Institutional performance was a topic given considerable attention by the Commission on the Future of Higher Education. Florida's Community College System responded to the challenge by committing to increase performance-based funding allocations from less than 2% to 5% of total state appropriations. Results of the analysis indicated that horizontal equity in Florida's performance-based budgeting allocation formula increased as appropriations increased. At the same time, it was observed that the nature of the allocation methodology incentivised institutions offering academic programs focused on the transfer function of the community college as opposed to remedial and adult programs. (Contains 14 tables and 5 figures.)