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:
1A New Approach to Performance Budgeting: Agency Strategic Planning and Service-Based Budgeting Richard D. BrownDirector,Virginia Department of Planning and Budget
2The Basics Many Factors and Perspectives Influence State Government Budget Development Changes in regulations and lawsDemand for servicesIncrease in number of clientsAutomationIncreases/decreases in federal fundsTraditional practicesPublic sentimentPriorities of the Governor and General Assembly
3The Basics Most States View Budget Development as a Zero-Sum Game Whereby Competing Demands Must Be BalancedFiscal 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. Governor’s agenda)Overall performance (quality of operations, focus on outcomes and return on investment).
4The 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)
5The 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!)
6Bringing 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)Don’t 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)
8Virginia’s Budgeting System is Evolving 1980:Program Budgeting and Evaluation:Agency strategic planning and Performance Measures2005:Service Planning & Performance-Based Budgeting
9Previous Budget Structure Program structure Level of controlFunctionSubfunctionProgramCentral budget control(by fund, by positions)SubprogramElement Cost centerObject of expenditureAgency budget control
13Establishing a Vision and Goals for the Commonwealth
14Making a Change Establishing a Statewide Vision The Council for Virginia’s 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; andperforming plan adjustments based on public input and evaluation of the results of the Roadmap.
15Composition of Council on Virginia’s Future The Council shall be composed of 18 members that include eight legislative members and ten nonlegislative members as follows:The Governor,The Speaker of the House,The majority and minority leaders of the House of Delegates,The Chairman of the House Committee on Appropriations,The President Pro Tempore of the Senate,The majority and minority leaders of the Senate,The Chairman of the Senate Finance Committee,One nonlegislative citizen member appointed by the Speaker of the House,One nonlegislative citizen member appointed by the Senate Committee on Rules,Two Cabinet Secretaries appointed by the Governor, andFive nonlegislative Citizen members appointed by the Governor.
17The Council on Virginia’s Future Has Articulated Seven Long-Term Objectives For Virginia Be recognized as the best managed state in the nation.Be a national leader in the preservation and enhancement of our economy.Elevate the levels of educational preparedness and attainment of our citizens.Inspire and support Virginians toward healthy lives and strong and resilient families.Protect, conserve, and wisely develop our natural, historical, and cultural resources.Protect the public’s safety and security, ensuring a fair and effective system of justice and providing a prepared response to emergencies and disasters of all kinds.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.
19Linking Strategic Planning and Performance Budgeting at State Agency Level
20A 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.”
21Process Design – Strategic Plan Service area structure is key:Generally, “service areas” are what agencies do for the citizen or for other agenciesThey consist of allocations of resources toward a specific objectiveEach service area forms the basic unit of both budgeting and of planningPrincipal objectives of these plans are:To provide agencies with a tool to assist them in self-managementTo give decision makers uniform and dependable data for budgeting and accountabilityTo link state resources to resultsTo eliminate current fragmented processes of strategic planning, budget development, workforce planning, capital planning, and technology planning
22Service Area Structure Current StructurePrograms/Subprograms =BudgetingAccounting SystemStrategic PlanningActivities =Virginia ResultsFuture StructureBudgetingService Areas =AccountingStrategic PlanningPerformance Measurement
23Service Area Structure Current Programs/SubprogramsRecommended Service StructureProposed Services = “*”Current ActivityPlanning, Budgeting, and Evaluation Services (71500)Budget Development and Execution Services (715 02)Budget Development and * Budget Execution Services*Budget Development and Budget ExecutionLegislation and Executive Order Review Service *Legislative Review ServicePerformance Management ServiceForecasting and Regulatory Review Services*Regulatory Review ServiceProgram EvaluationService *Program Evaluation ServiceFederal Budget ServiceExecutive Orders ServiceAdministrative Services (71598)Administrative Services *Support Service
27Looking At The Enterprise The Executive Progress Report Current PerformanceProductivityMajor Initiatives and Related ProgressVirginia rankingCustomer Trends and CoverageFuture Direction and PrioritiesImpediments
29The Revised Budget System Will Foster Transparency By Linking Together Expected Results, Funding, and Actual Performance For State Government ServiceProductContentsAgency Strategic PlanEstablishes strategic and operational plan for the agency and its service areasService 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 agenciesBudget DocumentBrings together and begins to explain relationships between expected results and proposed funding in the budget for service areas and state agenciesBudget 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.
30Integrating Planning and Budgeting Old NewCOVFVision & ObjectivesGuiding PrinciplesDPBData RepositoryLegislatorsAgencyStrategic PlanAgency Budget & Performance MeasuresX objectives andmeasures submitted to DPB/VaResultsBUDGETPROCSSERVI TC IE EDAR TE OBS UT DR GC ET TUService AreaBudget PerformanceService AreaBudget PerformanceAgency SelectsX objectives andmeasuresService AreaBudget PerformanceService AreaBudget PerformanceProgramProgramService AreaBudget Performance
31Tying Agency Planning and Budgeting Efforts to Statewide Goals
32Virginia’s Performance Leadership System for State Government Organization & Leadership Development (2006)Subject Area Results TeamsAnalysis and Strategy Formulation to Improve Quality-of-Life Outcomes(Transforming Virginia)Management Results TeamsAnalysis and Strategy Formulation toImprove Management Outcomes(Transforming Government)Planning & BudgetingInnovation & Improvement(2006)TransformingGovernmentVirginiaVISION (2003) & LONG-TERM GOALS (2004)Government & CitizensEconomy, Education, Health & Family, Transportation Public Safety, Natural / Historic / Cultural ResourcesENTERPRISE LEADERSHIP AGENDAHigh-Level Priorities and Enterprise Quantifiable ObjectivesAGENCY LEADERSHIP AGENDASInitial Agency Strategic & Service Area Plans & Budgets (2005)Refinement of Plans and Implementation of Strategies to Improve Outcomes (2006)Enterprise IndicatorsAgency Management & Programmatic Measures(2005)Societal IndicatorsAssessment
33Virginia’s Performance Leadership System Levels of Results Accountability DESIRED SOCIETAL RESULTSCouncil’s vision and long-term goalsSOCIETAL-BASED INDICATORSEnvironmental Scan: How is Virginia doing?AGENCY LEADERSHIP AGENDASAgencies’ strategic and service area plansAGENCY PERFORMANCE MEASURESAre agency programs that serve our customersproducing desired results?ENTERPRISE LEADERSHIP AGENDATargeted quantifiable objectives for long-term goals(Includes Gubernatorial, Legislative & Cabinet priorities)MEASURES TO MONITOR PROGRESSAre we achieving desired results?Are we improving the factors that influence the results?
34Bringing 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)Don’t 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)
35VISIT Virginia Department of Planning and Budget Council on Virginia’s Future