Performance measurement introduces a mechanism that managers and their councils can use to help make their budget priorities better reflect citizen preferences and to more efficiently provide the goods and services that citizens want. And since the 1990s there has been an explosion of experimentation in the use of performance measures to improve analysis in budget decision making as well as delivery of public services at the lowest cost. Here are four tools being used to improve government performance:
  1. Performance measures
  2. Performance budgeting
  3. Performance management
  4. Performance evaluation.

Here’s how they can help improve:

1. Performance measures

Performance measures are metrics that administrators use to monitor an organization’s use of resources (inputs), the results of its efforts (outputs), and the impact of those efforts on the community (outcomes). In the past decade, the use of performance measures by local, state, and federal governments has mushroomed. These measures are often reported in the budget document, although that document seldom makes clear the connection between performance measures and budget decisions.

2. Performance budgeting

Performance budgeting involves the use of performance measures to make budget decisions. Some governments have experienced obstacles with this type of tool. Donald Moynihan and Stephane Lavertu studied the use of performance reforms in federal agencies and concluded that while such reforms “promoted performance measurement,” they did not promote the use of performance data for making budget or operational decisions.1 And when performance measures are used in budget deliberations, the question inevitable arises as to what those measures really mean.

A few governments, such as Sunnvale, CA, have taken performance budgeting to the next level, but they do so by using cost accounting data at the activity level to allocate budget resources.

3. Performance management

Performance management integrates performance measures into the day-to-day operations of a program or department. It usually begins with the development of a strategic plan at the departmental level that establishes a five-year window as to the department’s goals and objectives, and the strategies that the department intends to pursue to achieve its goals. The strategic plan is guided by the city’s or county’s overall strategic goals or outcomes.

For example, Fort Collins, Colorado, identifies seven areas of community outcomes that guide budget deliberations: community, culture and recreation, high performing government, and transporation.2

Another example, Coral Springs, FL has a well-developed strategic planning process that links performance measures with departmental strategic plans and operating budgets.3 The use of a balanced scorecard also links strategic plans to overall organizational performance in the key four areas: financing, customer satisfaction, internal operations, and the learning and growth of employees.

4. Performance evaluation

The final tool – performance evaluation – uses information from past performance as feedback into the strategic planning and budgeting process to better inform the future development of performance measures and outcomes. Performance evaluation also involves reviewing a department’s operations to determine what processes inhibit the department from achieving its objectives.

Marathon County, WI, has developed a well-articulated linkage between inputs, activities, initial outputs (results), and intermediate and long-term vision. This process forces department heads to evaluate the immediate as well as long-term consequences of their actions, both budgetary and managerial.

1 Donald Moynihan and Stephane Lavertu, “Federal Managers and Performance Reforms,” La Follette Policy Report 22 (Fall 2012): 13.

2 City of Fort Collins, “2013 – 2014 Budget: Budget Process,” fcgov.com/citymanager/budget.php.

Information in this blog post has been extracted from the ICMA Publication, A Budgeting Guide for Local Government.


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