Performance Budgeting: What is it How do I do it

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Performance Budgeting What is it? How do I do
it?
Bill Arnold, MA, CDFM-A, CCA Management Concepts
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POP QUIZ

• The term Performance Budget was coined in
• a. 1949
• b. 1969
• c. 1989
• d. 2009

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Hint

• There are serious weaknesses in the internal
  operations of the Federal Government.
• The Governments accounting systems, outmoded
  and cumbersome, do not indicate what was
  accomplished with the money spent.
• We recommend the whole budget be refashioned by
  the adoption of a budget based upon functions,
  activities, and projects.
• This we designate as a Performance Budget.

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POP QUIZ

• The term Performance Budget was coined in
• a. 1949
• b. 1969
• c. 1989
• d. 2009
• The concept was put forward in the Hoover
  Commission Report

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GPRA
CFO Act
GMRA
PART
Performance Budgeting
SFFAS 4
PMA
Chief Performance Officer
A-11
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Performance Budgeting Focus

• Performance Results
• Outcomes
• Measurement
• Linkage
• budget ()
• inputs
• outputs
• outcomes
• annual goals
• strategic objectives

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Why Performance Budgeting Now?

• An Idea Whose Time Has Come
• Dwindling Discretionary Funds
• Media and Congressional Scrutiny

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Dwindling Discretionary Spending
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Dwindling Discretionary Spending
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Media and Congressional Scrutiny

• Media Headlines
• USA Today
• As agency foul-ups multiply, its time for some
  accountability.

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Media and Congressional Scrutiny

• Media Headlines
• USA Today
• Taxpayers receive virtually no accounting of
  results being achieved

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Media and Congressional Scrutiny

• Media Headlines
• AP
• Stalled switch to digital TV a classic tale of
  breakdown

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Media and Congressional Scrutiny

• Media Headlines
• Washington Post
• Lost U.S. weapons may be going to Taliban

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Congressional Scrutiny

• 2008 House Appropriations Committee Report
• Use a meaningful system of evaluation to justify
  funding levels.

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Congressional Scrutiny

• GAO Report
• Social Security Administration needs service
  delivery standards.

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Congressional Scrutiny

• GAO Report
• SBAs weaknesses exposed Government to fraud.

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Congressional Scrutiny

• GAO Report
• DOE needs to improve accountability of nuclear
  waste cleanup.

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Congressional Scrutiny

• GAO Report
• EPA needs to improve program effectiveness
  measures.

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Congressional Scrutiny

• GAO Report
• TARP Efforts to address accountability issues.

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Inputs, Outputs, and Outcomes

• Inputs
• Resources used Manpower, equipment, facilities
• Outputs
• Goods or services produced
• Work counts
• What comes out of your process engine
• Outcomes
• Results or benefits of the outputs
• Achievement of program purposes
• Benefits to taxpayers

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Performance Budgeting versus Object Class
Budgeting

• Object Class Budgeting focuses on Inputs
• Personnel, travel, rents, supplies, etc.
• Obligations based
• Performance Budgeting focuses on Outcomes
• Results, benefits
• Cost based
• Performance Budgeting requires a different
  analysis mindset

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Measurement

• The most critical component
• What gets measured, gets done!
• Carrot and Stick approach
• Intangible benefits

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Attributes of Good Performance Measures

• Drive Appropriate Behavior
• Consistent
• Repeatable
• Economical
• Understandable
• Controllable
• Meaningful

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Efficiency, Effectiveness, and Outcome Measures

• Efficiency Measures
• Inputs/Outputs Efficiency (Doing Things
  Right)
• Measures Bang for the Buck
• Effectiveness Measures
• Work counts and accomplishments
• Process oriented
• Outcome Measures
• Doing the Right Things
• Number quality of benefits to stakeholders
• Sizzle that sells the steak!

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Format What Works, What Doesnt

• Good Formats
• Help readers sort information quickly
• Highlight summary results
• Are clear and understandable
• Use tables and graphics effectively
• Have a high-quality, professional appearance
• Display successes and shortfalls equally

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Content What Works, What Doesnt

• Good Content
• Shows links between budget and results
• Emphasizes outcomes
• Anticipates and answers questions
• Includes specific actions
• Contains no math errors
• Doesnt hide problems
• Does not drive inappropriate behavior
• Is timely
• Has meaningful, rigorous, and challenging goals
• Is credible

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2004 Result
2005 Result
2006 Target
2006 Result
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WIIFM?
Whats In It For Me?

• MORE BUDGET AUTHORITY!!
• Use these principles to get a larger slice of the
  pie
• Beat your competitors who dont understand
  performance budgeting
• Better Organizational Performance
• What gets measured, gets done
• Doing the right things right
• Career Enhancement
• Performance budgetings time has come
• Be at the front of this movement -- Dont be left
  behind