Leadership for the next generation of government financial performance.

• Author: Oftelie, Antonio M.

Today's turbulent economic environment is testing the relationship between the value and cost of government services like never before. In response, government financial executives hold the key to unlocking the value of administrative, budgeting, and performance systems to transform government operations and turn them into high-performance enterprises.

THE SEEDS OF MODERN BUDGETING

The seeds of budgeting as we know it today were developed from innovations championed in the Progressive Era (1890s to 1920s), a time when increased value was being placed on transparency and accountability in government operations. Most of the innovations made in that period were a reaction against the "bureaucratic feudalism of legislatures ... waste and inefficiency ... lack of leadership and accountability ... dominance of special interests ... lack of goals and the ability to implement them." (1) As government operations became more complex, single, executive budgets were developed to help centrally manage interaction between legislators and program executives about the resources needed for government programs. (2) With these systems, organizations were held accountable primarily for measures such as the level of inputs (or funds) that flow into the organizations, and as a result, their accounting systems performed one single function: controlling costs and allocating resources across an enterprise fairly and equitably.

BUDGETING TODAY: ACCOUNTING FOR RESULTS

Today, heightened levels of constituent and media expectations about government transparency and accountability are driving a new focus on measuring outcomes and impact more robustly. Some of this pressure comes from the new capabilities of networks, inexpensive data storage, and data analysis methods that allow governments to measure results across the entire value chain of inputs, outputs, outcomes, and impact. When these measures are put together, managers can assess the performance of a government enterprise from a wider perspective--across departments, agencies, and jurisdictions--as well as a more granular perspective, deeper within programs and operating units. Once government administrators have fully harnessed the tools of "big data" and "analytics," we will look back at this era as transformational.

How should government finance officials lead these transformational efforts? First, by recognizing that financial leaders have the pivotal role in adopting the new methods and pacing the...