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The allocation of public funding to higher education has been increasingly subject to debates and change in recent decades. The changes have often been linked to changing beliefs and conceptions about how the public sector should be steered and managed. The backdrop to this was the New Public Management (NPM) approach to governing public organizations (Ferlie et al. 1996) which argues that the public sector should be addressed with similar management tools as the private sector. Under NPM, the predominant steering approach in European higher education systems has emphasized decentralization, with higher education institutions (HEIs) enjoying a large autonomy and receiving a lump sum budget from their funding authorities. To a large extent, HEIs are autonomous in areas such as the provision of educational programmes, managing their research portfolio, their human resources and their asset and property portfolio. This governance approach may be characterized as "state supervision steering" (Van Vught 1989). The government limits itself to a restricted number of "framework steering" elements: setting the tuition fees and distributing student financial support; organizing quality assurance of

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More and more governments have started to introduce elements of performance in the funding mechanisms for their higher education institutions. An example is a performance agreement: a contract signed between the funding authority and an individual higher education provider. In the Netherlands, a policy experiment involving performance agreements was concluded in 2016. We analyse whether the agreements actually have helped achieve the goals of improving student completion rates, educational quality and increasing the diversity in educational offerings. We present some indicators relating to these goals and discuss what can be learned from the performance agreements experiment in the Netherlands.

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