The AGA Weblog

Holiday Wishes for the Government Performance Management Community

By: Jon Desenberg

Jon Desenberg is policy director at The Performance Institute.

To the dedicated performance and budgeting professionals in state and local government around the country: Remember, what doesn’t kill you makes you stronger. The budget headwinds and the demands of reporting for the Recovery Act have made this the toughest in the 20 years I’ve been working in government. However, wherever I went, from Alaska to Florida and many stops in between I saw that the transformational work in business intelligence, performance indicators, strategy maps and improved strategic plans have paid off. Better decisions were made, even when we all wished that we didn’t have to make those tough decisions. From the new reporting scorecard in Fulton County, GA, to the county and city stat systems in Dade County, Baltimore, Philadelphia, D.C. and elsewhere, we saw that a focus on performance truly becomes valuable as times get tough. You’re true leaders in performance and accountability.

To our esteemed senators and congressman, the time is now—please embrace performance and results-based management practices, before its too late. Kudos to Sen. Mark Warner for creating the new Senate Task Force on Government Performance, but where are your colleagues? At a recent hearing, your colleagues were missing for all but a few minutes. Not making time ask a few questions about improved results indicates a lack of inclination to begin thinking about improved performance and perhaps actually doing something about it. Hundreds of thousands of federal employees look to Congress for leadership on spending wisely, setting the right goals, and matching funding accordingly. You’ve continued to disappoint them and the American taxpayer this year.

To our president and his appointees, your careful and serious thinking about performance management has been much appreciated. Now, however, is the time to do the very difficult job of moving plans into action. For all the problems and mistakes in our previous President’s Management Agenda, speed of execution was never one of them. While some agencies are going to move in the right direction on their own, some very important ones will not, at least not fast enough. We appreciate your careful thinking and we now need some strong direction.

To AGA, thank you. AGA’s focus on performance at their annual conference and the efforts they’ve taken to move hundreds of local governments in the right direction on performance has been pitch perfect and spot on. We in the performance community greatly appreciate it.  

Performance-Based Budget Cutting: Smarter Government, Better Results

By: William Aaron

William Aaron is the chief of Consulting Services and Innovation at Weidner, Inc. 

To say these are uncertain times seems an epic understatement. The economy is in grim shape, and no one can say when, or if, it will improve. State and local governments are facing huge budget cuts now and bracing for worse.

It feels like we’ve entered unchartered territory, like those dark, unknown areas on the old, old maps where the mapmakers would just write, “Here Be Monsters.” 

But the challenges we face, no matter how daunting, can be effectively met using a smart, performance-focused approach. Indeed, many local governments have been doing so for years.

One example: the Department of Job and Family Services of Franklin County, OH, which had a big problem several years ago. In 2000 the state of Ohio moved millions of dollars in welfare reform funds out to county governments. Franklin County put $25 million into 43 contracts with 30 different community and public sector organizations to deliver services.

The next year, those funds were cut. And not just cut—eviscerated. Nearly $18 million, or about 70 percent, vanished. More than half the grantees saw their funding cut substantially or eliminated.

But when the cuts were made, what was notable was what did not happen. Instead of political fighting over dollars, there was just one call of complaint. Instead of wailing and gnashing of teeth, grantees called to commiserate. And instead of universal suffering, in many cases the organizations actually became more successful.

What “secret” had Franklin County’s Job and Family Services uncovered? 

Mary Lou Langenhop was the director of Job and Family Services for Franklin County from 1998 to 2003. To her, their success was due to their relentless focus on three factors: results for customers, setting priorities and using performance data.

Results for Customers. In 2000 a focus on results for customers in government was not common—this came shortly before Franklin County implemented a county-wide managing for results system—but Langenhop knew the value of using outcome-based contracts.

“We were clear from the start about our approach,” Langenhop said. “We structured the contracts so grantees were not only paid based on things like enrollment in training classes and the number of trainees completing class, but also on the number of trainees who got jobs and the number of trainees who kept their jobs six months.”

In many cases, this shift in thinking had huge benefits that made the grantees more successful—even after their funds were cut. One agency raised significant new private funds using their demonstrated impact on their customers; others began benchmarking and reallocating internal resources to improve their performance.

“One organization’s board was so excited they could clearly see the success of their program that they reorganized to ensure the continued delivery of those services using their own funds,” Langenhop said. “They could measure it in terms of impact on the customer for the very first time.”

