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Abstract
Performance-based budgeting (PBB) has become popular over recent decades in both developed and developing countries. How a line agency evaluates program performance is crucial to understand PBB reform in the Chinese budgeting system. This study uses the Education Department of a major Chinese city that pioneered PBB reform in China. Inspired by the conceptual framework developed by Julnes and Holzer (2001), the author finds that the Education Department ‘adopted’ the techniques of performance measurement at the beginning of the reform then moved to the ‘implementation’ stage shortly thereafter. Unfortunately, after three years of ambitious innovation, the department reverted back to the ‘adoption’ stage. Apart from the technical difficulties involved in the reform, other contextual factors—leadership changes, accountability mechanisms, lack of consensus on the approach reform should take, and organizational capacity—shaped the direction of the PBB reform.
Notes
Disclosure statement
The author reports no conflict of interest. The author alone is responsible for the content and writing of this article.
Notes on Contributor
Meili Niu is a research fellow of Center for Chinese Public Administration Research, and an associate professor of School of Government, Sun Yat-sen University. Her research interest focuses on public budgeting and financial management.
Notes
1 Asian Development Bank, Capacity for Results Management; Bouckaert and Halligan, Managing Performance; Economic Commission for Africa, Public Sector Management Reforms in Africa; Organization for Economic Cooperation and Development (OECD), Performance Budgeting in OECD Countries; Hatry, Performance Measurement; Niu and Ho, “Evaluating the Conceptual and Methodological Challenges in Results-Oriented Management and Budgetary Reform,” 55–70; Wescott et al., The Many Faces of Public Management Reform in the Asia-Pacific Region.
2 Niu et al., “Performance-Based Budgeting in China,” 410–433.
3 Ma, “Goal Setting of China’s Budgetary Reform,” 1–15.
4 Andrews, “Performance-based budgeting reform,”, 31–70; de Lancer Julnes and Holzer, “Promoting the Utilization of Performance Measures in Public Organizations,” 693–708; Lu Mohr and Ho, “Taking Stock,” 426–458; Ho and Im, “Challenges in Building Effective and Competitive Government in Developing Countries,” 263–280.
5 Martin, “Outcome Budgeting,” 108-126.
6 Bouckaert and Halligan, Managing Performance; Ho and Im, “Challenges in Building Effective and Competitive Government in Developing Countries,” 263–280.
7 Ho and Im, “Challenges in Building Effective and Competitive Government in Developing Countries,” 263–280; Niu and Ho, “Evaluating the Conceptual and Methodological Challenges in Results-Oriented Management and Budgetary Reform,” 55–70.
8 de Lancer Julnes and Holzer, “Promoting the Utilization of Performance Measures in Public Organizations,” 693–708.
9 Cronbach et al., Toward Reform of Program Evaluation. San Francisco, CA: Jossey-Bass, (1980). "Toward Reform of Program Evaluation; Beyer and Trice, “The Utilization Process,” 591–622; de Lancer Julnes and Holzer, “Promoting the Utilization of Performance Measures in Public Organizations,” 693–708.
10 Niu, “Achievements and Challenges,” 85–91.
11 Niu, Zero-Based Budgeting Reform in Chinese.
12 Ibid.
13 Ibid.
14 Niu, “Achievements and Challenges,” 85–91.
15 According to the formal rules, in the Chinese Departmental budget system, employee and operational expenses together are called basic spending which is supposed to maintain the organization’s daily operation. All other expenses are program spending for achieving specific policy goals. However, in practice, because the quota for operational expenses is usually not sufficient for funding the daily operational demands, the Finance Department allows line agencies to include some operational expenses in the program budget in which called operational program. Niu, Zero-Based Budgeting Reform in Chinese.In China, the executive arm of government usually initiates the public sector reforms with the legislature (People’s Congresses) having a much more limited role. Therefore, the tradition is to use administrative orders instead of legislation to launch the reform and establish the rules.
16 Niu, “Achievements and Challenges,” 85–91.
17 Ibid.
18 In China, public sector retirees’ pensions and social benefits are not paid through a unified social security system, but are still part of the line agency’s departmental budget.
19 Niu and Song, “Restructuring Municipal Education Spending in China”.
20 Sparrow school is a metaphor for schools that are relatively small and have poor facilities and low quality instruction. From 2000 to 2004, Guangzhou invested RMB 1.1 billion to upgrade these schools.
21 de Lancer Julnes and Holzer, “Promoting the Utilization of Performance Measures in Public Organizations,” 693–708.
22 The Performance Evaluation Work Group was established in 2006 in order to enhance the authority of the performance measurement. Besides the Finance Department, the Audit Department, the Statistics Department and the Commission of Discipline Inspection also serve in the group.
23 In China, it was very common for the line agency or the program to receive less than its full appropriation during the budget year. This was true even though the budget was approved by the legislature. Actually, the Finance Department is responsible for transfer the money to the line agency’s account and this indicator is a measure meant to evaluate the Finance Department rather than the line agency. Therefore, it was removed later in some programs.
24 Bischoff and Blaeschke, “Performance Budgeting,” 344–358.
25 Private Affordable Preschools are the preschools provide decent quality of service, but under equipped. City request those preschools charge a rate that is slightly lower than the market price. The City promised to subsidize them for upgrading their facilities.
26 Niu and Song, “Why does the budget cannot be spent?”.
27 de Lancer Julnes and Holzer, “Promoting the Utilization of Performance Measures in Public Organizations,” 693–708
28 Ibid.
29 Alfred Ho and Im, “Challenges in Building Effective and Competitive Government in Developing Countries,” 263–280.