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A New Approach to Performance Budgeting: Agency Strategic Planning and Service-Based Budgeting Richard D. Brown Director, Virginia Department of Planning.

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Presentation on theme: "A New Approach to Performance Budgeting: Agency Strategic Planning and Service-Based Budgeting Richard D. Brown Director, Virginia Department of Planning."— Presentation transcript:

1 A New Approach to Performance Budgeting: Agency Strategic Planning and Service-Based Budgeting Richard D. Brown Director, Virginia Department of Planning and Budget

2 2 The Basics Many Factors and Perspectives Influence State Government Budget Development Changes in regulations and laws Demand for services Increase in number of clients Automation Increases/decreases in federal funds Traditional practices Public sentiment Priorities of the Governor and General Assembly

3 3 The Basics Most States View Budget Development as a Zero-Sum Game Whereby Competing Demands Must Be Balanced Fiscal Conditions (increases/decreases in available revenues) Fixed Costs (mandatory demands vs. discretionary actions) Economy (efficiency and cost savings, i.e. price per unit of service) Effectiveness (continuing need for existing programs and agencies) Priorities (agency budget requests vs. Governors agenda) Overall performance (quality of operations, focus on outcomes and return on investment).

4 4 The Issues Agency Strategic Planning vs. State Budget Development Agency strategic plans may not be based on fiscal realities (visionary vs. practical) Agency goals and objectives may not address statewide priorities (agency budget requests vs. statewide priorities) Agency performance measures may not adequately address overall performance (hard to measure desired outcomes and degree of state influence to achieve results may be limited) Agency strategic plans almost never address potential enterprise-wide or efficiency improvements (planning silos)

5 5 The Issues All Spending Decisions Are Not Focused on Results Types of Spending Decisions: Maintenance or fixed costs requirements (rent, insurance, gas, retirement/social security, etc.) Case load or unit cost thresholds (school enrollment, cost per unit, $xx per capita, etc.) Political considerations (budgeting is a compromise process) Results oriented actions (true investments, deal or no deal!)

6 6 Bringing It Together Guidelines For Improving Performance Budgeting Tie agency planning efforts to state goals (be really strategic in approach) Some things are more important to measure than others (concentrate efforts on what moves the needle; decisions that are true investments and results-oriented) Dont just record performance, evaluate it (have a thrust for what works and why it works) Look outside agency silos (create new enterprises for desired results) Recognize results and reward performance (promote consistency and desired behavior)

7 The Virginia Experience

8 8 1980: Program Budgeting and Evaluation : Agency strategic planning and Performance Measures 2005: Service Planning & Performance -Based Budgeting Virginias Budgeting System is Evolving

9 9 Previous Budget Structure Program structure Level of control Function Subfunction Program Subprogram Element Cost center Object of expenditure Central budget control (by fund, by positions) Agency budget control

10 10 Previous Performance Budgeting Process

11 11 Previous Dual Structure Orientation Programs/Subprograms= Budgeting Accounting System Activities= Strategic Planning Virginia Results

12 12 The Task At Hand

13 Establishing a Vision and Goals for the Commonwealth

14 14 Making a Change Establishing a Statewide Vision The Council for Virginias Future Created in 2003 (Code of Virginia ) to advise the Governor and the General Assembly on the implementation of a Roadmap for Virginia's Future. Responsibilities include: developing a set of guiding principles that are reflective of public sentiment and relevant to critical decision-making; establishing a long-term vision for the Commonwealth; conducting a situation analysis of core state service categories; setting long-term objectives for state services; aligning state services to the long-term objectives; instituting a planning and performance management system consisting of strategic planning, performance measurement, program evaluation, and performance budgeting; and performing plan adjustments based on public input and evaluation of the results of the Roadmap.

15 15 Composition of Council on Virginias Future The Council shall be composed of 18 members that include eight legislative members and ten nonlegislative members as follows: 1.The Governor, 2.The Speaker of the House, 3.The majority and minority leaders of the House of Delegates, 4.The Chairman of the House Committee on Appropriations, 5.The President Pro Tempore of the Senate, 6.The majority and minority leaders of the Senate, 7.The Chairman of the Senate Finance Committee, 8.One nonlegislative citizen member appointed by the Speaker of the House, 9.One nonlegislative citizen member appointed by the Senate Committee on Rules, 10.Two Cabinet Secretaries appointed by the Governor, and 11.Five nonlegislative Citizen members appointed by the Governor.

16 16 Organizational Framework Council Steering Committee EXECUTIVE BRANCH Innovation & Improvement Advisory Sub-Committee Planning, Budgeting & Assessment Advisory Sub-Committee CEO Advisory Group COUNCIL ON VIRGINIAS FUTURE LEGISLATIVE BRANCH Private Sector Reengineering Advisory Group Planning Group Performance Leadership Steering Group Governors Performance Leadership Group MAP Private Sector Reengineering Support Teams

17 17 The Council on Virginias Future Has Articulated Seven Long-Term Objectives For Virginia 1.Be recognized as the best managed state in the nation. 2.Be a national leader in the preservation and enhancement of our economy. 3.Elevate the levels of educational preparedness and attainment of our citizens. 4.Inspire and support Virginians toward healthy lives and strong and resilient families. 5.Protect, conserve, and wisely develop our natural, historical, and cultural resources. 6.Protect the publics safety and security, ensuring a fair and effective system of justice and providing a prepared response to emergencies and disasters of all kinds. 7.Ensure that Virginia has a transportation system that is safe, enables easy movement of people and goods, enhances the economy, and improves the quality of life.

