The Short Answer
1. Budgets are about choices. And results based budgeting (ends to means thinking, talk to action thinking) means we will have better choices. It does not mean that we will make better choices, but we will have better choices.
2. Budgets are about allocating scarce resources. Results based budgeting does not presume that money is the (whole) answer. Results based budgeting draws on partner’s contributions, and seeks the highest leverage for scarce resources.
3. Thinking from results to budgets can be used to drive any of the following components of a budget process: Assess spending priorities, create recommendations, write justifications, reallocate funding, request additional funding, revise budget forms, make judgments about what’s working and what’s not working, create joint funding plans with partners, show no-cost and low cost contributions, create new tools like children’s budgets and cost of bad results analyses, create cross-departmental spending analyses and budgets, provide local partners fund flexibility in exchange for Results-Based Accountability, structure internal budget reviews and legislative branch budget hearings, format and present the budget to the public.
This answer supplements the answer provided in 2.13 How do we create and action plan and budget?
(1) Assess spending priorities and create recommendations: The process of setting priorities will always be a political process. Results thinking can inform that process by presenting spending options in terms of alignment with results: i.e. “Does the spending proposal make a contribution to the results we are trying to achieve?” “Is it part of a credible larger strategy?” “Is it the most powerful use of resources toward that end?” Specific criteria can help establish priorities:Specificity, Leverage, Values and Reach
(2) Write justifications: Shift from justifying actions on the basis of “need’ and “problems” to the positive conditions we are trying to create for children, adults, families and communities, and how this program or spending proposal will move us toward those conditions. Use the logical progression in results thinking to structure written justifications: results, indicators, baselines, story behind the baselines, partners, what works, action plan and budget.
(3) Cut or reallocate funding: Cutting is a necessary and important part of budgeting. Most cutting is done under duress, when revenues and spending are out of line. Rarely is cutting done because something isn’t working. And partly the reason for this is the ambiguity of what it means to be “working.” Results thinking adds just a little clarity to this question. “Is a program or expenditure working (as part of a larger strategy) to improve results?” The answer to this question is a combination of art and science, just as budgeting is both art and science. Formal evaluation findings can tell us if a program is making a difference for clients/customers. Performance accountability provides for use of baselines to judge if a program is doing better than it’s history or satisfactorily in relation to comparable programs or relevant standards.
The “Approaches to Budget Cuts” chart displays two different approaches to budget cutting. The first, traditional approach, sorts spending into “mandated and non-mandated categories, based on law; and then according to impact on life, health and safety. This approach leads to cuts in non-mandated low life-health-safety spending (usually prevention and infrastructure) and protects mandated high life-health-safety spending. This approach to cuts leads over time to disinvestment in prevention and erosion of infrastructure.
A results based approach first separates spending for “maintenance and infrastructure” from spending which is designed to improve results. Maintenance and infrastructure includes everything from highways to welfare benefits. The decision to be made is whether this spending is necessary or not. “What level of disr
epair is acceptable? What level of destitution for dependent children is acceptable.” These are mostly value based decisions. Programs to improve results include prevention investments like immunizations, family preservation or welfare to work programs. The decision to be made is whether this spending is helping to turn a curve. “Is this spending making a measurable difference in the well-being of children, adults, families or communities, as measured by indicators and performance measures?” This is mostly a fact-based decision.
Another way to approach budget cuts uses the same criteria which help select elements of an action plan in the first place: specificity, leverage, values and reach. These can be used in reverse to rank order actions (programs, activities etc.) in relation to their power to effect change. And cuts can then be made by starting at the bottom of the list and working up. Other criteria can be added as appropriate. See the discussion of these criteria and the budget decision process in2.13
(4) Request additional funding, show no-cost low-cost contributions: The first order of business is to show that we are making the best use of the resources we already have. The answer to every problem is not new money. Many communities which have successful turn the curve stories to tell have done much of the work with resources already in the community. This does not mean that new money is not needed. Our investments in children and families are far below what is needed to turn the curve on the cost of bad results. Results based budgeting can be used to logically describe why new money is needed by placing new money requests inside a larger strategy to turn the curve(s). New money can be used to address gaps in that larger strategy and leverage other dollars (federal matching funds and private contributions) to fill those gaps.
(5) Revise budget forms, budget formats and present the budget to the public: If this new way of thinking is to become part of the way we do business, then it must be reflected in the budget processes and specifically in the budget forms we use. Budget forms are surprisingly important. They are the codification of the way budget staff put the budget together. There is much detail in budget forms that are not affected by changing to a results approach. There will always be a need for line item detail, for funding detail, for personnel detail etc. Most budget forms and printed budget formats are dry recitation of facts. A results based budget tells a story to decision makers and to the public. At the performance level, that story is about how well the program or agency is working in terms of the well-being of its customers or clients. The progression from customer results to baselines to story behind the baselines to partners to what works to proposed budget provides a natural progression for budget processes and budget forms. At the population level, this same progression can be used to tell the story of how the state, county, or city plans to improve the quality of life for its citizens.