Setting Priorities. Faced with cutting 70 percent, Langenhop knew they could not use the lazy tactic that too often passes for government budgeting: cut everyone equally and hope for the best. They knew they needed to set priorities—to decide what was most important and fund as much of that as possible.

“We had to ask ourselves, what were the most critical activities and outcomes we were paying for?” she said. Job and Family Services chose to focus on two priorities: people getting jobs and outcomes for youth.

“Some grantees were performing very well, but they were not part of these two critical areas,” Langenhop said. “So they got cut.”

Using Performance Data. The grantees delivering results in support of the selected priorities were then assessed using a powerful tool: the performance information they themselves had provided.

“We based the continuation of all contracts on performance. For example, had the agency been meeting its job placement targets? If not, their funding was cut back or eliminated,” Langenhop said.

“We gave the county commissioners spreadsheets with the performance information, presented by agency,” she said. “I met with each commissioner individually, shared all of the performance information, and presented how the funding decisions were made. As one of them told me, ‘I don’t see how anybody can question this.’ ”

“We went through that reduction with only one call complaining to the commissioners,” Langenhop said.

So as the public sector heads into what may seem to be unchartered territory, it’s worth remembering that, in fact, we know very well how to vanquish the monsters. A focus on results for customers, on setting priorities, and on using performance data to inform decisions will serve our citizens well, regardless of the challenge.

AGA’s Performance Management Conference Recap

By: Evie Barry

Evie Barry is director of performance reporting, AGA 

Last Thursday and Friday, AGA’s Fifth Annual Performance Management Conference was held in Seattle. The conference, attended by 160 federal, state and local performance management gurus and newbies, was all that was advertised—sessions on managing with performance measures, Citizen Centric reporting, getting the public engaged in government and performance…the whole shebang. My only disappointment was that I couldn’t be at two sessions at once!  

A sentence or two about the history of the Performance Management Conference—AGA has received funding from the Alfred P. Sloan Foundation to support the Certificate of Achievement in Service Efforts and Accomplishments (SEA) Report Review Program. Part of the Foundation mandate was to hold a conference that promotes not only AGA’s program but performance measurement and management in general. If you’d like to learn more about our SEA program and how you can participate, visit www.agacgfm.org/performance/sea/.

One of my favorite sessions was hearing from representatives from Bellevue, WA; Oklahoma Health Care Authority; Palo Alto, CA; San Jose, CA; and Saco, Maine. These governments received the GOLD Certificate of Achievement in SEA Reporting for their performance (SEA) report this past year. All of the representatives indicated that receiving the award heightened their awareness of gathering and reporting performance data, but little has been done to use the data when guiding budget decisions. Community reactions have been mixed—from no media recognition to Saco, Maine receiving a letter from Senator Susan Collins congratulating them on their accomplishment. But all did state that the report process has been institutionalized in their governments and they expect to continue to educate the public, media and their own governing bodies about the importance of reporting governments’ accountability successes as well as failures.

Another session, Performance at Risk: What You Should Know about Cyber Attacks, featured Tim Young, former deputy for e-Gov and Information Technology at the U.S. Office of Management, and Budget and David Martinez, King County, WA, chief information officer. Each identified the technology most at risk for cyber attacks, including e-mail to electronic payments to public records. Cyber threat-related activities including spam, network accessibility and e-mail viruses that also increase the vulnerability of electronic systems. Governments at each level are taking steps to protect critical infrastructure, but the cost is significant and older systems are more apt to be targeted and compromised.

Harold Steinberg, CGFM, CPA, was the principal researcher for report No. 23 in AGA’s CPAG Research Series, State and Local Governments’ Use of Performance Measures to Improve Service Delivery. His session highlighted his interviews with five jurisdictions that operate systems to improve delivery of programs and services by using data from the performance measures. Steinberg’s presentation also included the results of an online survey from 175 respondents, primarily from states or state agencies. These respondents indicated that they use performance measures to evaluate the effectiveness of government programs and services and improve service delivery. CPAG 23 will be up on the website in about two weeks but to learn more about AGA’s other research, visit www.agacgfm.org/research/publications/default.aspx.

Finally, conference attendees were treated to Jon Desenberg’s Performance 2.0: From Measurement to Management. Jon shared his thoughts on how performance management and measurement is changing in the federal government. With his vast experience and knowledge, Jon was able explain the history and future of federal performance reporting in a context that was understandable and interesting.

