2649146

The Changing Face of Accountability: Monitoring and Assessing Institutional Performance in Higher Education Author(s): F.
King Alexander Source: The Journal of Higher Education, Vol. 71, No. 4 (Jul. - Aug., 2000), pp. 411-431 Published by: Ohio State University Press Stable URL: http://www.jstor.org/stable/2649146 . Accessed: 11/12/2013 20:14
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?E
F. King Alexander
The ChangingFace of Accountability

Monitoring andAssessing InstitutionalPerformance in Higher Education
Introduction
During the last decade dramatic changes have emerged in the way governments interactwith colleges and universities. Governmental authorities are no longer as receptive to the traditional self-regulatory processes that have dominated university development for centuries. A new economic motivation is driving states to redefine relationships by pressuring institutions to become more accountable, more efficient, and more productivein the use of publicly generated resources. Earlier attempts by states to measure institutional efficiency and performancehave generally been met with passive resistance or benign neglect in academic circles. Although this trendstill prevails, an increasing numberof educational leaders are now exhibiting an awareness that the status quo is no longer a viable option for higher education. Barnett (1992) points out that our higher education systems have entered "the age of disenchantment"and "society is not preparedto accept that higher education is self-justifying and wishes to expose the activities of the secret garden. With greater expectations being placed on it, higher education is being obliged to examine itself or be examined by others" (p. 16). This observationreflects the increasing societal requirementthat colleges and universities must become more responsive to national economic needs and new governmental demands for increased performance.
E King Alexander is assistant professor of higher education, Department of Educational Organizationand Leadership, Universityof Illinois at Urbana-Champaign.
TheJournal of Higher Education, Vol. 71, No. 4 (July/August 2000) Copyright(? 2000 by The Ohio State University
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TheJournal of Higher Education
As part of the changing relationshipbetween government and higher education, state governments are placing an increasing burdenon higher education to play a pivotal role in transformingthe existing low-wage economic structures into high-performance, technology-based economies. Governments are increasingly looking to the different sectors of higher education to augment learning skills and improve workers' ability to develop and use technology, thus enhancing productivity and strengtheningthe state's economic position. According to Marshall (1995), former U.S. Secretary of Labor, "Educationis the crucial element in this transformationprocess. It can no longer be considered apart from the state's overall economic strategies" (p. 62). Marshall is inferring that education, and increasingly higher education, has become an essential componentof national economic investmentstrategy.In a competitive and global environment, increasing educational investment to produce a highly educated and skilled workforce is a vital element for future economic growth. Withoutthis investment and reliance on education, and especially tertiary education in industrialized societies, the competitive status of a nation will substantially deterioratein the coming years. This reliance on higher education as a principal economic engine is accented by today's world economy, which is changing national economic and educationalneeds more rapidly than ever before. Higher education increasingly determines a society's evolutionarypotential and, in economic terms, affects internationalcompetitiveness and choice of industrial location. In nations with comparativelysophisticated higher education systems, governmentsare adopting new economic and managerial strategies to assess and compare college and university performance. Governmentreportingand funding mechanisms for higher education are in the midst of a major transformationfrom complete input-based systems to the adaptationof more competitive outcomes-based approaches (Barnett & Bjarnason, 1999; Brennan, 1999; Ewell & Jones, 1994; Gilbert, 1999; Layzell, 1998; Schmidtlein, 1999). Since the early 1990s, government interest in performance funding and budgetingfor higher education has substantiallyincreased in OECD nations (Burke & Serban, 1997; El-Khawas & Massey, 1996; Jongbloed & Koelman, 1996; Layzell, 1998; Peters, 1992; Piper & Issacs, 1992). This transformationhas resulted from the realization that to strengthen their competitive positioning, states and nations must increase their involvement in the development of human capital and research through higher education. As Marshall (1995) observes, "In this more competitive world, dominated by knowledge-intensive technology, the keys to economic success have become human resources and more effective
Accountability in Higher Education 413
