Orienting Public Spending towards Achieving Results -

Performance and Performance Management: A Conceptual

Overview

Joel Turkewitz

World Bank

Outline of Presentation

The idea of performance in the public sector

Improving Performance Through the Budget Process

Results and Implications for Program Design

Performance in the public sector

Not a new idea – previously around the concept of “public service ethic”

Altered in post World War II environment– Rapid expansion of government – need to

demonstrate the value of government spending.– Challenges to idea of “public interest”

The idea of performance has remade the public sector

Re-engineered Processes– Program budgeting, MTEF, accrual,

performance auditing, etc. Reshaped the state

– Privatization, decentralization Changed accountability relations

– Monitoring and evaluation, citizen report cards, etc.

Ideas Associated with Improved Performance

Performance improves when managers know what is expected of them and are measured against those expectations.

Performance improves when managers are given flexibility to use resources

Performance ideas (2)

Performance improves through the devolution of authority to operating levels and units.

Performance improves when government decisions and controls focus on outputs/outcomes.

Performance improves when mangers are held accountable for the results produced.

Core Performance Strategies

Increased Competition in the Public Sector

Enhanced Managerial Autonomy

Program Review

Deregulation and Simplification

Each strategy=unique challenges

Performance improvement through competition – ensuring deep markets and reducing transaction costs.

Performance improvement through enhanced autonomy – creating incentives for managers to want to manage for results & establishing real accountability

A quick aside – Measuring and Performance

Frequent assumption – monitoring per se yields improved performance.– “That which gets monitored gets done.”

Key question – how does monitoring/measuring act to improve performance.– Importance of interest in monitoring results

Performance Budgeting

Sub-set of performance management

Definition: Performance Budgeting = procedures to enhance link between spending and outcomes/outputs through the use of formal performance information.

Long History

Initial efforts can be traced back in the U.S. to turn of the 20th Century

First serious efforts – 1960’s – U.S. (PPBS) and Sweden.

Now commonplace– 70% of OECD countries include performance info in

their budgets

– 40% have measures that distinguish between outputs and outcomes

Traditional Budgeting Performance

Inputs as ends in themselves

Relationship between inputs and outputs

Changes in inputs at the margin

Changes in inputs and results for program

Divorced from planning and management

Integrated with planning and management

Budgeted resources Costs

Traditional verses Performance Budgeting

Types of Performance Budgeting

Ex ante targeting– U.K. Public Service Agreements U.K. Public

Service Agreements Output-based

– New Zealand output-purchase Ex poste linkages

– U.S. Program Assessment Rating Tool (PART), Performance Management Agenda (PMA)

Challenges associated with ex ante and ex poste linkage

Ex Ante – translating expectations of performance into performance

Ex poste – managing the burden of evaluation in a process that does not create excessive conflict within the state administration

Issues in Performance Bugdeting

Establishing a program structure

Identifying useful indicators

Program structure

Fundamental to the dynamics of improved performance– Groups activities around a core objective– Groups costs associated with core objective

Not trivial– 10 years after the start of GPRA, fully 50% of

programs in U.S. could not be evaluated due to the absence of clear objectives.

Principles of Program Design

One program – one objective Hierarchical structure: program –sub-

program-activities-projects. Size appropriate for efficient management Clear connection between resources used

and outputs produced (and outcomes). Capture all related activities – integrate

capital and recurrent spending

Principles (2)

Establish accountability for the outputs of programs, sub-programs, and activities.

Responsibility for implementing each program aligned with a single vote in the budget.

Keys to Success in Establishing Program Structure

Establish clear rules to guide program identification and the level of sub-program and activity aggregation.

Align programs and organizational structure of government.

Programs and their outputs need to be designed considering the informational resources of the government.

Program Structure not just about grouping current activities

Program Structure – integrating design, management and accounting.– Strong implications for accounting, financial

reporting, internal auditing, and external oversight.

– Strong implications for the role of line ministries and central ministries, such as Min Fin.

Identification of indicators

Yes, it is a problem.

Not the core problem

Availability of resources– Other countries, experienced practitioners

Results and Implications for design

Widespread belief – Performance management does not work.

Where do we look for results.– Inter-sectoral allocations– But maybe, we should look instead at:

• Intra-sectoral allocations

• Intra-program re-allocations.

Evidence of impact of performance info on allocation

Broaden out allocation to not only refer to central processes.

Look at papers in the session– Australia– Harry Hatry – local examples– Look at references in the paper

Performance Improvement

Linked to:

– Better calibrated allocative process– Better designed programs– Managed in an environment that demands

performance.