18 18 Scorecard at a Glance

19 Linking Strategic Planning and Performance Budgeting at State Agency Level

20 20 A Mandate for Change at Agency Level HB2097(03) (affecting § ) …each agency shall develop and maintain a strategic plan for its operations defined in the legislation as the systematic clarification and documentation of what a state agency wishes to achieve and how to achieve it. The objective of strategic planning is a set of goals, actions steps, and measurements constructed to guide performance. HB1838(03) (affecting § ) The Executive Budget document is to include a statement of major goals, objectives, and specific outcomes related to expenditures for programs in each agency.

21 21 Process Design – Strategic Plan Service area structure is key: Generally, service areas are what agencies do for the citizen or for other agencies They consist of allocations of resources toward a specific objective Each service area forms the basic unit of both budgeting and of planning Principal objectives of these plans are: To provide agencies with a tool to assist them in self-management To give decision makers uniform and dependable data for budgeting and accountability To link state resources to results To eliminate current fragmented processes of strategic planning, budget development, workforce planning, capital planning, and technology planning

22 22 Current Structure Programs/Subprograms = Future Structure Service Areas = Budgeting Accounting System Budgeting Accounting Strategic Planning Performance Measurement Activities = Strategic Planning Virginia Results Service Area Structure

23 23 Service Area Structure Current Programs/Subprograms Recommended Service Structure Proposed Services = *Current Activity Planning, Budgeting, and Evaluation Services (71500) Budget Development and Execution Services (715 02) Budget Development and * Budget Execution Services* Budget Development and Budget Execution Legislation and Executive Order Review Service * Legislative Review Service Performance Management Service Forecasting and Regulatory Review Services* Regulatory Review Service Program Evaluation Service * Program Evaluation Service Federal Budget Service Executive Orders Service Administrative Services (71598)Administrative Services *Support Service

24 24 Budget Bill Display

25 25 Process Design

26 26 Agency Strategic Plan Content

27 27 Looking At The Enterprise The Executive Progress Report Current Performance Productivity Major Initiatives and Related Progress Virginia ranking Customer Trends and Coverage Future Direction and Priorities Impediments

28 28 Agency Strategic Plan Content

29 29 The Revised Budget System Will Foster Transparency By Linking Together Expected Results, Funding, and Actual Performance For State Government Service ProductContents Agency Strategic PlanEstablishes strategic and operational plan for the agency and its service areas Service Area PlanArticulates expected results (objectives) for each service area and defines performance criteria to measure progress toward expected results (sets baseline and target data for results). Budget BillAllocates funding among the various service areas of state agencies Budget DocumentBrings together and begins to explain relationships between expected results and proposed funding in the budget for service areas and state agencies Budget ExecutionAccounts for actual spending by service area and monitors accomplishments and results though reporting system for performance measured data. The Service Area is the link between all of the above. It is the common unit at which strategic planning, funding (budget), and performance information (results) is presented.

30 30 Legislators X objectives and measures submitted to DPB/VaResults X objectives and measures submitted to DPB/VaResults BUDGETPROCESSBUDGETPROCESS BUDGETPROCESSBUDGETPROCESS Program COVF Vision & Objectives Guiding Principles COVF Vision & Objectives Guiding Principles Agency Selects X objectives and measures Agency Selects X objectives and measures Program DPB Data Repository DPB Data Repository Agency Strategic Plan Agency Strategic Plan Agency Budget & Performance Measures S E R V I T C I E D A R T E O A B S U T D R G C E T U R E S E R V I T C I E D A R T E O A B S U T D R G C E T U R E Service Area Budget Performance Service Area Budget Performance Old New Integrating Planning and Budgeting

31 Tying Agency Planning and Budgeting Efforts to Statewide Goals

32 32 Virginias Performance Leadership System for State Government Organization & Leadership Development (2006) Subject Area Results Teams Analysis and Strategy Formulation to Improve Quality- of-Life Outcomes (Transforming Virginia) Management Results Teams Analysis and Strategy Formulation to Improve Management Outcomes (Transforming Government) Planning & BudgetingInnovation & Improvement (2006) Transforming Government Transforming Virginia VISION (2003) & LONG-TERM GOALS (2004) Government & Citizens Economy, Education, Health & Family, Transportation Public Safety, Natural / Historic / Cultural Resources ENTERPRISE LEADERSHIP AGENDA High-Level Priorities and Enterprise Quantifiable Objectives (2006) AGENCY LEADERSHIP AGENDAS Initial Agency Strategic & Service Area Plans & Budgets (2005) Refinement of Plans and Implementation of Strategies to Improve Outcomes (2006) Enterprise Indicators (2006) Agency Management & Programmatic Measures (2005) Societal Indicators (2006) Assessment

33 33 Virginias Performance Leadership System Levels of Results Accountability DESIRED SOCIETAL RESULTS Councils vision and long-term goals SOCIETAL-BASED INDICATORS Environmental Scan: How is Virginia doing? AGENCY LEADERSHIP AGENDAS Agencies strategic and service area plans AGENCY PERFORMANCE MEASURES Are agency programs that serve our customers producing desired results? ENTERPRISE LEADERSHIP AGENDA Targeted quantifiable objectives for long-term goals (Includes Gubernatorial, Legislative & Cabinet priorities) MEASURES TO MONITOR PROGRESS Are we achieving desired results? Are we improving the factors that influence the results?

34 34 Bringing It Together Guidelines For Improving Performance Budgeting Tie agency planning efforts to state goals (be really strategic in approach) Some things are more important to measure than others (concentrate efforts on what moves the needle; decisions that are true investments and results-oriented) Dont just record performance, evaluate it (have a thrust for what works and why it works) Look outside agency silos (create new enterprises for desired results) Recognize results and reward performance (promote consistency and desired behavior)

35 VISIT VISIT Virginia Department of Planning and Budget Council on Virginias Future


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