True budget reform remains at the center of the policy discussion in Richmond, as highlighted recently by Gov. Mark R. Warner's recent projections of budget deficits through the end of the decade. While many changes are needed to Virginia's budgeting process, and to the actual document itself, none is more important than performance and budget integration.
With a little more a year left in his administration, there is little more that Gov. Warner will be able to fully implement. However, it should be noted that the Governor and his administration have laid a foundation for serious reform.
Most of Warner's reforms are documented on the "Virginia Excels" webpage. One particular initiative holds much promise to achieving budget and performance integration. The "Management Scorecard" is a great first step, yet it demonstrates how far we still have to go.
The management scorecard gives little or no attention to performance i.e., delivering results to taxpayers. to achieve a top score agencies have only to "develop and document agency priorities in agency strategic plan, and communicate in at least two ways within thirty days of development to all managers and staff." The scorecard requires no tie between actual performance and delivery of results. A generous characterization might describe the scorecard as holding promise for the future. But with more potential deficits looming we don't have the luxury of waiting for that promise to materialize.
Any fair-minded observer would have to concede that meaningful reform does not happen overnight. Here in Virginia, Secretary of Administration Sandra Bowen should be lauded for her efforts to lay a solid foundation for the next administration. Yet the administration needs to display a greater sense of urgency — and it has no farther to look than across the Potomac River for an example of what can be accomplished.
In less time and on a larger scale, President George W. Bush has initiated and fully implemented budget and performance integration at the federal level. One of the President's key initiatives is the Performance Assessment Rating Tool (PART). The PART analysis is a standardized and evidence-based evaluation that provides hard data on whether federal programs are doing what taxpayers are paying for them to do and assesses whether they are being managed properly.
In each of the last three years, PART reviews have examined a fifth of the federal government. Over the past three years, nearly two-thirds of the federal government has been reviewed. The federal government has done far more to make accountable its huge, sprawling and dispersed bureaucracy than Virginia's leadership has done to tame its state bureaucracy. Richmond has not yet incorporated any comparable effort.
PART investigates the most important aspects of performance. It enables managers to paint an in-depth picture of just what exactly they are achieving, or if they are achieving anything at all. Agencies are scored as either "Effective," "Moderately Effective," "Adequate," "Ineffective" or "Results Not Demonstrated." The Management Scorecard does use similar ratings. However, at the federal level there is a clear link between the rating and an agency's budget.
In fiscal year 2005, "effective" programs enjoyed an average increase of 7.18 percent to their budget.
"Adequate" programs saw an average budget decrease of 1.64 percent. While "ineffective" programs were cut by a dramatic average of 37.68 percent. In addition, 15 federal programs were eliminated for failing to perform, resulting in savings over $1 billion.
This signals a seriousness about delivering results and performance to the taxpayer. Unfortunately, this signal is currently absent from Virginia's management scorecard or from the budgeting process in general.
Without data on performance and results, we can't tell success from failure. In addition we continue to reward failures equally with successes. A link between performance and budget must be established if we're serious about reforming how Virginia's government works.
Richmond can learn a lot from the federal government and the PART process. Borrowing a similar process would allow for immediate implementation and get Virginia on the long hard road of meaningful, true budget reform. The prospect of future deficits makes action all the more imperative. A Virginia version of the PART process would help the next administration build on the foundation that the Warner administration has already accomplished. Until then, reform efforts will largely remain at the margin.
Geoffrey Segal is director of privatization and government reform at Reason Foundation.