ABTA Conference, Part II

(You can see my earlier notes on the ABTA Conference here.)

The next panel at the conference was on the Marriage of Planning, Budgeting, and Performance Metrics. The only powerpoint presented was of a logic model based on Mark Friedman's work.

Robert McMillan, founder of ScotCro, LLC (which describes itself as "a driver of government accountability") spoke first. They have been collecting unit cost information nationally. This is different from ranking efforts in that it is not survey-oriented but taken from published reports -- taking the expenditures and activities and developing a unit cost. The goal initially was to develop unit cost information for 10 states, selected because their budget and activity data were presented in proximity to each other. One thing they discovered was that there was little practical application in the way data were submitted to legislatures. Their most important finding was that there was no correlation between activity and cost, no way to match dollars to their activities, and no way to determine either effectiveness or efficiencies. The state of Florida was the only exception.

David Tanner, Division Director responsible for Performance Management in the Georgia Office of Planning and Budget (and a fellow BYU graduate!) spoke of Georgia's experience with results-based budgeting. In 1994, Georgia passed laws to require results-based budgeting. In 2006, the budgeting process moved to program-based rather than line-item based. They are supported by the bi-annual publication of Georgia in Perspective (PDF). They use a logic model to determine inputs, activities, outputs, and short, medium, and long-range outcomes, answering the questions How much did we do? How well did we do it? Who's better off/How are they better off?

Activities-based costing is not an end in itself, but a means to better trending and decision-making. They have to be supported by a series of measures, which require data collection and a series of assumptions about what the data mean. This allows for collaboration with both public and private data reporting and efforts, since many of the intended outcomes are similar and multiple viewpoints can be helpful.

Peter Miller comes from Indiana's Office of Management and Budget in the Government Efficiency & Financial Planning division. They use 2,000 internal performance metrics, as well as aggregate up to a few high-level indicators that can be seen at Results.IN.gov. Miller suggested that creating an index is "interesting, but not actionable," and urged us to stay away from indices as a measurement tool (a position that I wholeheartedly agree with.) The biggest difference, he added, between government and business is politics -- which is why he refers to "performance-informed budgeting" rather than performance-based since, in the political process, politicians can always say they don't care what the data say and want to fund a particular program anyway. He also said, when working with politicians, a few high-level indicators that tell the story in broad terms are much more useful than many detailed indicators -- the details are for management, not for legislators or other elected officials.

The point of high-level indicators (think of a pyramid where many smaller measures support the top measures) is not just to drive costs down. The point is to look at effectiveness. In Indiana, we could see that we weren't achieving the outcomes we wanted in child services and knew where we were falling short, so we hired an additional 800 caseworkers.

Mark Abrahams, of The Abrahams Group, said that activities are the core of a good auditing system. We connect costs to results through the activities. Using a logic model helps us respond intelligently to the reality that outcomes cross departments, so on one page of a logic model we can include multiple departments that are working together towards shared outcomes.

A key first step for governments is to institute timesheets that are activity-based. 75 percent of your expenditures are in salaries, and if you can't connect the salaries to the hours spent per activity you can't manage activity costs. The logic model also helps make sure that the activities are aligned with the mission.

That conversation took us until lunch. I'll continue with my notes in another post.