USC INSTITUTE FOR PUBLIC SERVICE AND POLICY RESEARCH
- PUBLIC POLICY & PRACTICE JANUARY 2003 13
in public nance believe that the cardinal aim of PBB isaccountability. Performance information and data used inbudgeting holds public ofcials, especially program man-agers, accountable for service quality, cost-efciency, andprogram effectiveness. The focus for PBB is, once again, onresults, not simply inputs. Hence, governors, legislators,service or program recipients, and the public generally can determine accountability with a degree of certainty with the use of PBB methods, where this is not possibleutilizing traditional or line-item approaches. This ability toassess performance and hold managers accountable servesas a powerful incentive to ratchet up quality or positiveservice results.The implications of PBB to stir agency and program of-cials to meet or exceed performance expectations have,of course, two sides—one that “rewards” and the other that “penalizes.” With regard to “good” or “excellent” per-formance, rewards can be several. For one thing, agenciesor programs might be recompensed with additional or in-creased funding, or may be allowed to carry “saved” funds,due to efciencies, forward to the next scal year. Agen-cies or programs could also be absolved from burdensomepaperwork requirements, awarded some form of bonus,or perhaps even have agency responsibilities enhancedin some fashion. On the other side, penalties could behanded out to agencies or programs that perform poorly.This might include a reduction in funding or eliminationof a program altogether. It might additionally be cause for ordering a management audit or evaluation, transferringprogram responsibilities to another agency, or the ring of the agency director (Snell and Hayes, 1993, p. 4).
Uses of performance-based budgeting systems can be un-derstood in two ways. One way to make sense of the useof PBB is to speak broadly to the subject matter as it relatesto its primary aims. This would include PBB’s twin aims of improving decision-making and enhancing service delivery.The other way to understand the use of PBB would be toexamine its application or implementation among specicstates. This examination would allow for a grasp of PBB’suse in an actual or “hands-on” way. In this section, a brief discussion of these
will be presented with the purposeof gaining a more valuable comprehension of performance-based budgeting.
PBB Utilitarian Aims
Governments have pinpointed, according to the literature,two utilitarian aims that PBB readily strives to fulll. Theseaims are (1) improved decision-making, and (2) enhancedservice delivery (Epstein, 1984, pp. 6-7; Joyce, 1999, pp.600-601; Lee and Johnson, 1998, pp. 105-107).Public budgeting is essentially about making choices.To make better choices, decision-makers need qualitativeand complete information and data. PBB can provide thisthrough its various components or devices; e.g., the set-ting of goals and objectives, the prioritizing of these ends,and the measuring of performance levels (via the indicesof efciency and effectiveness).Pragmatically, and quite simply, measurement of perfor-mance assists government ofcials to assess “what” and “how well” a program is doing. For instance, what is Program X intended to do? Is Program X achieving these intendedends? Are Program X’s activities or operations cost-efcient? Asking and answering these and other similar questions will permit decision-makers to make wiser, more intelligentprogram, policy and spending determinations.Consider further, for example, the corresponding im-provement of the decision-making process with the addi-tion of differing levels or tiers of performance informationand data. Let’s assume that a state’s mental health agency wants to fund a program to treat individuals with alcoholand drug addiction. The rst budget tier of informationmight speak only to personal services, operating expenses,and assistance payments. A decision-maker (a governor, alegislator, a program manager, etc.) has little to work withhere—just broad expenditure classications. However, add
FIGURE 1Definitions of PBB Terms
These are the volume of resources used or totalexpenditures (costs) consumed to achieve a given output.
These are the quantifying of goods and servicesperformed or delivered to customers.
These are the indices that assess how wella program achieved its goals and objectives; e.g., percent of wetlandspreserved as a result of permit issuance; percent of inmates convictedof another crime after release, percent of placements successful after 30days, etc.
These are indices that assess or compare how much output was achieved per unit of input (costs); e.g. cost per com-plaint processed, cost per license issued, cost per prisoner incarcerated,etc.
These are indices that assess the level of effortrequired to carry out an activity; e.g., number of applications processed,number of inspections completed, number of miles patrolled, etc.
: Garsombke, H. and Schrad, Jerry. (February 1999). Performance measurementsystems: results from a city and state survey. From
Government Finance Review
. Chicago,IL: Government Finance Officers Association.