 |
|
||
by John M. Kamensky
After the September 11th terrorist attacks, the conventional wisdom in Washington was that all this “managing for results” stuff will go away, that the Bush Administration now has more serious concerns. This, however, seems to be wishful thinking on the part of many.
In mid-October, a senior official in the Office of Management and Budget (OMB) concluded that “the first President with an MBA” has brought in a cabinet-level team that is “relentless” about better managing the government for results. It seems that the significant budgetary consequences of the terrorist attacks has redoubled the need for greater budgetary discipline. He said that OMB has been asked to develop a scorecard on each agency’s progress toward the goals laid out in the President’s Management Agenda, and that the first set of scorecard results will be sent to agencies along with their budget “passbacks” that go agencies in late November. These passbacks are OMB’s markup of the agencies’ proposed fiscal year 2003 draft budgets. Thereafter, the scorecard also will go to the President quarterly.
To tighten the link between performance and budget, President Bush sent legislation to Congress in mid-October that lays the foundation for agency performance-based budgets. The long-term goal, according to OMB, is to budget for the full cost of resources where they are used. The first step, reflected in this proposed legislation, is to have agencies pay the full costs of their staffs. The next steps, which will require additional legislation in the future, will be to fully allocate agencies’ administrative costs to the program activities they support, followed by allocating capital costs. As costs are attributed to where they occur, OMB will also begin to parallel budget program and activities with their outputs, and possibly realign agency budget accounts.
This is a mouthful, but what does this really look like in practice?
It might be useful to start by looking at state experiences, since they’ve been at this a lot longer than the federal government. In 1994, a General Accounting Office report examined how states use performance budgeting to better manage for results and concluded that results-oriented management systems “may lead to improved program effectiveness.” A more recent survey by several Georgia State University researchers found that 47 states say they’re doing performance budgeting.
While a number of states say they use performance information to inform their budget decisions, the most relevant set of state experiences for federal agencies to examine might be those of the State of Texas. Former Texas Governor Bush brought his budget director, Albert Hawkins, with him to Washington in a key position. Together, they have a clear idea of how the federal government’s budget might be better integrated with performance. They both won’t be satisfied with the usual “it can’t be done” answer, since they actually did it in Texas.
What led Texas to performance budgeting in the first place?
In the midst of a major financial crisis in 1991, the Texas Legislature reformed its budget process by appropriating funds around strategies and key performance targets, not by traditional line items. In addition to reforming the budget process, the legislature also created a strategic planning process covering a six-year period, with funding for two-year increments. The first statewide and agency-level plans were produced in 1993.
By the time George W. Bush became governor in 1995, the budget and planning systems – dubbed the “Strategic Planning and Budgeting System” -- were in place and operational. He increased the emphasis on the development of the statewide plan and actively encouraged agencies to link their plans to the statewide plan. For example, every two years he convened the agency heads to emphasize the importance of being committed to the process, rather than just complying. He personally conducted orientation and training for his agency heads to drive home the point.
In this training, he articulated the key framework where each agency’s budget is described as a series of components that link funding to the agency’s strategic plan. An agency may have more than one goal, each goal may have more than one objective, and each objective may have more than one strategy, output, and efficiency measure. But the budget is described in the context of how it supports the goals in the agency’s strategic plan.
What does the Texas performance budget look like?
The state appropriations bill contains about 2,700 key measures that have been enacted into law. For example, the Department on Aging’s goal is, in part, to “enable older Texans to live dignified, independent, and productive lives.” It has an outcome of older people living independently because of the services the department delivers. It sets a goal of 85 percent coverage. It then defines a strategy – a statewide locally-based network of services and benefits delivered by caseworkers, with 8,730 people receiving case management services at a cost of $256 per case.
The State’s Legislative Budget Board and the Governor’s Office of Budget and Planning, which together oversee state agency budgets, require quarterly reports on performance against the legislated targets. If they are off by more than 5 percent, an explanation is expected. In addition, before the Legislature convenes every two years, legislative budget staff work with the State Auditor and the Governor’s budget staffs to compile an assessment of agencies’ performance against their targets. These “report cards” go to the Legislature along with legislative staff recommendations for the agencies’ budgets.
Does it work?
The Lyndon B. Johnson School of Public Affairs is assessing how well the Texas Strategic Planning and Budget System works after being in place for a decade. Its preliminary assessment is that it has been successful in meeting many of its original objectives, in part by increasing accountability of agencies to both citizens and the legislature. Interestingly, a number of agency staff interviewed during the process felt that “strategic planning has become too policy-driven by the legislature, as opposed to customer-driven.” The report also concludes that the use of performance measures by legislators to determine budget allocations is sporadic and that the process is not sufficiently outcome-oriented. These are challenges common to most other states and countries that are attempting performance budgeting.
So, what might this mean for federal agencies?
It’s hard to extrapolate good ideas from one governing system to another, but you can at least see what’s in President Bush’s mind when he says he wants to integrate performance with budget, despite the limitations facing the Texas system. Ara Merjanian, formerly Governor Bush’s point person for performance budgeting, says “The approach the Governor took in Texas was to integrate the various accountability and decision-making systems into a seamless, self-reinforcing system,” that ties together planning, budgeting, appropriations, budget execution, performance reporting, and auditing. That’s an approach long championed by good government observers, and now has a champion in the White House.
###