Government Performance Management
	Web Site Overview
About John Mercer
	Background & Experience
	Comments of Others
	News Articles
	International
Performance-Based Budgeting
	Overview
	CASCADE™ Performance Based Budgeting Software
	Guide to Performance Budgeting System
	White Paper
	Model Performance Budgeting System
	Performance Budget Examples
	ABC/M for Federal Agencies
	ABC/M Compliance
Government Performance and Results Act
	Overview
	GPRA Text
	GPRA Report
	Congressional Testimony
	The Big Picture of Federal Management Reform
President's Management Agenda
	Overview
	December 2007 Scorecard
	Strategic Management of Human Capital
	Competitive Sourcing
	Improved Financial Performance
	Expanded Electronic Government
	Budget and Performance Integration
	BPI - The Reform
	BPI - Expected Results
OMB's Program Assessment Rating Tool
	Overview
	PART Questions
	PART Instructions
	PART Program Ratings
Congressional Oversight
	Press Release
	Scorecard
Services & Clients
	GSA Schedule

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Performance-Based Budgeting

GPRA & Performance-Based Budgeting

In his June 2001 testimony before the House Subcommittee on Government Efficiency, John Mercer described Performance Budgeting and its relationship to GPRA. He explained some of its uses in resources allocation, program management, and accountability. Much of his understanding of the value of this type of budgeting was based on his experience in the model performance budgeting system that inspired GPRA.

What is a Performance Budget?

It is important to understand that performance-based budgeting not simply the use of program performance information in developing a budget. Performance-based budgeting does more than just inform the resource allocation decisions that go into develop of a traditional type of budget. In other words, it is not just "budgeting based on performance." Instead, it is the process by which a particular type of budget is developed -- a Performance Budget (or "program performance budget"). To design an effective system of performance-based budgeting, it is therefore vital to understand first exactly what the end product itself should be, what it should contain, and how it should look.

A true Performance Budget is not simply an Object Class budget with some program goals attached. It tells you much more than just that for a given level of funding a certain level of result is expected. A real Performance Budget gives a meaningful indication of how the dollars are expected to turn into results. Certainly not with scientific precision, but at least in an approximate sense, by outlining a general chain of cause and effect. The most effective governmental Performance Budget does this by showing, for each program area, how dollars fund day-to-day tasks and activities, how these activities are expected to generate certain outputs, and what outcomes should then be the result.

A program Performance Budget can be distinguished from an Object Class budget in a fundamental way. The Object Class budget will show what each dollar will be spent on : salaries, benefits, office supplies, travel, utilities, equipment, etc. The Performance Budget will show what each dollar will accomplish: process a grant application, inspect a worksite, review a compliance activity, etc. However, every program could (and probably should) be able to show its budget in both formats -- with the "bottom line" dollar amounts being exactly the same for each. Several performance budget examples are illustrated on this web site.

CASCADE™ Performance Based Budgeting Software

Newly available in 2008, CASCADE™ Performance Based Budgeting Software is a uniquely effective solution for addressing the strategic planning and performance budgeting needs of Federal departments and other government agencies. CASCADE™ presents a truly innovative approach to instilling operational planning transparency and accountability in organizations of from 50 to over 10,000 managers.

• Designed by John Mercer, the President of Strategisys LLC of Alexandria, VA. He is often called “the Father of GPRA” (Government Performance and Results Act) and is internationally recognized as a “foremost expert in performance-based budgeting.”
   
• Developed by Integrated Digital Systems of Manassas, VA. As a manufacturer of software solutions for government, IDS is a Microsoft Gold Certified Partner and a Veteran-Owned Small Business with a GSA Federal Supply Schedule contract.

CASCADE™ begins at the beginning – the place where your organization is first developing a new long-term strategic plan. Through a cascading hierarchy of goals and strategies that directly involves every manager at every level, day-to-day activities are clearly linked to each strategic goal of your organization. Detailed guidance and examples are provided every step of the way, ensuring that managers develop meaningful and measurable goals, and that they define specific strategies for accomplishing them.

CASCADE™ applies this same approach to developing your organization’s annual performance budget. Each manager’s own budget includes measurable results, with relevant unit costs, and is explicitly linked to organizational goals. The Goal Chart shows every manager’s goals, as they are developed, linked to higher-level goals. This provides an easy means to clarify both organizational and individual accountability for program performance.

CASCADE™ Performance Based Budgeting Software is the first and only integrated strategic planning and performance budgeting software solution that has been designed specifically to meet the unique needs of government agencies, with in-depth “how-to” guidance. It is not a product that was originally designed for commercial businesses. For more information contact John Mercer of Strategisys LLC at 703-924-2820.

A Guide to Performance-Based Budgeting

This website includes a 33-page guide to the Cascade™ Performance Budgeting System. This guide includes 24 tables and charts illustrating a step-by-step approach on how a government agency may develop an effective performance budget.

Performance-Based Budgeting White Paper

In March 2002, a white paper by John Mercer on "Performance Budgeting for Federal Agencies" was published. This paper explains what a Performance Budget is, some key steps in its development, and how it may be used.

Cost Accounting & Performance-Based Budgeting

A very important prerequisite to developing effective performance budgeting systems -- budget systems that can support comprehensive Performance Management all all levels of the organization -- was established in 1998 with implementation of a new accounting standard for federal agencies. The Federal Accounting Standards Advisory Board issued a standard for Managerial Cost Accounting that requires agencies to be able to develop a particular type of information essential to true performance-based budgeting. To cite a few lines from this standard (emphasis added):

“The managerial cost accounting concepts and standards contained in this statement are aimed at providing reliable and timely information on the full cost of federal programs, their activities, and outputs. . . . In July 1993, Congress passed the Government Performance and Results Act (GPRA) which mandates performance measurement by federal agencies. In September 1993, in his report to the President on the National Performance Review (NPR), Vice President Al Gore recommended an action which required the Federal Accounting Standards Advisory Board to issue a set of cost accounting standards for all federal activities. Those standards will provide a method for identifying the unit cost of all government activities.”

More information about this cost accounting reform may be found on this web site's pages on Activity Based Costing/Management and on ABC/M Compliance.

The President's Performance Budgeting Initiative

Senior officials at the Office of Management and Budget have described Performance-Based Budgeting as being the Bush Administration's top management priority. The importance of this reform has been emphasized in the President's Budget each year. Even more significant is the fact that OMB has outlined specific requirements for the initial phases of this reform, both as part of the President's Management Agenda and as key elements in the Program Assessment Rating Tool.