population systems, not possible new organizations of production, not natural resources and domestic economies of scale" (p. 53). For most Western democracies, higher education has become the critical link to future economic success. As The Economist (1997) stated, "In such an economy-one in which ideas, and the ability to manipulatethem, count for far more than the traditional factors of production-the university has come to look like an increasingly useful asset" (p. 4). To achieve the ends of economic growth, governments resort to many devices that are presumedto create greaterefficiencies in the use of public dollars while expanding the reach of higher education. Budget reductions and general resource constraints have become commonplace, while institutions are being asked to serve increasing numbers of students and constituencies (Dill & Sporn, 1995; Eicher, 1998). Methods for administering higher education are being transformed, while colleges and universities are being urged to engage in new tasks and assume new responsibilities (Marcus, 1997). The entire natureof the traditional relationship between government and higher education is in the process of significant change in stretching the public dollar to serve more students in attemptingto maximize economic returns. In this new era, governments have adopted public policies advancing the democratic concepts of massification and universalityof higher education and have generally rejected the more traditionallyrestrictivepractices grounded in meritocracy and exclusion (Gumport, lannozzi, Shaman, & Zemsky, 1997; Trow, 1974). The rapidexpansion of postsecondary education, in most cases, has proven to be a formidable task for institutionalleaders who have not been afforded correspondinglevels of public financial resources. Coinciding with national pressure to expand higher education services has been the creation and refinement of state evaluation systems devised to monitor and assess institutionaleffectiveness and productivity (Cowen, 1996). Such government initiatives devised to seek greaterefficiencies by employmentof evaluativetechniques to assess and compare the performanceof colleges and universities constitutes the currentthrustof the "accountabilitymovement"in higher education. These challenges have resulted in systemic modifications in the managementand financing of higher education institutions. It is the nature of these developmentsthat provides the impetus for this article. Accountability VersusAutonomy As history reminds us, universities have generally experienced difficulty in living up to the expectations of societies at large. Controversies over institutional autonomy and government control are as ancient as
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universities themselves (Ashby, 1966). As Berdahl(1990) observes, universities are inherently in a state of ambivalence with society because they are "both involved and withdrawn; both serving and criticizing; both needing and being needed" (p. 170). So what makes the recent performance-basedaccountability movement distinct? The accountabilitymovement currentlyinundatingmany OECD nations is premisedon the perceptionthat traditionalmeasuresof institutionalperformanceand effectiveness such as peer review and market choice are not sufficient indicators of institutional value. The conflict encompassing this issue was best defined by the British Committee of Public Accounts (1990), which after an internal review of English public universities expressed concern about the nature of autonomous governance, stating, "Wedo not accept that their [the universities'] independence and autonomy, although undoubtedly valuable in many respects, is a valid argument against the attempts to defend against the shortcomings in realistic and effective management and control of the public funds on which universities are dependent"(p. ix). Thus, despite unparalleledeconomic and scientific achievements attributableto higher education during the last three decades, public dissatisfaction with colleges and universities continues to permeatelegislative halls. The torrentof popular criticism has forced many institutions to reexamine their educational missions and to seek new funding alternatives (Mora & Nugent, 1998; Williams, 1998). These developments place arduousburdenson higher education systems as policymakersattempt to monitoreducationalquality and performancewhile insisting on greateraccessibility. Front and center at issue is the general allegation by governmental leaders that higher education is simply not responsive to societal and economic demands. State legislators in the United States and members of Parliamentin Britain have repeatedly attacked higher education for being locked away in "Ivory Towers" exhibiting only reluctantadaptation to the growing economic demands of the nation and a global economy. The disconnect between higher education and the externalcommunity has only increased as demand for greater equality through access and economic productivity have received more emphasis (Karabell, 1998). Others have countered that higher education systems have been given little credit for their adaptabilityand their dramaticevolution. As Neave (1995) observes, "For an institution supposedly reputed for its non-adaptabilityto 'social change,' for its 'non responsiveness' and for its 'resistance to change' in general, the immobility so often ascribed to it by pamphleteershas been remarkablyabsent these ten years past, so much thatwe have swung in the opposite extreme and, taking adaptation
Accountability in Higher Education
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for granted, dispute not whether the institution is capable of it but the speed at which it takes place" (p. 4). Merely to contend that governmental authorities have turned to the concept of performance-basedaccountability for the limited purpose of forcing higher education to change the way it conducts business is to oversimplify and minimize the more complex economic and societal developments that have occurred since the mid-1980s. During the last fifteen years, two significant fundamentaldevelopments have combined to stimulate an increased state-level interest in higher education performance: (1) the "massification"of higher education systems and (2) limitations of public expendituresfor higher education.
