Performance Information – Impacts on State Budgets and Government Management

March 1, 2012

Many state government officials have been thinking about and dealing with the use of performance information for a long time now.  Terminology for this topic differs – some call it performance budgeting, performance management, results based budgeting, zero base budgeting, performance informed budgets or evidence-based decision making. State budget officers have recently come together, through the support of the Annie E. Casey Foundation, to discuss the use of performance information in government decision making.  Some of the most significant challenges to the use of performance involve limited staff resources – this includes not having the time to gather data, develop strategies or make recommendations as to how to spend dollars on the most effective programs.  Another significant challenge involves ensuring that, in our democratic political system, the information on performance and effectiveness is actually used to inform the decisions as to where money is spent. 

Over many years, a great deal of excellent work on performance use has been done by academics, institutions and many hard working civil servants and government officials – so much work in fact that it’s too numerous to mention here.  Although I will highlight a report by numerous state and local organizations including the Government Finance Officers Association (GFOA) entitled, A Performance Management Framework for State and Local Government: From Measurement and Reporting to Management and Improving. This effort, I believe, provides great insight into the challenges and promises in using performance to inform decision-making and the management of government.  Since most additional revenue gets allocated to mandated services, many in government are talking more and more about how to use performance and data to determine the best places to use scarce resources.  In fact, as examples, Massachusetts Governor Deval Patrick issued an executive order February 14 calling on state agencies to publish two-year strategic plans that include goals and measurements to track progress.   California Governor Jerry Brown issued an executive order in December asking his Department of Finance to modify the budget process to increase efficiency and focus on accomplishing program goals.

To me, state officials thinking about the integration of performance information should start by “keeping it simple”.  The first step is to develop a mechanism for asking performance questions as part of the process.  Depending on the context – internal meetings, public meetings, legislative hearings, etc. – officials should specifically ask performance questions.  For example, officials should ask the head of the state health department, are vaccinations being provided for citizens?  Officials should ask for outcome data – ask the head of a jobs program, for example, are you finding people jobs?  Or with the health department, if you’re providing vaccines, is the disease declining? 

When I discuss performance with state officials I often encourage them to use performance information to make their case for the decisions they’re making – if you’re cutting a program because it’s less effective, show evidence to demonstrate that.  What’s just as critical is ensuring that senior officials -- along with all ranks of employees -- think about the outcomes and goals being pursued.  If state employees think they’re just processing a form, for example, they’ll treat the form in a routine manner.  When they find out the form is what gets drunk drivers off the road and thus saves lives, they know the goal to strive for – speed up the processing of those forms as much as possible.

Granted, the use of performance involves answering tough questions.  All levels of government have implemented some aspect of performance reporting at one time or another – but usually the efforts do not make sustained contributions to the ongoing debate about the use of public resources.  We’re often asked – which states do you say have done the “best job” – but its’ hard to answer with specific states since most states have at one time or another done a good job at implementing performance plans, or have done some aspects extremely well.  However, the success ebbs and flow with time and different elected officials.  Work in this performance topic area needs to continue.

Interestingly, during this last significant recession, states were rarely able to use their performance information.  When revenue is dramatically declining, officials report to us that cuts have to be made quickly.  There’s not a lot of time to analyze performance information and data.

Therefore, despite excellent past efforts, there is still a lot of work to be done in this area of performance. Regarding the use of performance, some of the questions that should be asked and examined further include:

  • Why is performance information often least used in the worst fiscal times?
  • How can officials become more comfortable using performance/effectiveness information to explain changes to programs?
  • What are the most effective ways to ensure performance information is collected adequately? What information is most useful?
  • What ways of presenting the information is most useful?
  • How can performance information help overcome the politics involved in budgeting?
  • How do you get questions of performance routinely embedded in the process – there are lots of examples of requiring performance information, but how do you make sure it’s actually used to make budget allocations?
  • In other words, how do you avoid a performance program from simply becoming checklists and rules to follow and make sure it’s one that actually gets the performance information to be used in decision making and management?

These are difficult questions to answer.  Developing the right strategy for using performance information in government decision making is a tough nut to crack.