Performance Budgeting for State and Local GovernmentFirst published 2011 by M-E. Sharpe Published 2015 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 711 Third Avenue, New York, NY 10017, USA Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright © 2011 Taylor & Francis. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers, Notices No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matier of products liability, negligence or otherwise, or from any use of operation of any methods, product contained in the material herein. instructions or ideas Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should. be mindful of their own safety and the safety of others, including parties for whom they have a professional responsibility Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Kelly, Janet M. Performance budgeting for state and local government / by Janet M. Kelly and William C. Rivenbark.—2nd ed. il references and index. ISBN 978--0-7656~2393-S (hardcover: alk. paper)—ISBN 978-0-7656~2304~2 (pbk.: alk. paper) 1, Budget—United States—States. 2. Program budgeting—United States—States. 3. Local budgets—United States. I. Rivenbark, William C. Il. Title. 112053.A1K45 2010 352.4°82130973—de22 2010018896 ISBN 13: 9780765623942 (pbk) ISBN 13: 9780765623935 (hbk)Contents Preface 1. Redefining Performance Budgeting The International Experience Federal Government State Government Local Government Redefining Performance Budgeting Plan of the Book Notes 2. The Lineage of Performance Budgeting Public Administration and Performance Budgeting Budgeting Begins in the City Machine Politics The Progressive Era The New York Bureau of Municipal Research Performance Budgeting Emerges Budget Process Reforms The Leadership Factor Is Performance Budgeting a Theory? Conclusion Notes. 23 24 27 30 31 36 39 45 46 49 49vi ConTENTs 3. Planning for Performance Strategic Planning Balanced Scorecard Citizen Perception and Service Satisfaction Citizen Engagement in Performance Measurement and Reporting Conclusion Notes. 4, Performance Measurement Program Planning Challenges of Performance Measures Using Performance Measures Performance Verification Conclusion Notes. 5. Efficiency Historical Overview Department, Program, or Activity Calculating the Input Calculating the Output Barriers to Efficiency Conclusion Notes. 6, Benchmarking Benchmarking for Decision Making Process Benchmarking Corporate-Style Benchmarking Targets as Benchmarks Comparison of Performance Statistics as Benchmarks Leadership for Benchmarking Conclusion Notes. 7. Performance Budgeting Budget Development Budget Implementation 53 57 3 78 84 85 89 OL 98 102 106 M1 113 115 116 119 120 124 127 130 130 133 134 137 139 142 156 157 158 160 163 174Contents vii Budget Evaluation Traditional versus Performance Budgeting Processes Conclusion Notes - Sustainable Performance Budgeting Capacity for Performance Budgeting Elements of Success Formula for Failure Conclusion Notes. Appendix A: Residential Refuse Collection Appendix B: North Carolina Benchmarking Project Index About the Authors. 217 231 243aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Redefining, Performance Budgeting Innovation guru Paul R. Williams theorized a phased progression to in- novation maturity and the innovation’s impact on organizational culture.! At the first level, the culture is suspicious of the innovation and seeks to minimize risk. At the second level, the culture recognizes some value in the innovation but lacks the systems to implement it. At the third level, the culture becomes more tolerant of the risk of innovation, and systems are developed to implement it. At the fourth level, the culture encour- ages risk taking as trust in the innovation grows. At the fifth and final stage, the culture moves from adoption of the innovation to collaborative improvement on it. Where is performance budgeting on this continuum? The concept of allocating resources to programs that are efficient and effective goes all the way back to nascent bureaus of municipal research at the beginning of the twentieth century.’ Practitioner’s guides to perfor- mance measurement can be traced back to the mid-1970s.* But the current roots of a performance-based approach to allocation decisions go back to the New Public Management (NPM) movement beginning in the 1990s The movement's foundational assumption was that the public sector was insufficiently accountable to the public for the way its tax dollars were being used and lacked the commitment to efficiency and effectivenes found in the private sector. A few dissenters pointed out that no research supported the assertion that the private sector was more accountable to its customers than the public sector was to its citizens. In other words, private sector values do not necessarily make for a strong civil society, 3aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.REDEFINING PERFORMANCE BUDGETING = 7 effective programs and recommended decreases for programs judged less effective.” Norcross and Adamson sustained that finding in their study of 973 programs in the OMB budget proposal for FY 2008, finding that more effective programs were more likely to enjoy budget increases and less effective programs were more likely to see budget decreases.?! To explain PART’s success in relation to other budget reforms that were not considered so successful (program budgeting, zero-based budgeting, GRPA), observers noted that PART’s development by OMB provided a direct link to the executive budget, and the subsequent institutionalization of performance data contributed to the success of the program.”? Oth- ers point out that PART was adequately funded, built on the legislative framework of GRPA, and explicitly involved Congress in the deriv ation of performance measures and use of performance results.2* Congres- sional involvement did not equate to consensus. Mullen (2006) noted that a significant challenge lay ahead for agencies, OMB, and Congress to define agreed-upon program outcomes and reduce complexity to a consensus bottom-line rating.” Despite these positive results, especially in contrast to GRPA, PART. is hardly a model performance budgeting framework. Many agencies rely on measures that are deemed inadequate (40 percent were deemed inadequate in 2005), and nonperformance measures like purpose, plan- ning, and management evidence a stronger correlation with funding than results.” State Government Ten years have passed since performance budgeting was adopted in forty- eight out of fifty states,?° but only twenty-nine states had implemented performance budgeting and the implementation process was sometimes limited or incomplete.” Moreover, performance budgeting did not sig- nificantly change how resources were allocated after implementation.”* None of these findings are surprising, as it takes time for state and local governments to move from a commitment to performance budget- ing to the integration of performance budg: into their administrative systems. And because much of state spending is driven by legal mandate, non-incremental shifts in allocation attributable to performance budget- ing would be unexpected. However, Crain and O’ Roark (2002) found that the presence of perfor- mance budgeting did have an impact on total state spending. Specifically,aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.ReberINING PerrorMANcE Bupcetinc 11 of outcome measures, particularly intermediate outcome measures like citizen satisfaction, and overall progress with meaningful performance measurement.