The Effects of Massification
The expansion of the higher education system in WesternEuropeand other OECD nations during the last fifteen years has been viewed by some as the most significant higher education development of this century. Throughout most of Western Europe, the term "massification"is traditionallyemployed to note the rapidenrollmentgrowth in higher education. According to The Economist (1997), massification is "the biggest single change in higher education over the past two decades. Before long, it will become a normalexpectationof every studentin rich countries to have access to some form of postsecondary education" (p. 5). The impetus behind governmentalinterest in moving towardthe massification and universality of higher education must be attributedto the aforementioned theory of human capital investment and national economic growth. Universities, once portrayedas culturaltraininggrounds for young minds, have become major agents for governmentinvestment in human development. Global economic advantagesare rapidly emerging in nations where widespread educational investments have become national priorities. In this environment,higher education is viewed as a vehicle to increase the stock of human capital that enables more effective competition in world markets.Therefore, governments increasingly view higher education as a stakes game too importantto leave to the universities themselves or to traditional peer faculty and governance processes that have dominated higher education for generations. As Slaughter and Leslie (1997) observe, "These changes are putting pressure on national higher education policy makers to change the way tertiary education does business" (p. 31). These trends have manifested in the United States in student enrollment increases of over 70% since 1970, resulting in new institutions, centralized governance structures, and widely diverse student bodies
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(Digest of Education Statistics, 1997). Currently, approximately 68% of high-school graduates enroll in some form of postsecondary education in the year following graduation (Mortenson, 1998). The massification of higher education is obviously a high priority public policy issue as state governments anticipate larger secondary school completion rates and more traditional and adult students who will be seeking postsecondary access in the next ten years. This is true at all levels of government. In an attempt to bring national attention to the issue of increasing postsecondary education accessibility, President Clinton, during a Commencement Address at Princeton University in- 1996, declared, "The clear facts of this time make it imperative that our goal must be nothing less than to make the 13th and 14th years of education as universal to all Americans as the first 12 are today" (The New YorkTimes,1996, p. Al). This statement discloses an acceptance of a basic tenet that the democratic concepts of massification and universality of postsecondary education have become a national economic priority. Expanding access and the resulting enrollment growth experienced mostly by public sector institutions have compelled governments to give greater scrutiny to the use of public resources. Most Western democracies have expanded and opened higher education admissions in what heretofore were largely closed higher education systems. The results of these rising enrollments have been dramatic. In Western Europe, student enrollment in higher education has risen by approximately one third since the early 1980s. Some of the most drastic increases have been experienced in Greece, France, and Britain, where enrollments have grown by approximately 70% since 1985 (UNESCO Statistical Yearbooks, 1995). What is increasingly apparent to policymakers is that the overwhelming majority of students will continue to take advantage of the accessibility and affordability of governmentally funded institutions. The Memorandum on Higher Education delivered by the European Community Commission (1991) very clearly supported this conclusion and pointed out the need for expanded access, stating,
Projections of enrollments in the past have always tended to underestimate the demandfor higher studies among young people. The demandis fueled by changing social structuresand cultural values as well as by the demands of the labor marketfor more highly educated manpower.As these factors will not only persist but will become more acute in the coming decade, an overall increase in demand for higher education would appear likely. This increase should reflect the circumstances of the new decade and show a more even growth in the participationof males and females and a greater expansion in part-timeand continuing education students. (p. 75) As postsecondary enrollments have substantially grown during the last decade, the composition of the student body also changed. Substantial
numbers of adult learners above the age of twenty-five are now being found in university classrooms, lecture halls, and qualifying examinations (Karabell, 1998). This is reflective of the growing demand for lifelong learning in OECD nations. Such development also reaffirms the failure of the more elitist higher education systems that excluded many of the currentadult learnersfrom participationat a much earlier age. Limitations of Public Expenditures As enrollments have continued to increase much faster than policymakershad anticipated,basic tensions have emerged between advocates of massification and proponents of the older, less accessible systems of higher education. Many university academicians and administrators were swept along with the new reforms regardless of whether they agreed with or opposed the expanded enrollments. Unlike most government leaders, their primary concerns focused on the limited amount of new public financial resources available and the consequent threatto the maintenance of quality in higher education systems. As The Economist states, "The tension between the numbers and quality dominates the debate about higher education in most advanced countries"(p. 4). Administratorsand faculty fear that if currentfiscal trendspersist, colleges