The State of the States: Performance-Based Budgeting Requirements in 47 out of 50

Abstract

The current wave of budgeting reform focuses on the performance of government agencies and programs and is reflected in state efforts to introduce performance-based budgeting (PBB). In the ideal, this budget system requires measurement of results, outcomes, and impacts. In an article titled Managing Public Finances Like the Future Matters, King (1995) suggests several reasons for this renewed interest in budget reform, including: * Government must be driven by citizen desires and needs, not government rules and regulations. * Taxpayers will pay for results, not efforts. * Government must better communicate progress toward goals and objectives. Actual performance-based budgeting systems may have a variety of goals. For example, they may or may not require measurement of outcomes. They may support strategic planning or focus on measurement development. It is the goal of this article to find out how many states have adopted some version of performance-based budgeting. It remains for future research to see how well these reforms are accomplishing overall objectives and whether some forms of performance-based budgeting work better than others. We surveyed the 50 states to determine the existence of legislative or administrative initiatives requiring performance-based budgeting. We define performance-based budgeting as requiring strategic planning regarding agency mission, goals and objectives, and a process that requests quantifiable data that provides meaning information about program outcomes. Performance-based budgeting may also require an assessment of agency progress toward specified targets. Several recent pieces of research inventory the existence and use of performance measures in the states (National Association of State Budget Officers, 1995; Fountain, 1997; see also case analyses of local, state, and federal experience with performance measurement provided by ASPA's Government Accountability and Accomplishment Task Force, 1996). Findings from these studies do not describe the legal or administrative requirements for the states to conduct performance-based budgeting as defined above. Methodology This study is based on a literature view and a survey of state administrators. The survey of executive and legislative budget offices was conducted by telephone in 1996 and 1997. These budgeters were asked about legislation (in place or pending) that has performance-based requirements or administrative guidelines for the state. Responses were received from budgeters; (usually the director or deputy director of the budget office) in all 50 states. Those answering that legislation existed were asked to send or fax a copy. Those states that did not have any legislation, even pending, were asked if an executive order or other administrative, guidelines were in place regarding performance-based budgeting. We asked these budgeters to send us budget guidelines or instructions. We asked a number of follow-up questions, including the following: * Who is responsible fix implementing performance-based budgeting and specifically, operationalizing measures? * What is the time frame for implementing performance-based budgeting? * Are there incentives (or disincentives) that promote the use of performance-based budgeting? * What oversight capacity is provided by the legislation? In this article, we review performance-based budgeting legislative and/or administrative guidelines, for performance-based budgeting as well as incentives, disincentives, timelines, and reporting and process requirements on the part of state agencies, central budget bureaus, and newly established oversight offices. Our research is more inclusive than past efforts, for we examine both law and administrative requirements short of law. Findings from this research indicate that a significant portion of performance-based budgeting activities at the state level occur without legislation. …