Orienting Public Spending towards Achieving Results - Performance and Performance Management: A Conceptual Overview

1
Orienting Public Spending towards Achieving
Results - Performance and Performance Management
A Conceptual Overview

• Joel Turkewitz
• World Bank

2
Outline of Presentation

• The idea of performance in the public sector
• Improving Performance Through the Budget Process
• Results and Implications for Program Design

3
Performance in the public sector

• Not a new idea previously around the concept of
  public service ethic
• Altered in post World War II environment
• Rapid expansion of government need to
  demonstrate the value of government spending.
• Challenges to idea of public interest

4
The idea of performance has remade the public
sector

• Re-engineered Processes
• Program budgeting, MTEF, accrual, performance
  auditing, etc.
• Reshaped the state
• Privatization, decentralization
• Changed accountability relations
• Monitoring and evaluation, citizen report cards,
  etc.

5
Ideas Associated with Improved Performance

• Performance improves when managers know what is
  expected of them and are measured against those
  expectations.
• Performance improves when managers are given
  flexibility to use resources

6
Performance ideas (2)

• Performance improves through the devolution of
  authority to operating levels and units.
• Performance improves when government decisions
  and controls focus on outputs/outcomes.
• Performance improves when mangers are held
  accountable for the results produced.

7
Core Performance Strategies

• Increased Competition in the Public Sector
• Enhanced Managerial Autonomy
• Program Review
• Deregulation and Simplification

8
Each strategyunique challenges

• Performance improvement through competition
  ensuring deep markets and reducing transaction
  costs.
• Performance improvement through enhanced autonomy
  creating incentives for managers to want to
  manage for results establishing real
  accountability

9
A quick aside Measuring and Performance

• Frequent assumption monitoring per se yields
  improved performance.
• That which gets monitored gets done.
• Key question how does monitoring/measuring act
  to improve performance.
• Importance of interest in monitoring results

10
Performance Budgeting

• Sub-set of performance management
• Definition Performance Budgeting procedures to
  enhance link between spending and
  outcomes/outputs through the use of formal
  performance information.

11
Long History

• Initial efforts can be traced back in the U.S. to
  turn of the 20th Century
• First serious efforts 1960s U.S. (PPBS) and
  Sweden.
• Now commonplace
• 70 of OECD countries include performance info in
  their budgets
• 40 have measures that distinguish between
  outputs and outcomes

12
Traditional verses Performance Budgeting
Traditional Budgeting Performance
Inputs as ends in themselves Relationship between inputs and outputs
Changes in inputs at the margin Changes in inputs and results for program
Divorced from planning and management Integrated with planning and management
Budgeted resources Costs
13
Types of Performance Budgeting

• Ex ante targeting
• U.K. Public Service Agreements U.K. Public
  Service Agreements
• Output-based
• New Zealand output-purchase
• Ex poste linkages
• U.S. Program Assessment Rating Tool (PART),
  Performance Management Agenda (PMA)

14
Challenges associated with ex ante and ex poste
linkage

• Ex Ante translating expectations of performance
  into performance
• Ex poste managing the burden of evaluation in a
  process that does not create excessive conflict
  within the state administration

15
Issues in Performance Bugdeting

• Establishing a program structure
• Identifying useful indicators

16
Program structure

• Fundamental to the dynamics of improved
  performance
• Groups activities around a core objective
• Groups costs associated with core objective
• Not trivial
• 10 years after the start of GPRA, fully 50 of
  programs in U.S. could not be evaluated due to
  the absence of clear objectives.

17
Principles of Program Design

• One program one objective
• Hierarchical structure program
  sub-program-activities-projects.
• Size appropriate for efficient management
• Clear connection between resources used and
  outputs produced (and outcomes).
• Capture all related activities integrate
  capital and recurrent spending

18
Principles (2)

• Establish accountability for the outputs of
  programs, sub-programs, and activities.
• Responsibility for implementing each program
  aligned with a single vote in the budget.

19
Keys to Success in Establishing Program Structure

• Establish clear rules to guide program
  identification and the level of sub-program and
  activity aggregation.
• Align programs and organizational structure of
  government.
• Programs and their outputs need to be designed
  considering the informational resources of the
  government.

20
Program Structure not just about grouping current
activities

• Program Structure integrating design,
  management and accounting.
• Strong implications for accounting, financial
  reporting, internal auditing, and external
  oversight.
• Strong implications for the role of line
  ministries and central ministries, such as Min
  Fin.

21
Identification of indicators

• Yes, it is a problem.
• Not the core problem
• Availability of resources
• Other countries, experienced practitioners

22
Results and Implications for design

• Widespread belief Performance management does
  not work.
• Where do we look for results.
• Inter-sectoral allocations
• But maybe, we should look instead at
• Intra-sectoral allocations
• Intra-program re-allocations.

23
Evidence of impact of performance info on
allocation

• Broaden out allocation to not only refer to
  central processes.
• Look at papers in the session
• Australia
• Harry Hatry local examples
• Look at references in the paper

24
Performance Improvement

• Linked to
• Better calibrated allocative process
• Better designed programs
• Managed in an environment that demands
  performance.