Performance budgets: here by popular demand.

• Author: Carter, Karen
• Position: Includes related article

LAWMAKERS ARE TURNING TO PERFORMANCE BUDGETS TO DEFEND THEMSELVES AGAINST TAXPAYER REVOLT AND FISCAL "CHECKMATE." WILL THIS POPULAR STRATEGY BE GIVEN TIME ENOUGH TO SUCCEED?

State governments are on the defensive--and rightly so. Polls emphasize the public's dissatisfaction with what government produces. Voters no longer believe that lawmakers can effectively manage the state's purse. To prove it, they're passing ballot initiatives that cap government growth and require voter approval of new taxes. What are lawmakers to do?

In 26 states, they are turning to performance budgeting. Agencies must now prove that what they are spending is worth it because the legislatures will be doling out money based on achievement.

A performance-based budget describes specific goals, sets performance targets for agencies and measures results. Perspective is the key. The focus in developing the budget is on what states get for a dollar, rather than cost.

Consider family intervention services. Lawmakers typically ask: "How many social workers do we employ? How many children can they see? What does intervention cost for an average family?"

Using a performance approach, legislators first ask about results. How many children are reunited with parents or placed in adoptive homes per budget dollar? If lawmakers don't like the answers, they explore costs and look for different ways to spend money to improve next year's performance.

EASIER SAID THAN DONE

Performance budgeting is easier to define than do. Lawmakers and agency heads must agree on performance measures. Performance information must be readily available and adequate. Lawmakers need a clear idea of the relationship between what they give and what they get. States need strategies to reach higher levels of performance. Despite these difficulties, more than half the states have taken up the challenge. Over the past two years, 18 legislatures adopted performance reforms that stress accountability for results through the budget. Texas shows just how sweeping the change can be.

THE TEXAS EXPERIENCE

Strategic plans are the foundation of Texas's reformed budget system and have been so for one biennial cycle. All agencies cost out strategies to reach specific goals negotiated with the Legislature. Possible responses are ranked for lawmakers' consideration. For example, one purpose in funding the State Commission for the Blind is to help visually impaired Texans find or keep jobs that match their skills, abilities and interests. Texas wants to increase the number of successfully employed, visually impaired citizens by 6 percent by 1995 and reach 15 percent by 1998.

That goal could be achieved in three different ways:

* Devoting money to vocational rehabilitation services.

* Targeting youth to improve the transition from school to work.

* Focusing on the food service industry to create new job opportunities for people who are visually impaired.

Lawmakers can compare, for example, time spent with clients and associated costs to decide what plan or combination of plans the commission should pursue. If Texas chooses to emphasize rehabilitation services, then the commission's performance would be judged by, for example, the percent of severely disabled clients successfully rehabilitated and now working.

Spending authority in Texas used to be itemized by category, but now all expenses are rolled into a single lump sum appropriation for each agreed-upon plan. This means managers have greater discretion over spending than in the past. In return for such flexibility, they are expected to meet a set of...