Academic journal article Public Administration Quarterly

Reconciling the Research: Municipal Finance Officers on the Role of Performance Data in the Budget Process

Academic journal article Public Administration Quarterly

Reconciling the Research: Municipal Finance Officers on the Role of Performance Data in the Budget Process

Article excerpt


Research on the use of performance measurement points to contradictory conclusions. Most municipalities self-report that they collect performance data on a regular basis but actually use the information only sparingly during the budget construction process. To explore what may be happening or not happening, the authors began with a case study of a medium-sized municipality in the southeast, then expanded to a survey of similar-sized cities in the same region. They conclude that most municipalities are indeed collecting performance data but are simply adding them to the budget document after the deliberation process is over. The role of the budget office in performance-based reform is discussed along with the organizational changes needed to embrace performance measurement during budget construction.


Can performance measurement systems do for government what they, anecdotally, did for corporate America? The private sector can easily use performance measures to create incentives for individual and department productivity. It does it by linking good performance to rewards. The public sector might also link productivity to rewards but does not, according to the evidence. The hard part of meaningful performance measurement is not in derivation of indicators but in application of results. As Ammons (1999:106-107) states:

The problem is this: unless a government ties its performance measures meaningfully into its management systems-unless those measures are something more than decorations for the budget document, as superficial reporting practices have been called derisively-any enthusiasm for measurement will quickly lose its luster, and probably deserves to.

One implication of this observation is that budget staff and finance staff are critical to the integration of performance measurement into the management process through the budget cycle. This article presents the results of a survey of finance directors in medium-sized southeastern municipalities on the role of performance measures in their budget process. It suggests that line-item expenditures and historical data driven budget construction even in municipalities that report a strong commitment to performance-based management. An especially interesting finding from the survey is the finance directors' reasons for disregarding performance data during budget preparation, given that they also report that city managers and city council members are interested in performance information.


Local governments are certainly encouraged to adopt performance measurement. Organizations like the Government Finance Officers Association (ICMA) and the American Society for Public Administration (ASPA) champion its use (Ammons, 19961 Hatry, 1980). The Governmental Accounting Standards Board (GASB) advocates the use of service efforts and accomplishment (SEA) reporting. Local performance measurement is an important management and accountability tool (Brown and Pyers, 1988; Poister and Streib, 1989; Wholey and Harry, 1992). As early as the mid-eighties, outcome-based performance had gained national acceptance. A survey of 460 municipalities revealed that 68% of the respondents were measuring performance and 77% were using either a program, zero-base or target-base budget (Poister and McGowan, 1984).

Yet, in direct opposition to the Poister and McGowan (1984) study, Cope (1987) found that 78% of municipalities were using traditional line-item budgets and that performance measures were not critical to the budget construction process. Other self-reported survey data have suggested widespread collection of performance data but examination of actual performance documents revealed limited use (Grizzle, 1987; MacManus, 1984). Finally, Streib and Poiser (1998) reported that 62% of the respondents did not use performance measures at all in a survey of municipalities with populations greater than 25,000. …

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