Performance-budgeting: Keeping Expectations in Check
We were disheartened, but not surprised by a February 2022 performance audit in Kansas about that state’s use of performance-based budgeting.
While the Kansas auditors noted that the state’s executive budget division met most of the basic requirements of the Kansas 2016 performance-based budgeting law, it didn’t mince words on the actual impact of all the law: “This doesn’t seem to have meaningfully changed how the state budgets,” auditors wrote in big bold letters on page 2 of the audit.
Before we go on, we want to take note of how impressed we were that the Kansas Legislative Division of Post Audit undertook such an ambitious, and ultimately useful, exercise. Its only through this kind of thoughtful work that there’s much hope for the future of performance budgeting.
Over the years, we’ve continued to believe in the importance of performance management and we like the idea that thoughtful agency performance measures should inform budget discussions. But basing budgets on performance has turned out repeatedly to be a very tall order.
Here are our suggestions, based on our reading of this audit and our observations based on seeing similar stories play out in other states.
1. Keep expectations for major change in check. As we wrote in our 2020 book, The Promises and Pitfalls of Performance-Informed Management (Rowman & Littlefield), “Frustration stems from disappointment when the benefits touted by advocates fail to materialize.”
2. Recognize that change happens slowly. The period of study for the performance audit was January 2017 through September 2021. While the law was passed in 2016, various parts of it were implemented between 2017 and January 2019. While this was a very reasonable time to do this audit, we’d advise Kansas leaders not to get too discouraged yet, as very little progress was made on a number of fronts during 2020 and 2021 as a result of the pandemic.
3. In mandating performance budgeting, spell things out clearly. The audit pointed out several different ways in which the 2016 law lacked detail. These problems included vague language about who would receive performance information, and the role of the legislative branch in using the performance information. There were also missing details about when and how agencies would update program inventories and performance measures they produce.
4. Focus more agency attention on the quality of their budget submissions. The 2016 statute had a strong emphasis on the importance of results-oriented measures. But too little emphasis may have been placed on how those measures were established and verified. An examination of seven agencies by the auditor raised questions about the quality of program inventories and performance measures submitted by agencies as part of the performance-budgeting process. Two out of seven agencies that were closely examined had “significant deficiencies,” in program inventories according to the audit. Three out of the seven agencies had “significant issues identified” in the accuracy and reliability of their performance measures.
5. Change the language. As we pointed out in our book, we think it’s important that people give up on using the very phrase “performance-based budgeting,” in favor of the more accurate “performance-informed budgeting.” As we wrote, this makes it clear that “there is no actual formulaic connection among measures, evaluations and budgets.”
6. Don’t give up. As Ivor Beasley and Don Moynihan, both well-known experts in this field wrote in 2017, “Governments are too quick to abandon rather than adapt past efforts.”
For anyone who wants to know more about this audit, the Kansas auditor’s office produces a useful podcast, called The Rundown Podcast, This audit was the most recent one featured.