This paper reviews the concept of performance funding (PF) in governmental and higher education budgeting at the state level, reports the results of a recent national study of state-level PF for higher education, and assesses the likelihood that PF will become a permanent fixture in most states' approaches to budgeting for higher education. The study is based on a mail survey of 40 state higher education finance officers, which sought information on the status of PF in the respondents' states, the breadth of PF programs, program objectives, program history, program mechanics, performance measures and evaluation, and the respondents' observations on the effectiveness and future outlook for PF. It found that, despite the rhetoric from governors and state legislatures about the need for increased accountability for higher education, only eight of the states surveyed (20 percent) had PF in place, and that the majority had no current plans to implement PF for higher education. The survey did find that policy-makers were generally perceived by the respondents as viewing PF as an effective management tool. A copy of the survey form is included. (Contains 12 references.) (MDM)