and universities will continue to experience largerclass sizes, less individual attention and faculty/studentinteraction,and eventually, reduced academic performance. Despite acknowledgingthe possible deleterious effects on educational quality, many governments have opted to maintain current policies by mandating even greater higher education enrollments without corresponding public resources (The National Commission of Inquiry into Higher Education,1998). Duringthe late 1980s and early 1990s a number of adverse macroeconomic conditions contributed to the international trendto limit public expendituresto higher education.In response to public concerns about other governmentalservices, policymakers deprioritized higher education in favor of medical care, social welfare, benefits for the elderly, primaryand secondary education, and crime prevention' (Slaughter & Rhoades, 1996). These changes, when coupled with a general voter backlashagainst increasedtaxation, reducedthe fiscal capacity of many governmentsto supportcolleges and universitieswith public resources during a period when expanding enrollmentsbecame a national priority.For example, in the United States, state governmentfunding as a percentageof all revenuesources for higher educationfell from 44.9% in 1985, to 38.2% in 1995 (Digest of Education Statistics, 1997). As a result of public revenuedeclines experiencedby colleges and universitiesin the United States, studenttuition and fees increased sharplyto offset reductions in state appropriations duringthe 1980s and early 1990s. From 1980
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to 1995, tuition and fees as a source of institutionalrevenue grew from 12.9% to 18.9% at public institutions(Alexander,1998). To make matters worse, as a rapidlyapproachingnew wave of graduatinghigh-school students demand more access to postsecondary education, pressure to increase currenttuition rates to maintainper studentexpenditurelevels will continue at public colleges and universitiesin the United States. In some WesternEuropeannations during the same period, reductions in per student expenditures for higher education occurred despite moderate increases in public funding for higher education as a share of total educational spending. In Britain, limited tax support for increasing student enrollments resulted in a 22% reduction in public funding per student from 1985 to 1993, and a 40% decrease since 1976 (The National Committee, 1997, pp. 43-46). In other Western European nations per student expenditure as a percentage of the national GDP per capita declined duringthe same period.Austria, Denmark,France,Germany,Belgium, Norway, Sweden, and Switzerland experienced declines in per student expenditures,forcing many institutions to adopt new mnanagerial strategies (Eicher, 1998). To complicate this distressing fiscal trend, declines in per student public supportfor higher education has occurred as college and university costs have increased at rates exceeding inflation. For many political critics of higher education, the lowered place in the queue for public resources derives not only from increased competition from other government services, but from the sense that institutionalcosts are out of control and massive expenditures are being recklessly used to promote agendas foreign to public interests. Governingofficials frequently assert that reducing public funding will not only make institutions more efficient, but more accountable to state demands (Gumport, lannozzi, Shaman, & Zemsky, 1997). Unfortunately,many policy decisions to place less emphasis on public funding of higher education has occurred during a period when governments have embraced the concept of massification. According to The World Bank (1996), this development has forced "many public systems to operate with overcrowded and deterioratingphysical facilities, inadequate staffing, poor library resources, and insufficient scientific equipment and instructional materials" (p. 2). Faced with these challenges, many OECD governments have followed the U.S. example and begun shifting the funding burdenfor higher education to the users or students. This funding shift has resulted in wide variations in college and university fees among OECD nations.2 For policymakers, the issue of student fees remains extremely contentious and politically volatile. By limiting traditional public funding alternatives, colleges and universities have
been given no alternativebut to seek state authorityto charge users and students for the services they receive to ensure educational quality for expanding student populations. In returnfor growing fiscal reliance on student user fees, governments are demandingmore stringent and informative accountabilityrequirements. Measuring InstitutionalPerformance According to Layzell (1998), the development of performance and outcomes measurementsto assess and monitor the effectiveness of colleges and universities "is ultimately based on the desire for greater accountability"(p. 104). At the government level, performance-basedaccountability is implemented by establishing institutionalobjectives and periodically assessing progressiontowardthese goals. Increasingly,performance-basedsystems have incorporatedfiscal incentives into the new managerial framework,forcing institutions to become more productive in attainingpredeterminedobjectives or risk reductions in annualappropriations. Performance-basedplanning and funding has also become a convenient means for governmentsto compare and rankthe productivity of one institution against the productivity of another. League tables, scorecards, national rankings, and reportcards are some of the popular devices developed by governing officials to compare institutional performance measurements. Underlying the ostensible concern for improvedpublic sector performance, outcomes indicators have emerged as an instrumentaleconomic rationalitydevised to improve institutionalefficiency and effectiveness. As Peters (1992) observes, "The call has not been restricted to education, indeed, it has provided major rationale for restructuringthe whole public sector, for privatization strategies and the introduction of managerialist techniques and practices" (p. 127). During the last decade, policies have clearly emerged as the model of choice performance-based for resource allocation to public colleges and universities. The United States Since the mid-1980s the United States has witnessed a substantial change in its relationshipwith individualstates and higher education.Because federal involvementin postsecondaryeducationis primarilylimited to direct student aid, research funding, and specific categoricals, state governmentshave inheriteda leading role in educationalreformthrough policies designed to improveinstitutionalaccountabilityand productivity. Although the relationship varies from state to state, state governments
