During the 2004 legislative session, the Colorado General Assembly enacted Senate Bill 189 (SB189), which established the first system of college vouchers in the United States. The supporters of SB189 hoped that the voucher system, called the College Opportunity Fund (COF), would: 1) stabilize the flow of state funding to higher education; 2) incent institutions to improve performance; and, 3) increase resident and underserved enrollment. This research presents an empirical study of COF to examine the extent to which it has impacted both funding and performance in Colorado's institutions of higher education. It uses budgetary theory to evaluate the overall success of the COF funding model. Through the analysis of funding and performance trends from fiscal year 1999 to 2014, this dissertation focuses on how the COF funding model impacted institutions after the legislation was implemented in fiscal year 2006. The present research effort adds to budgetary literature by 1) evaluating the success of the first ever higher education voucher system in improving performance and 2) developing insights on the nexus of policy design and budgetary theories of incrementalism and performance. The study used linear regression, t-tests, and other statistical tools as well as qualitative data to answer four research questions and yielded several findings. First, despite the best efforts to stabilize state funding to higher education, the overall appropriation in real dollars has decreased since the implementation of COF. Second, the Fee for Service funding mechanism that accompanies the COF stipend fails to reward performance as intended, but rather appears to be a mechanism to hold institutional distributions proportionally the same. Finally, although the state has seen increased enrollments both for Colorado resident and Colorado resident underserved students since the implementation of SB189, the COF voucher system seems to have not influenced enrollment at institutions of higher education. A major implication of this research is that SB189 has not been successful in achieving its goals, but instead the budgetary outcomes are best described as incremental. Policy makers must consider that the design of a funding system can bias the budgetary outcomes. [The dissertation citations contained here are published with the permission of ProQuest LLC. Further reproduction is prohibited without permission. Copies of dissertations may be obtained by Telephone (800) 1-800-521-0600. Web page: http://www.proquest.com.bibliotheek.ehb.be/en-US/products/dissertations/individuals.shtml.]