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FY 1999 Budget Development and Management Reform Implementation

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Title: FY 1999 Budget Development and Management Reform Implementation


1
Performance Results Management and Extreme
Budget Deficit Management Inside the
Beltway Mutually Exclusive or Symbiotic Tools?
Hyong Yi Office of Budget and Planning April
10, 2003
2
Introduction
  • Hyong Yi
  • Director of Operations and Policy
  • Office of Budget and Planning
  • Independent Office of the Chief Financial Officer
  • Government of the District of Columbia
  • KPMG LLP, Global Knowledge Management
  • DC Government, Executive Office of the Mayor
  • DC Financial Control Board
  • Views You Can Use Co-Editor for The Public
    Manager
  • Professor for the Center for Excellence in
    Municipal Management at GWU
  • Recently Married, No Kids, No Pets, Live outside
    DC, and drive a Volkswagen

3
Overview
  • The District A Brief History
  • The Districts Recent Financial History
  • Performance Based Budgeting Our Silver Bullet
  • Performance Based Budgeting The Reality
  • Conclusions
  • Questions and Answers

4
  • The District of Columbia
  • A Brief History

5
The District of Columbia is
6
The District of Columbia
  • Founded by Congress in 1791 over there.
  • Seat of the Federal government.
  • Diamond shaped until Virginia part ceded back
    after the Civil War.
  • 68 square miles.
  • 53 of the land is owned by the Feds, educational
    institutions, foreign governments, and
    non-profits.
  • No vote in Congress.
  • Homerule in 1974.
  • Mayor-Council form of government
  • Limited legislative powers in such instances as
    approving our Appropriations.

7
  • The Districts Recent Financial History

8
The Fall from Grace Rising from the Ashes
9
The Financial Control Board Period
  • Created by Congress in 1994 to oversee the
    Districts finances and management until four
    consecutive balanced budgets are achieved
  • Act also created an Independent Office of the
    Chief Financial Officer
  • Act also created an Office of the Inspector
    General

10
Revitalizing the District
  • 1997 Revitalization Act significantly shifted
    responsibilities between the District and the
    Federal government
  • The Federal government took over
  • All operating and capital costs of most aspects
    of the Districts court system
  • Assumed responsibility for the Districts accrued
    pension liability through 1997
  • Increased Medicaid reimbursement rates from 50 to
    70 percent
  • Eliminated annual payment (660 million in the
    1996)

Chart FY03 page 105
11
Impact on the Bottomline
12
Recent Developments
  • 1998 Anthony Williams elected Mayor (1st Term)
  • 1998 DC government receives authority from
    Control Board
  • 2001 DC balances fourth consecutive budget
    Control Board goes into hibernation
  • 2002 Internet Economy bursts Economy collapses
  • 2002 DC cuts 75 million to balance budget
    before year end
  • 2002 DC cuts 323 million from FY 2003 proposed
    budget based on declining revenue
    projections
  • 2003 DC cuts additional 128 million from FY
    2003 budget
  • 2003 District reduces FY 2004 expenditures

13
FY 2003 Sources of Local Revenue
14
FY 2003 Expenditures by Appropriation Title
(General Fund)
  • Expenditures total 5.7 billion in FY 2003.
  • Growth in public health and education constitute
    the largest increases in spending.
  • Without health and education, growth is a modest
    2.4.

15
FY 2003 General Fund Expenditures
16
FY 2003 Local General Fund Expenditures
17
The Current Challenge
  • As revenues continue to stagnate, how do
    stakeholders decide which programs to fund and
    which ones to cut?
  • How do we determine which agencies are performing
    well and which are not?
  • On what basis do we decide which programs are
    performing and delivering results and which ones
    are not?

18
  • Performance Based Budgeting
  • The Silver Bullet

19
Performance-Based Budgeting (PBB)
A budget structured and presented by activities
and programs (as opposed to organizational units)
that integrates results-oriented strategic
planning with measurable outcomes allowing for
budget decisions that are informed by program
performance and cost information.
20
Strategic Management Cycle
is an integrated District-wide leadership and
management approach that fosters continuous
improvement, demonstrates goal attainment and
facilitates transparency and accountability in
management.
The Strategic Management Cycle is the Districts
version of Managing for Results
21
Planning, Budgeting and Perf Mgmt in the
Strategic Cycle
22
PBB Integration with other SMC initiatives
CYCLE PHASE
Budget Development
Performance Management
Strategic Planning
?
?
?
City Administrator / Office of Personnel
Budget Planning
Office of the Mayor
AGENCIES INVOLVED
?
?
?
Agency Strategic Business Plans
Citywide Strategic Plan
Budget Financial Plan
Agency Scorecard
Agency Strategic Plan
INITIATIVES
Director Performance Contracts
Performance Accountability Plan Report
Policy Agenda
C.A.F.R.
Strategic Neighborhood Action Plan (SNAP)
Performance Management Program
Agency Strategic Business Plans are the linchpin
to aligning Planning, Budgeting and Performance
Initiatives
23
Our Goal with PBB
  • Focuses resources personnel and funding on
    results
  • Communicates the results and costs of programs
    provided to citizens
  • Provides performance and expenditure information
    about agency programs and activities
  • Allows improvement in service delivery
  • Changes the discussion from what is spent to what
    the District government accomplishes

