Benchmarking: Taking Local Government into the 21st Century
The economic uncertainty of our tomorrows necessitates a commitment to preparedness on the part of county and municipal governments successfully to meet the challenges of the 21st century. Sluggish economic growth and reduced federal and state financial assistance, coupled with increased demands for services and public intolerance for additional taxes/fees, underscore the importance and timeliness of further enhancing governmental accountability and responsiveness.
This point is well made in The Enduring Challenges in Public Management, by Halachmi and Bouchkaert: “As the public sector prepares and adapts to 21st Century realities, there is an increasingly urgent sense that the old ways will not do anymore, that management problems, public lack of confidence, and resource scarcity cannot wait any longer, and that change must be the new order. In searching for an engine of difference, public sector managers will find quality management and re-engineering clearly capable of driving improvement and innovation to accomplish true and necessary change, thereby enhancing accountability.”1
Emerging as a common denominator throughout the country is a shift toward innovative approaches in governing, a functional transformation mirroring the private sector. It is called, “performance-based governance.” It relies on performance measuring – or “benchmarking.” In plain English, it focuses on results more than efforts, output more than input.
Performance-based governance illustrates to citizens what government is doing with their tax dollars: (a) by identifying a preferred vision for the future; (b) by formulating goals to achieve this vision, which are then accomplished via realization of concomitant objectives; (c) by utilizing quantifiable performance measures to gauge, monitor and report progress over a five-year period; and (d) by structuring policies and resource-allocation decisions that are responsive to and consistent with the vision, goals and objectives. It is advance planning.
Today, the public-sector budget-making process generally focuses on efforts: the identification of programs by departments, the attendant number of employees, the quantity of funds allocated to programs and so on. Such a process results in budget documents that convey nothing to the public about the return on its investment. There is no meaningful accountability, no standard of performance. With benchmarking, this is not the case.
To help put this in perspective, consider the following example, pertaining to the Kent County’s Department of Public Works, per its fiscal 1997 budget. The department’s budget opens with its vision, which is to “safeguard the structural integrity and efficiency of Kent County’s infrastructure system in order to protect the health, safety and welfare of the citizenry, to preserve the aesthetic nature of the County and promote balanced economic development within the County.” Then follows the goal statement: “Kent County will continue to promote incentives to recycle vs. solid waste disposal.” An objective tied to the goal – “reducing solid waste tonnage from the waste stream through increased recycling” – is followed by performance measures as shown in table 1.
To call this a simple concept would, of course, be a considerable understatement. The private sector must plan ahead in this manner and many households undertake some sort of advance family budgeting. Traditionally in government, however, such forethought has not occurred. Thus, performance-based government represents a fundamental departure from typical governance because it is predicated upon an outcome-oriented management strategy. This dictates the articulation of quantifiable data useful in assessing not only how a governmental entity utilizes its resources (the predominant system of governing today), but also what its constituents receive for the use of their money.
Adherence to performance-based governance, with its reliance upon performance measuring, will bolster public confidence, improve operational efficiency and strengthen accountability. For the first time, the citizenry will be able to identify a strategic blueprint for the future and hold government accountable. What gets measured gets done.
A number of steps have already been taken around the country. In 1993, Congress mandated, in the form of the Government Performance and Results Act (GPRA), that all federal agencies develop quantifiable performance measures by the year 2000.2 Additionally, 18 states have initiated budget reforms providing for the use of performance measures as a means of determining whether services provided are essential, efficient and effective.3 In Maryland, the Glendening administration appears to be moving in this direction. A recent study by the Government Finance Officers Association (GFOA) of 554 county/city budgets across the country found that 330 (or 60 percent) now utilize performance measures.4 Meanwhile, on May 10, 1995 Maryland’s legislative auditor recommended in a special report to the General Assembly that performance measuring at the state level be mandated by statute.5 Though the state has not adopted performance measuring for itself, the 1996 legislature did pass a resolution concerning “Governing Local Governments into the 21st Century” (H.J.R. 16), “for the purpose of informing county and municipal governments in Maryland about the concept of performance-based governance with its reliance on performance measuring for purposes of guiding their practices and policies through the fiscal uncertainties of the 1990s and strengthening public accountability.”6 (Note, however, that the text specifically says that H.J.R. 16 is not to be construed as a mandate upon local governments; nor does it apply to the state government.)
Harford and Kent Counties
The first two jurisdictions in Maryland to have effected performance measuring have been Harford and Kent counties. Their respective FY 1997 budget documents identify visions, goals, objectives and performance measures by each agency and department. Both jurisdictions will likely serve as models as more jurisdictions come to understand the importance of performance measuring. Think about it. These are the first counties in Maryland publicly to declare a navigational course to guide their practices/policies through the year 2000. Success and/or failure await them via the judgmental eyes of their residents; results are quantifiable and will be reported.
My consulting company, William R. Miles & Associates, helped both jurisdictions develop their performance measures. Do not think that departmental heads and rank-and-file employees in either county openly embraced the initiative imposed upon them by their bosses. Indifference, skepticism and, in some cases, outright hostility awaited us in both jurisdictions. How did we overcome such obstacles? In each case, the strategy was the same.