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typically provideover 35% of operationalfundingto public highereducation institutions (Digest of Education Statistics, 1997). How and where these resourcesare spent continues to be increasinglyscrutinizedby legislaturesattemptingto get more value from existing resources. Issues dominatinghighereducationpolicy debates in the United States during the last five years alone have.focused on quality measurements, institutional comparisons, outcome assessments, faculty workload reviews, time-to-degree reductions, and reallocation strategies.Van Vught (1994) observes that "the United States was instrumentalin startingthe movement toward greater accountability"(p. 41). In 1978 the State of Tennessee first addressedsystemized accountabilityby establishing a series of performanceor incentive funding initiatives that began shaping a portion of the higher education funding structurebased on measurable fundoutcomes. The Tennessee system established a performance-based ing method allocating monies to institutions accordingto predetermined fundgovernmentallygeneratedpriorities.Today,the performance-based ing system continues to be used in Tennessee and constitutes 5.45% of all state operatingresources allocated to public universities. As national interest in performance-basedaccountability has grown, other states have adopted performance funding policies. According to Burke and Serban (1998), 27 states were using some form of performance funding or budgeting system that linked institutional outcome measuresto financialresources.Of these, 13 states had directly linked institutional performanceto annual funding, whereas 21 states had indirectly linked institutionalperformanceto funding through their internal budgetaryprocess (see Table 1). In addition,8 of these states had adopted both performancefunding and budgeting systems linking annual appromeasurements. priationsdirectly and indirectlyto performance-based
TABLE 1 States Using PerformanceFunding and Budgeting Systems to Finance Higher Educationin 1998
Funding System States
PerformanceFunding (Direct Link)
Colorado, Connecticut, Florida, Indiana, Illinois, Louisiana, Missouri, Ohio, Oklahoma, Oregon, South Carolina,South Dakota, Tennessee, Washington Colorado, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Mississippi, Nebraska, North Carolina, Oklahoma, Oregon, Rhode Island, South Dakota, Texas, Washington, West Virginia
PerformanceBudgeting (IndirectLink)
SOURCE:Calculatedfrom survey data providedby Burke and Serban (1998) and a nationalsurvey of state funding
formulas for higher education.
Like Tennessee, most states using performancefunding and budgeting systems in the United States allocate less than 6% of annual operating funding through these mechanisms. South Carolina is the only state to adopt a performance-fundingscheme as the primaryvehicle for allocating state funding to higher education. In 1999 nearly 100% of South Carolina'sstate operating resources to universities were appropriated by means of performance-basedcriteria. The South Carolinascheme envisions the use of 37 indicators in 9 distinct performancecategories, including mission focus, quality of faculty, quality of instruction, institutional cooperation and collaboration, administrativeefficiency, entrance requirements,graduates' achievements, user-friendliness of institution, and researchfunding. accountability in the The extraordinary interest in performance-based United States has emanatedfrom a taxpayerbacklashagainst increases in public college spending and widespreadpublic concern for improvinginstitutionalproductivity.As McKeown (1996) observes, "Manystates are either beginning to use or are considering performancefunding, which is a naturaloutgrowthof the currentpublic demand for the most effective use of tax dollars" (p. 6). Although most states have initiated numerous changes aimed at improvingthe qualityof higher education,performance funding is the only budgetaryreform to date that directly links financial incentives to achieved results in policy areas states consider important. Along with performance-basedfunding initiatives, many states and governing authoritieshave adopteda series of additionaloutcomes-based mechanisms devised to provide governments with comparative institutional data. Concerns about faculty productivityemanatingfrom governing authoritiesand legislatures have led to adjustmentsin faculty workload policies in more than thirty states (Hauke, 1994; Layzell, 1996). Information relatedto workloadreportingand standards,instructionaland research-oriented workloads, and total faculty activities are increasingly being generated and monitored by governing officials. This enhanced governmentalinterestin workloadissues representsan increasingdemand for developing comparativeinstitutionaldata that measurefaculty and institutionalperformanceand productivity(Presley & Englebride,1998). Another manifestationof the new pursuitof institutionalperformance is found in growing governmental interest to develop policies that decrease the time it takes students to complete their degrees. Policies related to time-to-degree and faculty per degree ratios are being used in several states, such as Florida, North Carolina, and Indiana,to force institutions to increase the numberof studentsparticipatingin higher education, while creating a corresponding pressure to reduce the time it takes students to complete degrees.