And finally if you haven’t had an opportunity to read Chris Camara’s blogs about the conference keynote speakers, visit http://aga.typepad.com/aga/2009/11/agas-performance-management-conference-under-way-in-seattle.html and http://aga.typepad.com/aga/2009/11/update-from-the-pmcs-final-day.html. If you would like more information about the PMC speakers’ presentations, visit www.agacgfm.org/pmc_2009/presentations.htm.

So how do you see your government moving forward in the area of performance reporting? How passionate about reporting to the public are your public leaders? And what strategies can be adopted to encourage the media to move from only exposing the governments’ dirty laundry to explaining the government services that work and more importantly the dedication of its workers?

Unfortunately I don’t remember who said this phrase at the conference, but it has resonated in my head these past few days, “Those who do not look back from where they come from, will not reach their destination.” In these challenging times, I think that says it all.

Update from the PMC's Final Day

The final day of AGA’s Fifth Annual Performance Management Conference opened Friday with a lively panel discussion on the relationship between chief information officers and chief executive officers, and how the partnership can drive innovation in government.

The panelists, who brought various perspectives to the issue of performance management, were Bajinder Paul, chief information officer of the U.S. Office of the Comptroller of the Currency, PK Agarwal, chief technology office for the state of California’s Department of Technology Services, and Rohit Verma, chief financial officer and head of strategy, Zurich North America.

The panelists talked about using information technology as a transformational force to improve government services. However, many organizations are spending too much time gathering data, or correcting data they receive, than analyzing the information.

Verma said deriving insights from data is “the next frontier.” Paul said 8,000 banks report data to his office quarterly. Prior to establishing standards for data collection, including XBRL, his financial examiners were spending 80 percent of their time validating the accuracy of the information. By the time the problems were resolved, the information was stale. Now, he said, they spend only about 20 percent of their time validating the information. “This is a real tangible example in the regulatory environment.”

The panelists were also asked to address those who work in organizations that have not achieved the kinds of successes being discussed. Where should they begin to make big changes?

Paul said, “It’s really about building trust and achieving a level of confidence.” He said he has a strong relationship with his chief financial officer, which was built over time by learning about his perspective on the agency. Agarwal said two things need to happen first: a clear sense of business goals and an understanding of how to measure success. He added that keeping the goals simple is important. He recalled discussing performance management with a pilot while he was on a flight. The pilot said his metrics are very simple: “Make sure the number of takeoffs match the number of landings.” 

Jonathan Walters, Governing magazine reporter and a local government official, gave attendees of  AGA’s Performance Management Conference tips on how to communicate effectively with the media.

He encouraged attendees to develop a media strategy. Think about what you’d like to accomplish: For example, is it moving a particular agenda, selling an idea or getting publicity for a key player in government? He told them that it’s part of their jobs to do some homework about which media outlets to target, and the most appropriate reporters and editors to contact. If you do that homework, he said, you can target your message.

“Do not run away from reporters,” he said. “Seek them out.” In fact, he went so far as to say that government officials should be the ones to tell reporters about negative stories. Walters, who is chairman of the planning board in Ghent, NY, and a volunteer firefighter there, said he told the local newspaper reporter that the planning board was being sued for approving a gravel mine in his rural community. Why? “It allowed me to get my side of the story out first.”

He said he had made regular, informed and direct contact with the reporter, who had become a friend. No story involving the planning board appeared in the paper without Walters knowing about it beforehand. When it comes to bad news, he said, “Break it yourself. Don’t wait for them to dig it up.”

Walters urged the government officials to allow all their employees to talk to the media. He said government officials should resist the temptation to control what is said about their agency. If you trust employees to work for you, you should trust them to talk to the press, he said.

He also encouraged government officials to avoid jargon and acronyms and to apply what he calls the “explaining it to mom” rule. Government officials should tell a story.

“You’ll have a shot at shaping the news.”

—Christina M. Camara

AGA's Performance Management Conference Under Way in Seattle

AGA’s Fifth Annual Performance Management Conference kicked off in Seattle Thursday with a discussion about successful performance management efforts in the state of Washington, which has been recognized by Governing magazine as one of the best-managed states in the nation.

Robin Arnold-Williams, director of the state’s Executive Policy Office, gave specific examples of how Gov. Christine Gregoire has pushed performance measurement and management as a way to improve services, dramatically in some cases, for Washington residents.