*° Melkers and Willoughby reported that in a survey of forty-seven counties and 169 cities almost half of the respondents reported that all departments used performance measures, and 20 percent reported that at least half their departments used measures.*” Overall, they concluded that local governments have increasingly shifted from easy-to-measure output indicators to indicators of service results or impacts. Of particular concern here is the local governments’ responses to questions about the use of performance information for budgetary decision making. “Between two-thirds and three-fourths of all respondents rated these particular mea- sures as ‘not important’ or ‘somewhat important’ anywhere in the budget cycle. When measures where used, they were used more often in budget development, slightly less in executive deliberation, and considerably less in legislative deliberations and budget execution.”* So much of the survey literature on local government use of perfor- mance measurement has been focused on counting and forced-choice selection of uses of performance measures that we are not left with the depth of understanding that has been offered in the state analyses. While case studies have their limitations, it is instructive to review in some detail the work on six U.S. cities that were on record as having launched significant performance measurement systems.” They were Baltimore, Maryland; Des Moines, Iowa; Phoenix, Arizona; Portland, Oregon; San Diego, California; and Worcester, Massachusetts. Chosen either for the sophistication or comprehensiveness of their systems or their innovation in citizen engagement in the budget process, Sanger found that context mattered most in understanding outcomes. That is, the history and culture of each city were so powerful that no one element was identifiable as a success factor across the cities except the presence of a strong champion for performance measurement in a position to influence its use. The impediments to performance measurement were more predict- able. Good performance measurement systems are costly to develop and may threaten managers who are concerned that they are accountable for outcomes they cannot control. The temptation to manage negative results is always present, For that reason, select measures may be tangentially incorporated into the budget process. Sanger concluded, “the development, maintenance and use of performance measurement that is meaningful, comprehensive, specially when results are communicated to citizens.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.REDEFINING PERFORMANCE Bupcetinc = 15 performance budgeting. We then discuss some of the more recent critical periods when performance budgeting was adopted and discarded by the various levels of government in the United States. Infrastructure Chapters An infrastructure built without a plan cannot be expected to serve the future growth and development needs of a government well, and a per- formance infrastructure without a plan cannot serve the management needs of a government well either. Chapter 3 is devoted to planning for performance, the first step toward successful performance budgeting. Strategic planning is the first step toward achieving the critical align- ment of agency and department goals with organization-wide goals. This is important, because there is no equivalent of Adam Smith’s “guiding hand” in performance budgeting. Program optima simply do not ag- gregate to system-wide optima. Subdivisions of the organization must recognize that their objectives should support the wider organizational objectives and must align their objectives accordingly. Therefore, in this chapter we present the role of the balanced scorecard as a method of helping public organizations align their agency and department goals with organization-wide goals, which includes the customer perspective. Because more state and local governments are engaging citizens for planning and performance purposes, Chapter 3 also contains a major section on citizen perception and service satisfaction. The second step in building an infrastructure for performance budget- ing is deriving meaningful and reliable measures from aligned objectives. Chapter 4 is concerned with identifying measures from the program's mission, goals, and objectives and allowing these measures to provide feedback on the success of services and activities. After confronting several of the impediments that surround measures (perverse incentives, proxies, and managerial control), we describe how governments are us- ing performance measures for service improvement and identify some factors that make data-driven service provision decisions more likely. We conclude the chapter with the need to audit performance measures for accuracy and reliability. In Chapter 5 we tackle the thorny issue of efficiency and the nature of cost. The budget is a multipurpose policy document, but cost dominates. How cost information is presented frames the decisions that surround it. Cost is the root of most efficiency measure: which are simultaneouslyaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.REDEFINING PERFORMANCE BupceTINc = 19 systems. Surprisingly, the list is short and widely applicable across all jurisdictions. We illustrate the pitfalls of performance budgeting with anecdotes that range from funny to tragic and encourage all organizations that may be using the text to develop or improve their systems to take note of the pitfalls, even as we exhort them to build the infrastructure required for performance budgeting and fully integrate performance into their budget process. Notes |, Paul R. Williams, The Innovation Manager’s Desk Reference. See hitp:// www.lulu.com, 2009. 2. Frederick C. Mosher, Basic Documents of American Public Administration, 1776-1950. New York: Holmes and Meier, 1976. 3. Harry P. Hatry ct al., How Effective Are Your Community Services? Procedures for Monitoring the Effectiveness of Municipal Services. Washington, DC: The Urban Institute and the International City/County Management Association, 1977. 4. Rita Mae Kelly, “An Inclusive Democratic Polity, Representative Bureau- cracies, and the New Public Management,” Public Administration Review 58.3 (1998): 201-8; Robert B. and Janet V. Denhardt, “The New Public Service: Serv- ing Rather than Steering.” Public Adminisiration Review 60.6 (2000): 549-59; H George Frederickson, “Painting Bull’s Eyes around Bullet Holes,” Governing 12.10 (1992): 13 5. Barry Bozeman, “Public-Value Failure: When Efficient Markets May Not Do,” Public Administration Review 62.2 (2002): 145-61 6. Janet M. Kelly and David Swindell, “A Multiple-Indicator Approach to Mu- nicipal Service Evaluation: Correlating Performance Measurement and Citizen Sat- isfaction across Jurisdictions,” Public Administration Review 62.5 (2002): 610-21: Janet M. Kelly, “Citizen Satisfaction and Administrative Performance Measures: Is There Really a Link?” Urban Affairs Review 38.6 (2003): 855-66. 7. Christopher Pollitt and Geert Bouckaert, Public Management Reform: A Comparative Analysis. Oxford: Oxford University Press, 2000. 8. David N. Ammonsand William C. Rivenbark, “Factors Influencing the Use of Performance Data To Improve Municipal Services: Evidence from the North Carolina Benchmarking Project,” Public Administration Review 68.2 (2008): 304-18. 