Greg  Wass,  CTO,  State  of  Illinois  

05.06.2014  

Budgeting  for  Results  and  Paying  for  Success  in  State  Government  

1.    Background  

•  Serves  a  population  of  nearly  13  million  

•  Annual  operating  budget  =  $66  billion  

•  50,000  state  employees  •  Nearly  7,000  units  of  local  

government  (#1  in  the  U.S.)  •  $12.7  billion  annual  Medicaid  

spend,  serving  more  than  3  million  people  (after  ACA)  

 

Illinois  state  government:    by  the  numbers  

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•  Annual  ICT  spend  =  $500  million  ($300m  centrally)  

•  750+  ICT  employees  (500  centrally)  

•  7900  datasets  on  data.illinois.gov  (includes  some  federal)  

•  8000  customers  of  Illinois  Century  Network  

Illinois  state  ICT:    by  the  numbers  

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•  53,000  violent  crimes  annually  •  332,000  property  crimes  •  1,000  deaths  each  year  from  motor  vehicle  accidents  •  16,000  teen  births  •  2.1  million  public  school  students  •  Below  50%  proficiency  in  11th  grade  reading  &  math  

•  More  than  80%  juvenile  recidivism  (3  year  re-­‐arrest  rate)  

*All  data  from  Illinois  state  agency  sources.  

Big  city  /  big  state  issues:    Illinois  data*  

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•  Recession  reduced  income  tax  revenues…  •  …and  increased  demand  for  state  gov’t  services  

•  Collective  bargaining  agreements  •  Pension  costs  •  Healthcare  costs  (Medicaid,  group  insurance)  •  Consent  decrees  

•  Pew  Center  ranked  Illinois’  finances  among  10  worst  

Illinois  was  in  a  precarious  fiscal  position  

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•  Temporary  income  tax  increase  $4  billion  (to  1.1.15)  •  Reduced  Medicaid  spend  $1.6  billion  annually  •  Cumulative  cost  reductions  of  $5.7  billion  •  Major  pension  reform  passed  (but  blocked  by  court  

challenge)  •  Backlog  of  old  bills  reduced  from  $10  billion  to  $5b  

•  Governor  proposed  extending  income  tax  •  5-­‐year  fiscal  stabilization  plan  (incl  current  on  bills)  

Spent  past  5  years  digging  out  

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•  Taxpayers’  budgets  are  tight  •  Government  has  to  “do  more  with  less”  •  Demand  for  more  accountability  and  transparency  •  Government  should  be  run  “like  a  business”  •  Diminishing  willingness  to  fund  social  programs,  at  

the  same  time  as  needs  &  mandates  are  increasing  

People  expect  /  want  more  from  gov’t  

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•  Incremental  budgeting  •  Line-­‐item  budgeting  •  Perpetual  grant  and  contract  renewals  •  Bad  habit  of  deferring  costs  (esp.  pensions)  •  Lack  of  performance  management  culture  (incl.  data-­‐

driven  decisionmaking)  

Diagnosing  Illinois’  fiscal  problems  

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2.    Budgeting  for  Results  

•  Passed  by  GA  and  signed  by  the  governor  

•  Defined  as  “a  method  of  budgeting  where  each  priority  must  be  justified  each  year  according  to  merit  rather  than  according  to  the  amount  appropriated  for  the  preceding  year.”    

 

Budgeting  for  Results  –  IL  P.A.  96-­‐958  (2010)  

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Every  program  supports  a  key  outcome  

Area Outcome

Education Improve School Readiness and Student Success for All

Economic Development Increase Employment & Attract, Retain and Grow Businesses

Public Safety Create Safer Communities

Improve Infrastructure

Human Services Meet the Needs of the Most Vulnerable

Increase Individual and Family Stability and Self-Sufficiency

Healthcare Improve Overall Health of Illinoisans

Environment and Culture Strengthen Cultural & Environmental Vitality

Government Services Support Basic Functions of Government 13  

Current  general  funds  allocation  

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12,551  

5,123  

6,804  

2,955  

0%   20%   40%   60%   80%   100%  

Educa2on    (incl  pension)  

Economic  Development  

Public  Safety  

Human  Services  

Healthcare  

Nature,  Culture  and  Environment  

Government  Services  (incl  pension  &  group  health)  

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($  in  millions,  FY13)  

