Week 14: Developing Performance Measures and Budgets: Best Practices

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.html • http://www.mri.state.mo.us/MFR/Live.html • Link to budget: Form 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