Measuring the performance of local governments in North Carolina.

• Author: Few, Paula K.

A model developed to help cities and counties measure and assess their performance and costs provides useful data for benchmarking, improving service, and evaluating privatization proposals.

North Carolina cities and counties are continually looking for ways to improve services, become more efficient, and save tax dollars. As part of this effort, local officials are asking hard questions: Are services meeting the needs or resolving the problems for which they were created? Are services achieving the goals that elected officials have established for them? Do officials know the true cost of providing each service? Are governments doing a better job today than five years ago?

The North Carolina Local Government Performance Measurement Project - a joint undertaking of the North Carolina Local Government Budget Association, the University of North Carolina's Institute of Government, and participating cities and counties - arose to help provide answers to these questions. Its primary purpose is to develop a model that North Carolina's cities and counties can use to support their ongoing efforts to measure and assess their performance and costs. A second purpose is to test and refine the model by applying it to a select group of city and county services. The ultimate goal is to produce methods and data that localities across the state can use to assess the quality and the cost of services, make comparisons among similarly situated cities or counties, consider alternative levels of service, and evaluate proposals to provide services from private companies. The project also will help local governments identify innovative or improved methods of service delivery and develop benchmarks (targets) for performance of the services studied.

The Project's Beginings

The impetus for the project came from two groups: city and county managers and budget officials. In 1994, the North Carolina League of Municipalities convened a meeting of managers from several of the state's large and medium-size cities. Although this meeting focused on privatization and competition with private providers of public services, one subject was the use of performance measures and benchmarks to compare performance by a city's own workforces with proposed or actual performance by private contractors. Subsequently the Winston-Salem budget director proposed to the North Carolina Local Government Budget Association that interested members of the association undertake a performance measurement project. In early 1995, representatives from several large cities and counties and staff from the Institute of Government, the North Carolina League of Municipalities, the North Carolina Association of County Commissioners, and North Carolina State University met and assigned to a smaller working group the task of preparing a proposal for such a project.

When the proposal was complete, the North Carolina Local Government Budget Association and the Institute of Government agreed to cosponsor the project and provide logistical and financial support. In fall 1995, the Institute of Government hired a project coordinator, whose first step was to secure commitments from seven large cities to participate in and help finance the initial phase of the project. Subsequently seven large counties agreed to do the same in the project's second phase. A third phase, involving 21 medium-size and small cities and counties that are using or wish to use performance measurement, began in January 1997. Exhibit 1 lists the jurisdictions participating in each phase and the services studied. The Phase III city and county steering committees chose to replicate the services studied in Phases I and II except that the counties are not studying jail operations. They also elected to use the performance measures developed for these earlier phases with several refinements. These units are also helping to finance Phase III.

The Phase I steering committee used several criteria in selecting city and county services for inclusion in the project. The services had to 1) be important to the mission of city or county government; 2) affect large numbers of citizens or have many clients; and 3) in a few cases, be a candidate for contracting out or privatization. An effort was made to keep the number of selected services relatively small because the project's primary goal is to develop and test methods that North Carolina's cities and counties can use for their own performance measurement and cost accounting. Only selected services needed to be chosen and studied for this purpose. The project's second important objective is to produce valid and reliable data. To achieve this as well, it has been advisable to include a modest number of services in each phase. (For more information on cities' participation in Phase I, see the article on p. 35 of this issue.)

Project Performance Measures

The North Carolina project is using three broad categories of performance measures: 1) measures of service need and quantity, 2) measures of efficiency, and 3) measures of effectiveness.

Measures of Service Need and Quantity. Measures of service need and quantity (output or workload) are a starting point for analyzing service performance. Measures of the need for a service address the [TABULAR DATA FOR EXHIBIT 1 OMITTED] fundamental question of why services exist. They are generally the principal ingredient that officials use to set objectives and formulate outcome-oriented measures to determine whether services achieve their objectives, Measures of the quantity of a service speak to magnitude. In the project, measures of service need and quantity are presented as comparisons - say, units of need or output per 1,000 customers or citizens. For some services, measures of need are different from measures of quantity. For example, in street maintenance, the measure of service need is lane miles of streets maintained by the city, whereas the measure of quantity is tons of repaving material applied to maintain streets. For other services, one indicator measures both service need and...