Academic journal article Public Finance and Management

Performance Budgeting in the U.S. Federal Government: History, Status and Future Implications

Academic journal article Public Finance and Management

Performance Budgeting in the U.S. Federal Government: History, Status and Future Implications

Article excerpt

ABSTRACT

Performance budgets emphasize activities performed and their costs, and include various performance measures in the budget to document what is gained from what is spent. These measures usually include unit cost comparisons over time or between jurisdictions. Performance budgeting tends to emphasize measures of efficiency and effectiveness. Broader measures (outcome) are often difficult to define and measure, particularly in human service areas. Nonetheless, performance budget concepts have proven persistent. For the federal government, a key measure that has stimulated increased interest in the topic was passage by Congress of the Government Performance and Results Act in 1993 (GPRA) and subsequently the Government Management and Results Act (GMRA) in 1995. This article notes the long period of experimentation with performance budgeting in the U.S. and identifies some of the lessons learned from this initiative. It also addresses reforms including the Office of Management and Budget (OMB) Program Assessment Rating Tool (PART) as they relate to incentives for budgeting based on performance. Conclusions also touch upon the difficulties faced in attempting budget reform in the midst of a period of fiscal and monetary stress. We conclude that while the expressed interest of the Obama administration in assessing the performance of federal government agencies is evident, there is no evidence to suggest that the administration will attempt to implement performance budgeting per se as a means to accomplish this end. Rather, performance is now reviewed by OMB only as an input to budget decision making, which is perhaps the best that advocates of performance budgeting can hope for in the medium term. What it would take to interest federal government decision makers, particularly members of Congress, to accept performance budgeting is impossible to determine given the present focus of the government on health care reform, job creation, the state of the economy and armed conflicts abroad. Administrative reform, except in the areas of regulation of financial institutions, national security and transportation safety, has not been high on the agenda of the Obama administration or Congress in the period 2008-2010. However, this could change with new initiatives recently announced by the administration and Congress.

1. INTRODUCTION

Performance measurement and performance budgeting are topics that have long been a part of the public administration agenda in the United States (Eghtedari and Sherwood, 1960a; 1960b; Schick, 1971). Interest in performance budgeting developed in response to perceived abuses at the local government level as early as the 1870s in the U.S. (e.g., in New York City), at the beginning of the 20th century (e.g., in the budget research of the New York City Bureau of Municipal Research, which eventually became the Brookings Institution), from a response to growth of government at all levels and particularly of the federal government during the presidency of Franklin D. Roosevelt during the Depression of the 1930s, through the mid-1940s and in the post-World War II era, especially during the Eisenhower presidency (McCaffery and Jones, 2001: 43-67). The first wave of what we would identify as pure performance budgeting occurred during the 1950s under the guidance of the President's Bureau of the Budget (BOB). In the view of the leadership of the BOB in the 1950s, performance budgeting and performance measures were intended to emphasize efficiency and effectiveness. Then, as now, broader measures (outcomes) were desired but often were difficult to define and measure, particularly in human services programs. Nonetheless, performance budgeting in concept has proven persistent over time in the U.S. federal government, as well as in state and local government. Evidence of this trend is found in the huge expansion of the literature in this area in the past decade. It is interesting to note that until the 1990s, in the U. …

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