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Research and Library Services
Northern Ireland Assembly
Research Paper 06/10 January 2010
METHODS OF BUDGETING
Colin Pidgeon
Research Officer Research and Library Service
A paper that presents different approaches to budgeting in the public sector along with case studies of their application by various organisations internationally.
Library Research Papers are compiled for the benefit of Members of The Assembly and their personal staff. Authors are available to discuss the contents of these papers with Members and their staff but cannot advise members of the general public.
SUMMARY OF KEY POINTS
- As a budget is a forward plan expressed in money terms, it is unlikely that any refinements to the budgeting process will ever enable budgets to be perfect. By nature they contain a level of assumption about uncertain conditions.
- Budgeting in the public sector can be viewed as more problematic than in the private sector. There is no profit or loss bottom line by which the performance of organisations can be measured. Further, measurement of the outcomes of public-spending programmes can be problematic. This makes the alignment of the budget process with intended outcomes a complex task.
- Public sector organisations such as government departments are large and complex. They design interventions across a wide range of policy areas and have to balance competing pressures.
- The current process of incremental budgeting for departments in Northern Ireland has a number of drawbacks. Some of these problems could probably be lessened by moving to alternative approaches to budgeting. But any alternative approach will also have its own drawbacks. And some of the approaches outlined in this paper can be very resource-intensive.
- It is often difficult from the budget documents presented to see how departmental spending is aligned with the priorities of the Programme for Government. For example, the tables presented following the quarterly monitoring rounds indicate departments’ reduced requirements. They also show proposed reallocations. But there is no explicit link between the reallocation of money and departmental objectives or performance.
- Alternative approaches to budgeting outlined in this paper attempt in various ways to make more explicit the link between budgets and performance and outcomes.
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INTRODUCTION
In June 2007 consultants PKF published a review of the forecasting and monitoring of financial information in the Northern Ireland Civil Service on behalf of the Department of Finance and Personnel (DFP). The report highlighted examples of good financial management practice in departments but also made a number of recommendations for improvement.
Recommendation 4 of the report was that in the medium term:
the planning and budgeting process should move away from the existing incremental approach .[emphasis added] This would first involve the development of a more transparent link between inputs and outputs, and would require, and indeed facilitate, greater challenge by Board members based on historic performance, thus enabling the setting of budgets that are better linked to performance targets. Performance would be subsequently monitored on a monthly basis through an effective monitoring and forecasting regime. This would ensure that Departmental budgets are more realistic and more closely managed, which in turn would facilitate, as a minimum, a significant reduction in the extent of the existing over commitment process which currently leads to budgets that are inherently overinflated and creates a climate within which there is increased pressure to seek to claw-back funding in-year.^1
In the Republic of Ireland, a report by a Special Group on Public Service Numbers and Expenditure Programmes was released in July 2009. Similar to the PKF report on NICS departments, the McCarthy report recommended a more explicit link between spending by public bodies and outcomes. It particular it recommended that:
Every proposed new spending programme should be accompanied by a Public Service Performance Charter, which sets out clearly the business case for the programme, the resources that will be required and output/impact indicators that can be used to measure success or failure of the programme.
Further, these proposed Public Service Performance Charters are to be linked into other existing publications:
The annual Estimates of Expenditure should be produced on a programme-by- programme basis, fully consistent with the Annual Output Statements and our proposed Public Service Performance Charters with full allocation of administrative and staffing costs.^2
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(^1) PKF Review of Forecasting and Monitoring (2007) available online at
http://www.dfpni.gov.uk/07_0614_dfp_update_v.2.2__final_-2.pdf (see page 10) (accessed 06 January
(^2) Report of the Special Group on Public Service Numbers and Expenditure Programmes Volume I (2009)
available online at http://www.finance.gov.ie/documents/pressreleases/2009/bl100vol1fin.pdf (see section 2.13) (accessed 06 January 2010)
DFP officials indicated in evidence given to the Committee for Finance and Personnel on 15 October 2008 an aspiration to move towards linking performance management with what is known as zero-based budgeting:
Dr Farry: I turn to the issue of the PKF report. What is the status as regards the implementation of the report’s recommendations? Bearing in mind the wider discussions on budget processes, could consideration be given to starting from the current baseline and making adjustments up or down, setting goals and working out what resources to allocate against them, rather than starting the budget processes every three years?
