Performance Budgeting and Performance Funding in the States: A States Assessment

For a variety of reasons, performance budgeting has gained new life in the 1990s. Initially introduced in the 1950s by the Hoover Commission and others, performance budgeting efforts, in the 1990s, go beyond the workload productivity and efficiency focus of earlier phases and place greater emphasis on outcomes and accountability. This study reports on a survey of state executive-branch budget officers designed to determine the current status of state performance budgeting efforts including performance budgeting processes used by the states, their perceived impacts on budget decision making, and their probable future use. In addition, the study assessed the emerging role of performance funding as a further extension of performance budgeting processes. The linking of performance to the allocation or distribution of appropriated funds may be emerging as the next iteration of performance budgeting in the states. In addition to reporting on the survey, relationships between performance budgeting and various aspects of state budgeting practices are analyzed through crosstabulations, and regression analysis is employed to examine the states' organization, fiscal, and political capacity to implement performance budgeting and funding.     

Performance Budgeting: The Perspective of State Agencies

Although performance‐based budgeting requirements are pervasive, what remains a challenge is how to gain the support from all stakeholders in the budget process that are essential to the integration of performance information with budgeting. This study examines the perspective and role of state agencies on performance budgeting. The finding indicates that for agencies to conduct performance‐informed budgeting, the focus needs to be on elevating managerial capacity to use performance information, and improving measurement quality. Moreover, it is crucial to recognize that performance budgeting is a collaborative process in which each participant plays a valuable role.     

Performance Measurement in Budgeting: A Study of County Governments

This article focuses on the use of performance measurement in public budgeting. Based on a national survey of county governments, it finds that governments use performance measurement in a wide range of budgeting areas. The results also show that performance measurement users are experiencing technical obstacles in conducting performance analysis and obtaining support from legislatures and citizens. The article concludes that analytical competency and political support increase the use of performance measurement in budgeting, which leads to a more efficient, effective, and accountablegovernment.     

Program Budgeting and Accountability in Local Government

Much has been written about program budgeting and its relevance to improved efficiency and effectiveness. However, there is little discussion about the relationship between the use of program budgeting and accountability. While, organisations using program budgeting focus on the issues of performance, the accountability of management to an elected body, such as a local council has been given little attention. In this article three questions are posed: (1) Is the performance information available to enable councillors to form a judgment about management's performance?; (2) Is management involved in determining issues of policy, such as objectives, programs and performance measurement?; and (3) Are councillors confronted by a greater volume of budgetary documentation but with no increase in time to consider it? The results show that program budgeting does not always enhance accountability in local government.     

Performance Measurement and Budget Balancing: State Government Perspective

This research assesses the perspectives of budget officers and agency personnel in state governments about performance measurement applicability for budgeting purposes. Results show that both perspectives consider performance measurement use effective for improving communication, increasing awareness about results, improving service quality, and changing strategies to reach certain results. Then again, the use of performance information is not found as effective, often not at all, for cost or program cutting, or for changing spending levels. This suggests that while today's governors might need to temper their expectations regarding the usefulness of performance initiatives to support budget balancing in the short run, they should remain steadfast in promoting performance measurement applicability for the long-term benefits recognized by both budgeters and agency staff.     

Good Cuts,Bad Cuts: The Need for Expenditure Analysis in Decremental Budgeting*

Quantitative targets are widely used in decremental budgeting. On the macro-level, governments set global limits for the growth of public expenditures, government deficits, or the ratio of government spending to GNP. On the micro-level, reduction targets are frequently assigned to spending ministries or agencies on a selective basis or across-the-board. While this kind of targetry appears to be indispensable to achieve cutbacks, it is also very deficient in that it treats public expenditures as a fungible commodity, consisting of interchangeable units of account. As austerity policies are coming of age, the inherent weaknesses in the targets approach attract increasing attention, and there is growing concern about the quality of austerity measures. To make sound decisions on such measures, governments must develop a better understanding of the characteristics and properties of various public expenditures. This paper outlines four varieties of expenditure analysis that may contribute to ‘the leap from quantity to quality’ in decremental budgeting.     

Using Adjusted Performance Measures for Evaluating Resource Use

Public service organizations are looking for ways to improve the evaluation of performance and resource allocation. One of the approaches is to use adjusted performance measures, which attempt to capture factors that affect the organizational performance but are outside of the organization's control. This article illustrates the construction and use of adjusted performance measures to assess the performance of public schools, and reports findings from a study of school-based budgeting in Chicago that relates adjusted performance measures and patterns of budget allocations.     