One graphic example was the improvement in services to at-risk children in Washington state. Arnold-Williams said Gregoire told her that the state in some cases took 10 days to respond to reports of abuse while pointing to a file that contained information on a child who died on the ninth day. “Talk about having an urgency for action,” Arnold-Williams said. With the conviction that the state had to improve its response rate, state officials set to work. The response goal was changed from 10 days to 24 hours in 2005. “We said to staff, this is a priority, and the staff said, ‘thank you.’ ”Arnold-Williams said.

While getting to the scene of reported abuse quickly was critically important, “you can’t just stop with measuring.” Maybe Child Protective Services personnel got there in time, but did they do the right things while there? The “ultimate outcome” was to prevent children from being victimized again, she said. Arnold-Williams showed a graph that illustrated the dramatic decline in the number of children who had been re-victimized in a six-month period after the first report of abuse.

“For me, this is closing the loop and connecting the dots all the way through,” she said. From there, the legislature and the governor supported an infusion of resources that paid for 400 more case workers, reducing case loads from roughly 24 clients to 15.

Arnold-Williams pointed out that success can be difficult to quantify. She pointed out that enrollment in Washington’s community college and technical institutions increased tremendously during the economic downturn, but how do you define success in worker retraining programs? Is it simply the number of enrollees in the program? Is it the number of certificates and degrees? If the program isn’t completed, is that a failure? What if a student left the program because he or she got a job? Was that a good use of state resources?  These are the kinds of questions that should be asked to determine how to define success for various programs,

One clear success was in the Department of Licensing, where budget shortfalls forced the state to close 11 under-utilized offices. Despite the closures, the state was able to decrease wait times by 30 percent, from 34 minutes to 25 minutes, by increasing hours at some of the remaining offices, adding self-service kiosks and other measures.

Keeping the momentum of performance measurement during an economic downturn is a challenge, she said, but added, “We do need the courage to act with the path is not clear.”

The second keynote speaker, Shelley H. Metzenbaum, Ph.D., associate director of Performance and Personnel Management, U.S. Office of Management and Budget, shared lessons of performance lessons from local, state and federal governments.

The bottom line, she said, is performance management can work remarkably well. She emphasized the word ‘can,’ and added that it is one of the most powerful tools to drive dramatic performance in government while strengthening citizen involvement in the democratic process. The key, she said, is to make sure government performance is focused on outcomes, rather than measuring the outputs of government as a compliance exercise.

People in government need to discuss the stories the data reveals, or the cost of measuring performance can swamp the progress, she said.

Some key lessons she’s learned is that performance measurements must be used to be meaningful, the connection between outputs and outcomes should be clear, analysis should be ongoing, inquiries should be interactive and the measures should be as simple as possible. She suggested, for example, that governments think about “bad things you want to slow, and good things you want to grow.”

Crime rates can be driven down, smoking can be decreased, recycling rates can be increased and river cleanups can show measureable improvements using performance management techniques, she said. In two decades in the field, Mezenbaum said progress can feel slow at times, “but it’s a whole lot better than it used to be.” —By: Christina M. Camara

Think Big! Act Courageously! Make a Difference! Performance Management is Key!

By: William A. Morehead, Ph.D., CGFM, CPA, Chair of Accountancy, CIS & Finance, Delta State University; AGA National President, AGA Past National Treasurer and Member, AGA National Executive Committee

AGA’s Fifth Annual Performance Management Conference is coming up in less than three weeks in Seattle. We gather to highlight the advances and best practices occurring in governments around the country as they measure their performance, and, most importantly, manage themselves based upon that data. There's still time to register. 

Throughout the 25 years I have served the citizens of Mississippi through government financial management in state agencies and academia, I have witnessed both effective and ineffective performance management systems. As a leader, one thing I have always sought to do was find ways to encourage those who have been part of my work team. This has not always been easy when resources were scarce. 

During the last nine years of my career, I have served at Delta State University in Cleveland, MS, and I have followed my AGA presidential theme and goal of “Think Big! Act Courageously! Make a Difference!” Delta State has been an organization that “thinks big” and has set lofty goals for progress during the time I have been at the university. Doing so has required bold action, and sometimes, significant risk. It was necessary to “act courageously” to bring about meaningful change. Looking back over the past nine years, I truly can see where we have “made a difference.” The journey has not always been easy, but it has been rewarding—especially when the lives of our students, faculty and staff have been positively affected.