Mr Pengelly: The PKF report contained a series of recommendations. The Department appointed an individual from its financial management directorate — which is the other side of the house from us — to work specifically on that matter. Much good work has been done and continues to be done. A short-term issue has arisen in that that individual has been promoted and moved to another Department — fortunate for him, but not for us. His promotion is perhaps an indication of his success in dealing with those recommendations. Therefore, some progress has been made, but more remains to be done. It is one of our key objectives, and we continue to focus on it.
Essentially, your question is whether we should carry out zero-based budgeting. Ideally, yes, we should. The scale of the task for public services is huge. Equally, incremental budgeting takes one into some very bad places. The combination of the enhanced performance-management framework and system, and better information about delivering on targets, will go a long way towards bridging the gap.
Separately, the central finance group wants to start a programme of rolling- baseline reviews. It would be a task beyond us to carry out a zero-based review of everything as part of every Budget cycle. Over a period of three or five years, I would like to subject 100% of each Department to that sort of zero-based analysis — that could mean doing 20% a year in a five-year cycle or 33% in a three-year cycle. That would fall very much to Jack’s side of the house as part of the normal supply dialogue. We want to build an information base to do that.^3
DFP’s Central Finance Group’s Balanced Scorecard for 2009-10 includes targets in relation to baseline reviews. Objective 1 in its Business Results Quadrant (‘To secure, plan, manage and monitor public expenditure, including EU Programme expenditure, in line with the priorities set by the Executive’) was underpinned by the following target:
No less than 15 per cent of departmental baselines to be reviewed (as first step towards full coverage over 5-year period)
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(^3) Official report 15 October 2008:
http://www.niassembly.gov.uk/finance/2007mandate/moe/2008/081015.htm
- decision-making. A well-designed budget can be a useful tool in evaluating the consequences of proposed changes in actions, since it should be possible to track the effect of any change throughout the organisation.
Different budgeting methodologies allow the budget to perform these roles in different ways and to differing extents. For example, the planning programming approach (see section 4.3) can be clearly seen as underpinning the decision-making function. Conversely, one of the criticisms of the incremental approach is that it does not allow for full consideration of proposed changes in action as it is a more backward-looking method; it could be argued that incremental budgeting does not support decision making very well.
1.3 Economic theory and budgeting
Economists have developed various tools and concepts for considering the
allocation of resources in the public sector. These include analysis of when and
how the public sector should intervene in failing markets; measuring marginal
utility and cost effectiveness; allocative efficiency and cost-benefit analysis.^7
Ultimately, however, all the economic techniques have their problems. For
example, how to measure the benefits of decreased mortality as a result of a
public health programme. One way of approaching this might be to try to value a
lost human life in terms of potential income that is forgone.
One difficulty of using such an opportunity-cost approach is that it would value
the life of a healthy male in his mid-thirties over that of a healthy female in her
mid-thirties because the income not earned by the male if he dies is likely to be
higher than that of the female – simply because male earnings tend to be higher
as a result (at least in part) of gender-income inequality. What if the male had a
severe disability? His potential earnings are then much reduced.
In public policy terms, is an intervention aimed at reducing a disabled males’
mortality ‘worth’ less than a healthy female because his earning potential is
lower?
This is just one instance of the difficulties of applying economic theory to
budgeting. In 2001, Fozzard concluded:
After a search of sixty years for a comprehensive theory of budgeting that
would resolve the basic budgeting problem, it is somewhat disappointing to
arrive at a conclusion that no such theory exists and it is unlikely that such a
theory can ever be formulated […] nevertheless, considerable progress has
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(^7) For a helpful summary of these techniques, see Fozzard, A The Basic Budgeting Problem: Approaches to
Resource Allocation in the Public Sector and their Implications for Pro-Poor Budgeting, Overseas Development Institute (2001) available online at: http://www.odi.org.uk/resources/download/1395.pdf (accessed 12 January 2010)
been made in the development of analytical techniques that support the
appraisal of public expenditure decisions. Individually these techniques do
not provide a satisfactory basis for resource allocation decisions, though
they are more powerful when combined so that spending decisions are
subject to an analysis of the underlying rationale for public intervention, the
relative costs and benefits of alternative interventions and the distributional
impact of spending.^8
If, then, economic theory is imperfect in resolving the budgeting problem, what
remains is to look at different approaches that have been used in the public
sector and consider the advantages and disadvantages of different models.
