Performance Budgeting


federal-budget.jpgTurkey has committed to budget its government based on the performance of its agencies and programs by 2010.  I learned that yesterday at a seminar being held for several senior Turkish Finance Ministry officials visiting Washington, DC to examine how the U.S. has been progressing in the use of performance budgeting since the federal government committed in 2001 to this initiative.

This seminar was an opportunity for me to reflect on the progress made, and the potential agenda the next president might face when he or she starts to develop their first budget to submit to Congress.

Performance budgeting, according to budget expert Phil Joyce, “. . . involves focusing government allocation processes at all levels on relationships between dollars and results.”  While a simple notion, it is difficult to actually do.  The federal government began reporting budget information, financial information, and performance information in the 1990s under President Bill Clinton.  The challenge is integrating those three streams of reporting.

President George W. Bush centered his government management improvement agenda on performance improvement through the integration of performance and budget information.  In the past seven years, his Administration’s efforts have resulted in far more transparency in budget, financial, and performance information:

The “unit of analysis” for assessing performance in government has shifted from how well agencies are performing to how well individual programs perform.  The Program Assessment Rating Tool was created by the Office of Management and Budget (OMB) and is used to assess each of nearly 1000 major federal programs.  Summaries of those assessments are posted publicly on the web.

  • OMB has “cleaned up” the federal budget structure, eliminating dozens of small accounts that complicated rather than clarified where monies were spent.
  • Agencies are being graded by OMB on the extent to which they integrate performance and budget information into how they manage – does it tie to their decisions?  Does it tie to how individual employees are rated on their performance?
  • Agencies are also presenting performance information more consistently to Congress. But not without some skepticism. For example, the IRS recast its budget structure in 2002 from the traditional approach to one that reflected what results it was trying to achieve and Congress asked GAO to assess the new structure.
  • OMB is sponsoring a “line of business” around the budget process that can lead to common standards and processes across agencies.

These and related efforts create a new foundation of performance information for the next President to build upon.  Much like President Clinton left a foundation of performance information as a result of his active implementation of the Government Performance and Results Act, President Bush’s Administration has “set up” opportunities for the next president.

What might those new opportunities look like?

First, with a full set of descriptive program assessments, it will be possible to “mix and match” programs that contribute to common outcomes – even if they are not in the same agencies.  Fighting forest fires crosses agency boundaries.  Fighting pandemic flu crosses agency boundaries.  Fighting poverty crosses agency boundaries.  It will allow a view of the government based on services and results, not just the traditional view of agencies and programs.

Second, having transparent performance information that is publicly available will allow — with today’s technology — “mash-ups” of information from different sources.  So someone could, for example, take OMB’s program assessment information and cross it with congressional committee jurisdiction of those programs so a congressional staffer could see which programs are related to which committee, and which services and results are produced.

Third, the “line of business” approach will begin to create a common language across agencies at the technical level.  Based on past experience, this is a necessary prerequisite to creating more collaborative relationships at the policy level between programs and agencies.  Agencies are more willing to work together if they have common administrative processes for handling money, services, and information.  This was a major lesson in getting the Defense and Veterans health care systems to collaborate.

And fourth, some academics, including Joyce, are floating the idea of giving citizens a more formal role in assessing performance and providing advice on budget and policy alternatives at the federal level.  A recent IBM Center report notes that this is a growing trend in other countries and at the local level in some communities in the U.S.  Alternatives for the federal level include:  including citizens in OMB’s program assessment review process and organizing representative forums around major policy choices.

While these would be major steps to take, they could create new leverage points for a President to address increasingly complex challenges.  Do you have other ideas on improving how budget and performance information could be improved?


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