Better Performance with Performance Budgeting? Analyzing Cases of Success and Failure in Public Administrations

ABSTRACT

The introduction of performance budgeting has substantially changed the working environment of public managers. Changes include a shift from input to outcome orientation as well as more freedom to manage. However, current public management theories are unable to explain why performance budgeting sometimes fails. This article proposes a causal model that integrates three contextual factors and two individual factors in order to explain the diverse results. The model is tested with cases generated from interviews with Swiss public managers. The compiled data suggests that the type of tasks in a department as an antecedent variable and the perceived freedom of public managers have a dominating influence on the perceived reform outcome. Other factors, such as the behavior of the legislature, the project management and the prior career of managers, tend to be less important. These results contribute to the scientific discourse about success factors for performance budgeting in public administrations.     

PBB in American Local Governments: It's More than a Management Tool

Despite academic findings that performance information seldom is used in appropriations decisions, many professional organizations and governments continue to press for integrating performance information into local public management, planning, and budgeting processes. Is it possible to reconcile such inconsistencies? Looking beyond the executive–legislative relationship and departmental appropriations, the author examines the budget implications of applying performance information at the subdepartmental program level. Case analysis of Indianapolis’s IndyStat initiative underscores that performance measurement application is positively related to intradepartmental program budget changes. Hence, performance‐based budgeting (PBB) can improve local budgeting despite severe political constraints. Still, successful use of PBB requires strong executive leadership, and its effects remain less visible at the departmental level or within the wider political arena of legislative bargaining. The author concludes by recommending some rethinking of the current analytical focus of PBB both in future research as well as recommended practice.     

The Ups and Downs of State Budget Process Reform: Experience of Three Decades

From zero-base budgeting to the Government Performance and Results Act, state budgeting systems have been synonymous with budgeting reform for over 30 years. This article examines the trends, both long-term and short-term, which have been identified through analysis of state budgeting office practices. Particular emphasis has been placed on understanding the changes in performance measurement over the period of 1970 to 2000. The findings reveal trends such as changes in the makeup of budget office personnel, a lack of budget offices in moving toward cost accounting, and trends in budget preparation and budget documents. Some budget reforms seem to have plateaued, beginning in the mid-1990s, while other reforms have exhibited "backsliding." It is clear that the states are not all marching in unison in reforming their budget systems. As with earlier phases of this study, the 2000 data raise many questions that will be explored in future research.     

Individual Engagement to Collective Participation: The Dynamics of Participation Pattern in Performance Budgeting

Active participation from all stakeholders in the budget process is one of the key issues to the integration of performance information with budgeting. While individual stakeholders' participation is cited as important by various studies, participation pattern, that is, how they engage relative to each other in performance measurement, is less known. Empirical studies on participation patterns and their collective impact on performance budgeting are scarce. Using the survey data collected in Georgia, this study conducted a cluster analysis in order to further provide a dynamic understanding of the mechanism and structure of a participative process in performance budgeting. The findings suggest that participation pattern is a different construct than individual participation and that the effective patterns vary by the purpose for which performance information is used. In addition, the patterns that are open to external professionals and citizens, with shared responsibilities among the agencies, executive offices and the legislative branch, and tailored to various purposes are more likely to be effective in integrating performance information with management and budgeting.     

Public Service Professionalism for Performance Measurement and Evaluation

For over fifty years, efforts have been made to measure the results of government activities. Most recently, performance measurement and evaluation have been key components of government reforms in many countries in reaction to loss of confidence in governments and budget stringency. Emphasis is on measuring outcomes or results within a general framework of strategic planning and objective setting, and in a context of devolution, managerial decentralization, and privatization. While it seems reasonable that governments should justify their use of public funds by demonstrating the effectiveness of their programs and activities, performance measurement in practice is by no means straightforward and demands considerable thought in its design and implementation.     

Taking the Measure of Congress: Reply to Chiou and Rothenberg

e-mail: binder{at}gwu.edu Chiou and Rothenberg raise important questions about how tomeasure key concepts in the study of legislative stalemate inthe U.S. Congress. In challenging my choice of measures to capturebicameral differences, Chiou and Rothenberg argue that my findingsare the artifact of measurement error. In this reply, I reviewthe hurdles involved in measuring policy views over time andacross institutions and suggest that the preferred measure ofChiou and Rothenberg falls short for measuring bicameral differences.Second, I assess the extent to which measurement choices affectthe robustness of my findings about the determinants of gridlock.Drawing on new measures and model specifications, I show thatmy results are robust to alternative specifications. I concludewith an assessment of the broader challenges posed by how wemeasure critical concepts in the study of congressional performance.     