A performance management system is only as effective as the organization’s ability and willingness to collect data, effectively measure it and make improvements based upon the knowledge gained. It is our responsibility as leaders to establish realistic strategic goals that stretch our organizations. Leaders must ensure the goals are effectively communicated to all staff so they become engaged in the process. These goals must be measurable and clearly linked to the organization’s mission, strategies and budget. The performance results not only need to be measurable, they must be evaluated on a regular basis; and, we leaders must use the feedback to make meaningful change and improve strategic planning when performance gaps are revealed.

When we set out to affect change at Delta State based upon previous and subsequent performance, we began our efforts by examining our short-and long-term strategies, our mission and our vision. We had to ensure our goals and objectives were directed to improve our university. We did so by focusing our efforts on performance management, both measuring our efforts and subsequently making decisions from our data. 

One key issue, if not the most important issue, in any performance management system is “people.” It is the people of the organization who must embrace the change necessary to make the performance management system successful. Often, these same people must be educated regarding the issues, goals, strategies and processes that make the organization “tick." And, it is these people who cause the change to occur or prevent it from succeeding.

Like many organizations, we discovered an absence of an “attitude of change” at Delta State as we began to examine processes. Unfortunately, one of the main issues we faced was that processes and procedures had been passed down from one employee to another without any question of “why do we do this?” Many folks would say, “we’ve never done it that way before” or “it works okay now, why do we need to change anything?”  Many of these statements stemmed from the uncertainty of the outcome of examining processes. Fears of losing positions or not being needed by the organization fueled the uncertainty and resistance.

We tackled many performance management projects during my tenure as vice president for Finance and Administration at Delta State, and I have written about them in the upcoming book on leadership and performance management being released by Oracle at the PMC in Seattle. As I highlight these projects, I note the common factor in each performance management project tackled by the university has been its people. Improving processes required extensive collaboration among many stakeholders. While not always easy, quick or painless, it is and has been very rewarding to be a part of continuously improving our university. It is exciting to watch staff grow through these process renovations and become a team affecting positive performance management. I challenge you to do the same in your organizations.

Performance management is all about people and it involves change.

All along the way, AGA has been there helping me to, “Think Big! Act Courageously! and Make a Difference!”

Performance Reporting/Management Guidance: One Skeptic’s Views

By Kenneth A. Smith, Ph.D., CPA

Kenneth A. Smith, Ph.D., CPA, is a founding member of AGA’s Mid-Willamette Valley Chapter, a founding member of the Oregon Public Performance Measurement Association (OPPMA.org), and an assistant professor of accounting and information science at Willamette University.

Performance measurement and external performance reporting have been hot topics for the past 20 years. Today I’ll discuss recent proposals by three organizations:

• Governmental Accounting Standards Board's (GASB) “suggested voluntary” guidelines
• Government Finance Officers Association (GFOA)/National Performance Management Advisory Commission’s (NPMAC) “Performance Management” framework
• AGA’s Citizen-Centric reporting

The framework for my comments is skepticism—like many accountants, I am a skeptic. I doubt the numbers that people report along with the words or stories they tell. It’s not that I can’t or don’t trust—it’s that I trust most people are surrounded by intense pressures and that some people succumb to these pressures. Both history and personal experiences reinforce my skepticism. The professional standards tell me my skepticism is a good character trait, while my wife, my students and several social acquaintances often tell me otherwise. 

It is with increasing skepticism that I approach the topic of performance measurement and those who set standards or provide guidance on reporting and management. Two questions continue to haunt me:

A)   Can we create a set of performance reports that allow comparisons of different governments?

B)   What is the proper role of accountants in preparing and providing assurance on these reports?

My gut has always told me the answer to “A” is YES. Back in the late 1980s the GASB enlisted over 30 scholars and practitioners to research the state of the art. It concluded with a series of reports on 12 service areas that “Its time has come” for external reporting. These reports included what could form templates for such reporting. I’ve watched and researched the actual reporting behavior of cities and states over the past 20 years, and relatively few local governments externally share high-quality reports under the current voluntary scheme. The skeptic in me says the quantity and quality of reporting will not improve without a substantial change in the incentives faced by preparers. Professional guidance can change those incentives, so let’s look at what is new.

