This study examined the attitudes of State Higher Education Finance Officers (SHEFOs) in regard to performance budgeting and performance funding of public higher education. A telephone survey of all 50 SHEFOs or alternate officers was conducted in June 1998, and the results were then compared to a similar survey conducted in April 1997. It was found that 21 states used some form of performance budgeting in public higher education in 1998, up from 16 in 1997, and that 13 states used some form of performance funding in public higher education in 1998, up from 10 in 1997. The 1998 survey indicated that half of the states employed at least one of the two funding programs, and that 11 more were considering adopting such programs in the next 5 years. Eight states had both performance budgeting and performance funding in 1998, and 14 more were considering adopting both program in the next 5 years. The report notes that performance funding is becoming less comprehensive and more circumscribed in its goals, and also that state mandates and prescriptions are declining, thus allowing coordinating boards, with campus participation, to initiate less ambitious funding programs. A copy of the survey questionnaire is included. (Contains nine tables.) (MDM)