatically changed the responsibilities of the South Carolina Commission on Higher Education (CHE) as related to determining how public institutions of higher education are funded.  The legislation required that the CHE allocate state appropriations to South Carolina’s public institutions of higher education based on their performance in nine areas or “critical success factors.”  The General Assembly identified several performance indicators that could be used, if applicable to a particular type of institution, in assessing institutions’ successes in achieving performance in each of the areas.  In all, 37 performance indicators spread across the nine critical success factors are specified.  The CHE was assigned the responsibility of developing and implementing a system for basing funding on institutional performance and for defining how each of the specified indicators would be measured.  The General Assembly provided regulations that allowed for a 3-year, phase-in period for implementing a system to provide 100% of available state funding on institutional performance.

In compliance with its legislative mandate, the CHE, in cooperation with South Carolina’s higher education institutions and other stakeholders in the state’s public higher education system, has developed a system for determining institutions’ funding based on performance across the nine critical success factors using the 37 performance indicators as applicable.  For the current fiscal year, 1999-2000, the CHE has determined institutions’ appropriations based fully on their performance.  During the preceding fiscal years, the CHE based only a portion of institutions’ appropriations on institutional performance on select indicators – 14 of the 37 indicators were used in determining a portion of institutions’ funds for FY 1997-98 and 22 of the 37 were used for FY 1998-99.

The system for determining funding has two major components:  1) a determination of financial needs for the institution and 2) a process for rating the institution based on performance across the indicators.

The first component, the determination of need, identifies the total amount of money the institution should receive based on nationally and regionally comparable costs for institutions of similar mission, size and complexity of programs (Mission Resource Requirement) and by the prior year’s level of appropriation.

The second component, the performance rating, is determined by assessing whether or not the institution meets or exceeds standards for each indicator.  Standards are set either for the individual institution or for institutions within the same sector and are approved annually by the CHE.  Each year, the institution is rated on its success in meeting the standards on each of the indicators.  These ratings are totaled and expressed as an average score for the institution.  The institution with the higher score receives a proportionally greater share of available state funding.

Currently, the CHE is in its fourth year of implementation and is continually working to refine and improve the performance measurement of South Carolina’s public higher education institutions. As might be expected, in the three years since the passage of Act 359 of 1996, the CHE has made revisions and refinements to the overall system as well as to various measures as strengths and weaknesses have been identified.  Currently, a Legislative Study Committee is reviewing the work that the CHE has done with the process of performance funding.    

As noted, the determination of the 1999-2000 appropriations was the first year for which all funds were based on performance across all indicators.  The system employed to do so differed from that used in the first two years of implementation.

The CHE publishes a Performance Funding Workbook that outlines, in detail, all of the performance indicators, how they have been defined and to whom they apply.  The workbook is provided as a guide to be used by institutions in the benchmarking and rating process and should also be useful to other interested in the performance funding system in South Carolina.

For additional information regarding the Performance Funding Process, contact Julie Carullo, This page last updated 11/28/2005