Performance Budgeting

Advocates of performance budgeting--budgeting that links performance levels with specific budget amounts--have argued that systematically presenting information on agency and program performance will improve budget decision-making by focusing choices on program results. The Senate's recent passage of legislation calling for a series of pilot projects dealing with performance measurement and performance budgeting indicates renewed interest in this subject at the federal level. This report looks at the uses and the limitations of performance measurement and budgeting as experienced by certain states. GAO describes the experiences of these states, considered leaders in performance budgeting, and discusses the potential implications of these experiences for the federal government.

GAO found that: (1) representatives from all groups of state officials generally supported performance budgeting and thought there ought to be a stronger connection between performance and resource allocations; (2) nearly all officials interviewed were dissatisfied with the measures currently included in their budget documents; (3) legislators thought that current performance measures have little credibility and are of little or no use in allocating resources; (4) most legislators still rely on budgeting by expense categories; (5) legislative officials recognized that performance information can enhance oversight of executive branch actions, but that it can also complicate resource allocation decisions; (6) legislative staff cited short legislative sessions, small staffs, and the need to respond to constituent priorities as factors inhibiting legislators' ability to use or develop performance measures; (7) central staff officials stated that performance measures had been useful for internal agency management purposes and justifications for initial budget formulations; (8) program managers tended to be more optimistic about the detailed performance measures that were kept internal to their agency and said that these measures had been more useful for management improvement efforts than in the budget process; and (9) central budget staff tended to rely on across-the-board reductions, except for the highest priority programs, during periods of fiscal stress.