Performance Measurement in State Budgeting: Advancement and Backsliding from 1990 to 1995

Performance measurement has been one of the dominant themes of budget reform in the 1990s and has been prevalent in the mainstream of budgeting since the 1950s. Given the attention that performance measurement has had nationally, states might be expected to have made major strides in this arena in recent years. The article considers the current status of performance measurement practices, and identifies both advancement and backsliding made by states between 1990 and 1995. The discussion is based on data obtained from surveys of state budget offices in those two years. Indexes of performance measurement were constructed, and these became the bases of regression analyses using independent variables pertaining to state characteristics. Generally, these analyses were unsuccessful in explaining the variations among the states. The findings underscore the diversity among the states in their budgetary practices and the fact that budget reform, in the sense of increased use of performance measurement, is not necessarily achieved in a straight line of progression. The article considers possible explanations for the changes.     

The Problem with Programs: Multiple Perspectives on Program Structures in Program‐Based Performance‐Oriented Budgets

Often the transition to performance‐based budgeting requires the initial development of a program structure. While a substantial body of literature is available to assist governments in developing performance measures, program development has received little recent attention in the scholarly literature. This research draws on a case study of the State of Georgia's effort to develop a program structure. The problems encountered by Georgia provide the foundation for an analysis that explains how programs interact with competing budgetary purposes and agendas. The analysis in turn suggests ways that budget structures might be adjusted to better balance competing purposes.     

Budgeters' Views of State Performance-Budgeting Systems: Distinctions across Branches

Given that a majority of states have had some sort of performance‐budgeting initiative on the books for several years, how has implementation of such reform progressed? To answer this question, we surveyed legislative and executive budgeters from the 50 states, asking them for their impressions of performance‐budgeting implementation in their state. Specifically, we asked these budget officers about the reasons for introducing performance budgeting in their state; the types of activities required of their system; responsible oversight bodies; extent of application across state agencies and departments; and perceived levels of effectiveness and problems experienced with implementation of the budget reform. Our findings indicate that implementation of performance‐based budgeting systems is proceeding slowly. While there are some benefits to highlight, results show that implementing performance budgeting is not without problems—perhaps the greatest being differing perceptions of use and success among budget players, particularly across branches of government.     

Decentralizing the Development Budget Process in Indonesia: Progress and Prospects

Decentralization of the development budget process in Indonesia has been a high priority of official reform efforts for over fifteen years, but in many respects the process remains highly centralized. This article describes the forces that helped shape this centralized process, in which central planners traditionally have had a degree of influence over budgeting that is unusual in the developing world. Efforts to help local officials play a more meaningful role in this process are reviewed, including innovative training programs introduced recently in response to enduring problems affecting local level participation. Although these recent efforts appear to be productive, government reformers recognize that meaningful decentralization over the longer term will be difficult to achieve without more fundamental changes in policies, procedures, and attitudes at the central level of government.     

State Performance‐Based Budgeting in Boom and Bust Years: An Analytical Framework and Survey of the States

The authors examine the track record of applying performance‐based budgeting (PBB) across three time periods within a sample of U.S. state governments: (1) throughout the 1990s, (2) in the early 2000s, and (3) during the Great Recession. State‐level PBB is analyzed according to four elements: (1) the development of performance measures, (2) its applicability to budgeting and management processes, (3) its utility across the business cycle, and (4) its usefulness for budget players. An analytical framework is devised that highlights the “publicness” of American government, draws on the principal–agent model, and considers incentive mechanisms theory. Findings confirm that a good performance measurement system takes time to develop and operate well and that PBB functions more effectively for executive management than legislative purposes. PBB is used more by the states during strong economic times as opposed to during economic downturns. More importantly, PBB is only selectively applied by legislators in most states, whereas top executive policy makers, middle managers, and staff embrace and utilize PBB systems more extensively.     

Making Government Accountable: Lessons from a Federal Job Training Program

This article describes the evolution of a performance measurement system in a government job training program. In this program, a federal agency establishes performance measures and standards for substate agencies. The performance measurement system's evolution is at least partly explained as a process of trial and error characterized by a feedback loop: The federal agency establishes performance measures, the local managers learn how to game them, the federal agency learns about gaming and reformulates the performance measures, possibly leading to new gaming, and so on. The dynamics suggest that implementing a performance measurement system in government is not a one-time challenge but benefits from careful monitoring and perhaps frequent revision.     

The Kansas Financial Information System (KFIS): Policy Design and Policy Failure

States are reported to have spent large sums of money on information resources management in financial year (FY) 1989. Of concern to several authors is the fact that most states have not attempted to integrate their accounting and budgeting systems. Calls for integrating accounting, budgeting, and personnel systems frequently fail to take into account the design problems associated with such tasks. This article uses a case study of the Kansas Financial Information System (KFIS) to highlight the importance of policy design to successful policy implementation. The results support the theory that design is an integral part of decision making and policy development. Policy design is an important determinant of implementation outcomes.