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A deeper look at performance
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Over the past few weeks, I have explored topics with a consistent tone: We need to be cautious with the state’s financial decisions and the choices we make.

But as the bond raters consistently remark, Georgia will once again flourish and the outlook will not be so grim. This presents an odd dilemma for elected officials.  The mood of our state is for limited government. In those services deemed necessary, taxpayers want delivery targeted and efficient. As revenues start to flow back into the treasury, the question arises for many elected officials:

How do we ensure that tax revenues are being used in the most targeted and effective manner possible?

This is one area where we can learn from the private sector. In the private sector, the bottom line revolves around profit margins and market share. When these two numbers change, successful companies are quick to determine the cause and make needed adjustments.  State government has a little more difficult time reacting to changing conditions as it does not have a profit or market share focus. State government is in the business to provide many unrelated outcomes.  Citizens demand that their children be educated and healthy, prisoners be punished and rehabilitated, and roads to be drivable among many other things. The variety of these goals and the long time sometimes needed to accomplish them often leads to waste and poor decisions.

But as in the private sector there is information available to make sure that the State is on track to meet its goals. This information is Performance Measures.

More accountability in the budget

Beginning in 2003, a push began to reform the process of budgeting. Up until this time, the state budgeted by “object class” or “line item,” which meant that lawmakers dictated exactly how much could be spent on salaries, travel, postage, etc. Agency officials who wanted to explore different techniques of providing a service, such as creating a Web site instead of having a constantly manned call center, were restricted because these innovations crossed spending categories (in this example, computer expenses versus personnel). This type of micromanaging was appropriate when object class budgeting was first implemented in the early 1900s because it helped prevent corruption - a concern at the time.

The problem with this type of budgeting is that accountability is relegated to an afterthought.  First, agencies can deny responsibility for performance because they are bound by an implementation plan essentially set by the General Assembly. The second problem is more significant.  Georgia has a part time legislature with many demands on its time. Micromanaging at this level leaves little time for discussions about policy, goals and oversight.

In 2006, under a Republican General Assembly for the first time since Reconstruction, the Legislature adopted program budgeting as its legal standard. Agency officials were released from object classes and money was appropriated by program. Examples of programs include Vital Records in the Department of Public Health, Adult Literacy in the Technical College Systems, and Revenue Processing in the Department of Revenue. While the General Assembly would concentrate on setting the goals and objectives, agencies would have more discretion to decide on the implementation method. Object classes would be monitored to make sure funds were being spent appropriately, but they would not be the dominant topic as in the past.

Part of this switch was the intended use of performance measures and evaluations. Using vetted data, legislators would set performance targets related to their goals. Any red flags arising from this data would indicate an area for legislators and staff to explore. As the Atlanta Public Schools cheating scandal proves, relying on data alone to make decisions is not adequate. 

Performance data is a tool, but not a substitute for a thorough examination of a program. Often the problem isn’t with money but rather management style, competing priorities or outdated practices. 

Better decision making

Program budgeting was implemented but the recession delayed the General Assembly taking a comprehensive look at performance. Legislators were confronted with such a large shortfall that even well-performing programs had to be reduced in order to balance the budget. But stabilizing revenues and the desire to ensure new money is well spent requires the General Assembly to pick up where it left off.

Over the past few months, staff of the Senate, the House and the governor’s office have been discussing ways to restart the reforms and appropriate measures for agencies. In the Senate, we will be exploring ways for members of the Appropriations Committee to use this information to make better budget decisions.

For example, the Department of Driver Services currently reports that 90 percent of customers are initially served within 30 minutes. If DDS requests additions or reductions for driver’s license examiners, budget writers should ask how this time standard will be impacted by the request and decide whether that is the best use for the limited funds.

The next few years will be a learning experience for legislators as they start to see the utility of measures. But even if the road is a little bumpy in the beginning, I am confident that Georgia’s citizens will react positively to the fact that legislators are constantly striving to spend their tax dollars in the most efficient and effective manner possible.

I may be reached at
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