Program performance budgeting Slovak experience with program - - PowerPoint PPT Presentation

Program performance budgeting

Slovak experience with program performance budgeting

• Slovakia: compulsory (for muncipalities over

2000 inhabitants), but implementation gaps

• Exercise

Modern public financial management

Governance Budgeting & Accounting Medium term, program, performance, accrual full cost accounting Financing public subjects Transparent and performance based allocation Financing investments „Value for money“ – ex-ante project appraisal Procurement Focus on results not process Control and audit Increasing role of performance audit Delivery of public services Public-private-civil sector mix

Topics

• Performance budgeting versus (programme) performance

financing.

• Pros and cons of programme performance budgeting (plus

existing experience, current approaches and purposes for its failure in our region).

• International experience with performance budgeting.
• Implementing (programme) performance budgeting.

– Programmes/activities/Inputs, outputs, outcomes/Goals, indicators and targets – Methodology of proposing and measuring targets and indicators.

• Pros and cons of performance financing of public
• rganisations.

Performance budgeting versus (programme) performance financing

• PPB – simplification: method how to construct

and display budget

• Performance financing – allocating resources

according performance

What is program performance budgeting?

OECD defines performance budgeting as

• budgeting that links the funds allocated to

measurable results

• Budgets that contain information on actual or

estimated results

• Presentation clearly explaining relationship between

performance goals and the cost of achieving those goals

What is program performance budgeting?

• Performance budgeting shifts focus from

inputs to outputs or outcomes

• Thus from:

How much money will I get to What can I achieve with this money

Why program performance budgeting?

• Performance budgeting is supposed to:

– enhance transparency – improve accountability – improve allocative efficiency – serve as a signaling device – serve as a mechanism to set/review priorities and to monitor – inform citizens

Inputs, outputs, outcomes: example

• Public service: road safety
• Define:

– inputs: – outputs: – outcomes: – Impacts/results:

Problems of PPB

• Measurement of output and especially of outcome

and impact (measuring what can be measured)

• Distorting behaviour (perverse incentives)
• The focus is on objectives, i.e. on pursued effects

while neglecting side-effects

• The link between inputs and outputs/ outcomes is

ambiguous

• Resistance to change
• Setting specific goals and relevant indicators
• Quality of data
• Lack of management involvement

Peformance evaluation/measurement

• Performance information indicates how well

an organisation is performing against its aims and objectives.

• Performance information can refer to:

– Outcome – Output – Input

Performance evaluation/measurement

• Performance information consists of:

– An indicator to measure the oranisation‘s performance in relation to its objectives

• e.g. the average waiting time for heart surgery
• A target(s) to express a specific level of

performance that the organisation wants to achieve

e.g. 6 weeks by the end of 2016

Performance evaluation/measurement

• Performance information does not need to be

quantitative!

• Qualitative performance information: Example

– Objective: Quality supervision of the financial sector by the MoF – Indicator: Assessment by the IMF – Target: Positive assessment in 2016

Performance evaluation/measurement

• Criteria for the design of performance

indicators:

– Focused – Appropriate – Balanced – Robust – Integrated – Cost effective

Peformance evaluation/measurement

• A target is a commitment to achieve a specific and

better quality or level of ‘service’ over a specified time frame.

• Target-setting should be SMART:

– Specific – Measurable – Achievable – Responsible – Time-bound

Peformance evaluation/measurement

• Options:

– set a binary measure: yes/no – set an absolute number: 100 – set a percentage: % – set an interval: minimum – maximum – set a direction: decrease/increase versus a base year – set a benchmark: top 3 of EU countries

Performance financing

• Direct link between performance figures and

allocated financial resources to a organisation

• Example: formula financing of schools

Benchmarking

PPB should/shall be connected with this most appropriate performance management tool for CEE conditions Assesment of the position of own organisation

• n the base of comparing processes or results