9. Mickatrien Sterek, “The Impact of Performance Budgeting on the Role of the Legislature: A Four-County Study.” International Review of Administrative Sciences 73.2 (2007): 189-203. 10. Irvine Lapsley, “New Public Management: The Cruelest Invention of the Human Spirit?” Abacus 45.1 (2009): 1-21 11. Ibid. 12. Mi el Power, The Audit Society: Rituals of Verification. Oxford: Oxford University Press, 1997; Michael Power, “Evaluating the Audit Explosion,” Law & Policy 25.3 (2003): 185-202 13. Lyndsay Moss. “8 Minutes: The Target More Important Than Life or Death,” The Scoisman, December 17, 2007.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.2 The Lineage of Performance Budgeting, The general idea of performance budgeting surfaced when the field of public budgeting emerged almost 100 years ago. The concept flickered after the Great Depression and then returned in earnest after World War II. In the 1950s, some leading thinkers in public administration described the actual budget process of government and pointed out the mismatch between theory and practice. Performance budgeting was one of the casualties of this “realism” period. The modern reintroduction of performance budgeting traces back to roughly the mid-1990s. How long will this latest version of performance budgeting last? No one knows for sure, but before you conclude that performance budgeting is just another “flash in the pan,” let us affirm that every major budget reform move- ment has lasting impacts even when the next, new thing has overtaken it. Because it advocates using data analysis to link inputs (expenditures) with outcomes (results), performance budgeting is a concept with stay- ing power. We believe that the current iteration of performance budgeting has greater staying power than the one fifty years ago because it is an infor- mation-driven reform, and information technology is widely available today to every government, regardless of size. Still, we need to examine the reasons why performance budgeting may be a fragile reform. Our political system allocates resources based on values, not administrative performance. Attempts to force a rational framework on a value-based system is doomed to fail, and should fail, because it is Fundamentally un- democratic. Second, performance budgeting may not have enjoyed a fair 23aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tur Lineace of PerrorMANcE Bupcetinc 27 during periods of public demand for government action. Budget officers cannot operate in a closed budget system, immune to the political envi- ronment, any more than elected officials can. Therefore, politics cannot be separated from financial administration because Americans demand open systems. Citizens prefer a government that is both responsive and efficient. The fact that citizen preferences may sometimes be contradic- tory does not mitigate the necessity of respecting them. Our history of budgeting suggests that reform has been driven more by the need for responsiveness to public opinion than to advances in analytical techniques that would facilitate efficiency-based decision making. This paradox of budgeting, the public demand for both responsiyenes and efficiency, emerged at the same time as the idea of budgeting back in the early twentieth century. Even as the founding fathers of public budgeting argued for keeping the budget value neutral, they brought their own values about the dichotomy between politics and adminis- tration. Yet when there is a policy crisis, the budget does not separate politics and administration. It merges them to achieve a response to the crisis. Even when there is no policy crisis, the budget brings politics and administration together. The separation of the political function and the administrative function of government was the founding assumption of the field of public budgeting, and the way that the professionalization of public budgeting was sold to the public. Budgeting Begins in the City America’s transformation from an agrarian economy to an industrial economy in the nineteenth century brought people to the cities to work. It was in those cities that we really began our experiment with modern government; budgeting for service provision therefore started at the level of municipal government rather than federal or state. As migrants and immigrants moved to the cities to take factory jobs, municipal govern- ments were left to deal with matters practical and political. One of the first practical matters was moving the merchandise pro- duced by the factories to consumers. Getting merchandise from one harbor to another was a relatively simple matter, but getting merchandise from the harbor to inland locations where the buyers were located was considerably tougher. Municipal governments could notthink of a way to recover their cost for road construction, which amounted to clearing away tree stumps and rocks. Sometimes shopkeepers paid for their own roadaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tue Lineace or PerrorMANce Bupcetinc 31 the field of public administration, Frank Goodnow, saw the effective representation of the working class and the emergence of a professional administrative class as desirable.° Political reform such as nonpartisan elections would bring an end to the political machines, and administra- tive reform would produce decisions in the public interest. This separa- tion between politics and administration was embodied in the creation of the National Municipal League in 1894 and its Model City Charter of 1916. The New York Bureau of Municipal Research The originator of modern public budgeting, The New York Bureau of Municipal Research, is considered one of the most noteworthy reform institutions of the Progressive era. Like the National Municipal League, bureaus of municipal research were organizations formed by citizens with the goal of local government reform, or, as Jane Dahlberg describes, “to get good men in government.” The New York Bureau of Municipal Research, incorporated in 1907, was the first of its kind, Its founders were Henry Bruere, director, Frederick A. Cleveland, technical director, and William H. Allen, secretary, whose duties included publicity and fund- raising. Cleveland and Allen held doctorates from the Wharton School of Business at the University of Pennsylvania. Bruere had a bachelor’s degree from the University of Chicago and a track record as a social reformer. Their relationship was sometimes tense, but cach brought to the bureau some talent essential for the kind of lasting impact they would have on government and public finance. The New York Bureau identified the following purposes for its work: 1) to promote efficient and economical government, 2) to promote the adoption of scientific methods of accounting and of reporting the details of municipal business, with a view to facilitating the work of public offi- cials, 3) to secure constructive publicity in matters pertaining to municipal problems, 4) to collect, 5) to classify, 6) to analyze, 7) to correlate, 8) to interpret, and 9) to publish facts as to the administration of municipal government.? The bureau did not create the concept of the budget; private businesses had been reconciling accounts for years and calling the result a budget. What the bureau did was to take the practice of accounting, modify itaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tue Lineace