Performance budgeting continues to be a big challenge for many states. Implementing an effective method of using information about the performance of state programs to influence how state tax dollars are spent has not proven easy. There seems to be some positive movement to new thinking on performance budgeting – especially based on learning from past performance budgeting projects. A good summary of these lessons learned was offered recently in a dynamic presentation by Gerhard Steger, the Budget Director for the Austrian Ministry of Finance, at an event hosted by the Pew Charitable Trusts in Washington, DC.
Steger, an energetic speaker, outlined Austria’s very ambitious and successful implementation of the use of effectiveness and performance measures to allocate resources through the nation’s budget. What struck me was how Austria’s experiences – and the lessons that country has learned – echo many of the lessons U.S. states have learned after a lot of “trial and error” with performance-based initiatives. The observations that Steger pointed out in his presentation will likely sound familiar to state budget folks from their own experiences with performance budgeting, such as:
- Agencies need to buy into performance budgeting processes. Agencies and departments will be reluctant to participate if they think that performance budgeting will be used simply as a way to take money from them. There need to be incentives for state agency and department staff to gather useful data and information about the effectiveness (or lack thereof) of their programs.
- True cultural change is necessary. Successfully implementing a performance-based budgeting process entails the gathering of meaningful performance data that can be analyzed and used to determine where money should be spent. For this process to work, a government-wide culture centered on performance and evidence-based policy is crucial.
- Staff training is critically important. When performance budgeting is implemented, all civil servants involved must be trained in the new processes. In Austria, they even provide in-depth training for legislators on how to use performance data and what questions they should be asking to truly understand how programs are spending funds.
- Leaders at the top must play a key role. The highest officials in government – Governors and legislative leaders – must be involved, and must signal to government departments that the use of performance is a high priority and that this information should influence how resources are allocated.
- Keep it simple! I personally feel very strongly about this and it’s been a mantra of NASBO staff for many years. Too many measures and overly-burdensome paperwork cause performance budgeting projects to collapse of their own weight. As Steger put it, “prevent monster bureaucracy,” while gesturing toward a huge stack of papers and explaining that if the process is too complex, no one will use it. Instead, focus on the highest priorities and core objectives.