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In most instances, states have tended to increase the accountabilityof their higher educationsystems by implementing an arrayof performance measures that attemptto determine what is called "value for resources." Ewell and Jones (1994) noted four approachescommonly used by states in measuring such value. First, value-added measurementsto departing students in the form of inputs, processes, and outcomes have been mandated in nearly one half of the states. Second, efficiency measurements to assess resourceusage, such as faculty, space, and equipment,have seen widespread adoption by governmental agencies in performancecontingent systems. Third, returnon investmentand needs measurementshave been used to determine institutional effectiveness and productivity. Fourth, an approach built on the notion of "consumerism"that is designed to measure the impact of higher education in meeting individual and state needs has also been commonly adopted (pp. 12-14). As most states anticipate enrollment expansion during the next decade, governing authorities and legislatures will remain focused on generating creative ways to measure the productivity and efficiency of public institutions. The increased emphasis on performance-basedaccountability in the United States reflects a growing national interest in identifying measurable outcomes. This combined with the growing movement to assess student learning and performanceas anotherdimension of performance-based accountability, may continue to push state governments in the United States to couple formulaic funding levels with institutionaland student performancestandards. The United Kingdom In response to the increased drive for greater accountability and performance, Britain has witnessed unprecedentedinterventionby the central governmentinto the financial affairs of higher education. Partington (1994) refers to this governmental encroachment as a direct "legacy of Thatcherism"and the priorities that were and continue to be part of the conservative Tory philosophy (p. 147). Understandingthe new performance-funding initiatives requires a brief discussion regarding the course of their implementation. During the last decade, the relationship between the Parliamentand higher education has dramaticallychanged and no longer resembles the governance and funding structures that were in place until the mid1980s. With the passage of the EducationReformAct of 1988, the initial stages of a power transformation began to evolve. The Act eliminatedthe University GrantsCommittee (UGC), once perceived as a buffer or mediating institution between central government control and institutional autonomy.The UGC was perceived by the Thatchergovernmentsof the 1980s as a defenderof vested interestsrepresentingtraditionaluniversity
values (Salter & Tapper,1994, pp. 199-202). The consequence for representing the traditionalhigher education establishment against new Tory demands was the replacement of the UGC by the University Funding Council (UFC), which, following its amalgamationwith the Polytechnics and Colleges Funding Council (PCFC) in the Furtherand Higher Education Act of 1992, has been supersededby the Higher EducationFunding Councils (HEFCs).3 The creation of the HEFCs substantially changed the natureof the higher education environmentby centralizing state authority over higher education. As Salter and Tapper (1994) observe, "Afterdecades of prod and nudge politics, of wait and see, the state has acquired powers which mark a qualitative shift in its relationship with the institutions of higher education. It is now in a position to orchestrate change on a scale and in a mannerwhich knows no precedent"(p. 1). The mission of the Higher Education Funding Councils was to promote the quality and quantityof learningand researchin highereducation institutions, cost-effectively and with regard to national needs (Davies, 1995, p. 3). Within two months after their creation, the central government issued a series of guidelines for the HEFCs reaffirmingthe changing relationship between government and higher education. First, the guidelines demandedthat Funding Councils develop sectorwide funding methods for allocating resources for teaching and research. Second, Funding Councils were to specify clearly what institutions are expected to provide in returnfor teaching and researchwhile securing greaterfiscal efficiencies as studentenrollmentexpanded.Third, FundingCouncils were to increase accountability of research funding from sector institutions. Finally, the guidelines declared the need for the maintenanceand enhancementof quality by relatingfunding to the Council's performance assessments of teaching and researchquality (Davies, 1995, pp. 6-10). By 1993, the HEFC in England (HEFCE), Britain's largest HEFC with 131 institutions, had established several assessments and performance practices as funding allocation tools. The first component devised by the HEFCE was a researchassessment that directly linked funding to the results and performance of academic units and institutions (ElKhawas & Massey, 1996). This new funding approachremoves a sizable amountof funds from a predictableformulabasis and gives it a new performance formulaic foundation with external governmentaland peer assessors distributing a portion of the funds. This represents a major departurefrom the competitive federal research funding practices in the United States. Under the new English system the amount of departmental researchfunding became dependent on a series of performanceindicators, including quality publications (to measure output), numberof citations (to measure quality of impact), research income, research students, and peer review (Cave, Hanney, Henkel, & Kogan, 1997).