or PerrorMANcE Bupcetinc 35 world of budget reform, before one citizen could speak authoritatively to another on a matter of public concern, he or she first had to consult the budget for relevant information.” The budget ultimately emerged as an instrument that facilitated, ratio- nalized, and legitimated the expansion of government. It was not intended primarily to constrain government expenditures or to force hard choices about distributing services. On the contrary, by identifying waste and distinguishing “legitimate” programs from graft, budget reform would enable an activist government to expand to meet all true social needs as defined by the budgetmakers.! The New York Bureau of Municipal Research deserves so much atten- tion because it changed the way we talk about government and established the budget as the document of accountability. Many attribute the federal budget reforms following the 1910 Taft Commission on Economy and Efficiency to ideas planted by the bureau. Frederick Cleveland chaired the Taft Commission, and its report on the executive budget reflected the bureau’s position on the executive's responsibility for administration and recommended an executive-level department, Bureau of the Budget, to produce and implement the federal budget.” The Taft Commission report described the first unified federal budget, bringing expenditures for all federal operations into one document and putting responsibil- ity for that document under the executive’s control. Congress fiercely resisted this relocation. A decade later, Congress passed the Budget and Accounting Act of 1921, which increased congressional control over federal appropriations. World War I redirected public attention from the Progressive agenda, for obvious reasons, but Progressive-era ideals have never lost their ap- peal. The confidence in science and rationality to lift the public interest above partisan politics remains constant, even as public support for the men and women in the bureaucracy who bring those skills to policy- making wavers. The enthusiasm for a science of administration that developed during the Progressive era of public administration was not really driven by public demand for a more activist government, but by an appetite for reform fueled by a suspicion that public dollars might be wasted, or worse. The New York Bureau of Municipal Research's system of line-item expenditures was conducive to cost control and re- sistant to trickery, and so it endures to this day, even though the process reforms we are about to describe have expanded the budget’s functionaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tue Lineace or PerrorMANCE Bupcetinc 39 for which we have special fondness as, seventy years later, we define performance budgeting as a management system. Postwar public admin- istration was seeking an identity separate from private administration, and Luther Gulick was advancing the cause by defining what it is that managers do. Gulick believed the division of work that had made Henry Ford prosperous could be used to realize efficiency improvements in public administration that would advance the public interest, consistent with the reform agenda of the Progressives. Gulick’s concern with the separation of politics and administration, a Progressive-era article of faith, is revealed in his writings on the nature of the managerial function. As Dr. Frank Goodnow pointed out a generation ago, we are faced here by two heterogeneous functions, “politics” and “administration,” the combination of which cannot be undertaken within the structure of the administration without producing inefficiency.” As one of the elements of Gulick’s POSDCORB (planning, organiz- ing, staffing, developing, coordinating, reporting, and budgeting), the budget function included detail of the activities still associated with budgeting today—fiscal planning, execution, research, accounting, and auditing. Gulick can be credited with an early description of the modern budget office. Budget Process Reforms We begin with a quick review of the “modern” period of budget reform with two ideas firmly planted in public administration: (1) The budget should perform the control and oversight function first, but it also can be used to implement management reforms that fundamentally change outcomes in a way that advance the public interest. (2) The appropriate way to reform the budget process is to add more rationality to allocation decisions, usually by adapting whatever science methods are popular at the time to the budget process. Modern presidents still use the select committee of “experts” as a vehicle for achieving their desired budget reforms. Some patterns in the use of these committees trace back to the Brownlow Committee and the Hoover Commission. First, these commissions claimed independence and neutrality, though each would offer recommendations that were in concert with the president’s budgetary priorities. Second, they helped align administrative budget practice with popular opinion about the roleaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tue Lineace or PerrorMANcE Bupcetinc 43 The epitaph for ZBB at the federal level was not particularly laudatory, though Carter and the OMB hailed it as a success. Preparation of three budgets took more agency time than preparation of one, and the two alternatives were simply a percentage increase and/or decrease over the current budget. Budget justification replaced budget preparation as the dominant activity. It was impossible to isolate single goals for agency activities, and interaction effects among activities made considering the budget for any activity without regard to the others questionable. The amount of paperwork was significantly increased under ZBB, and there were very few changes in budget outcomes as a result of it. Reagan aban- doned it immediately upon taking office, but he kept one feature of ZBB, the multiple budget formats. Now the emphasis shifted to cost cutting, and the relevant spending categories were, appropriately, the reduction budget, the maintenance budget, and the agency request budget, Cutback Budgeting President Reagan had an answer to the economic woes of the 1970s: government is not the solution; government is the problem. Reduce the size of government, and you reduce the size of the problem, Reagan’s committee on reorganization, the Grace Commission, reflected the president’s diagnosis. The Grace Commission Report was filled with examples of government inefficiency and unfavorable comparisons of government operations with the private sector. Critics would note that many of the examples were wrong or misleading,” ‘ommendations the commission made in a series of reports spanning two years were never implemented. The Grace Commission’s effort was not necessarily considered a failure by the Reagan Administration, however, as it helped cement the public opinion that government is wasteful and inefficient and legitimated Reagan’s position that a weaker public sector would strengthen the private sector. Under cutback budgeting, the role of the budget office changed again. Its focus did not revert from a programmatic one back to the institutional “no” to new expenditures but changed instead to actively targeting potential cost savings. As Behn described, cutback budgeting involved examining the base budget for potential cuts, putting programs and their advocates in competition with each other for existing resources.