2. INCREMENTAL BUDGETING
2.1 What is incremental budgeting?
Public sector budgets in Northern Ireland and elsewhere in the UK typically rely on the incremental approach (although the Comprehensive Spending Review 2007 process did involve a series of departmental baseline reviews). The previous year’s budget for a department or division is carried forward for the next annual budget. It is adjusted for known factors such as new legislative requirements, additional resources, service developments, anticipated price and wage inflation and so on.
It is known as incremental budgeting because the process is mainly concerned with the incremental (or marginal) adjustments to the current budgeted allowance. In that respect it is rather similar to the NI block funding: any changes are up or down from the existing funding for particular activities.
According to the Chartered Institute for Public Finance and Accounting (CIPFA), a key characteristic of the approach is that budget preparation is a process of negotiation and compromise. “Incremental budgeting is therefore based on a fundamentally different view of decision making than more rational approaches.”^9
This is because negotiated settlements between interested parties require a willingness to compromise. If consensus breaks down, compromise cannot be reached and the incremental process becomes invalid. According to CIPFA, use of this model, therefore, requires a relatively stable form of representative government.
(^8) Fozzard, A The Basic Budgeting Problem: Approaches to Resource Allocation in the Public Sector and
their Implications for Pro-Poor Budgeting, Overseas Development Institute (2001) available online at: http://www.odi.org.uk/resources/download/1395.pdf (accessed 12 January 2010) (see page 44)
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(^9) Budgetary Models, CIPFA (2009)
CIPFA argues that business area managers “find it easier to communicate a few changes to politicians within the annual decision making process. Slow adjustments to budgets are often easier to implement than sudden shifts in priorities.”^10 From a business-management perspective it’s generally better to introduce change gradually; it can therefore be argued that the incremental approach is rational for public services as the effects of changes can be monitored and alterations made as the need becomes apparent.
The biggest difficulty is that it can be problematic for managers and Ministers to get an overall picture of performance. Also, the potential for inertia is a source of possible concern; the inefficient and ineffective use of resources can be perpetuated and creative thinking could be stifled.
3. ZERO-BASED BUDGETING
3.1 What is zero-based budgeting?
Zero-based budgeting – unlike the incremental approach – starts from the basis that no budget lines should be carried forward from one period to the next simply because they occurred previously. Instead, everything that is included in the budget must be considered and justified.
According to CIPFA, zero-based budgeting in its purest form “involves the preparation of operating budgets on the assumption that the organisation is starting out afresh in the new planning period – it as is the life of the organisation exists as a series of fixed-term contracts.”^11
The approach relies upon the involvement of all executive managers. It requires the organisation’s objectives to be clearly stated – as with any budget process – but also considers and assesses different ways of delivering those objectives before the budget is allocated. It is, therefore, less ‘how should we deliver this service with the money available’ and more ‘here’s what we have to achieve, different options for achieving it and the budget required for each of those options’.
The process requires specification of minimum levels of service provision, the current level, and an ‘incremental’ level – either between the minimum and the current or an improvement over the current level. Options for delivering at each level can then be evaluated and a justification put forward along with the request for resources.
Essentially, this is a process of providing business justification for each activity undertaken by an organisation. According to CIPFA, ”the analysis should also extend to considering the benefits of the activity, alternative courses of action, how to measure
(^10) Budgetary Models, CIPFA (2009)
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(^11) Zero-based budget briefing, CIPFA (2006)
performance, and the consequences of not performing the activity.”^12 Activities are then ranked in order of priority and this is where resources are focused.
3.2 Advantages of zero-based budgeting
- allows questioning of the inherited position and challenge to the status quo;
- focuses the budget closely on objectives and outcomes;
- actively involves operational managers rather than handing them down a budget from above;
- can be adaptive to changes in circumstances and priorities; and,
- can lead to better resource allocation.
3.3 Disadvantages of zero-based budgeting
- more time consuming than incremental budgeting (i.e. it may become overly bureaucratic and produce excessive paperwork);
- need for specialised skills/training;
- difficulties can arise in the identification of suitable performance measures and decision/prioritisation criteria (if there is insufficient information in some areas ranking them could also be problematic);
- the specification of a minimum level of service provision (if below the current level) may demotivate managers;
- questioning of the inherited position can be seen as threatening to organisations and their people (so careful management of the people element is essential); and,
- may be difficult to cost and estimate resource requirements for options different from the current practice (giving rise to greater uncertainty).