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The second component emphasizing academic performancewas the quality assessment of teaching and learningeffectiveness incorporatedin 1993 by the HEFCE.These quality assessmentproceduresdirectlylinked funding to judgmentsmade about academic quality in teaching and learning. The currentassessment uses an output ratingscheme to measuresix dimensions of teaching quality (El-Khawas& Massey, 1996). Each of these policy initiatives represents an important departure from previous funding schemes for higher education. Scott (1989) predicted two prominentchanges that occurredas a result of these fiscal reforms: first, "universitieswill be bound by much tighter rules when they receive state grants, which will certainly involve more detailed auditing and performancemeasurement."Second, "universitieswill have to bid against each other to participate in specific initiatives for which funds will be earmarkedand accounted separately" (p. 303). The 1988 and 1992 Acts ultimately established the foundationfor the centralizationof fiscal control and the implementation of new performance and quality standardsfor higher education. It is also importantto note that these changes occurred during a time when the Tory government mandated that higher education double its enrollment by the turn of the century without any additionalpublicly generatedresources. Today, three British government departments, including Education and Employment, Science and Technology, and the Cabinet Office, are exerting unprecedentedinfluence on the ways in which activities of universities and colleges are conducted and managed. Through the Higher EducationFunding Councils, the Departmentof Educationand Employment (DEE) has designed and operates a funding system based on performance criteria and quality measures in teaching and research. By using the HEFC system of performanceand quality indicators,resources are allocated based on governmentally defined guidelines. Some of the indicatorsreflect the growing economic needs of the state by emphasizing technical, industrial,and business-orienteddemands for higher education. The DEE continues to increase its influence over higher education by monitoring employer decisions and encouraging industrial partnerships.The Cabinet Office has implemented a Higher Education Charter,which focuses on the notion of "consumersatisfaction,"and a set of obligations that institutionsare expected to meet. The extent of this requirementwill include satisfaction surveying of consumers, students, researchcontractors,employers, and membersof the local community. The statementthat best exemplifies the British government'sphilosophy for infusing performance-basedaccountability into the mechanics of higher education institutions was summarized by Salter and Tapper (1994) when they stated that "the pressures upon the state to control higher education's resources, and force it to respond to what we have
called the 'economic dynamic' are overwhelming and inescapable. Modern economies require an ever-changing blend of new knowledge and educational manpower if they are to function effectively, and no state can afford to leave its higher education system to its own devices" (p. 18). Shattock (1994b) symbolically referredto this transitionperiod as the end of an era of independentacademic culture in Britain. Emerging Performance-BasedReforms If one takes a broadview of the Europeancontinent, it is evident that higher education is in the midst of an immense transitionperiod during which performance-based accountabilityreformsare widespread.In most cases, the dynamics encompassing these reform efforts are reflective of those that U.S. and British policymakershave been strugglingto address over the last decade. The need to monitor and assess institutionalperformance is a recurrent theme among Europeannations with maturehigher education industries.For example, in Finland a new funding model was implementedin 1997, incorporatinga performancecomponent that constituted3% of the entire universitybudget (Hamalainen& Moitus, 1999; componentis based on five Holtta, 1998, p. 59). The performance-funding indicatorsmeasuringinstitutionalefficiency and effectiveness in academic activities: first, by measuring an institution's ability to attract external sources;second, by measuringan fundingfrom domestic and international institution'srelative position in the institutionalrankingsin international student and faculty exchange; third,by measuringthe efficiency of adult educationservices; fourth,by measuringcareerplacementof graduatesin the labor market; fifth, by measuringthe success of the institutionin creating academic qualityin teaching and research(Holtta, 1998, p. 59). Like Britain, Finland and other Europeangovernments are struggling to find the proper balance between institutional autonomy and performance-based assessments. In Germany,Sweden, Denmark,and Austria, universities are gaining more financial autonomy through pilot funding programs and limited block grant allocations as part of the tradeoff for increases in centralized performance-based demands (Cave, Hanney, Henkel, & Kogan, 1997). In the Netherlands,policymakers have implemented a researchfunding mechanism similar to the British plan where research productivity is assessed on a government rating scale (ElKhawas & Massey, 1996). Influenced by recent U.S. and European trends and their own fiscal dilemmas associated with rapidly expanding higher education systems, the Canadianprovincesof Albertaand Ontarioalso have recently adopted performance-based funding as a mechanism to assess university efficiency and quality (Barnetson, 1999; Gilbert, 1999). The Alberta performance system uses a 1-3 rankingprocess to assess institutionalquality,
