Week 13: Performance Management and Performance Budgeting

1
Week 13 Performance Management and Performance
Budgeting

• Discuss BCP Assignment and Presentation Order
• Conceptual Origins of Performance Management
• Government Performance and Results Act (GPRA)
• Strategic Planning
• Performance Measurement
• Performance Budgeting
• Examples in setting goals, objectives, measures

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/culture change
• Outcomes orientation (as opposed to inputs)
• Customer and service focus
• Use of performance information (program and
  personnel)
• Incentives and rewards
• Deregulation/flexibility for program managers
• Decentralization/empowering employees
• Accountability
• Strategic Plan linked to budget (performance
  budgeting)

4
Outcomes Orientation Challenges

• Outcomes are hard to measure
• Outcomes are usually not controllable by any one
  agency
• Outcomes are often long-term
• Consequences of negative outcomes (for managers
  and politicians)

• Inputs
• Process
• Outputs
• Outcomes

5
Government Performance and Results Act (1993)

• Components
• strategic plans, performance plans, performance
  reports
• pilots performance budgeting managerial
  flexibility
• Status report (GAO)
• some improved use of measures and data
• strategies discussed in terms of performance
  goals
• limited organizational capacity to collect and
  use data
• results orientation limited esp. cross-cutting
  programs
• need to show performance consequences of budget
• Future Prospects
• Pre-Bush lowered expectations limited Congr.
  interest
• Bush era re-orienting from a Clinton program

6
Strategic Planning

• A key part of performance management
• 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

7
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 its used

8
Integrated Planning at CSU, Sacramento
Planning
Assessment
Resource Allocation
9
Evolution of CSUS Strategic Plan and Planning
Process

• From unit plans to Strategic Plan (eight themes)
• Linking plan and budget resource priorities
• Impact on budget process requests must address
  resource priorities
• Adding assessment (evaluation)
• search for measures and standards
• Improve objectives
• more specific
• more measurable
• Tighten and explain the budget links (more next
  week)
• Strategic Plan is dynamic

10
Performance Measurement Defined

• American Society for Public Administration
• A method of measuring the progress of a public
  program or activity in achieving the results or
  outcomes that clients, customers., or
  stakeholders expect.

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Performance Measurement

• Purposes and audiences
• For policy makers to determine program success
  and relative priorities
• Public accountability
• symbolic value
• actual information
• Information for managers to increase
  effectiveness of organizations
• Discussion questions
• What if objective measures of performance diverge
  from perceived measures (citizen satisfaction
  levels)?
• Does better performance result in higher level of
  citizen satisfaction?

12
Performance Measurement Vocabulary

• Clarify the differences among
• objectives
• performance measures (or indicators)
• value for a performance measure
• benchmark or standard
• Objective the intended result of a program or
  service
• Performance measure a basis for reporting
  outcomes
• Value on performance measure the score or
  outcome
• Benchmark a standard to which to compare the
  score
• Policy outcome v program outcome--useful to
  distinguish what outcomes are within agencys
  control

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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)
• Program -- a set of related functions that
  contribute to a common goal
• Programs should not be defined around
• organizational structure
• funding source

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Relating Performance Measures to Budgeting

• Purpose of the budget process
• To help decision makers make informed choices
  about the provision of goods and services and to
  promote stakeholder participation in the process
• Ideal performance budget helps decision makers
  understand performance consequences of budget
  decisions
• Good performance budget helps decision makers
  connect to program results to try to affect
  outcomes

15
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

16
Steps in Performance Budgeting

• 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???

17
Performance Budgeting in Practice

• hard to define and measure outcomes
• hard to tie dollars to outcomes
• many factors outside control of agency and long
  term
• limited knowledge of cause/effect relationships
• budget structures dont match program structures
• loose linkages with budget at best
• greatest benefit is internal to organization
• possible perverse incentives whats measured
  gets done

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History of Performance Budgeting

• 1949 Hoover Commission
• Planning-Programming-Budgeting-System (PPBS)
  LBJ 1965
• Management by Objective Nixon 1973
• Zero-Base Budgeting (ZBB) Carter 1977
• GPRA Clinton 1993
• States primary use of perf. budg. is at agency
  level, not in central budget office or
  legislative budget process
• Cities
• less than half of cities gt25,000 use performance
  measures
• less than ¼ have centralized perf monitoring
  systems

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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?

20
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?
• Are outcomes really what we should be measuring?
• does it depend on goal/audience?

21
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
• Grade C from Governing

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Preview of Week 14

• Workbook on performance measures
• Last memo due (not counting portfolio reflection)
• performance measures
• Class exercises on developing performance measures