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Unformatted text preview: to produce the long­term desired results in the first year of its inception Must build a Performance Based Management System 67 Management Tool Performance budgets focus on missions, goals, and objectives to explain why money is being spent and provide a way to allocate resources to achieve specific results PBB is intended to be a management tool for program improvement, not a “carrot and stick” methodology used to “punish” departments for not meeting goals 68 CAUTION! One of the greatest mistakes in Performance Based Budgeting is to make simplified assumptions based on unrefined results and then apply a system of rewards and punishments based on them Such an approach frequently yields adverse program impacts 69 Unintended Consequences If PBB used as a reward and punishment system, how do you ensure that reducing a budget by, say 5% for poor performance, doesn’t reap a future 20% decrease in future performance? How do you ensure you’ve considered all factors that may have affected the decline in performance? 70 Potential Flaws Incorrect assumptions or conclusions Police: Arrests are up; we gave you more money, what’s wrong? Police: Arrestsare down, we gave you more money, what’s wrong? Do more arrests mean better police work, more crime, less crime, better crime prevention, or less police work? 71 Example An effective Police Department deters crime, how does one measure “deterred’ crime? “Police arrests are down 5% from last year so, under Performance Based Budgeting, we should reduce the Police budget by 5% until they improve their results” Such a simplistic approach fails to account for the success of crime prevention efforts and community policing, therefore, punishing good performance 72 Performance Measurement 73 Performance Measurement The regular systematic collection, analysis, and reporting of data that tracks resources used, work produced, and whether specific outcomes were achieved by an organization Note: Measurements are only meaningful to the degree that they are a basis for strategic and operational decision­making 74 Performance Measurement Performance Measurement should: Be based on program goals and objectives that tie to a statement of program mission or purpose Measure program outcomes Provide for resource allocation comparisons over time Measure efficiency and effectiveness for continuous improvement Be verifiable, understandable, and timely 75 Performance Measurement Be consistent throughout the strategic plan, budget, and accounting and reporting systems over time Be reported internally and externally (Federal grants do and GASB may soon require it) Be monitored and used in managerial decision­making processes 76 Performance Measurement Be limited to a number and degree of complexity that can provide an efficient and meaningful way to assess the effectiveness and efficiency of key programs Motivate staff at all levels to contribute toward organizational improvement 77 Performance Based Budgeting (PBB) 78 The Basics of PBB Objectives, Performance Measure, Linkage Accountability Objectives­Agencies should develop strategic plans of what they intend to accomplish. These plans should contain objectives based on outcomes the public values Performance Measure­Based on their strategic plans, agencies should develop specific measures of outcomes that can be used to determine how well that agencies are meeting the objectives. Example include student test score for education programs, mortality rates for health programs79 The Basics of PBB Linkage­ objectives and performance measures are integral parts of budgetary process. Appropriations are linked to agencies result : how well they are meeting their objectives as indicated by performance measure. Accountability­Agencies are responsible for and held accountable for outcomes. Budget proposals and reports will stress outcomes, not inputs. Because accountability is now based on what agencies accomplish, agency managers are given greater freedom in how resources are 80 allocated to address agency objective. Performance­based Budgeting (PBB) Performance­based budgets focus on “return on investment”—that is, what do we get for our investment of resources? Basic service level (or continuation of basic services)? Increased services (more services to same recipients or expansion of same services to more recipients)? Better (higher quality) services? More efficient services (cost savings in service delivery)?...
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