Performance Budgeting in American States: A Framework of Integrating Performance with Budgeting

Abstract

The past 20 years have witnessed ongoing endeavors researching the factors that influence the implementation of performance budgeting. While various factors have been identified, the effort to build frameworks is still lacking. This research proposes a framework to study the nature of relationships among various political, economic, legal, and organizational factors with performance budgeting, as evidenced in US state governments. We found that the presence and the characteristics of the legal foundation, managing for performance, shared responsibilities with the legislature, and capacity building are the most important factors. The environmental factors, however, are not statistically significant.

Keywords:

• budgeting
• factors
• model
• performance

Notes

¹ The GPP was a multi-year assessment of public management capacity funded by the Pew Charitable Trusts that began in 1996 and continued until 2008. Across these years, the GPP provided management grades for American local governments and several US federal agencies in selected years only and for the 50 American states four different times. The Project employed multiple methods of data collection and analyses and included both academics and journalists to “grade” governments in the areas of budgeting and financial management, capital and infrastructure management, human resources management, and information management. For instance, evidence that budgetary decisions actually incorporated the consideration of performance data was collected (1) via interviews of state officials conducted by the GPP journalists, (2) through the online survey completed by state managers and staff, and (3) by the GPP academic partners regarding state budgeting and management backgrounds, processes, and practices. The data from these three different sources were then considered collectively by journalists and academics when determining state scores, from weak to strong. There now is substantial research that incorporates GPP grades as a measure of government management capacity. Heckman (2012) acknowledges some limitations to these grades as proxy measures of public management execution, specifically given the “action orientation” of government management. Still, this scholar (2012, p. 474) considers the criteria used by the GPP to adequately represent “best practices” in public management and notes the GPP grades to be the “best, criteria-based, multidimensional measure of [management quality]” to date that have been regularly applied to multiple governments.

² Access the full report that provides assessment of each state (strong, mid-level, or weak) regarding budgeting for performance in Governing “Measuring Performance: The State Management Report Card for 2008” (March). Retrieved from http://www.pewstates.org/uploadedFiles/PCS_Assets/2008/Grading-the-States-2008.pdf.

³ As of January, 2012, 10 states do not have performance budgeting law, including: Arkansas, Kansas, Maine, Massachusetts, New Hampshire, New York, North Carolina, North Dakota, South Dakota, and West Virginia. These states may have had such law in the past and/or may have vestiges of past administrative reforms or executive requirements for performance budgeting.

⁴ Access the full report that provides assessment of each state (strong, mid-level, or weak) regarding managing for performance in Governing “Measuring Performance: The State Management Report Card for 2008” (March). Retrieved from http://www.pewstates.org/uploadedFiles/PCS_Assets/2008/Grading-the-States-2008.pdf.

⁵ The remaining one (coefficient of integration) is in the expected direction although it is not statistically significant.