School  Readiness  

Effective  Teachers  and  

Leaders  

#  new  National  Board  Certified  

teachers  

Meet  Needs  of  Most  Vulnerable  

Comprehensive  Care  

Coordination  

#  transfers  from  institutions  to  

community  care  

Examples  of  data  hierarchy:  from  desired  outcomes  to  program  measures  

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•  60  agencies  under  the  governor  •  450  programs  •  A  minimum  of  one  indicator  per  program  (FY15)  •  Focus  on  outcomes  not  activities  •  But  get  in  the  habit  of  reporting  •  Continuous  improvement  •  Produce  lots  more  information  about  programs  •  Use  data  to  drive  budget  decisions  

BFR  scope  and  principles  

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Strategic  Planning  

Performance  Management  

BUDGETING  for  RESULTS  

Program  Budgeting  

BFR  incorporates  three  disciplines  

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Strategic  

Strategy  maps  Logic  models  

BFR  Commission    (2010-­‐present)  

Structural  

Chief  Results  Officers  IPRS  quarterly  data  

Budget  book  Approps  hearings  (2012-­‐present)  

Evaluative  

Pilot  project  (Education)  

Foundations  State  data  unit  

(2014-­‐forward)  

Implementing  BFR:    3  workstreams  

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•  Pilot  project  •  Funded  by  MacArthur  &  Chicago  Community  Trust  •  Developing  evaluation  methodology  •  Analyzing  50  programs  in  one  outcome  area  •  Additional  “sub-­‐outcomes”  •  Research  evidentiary  basis  for  program  effectiveness  •  Measure  cost  per  outcome  •  Comparative  analysis  of  programs  

Developing  a  program  evaluation  framework  

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•  Download  /  analyze  the  performance  data  •  data.illinois.gov  &  budget.illinois.gov  •  Attend  BFR  Commission  (monthly  public  meetings)  •  Attend  public  hearings  this  summer  •  Later  in  2014:    we  publish  KPIs  on  interactive  site  

How  to  get  involved?  

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3.    Pay  for  Success  

•  A  “special  case”  of  budgeting  for  results  •  New  type  of  performance-­‐based  contract  •  Applies  to  social  issues  that  need  large  upfront  

investments  to  get  results  –  Children’s  health  (e.g.,  birth  weight,  asthma)  –  Early  childhood  education  –  Adult  and  juvenile  recidivism  –  Social  determinants  of  health  incl.  supportive  housing  –  Homelessness  

Pay  for  success  AKA  social  impact  bonds  

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PFS:    a  model  

Illustration  by  Dan  Stiles  

from  Harvard  Magazine,  July  2013  

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•  Reviewed  existing  state  &  city  projects  (UK,  US)  •  Surveyed  state  agencies  for  ideas  &  enthusiasm  •  Working  with  10  other  states  and  Harvard  SIBlab  

•  Announced  first  contract  award  in  the  area  of  improving  outcomes  for  dually-­‐involved  youth  

•  Will  do  more;  in  the  five-­‐year  fiscal  stabilization  plan  

Illinois  contemplated  >25  ideas  for  PFS  

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•  Serve  youth  ages  13-­‐17  with  current  and  simultaneous  involvement  in  the  child  welfare  and  juvenile  justice  systems,  entering  through  either  system  

•  Include  youth  in  urban  and  rural  communities  from  across  the  state    

•  Divert  newly  dually-­‐involved  youth  and  step-­‐down  current  dually-­‐involved  youth    

•  Serve  enough  youth  to  allow  for  meaningful  evaluation    

*  Youth  in  substitute  care  with  DCFS  with  at  least  1  day  in  detention  or  IDJJ/DOC    

PFS  for  dually-­‐involved  youth*  

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Majority  of  dually-­‐involved  youth  are  13-­‐17  

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•  Ensure  outcomes  are  aligned  with  child  wellbeing  and  long-­‐term  system  improvements,  and  correlated  with  taxpayer  cost  savings    

•  Payments  should  be  based  on  reduction  of  negative  outcomes  and  achievement  of  positive  outcomes    

•  Keep  payment  metrics  simple  and  few    •  Allow  for  a  rigorous  evaluation  methodology    

How  to  determine  success  payments  

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Example  performance  indicators  

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Provide  wraparound,  evidence-­‐based  interventions  

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@gregorywass  

Contact  me:    greg.wass@illinois.gov  

Thanks!