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research, and efficiency. Universities acquiring higher rankings may receive up to a 2.75% or a $6.05 million funding increase. In Ontario the Ministryof Educationand Trainingwill implementa plan in 2000 linking to three performanceindicatorsmeaup to 6% of annual appropriations suring college graduationrates, graduateemployment rates, and alumni, employer, and student satisfaction (London Free Press, 1998). The new funding scheme will allocate approximately$16.5 million to universities and $14 million for community colleges. Institutionsthat rank in the top third in their category will receive twice as much funding as the middle third,while those in the bottom thirdwill receive no funding. These internationalperformance-basedinitiatives represent a sea of changes in the relationshipbetween governments and higher education. In attempting to produce greater accountability, the state is entrusting university and institutional leaders with educational missions that are calculated to address the necessities of a national economy in a competitive global marketplace. In this more competitive model governments carefully scrutinize the overall progress and performanceof universities in addressing the economic needs of the state through the use of fiscal incentives and disincentives. Universities, on the other hand, are expected to compete intensely for additional resources based on predetermined performance objectives established by the state. In this kind of performance-basedsystem the responsibility for improvementrests with individual institutions and departments. CommonalitiesAmong Performance-BasedSystems In reviewing the progressionof the recent performance-based accountability movement in the United States, Britain, and other OECD nations, two important commonalities emerge. First, performance funding and budgeting policies have intensified the tension between policymakers and faculty because of divergentoband higher education administrators jectives. Governmentauthoritiespreferto use indicatorsthat measure institutionalefficiency, consumer satisfaction,job placement, and value for resources. They also advocate using performance measurements as a means of comparing institutionalproductivityand performance.On the and faculty favorperformancemeaother hand, universityadministrators sures that reflect the quality of the educational experience in a manner that elucidates their own specific institutional mission(s). University leaders also advocate the adoption of performancemeasures only when they are premised on the assumption that the results will be used in a noncompetitivemannerto improve one's own performance. Second, it is clear that the nature of the state's relationship with higher education has evolved from one of authoritativeoversight, to one
of active involvement in financial arrangementsand economic decisions. This represents a significant change in governmental expectations of higher education. According to Goedegebuureet al. (1994), "The trend for national governments is to retain the prerogative to set broad policies, particularlybudgetaryones, while increasingly transferringthe responsibility for growth, innovation, and diversification in higher education to individual institutions" (p. 1). Under these new arrangements, governments are simultaneously devolving more control over programs and budgets to individual institutions while directly intervening in higher education systems in order to ensure greatereconomic efficiency, quality of outcome, student access, and accountability. McGuinness (1994) recognized that these fundamentalchanges in the relationshipbetween governments and higher education were caused by new economic demands. Higher education has evolved into a foundational component of national economic growth. It is being called upon to resolve the economic problems of nations without adequate investment in most circumstances. Once it has been established that the primary purpose of higher education is to serve the economy, then it becomes the responsibility of the state to ensure that the institution is held accountable in successfully achieving this task. Conclusion For nearly two decades pressureson states to gain greatercontrol over higher education resourceshas been overwhelming and inescapable.Driven by a 'new economic dynamic,' societies throughoutthe world are requiring an ever changing combination of highly skilled workers and knowledge that only education can provide.As Salter and Tapper(1994) stated, the stakes have become far too great for nations to leave their higher education systems to their devices, and "such action would amount to an abdicationof responsibility which no present-daygovernment or its bureaucracy could tolerate either in terms of their internalorganizationaldynamic or in terms of the externaldemandsupon them"(p. 18). During the last decade, this governmentalresponsibilityhas emerged in policy form underthe mask of performance-based accountability. In seeking ways to measuregreaterproductivityand performance,governmentsare reflecting a more utilitarianview of higher education.From a utilitarianperspective,economic values are supremeand the quantification of fiscal resources is the true measure of value. Unfortunately,university leaders who are unable to define and demonstrateeducationalobjectives and achievementsin utilitariantermswill have limited success in meeting the new demandsplaced on highereducation.These pressuresdo
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not appearto be withering away as governmentsadvancemixed messages to higher education, demanding greater performancewithout additional financial investment. As Breneman (1993) indicated, these financial changes are not an aberrationin historical funding patternsbut are a new reality to which higher educationwill have to accommodate. In this utilitarian environment, it is inevitable that governments will seek greateraccountability and performance.States are not being driven in this direction because of an authoritativedesire to control and regulate, as Levine (1997) insists. Governments are attempting to better monitor and assess colleges and universities in practicalways because of their utilitariancompulsion to acquire more value for resources. Higher education does not have to be completely comfortable with this utilitarianapproach.There is nothing wrong with institutions being uneasy with externally mandatedperformance-basedaccountability. In fact, as Bender (1997) observes, "The university ought never to be too comfortable in and with society-and vice versa." He further stated, "There ought to be a degree of friction deriving from the critical spirit that is central to academic intellect" (p. 31). This friction is essential for developing effective performancemeasurementsystems that truly assess educational quality and productivity.
Notes
'In 1997, local and state governments in the United States spent $960 billion on higher education. This constituted 6.22% of the entire budget and a decline of 2.16% since 1982. During the same period the percentage of local and state governmentbudget support received by Medical Care increased by 8.6%, while corrections received an increase of 1.9%. 2Europeancountries that have adopted student fee policies include France, Belgium, Spain, Ireland,Italy, Netherlands, Portugal, Switzerland, and the United Kingdom. 31n 1992, separate funding councils were established for England, Scotland, and Wales.
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