Green Carrots: A Survey of State Use of Fiscal Incentives for Academic Quality. ASHE Annual Meeting Paper.

This paper presents data from a 1989 survey of 48 state higher education executive officers regarding the use of fiscal enhancement programs as a strategy to influence higher education performance. The paper reports on the purposes and objectives most often funded through specific incentives, and on the key advantages and disadvantages of this budget tool. Guidelines for structuring or evaluating such programs are suggested. It was found that 32 states had established enhancement programs which could be classified as categorical programs, competitive programs, or incentive programs. While overall budget conditions have led to reduced dollars being channeled to campuses through enhancement programs, the number of programs and the degree of commitment on the part of states to use enhancement funding techniques is increasing. The purposes most often served by incentive programs were economic growth, technology transfer, and applied research. Advantages of the use of enhancement programs are that they make state policy concrete through the mechanism of the budget, are based on performance indicators, reward and encourage meaningful institutional differentiation, and work as change strategies. Among disadvantages are that these programs emphasize short-term goals over long-term planning and distract public attention away from the necessity to adequately fund the base budget. A postscript discusses the formative and summative uses of incentive program results. (16 references) (JDD)