Public Sector Governance and Accountability Series: Budgeting and ...

Budget Methods and Practices 123
contribution to the goal. The packages are then ranked in order of priority,
and an operating budget prepared. The final stage involves selection of
decision packages at the decision unit and finally at the agencywide level
(Mengistu 1997: 9–13).
Although such an approach would, in principle, facilitate the discontinuation
of programs that are no longer required, in practice it is close to
impossible to implement. First, like the PPB approach, it generates masses
of paperwork for which there is neither the time nor the human capacity in
budgeting systems. Second, it is not necessarily true that lower-priority
programs will receive less funding or be discontinued: the approach fails to
take into account the realities of institutional and public politics that drive
budgets. Third, some public policy areas—for example, those that are
driven by legislation—do not lend themselves to dismantling and reevaluation.
In reality, most state programs are not amenable to annual evaluation,
because even if they are not required by legislation, they involve multiyear
contractual relationships with service providers, not to mention public
officials. And fourth, it is not self-evident what is maximized if zero-based
budgeting is adopted in its classical form. In this form, it is an inwardly
focused process that puts emphasis on the priorities of managers. Insufficient
attention is paid to mapping decisions to the preferences and priorities
of beneficiaries. Zero-based budgeting, however, remains popular as the
ideal budgeting technique for public institutions, particularly those with
external stakeholders who are concerned with the efficacy of public
budgeting methods.
Both PPB and zero-based budgeting were attempts to make public
budgeting a pure, comprehensive, rational undertaking, although the first
put emphasis on cost-benefit analyses while the second was more concerned
with workload measurements. Both failed because, as Nobel Prize winner
Herbert A. Simon has argued since the early 1950s, there are cognitive limits
to decision makers’ ability to consider all possible options. These limits force
them to consider alternatives selectively, and even then they choose on ideological
or political grounds. Like the PPB system, zero-based budgeting was
also abandoned as a budgeting technique.
Making Results Orientation Work in Budgeting
Despite problems with early application in the United States and the failure
of the PPB experiment, some form of program budgeting approach has
persisted in the methods and practices of several developing and industrial
countries. It is perhaps noteworthy that many of the modern approaches to