*! The process of separating mandatory spending (i.c., transfer payments to individuals) from discretionary spending (i.c., spending for programs or and most of the ree-aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tue Lineace or PerrorMANcE Bupcetinc 47 In other words, we were not making progress toward getting the politics out of budgeting and never would so long as we remained se: © to public preferences for programs and services. Verne Lewis's 1952 response reflected the administrative environment of the time. The problem, Lewis. asserted, is not that we lack theory but that we lack facts. “It canbe shown, I think, that the problem in government, so far as it exists, arises out of a lack of firm numbers rather than out of the lack of a method.” It was in this era of confidence in rationality and science to bring about optimal decisions that Charles Lindblom’s 1959 essay appeared. Lindblom argued that what Key sought (a theory) and what Lewis found (better facts) were prescriptive, not descriptive. Policy, Lindblom said, is made at the margins, but not through the application of marginal utility theory. It is a system of successive limited comparisons among finite numbers of alternatives. Itmay be worth emphasizing that theory is sometimes of extremely limited helpfulness in policy-making for at least two rather different reasons. It is greedy for facts; it can be constructed only through a great collection of observations. And it is typically insufficiently precise for application to a policy process that moves through small changes. Lindblom asserted that we do not need more theory or more facts to make better decisions. We need to understand what we really do and seek ways to do it more strategically. He would make this case even more clearly in his later essay on “muddling through,” where he argued that describing what we actually do and trying to improve our processes offers public administrators both intellectual honesty and a path to im- prove outcomes.** Aaron Wildavsky advanced Lindblom’s argument by pointing out that bargaining and negotiation, not the application of science, determines public policy. Moreover, he asserted, the former is consistent with de- mocracy while the latter is not.*° In a 1964 budgeting text that still is relevant to modern public budgeting, Wildavsky described the theory of incremental budgeting based on this same concept. In practice, agen- cies receive small increases over their base budget, defined as what they got last year. The practice of incremental budgeting promotes stability and cooperative relations among budget actors; it is both descriptive and prescriptive.’ Incrementalism is permeable to the political system, which translates public preferences into policy outcomes. Other scholars questioned both the descriptive and normative value of the incrementalaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Tue Lineace or PerrorMANce Bupcetinc 51 3. E.O. Harper, F.A. Kramer, and A.M. Rouse, “Implementation and Use of PPB in Sixteen Federal Agencies.” In Perspectives on Budgeting, ed. Allen Schick, 91-102. Washington, DC: American Society for Public Administration, 1980. 34. Peri E. Arnold, “Reform’s Changing Role. 35. Allen Schick, The Capacity to Budget, 33. Washington, DC: Urban Institute, 1990, 36. Peter F. Drucker, The Practice of Management. New York: Harper, 1954. 37. Richard Rose, “Implementation and Evaporation: The Record of MBO.” In Perspectives on Budgeting, ed. Allen Schick, 107. Washington, DC: American Society for Public Administration, 1980. 38. Peri E. Arnold, “Reform’s Changing Role.” 39, Thomas P. Lauth, “Zero-Based Budgeting in Georgia: Myth and Real Perspectives on Budgeting, ed. Allen Schick, 114-32. Washington, DC: Amer Society for Public Administration, 1980; Peri E. Arnold, “Reform’s Changing Role.” 40. Steven Kelman, “The Grace Commis The Public Interest 78 (1985): 62-82. 41. Robert D. Behn, “Cutback Budgeting,” Journal of Policy Analysis and Man- agement 4.2 (1985): 155-77. 42. Ibid., 168. 43. David Osborne and Ted Gaebler, Reinventing Government: How the Entre- preneurial Spirit Is Transforming the Public Sector Reading, MA: Addison-Wesley, 1992, 44. National Performance Review, Creating a Government That Works Better & Costs Less. Washington, DC: Government Printing Office, 1993 Q. Wils 2 Public Administration,” Political Science and Politics 27.4 (1994): 667-73. 46. The National Performance Review was retitled the “National Partnership for Reinventing Government” in 1997. 47. James R. Thompson and Vernon D. Jones, “Reinventing the Federal Govern- ment: The Role of Theory in Reform Implementation,” The American Review of Public Administration 25 (1995): 183-99. 48. Donald F. Kettl, “Building Lasting Reform: Enduring Questions, Missing Answers.” In Inside the Reinvention Machine: Appraising Governmental Reform, ed. Donald F, Kett] and John J. Dilulio, Jr., 9-83. Washington, DC: The Brookings Institution, 1995. 49. Warren G. Bennis, An Invented Life: Reflections on Leadership and Change. Reading, MA: Addison-Wesley, 1993. 50. James Q. Wilson, Bureaucracy: What Governments Do and Why They Do It. New York: Basic Books, 1989. 51. VO. Key, Jr., “The Lack of a Budgetary Theory.” The American Political Science Review 34.6 (1940): 1137-44. 52. Verne B. Lewis, “Toward a Theory of Budgeting,” Public Adininistration Review 12.1 (1952): 47. 53. Charles E. Lindblom, “The Science of ‘Muddling Through," Public Admin- istration Review 19.2 (1959): 79-88. 54. Ibid., 87. 55. Charles E. Lindblom, “Still Muddling, Not Yet Through,” Public Administra- tion Review 39.6 (1979): 517-26. jon: How Much Waste in Government?”aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE = 55, plished with the creation of a strategic plan. The next step is to establish linkages to broad organizational goals. State and local officials use these broad goals for guidance in creating their own goals and objectives, providing the framework for their performance measurement systems. It should be noted, however, that not all goals and objectives at the program level are directly aligned with organizational goals. Programs have their own mission statements that must be supported with specific goals and objectives. Planning, therefore, requires a disciplined effort on the part of all public officials to acknowledge organizational and program direction when crafting meaningful goals and objectives. Step three requires state and local governments to focus budget deci- sions on performance results and outcomes. Because performance mea- sures are a derivative of program goals and because program goals are framed within organizational goals, results-oriented budget decisions help move the entire organization forward in the desired direction. However, these budget decisions are not made in isolation. Effective communica: tion with stakeholders and incentives to managers and line employees (steps four and five) are then used to make performance efforts relevant to the organizational culture. In essence, these characteristics help state and local governments overcome their historical tendency to use strategic planning as ameans to look professional while they continue to do what they are already doing.’ The GFOA encourages strategic planning for reasons beyond trans- forming the budget process. It also encourages the adoption ofa strategic plan in support of long-term financial planning, which is the process of aligning financial capacity with long-term service goals and objectives.? Research provides additional insight into the relationship between these two management tools. Public officials perceive that strategic plans are more effective when financial planning is used to determine the financial feasibility of proposed strategies and actions for plan implementation." Financial planning simply makes the strategic plan “real” when financial resources are attached, moving from abstract to reality. Public officials also are more likely to react to strategic plans when funding scenarios accompany them. Consider the case of the anonymous city of Big Bear (Box 3.1). Strategic planning can be used to move beyond simply documenting what a government is doing to documenting progress toward what the government wants to be doing, including how organizations are using planning in their performance budgeting programs. There are multipleaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE 59 Some organizations already have a vision, mission, and set of values in place. Others will have to create them. The vision is an external view, for example, what the community desires to be ten years from now. The mission is an internal view, which states the purpose of the organiza- tion's existence. A set of values is identified to provide guidance on how decisions are made. Common values may include integrity, stewardship, responsiveness, efficiency, effectiveness, and equity. Steps 4 and 5. SWOT. These steps require an organization to identify its strengths (S), weaknesses (W), opportunities (O), and threats (T). However, the order of the SWOT analysis is often different for strategic planning. Organizations begin with Step 4 of assessing the external en- vironment or reviewing the community’s opportunities and threats. The reason for beginning with an external environmental scan is the same for beginning with a vision statement. Where are the opportunities to realize the vision, and what threats could thwart success? Step 5 is the internal environmental scan to identify the organization’s strengths and weak- nesses. Part of the discussion will be how the organization’s strengths can immediately impact the vision and mission, and other discussions will be focused on how to improve the organization’s weaknesses to eventually impact the vision and mission. Step 6. Identifying Long-Term Organizational Goals. This step, iden- tifying and selecting long-term goals to guide the organization over the coming years, may be the most important of the process. Goals are the framework within which strategies are developed, funded, and imple- mented as required in Step 7. They are reviewed on an annual basis, typically as part of the budget process, and can be thought of as a way to shift the focus from rowing the boat to steering the boat.'? The core of the strategic plan is completed after the goals are identified. Step 7. Formulating Strategies to Advance Organizational Goals. This step may be conducted as part of the strategic planning process or may be part of the annual budget process. Either way, it represents an ongoing and dynamic process where agency and department heads identify and implement strategies for improving services and for making progress toward organizational goals. One of the most effective approaches to strategy development is to require annual work plans from agencies and departments as a part of the budget process. An annual work plan offers a connection between the strategic plan at the organization-wide level and the plans that support agency and departmental budgets. The reason that this connection is often blurred.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE 63 Table 3.3 Mesa County's Mission Statement and Outcome Areas Mission: In partnership with citizens, Mesa County will maintain and enhance quality of life by effectively providing community services that ensure public health, safety, and well being in a transparent and equitable way. Outcome Areas: Continue to efficiently and effectively protect and manage all public resources Continue to promote and protect public safety Promote economic vitality in Mesa County Continue to promote and protect public health and the success of all citizens Create well-planned and developed communities akon Source: Mesa County, Colorado, 2009 Budget. is the citizen attitude survey, where the county solicits citizen input on quality of life and county service issues. The third step is identifying “program drivers” and how they impact service delivery. Program driv- ers are factors like legislative, economic, and demographic changes that departments have little control over but still have to manage in budgeting for outcomes. The fourth step is a review of the organization’s mission statement and outcome areas (goals), which are located in Table 3.3. The county expanded its process in 2008 when it engaged citizens to help prioritize services within each outcome area, which helped guide how county commis Akey aspect of budgeting for outcomes is the county’s performance measurement system, where each department identifies its service de- livery programs and creates a limited number of outcome measures for each program. For example, the outcomes measures for the program of ‘ioners allocated resources to the five outcome areas. law enforcement in the sheriff's office focus on response time to priority one calls for service, the confidence of citizens as measured by the citi- zen attitude survey, and the utilization of data to increase office-initiated activities. Departments then try to “sell” their services during the budget process to one of the five “buyers” that represent the outcome areas of the county. The buyers, which are teams of employees, purchase services based on the dollar allocation provided by the county commissioners and program strategies to advance outcome measures. After appropriations outside of this process are made, internal service funds for example, the operating budget and capital improvement plan are presented to the board for approval.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.-s0ygu3 04 ae 3100101 eo ce E> &) E> = Se i a 2 GS wes 1 nN paaamons make: mae cee ig aes somes Ss cette) (aetna) REESE) tagmmin (nem) | potion So) See) ES) RES) ami) (a = S3AILDAraO NMOL SFAILIFdSYAd ‘eves funwuieo < seoqag edn < ain Aueno< ADALVALS NMOL sommsolid 21693815 pivog umMoL eujlo1e9 YON ‘yBnosogsIIIH 40} pazse109g peouelea z’¢ @n614aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE = 71. Innovation and Learning Quadrant The fourth quadrant, innovation and learning, was renamed by the gov- cerning board “develop personnel.” This perspective addresses the most important resource in state and local governments—the employees of the organization—and involves the hiring of qualified individuals, providing them continuous training and skill development and creating a positive work environment. An argument could be made that this quadrant alone makes the effort needed to implement the balance scorecard worth it, as human capital is often overlooked in state and local government plan- ning processes. Hillsborough identified three town objectives to support the quadrant ‘on develop personnel, including develop a skilled and diverse workforce; support training, learning, and growth; and enhance relations with other entities. The