Performance Based Budgeting Needed In County & City Hall
by Paul Wolf - posted 12:26 am, September 27, 2013
Section 2503 of the Erie County Charter states in part:
“Quantification: Program measures and performance standards to be used in monitoring and evaluating the delivery of services, including the specification of appropriate evaluation cycles and milestones, and a description of the manner in which the citizens of the County will be able to obtain access to the results of such monitoring and evaluations.”
The language above requires Erie County to establish performance measures to monitor and evaluate the delivery of services. Several years ago citizens of Erie County approved in a public referendum a new Charter, which among other changes required the county to utilize performance based budgeting. While this language is in the Erie County Charter, performance based budgeting has not been implemented. The City of Buffalo has its CitiStat program, but the tracking of city departments is not tied to an overall strategy.
A recent article at the IBM Center for the Business of Government, titled Performance Budgeting, Texas-Style, provides some great tips on implementing performance based budgeting in government. As stated in the article:
“There is no one single definition of performance-based budgeting (PBB). A review of the literature does, however, suggest what it means commonly. Most observers of—and experts on—public budgeting do agree that, generally speaking, PBB is the allocation of funds to achieve programmatic goals and objectives as well as some indication or measurement of work, efficiency, and/or effectiveness.”
The four points below are excerpts from the article.
Four Key Implementation Insights
First, don’t separate budget and finance systems from the strategic goals of political leaders. These processes and systems need to be tied to the overall strategy of the city or state via committed leadership in both the executive and legislative branches. For example, Baltimore City’s mayor , Stephanie Rawlings-Blake, has identified six priorities for the city and the city’s budget is organized around those priorities.
Second, use analytics and evidence-based approaches to inform budgeting priorities. This increases the likelihood that resources will be targeted to the root cause of a problem rather than its symptoms. For example, in Virginia, evaluations have shown that third grade reading levels are a strong predictor of future academic performance. As a result, the state has targeted additional budget resources to third grade reading programs.
Third, budgets should be organized around the outcomes or initiatives in the strategic plan – and not around the traditional agencies and programs that populate the organization chart. In Iowa, for example, former governor Tom Vilsack proposed a set of priorities and agencies “bid” on what they services would contribute, and at what cost, to implement the priority. This was then used to develop the budget proposal taken to the legislature.
Fourth, to make this possible, states and localities need to create a budget and finance structure that can accommodate such flexibility. This means creating common classification standards across budget, grant, contract, and financial systems that can show how discrete inputs can be tied back to broader outcomes. This more technical requirement tends to be a prerequisite for providing budget and financial information in various formats to ensure accountability by various stakeholders.
Performance Budgeting In Texas
Texas has used performance budgeting for more than two decades. The governor prepares a strategic plan, uses its to prepare a budget proposal and the legislature adopts a biennial budget for the state that includes specific levels of performance linked back to the strategic plan. A 2005 IBM Center study by Joe Adams provides a good overview, beginning with the creation of a statewide strategic planning process in 1991.
A recent guide that explains the process says that the governor and the Legislative Budget Board prepare a mission statement and core principles, and then the 200 relatively independent state agencies each prepare a strategic plan. The most recent strategic plans covers the period 2011- 2015 and are used to develop agency budget proposals.
Each agency’s budget proposal includes:
- A Goal
- An Outcome (or results, or impact)
- One or more Strategies
- One or more Outputs (volume)
These are then followed with Performance Measure Targets for each outcome and output.
Erie County and Buffalo have not identified a few key priorities to focus on. Without a clear vision and focus, organizations drift. We need leadership at the top and in the legislative bodies to push for a discussion on establishing high priority goals that are measured to determine success.
What do you think about implementing performance based budgeting in government?