Public higher education has relied on a variety of funding structures since the 1950s. Layzell (2007) describes five general approaches in contemporary use in the United States. "Incremental (baseline) budgeting" uses the current year budget as the base and then makes adjustments to account for expected changes in activities, revenues, and expenditures in the upcoming year. "Funding formulas and guidelines" rely on mathematical formulas to set funding allocations. "Performance funding" is a manner of formula funding that pegs the level of funding to institutional performance on set indicators. Similarly, "performance contracting" is performance funding tied to future, contracted performance. Finally, a "voucher" system provides stipends directly to state residents who are admitted and enrolled at any state institution. These general approaches to public funding are not mutually exclusive, and states commonly use multiple methods to fully allocate funding to their higher education sectors. In this article, the author discusses how North Carolina uses funding formulas to set revenues for the sixteen campuses of the University of North Carolina (UNC) System and the fifty-eight campuses of the North Carolina Community College System. Formula funding across the system was introduced as part of the establishment of the UNC System through the Higher Education Reorganization Act of 1971. The UNC system's funding model also contains aspects of both incremental budgeting and performance contracting. (Contains 2 figures and 2 tables.)