The GASB recently issued its second draft of “Suggested Guidelines for Voluntary Reporting SEA Performance Information” with comments due Oct. 30, 2009. I believe this document is a solid improvement upon the exposure draft of the same title the GASB issued last year. The main points include: performance reporting is voluntary, each jurisdiction is unique, GASB is not suggesting any specific measures giving large discretion to preparers, the number of “criteria” are reduced from 16 to 10 and more closely follows earlier accounting theory (e.g. relevance and reliability).

A different approach comes from the GFOA-staffed National Performance Management Advisory Commission’s draft report “A Performance Management Framework for State and Local Government: From Measurement and Reporting to Management and Improving”. Comments were due Sept. 30 and are still being accepted. The main points include:  collecting and reporting performance data is important but not sufficient to produce sustainable performance improvements, there are many management models to choose from (e.g. Stat, benchmarking), the framework is theoretical rather than a “how-to” guide and the prime audience is public managers and public officials.

Neither report is short, with GASB using 58 pages and NPMAC taking 38, though both provide summaries and illustrations along with text. The NPMAC cites recent relevant publications (including articles from the Harvard Business Review) while the GASB report mostly refers to its own research and activities. I find the NPMAC report is easier to read and more thought-provoking, it is definitely worth reading.

One of the things that bothers me is that neither approach is (as of yet) “elegant” in the way that financial reporting is elegant. This gets me back to question “B” – what is the role of us accountants? I tell my students that financial accounting is elegant in its ability to generate comparable single-page reports that summarize the financial results and position of organizations both large and small. The AGA’s four-page Citizen-Centric reports are elegant in the sense they are short, but the skeptic in me wonders if the quality, completeness and comparability of the content is sufficiently high to be elegant.

So what makes me skeptical? I am skeptical that the NPMAC is only interested in the positives of performance management. Is it possible the NPMAC is a counter-attack on the potential pressure from GASB to increase external performance reporting? Since the NPMAC report is clear and thought-provoking, I am less worried but not completely satisfied. I am also skeptical that GASB’s report will have a noticeable impact on improving the quantity or quality of performance report preparers. My fear is we will continue to have a very small group of decent reporters with the majority failing to provide useful information.

Beyond the goals or consequences of these reports, I am beginning to become skeptical about the cost/benefit relationships regarding performance measures—due mostly to the capacity and interest of citizens, leaders and elected officials to truly engage in the hard work of understanding difficult government problems and being willing to enter into pragmatic discussions about what can be done. An underpinning argument in both GASB and NPMAC is that some important stakeholder wants the organization to be transparent and improve (GASB proxies for citizen and NPMAC for the elected and appointed leaders). It’s sad to say, but the skeptic in me wonders if large numbers of either group really cares enough to make and sustain improvements….what do you think?

The Four Levels of Transparency

By: William Aaron

William Aaron is the chief of consulting services and innovation for Weidner, Inc. 

It’s hard to recall a time when there has been more focus on the need for transparency in government. From the president on down to local elected officials, the attention to ensuring government is transparent is extraordinary—and continuing to grow.

But while transparency in government is one of those ideas that you just can’t argue against—right up there with baseball, Mom and apple pie—it’s important to note that all transparency is not created equal.

So let’s get transparent about transparency.

From our work over the past 11 years with government organizations and jurisdictions at the federal, state and local levels, we have come to understand that government transparency can be defined on four separate levels. The next time you hear someone talking about transparency in government, check and see how transparent they really are.

The four levels of government transparency, moving from least transparent to most transparent, are:

Level One:  How We Plan to Spend Money. This is the level where government has traditionally defined transparency:  What does the budget say about how we intend to spend money? It’s the first step—it speaks to what we plan to spend money on, after all. We might, for example, declare that we’re adding $500,000 to the city budget to fight truancy. Many governments are working hard but are still struggling with this first level of transparency.

Level Two:  How We Actually Spend Money. At this level, we may be able to be clear about how dollars were spent. Did we actually spend that $500,000 we budgeted to fight truancy, and did we spend it on the anti-truancy effort? At this level of transparency we are beginning to have a story of fiscal responsibility, but are not yet able to tell a story about performance, about what spending that money accomplished.

Level Three:  What we Delivered With the Money. At this level of transparency we are able to be clear that our customers got something for the money we spent. With the additional $500,000 to fight truancy, we provided X number of counseling sessions or Y number of tutoring sessions—so we know services were delivered, what sort and how many. We are building a more complete story of transparency of whether we spent the money appropriately and delivered what we intended to deliver. To be fully transparent, though, we need to report on the results customers experienced as a consequence of receiving our services.

