Performance Budgeting

Module 5

PERFORMANCE BUDGETING

GOVERNMENT OF ALBERTA

Module 5

PERFORMANCE BUDGETING

Overview For Workshop Participants

GOVERNMENT OF ALBERTA

Performance Budgeting: Overview

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Module 5: Performance Budgeting An Overview For Workshop Participants

Faced with fiscal constraints and demands for more and better public services, governments at every level are discussing, experimenting with, and implementing new ways of budgeting. The budget is increasingly being seen as a tool to promote government accountability and effectiveness, rather than simply as a vehicle for allocating resources and controlling expenditures. Performance based budgeting has been defined as a system wherein managers are provided with the flexibility to utilize agency resources as required, in return for their commitment to achieve certain performance results. This was also the fundamental underlying philosophy of the business planning process adopted by the government of Alberta in 1993. Ministries were provided with fixed resource allocations and expected to fulfill program obligations within those parameters. In exchange, financial controls were relaxed and the authority to reallocate funds among programs was delegated to ministries. While no Canadian jurisdictions seem to have fully implemented performance based budgeting, many are putting in place the necessary prerequisites, such as activity based costing and performance measurement. In the US, a number of cities and states use this approach to budgeting; leading the field are the states of Texas and North Carolina. What the various approaches have in common is an emphasis on results. Budgets are based on agreed upon outcomes rather than “historical efforts and good intentions.”1 Initiatives such as these are often referred to as performance budgeting and are designed to help answer the questions: can issues and problems be solved with more money or might other measures be more effective.2

What is Performance...