Fiscal incentives, Clark's triangle, and the shape and shaping of higher education systems

• Published in: Policy reviews in higher education 2017-07, Vol.1 (2), p.112-138
• Main Author: Lang, Daniel W.
• Format: Article
• Language: English
• Subjects: Budgeting; Clark's triangle; Educational Finance; Financial Support; Higher Education; incentive funding; incentive-based budgeting; Incentives; performance funding
• ISSN: 2332-2969; 2332-2950
• DOI: 10.1080/23322969.2016.1246065

For nearly 35 year's Burton Clark's triangle has been used as a paradigm for describing, assessing, and comparing systems of post-secondary education. Since then two major developments, neither of which could Clark have foreseen, in the financial management of higher education have occurred contemporaneously: incentive or performance funding on the part of the state and incentive-based budgeting on the part of universities. Both developments are based on fiscal incentives. Despite several inherent and inter-connected similarities, incentive funding and incentive-based budgeting have been appraised on parallel tracks, neither of which has led to a possible effect on Clark's fundamental model, particularly with regard to the interaction of institutional behavior as it is shaped by and shapes systems of higher education. This study investigates their convergence with one another and the consequential effect on the relationship between the state, the university, and the market as foreseen by Clark's Triangle. The study concludes that, although incentive funding and incentive-based budgeting are sometimes at cross-purposes, they are functionally so inter-connected, whether intentionally or coincidentally, and that they may change the shape of a given system's 'triangle' by altering the zero-sum balance between the state, market and academic legs of the triangle.