3.4 Further considerations
According to CIPFA, the key benefit of a zero-based approach is that it focuses attention on “the actual resources that are required in order to produce an output or outcome, rather than the percentage increase or decrease compared to the previous year.”^13 Clearly the time/resource-consuming nature of the approach is a major consideration for DFP.
CIPFA argues that the technique is usually used most effectively when applied to activities that are wholly or mainly discretionary in nature – and therefore can be ceased. In many areas of public-sector activity this will not be the case because of legislative and regulatory obligations. But CIPFA also cautions that “it is very easy to fall into the trap of assuming that something is non-discretionary for no other reason than the activity has been carrying on at a similar level for a number of years.”^14
(^12) Zero-based budget briefing, CIPFA (2006) (^13) Zero-based budget briefing, CIPFA (2006)
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(^14) Zero-based budget briefing, CIPFA (2006)
Case study: zero-based budgeting in the United States in the 1970s
In 1979, the US Comptroller General reported to Congress under the title Streamlining Zero-base Budgeting Will Benefit Decisionmaking.^18
Zero-based budgeting (ZBB) was used in the late 1970s in putting together the President’s budget documents before submission to Congress. The report examined the experiences of Federal agencies, State and County governments and private industry.
The report found that:
Despite popular expectations, some organisations, including the Federal agencies contacted, had an overall sense of disappointment with zero-base budgeting… ZBB has created little change in the Federal budget process and generated limited optimism for the system in the agencies we studied.^19
It was argued that the administration was anxious to get ZBB implemented. There was, as a result, no attempt to tailor ZBB concepts to agencies’ needs or implementing the methodology in a way that would integrate it with all budget processes: A “strict process” approach to ZBB was used for the executive portion of the Federal budget process, but all other parts (at the lower levels) remained unchanged.
Problems encountered in implementing “strict process” ZBB included inadequate planning, which in turn led to:
1. excessive use of resources, such as staff, paper and automatic data
processing systems;
2. useless data and duplication of effort due to unresponsive information systems; and
3. frustrations created when, despite ZBB, management did not cut expenditures, follow proposed priority rankings or adjust programmes.^20
But the study also found that, outside the Federal arena, some organisations did manage to incorporate ZBB concepts into their budget systems:
They did not make the mistake of considering ZBB little more than a process. They looked at themselves and they looked at the concepts, and only then did they devise a
(^18) Streamlining Zero-base Budgeting Will Benefit Decisionmaking United States General Accounting
Office, 25 September 1979 (^19) Streamlining Zero-base Budgeting Will Benefit Decisionmaking United States General Accounting
Office, 25 September 1979, page 47 (^20) Streamlining Zero-base Budgeting Will Benefit Decisionmaking United States General Accounting
Office, 25 September 1979, page 47
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process – a process to suit their special needs. This spelled success. It can be successful in the Federal Government too.^21
The successful organisations did not attempt to apply all the ZBB concepts during the budget cycle. Rather they were introduced in phases: planning, budgeting and reassessment. The analysis of alternative approaches should become part of the planning phase. Decisions made in the planning phase should feed into the budgeting phase – which should incorporate the alternative funding levels and the determination of programmes priorities. Comprehensive information should only be created for those programmes that are scheduled for in-depth review. For others, only minimal information should be produced. The reassessment phase should include the programme effectiveness reviews that feed information into the next planning and budgeting phases.
The report observed that Federal agencies were “not handling the process in phases and are having problems. For example, they are not able to identify realistic, alternative ways of carrying out the programs and activities, and evaluations are not being effectively fed into the process.”^22
Despite difficulties at the Federal level, a number of US authorities persisted with zero- based budgeting. ZBB was used in Texas from 1973-1991 when it was replaced by a performance-based budgeting system.^23
Further, there appears to have been a resurgence in confidence relating to zero-based approaches in recent years. The City of London Police policing plan for 2009- describes zero-based budgeting as one of four interlinked key strategic processes – the other three being control strategy, risk assessment and business planning.^24
Further afield, on 31 March 2009 the Latvian Cabinet of Ministers agreed to institute a zero-based approach to develop amendments to its 2009 state budget.^25 The aim was to reduce the Latvian budget deficit to 3% of GDP – one of the Maastricht criteria for membership of the Euro. The decision was taken against a background of falling GDP and average earnings, a decline in the balance of payments and reducing tax revenues.
Case study: the Idaho Department of Water Resources
The Idaho Department of Water Resources is responsible for managing water resources in the state, including the development of hydro-electric power, management of river basins and regulating the use of water.
