The activities and accomplishments of the second year of the Tennessee Higher Education Commission's Performance Funding Project at Tennessee Technological University are reported. The purpose of the Project was to explore the feasibility of allocating some portion of state funds to colleges and universities based on a performance criterion with performance centered on the instructional mission. The report is organized into four sections: Descriptions of Project Activities, Evaluation and Recommendation, Abstract of Goals and Indicators, and the Appendix. Institutional goals and performance indicators were chosen and alumni and students were surveyed to assess the appropriateness of the goals. Writing skills, speaking skills, mathematical abilities, critical thinking and problem-solving abilities, and reading ability were assessed for Tennessee Technological University students as well as their understanding of history, social sciences, economics, behavioral sciences, and science and technology. Survey results for each category are presented and the survey instrument is included. (SF)