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

152 Anwar Shah and Chunli Shen
managers to disseminate information about their programs to the public
and to obtain public understanding of and support for their activities.
Improved management in government agencies. Performance budgeting
reform can help program managers specify organizational goals, monitor
program performance, maintain better knowledge of problems with
program structure and operation, plan for the future, improve internal
control, and communicate program results. Wang (2000) analyzed survey
responses from 205 U.S. local governments and found that 70.6 percent
agree that performance measurement has increased their ability to determine
service efficiency, 65.1 percent believe that performance measurement
has increased their ability to determine service effectiveness, and
65.4 percent agree that performance measurement has improved the
accountability of program performance. In Australia, a survey in 2001 by
the National Institute of Labour Studies showed that 93 percent of agencies
consider that the agency’s performance orientation in management
budgeting has contributed to improved individual and organizational
performance (Scheers, Sterck, and Bouckaert 2005).
More informed budgetary decision making. Performance budgeting may
not rationalize and transform the political budgeting process, but it certainly
adds value to deliberations because performance information is taken
into account when the level of funding is decided. With appropriate
information, politicians are able to exert pressure for improvements and
can better understand the issues involved. Performance information may
play an active role in resource allocation in the following instances:
justifying the reallocation of resources, changing the focus of discussion
from line items to broader objectives and performance of agencies and
programs, influencing decisions about proposed new programs and
funding increases or decreases, and providing benchmarks useful to legislators
in making decisions.
Higher transparency and accountability. The budget document can serve
as a major tool of transparency and accountability for the legislative body
and the public. Traditional budgets, typically organized according to lineitem
inputs, fail to deliver meaningful information regarding what and
how well the government is doing. In comparison, performance budgeting
classifies resources by programs and presents performance indicators.
The budget makes it much easier for the public to get a sense of major
government activities and their achievements. Government performance
is under public scrutiny in the annual or semiannual performance reports.
Accountability in the public sector has traditionally been based on compliance
with rules and procedures. Basically, it has not mattered what a