(^21) Streamlining Zero-base Budgeting Will Benefit Decisionmaking United States General Accounting
Office, 25 September 1979, page 47 (^22) Streamlining Zero-base Budgeting Will Benefit Decisionmaking United States General Accounting
Office, 25 September 1979, page 53 (^23) See http://www.lbb.state.tx.us/The_LBB/Agency/History.htm (^24) See http://www.cityoflondon.police.uk/NR/rdonlyres/F16EDF4F-FB30-4209-B24A-
D63F7A656713/0/City_of_London_Policing_Plan_2009.pdf page 5
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(^25) See http://www.li.lv/images_new/files/2009_04_06__LI_FS_Nr_26_zerobudget.pdf
Case study: Oklahoma
In 2003 the State of Oklahoma passed a zero-based budgeting law. In an attempt to control government spending, ZBB was mandated for the whole budget and every agency covered by its requirements.
In that first year, budget appropriation hearings listened to the Oklahoma Department of Human Services (DHS) describe increases in child support collections. However:
What zero-based budgeting didn't require DHS to report was that if Oklahoma's efficiency at collecting on these deadbeats would have merely matched the 50-state average, DHS would have collected 44 percent more for Oklahoma children. Instead of the $143 million in deadbeat dad collections in 2003, DHS would have secured $ million, or an additional $63 million for Oklahoma children.^27
Oklahoma’s legislature then required each agency to design performance measures. However, some performance measures “were at best measures of inputs and outputs and at worst a mockery of the concept.” The Energy Resources Board, for example, submitted a measure that required it to “increase the number of positive media stories”.
It has been argued that the failure of the state authorities to penalize the failure of agencies to meet their own performance measures further undermined accountability. Also in the first three years since the inception of ZBB, Oklahoma state budget appropriations rose by nearly 20%.
So the lesson from this example appears to underpin the assertion by CIPFA that full business justification is need for each area – not simply in terms of alternative levels of service, but also in respect of benchmarking performance with comparable agencies.
4. ALTERNATIVE BUDGETING TECHNIQUES
What follows is a brief summary of alternative budgeting techniques that may also be of some use or interest in the public services.
4.1 Priority-based budgeting
Priority-based budgeting is a modification of the zero-based approach. It focuses on corporate priorities and allocates growth and savings in budgets accordingly. It is based
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(^27) Viewpoint: Why Zero-based budgeting had Zero effect in Oklahoma The Buckeye Institute for Public
Policy Solutions (2006) available at: http://www.buckeyeinstitute.org/article/704 (accessed 11 January
on a thorough on-going review of departmental services. According to CIPFA, the review requires a statement of:
- the objectives/purpose of the service;
- targets/standards the service is trying to achieve, and;
- various thresholds at which the service could operate.
Based on analysis of these statements, elements of spending by each business unit could be classed as essential/highly desirable/beneficial and this information would be presented to decision makers.
4.2 Decision conferencing
This approach is computer-software aided. It allows participants in decision-making conferences to identify key service areas and the resources committed. Costs and benefits of levels of activity are given scores and plotted on a graph – these can be varied to allow the implications for service delivery to be evaluated. While it can be an effective tool, CIPFA suggests that the focus is largely at service level and is more difficult to apply across services. Also, it is time consuming and expertise with the associated software is required across organisations.
4.3 Planning Programming budgeting system
This system is primarily associated with corporate management and identifies alternative policies, the implications of their adoption and provides for their control. The key difference from traditional approaches is that it relates cost estimates to programmes using a cross-cutting method rather than attributing costs on a traditional departmental basis.
