Using Performance Information for Management and Budgeting - Canada

1
Using Performance Information for Management and
Budgeting - Canadas Experience

• Lee McCormack, Executive Director
• Results-based Management
• OECD Presentation, May 3, 2006

2
Overview

• The Canadian context
• Problems, priorities and implementation
  challenges
• Lessons learned

3
The Canadian context
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Canada is a big country with relatively few
people and a highly decentralized government

• 32 million citizens in 5 ½ time zones
• Decentralized federation with 10 provinces and 3
  territories
• Provinces are equal to the federal government and
  have real power
• Hundreds of federal-provincial agreements and
  federal programming is weighted towards transfer
  payments
• Over 90 departments and agencies in the federal
  government
• 46 Crown corporations
• 172 000 public servants
• Eight consecutive federal surpluses
• New Conservative minority government

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The majority of federal expenditures are transfer
payments

• Total net expenditures in 2004-05 were 172.8 B,
  of which 56 (96.8B) were transfer payments
  (including major transfers grants and
  contributions)

Total Net Expenditures 172.8 B
Grants and Contributions 22.5B
Transfer payments
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The federal expenditure management system is
also decentralized
Element Responsibility
Developing an annual Budget and a multi-year fiscal framework Department of Finance
Establishing annual departmental reference levels Treasury Board Secretariat and departments approved by Treasury Board
New policy or program approval phase Privy Council Office supporting Cabinet
Allocating and reallocating to ensure alignment with priorities and aggregate expenditure control Departments routinely plus three central agencies in special cases
Seek Parliamentary approval of spending plans Treasury Board Secretariat
Reporting to Parliament on spending plans, actual expenditures, and results achieved Treasury Board Secretariat and Departments

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The Finance department sets the Fiscal Framework
and manages the annual budget process
Budget Speech Budget Bill Main Estimates
Cabinet Review of Priorities
Final Decisions on Budget
February
Focus on the increment No formal mechanism
requiring incorporation of performance
information into Budget process Not many targets
Jan-Feb
Aug-Sept
Release of Budget Consultation Papers (Fall
Update)
Cabinet Review of Budget Strategy
Budget Consultation Process
October
Dec-Jan
Oct-Dec
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Treasury Board Secretariat monitors the ongoing
A-Base and seeks Parliamentary supply
Main Estimates Interim Supply
A-Base Perspective Input to Budget
Supplementary Estimates and Supply Bill
February
Jan-Feb
Feb-Mar
Substantial planning and performance information
given to Parliament Much performance information
available, especially on G and C programs Room to
develop more systematic cyclical review
Pressure Management Dept Baseline Funding
Reports on Plans and Priorities Full Supply Bill
March-June
Oct-Jan
A-Base Perspective Input to New Policy Proposals
Supplementary Estimates and Supply Bill
Departmental Performance Reports, Canadas
Performance and Public Accounts
Nov-Dec
Aug-Nov
Aug-Nov
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Canada has a relatively mature performance
measurement and reporting infrastructure

• All major departments and agencies
• Have internal audit and evaluation units
• Publish their audits and evaluations
• Produce and explain to Parliament upon request
  their reports on plans and priorities and
  departmental performance reports
• Are developing outcome frameworks that are
  consistently based across government
• Treasury Board Secretariat
• Reviews program and management performance,
  focusing primarily on G and C programs
• Has a strong policy centre for results based
  management
• Produces an annual performance report Canadas
  Performance
• Assesses management performance across
  government, including results-based management
  capacity
• Office of the Auditor General
• Produces performance audits of departments and
  agencies

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Although there is long results management history

• Management, Resources and Results Structures
  regaining detailed program level knowledge
• Possible Federal Accountability Act 2006
  cyclical evaluation of all transfer payment
  programs
• Improved Reporting to Parliament moving to
  whole of government planning and reporting
• Management Accountability Framework assessing
  management performance across government
• Canadas Performance linking programs to
  societal performance
• Results for Canadians results-based management
  as a stated priority of government
• Transfer Payment Policy performance frameworks
  and evaluations reviewed by TBS
• Modern Comptrollership investment in management
  practices and controls
• Program Review dealing with a large deficit
  through major expenditure cuts
• Departmental Reporting to Parliament moving to
  results-based plans and reports on performance
• Planning Reporting and Accountability Structures
  unsuccessful try at linking resources to
  results
• First Program Evaluation Policy government-wide
  implementation

