New Budgeting Board Rolls Up Its Sleeves
One of the traditional methods of building an annual budget is to start with the previous year’s plan and make adjustments up or down as needed. The problem with such a method, critics say, is that it doesn’t address structural flaws in the base budget.
For governments, one of the increasingly popular ways to address this is through performance-based budgeting tactics, which break down all the activities of the various agencies into the smallest possible tasks and then analyzes whether the agency is achieving the aims of the task and how much it is costing.
“Performance based budgeting (PBB) differs by focusing on results rather than money spent,” a fact sheet on the practice from the National Conference of State Legislatures states. “The basic principle of PBB is accountability, not merely on compliance with law and previous funding decisions.”
“There’s more spending detail [in the performance reports],” IFO Director Matthew Knittel told members of the board at its first hearing of the year. “In the reports, you’ll see detail for personnel operating and other expenditures. … The PBB plans have actual spending versus appropriations in the traditional budget. We show actual [full-time employees] instead of authorized complement. When it’s possible, we allocate overhead costs to the activities. We also show all relevant funding per activity, and we show a five-year history based on the actual spend per activity.”
The first round of reports to be presented to the board focused on the state’s criminal justice agencies. Department of Corrections Secretary John Wetzel told the board that his agency was the perfect place to begin the exercise because his department was already incorporating performance measures.
“In 2012, we started performance contracting, first corrections agency in the country to do that,” Wetzel said. “So I think a lot of this stuff was a much easier lift for us than some of the agencies coming afterwards.”
Wetzel encouraged the board to use the performance analyses to advocate for justice reforms that invest initial dollars and save money in the long run.
“Your voice as, as the folks looking at performance budgets and understanding that decisions, policy decisions lead to spending, is critical,” he said. “One of the things that’s notable … is when we divert people, especially through county intermediate punishment, not only is it less expensive, but more effective, less likely to commit a crime in the future.”
The Performance-Based Budget Board’s chairman, Pat Browne, is also the chairman of the Senate Appropriations Committee, which works with its colleagues in the House to scrutinize and put together the state budget each year. Browne said that the work of the IFO would have a significant role in budget analysis this year.
“The plan itself needs to be used by the appropriations process to determine whether we’re spending the money appropriately, and to consider other policies that could be advanced in order to make sure it works better,” Browne said.