Performance Budgeting in the Canadian Federal Government

Results Based Management Division Expenditure Management Sector Treasury Board of Canada Secretariat

November 24, 2014

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Objective

• To outline the performance budgeting initiatives currently in practice in the Canadian Federal Government

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Outline

Outline:

• Overview of Canada's system of government • Performance Budgeting in the Federal Government • Federal Role in Education • Summary

• Annex A – Examples: Two Federal Programs Contributing toward Education

• Annex B – Tagging Provides Analytical Information

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Sovereign Governor General

Legislative Branch Executive Branch

Cabinet Cabinet

Prime Minister Parliament

Judiciary Branch

Supreme Court

Canada is a constitutional monarchy and a parliamentary democracy

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Treasury Board Treasury Board

Treasury Board Secretariat Treasury Board Secretariat

Cabinet Cabinet

Privy Council Office Privy Council Office Finance Finance

Central Agencies

Cabinet Committees

Prime Minister

• Department of the Prime Minister

• Government’s Policy Agenda

• Management Office • Budget Office • People Management

• Fiscal Policy • Tax Policy • Federal Budget

Structure of the Executive Branch

Major and Other

Transfer Payments

61%

Public Debt Charges 12%

Direct Program

Expenditures 27%

Employment Insurance

18.5%

Elderly Benefits 41%

Child Care Benefits

2.7%

Equalization & Transfers

to Territories 15.4%

Health & Social

Transfers 40.5%

Grants and Contributions

39%

Operating and Capital

Expenditures 61%

Total Expenditures $251.9B Fiscal Year 2012-13

Major and Other Transfer Payments

(to provinces) $117.0B

Direct Program Spending $112.5B

Source: 2012-13 Main Estimates – Part I

TB/TBS Focus

Overview of Federal Expenditures 2012-13

The Treasury Board Secretariat supports three roles:

• Management Office – Policies for management (e.g. financial management, IT/IM,

procurement, assets management, internal audit, etc.) – Assesses management performance via the Management

Accountability Framework

• Budget Office – Public Accounts of Canada – Estimates for Parliamentary appropriation – Strategic Reviews of departmental operations – Performance Budgeting Policies

• People Management – Employer of public service – HR management policies and terms and conditions of employment,

compensation, benefits and labour wages 7

Treasury Board Secretariat

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Performance Budgeting: Expenditure Management System

• The Expenditure Management System (EMS) is the framework for

developing and implementing the government’s spending plans and priorities within the limits established by the Budget

• The system is designed to ensure that all programs are focused on results, provide value for taxpayers’ money, and are aligned with the government’s priorities and responsibilities

• Program delivery takes place across 5 time zones and 1600 points of services to 35 million citizens

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Key Performance Budgeting Policy Elements

• The Policy on Management, Resources and Results Structures (MRRS)

– The Policy on MRRS provides a common approach to the collection, management, use and reporting of financial and non-financial performance information

– Program Alignment Architecture (PAA): a structured inventory of departmental programs

– Performance Measurement Framework (PMF): outlines the details of performance data collected against the PAA, including expected results, performance indicators, targets, and actual results

• The Policy on Evaluation

– In the Government of Canada, evaluation is the systematic collection and analysis of evidence on the outcomes of programs to make judgments about their relevance, performance and alternative ways to deliver them or to achieve the same results

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Strategic Outcome 1 Broadest enduring societal benefit for a department

Program 1.1 An even broader but distinct societal area

of intervention of which the subs represent a part

Program 1.2 An even broader but distinct societal area of intervention of which the subs represent a

part

Repeat of Sub- and Sub- Subs as per first set

Sub-Program 1.1.1

A broader but distinct societal area of intervention of which the sub-subs

represent a part

Sub-Program 1.1.2 A broader but distinct societal area of

intervention of which the sub-subs represent a part

Sub-Sub-Program 1.1.1.1

Sub-Sub-Program 1.1.1.2

A distinct societal area

of intervention

A distinct societal area

of intervention

Sub-Sub-Program 1.1.1.3

A distinct societal area

of intervention

Sub-Sub-Program 1.1.2.1 A distinct

societal area of intervention

Sub-Sub-Program 1.1.2.2 A distinct

societal area of intervention

The PAA depicts programs in a logical relationship to each other and to the Strategic Outcomes

Program Alignment Architecture – An Inventory of a Department’s Programs

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DEPARTMENTS Management Tool

Reflects full mapping of programs Better alignment of resources & priorities

More evidence based reporting Improve program performance

Finance PCO

Budget Plan

TBS Informed decisions on

investment choices based on priorities and value for money

PARLIAMENT Reporting Tool

Stronger accountability for spending and results

Common basis for planning and reporting inside

and outside

More logical and consistent basis for interaction

PAA/PMF

The PAA Provides Well Structured Information for Analysis and Decision

Making

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Estimates: Planning and Reporting

• The Estimates are an annual process to develop and implement the government’s spending plans within the limits established by the budget

• Part 1 - Government Expenditure Plan provides an overview of the federal spending

• Part 2 - Main Estimates list the financial resources required by departments for the upcoming year

• Part 3 - Departmental Expenditure Plans – Report on Plans and Priorities (RPP) annually sets out the expenditure

plans of appropriated departments and describes priorities, expected results and associated resource requirements for a three-year period

– Departmental Performance Report (DPR) annually describes the actual performance of appropriated departments, for the most recently completed fiscal year, against the plans, priorities and expected results set out in their respective RPPs

• Parliamentarians are responsible for reviewing and approving spending plans supported by performance management information.