Todays Agenda
2000
Mid 90s
Early to Mid 80s
some real challenges remain
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Problems, priorities and implementation challenges
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Our agenda focuses on four main problems that are
limiting us from getting performance information
into our budget and management processes

• To regain our detailed whole-of-government
  understanding of the ongoing program base we are
  implementing the Management, Resources and
  Results Structure (MRRS)
• To have better ongoing measurement, periodic
  evaluation and use of performance information we
  are renewing the evaluation function
• To help Parliamentarians fulfil their role of
  holding the Government to account we are
  transforming the existing reporting regime
  through the Improved Reporting to Parliament
  Project (IRPP)
• To ensure the right management incentives are in
  place we are implementing the Management
  Accountability Framework (MAF)

• Agenda
• MRRS
• Evaluation
• IRPP
• MAF

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How do you regain a detailed understanding of the
program base?
MRRS Evaluation IRPP MAF

• To manage its programs, the government needs to
  know
• What they are
• How they align to intended outcomes
• What they cost
• What results they achieve
• This should support more informed decisions on
  value for money, program effectiveness and
  possible ways of improving
• Treasury Board approved the Management, Resources
  and Results Structure policy (MRRS) to remedy
  this situation
• The policy is mandatory for appropriated
  organizations and entering the second year of
  implementation

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The approach requires consistent, structured
information for every department and agency
MRRS Evaluation IRPP MAF
Program Activity Architecture (PAA)
Financial and non financial information

• Planned and Actual Results
• Planned Actual Financial information
• Governance

Required for all elements and all levels of
the PAA
Required for the highest or program activity
level
Recoding of departmental information systems will
be necessary Central Expenditure Management
Information System (under development)
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MRRS Evaluation IRPP MAF
MRRS is the basis for planning, resource
allocation and reporting across the government
More logical consistent basis for interaction
MRRS
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Implementation faces four main challenges
MRRS Evaluation IRPP MAF

• Cultural
• Some departments have had difficulty in adopting
  a performance measurement culture
• Many tend to identify too many measures and
  actually measure too few
• Transparency leads to accountability and that can
  be scary
• Estimate it will take 3 5 years to establish a
  government wide performance measurement framework
• Institutional
• Departments are managed in vertical,
  organizational silos and some are having
  difficulty converting to logic based program
  structures
• Over the last 2 years 30 of departments have
  made changes to the basic program activity
  architecture not unexpected
• Performance measurement capacity demographic
  concerns
• 3-5 years to stabilize to long term and enduring
  structures

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Implementation faces four main challenges
MRRS Evaluation IRPP MAF

• Definitional
• What is a program?
• How do you measure the effectiveness of corporate
  services?
• How do you treat overheads consistently?
• What is the lexicon of program descriptions?
  (dozens of other questions)
• Technical
• Developing a system capable of collecting,
  sorting and linking information
• Making sure it talks to other systems annual
  budget, public accounts and others
• Recoding of departmental systems is a large job
  pilot projects

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The Federal Accountability Act, if passed, will
increase scrutiny of program performance
MRRS Evaluation IRPP MAF

• Auditor General to inquire into the use of funds
  by third parties under any funding agreement with
  the federal department
• Parliamentary Budget Office to provide analysis
  to Parliament about the nations finances and
  trends in the national economy
• Departments to evaluate, at least once every five
  years, the relevance and effectiveness of its
  grants and contributions programs

and this will put a strain on evaluation
capacity
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There are some real challenges for the evaluation
function
MRRS Evaluation IRPP MAF

• Quality, timeliness and strategic focus issues
  make it difficult to use evaluation to support
  decision-making
• often focused on small programs and not strategic
  
• can take too long to complete and are difficult
  to understand
• can be self serving when funded by program
  managers
• Government wide capacity issues have made it
  difficult to deliver
• Lack of trained evaluators
• No consistent competencies for those who lead the
  evaluation function
• Definition of the evaluation product hasnt
  changed much in 20 years

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Step 1 is to renew our policy so that
evaluation is
MRRS Evaluation IRPP MAF

• Better recognized as a core function of public
  management
• Embedded in the decision-making process
• Linked to budgeting and expenditure management
• A neutral and independent function, aligned to
  government management priorities
• Timely in its production of a quality product

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Step 2 is to zone in on implementation
MRRS Evaluation IRPP MAF

