the potential of performance budgeting - icgfm...the potential of performance budgeting prepared...
TRANSCRIPT
Can it really make a difference?
December 6, 2017
The Potential of Performance Budgeting
Prepared for:
2
Who We Are Dr. Stephen Lewarne • Principal in Emerging Markets practice • More than 25 years of experience leading economic and
fiscal reform programs around the world • Supported transitions to market economics across
Eastern Europe and Central Asia
Julie Cooper • International PFM specialist with USAID, IMF, World Bank • 20 years of experience in performance budgeting in
Central Asia, Africa and the Middle East • Supported PFM reforms in Australian Federal
Government
Jimmy Rollins • PFM and performance management specialist with
USAID, World Bank, IMF, CDC • Supported government performance budgeting efforts in
Jordan, Jamaica, Bangladesh, and the US
3
Overview
• What is performance budgeting
• History of performance budgeting
• Performance budgeting today
• Success factors for performance budgeting
• Common challenges
• Can performance budgeting really make a difference?
• Case studies
4
What is Performance Budgeting?
WHAT IT IS
• A comprehensive framework
• Integration of planning and budgeting
• Performance reporting • Adaptable tools and
techniques • One part of performance
ecosystem
WHAT IT ISN’T
• Formula/algorithm for funding decisions
• A single tool or technique • Use to cut or increase
budgets • Only for Budget
Department • Remedy for all
performance issues
ü û
5
History of Performance Budgeting
Performance budgeting has been in practice for decades
1950s: introduction of the principles of Management by Objectives
1990s: extensive public sector reforms in response to economic, social and political pressures
New Public Management evolved which widened the scope of Performance Budgeting
Today: term used to mean a comprehensive public sector management framework
Performance budgeting today
7
Performance budgeting today
• Comprehensive framework
−Budget planning and preparation
−Budget execution and reporting
• Performance management culture
−Focus on outputs and outcomes over inputs
−Focuses on quality, efficiency and effectiveness
−Influences policy decisions
8
Performance budgeting today
• Tool for performance improvement opportunities
• Stronger accountability and transparency
• Includes civil service and reform to work culture
• Drives behavior changes
Deloitte has developed the following framework in its extensive work with governments around the world
9
Performance Budgeting Success Characteristics
Performance data informs policy
decisions
Are there clear links to strategic priorities?
Are programs rational and costed appropriately?
Are KPIs clear and compelling?
Are budget documents structured clearly?
Is performance used in internal budget allocation decisions?
Do systems provide availability of timely, reliable data?
Do regular reviews of progress take place within ministries?
The right things are measured
Performance is monitored and
evaluated regularly
Management culture focuses on
performance
Does senior leadership focus on performance management?
Are roles and responsibilities clearly defined?
Is performance used in national level budget allocations?
Do regular reviews of progress take place with central authorities?
Is performance information available to citizens?
Success Factors
Are program managers held accountable?
Is there a system of program evaluation?
Are program and funding changes made when needed?
Success characteristics
Deloitte works with organizations to realize benefits of multiple simultaneous reforms
10
Success characteristics
Challenge:
Governments need assistance to prioritize, sequence and implement PFM reforms
Possible Solution:
Rationalize and prioritize key process improvement initiatives:
Tools and Approaches:
• Synthesis of Existing Assessments
• Detailed Risk Questionnaires
• PFM Risk Assessment
• Capability Maturity Model
• PFM Improvement Plans
Challenge:
Public service job duties and skills often do not keep pace with reform
Possible Solution:
Build institutional abilities to absorb and sustain PFM reforms
Tools and Approaches:
• Training Needs Assessment
• Training Plan
• Competency Framework and Surveys
• Training of Trainers Program
• Strategic Organizational Reviews
Challenge:
Governments struggle to align resources with public goals and objectives
Possible Solution:
Link strategies with budget formulation and execution:
Tools and Approaches:
• Program Creation or Rationalization
• Forward Estimates Framework and Tools
• Performance Measures Assessment and Guidance
• Analytical Tools
• Business Process Reengineering
Technical Process Improvement
Performance Budgeting
Sustainable Capacity Development
Common implementation errors
12
Common implementation errors
• Lack of a comprehensive performance framework
• Continued focus on inputs
• Little or no attention to creating a performance work culture
• Used to name and shame rather than to improve performance
• Monitoring and evaluation system not used as a management tool
• Emphasizing technical solutions over improving analytical skills
13
Common implementation errors
• Oversimplified performance reporting (Green/Yellow/Red headlights)
• Not improving governance and accountability for service delivery
• Ignore concurrent reforms
• Downplay institutional capacity constraints or resistance
• No or little focus on budget execution requirements
Can it make a difference?
15
Can it make a difference? YES
• But it’s not easy
• Requires mandate and political support
• Civil service needs to be performance focused
• Integrate with government-wide performance management practices
Performance budgeting cases
Illustrative example: Jamaica
Fiscal Policy
Potential topics to address with assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability
In this area, Deloitte has:
• Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay
• Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID
• Motivation: macroeconomic downturn, government transition
• Reform: rationalize programs and integrate performance measures
• Focus on change management
The World Bank
Illustrative example: Jordan
Fiscal Policy
Potential topics to address with assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability
In this area, Deloitte has:
• Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay
• Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID
• Motivation: program budget not changing culture
• Reform: move from compliance to management
• Upgrading Budget Analyst skills seen as critical
U.S. Agency for International
Development (USAID)
Illustrative example: Oklahoma
Fiscal Policy
Potential topics to address with assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability
In this area, Deloitte has:
• Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay
• Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID
• Motivation: commodity price drop, no strategy
• Reform: government-wide programs and objectives
• Link with Chart of Accounts
• Focus on transparency to public
Illustrative example: Australia
Fiscal Policy
Potential topics to address with assignment countries include revenue and expenditure planning, public expenditure management, policy implications and sustainability
In this area, Deloitte has:
• Provided taxation and expenditure technical assistance in dozens of countries, including Zambia, Rwanda, Kosovo, Jordan and Paraguay
• Developed or evaluated performance budgeting frameworks and procedures in Jamaica, Jordan, and Bangladesh for the World Bank and USAID
• Motivation: focus on greater efficiency and effectiveness
• Reform: Output and Outcome Framework
• Accrual budgeting and accounting
• Purchaser/Provider agreements
Conclusion
Questions and Answers
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com / about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com / us / about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
Copyright © 2017 Deloitte Development LLC. All rights reserved.