The Tennessee Higher Education Commission's (THEC) use of a performance criterion in funding higher education is discussed, along with the results of evaluating this initiative. Information on program quality and improvement efforts is a factor in determining the budgetary allocation for each state institution. With funding from the Kellogg Foundation, an evaluation was conducted of the use of outcome information at the University of Tennessee, Knoxville. The following student outcomes were studied: achievement in general education, achievement in the major field, and opinion measurement concerning the quality of academic programs and services. Task forces recommended that student outcome information be included in the evaluative data gathered for the university's comprehensive program review process. Changes in instruments, data collection/analysis, and interpretation of results were recommended before utilizing outcome information. The initiative has strengthened the academic program review process and stimulated increased use of outcome information in departmental decision-making as well as campuswide strategic planning and resource allocation. Specific impacts on curriculum and instruction, student services, and institutional planning and evaluation are identified. (SW)