This approach was first used by the US federal government half a century ago. In the UK the Ministry of Defence and a number of English local authorities also experimented with the system. However, according to CIPFA, from 1970s it became apparent that the model was flawed with the following criticisms:
- it is costly and time consuming;
- it is difficult to identify and quantify objectives in the public sector;
- it can depoliticise the budget process by taking decisions away from elected representatives; and,
- outcomes from activities can be difficult to measure (for example the populations increased wellbeing from reducing crime) as they may be intangible;
Also, there are difficulties with developing budgeting systems on a programme basis because departments contribute to more than one programme at a time:
For instance, a police authority could have objectives such as accident prevention and crime prevention. The provision of a police patrol car in an area could contribute towards both of these programmes, but how should the costs be split between two objectives? The problem is that two budgeting systems would be required: Providing research and information services to the Northern Ireland Assembly
CIPFA identifies the following issues as possibly contributing to the slow development of performance-based budgeting:
1. public entities need to be clear about what they are trying to achieve. Therefore, there needs to be clear strategic direction in the organisation (which may not _always be the case);
- translating strategic goals and objectives into performance measures can be very_ difficult. In many public services, outcomes are difficult to measure and there is a _tendency to fall back upon less appropriate output and input measures;
- systems for collecting cost and performance information may need to be_ developed. Costing out services can be difficult and in particular decisions on _how to deal with overheads are problematic;
- problems may exist in respect of presenting this information to those making_ decisions on budgets. Information may need to be presented in appropriate formats to a variety of users. If information on performance is separated from accounting operations then this will hinder the ability for it to penetrate decision- _making processes associated with the operations;
- there may be procedural problems caused by failure to change existing_ budgeting rules and processes. Organisations continue to publish budget and _performance in separate documents;
- a lack of political acceptance of reform may prevail. Performance information_ represents a threat to the ‘political’ aspect of budgetary decision making since its explicit measurements tend to limit the discretion politicians can exercise. It has to be said, however, that in a complex environment of competing interests it is difficult to see how any rational, planning-based system can be expected to totally replace political decision making, and;
- management may not accept a performance budgeting process. There are often problems in defining who is accountable for performance and managers may fear that they will be reprimanded for failure to achieve published performance targets, and thus may try to avoid being accountable.^30
Once again, many of these issues have been aired previously, in this paper and elsewhere, and seem to present fundamental difficulties with public sector budgeting. Others, in relation particularly to the reduction of political control over budgeting, are different considerations from those identified with other budgeting approaches.
The case study presented below addresses, amongst other things, CIPFA’s observation at point 4 in the above list about the need for the appropriateness of information that is presented.
Case study: performance-based budgeting in Arizona
Arizona […] uses a budgeting system that combines strategic planning, performance measurement, and program evaluation. The system, called Program Authorization Reviews (PAR), requires all agencies to submit a one-page overview of its performance
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(^30) Budgetary Models, CIPFA (2009)
measurements for the upcoming fiscal year along with its regular detailed budget request. The recent FY 1998-1999 budget also required an extensive PAR budget submittal from 14 select agencies that included complete performance information and data on 30 programs and subprograms.
More specifically, PAR required these 14 agencies to answer four main questions in their budget submittals. One question addressed how programs and their objectives related to their agency mission statements. Another question asked was how efficient and effective programs were in carrying out their activities and in attaining their objectives. The two remaining questions inquired as to how well programs measured up in comparing expected to actual results and, additionally, as to the use of cost-effective alternatives.
Arizona’s PBB approach has been applauded for not “overloading” its budget document with superfluous performance information and data. Providing decision-makers with a manageable, yet thorough, set of performance data for making good spending choices is a time-consuming and hard won endeavor. Arizona appears to have proven that this can be done.^31
A further case study illustrates how the problem of aligning performance and budgets may be addressed. The approach used in Oregon also integrates a considerable element of participatory budgeting, which is discussed further in section 4.5.
Case study: performance-based budgeting and strategic planning in
Oregon.
Oregon is recognized, arguably, as the most sophisticated or highly evolved state in terms of model strategic planning and PBB initiatives. Called “Oregon Benchmarks” – and alternately “Oregon Shines” – the model system was introduced in 1989 when over a hundred citizens and policy-makers came together to develop a multi-year strategic plan for the state. The state legislature also created that year the Oregon Progress Board to maintain, revise and oversee the implementation of the state’s comprehensive strategic plan “well into the twenty-first century.”
In 1991, with plentiful input from all levels of government and the people of Oregon, the Progress Board adopted 158 indices or “benchmarks” that they considered of the greatest priority to the progress of the state. These measures were oriented to performance and not effort. The Progress Board was interested, for example, not in measuring or monitoring school expenditures to assess school performance, but rather, in measuring student achievement as predicated on standardized testing.
In 1994, the Progress Board implemented a program to facilitate performance by restructuring many of the state’s intergovernmental and programmatic relationships. For
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(^31) Source: Young R D Performance-Based Budget Systems USC Institute for Public Service and Policy
Research (2003) available online at: http://ipspr.sc.edu/ejournal/assets/performance%20based%20budgets.pdf see page 16
