1. Week 14: Developing Performance Measures and Budgets: Best Practices Performance budgeting –theory v. practice Performance measures –theory v. practice –examples Best practices sites Course evaluation

2. Performance Budgeting Definition: Systematic incorporation of performance information into the budgetary process Basic Requirements –availability of performance information –use of that information in budgetary decision making program structure (or at least program thinking) match between planning and budgeting structures

3. History of Performance Budgeting 1949 Hoover Commission Planning-Programming-Budgeting-System (PPBS) –Johnson: 1965 Management by Objective –Nixon: 1973 Zero-Base Budgeting (ZBB) –Carter: 1977 GPRA –Clinton: 1993

4. GRPA: Anything New? Involves Congress Tries to integrate performance and budget information –eliminate need for “crosswalks” More realistic –less mechanistic –accepts role of politics –strive toward outcomes (not process or output) –evolutionary start with strategic plans and performance plans several years before performance budgets

5. Performance Budgeting: State and Local National Perf. Review and GPRA spurred local efforts States’ primary use of performance budgeting is at agency level –used to support internal management –not coordinate in central budget office or used in legislative budget process Cities: –less than half of cities >25,000 use performance measures –less than ¼ have centralized performance monitoring systems

6. Performance Budgeting in Theory improvement over line-item budgeting focus on performance, not compliance connects resource needs to results (tight links) integrates performance information into budget structures and budget process provides for informed choices: impact of $$ support levels improves accountability improves management

7. Steps in Performance Budgeting -- Theory Ideal performance budget: helps decision makers understand performance consequences of budget decisions Establish a program plan (mission/goals/objectives) Select means to measure results (measures/indicators) Set performance targets (or standards) Determine strategies for meeting targets Provide cost projections for meeting strategies Allocate funds based on cost projections Collect data on performance measures (the measurements) Adjust funding???

8. Performance Budgeting in Practice hard to define and measure outcomes many factors outside control of agency; long-term limited knowledge of cause/effect relationships setting targets is problematic and arbitrary budget structures don’t match program structures loose linkages with budget at best possible perverse incentives – what’s measured gets done

9. Approach to Developing Performance Budget -- Reality Good performance budget: helps decision makers connect $$ to program results to try to affect outcomes Are the program purposes and outcomes clear? Can you determine the service effort and accomplishments? Are major funding issues highlighted and supported with performance data? Does the narrative and performance information “tell the main budget story” in a manner that is easy to understand?

10. Performance Budgeting Issues Rationality revisited--is performance budgeting just another attempt to rid budgeting of politics? What should be the budgetary consequences of not meeting performance goals? Rewards v incentives Rewards to unit budget or individuals (salaries) How much of budget should be allocated based on performance? Will managers focus too much on technical measurement and lose sight of meaningful results? Do we really need to measure outcomes? Does effort matter?

11. Performance Measures -- Theory Follow from mission/goals/objectives Objectives: specific, measurable, outcome-oriented Performance measures: –outcome oriented efficiency (better in conjunction with outcome) outputs service (customer satisfaction) –limited number most directly related to objectives meaningful and useful available (be careful with this one) –standards/benchmarks available (external and internal) –linked to budget choices

12. Performance Measures -- Practice Objectives: not always possible/practical to set targets Measures: activity or process measure may be reasonable Customers may not always the best judge of service Best measures may not be available – need to take time to get them Keeping it simple may misguide or disadvantage the organization Organizational incentives may discourage setting meaningful targets There may not be a strategic plan or vision to guide objectives and performance measurement

13. Performance Measurement -- Example Public Library Goals –increase access to desired library materials –increase reading and improve literacy –increase information competence Objectives? Performance measures?

