Transcript Functions of Budgeting

Linking Performance and
Budgeting: A Framework and
Current U.S. Practice
Philip G. Joyce
Professor of Public Policy and Public Administration
The George Washington University
April 2, 2008
Framework for Linking
Performance and Budgeting
Linking Performance and
Budgeting
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Has many names—PB, PBB, MFR, etc.
What all have in common is desire to
link inputs to outcomes (through
outputs)
Reform in vogue throughout the world
Goal—Performance-INFORMED
budgeting
Linking Performance and Budgeting:
Conditions for Success
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Public entities know what they are
supposed to accomplish
Valid measures of performance exist
Accurate measures of cost exist
Cost and performance information
are brought together for budgeting
decisions
Incentives for use of performance
information
A Framework for PerformanceInformed Budgeting
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Historically—focus on legislature/budget office
Budget process has many stages--preparation
(agency and central budget office), approval
(legislative and chief executive), execution, and
audit/evaluation
Questions in multi-stage approach
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Is performance information available?
Is performance information used?
Perhaps greatest payoff is in budget execution
A Comprehensive View of Performance-Informed
Budgeting
Stage
Availability
Use of Information
Budget Preparation-Agencies
-Agency strategic plan/performance
plan
-Tradeoffs between bureaus
-Budget justification to OMB
Budget Preparation—
Budget Office
-Governmentwide/agency
strategic/performance plans
-Agency budget requests
-Tradeoffs between agencies
-Executive budget
Budget Approval-Legislature
-President’s budget
-Agency budget justifications
-Laws governing taxing and spending
Budget Approval--President
-Agency analysis of legislativel budget
-Signature or veto (also SAP)
Budget Execution
-Performance expectations in
legislation
-Spending flexibility used to maximize
performance
Audit and Evaluation
-Performance and accountability reports
-Audits and evaluations focus on
effectiveness of programs
Three Greatest Obstacles Created By
Independent Legislative Bodies
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Setting unclear or conflicting objectives
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Making ill-informed budget decisions
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Inadequately focusing oversight
Unclear or Conflicting Objectives
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Desired state: “clarity of task and purpose”
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Legislative bodies create ambiguity
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they must establish coalitions
they lack expertise
administrative flexibility is necessary
Additional problems are created by legislative
involvement in budget execution
Result: multiple and conflicting goals for
ministries
Ill-informed Budget Decisions
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Desired state: collecting and using performance
information to allocate resources
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Challenges in the supply of appropriate cost and
performance data
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Demand is an even more difficult problem
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“pork barreling”
incorrect or incomplete understanding of connections between dollars
and performance
Result: Budgeting by input, budgeting by
anecdote
Oversight Focus
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Desired state: legislative focus on comprehensive results
Most legislative bodies have oversight tools; incentives to
use them vary
Attention tends to be episodic rather than
comprehensive
Result: Little attentiveness to performance, signals to
ministries that overall results don’t matter
Current Practice in U.S.
Government
Federal Management Initiatives
Predating Bush Presidency
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Performance Budgeting (1950s)
PPBS (1960s)
ZBB (1970s)
MBO (1980s)
GPRA (1990s)
NPR (1990s)
Bush Administration Management
Agenda
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Government-wide initiatives
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Strategic management of human capital
Competitive sourcing
Improved financial performance
Expanded electronic government
Budget and performance integration
Also nine program/agency specific reforms
Standards for success in each management area
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“Green/Yellow/Red Scorecard” first in Bush FY03 Budget
Performance Improvement
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Current “green light” criteria
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Senior agency managers meet at least quarterly to examine reports that
integrate financial and performance information, and use this information to
make decisions
Strategic plans contain a limited number of outcome oriented objectives,
and are consistent with PART reviews and the aforementioned reports
Full budgetary cost charged to mission accounts/activities; marginal cost of
changing performance goals is accurately estimated
Agency uses PART evaluations to direct program improvements and PART
ratings used to justify funding requests; fewer than 10% of programs have
“results not demonstrated” label
Results thus far
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FY03 budget—3 yellow (EPA, DOT, SBA), 23 red
FY08 (December 2007)--14 green (USDA, Commerce, Education, Energy,
EPA, Justice, Labor, DOT, GSA, NASA, NSF, SBA, Smithsonian, SSA), 12
yellow
PART—A New Method of Performance
Measurement
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PART—Program Assessment Rating Tool
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Currently has been used to evaluate almost 1000 (977)
programs
Overall ratings (effective, moderately effective, adequate,
results not demonstrated, and ineffective)
Results not demonstrated for 21% of programs (down from
50% for FY04)
Effective or moderately effective for almost ½ of programs
Relation between PART scores and funding?
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PART scores seem to be correlated with treatment in 2008
budget
BUT: relationship complex and also depends on other things
(politics, ideology, policy priorities)
Effects of PART: Percentage Change 2008Requested vs. 2007Estimated
Effective
Moderately Effective
Adequate
Results Not
Demonstrated
Ineffective
15.0%
0.
0%
2.
6%
0.
0%
0.0%
-5.0%
%
.1
-2
-10.0%
%
.1
-8
-15.0%
-1
4.
6%
Percentage Changes in Budget 008vs.007
5.0%
3.
9%
10.0%
9%
9.
4%
9.
-20.0%
-25.0%
-30.0%
-35.0%
%
.2
4
-3
-40.0%
Mean Pct.Change 008/007
Median Pct.Change 008/007
Congressional Response to Bush
Management Initiatives
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Interest has been greatest in the “management”
committees
Interest is probably least in the appropriations
committees
GPRA benefited from status as a law, but support
was a mile wide and an inch deep
Congress has not focused at all on the PMA
There have been attempts to pass a law requiring
PART/others to prohibit agencies from PARTing
programs
PART reviews have not been used in Congressional
budgeting decisions
Why Has the Congress not Made
More Use of Performance
Information?
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It has only been recently that such information was
available
There are other issues besides performance that affect
resource allocation
There is no simple rule connecting performance and
resources
Incentives that face members of Congress do not favor
changes to the status quo
There is also no incentive to do systematic oversight, where
the PART data in particular should be quite useful
More progress has been made in agencies’ use of
performance information to manage resources
What’s Ahead?
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No reason to expect reverse of recent trends
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Production/use of performance information by
executive
Apathy/hostility by Congress
We know very little about potential
management agenda of Presidential
candidates
Even if it IS the same, it won’t look the same
A lot may depend on OMB director
State-Level Efforts—a Brief
Advertisement
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Government Performance Project (GPP)
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Information is one of the management categories in
GPP
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Joint academic/journalistic collaboration
Gives management grades to the 50 states in four
categories
Covers planning, use of performance information,
performance auditing and e-government
Some states have progressed much farther than
federal government
Results found at:
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www.pewcenteronthestates.org/gpp_report_card.aspx
Distribution of Grades--Information
Linking Performance and
Budgeting—Lessons Learned
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Performance is here to stay
Production easier than use
Measuring costs as hard as measuring results
Use involves leadership and incentives
Legislatures have been particularly reluctant
Agencies can use performance to manage
Performance data important to transparency
The Role of Technology in
Managing for Results
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Mission-focused technology
Technology helps produce
performance/cost data for managers
and politicians
Technology helps citizens connect to
government
Technology enhances transparency