24
PBB Results for District Residents
  • Clarifies what citizens can expect from their
    government
  • Facilitates improved access and participation in
    governance
  • Improves services by introducing a level of
    accountability

25
PBB Results for Policymakers
  • Provides information needed to make policy
    decisions and provide policy direction to agency
    leadership
  • Clarifies policy decision making by illuminating
    results of proposed actions
  • Links budget funding with program results

26
PBB Results for District Employees
  • Provides information to make day-to-day
    operational decisions to improve services
  • Articulates results the agency plans on achieving
  • Assists employees in understanding how their job
    contributes to achieving results

27
Elements of an AgencysStrategic Business Plan
  • Mission and Goals
  • Program Structure
  • Program Result Measures
  • Program Purpose Statements
  • Activity Performance Measures
  • Results
  • Output
  • Demand
  • Efficiency (Activity Based Costing)

28
Strategic elements of theStrategic Business Plan
  • Mission - The Departments Mission is a clear,
    concise statement of purpose for the entire
    department
  • Issue Statements - Issues, both internal and
    external to the agency, which determine the goals
    to be met
  • Goals - Strategic Result Goals outline the
    significant results to be achieved over the next
    2-3 years
  • Specific (date certain)
  • Results-Oriented (e.g., quantifiable and
    measurable)
  • Informs citizens as to what to expect from the
    agency

29
Business elements of theStrategic Business Plan
  • Program/Activity/Service Structure
  • Budget and accounting structures are the same
    organized around the results to be achieved
  • Program Purpose Statements
  • What are you doing?
  • Why are you doing it?
  • Who are you doing for?
  • Family of Performance Measures for every Activity
  • Results
  • Output
  • Efficiency
  • Demand

30
Sample Activity Purpose Statement and Activity
Measures

31
Integration of Agency SBPs, PBB and the SMC
A structured Corporate Review process was
developed to ensure agency strategic business
plans support the Districts corporate planning
processes and performance management activities.
32
  • Performance Based Budgeting
  • The Reality in a Budget Cutting Environment

33
Implementation takes time
34
Program Budgeting Theory and Implementation
  • Cuts are results based
  • Cuts are program/activity/service level focused
  • Based on performance results and cost (I.e.,
    value), lowest value services are cut first
  • Activities can be reduced first or eliminated

X
X
X
X
X
35
District-wide not as effective
  • Assumes agencies are givens (cuts below agency
    level)
  • PBB helps manage agencies performance and
    budgets, not a whole jurisdiction
  • The larger the deficit, the less useful PBB will
    be in helping to close the gap
  • DC in closing its 323 million and 128 million
    deficit resorted to a mixture of program and
    across-the-board reductions on the expenditure
    side and increased taxes on the revenue side

36
Actions to Balance Budget
37
  • Conclusions

38
Another tool in the mgmt toolbox
  • Increases accountability and transparency of
    government programs
  • Progressively linking programs ? funding ?
    results
  • Slowly changing how DC officials, employees, and
    citizens think about what government does and how
    we measure it
  • Helps managers own their programs and provides
    incentives to perform
  • Identifies similar programs across agencies
    (I.e., Medicaid)

39
PBB is not a magic bullet
  • Its a micro-level tool that works best at the
    agency/program level
  • Not very effective in managing macro-level
    financial problems
  • Governments will always resort to a suite of
    actions both revenue and expenditure based to
    balance any budget deficits
  • Most programs, even the worst performing, have a
    constituency
  • It can contribute to managing a deficit, but it,
    on its own, most likely will not solve it
  • Lack of clarity in agency performance measures
    limits ability to make management decisions based
    on measures
  • Link between programs?funding?results can be fuzzy

40
Challenges and Next Steps
  • Change management/Organizational change
  • Training and education

41
  • Questions?
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