more interesting objective is to enhance relations with other entities. The town realized that skill development and training were sim- ply not enough for developing its personnel in a manner to supporta high- performing organization. This objective therefore promotes relationship building with other local governments and with nonprofit organizations to enhance workforce development in several ways. Employees become more knowledgeable of how other organizations provide similar types of services, which only improves their ability to manage initiatives like continuous process improvement. Employces also build networks that support collaborative arrangements between organizations for realizing economies of scale. Table 3.5 shows that fleet maintenance tracks the number of certifi- cations obtained by technicians as its measure for develop skilled and diverse workforce. The prior-year actual is 11, with a performance target of 24. Therefore, the town must be committed to providing the resources needed to have technicians attend the necessary training courses to re-~ ceive the additional certifications. Hillsborough did not stop at requiring departments to link their performance measurement systems with the balanced scorecard as shown with fleet maintenance. Departments are also required to submit mid-year performance reports to the govern- ing board to begin the annual budget process. The board members use this information to help make funding decisions on a department-by- department basis. An example of using the balanced scorecard to make a funding decision comes from the utilities department. The board funded. generators at several pump stations that lacked emergency stand-byaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE 75, “Hard” and “Soft” Measures of Service Performance The first issue to surmount is the relationship between “hard” indicators of service quality (quantitative performance measures) and “soft” indi- cators (citizen satisfaction). Managers often want to judge the validity of the latter by the former. Case studies do offer evidence that citizens can produce evaluations that approximate some objective standard of service quality. There is long-standing and well-established evidence, primarily coming from the urban policy literature, that citizens’ percep- tions and experiences affect their evaluation of municipal services. For example, citizen perception of police response time corresponded with actual response time as measured by police services (which is one of the more reliable measures of service quality).?* A comparison of city employees’ evaluation of street conditions with ci indicated that citizens could make accurate evaluations, especially zen evaluations when the multiple, specific dimensions of the services were presented to citizens.” Sources of Error in Citizen Surveys There are two general types of errors citizens might make in evaluat- ing service delivery. First, there are errors of attribution. A citizen may believe that a government is providing a service that it is not providing, ‘or he may believe a government is not providing a service when it is. Attribution error can occur in fragmented urban governments where services may be provided by a number of general purpose governments, special districts, or private contractors.” For example, a survey of the Detroit metropolitan area found that citizens frequently attribute service delivery to their city or township even when another jurisdiction or a private contractor provides the service.*' However, it is not apparent that the failure to identify the provider of a service leaves the citizen incapable of evaluating the quality of the service provided, so this is the less important of the two sources of error. The second type of error acitizen might make is assessment error. Here the citizen evaluates the quality of services in a way that contradicts some objective indicator of service quality, such as a performance measure. Some contend that this type of error is possible even when the respondent has had recent, personal contact with the service being evaluated. Many scholars of survey research believe that assessment error is the normaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE 79 enough for performance budgeting, as we will discuss, but the idea that a municipality cannot produce citizen-based measures without oversight from anon government organization is deeply troubling. To date, no evidence has been produced that (1) demonstrates that municipalities are unresponsive to their citizens and (2) that municipalities are more responsive when outside organizations produce performance measures derived by citizens. The GASB points to a body of research derived from citizen focus groups on performance reporting to sustain its recommendations. Indeed, citizen focus groups are important sources of insight and guidance for a wide variety of governmental decisions, most especially strategic planning. However, it is important to recall that citizens self-select into the focus group, and they are therefore comprised of the more aware, vocal, and civically minded individuals in the community. Just as the citizen survey must evaluate responses from all citizens regarding service quality expectations and experience, we are constrained to consider the information needs of citizens that have chosen a more limited role in local government, which is the vast majority of citizens in the locality. We risk poor decisions when we listen only to the voices that choose to speak and do not consider the preferences of those for whom the vocal may not speak. The Efficiency-Responsiveness Conundrum Despite all the cautionary statements about citizen-driven measures, citi- zens are a tremendous resource for state and local governments because they can help keep programs focused on service outcomes rather than rvice outputs. Consider the difference between what our universiti might count and what our students might value. Our universities keep track of how many courses we teach and how many students are enrolled in those courses. That is an indication of our workload or output. Our students, however, are not interested in our workload. They care about the quality of the instruction that takes place in the classroom and the usefulness of the information they receive to their career in government or business. To be fair, our universities also care about what happens in the classroom, as indicated by our teaching evaluations. But for planning purposes, our universities are more focused on whether or not there are enough classes to meet student demand and enough qualified profi to teach them, rather than on the evaluations of individual classes. Citizens, like students, tend to value responsiveness as much, or perhaps ors:aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.PLANNING FOR PERFORMANCE = 83 the goals associated with the 1995 strategic plan had been achieved. The city council subsequently adopted twelve new goals, and twelve teams were assembled to devise strategies for these goals, each with substantial citizen representation. Like the first effort, they surveyed around the twelve goals and found some encouraging results. Citizens were satis- fied with the quality of public safety and community assets such as parks and bridges and with the quality of service from city employees. They were least satisfied with the fairness of the city’s tax and fee structure, job quality, the state of the economy, and efforts to conserve energy and protect the environment.