Results-Based Government

Agencies should justify spending

Results matter… or at least that they should. Especially when it comes to tax dollars and public expenditures. Increasingly, taxpayers are demanding results and performance in return for their hard-earned dollars.

Ideally, keeping taxes low and reeling in spending would control the size and scope of government. But a results-based approach to government can achieve the same goal. Requiring all government agencies, big and small, to demonstrate success and justify what they spend will separate effective and useful programs from programs that are ineffective, or even wasteful.

Measuring results gives taxpayers a powerful tool to monitor how our money is spent, and to hopefully keep taxes low.

The Commonwealth has made some progress in this direction over the last few years. The Roadmap for Virginia’s Future holds promise, but its effectiveness for change has yet to be determined. And there were some successes in the most recent legislative session. A bill carried by Sen. Jay O’Brien, R-Clifton, implemented performance-based budgeting for drug and alcohol treatment as well as job training programs – essentially requiring agencies to fund only those programs that can demonstrate results and stop funding those that don’t or can’t.

The O’Brien bill is a step in the right direction but should be expanded to cover even more programs this year. In addition, Executive Order 67, which mirrored unsuccessful legislation to bring real budget reform to Virginia offered by Del. Gary Reese, R-Oak Hill, also holds much promise to bring real budget and spending reform to the Commonwealth. However, this executive order has yet to be “activated.”

These are nice steps, but to move to the next level of efficiency, each and every activity the state undertakes should be reviewed to ensure they are producing intended results. Additionally, agencies should be forced to show how each activity is directly related to its core mission, goals, and the Commonwealth’s priorities. If they can’t do all of these things, it is a clear signal that we need to ask why the activity or service is being done, and paid for by taxpayers, in the first place.

To determine what works and what doesn’t, a top-down review of current programs should be done to evaluate effectiveness and efficiency. California is using a similar approach to tackle its massive deficit: A review of the state’s prison system led by former Republican Gov. George Deukmejian yielded 239 recommendations for improvements. Texas has used this review system for years, abolishing 44 agencies, consolidating another 11, and saving over $2.4 billion. Florida , which also has demanded results from agencies, was able to return more than $1 billion to taxpayers this year. Even the federal government has taken action: In the FY05 budget, a similar performance review eliminated 13 federal programs, saving over $1 billion.

Every agency, program, and activity should be evaluated on three factors: performance, relevance, and management efficiency. Performance is easy to understand and see – is the program or activity having a positive impact or not? Relevance is a little trickier. Is the program a priority against other competing needs, or is it duplicative of other government programs? Finally, management efficiency looks at the operations to see if there is another way of doing things, including public-private partnerships or privatization.

A program not meeting the first criteria, performance, should be terminated and its funding allocated to other programs in its mission area that can produce results. A program not meeting the second criteria, relevance, should be suspended: The program may be worthy or beneficial, but there just are not enough resources to fund all of the “nice idea” programs and maintain the “vital imperative” programs. Finally, a program not meeting the third criteria, efficiency, should be reformed immediately and cost savings from improved management should either be reallocated to that program or allocated to other important programs.

Debates on taxes and spending are divisive. However, we can all agree that if the Commonwealth does choose to spend money, it should at least be able to show progress towards a goal, to demonstrate that positive change is being made, and to ensure that our tax dollars are being used effectively and efficiently.

Chances are slim that a member in the General Assembly or the Warner administration would stand up and say they’re not for performance and results – that they don’t want to make sure our tax dollars are spent effectively.

Over time, putting results and performance first will make the Commonwealth more efficient, but more importantly, more effective. A results-based approach is the most successful way to keep spending down and taxes low. It will halt Ineffective and wasteful spending, shrink the reach of government and lower the demand for future taxes.

We can’t afford not to put performance first.

Geoffrey Segal is director of privatization and government reform at Reason Foundation.