Week 12: Performance Management and Performance Budgeting

1. Week 12: Performance Management and Performance Budgeting • Discuss Eureka exercise • Review mid-term • Conceptual Origins of Performance Management • Government Performance and Results Act (GPRA) • Strategic Planning • Performance Budgeting • Class Discussion Questions

2. Why Performance Management? Context • Public dissatisfaction with government • “Reinventing Government” 1992 • Intractable problems (crime, health care, education) • Fiscal crises Goals • Better management • More effective and efficient government programs • Better accountability • More Congressional oversight -- especially of cross cutting programs

3. Key Tenets of Performance Management • Mission-driven organizations and decision making • Outcomes orientation (as opposed to inputs) • Customer and service focus • Deregulation/flexibility for program managers • Decentralization • Entrepreneurial • Accountability • Incentives and rewards • Strategic Plan linked to budget (performance budgeting) • Changing organizational culture

4. Outcomes are hard to measure Outcomes are usually not controllable by any one agency Outcomes may not be positive Do politicians really want to know the outcomes of their pet projects? Inputs Process Outputs Outcomes Outcomes Orientation: Challenges

5. GPRA (1993) -- Components • Strategic Plans • Annual Performance Plans • performance, measures, resources for each activity • Annual Performance Reports • actual performance compared to goals • Performance Budgeting Pilots • Managerial Flexibility Pilots • staffing levels, compensation, budget transfers

6. GAO Assessment of 2000 GPRA Performance Plans • Major Strengths: • results-oriented goals and quantifiable measures are frequently used to address program performance • some good use of intermediate measures (e.g. outputs) to show interim progress • use of baseline and trend data to identify past performance is widespread • program strategies are often discussed in relation to the achievement of performance goals

7. GAO Assessment of 2000 GPRA Performance Plans • Recommendations for improvement • better articulate a results orientation • coordinate crosscutting programs • show the performance consequences of budget decisions • clearly show how strategies will be used to achieve results • build the capacity within agencies to gether and use performance information

8. GPRA -- Prospects for Success • new President -- less priority? • unrealistic expectations are being lowered • lack of interest in Congress in oversight and appropriations • appropriations committee structure doesn’t match programs • need to link evaluation research with performance measures to help assess impact of complex programs • who are the champions of the process? • benefits planning, internal management, and public image, even if it doesn’t directly affect budgets • will performance reports aid public accountability?

9. Strategic Planning • Definition: “a disciplined effort to produce fundamental decisions and actions that shape and guide what an organization is, what it does, and why it does it” • Process for determining direction, purpose, priorities • takes into account strengths and environment • Benefits • develops a framework for decision making • focuses organization on key issues • look across organizational boundaries • helps take charge of change

10. Strategic Planning Process • Common, useful steps • convene stakeholders • develop mission statement • look at internal and external environment • identify key issues • create vision • Keys to success • fit with organizational culture • champions for the process at high levels • evidence that the plan matters--that it’s used

11. Performance Budgeting in Theory • improvement over line-item budgeting, which ignores program and policy for input focus • focus on performance, not compliance • connects resource needs to results (tight links) • requires restructured accounting systems to align budget structure with program areas • integrates performance information into budget structures • provides for informed choices: impact of $$ support levels • improves accountability • improves management

12. Performance Budgeting in Practice • hard to define and measure outcomes • hard to tie dollars to outcomes • very limited knowledge of cause/effect relationships • must fit into existing line item budget structures • lack of good cost data at level of program outcome • loose linkages with budget at best • informs decision making only at “macro” level • greatest benefit is internal to organization • many factors outside control of agency

13. State-level Initiatives in Performance Management • Most states have performance budgeting requirement (some legal, some executive order) • great variation in degree of actual linkage to budget • more valuable as management tool • California: • executive order for strategic planning • Performance and Results Act of 1993 • set up performance budgeting pilots • not a priority for Davis administration; pilots not being continued

14. Questions to Consider in Developing Performance Budget • 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?

15. Performance Budgeting Issues • Rationality revisited • is performance budgeting just another attempt to rid budgeting of politics? • What should be the consequences of agencies not meeting their performance goals? • Rewards v incentives? • Rewards to unit budget or individuals (salaries)? • Will managers focus too much on technical measurement and lose sight of meaningful results?

16. Preview of Week 13 • Guest Speaker: Teresa Rocha, Department of Corrections • Workbook on performance measures • Last memo due -- performance measures • Class exercises on developing performance measures