Budgeting for outcomes: key findings from GFOA research.

• Author: Mucha, Michael J.
• Position: [PM.sup.2] Connections: PERFORMANCE MEASUREMENT & MANAGEMENT - Government Finance Officers Association - Report

Over the past 10 years, many governments have turned to budgeting for outcomes (BFO) as a way of closing large budget deficits and creating sustainable budgets that position the government to deliver the services citizens demand and expect. The GFOA recently researched a number of organizations that have moved to a BFO process to identify just how much their processes varied, and ultimately to determine whether any variation had an impact on overall success. (1)

BFO is generally considered a best practice, but it isn't for every government--or, put differently, not every government is ready for BFO. Some BFO implementations have been very successful, ushering in a full transformation of organizational culture. And some governments have struggled with BFO and ultimately abandoned the effort. The focus of the GFOA's recent research was to identify experiences and trends across a number of BFO implementations and then communicate these lessons learned to other organizations that are considering BFO.

THE BFO PROCESS

While every organization develops a slightly different approach, the following eight steps generally define the BFO process.

Step 1: Determine the Price of Government. The standard BFO process starts with a government defining how much money is available to spend. This "price of government" is commonly expressed as a percentage of community income.

Step 2: Identify the High-Priority Areas. The government identifies a relatively small number of high-level priorities that are important to the public. These priorities form the basis for organizing the budgeting process. Priorities are often expressed from the citizen perspective (e.g., "I want a government that provides ...").

Step 3: Allocate Revenue to Priorities. Revenues are allocated among the high-level priority areas by percentages or dollar amount, establishing how much will be spent on each priority.

Step 4: Develop Requests for Results. The government prepares budget instructions in the form of request for results (RFRs), which provide guidance to departments as to what results are expected within each priority area. Typically, RFRs are developed by "results teams" that are formed to identify the factors with the most bearing on the high-level strategies.

Step 5: Prepare and Submit Proposals. Rather than submitting proposed budgets, departments prepare and submit proposals that explain how their service or program would help to achieve the outcome and how it is consistent...