First, after hours of discussion, the departments ultimately came to view performance measuring as an ideal opportunity to document the efficiency of their operations, receive recognition for prior, non-publicized, cost-saving initiatives and to set the stage for new ways to realize “good government.” Second, the two county administrations afforded the departments complete and total autonomy to develop performance measures under the guidance of my company. So measures were not imposed from above. Third, the departments were assured that goals, objectives and performance measures identified today were fluid in nature and could change in response to the unforeseen socio-economic events of tomorrow. Fourth, the administrations directed the departments only to identify those goals, objectives and performance measures that could be realistically achieved and measured. The administrations understood that there was nothing to be gained from expecting agencies to solve all of society’s ills. Last, all parties agreed that no goal or objective would be adopted absent unanimity by all parties, “parties” in this case meaning department heads and policy makers.
Benefits
Jurisdictions looking for a quick fiscal fix will not likely realize it through performance measuring. Savings will undoubtedly occur – but only over time, through improved operational efficiency and assuming endorsement by responsible policy makers. Nonetheless, these benefits are real enough.
Performance measuring truly documents accountability. A directional heading for the future is charted and an annual report card is issued on the success and failure of the journey. The inability to meet a particular target goal should not be construed as failure per se, for performance measuring is a fluid process, an evolving process. Success will ideally be rewarded by siphoning a portion of an agency’s year-end unexpended fund balance for employee training, bonuses and/or new initiatives previously thwarted due to lack of funding – a different approach to “gain sharing.”
Also, performance measuring enables policy makers and managers to determine which programs/services are essential, efficient and effective. By means of measuring, priorities become established and a new level of control is integrated into the managerial equation. Such efforts also help decision makers determine which public services can be performed by the private sector at a lesser cost or with improved efficiency. In Kent County, for example, privatization is a priority for the Department of Parks and Recreation. Specific reference is made to privatization in the agency’s fiscal 1997 goals statement.
Savings resultant from benchmarking will be two-fold: (a) operational efficiency ideas will emanate from the benchmarking micro-assessment that otherwise might not have been discovered; and (b) through establishing priorities, the resource-allocation process will channel monies to where they are most needed. In Kent County, for example, we identified 19 different efficiency-related ideas that stemmed from our performance-measuring efforts. At this time, the Kent County commissioners have incorporated virtually all of them into the county’s fiscal 1997 budget, in all likelihood saving county taxpayers thousands of dollars.
The more counties that join together in demonstrating enhanced efficiency through performance measuring, the stronger the collective argument for defending against potential future state aid cuts. One of the principal reasons behind crippling state aid reductions during the 1991-93 recession was the perception by state lawmakers that local governments were “fiscally fat.” Likewise, this summer’s dispute between Governor Glendening and Baltimore Mayor Kurt Schmoke stems ultimately from the belief in Annapolis that the city misspends state education aid.7 Performance measuring helps dispel such sentiments by educating state lawmakers – and the citizenry – about the local governments’ prudent management of scarce financial resources, if prudent it be.
Related to this effort was the September 28, 1995 Symposium on Performance Measuring and Budgeting hosted by Harford County – an effort to persuade other counties that this is a concept that will eventually sweep across Maryland. The success of the conference was demonstrated by the agreement of all participants to continue the gathering on a semi-annual basis. These meetings are ultimately envisioned as becoming a coordinated effort to encourage “jurisdictional benchmarking,” so that proven strategies for improvement can be shared.
Conclusion
In the final analysis, adoption of performance-based governance will not solve all the fiscal difficulties facing local governments; nor should overnight results be expected. Its adoption, however, represents the bold promise of elected officials to elevate accountability and responsiveness in government to a much higher level than present. Not all elected officials will likely feel so inclined. But those policy makers brave enough to effect performance measuring will be well positioned to secure their jurisdictions’ competitive advantage for the 21st century. Keep your eyes on Harford and Kent counties.
A former employee of the state Department of Fiscal Services, Mr. Miles leads a group of analysts who specialize in advising local governments on improving operational efficiency, William R. Miles & Associates. He now serves upon the Calvert Institute’s board of advisors.
End Notes
[Back] 1. Arie Halachmi and Geert Bouchkaert, The Enduring Challenges in Public Management (San Francisco, Calif.: Jossey-Bass Publishers, 1995), p. 174.
[Back] 2. This bill was passed during the 103rd Congress. See the Government Performance and Results Act of 1993 (P.L. 103-62).
[Back] 3. The 18 states are Arizona, California, Connecticut, Florida, Georgia, Idaho, Massachusetts, Minnesota, Mississippi, North Carolina, New Mexico, Oklahoma, Oregon, South Carolina, Texas, Virginia, Washington and Wyoming. See National Conference of State Legislatures (NCSL), State Legislatures – Performance Budgets: Here by Popular Demand (Washington, D.C.: NCSL, December 1994).
[Back] 4. Patricia Tigue and Dennis Strachota, The Use of Performance Measures in City and County Budgets (Chicago, Ill.: Government Finance Officers Association, 1995), p. vii.
[Back] 5. William S. Ratchford II, Use of Performance Measures to Improve Accountability: Special Review (Annapolis, Md.: Department of Fiscal Services, May 10, 1995), p. 1.
[Back] 6. Maryland General Assembly, House of Delegates, Committee on Commerce and Government Matters, H.J.R .16, p. 1, lines 3-6. Resolution sponsored by Delegate Gerald J. Curran (D-Baltimore City).
[Back] 7. Rafael Alvarez and William F. Zorzi, Jr., “Schmoke Erupts over School Aid,” (Baltimore) Sun, August 23, 2996, p. 1A.
Posted in: Efficiency in Government, News Series