(6) Make judgments about what’s working and what’s not working: The performance budgeting component of results based budgeting makes use of baselines, showing how a program is doing in relation to its own history, and to comparable performance of other programs and where relevant program standards. The review of performance is not something that should be done for the budget process. It should be done every month or quarter because that is what good managers do. The budget becomes a by-product of this work. Each month or quarter, performance measurement should ask and answer the questions: “Is this program working?” “What can we do to make it work better?” Budget processes can not always wait for evaluations to be done. Judgments often need to be made without formal evaluation data. The performance measurement thinking process provides a basis for such judgments.
(7) Create joint funding plans with partners: No one program, on one agency, no one level of government can, by itself, turn a curve on a condition of well-being. Results provide a reason to partner. And results budgeting can be a mechanism to create strategies and funding plans which span across the enterprise to turn the curve.
(8) Create cross-departmental spending analyses and budgets: No one agency can, by itself, reshape an entire service system. The out-of-home care system, for example, involves child welfare, juvenile justice, mental health and education, plus a wide array of private providers. The current budgeting system does not provide a complete picture of spending for such systems. And yet such a picture is necessary to make sense of any reform effort and in particular how to fund such an effort and how to rearrange the financing to support the new system.
(9) Create new tools like children’s budgets and cost of bad results analyses: Children’s budgets are complete pictures of spending for children and their families in a given geographic area. Children’s budgets progress through three stages of development: a line item summary of spending for children and families; a functional (or service type) summary of spending; and a results (turn the curve) summary of spending. The functional summary can provide the kind of analysis addressed in (8) above. But children’s budgets, at their best, are strategic documents, which present choices about our future and how it might be financed. Children’s budgets therefore have two functions: to present facts and to present choices. The most important of these choices will be about investing in the well-being of children and families so that we will see better results and lowered costs of bad results in the future.
(10) Provide local partners fund flexibility in exchange for Results-Based Accountability: Most money flows from the federal government to state government to local government with lots of strings attached. These strings taken together have tied local service delivery systems up in knots. It is possible to craft state local agreements which provide new fund flexibility in the use of categorical dollars in exchange for new Results-Based Accountability. These agreements must be negotiated agreements and must answer, at a minimum, the following questions: Who is accountable, For what results, With what money, With what standards and safeguards, With what risks rewards and penalties, For what period of time? Such agreements exist in Iowa’s Decategorization program, in Maryland’s agreement with Montgomery County, and in Vermont’s agreements with local partnerships.
(11) Structure internal budget reviews and executive and legislative branch budget hearings: Any process which can be used to develop a budget can also be used to structure review of that budget. The thinking progression in results-based budgeting can be applied to structuring internal budget reviews and also executive and legislative branch budget hearings. Each step in the thinking process represents a set of questions that can be asked and answered in budget review and hearing processes.
Example: Results-Based Accountability hearing on “all children ready for school” Ask “what are the indicators that tell us if all children are ready for school? How are we doing on those indicators? Who are the partners who have a role to play in doing better? What works to do better? What do you propose to do? (See Exercise to Design a Legislative Results Hearing and Exercise to Design a Legislative Performance Hearing
Example: Performance accountability internal budget review for the foster care program: What are the most important performance measures for foster care? How are we doing on those measures? Who are the partners who have a role to play in doing better? What do you propose to do?
(12) Here are some practical first steps you could take to link Results-Based Accountability to the budget, and some more ambitious longer term things to do.
In the process as we know it today
(a) Use the what works strategy to develop a set of recommendations for additional or changed funding in the budget process at the enterprise or agency/program level. (Results and/or Performance accountability
(b) Use the what works strategy as the basis for seeking additional funding support from the private sector (e.g. foundations, business etc.) to show as contributions to state or county or city funding in the next budget cycle. (It always helps to show you are trying to match or leverage general funds to bring in other funding.)
(c) Revise the budget forms: Revise the budget forms to reflect this thinking process. This is more likely to be done at the performance accountability level. (SEE SAN MATEO COUNTY): Program, 2 or 3 performance measure baselines, story behind the baselines, what works, recommendations for budget change plus the usual detail by object/subobject and by fund source.
(d) Develop and use a Family and Children’s Budget to inform the budget development process and allow an analysis of budget actions after the Executive Branch submits the budget and after the legislative branch acts on the budget.
In the process of the future:
(a) Results-Based Accountability: Structure interdepartmental teams by results. Staff a process by which they review the status of all indicators each quarter and report changes in the action plan, and recommended changes in the budget.
(b) Print a Volume I of the budget which is about how the state, county or city is doing on key results (e.g. Clean environment, Healthy and Safe Children, etc.); and a Volume II which is organized by Department, program, subprogram, etc, but which uses the revised budget forms above.
(c) Hold legislative or county council hearings for one or more results: