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Significant political science and economic literature bases have articulated the role of state governors as critical to state spending and policy priorities (Barrilleaux & Berkman, 2003; Beyle, 1996; Hendrick & Garand, 1991). In the wake of declining state appropriations, higher education scholars have become increasingly interested in the role and influence of party affiliation among external stakeholders to the academy (Archibald & Feldman, 2006; McLendon et. al., 2009; Tandberg, 2010). Given the broad authority of state governors with respect to a state’s budget-setting process, several empirical studies have focused on the role of gubernatorial political party affiliation regarding a state’s fiscal support for higher education. Extant literature is generally consistent regarding this topic area, finding that (1) Democratic governors provide greater financial support to higher education and (2) the proportion of Democratic state legislators is positively related to the amount of state appropriations (Archibald & Feldman 2006; McLendon et al. 2009; Tandberg, 2009, 2010).
By capitalizing on close election results, this papers adds to the literature on the influence of gubernatorial party affiliation on state support for higher education by moving from prior descriptive findings to generating causal estimates. Additionally, we add further nuance by leveraging state adoption of performance-based funding policies as a potential confounder of governors’ ability to support higher education. We also test for systematic differences between states with Democratic and Republican/Independent governors. Overall, the results from our study indicate that Democratic governors have significantly higher expenditures on higher education compared to Republican/Independent governors. However, we find that the presence of a performance-based funding policy influences the fiscal mechanism by which Democratic governors can support higher education. Governors not facing the constraints of performance-funding policies increased state general funding expenditures (primary source of state appropriations), while Democratic governors not facing performance funding increased alternative higher education funding sources, such as tuition and fee revenue and bond-based (capital) expenditures. Results add to the growing empirical literature base on the role of governors regarding their level of financial support for higher education.