Level Four:  What Results Were Accomplished with the Money. This is the highest level of transparency, where government gets very clear about what every taxpayer knows: that spending money is only a means to an end. That end is defined as the experience or result the customer has as a consequence of receiving the services. What difference was made? With the additional $500,000 we spent to fight truancy, did we actually change the truancy rate? Did we improve academic achievement, or increase the graduation rate? What result did we accomplish?

At this highest level of transparency, you are telling your customers the extent to which you are able to influence the results you clearly laid out in Level One—the budget. As the good folks in Oklahoma City say, “We Deliver What We Promise”—and they mean it in terms of results.

Government organizations, which are widely recognized as among the best managed in the nation, can answer these questions with objective performance information—and they use that same information to guide their management decisions, including how they allocate their budgets.

So how transparent is your organization? And—more important—how transparent do your customers expect you to be?

You can download a free self-assessment tool to help you determine how transparent and accountable your organization is at http://www.weidnerinc.com/blogdocs/SelfAssessment.pdf

It Takes People to Make the Plan Work

By: Rebekah Stephens

Rebekah Stephens is strategic management coordinator for Metropolitan Government of Nashville and Davidson County.

General George S. Patton once said, “Plans must be simple and flexible . . . They should be made by the people who are going to execute them.” 

We see the wisdom of this statement today in our own business, regardless of where we work or what we do. If the employees who are tasked with carrying out the goals of an organization are given the opportunity to help craft those very goals for which they will be held accountable, the results can be amazing. 

An organization with Metro Nashville is a perfect example. Shortly after the organization instituted a formal strategic business plan, the director made it a priority to communicate the goals of the department to every employee. One of the employees charged with the delivery of more than 16,000 items among 21 buildings began to revise the delivery process so that the materials could be delivered in a more efficient way. This employee knew what the goals of the organization were and how his work contributed to the organization’s success. 

Below are listed just a couple of benefits of involving employees at all levels of the organization in the organization’s strategic planning process.

Organizational alignment—Everyone has heard the story about the janitor who worked at NASA, and when asked what his job was, responded, “To put a man on the moon.” That example of organizational alignment paints a clear picture of what can happen when you have everyone, from front-line staff to the executive leaders, involved in crafting a strategic plan for an organization. 

Clear purpose—According to management consultant Peter F. Drucker, “What makes a plan capable of producing results is the commitment of key people to working on specific tasks.” Might employees find it helpful to have a clear explanation of not only their job responsibilities, but also how those everyday responsibilities contribute to a larger purpose or goal? 

For example, what might happen if employees at an Election Commission, tasked with updating addresses in the database, knew that they were not only fulfilling their daily responsibilities, but also making sure that people who had recently moved continued to be able to vote in upcoming elections at the voting poll to which they were assigned? What might happen if that employee kept in mind that what they did every day helped to maintain a citizen’s ability to vote?  Might entries be made faster? Might the process be made more efficient?

I will leave you with this final thought for today: “The final test of a plan is its execution.” —1949 U.S. Army Field Service Regulations

What does your organization do to make sure that employees at every level know how the work that they do every day contributes to the goals of the organization?

The Role of Performance Indicators During Fiscal Stress

By: Anthony Rainey

Anthony Rainey is treasurer and CFO of Hyattsville, MD.

In 1975 Peter Drucker (Management: Tasks, Responsibilities and Practices) identified five prioritization and performance approaches of successful organizations:

• They clearly define the nature and scope of their function, mission and activities.
• They set clear objectives.
• They set priorities, concentrate on the objectives and set standards of performance for themselves.
• They measure performance, analyze the results and work to correct deviations from established standards.
• They regularly conduct audits of performance to ensure that the management system continues to function properly.

Federal, state and municipal governments attempt to utilize these approaches until there is a significant reduction in revenues that will adversely affect the ability to fund the current public service and public product levels. Rarely are significant revenue reductions transformed into a fiscal planning process where the executive and legislative branches base expenditure reductions upon “priorities” and “levels of performance.” This often results in the third “P” of budgeting—politics—to fill the vacuum of leadership in priorities and performance in fiscal decisions. Interest groups who receive public goods or public services, or who are the providers of public goods and public services through government contracts or grants, enter the picture with their respective “priorities” but rarely with new “performance levels.” How can we change this?

