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 organisations.

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: – F ocused – A ppropriate – B alanced – R obust – I ntegrated – C ost 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: – S pecific – M easurable – A chievable – R esponsible – T ime-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 on the base of comparing processes or results