Performance-Based Budgeting

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Performance-Based Budgeting: Lessons learned from implementation Performance-based budgeting measures, reports, and factors the outcome of an agency or program into future budget allocations. Moreover, this approach to appropriations creates incentives for an agency or program to produce measurable results in order to justify spending. This type of budgeting is defined as an “allocation of funds to achieve programmatic goals and objectives as well as some indication or measurement of work, efficiency, and/or effectiveness” (Young 12). Performance-based budgeting originated in the 1940’s after World War II when Hoover’s administration faced debt that surpassed the nation’s gross domestic product. The Hoover Commission attempted to align spending decisions with expected performance by recommending a shift from the traditional emphasis of government inputs to outputs (GAO 1997). Performance-based budgeting was designed to reform budgeting practices to focus on the measurement and reporting of outcomes. There are several goals associated with implementation of performance-based budgeting. The ability to inform the decision-making process is a top priority goal for PBB. Performance-based information ensures that budgeting is based on empirical data and spending decisions are soundly rationalized. Decision-makers can focus beyond changes to the baseline and consider the broader context of the budget decision (Howard 2012). Holding an agency accountable for spending is another
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