As many states face financial deficits and strained resources, legislators are often looking for innovative ways to tackle budgeting challenges. As the Council of State Governments has reported, the last few years have seen many states focus on performance-based budgeting as a way to set measurable goals and drive programs and initiatives to meet specific objectives. Unlike traditional budgeting, which relies on incremental changes to baseline spending from year-to-year, performance based budgeting focuses on results and a return on investment for taxpayers.
There are several advantages to performance financing. As CSG noted, this method requires state departments and programs to examine how well they’re meeting their objectives, which gives greater insight into what initiatives aren’t working or are running inefficiently.
Under this method, states are encouraged to do more with the available resources, which leads to increased inter-departmental cooperation and resource sharing. Allocation of funds in the next budget cycle will be tied to how well these initiatives hit their performance goals, which gives the public greater insight into how efficiently their tax dollars are being spent.
However, as The National Association of State Budget Officers has found, there are challenges to performance based budgeting. The expectations of lawmakers must be clearly communicated so departments and programs can establish clear and specific goals. Performance data will also be key to evaluating the success of these programs, and there needs to be a way to easily and accurately track this reporting.
With Questica software, public sector agencies can consolidate and manage all performance-related information and metrics into a single streamlined source that can be easily shared and updated. Questica’s web-based solutions allow departments and lawmakers to accurately track performance data, integrate it into sounder decision making and push for desired outcomes.
State lawmakers considering performance-based budgeting should contact Questica to learn how budgeting and performance measurement software contribute to aligning spending with desired outcomes and in increasing transparency.