Measuring local public expenditure effectiveness using sustainable development goals

Abstract

PurposeThis paper aims to propose a tool to assess local public expenditure effectiveness based on a framework of alignment between outputs, outcomes and impacts – the Index of Municipal Expenditure Effectiveness (IMEE). This index is composed of a set of indicators associated with the typology of local expenditure.Design/methodology/approachThe paper describes the methodological approach used in the development of the Index, considering the insights from the literature review and the opinion of a panel of experts. The indicators of outcomes and social impacts that are part of the Index are intentionally aligned with the UN Sustainable Development Goals (SDGs) as they provide an essential guide to assess public value creation in the current context. For simplicity purposes, three main components of municipal expenditure were considered, namely Education, Essential Public Services and Local Public Transportation. The Index is then illustrated through a pilot application, using data from five Portuguese municipalities.FindingsThis study argues that measuring the public expenditure effectiveness based on outcome and impact indicators can provide the data needed for local governments to better understand the effects of their activities over time, ultimately assessing their contribution to public value.Practical implicationsAssessing the impact of local spending is important to ensure the best use of public resources. Linking local public expenditures with the 2030 Agenda and the SDGs is a promising avenue to understand up to what extent the application of the public money is contributing to create public value by impacting on citizens’ lives.Originality/valueThe proposed IMEE contributes to addressing a gap identified in public organizations, including local governments, regarding the lack of consideration of expenditure and outcome/impact relationships, and the use of variables to measure long term impacts.