“ As before, the city’s ability to impact some of the twelve goals is very limited, but that did not cause Des Moines officials to reject them as unimportant. Rather, their approach has been to see what impact the city can have on some goals and to communicate their efforts and results to citizens in a handsome performance report featuring the work of local artists. Though the budget process includes citizen input on performance measures relating to the twelve goals, it does not present objectives or measures in the budget document.” What can we learn from the Des Moines experience? There are sey- eral valuable lessons common to many governments that are serious about including citizens in a comprehensive performance measurement program. First, a plethora of measures unlinked to a strategic plan are worthless inside and outside the organization. Second, citizen involve- ment in strategic planning is essential, though sometimes the most press- ing concerns of citizens lie in issue areas outside the jurisdiction. Third, transformation of performance measurement from outputs to outcome: is likely to be met with initial resistance because it challenges managers Fourth, citizen-developed per- formance measures are likely to have limited value, primarily because citizens don’t understand service constraints and tend not to stay engaged in the tedious work of learning them. Fifth, benchmarking programs like the ICMA efforts can show a state or locality how it ranks with others service providers, but templates that don’t reflect service objectives may have limited decision value. Sixth, properly conducted citizen surveys are excellent indicators of citizen satisfaction with service quality, which is both an outcome measure and a bellwether for existing and emerging service issues. Seventh, asking questions of citizens in the survey and sharing information that is relevant and credible in a form that is acces- sible may help increase overall citizen satisfaction with governmental responsiveness and accountability. Finally, the process is never over, to examine their service effectivenes:aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page 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that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.Depreciation of capital assets, 122, 123-124 Des Moines (Iowa) citizen representation in strategic planning, 80-83 performance measurement in, 11, Development, budget, 16-17, 163-174 Direct costs, 122, 124 Disclaimer, auditor's, 186 Discretionary spending, 13, 43-44 Distinguished Budget Presentation Awards Program, 119, 129, 161, 206 District attorney's office, performance measures in, 99-100 Dougherty, Michael J., 8 Dover (Delaware), budget requests in, 210-211 Drucker, Peter, 41 E Educational performance measures, 99 Efficiency defined, 117 vs responsiveness, 24-27, 79-83 Efficiency measures, 93, 115-130 tivity-based costing, 120 barriers to calculating and reporting, 127-130 and budget process, 117-118, 129-130 higher-order, 104-105, 115 historical overview of, 116-119 input calculations, 120-124, 121, 123 output calculations, 124-127, 126 output/input approach, 95-96, 119-120 and performance budgeting, 195-196 program-based costing, 120 to promote data use, 105, 115-116 shift to, 198 Emergency communications efficiency measures of, 124125 performance verification of, 108-109 Employees. See Workforce Evaluation, budget, 18, 183-191, 194 Extemal benchmarking, 133-134, 143 Extemal capacity, 203-204 INpEx F Fairfax County (Virginia), citizen participation in, 167-173, 170 Federal government and budget reform, 35, New Deal programs of, 36-37 performance budgeting research of, 6-7 Federal Trade Commission Act of 1914, 30 Financial audit auditor’s opinions, 186 auditor’s report, 185~186 of cost data, 150-151 external, 193, 194 internal, 193, 194, 195 overview of, 184, 194 steps in, 183-185 Financial planning, 55 Financial quadrant, in balanced scorecard approach, 70 Financial statements, 185, 186 Fire department, service delivery goals of, 92 Fiscal year, 185 Fleet services balanced scorecard for, 68, 69, 70-72 benchmarking data for, 135, 148, 150-151, 154, 155, 155 efficiency measures for, 105 and performance budgeting, 134-136 Flexibility, in budget implementation, 175 Florida, 8 Florida Benchmarking Consortium, 146 Food and Drug Administration, 26 Ford, Henry, 30, 39 Full-cost perspective, 123 Full-time equivalent (FTE) positions, 96 Functional classification system, 34 Fund balance, 176 Gainsharing, 104 Generally accepted accounting principles (GAAP), 127-128, 183, 185, 186, 189aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.238 Performance budgeting (continued) research on, 5-12 federal level, 6-7 international level, 5-6 local level, 10— state level, 7-10 staying power of, success factors for, 205 as theory, 46-49 vs traditional budget process. 191-193, 192, 193, 194, 195 Performance measurement, 89-113. See also Benchmarking; Efficiency measures and accountability, 90, 199-200 and citizen engagement, 78-84, 167 and citizen satisfaction, 74, 77, 78-84, o7 convenience siatistics as poor basis for, 89 explanations for adopting, 4 GASB initiative on, 91, 112-113 origins of, 3-4 problems with, 90, 98-102 causal fallacy, 90, 100-101 managerial control, 101-102 perverse incentives, 99-100 proxy measures, 90, 100 program planning, 90, 91-98 efficiency measures, 93, 95-96 measurable objectives, 93 mission statement, 91-92 outcome measures, 93,97, 99 output (workload) measures, 93, 94-95 productivity measures, 98 quantitative, 75 reporting of data, 108-109, 1/2, 112-113 and service delivery, 68, 69, 70 and strategic planning, 53-54. 55. 60-61, 63, 65 usefulness of, 90, 102-106, 115-116 verification of data, 90, 106-111 complexity of, 107 functional boundaries to, 109 INpEx Performance measurement verification of data (continued) and organizational changes, 107-108 and service dimension, 108 Texas model for, 109-111, 177 Performance monitoring budgeting, 213-215 statistical, 179-182 Performance verification, 106-111, 1/1 Perverse incentives, and performance measurement, 99-100 Pettijohn, Carole D., 8 Pew Center on the States, 62 Phoenix (Arizona), 11 Planning. See Strategic planning Planning-programming-budgeting system (PPBS), 40-41, 84 Plunkitt, George Washington, 33 Poister, Theodore H., 10 Police servi benchmark data on, 136, 137-138 itizen evaluation of, 73, 76-77 efficiency measure for, 119 performance measures for, 101 Political reform, 29-30, 31 Portland (Oregon), 11 POSDCORB (planning, organizing, staffing, developing, coordinating, reporting, and budgeting), 39 Power, Michael, 5 Practice of Management, The (Drucker), 4l President’s Advisory Council on Govemmental Organization, 41 Price Commission, 45 Prince George’s County (Maryland), Charter for Change, 139 surveys of, 76, 77 Privatization, of residential refuse collection, 126-127, 153 Process benchmarking, 133, 137-139 Product comparability, public sector, 74 Productivity measures, 98 Program Assessment Rating Tool (PART), 6-7 Private sector, customaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.This page intentionally lefi blankaa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.aa You have either reached a page that is unavailable for viewing or reached your viewing limit for this book.