14. Performance Measurement Exercises: How well does the outcome measure address the objective? Objective: improve quality of life of clients in drug treatment program Measures: monthly visits with clients to determine quality of life completion rates of treatment programs Objective: reduce delays in power plant siting process Measures: average time to completion of application satisfaction of applicants

15. Performance Measurement Exercises: How well does the outcome measure address the objective? Objective: increase awareness of issue and availability of service Measures: creation of a media campaign number and type informational materials distributed estimated number of people reached by the campaign Objective: reduce customer complaints about potholes Measures: # of potholes repaired percentage of customers satisfied number of complaints

16. CSUS Change in process to make planning information more useful to budgeting http://www.csus.edu/portfolio/index.htm

17. Examples from CSUS Planning: old v new approach Old objective: To increase opportunities for students to engage in experiential learning (e.g. service learning, internships, cooperative education, involvement in research) during their academic career at CSUS New objective: Increase enrollment in service learning, internships, and cooperative education coursework –Measures: enrollment data; CASPER phone poll

18. Examples from CSUS Planning: old v new approach Old objective: To assist students in becoming effective learners New objective: Implement and evaluate programs or practices aimed at helping students become more effective learners –Measures: effectiveness of new programs or practices

19. Examples from CSUS Planning: old v new approach Old objective: To create an environment in which all employees are supportive of University efforts to achieve a pluralistic community, are knowledgeable about University efforts, and have the skills, awareness, and motivation to support these efforts at the University, unit, and individual levels. New objective: Reduce the perceived discrimination and insensitivity on campus with respect to race, ethnicity, culture, religion, gender, sexual orientation, and disability as reported by members of the campus community –Measures: CASPER phone survey; SNAPS; new campus climate survey

20. Examples from CSUS Planning: old v new approach Old objective: To improve the ability of the University to serve a qualified, diverse student population while responding to changes in enrollment demand and societal needs New objective: Increase the percentage of classes and labs that are scheduled on Fridays, evenings, and weekends to better utilize campus facilities –Measure: new report on % of sections scheduled by time period; Chancellor’s Office measure on % of FTES served by time period

21. Texas: Performance Budgeting Integrates strategic planning, performance monitoring, budgeting Agency budget requests include relate to strategic plan goals, objectives, strategies Include performance reporting for all measures included in request Legislature and Governor use performance information to make funding decisions Key performance measures and targets are displayed in Appropriations Act

22. Missouri “Managing for Results” Five themes: early childhood, education, security, health, safety Fact-based decision making for better results and accountability Published results: –small number of measures (only the good ones?) –meaningful measures –explanations –“what works” -- (not directly linked to results) –links for more information –http://www.mri.state.mo.us/MFR/Succeed.htmlhttp://www.mri.state.mo.us/MFR/Succeed.html –http://www.mri.state.mo.us/MFR/Live.htmlhttp://www.mri.state.mo.us/MFR/Live.html Link to budget: Form 5Form 5 –requests linked to department strategic plan and measures

23. Prince William County Based on strategic planning –community input –strategic goals and measurable community outcomes From plans to budgets –community outcomes=>program outcomes –measurable program objectives –activities to meet targets and associated costs/budget Budget approval process –agencies review prior year performance with Exec Management –set budget year targets, activities using benchmarks –agencies submit budget requests based on new targets –review by Board of Supervisors with community input

24. Prince William County (p.2) Accomplishments of performance budgeting –shift away from line item budgeting –reallocated funds toward strategic priorities major increases: public safety, judicial administration, human services, capital improvement major decreases: parks and library, administration, general government, planning and development –more efficient government (cost per capita declined) –increased citizen satisfaction with value of tax dollars –won several awards (helps gain citizen support)

25. Bellevue, Washington Budget based on five strategic themes and related priorities –programmatic, cross-departmental approach Department budget request includes: –goals and significant budget issues organized around city’s strategic themes –programmatic, not line-item presentation –outcomes, activities, performance measures Performance scorecard: –“Bellevue’s Vital Signs” –Department scorecards –comparisons to other cities

26. Preview of Week 15 Ethics Course wrap-up Begin presentation of BCPs