– A significant time and effort each year is devoted to study the performance data presented in Part III of the Estimates

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Key Initiatives Aim to Capitalise on Years of Implementation

• Internal Services – An initiative aimed toward establishing a basis for greater consistency in

recording and reporting internal services expenditures across government

• Horizontal Initiatives – An initiative aimed toward improving the management and reporting of

horizontal or cross-cutting initiatives that involve multiple federal organizations

• Efficiency – An initiative designed to measure the efficiency of programs to gain insight

into the cost of delivering a program relative to the work performed – The goal is to ensure that not only are programs delivering results for

Canadians, but that such results are being achieved at the minimum possible costs

• Tagging – An initiative aimed whole of government analysis of programs – Standardises program target groups, method of intervention, activities.

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Federal Role in Education

• In Canada, there is no federal department of education. Canada's Constitution Act of 1867 provides that:

– [I]n and for each province, the legislature may exclusively make Laws in relation to Education

• Provincial and territorial ministries of education are responsible for the

organization, delivery, and assessment of education at the elementary and secondary levels, for technical and vocational education, and for post-secondary education

• The federal government of Canada provides financial support for post-

secondary education through the Canada Social Transfer (CST)

– The CST is a federal block transfer to provinces and territories in support of post-secondary education, social assistance and social services, and early childhood development and early learning and childcare

– Provincial and territorial governments are accountable to their residents for how well they spend federal dollars on education

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Federal Contributions to Education

• The federal government is responsible for the education of Registered Indian people on reserve, personnel in the armed forces and the coast guard, and inmates in federal correctional facilities

• Additionally the federal government contributes to education in the following manner:

– Aboriginal Education at the Elementary and Secondary Levels • The federal government shares responsibility with First Nations for the provision

of education to children ordinarily resident on reserve and attending provincial, federal, or band-operated schools

– Aboriginal Post-secondary Education • Funding is also provided for post-secondary assistance and programs for Status

Indian students residing on or off reserve – Federal Funding Support for Post-secondary Education

• In addition to providing revenue for universities and colleges through transfer payments, the federal government offers direct student support. These programs, and many similar ones offered by the provinces and territories, are designed to make post-secondary education more widely accessible and to reduce student debt

– Language Education • The federal government's official-language policy and funding programs include

making contributions to two education-related components (i.e. minority-language education and second-language education & training)

In Summary • Education is constitutionally a provincial responsibility in Canada

• The Federal government supports education largely by Transfer Payments to the Provinces or directly to students

• Both Provincial and Federal governments are accountable to citizens for the state of education in Canada

• Federal departments report on the results of their spending, and make proposals for additional funding through the expenditure management system when education policy issues arise

• Federal programs are also periodically evaluated for relevance and performance

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Annex

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Annex A – Examples: Two Federal Programs Contributing toward Education

Here are two federal programs that are involved in education and the type of performance information that is collected and reported:

Natural Sciences and Engineering Research Council •Program: Fund Basic Research

•Expected Result: The discovery, innovation and training capability of university researchers in natural sciences and engineering is enhanced by the provision of support for ongoing programs of basic research

•Performance Indicator: Percentage of funds spent on training of students and postdoctoral fellows •Target: 35% •Actual Result: 49%

•Links to Estimates Part III – Report on Plans and Priorities (2014-15) & Departmental Performance Report (2012-13) •http://www.nserc-crsng.gc.ca/NSERC-CRSNG/Reports-Rapports/RPP-PPR/2014-2015/index_eng.asp •http://www.nserc-crsng.gc.ca/NSERC-CRSNG/Reports-Rapports/DPR-RMR/2012-2013/index_eng.asp

Social Sciences and Humanities Research Council •Program: Doctoral and Postdoctoral Fellowships

•Expected Result: Awardees expand their skills (e.g., training, teaching and professional) through opportunities to gain international experience

•Performance Indicator: Proportion indicating “above average” quality level of the overall research experience (≥4 on a 5-point scale )

•Target: 80%t by 2012-13 •Actual Result: Doctoral: 84%, Postdoctoral: 85%

•Links to Estimates Part III – Report on Plans and Priorities (2014-15) & Departmental Performance Report (2012-13) •http://www.sshrc-crsh.gc.ca/about-au_sujet/publications/rpp/2014-2015/rpp-eng.aspx •http://www.sshrc-crsh.gc.ca/about-au_sujet/publications/dpr-rmr/2012-2013/dpr-rmr-eng.aspx

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Num

ber o

f Pro

gram

s

Number of Programs by Target Groups

Tagging allows for the identification of all organizations that have programs aimed toward a particular target group, e.g. “students”

Top three departments that have programs aimed toward students: 1. Natural Sciences and

Engineering Research Council 2. Social Sciences and Humanities

Research Council 3. Employment and Social

Development Canada Method of Intervention (e.g. how programs are delivered): • Transfer payments Number of programs that are aimed toward students: • 19

Tagging enables the identification of the type of activities that are involved in delivering programs to a particular target group, e.g. “students”

Annex B – Tagging Provides Analytical Information