Linking Performance and Budgeting: A Framework and Current U.S. Practice
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Linking Performance and Budgeting: A Framework and Current U.S. Practice



Presentation by Philip Joyce, Professor of Public Policy and Public Administration at The George Washington University

Presentation by Philip Joyce, Professor of Public Policy and Public Administration at The George Washington University



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Linking Performance and Budgeting: A Framework and Current U.S. Practice Linking Performance and Budgeting: A Framework and Current U.S. Practice Presentation Transcript

  • 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
    • 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
    • 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 Performance-Informed Budgeting
    • 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
      • Is performance information available?
      • Is performance information used?
    • Perhaps greatest payoff is in budget execution
  • A Comprehensive View of Performance-Informed Budgeting -Audits and evaluations focus on effectiveness of programs -Performance and accountability reports Audit and Evaluation -Spending flexibility used to maximize performance -Performance expectations in legislation Budget Execution -Signature or veto (also SAP) -Agency analysis of legislativel budget Budget Approval--President -Laws governing taxing and spending -President’s budget -Agency budget justifications Budget Approval--Legislature -Tradeoffs between agencies -Executive budget -Governmentwide/agency strategic/performance plans -Agency budget requests Budget Preparation—Budget Office -Tradeoffs between bureaus -Budget justification to OMB -Agency strategic plan/performance plan Budget Preparation--Agencies Use of Information Availability Stage
  • Three Greatest Obstacles Created By Independent Legislative Bodies
    • Setting unclear or conflicting objectives
    • Making ill-informed budget decisions
    • Inadequately focusing oversight
  • Unclear or Conflicting Objectives
    • Desired state: “clarity of task and purpose”
    • Legislative bodies create ambiguity
      • 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
    • Desired state: collecting and using performance information to allocate resources
    • Challenges in the supply of appropriate cost and performance data
    • Demand is an even more difficult problem
      • “ pork barreling”
      • incorrect or incomplete understanding of connections between dollars and performance
    • Result: Budgeting by input, budgeting by anecdote
  • Oversight Focus
    • 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
    • Performance Budgeting (1950s)
    • PPBS (1960s)
    • ZBB (1970s)
    • MBO (1980s)
    • GPRA (1990s)
    • NPR (1990s)
  • Bush Administration Management Agenda
    • Government-wide initiatives
      • 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
      • “ Green/Yellow/Red Scorecard” first in Bush FY03 Budget
  • Performance Improvement
    • Current “green light” criteria
      • 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
      • 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
    • PART—Program Assessment Rating Tool
      • 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?
      • PART scores seem to be correlated with treatment in 2008 budget
      • BUT: relationship complex and also depends on other things (politics, ideology, policy priorities)
  • Congressional Response to Bush Management Initiatives
    • 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?
    • 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?
    • No reason to expect reverse of recent trends
      • 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
    • Government Performance Project (GPP)
      • Joint academic/journalistic collaboration
      • Gives management grades to the 50 states in four categories
    • Information is one of the management categories in GPP
      • Covers planning, use of performance information, performance auditing and e-government
    • Some states have progressed much farther than federal government
    • Results found at:
      • www.pewcenteronthe
  • Distribution of Grades--Information
  • Linking Performance and Budgeting—Lessons Learned
    • 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
    • Mission-focused technology
    • Technology helps produce performance/cost data for managers and politicians
    • Technology helps citizens connect to government
    • Technology enhances transparency