Difference between revisions of "Performance Based Budgeting (PBB)"
(Performance-based budgeting is the practice of developing budgets based on the relationship between program funding levels and expected results from that program.) |
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| − | Performance-based budgeting is the practice of developing budgets based on the relationship between program funding levels and expected results from that program. The performance-based budgeting process is a tool that program administrators can use to manage more cost-efficient and effective budgeting outlays.<ref>Defining Performance Based Budgeting [https://en.wikipedia.org/wiki/Performance-based_budgeting en.wikipdia.org]</ref> | + | Performance-based budgeting is the practice of developing budgets based on the relationship between program funding levels and expected results from that program. The performance-based budgeting [[process]] is a tool that program administrators can use to manage more cost-efficient and effective budgeting outlays.<ref>Defining Performance Based Budgeting [https://en.wikipedia.org/wiki/Performance-based_budgeting en.wikipdia.org]</ref> |
| − | A performance budget has the following characteristics:<ref>Performance Based Budgeting Fact Sheet [http://www.ncsl.org/research/fiscal-policy/performance-based-budgeting-fact-sheet.aspx ncsl.org]</ref> | + | A performance [[budget]] has the following characteristics:<ref>Performance Based Budgeting Fact Sheet [http://www.ncsl.org/research/fiscal-policy/performance-based-budgeting-fact-sheet.aspx ncsl.org]</ref> |
*It presents the major purpose for which funds are allocated and sets measurable objectives. | *It presents the major purpose for which funds are allocated and sets measurable objectives. | ||
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*It offers agencies flexibility to reallocate money when conditions merit, rewarding achievement and possibly imposing sanctions for poor performance. | *It offers agencies flexibility to reallocate money when conditions merit, rewarding achievement and possibly imposing sanctions for poor performance. | ||
| − | It is important to understand that performance-based budgeting is not simply the use of program performance information in developing a budget. Performance-based budgeting does more than just inform the resource allocation decisions that go into the development of a traditional type of budget. In other words, it is not just "budgeting based on performance." Instead, it is the process by which a particular type of budget is developed -- a Performance Budget (or "program performance budget"). To design an effective system of performance-based budgeting, it is therefore vital to understand first exactly what the end product itself should be, what it should contain, and how it should look. A true Performance Budget is not simply a Line-Item (or object class) budget with some program goals attached. It tells you much more than just that for a given level of funding a certain level of result is expected. A real Performance Budget gives a meaningful indication of how the dollars are expected to turn into results. Certainly not with scientific precision, but at least in an approximate sense, by outlining a general chain of cause and effect. The most effective governmental Performance Budget does this by showing, for each program area, how dollars fund day-to-day tasks and activities, how these activities are expected to generate certain outputs, and what outcomes should then be the result.<ref>What is Performance Based Budgeting? [http://strategisys.com/pbb strategisys.com]</ref> | + | It is important to understand that performance-based budgeting is not simply the use of program performance information in developing a budget. Performance-based budgeting does more than just inform the resource allocation decisions that go into the development of a traditional type of budget. In other words, it is not just "budgeting based on performance." Instead, it is the process by which a particular type of budget is developed -- a Performance Budget (or "program performance budget"). To [[design]] an effective [[system]] of performance-based budgeting, it is therefore vital to understand first exactly what the end [[product]] itself should be, what it should contain, and how it should look. A true Performance Budget is not simply a Line-Item (or object class) budget with some program [[goals]] attached. It tells you much more than just that for a given level of funding a certain level of result is expected. A real Performance Budget gives a meaningful indication of how the dollars are expected to turn into results. Certainly not with scientific precision, but at least in an approximate sense, by outlining a general chain of cause and effect. The most effective governmental Performance Budget does this by showing, for each program area, how dollars fund day-to-day tasks and activities, how these activities are expected to generate certain outputs, and what outcomes should then be the result.<ref>What is Performance Based Budgeting? [http://strategisys.com/pbb strategisys.com]</ref> |
===References=== | ===References=== | ||
<references /> | <references /> | ||
Latest revision as of 17:35, 6 February 2021
Performance-based budgeting is the practice of developing budgets based on the relationship between program funding levels and expected results from that program. The performance-based budgeting process is a tool that program administrators can use to manage more cost-efficient and effective budgeting outlays.[1]
A performance budget has the following characteristics:[2]
- It presents the major purpose for which funds are allocated and sets measurable objectives.
- It tends to focus on changes in funding rather than on the base (the amount appropriated for the previous budget cycle).
- It identifies programs and agencies that are seeking similar outcomes, thereby drawing such inter-relationships to the legislature's attention.
- It offers agencies flexibility to reallocate money when conditions merit, rewarding achievement and possibly imposing sanctions for poor performance.
It is important to understand that performance-based budgeting is not simply the use of program performance information in developing a budget. Performance-based budgeting does more than just inform the resource allocation decisions that go into the development of a traditional type of budget. In other words, it is not just "budgeting based on performance." Instead, it is the process by which a particular type of budget is developed -- a Performance Budget (or "program performance budget"). To design an effective system of performance-based budgeting, it is therefore vital to understand first exactly what the end product itself should be, what it should contain, and how it should look. A true Performance Budget is not simply a Line-Item (or object class) budget with some program goals attached. It tells you much more than just that for a given level of funding a certain level of result is expected. A real Performance Budget gives a meaningful indication of how the dollars are expected to turn into results. Certainly not with scientific precision, but at least in an approximate sense, by outlining a general chain of cause and effect. The most effective governmental Performance Budget does this by showing, for each program area, how dollars fund day-to-day tasks and activities, how these activities are expected to generate certain outputs, and what outcomes should then be the result.[3]
References
- ↑ Defining Performance Based Budgeting en.wikipdia.org
- ↑ Performance Based Budgeting Fact Sheet ncsl.org
- ↑ What is Performance Based Budgeting? strategisys.com