This was a study of the development of an objective funding method for public higher education institutions in Tennessee. The review covers the history of higher education funding from the early 1800s through the beginning of the twenty-first century with emphasis on the early 1960s through the year 2000. The study describes and analyzes the efforts made in Tennessee to provide adequate and equitable funding to public higher education institutions. Minutes of meetings of the Tennessee Higher Education Commission, reports on studies commissioned by state officials, accountability reports prepared by the Tennessee Higher Education Commission, the Tennessee Board of Regents and the University of Tennessee, and official budget-related documents and annual financial reports of the colleges and universities were examined for this study. Fifteen personal interviews were conducted with individuals identified on the basis of their longevity in Tennessee higher education and/or the timeframe of their service, and because they represented a cross-section of state officials, officials of governing boards, and university and community college officials. A financial analysis of state appropriations, revenues and expenditures is included for 1993 through 2002. This study found that Tennessee’s formula contains most of the elements that have been brought forward in the literature over the years as indications of a good formula, and it addresses several of the disadvantages of formula funding. The funding formula has moved Tennessee higher education institutions closer to “equitable and fair” funding among the institutions since its application in the early 1970s. A provision for performance funding and implementation of Centers of Excellence and Centers of Emphasis programs addressed quality issues relative to funding. However, use of a formula has not solved the problem of insufficient funding. The complexity of college and university financial reporting has contributed to misunderstandings and distrust between higher education and state officials. This study combines lessons from the past with recommendations for future modifications to the funding formula used by Tennessee’s higher education institutions.

The purpose of this phenomenological research study was to describe the cultural influences of resource dependence for community college administrators responsible for the implementation of initiatives related to Tennessee’s new performance funding program. Tennessee’s funding formula, considered one of the most aggressive and robust in the country, is among a second generation of performance funding programs commonly referred to as performance funding 2.0. Cultural influences of resource dependence were defined as values, beliefs, and customs that influence administrator efforts to improve institutional outcomes and acquire additional resources through performance funding. A top performing community college in terms of the performance funding formula was selected because resource dependence theory suggests that a college succeeding under performance funding would be one that is adapting to improve outcomes and acquire state appropriations. Data were gathered from interviews with 10 administrators responsible for the implementation of initiatives related to Tennessee’s new performance funding program. Data were also gathered from 3 observations and 144 documents. Findings indicated 4 themes: (1) Students Come First (values), (2) Pathway Mentality: Benefits and Conflict (beliefs), (3) The College Way: Be First, Be the Best (customs), and (4) Building on Foundation, Maintaining Momentum (changes). Overall, cultural influences of resource dependence for administrators responsible for implementing initiatives related to performance funding appear to be limited. Data suggest administrators are influenced by multiple cultural influences such as personal values, sense of community, faith in leadership, belief in the purpose of community colleges, and personal and institutional pride. Although data indicate resource dependence has some influence, data also indicate that the power of performance funding’s influence appears connected to the vision and narrative it embodies. The study is significant because it contributes to the body of knowledge related to performance funding 2.0 programs. The study also provides rich understanding of cultural influences of performance funding and addresses the relationship between culture, organizational behavior, and organizational change.

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