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Reason Foundation

Bacon's Rebellion

Virginia's Budget Mess, Performance Measures Missing

Council for Virginia's Future can do better

Geoffrey Segal
October 17, 2005

About three years ago the Governor and General Assembly created the Council for Virginia's Future to review state government and "measure Virginia's current performance, prioritize our future goals and establish metrics to help measure our progress toward meeting those goals." Laudable goals for sure.

Nearly three-quarters of the Council is made up of members of the General Assembly and the administration. These are all fine people, but many are not known as "change agents" and have no truly compelling reason to significantly alter what they helped create.

At the Council's May 12th meeting on strategic planning and performance based budgeting, actions were taken can be charitably described only as "the first steps" toward real reform. Having traveled the country, working with elected officials in over a dozen states, I can safely say that what has been proposed to date by the Council for Virginia's Future will not provide the necessary management tools so badly needed.

The most critical tool for better management is the state budget document. Our current one is so totally incomprehensible that it must be dramatically improved if true change is to have a chance (see the Thomas Jefferson Institute's study in October 2003 on its website).

According to the Council's website, the May meeting produced a report that outlines its vision and recommendations for what the Commonwealth's budget should look like and how performance measures should be included in the future. While this is a good start, the proposed budget changes fall well short of what is needed.

After reading this proposed "new budget document," one wonders how closely this Council reviewed the budgets that other states have crafted to bring much better management to the state. Several key components are missing from the Council's draft plan.

First, programs and activities are not evaluated on an individual basis. They continue to be lumped together. This prohibits use of true performance-based budgeting that allocates dollars only to those programs that achieve the greatest results. Unfortunately without this link, the Council's initial purpose cannot be achieved.

Secondly, the measures and data the Council recommends don't give the user any sense of relative performance. They simply identify current operational levels and performance. While some historical data is presented, no benchmarks are offered to guide the user as to what goals are to be achieved. And there are no references to how the Commonwealth measures up against neighboring states.

While contextual data isn't necessary to see performance improvements within the state, it does put things into perspective by revealing whether the Commonwealth is gaining ground or falling relative to our neighbors.

Third, there is no cost per unit of services provided. Admittedly, the Council-proposed budget document is a work in progress. But if such data is not part of this "new and improved" management tool, it will fall far short of what is needed. This noticeable void suggests that critical performance and efficiency information may not be part of any budgetary recommendations.

While these three deficiencies are significant, they can be easily fixed. The budget provided at the May 12th meeting is a working draft and changes can and will likely be made. The Council's work has made significant progress and it should be commended for improving the Commonwealth's current opaque budget process.

The Council should review the budgets of North Carolina, Texas, Florida, and California, to name a few, to see what these states provide to the legislators, managers and to the public.

Beyond making the changes suggested above, the Council should consider other mechanisms to bring more transparency, accountability, and performance to the Commonwealth's government. While administering the U.S. Office of Management and Budget, Indiana Gov. Mitch Daniels initiated an innovative performance-based budgeting review, the Program Assessment Rating Tool or "PART." He has taken that to Indiana and has begun implementing a similar initiative. Virginia can and should follow these two efforts with one of its own.

Another option is creating a type of sunset commission to review programs and activities for relevancy and performance. This proposed commission would operate similarly to the Base Realignment and Closure commission (BRAC) whose recommendations are given a straight up or down vote. Such a procedure would remove the influence of individual special interests and require legislators to review the proposal as a whole.

The Council for Virginia's Future can dramatically increase its impact by shoring up the performance based budgeting piece of its proposal. It would be a shame if the Council missed this opportunity to offer real change.

Geoffrey F. Segal is the director of government reform at Reason Foundation..



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