Look at What Government Provides

Government provides public goods and public services. The actual production of goods and or the provision of public services are typically classified by their “non-excludability” and/or “non-rivalry.” Non-excludability designates that the difficulty to exclude any person, group, or organization from benefiting from the public good or public service—even if they do not or will not pay for it. Non-rivalry designates that the consumption of the good or receipt of the service by a person, group or organization does not prevent the consumption of that good or receipt of that service by others. In the private sector, a private good or service has excludability for it can be excluded from a person, group, organization benefiting from the good, or service if the consumer or receiver does not pay. Private goods have a rivalry in that consumption of the good or receipt of the service by a person, group, or organization prevents its consumption or receipt by others.

Look at the Cost of Public Services and Goods

In our current economic environment, particularly the decline in federal, state and municipal revenues, the cost of the provision of public goods and services affect short and long-term expenditures, debt service and fund balances. Budget balancing discussions about revenue shortfalls typically focus on immediate or phased in expenditure reductions not tied to prior priorities or stated levels of performance. The federal government’s debt service capacity will soon put them in the same situation as state and municipal governments. Faced with significant revenue shortfalls, budget processes become expenditure reduction exercises greatly influenced by the consumers of public goods, recipients of public services, and the payers of the public revenues for these goods and services. Without utilizing having a “prioritized” list of products and services as well as the expected “performance levels,” the resolution of required expenditure reductions must often be revisited.

Q1. WHY NOT SOLICIT ASSISTANCE FROM PROFESSIONAL ORGANIZATIONS, FOUNDATIONS, AND UNIVERSITIES TO DEVELOP AN INVENTORY OF FOR EACH RESPECTIVE SERVICE OR PRODUCT PROVIDED BY A GOVERNMENT? A table, as depicted below, would be created:

1 Public Service

2 Public Products

3 Budget By Fund

4 Structural Funding Require- ment

5 Levels of Perfor-mance

6 Pri-ority

The “Public Service” column would identify all the public services and the “Public Products” would identify all of the public products in the budget. The “Budget By Fund” column would identify the amount of each “Public Service” by fund. The professional organization, foundation, or university could be utilized to assist the governmental entity in matching services and products with budgets by fund.

The “Structural Funding Requirement” would serve to identify whether laws, statutes, contracts, or agreements require these services and products to be funded. The “Levels of Performance” would depict those measures of performance that was approved based on the budget by fund.

Q2. AFTER THESE FIVE COLUMNS WERE CONSTRUCTED, WHY NOT ENGAGE THE INSPECTOR GENERALS AND STATE AND MUNICIPAL AUDITORS TO ASSESS AN ANNUAL PRIORITIZATION BY THE ELECTED OFFICIALS AND FIND OUT WHAT THEIR ANTICIPATED LEVELS OF PERFORMANCE ARE? When it comes to performance, many in the Legislative Branch may delegate the assessment of performance to the auditor. The auditors would serve as the objective interpreter of the information identified. I would expect that there could be different priorities by agencies, departments, divisions, bureaus, directors, agency or department heads, budget offices, executive offices, legislative offices. Such disclosure at the beginning of a process could aid in resolving differences.

Q3. RATHER THAN AWAITING THE PRIORITIZATION OF A GOVERNMENT’S PUBLIC SERVICES AND PUBLIC PRODUCTS DURING A FISCAL CRISIS, WHY NOT HAVE THE ABOVE CONDUCTED ON AN ANNUAL BASIS? Note, may governments or agencies will assert that this already happens within their budget process. Citizens and others often question the proper role of government, and often have concerns about government intrusion. This approach could clarify the specific product and/or service. Citizens and policy makers often question the effectiveness and efficiency of government programs. I see a program providing a bundle of services and products. This approach could identify redundancy and duplication as well as what constitutes an acceptable level of service or even quality of a product.

Q4. WOULD THIS TYPE OF PERFORMANCE REPORTING SPECIFICALLY TIED TO PUBLIC SERVICES AND PRODUCTS, ASSIST MANAGEMENT, STAFF, DECISION-MAKERS AND CITIZENS DURING TIMES OF FISCAL STRESS? When a reduction in force is undertaken or a budget gap filled by a “one-time” versus “ongoing” revenue, would this depict the effect on the particular public service or public good?