• Make sure the function is properly resourced
• Build capacity by re-establishing training and
  recruitment programs and partnering with
  universities on certification
• Ensure objectivity evaluators fund evaluations,
  period
• Redefine the product to promote relevance and
  better coverage
• Strategic policy evaluation
• Impact evaluation
• Value-for-money assessments
• Implementation evaluation
• Treasury Board Secretariat to assess quality and
  set out clear competencies for Heads of
  evaluation and evaluators
• Introduce a Government wide evaluation plan

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Canadian evaluators are ready for change but
they will face real implementation challenges
MRRS Evaluation IRPP MAF

• Demographic - High turnover rates will need to be
  met with targeted whole of government recruitment
• Workload Will be difficult to manage without a
  realistic plan
• Skills Will take time to rebuild training
  programs and partner with universities
• Jurisdictional Continually reinforcing the
  distinction between internal audit and evaluation
• Relevance Good quality, timely products need to
  be used to inform allocation and reallocation
  decisions

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Parliamentarians want better public performance
reporting, ideally
MRRS Evaluation IRPP MAF

• Simpler, more integrated information
• More context and analysis (trends, graphs,
  including reporting on horizontal issues)
• High level overviews with the ability to
  drill-down to more detail
• Clearer logic between planning and performance
  reporting documents
• More balanced reporting
• Better links between programs, resources and
  results
• More clarity between parliamentary reports and
  estimates votes

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Whole of Government planning and reporting is
part of the solution
MRRS Evaluation IRPP MAF

• Government could better communicate its overall
  strategic plan
• This strategic plan could be akin to a whole of
  Government Report on Plans and Priorities
• Outlining plans and priorities for the coming
  fiscal year
• Linking planned results to planned expenditures
• Electronic, in every parliamentary office
• Logically, a fall whole of Government performance
  report could present the results and actual
  spending vis-à-vis such a Plan

but this solution depends on a stable, whole of
Government framework
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This framework has been tested in Canadas
Performance over the past few years
MRRS Evaluation IRPP MAF
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This agenda depends on better management
overall the Management Accountability Framework
MRRS Evaluation IRPP MAF
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The Management Accountability Framework is
results based and demands attention
MRRS Evaluation IRPP MAF

• All departments are assessed against a set of
  indicators including the quality of Management,
  Resources and Results Structures, program
  evaluation and reports to Parliament
• Discussions with senior officials identify
  management improvement priorities
• Treasury Board Secretariat feeds this input into
  performance appraisals for the most senior
  officials
• So far, so good but there are some implementation
  issues
• Process takes time
• Resource intensive
• Debates on ratings with departments

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Lessons Learned
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There are several lessons learned from recent
Canadian experience

• There is no end point on results based management
  persistence over many years is required and you
  never get it right
• You need central leadership to build capacity
  someone with authority must set the game plan,
  make and enforce policies and invest
• A detailed understanding of the program base is
  essential it is very easy to lose and not easy
  to get back
• Everybody knows about cultural barriers but dont
  underestimate the challenges with systems
• You need a common whole of government planning
  and reporting framework if you want to do real
  strategic planning and reporting
• There is no substitute for evaluation but you
  need to give it some backbone and support
• Parliamentarians and the external auditor demand
  better public performance information and this is
  good
• There is no managing for results without sound
  management practices period you need clear
  expectations and annual assessment

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Useful resources

• Government of Canada - http//canada.gc.ca/main_e.
  html
• Treasury Board Secretariat - http//www.tbs-sct.g
  c.ca/index_e.asp
• Finance (Budget) - http//www.fin.gc.ca/fin-eng.ht
  ml
• Reports on Plans and Priorities (2005-06) -
  http//www.tbs-sct.gc.ca/est-pre/20052006/deptlist
  _e.asp
• Departmental Performance Reports (2004-05) -
  http//www.tbs-sct.gc.ca/rma/dpr1/04-05/0405dpr-rm
  r_e.asp
• Canadas Performance - http//www.tbs-sct.gc.ca/re
  port/govrev/05/cp-rc_e.asp
• Results-Based Management (MRRS, Evaluation,
  Improved Reporting to Parliament)
  http//www.tbs-sct.gc.ca/rma/rbm-gar_e.asp
• Management Accountability Framework -
  http//www.tbs-sct.gc.ca/maf-crg/index_e.asp
• EMIS - http//www.tbs-sct.gc.ca/emis-sigd/index_e.
  asp

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