“cut to the bone” budget cutting and reallocation

What are the current challenges you face as a public sector manager?

Survey in UK of public sector managers by the Institute on Leadership and Management, 2010

• All direct program spending reviewed - 25% each year

• Treasury Board and its Secretariat set terms of reference:

Comprehensiveness – assessment of mandate, departmental objectives, program effectiveness, efficiency and alignment to government priorities

Reallocation proposals – options for program reductions or eliminations to reallocate to government priorities and support overall spending control

Reinvestment proposals – options to better support government priorities

• Departments review the relevance and performance of their spending, identify lowest performing/priority 5% of programs, seek outside expert advice and report to the Treasury Board

• Privy Council Office identifies review departments every year and assesses, with Treasury Board and the Department of Finance, the departmental proposals

Strategic Review Process – Centrally Driven

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Strategic Reviews – Scope and Key Elements

Departmental Strategic Reviews to answer specific questions in key areas:

Government Priority, Federal Role, Relevance (i.e. continued program need)

Performance (effectiveness, efficiency, value for money)

Management Performance

Departmental Strategic Reviews to be conducted using the following key elements

Analytical Framework: The department’s Program Activity Architecture

Information Sources: Evaluations, Audits, Management Accountability Framework assessments, Auditor General Reports, and other reports

Reporting Requirements: Outlined in the Terms of Reference

Steering Committee: A departmental steering committee to be established with ex officio membership from TBS

External Advice: Expert outside advice to be involved on each Review to ensure neutrality and credibility

Strategic Reviews –Conditions for Success

Sufficient time for deliberative process

Ministerial engagement throughout the Review process

Clear and strategic alignment of programs and results (value of a strong Program Activity Architecture)

Comprehensive assessment of all programs (100%)-not focussing only on 5%

Early involvement of senior management team – policy, communications, and corporate services

Multiple lines of evidence – evaluations, audits, benchmarking, international comparisons

Overview portion of the Strategic Review should tell a compelling departmental story

Arm’s length expert advice as effective challenge to proposals and alternatives

• In 2009, the third year of the Strategic Review Process, 20 federal organizations (including departments, agencies and Crown corporations) undertook strategic reviews of 100 percent of their direct program spending.

• In total, almost $26 billion, or approximately 23 percent, of all government program spending was examined.

• Savings of $287 million were redirected to Budget 2010 priorities

• Savings were redirected to fund new initiatives, both within departments and to broader spending priorities in Budget 2009

• Moving from ¼ of all departments to whole of government • Now, savings will be directed to deficit reduction• Targetting total of $11 billion by 2016

The first reviews generated savings but also demonstrated a need to improve the quality of results information …

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Managers must approach budget cutting with care, so as not to

harm the organization's capacity to achieve its purposes. The

toughest question they face is how to reduce the budget without compromising the organization's

mission.

In an organization with low trust levels, complex

programming and relatively poor information, the best

approach may be across-the-board cuts.

From Treasury Board of Canada Guide on Costing http://www.tbs-sct.gc.ca/pol/doc-eng.aspx?section=text&id=12251