Implementing Performance‐Based Program Budgeting: A System‐Dynamics Perspective

Abstract

The article proposes a model for evaluating budget reforms that combines insights from budgeting, policy implementation, and system-dynamics literatures. System-dynamics modeling combines both quantitative and qualitative research techniques to provide a new framework for applied research; its use is illustrated using performance budgeting as an example. Applied to the implementation of Florida's performance-based program budget, the model identifies actions in the short run that will increase the reform's likelihood of success: providing clear communications; facilitative budget and accounting routines; reliable performance information. The model also identifies critical legislative behaviors that influence executive implementation: how the legislature in the long-run uses performance information to inform resource allocation and how it applies incentives or sanctions to programs that achieve or fail to achieve their performance standards. The legislature has the opportunity to use program reviews prepared by legislative staff to invigorate the executive branch's resolve to continue implementing the reform.Throughout the last century, state and local governments were laboratories for budget reform. Many reforms were heralded but never implemented; others were implemented initially but did not survive changes in administration. Others at least partially succeeded, only to be followed by still more reforms. The result is a landscape of hybrid budgets in which fragments of the latest budget reform are overlaid and integrated with the most useful parts of previous budget reforms.In 1994, the Florida legislature passed the Government Performance and Accountability Act (chapter 94-249, FS), requiring a statewide, phased-in conversion to a budgeting approach it called "performance-based program budgeting" (PB 2 ). Because Florida is one of only two states that apply budgetary incentives and disincentives for performance results (Melkers and Willoughby 1998), studying the state's experience should provide valuable insights. Judged against the prescriptions of rational budgeting theory, performance-based program budgeting would be given high marks as a good budget reform. PB 2 requires government spending to be classified by program; programs must have missions and objectives; and input, output, and

What Makes Organisations Measure? Hypotheses on the Causes and Conditions for Performance Measurement

“…They add among other things adequate information systems as a requirement for measurement capacity. De Lancer Julnes and Holzer (2001) and Grizzle and Pettijohn (2002) identified the commitment of resources as one of the factors for performance measurement. Our survey asked for the extent to which the respondents see the lack of ICT, human and financial resources as a potential hindrance for performance measurement.…”

Internal Performance-Based Steering in Public Sector Organizations: Examining the Effect of Organizational Autonomy and External Result Control

“…Organizational size in terms of staff as a proxy for the need for performance management tools as internal control mechanisms as well as the capacity to implement such tools (Askim, 2009;Laegreid et al, 2006;Moynihan & Ingraham, 2004;Poister & Streib, 1999); . Budget size as a proxy for degree of political salience of an organization (Pollitt, Talbot, Caulfield, & Smullen, 2004;Verhoest et al, 2010); or adequacy of allocated resources (Askim et al, 2008;de Lancer Julnes & Holzer, 2001;Grizzle & Pettijohn, 2002;Moynihan & Landuyt, 2009;Van Dooren, 2005). .…”

Taking Stock: Assessing and Improving Performance Budgeting Theory and Practice

“…For example, at the U.S. federal level, performance information is now fully integrated into agencies' strategic planning and budgetary preparation process (Breul, 2007;Ho, 2007), and performance information seems to have strengthened the focus on program management and results by the budget office and agencies (Posner & Fantone, 2007). At the state level, Grizzle and Pettijohn (2002) show that the Florida performance budgeting reform led to new operating and reporting guidelines from the Governor's Office and the Office of Planning and Budgeting. It also impacted executive communication with the Office of Program Policy Analysis and Governmental Accountability.…”

“…Others look at performance budgeting more from an organizational management perspective and examine how the structure and process, organizational nature, and managerial capacity influence the implementation and success of reforms (Gueorguieva et al, 2009;Moynihan, 2006;Sterck, 2007). There are also some who treat performance budgeting as a policy phenomenon and apply implementation theories and other policy evaluative frameworks to evaluate different performance budgeting initiatives (Greitens & Joaquin, 2010;Grizzle & Pettijohn, 2002;Long & Franklin, 2004).…”