Challenges for Change may be a “dirty word,” as House Speaker Shap Smith put it, but “performance-based” budgeting, also known as “outcomes-based” budgeting, a concept derived from the C4C process, isn't dead yet, even though the Challenges approach to budgeting was effectively abandoned by lawmakers in the last legislative session.
Only a handful of provisions passed in the budget bill specifically referenced performance measures.
Nevertheless, Smith recently told members of the Government Accountability Committee that their charge – to ensure that state government operates efficiently – is more important than ever as Congress looks to significantly shrink funding for state programs.
Federal budget numbers won't be finalized for some time, but state officials anticipate millions of dollars in potential cuts to services for the poor, such as the Low Income Heating Assistance Program and Community Service Block Grants.
“The thing I hear more and more is that we aren't necessarily getting results for the money we spend,” Smith said. “I think we are and we need to be able to explain that.”
Like many of the previous meetings of the Government Accountability Committee, discussion centered on what lawmakers characterized as a perception problem. This time, however, the conversation turned somewhat. The Challenges may be part of the PR issue, they face, but the underlying problem runs much deeper: Vermonters don't, they reiterated, seem to understand the value of government services.
The committee's responsibility, according to Smith, is to make the case for programs that are worthwhile, but that don't at this point come with measurable outcomes. For example, systems for analyzing human services data were abandoned in 2007 under the Douglas administration.
“We all share the goal of better understanding what we're getting for the money,” Smith said in a short speech to lawmakers. “We need to be able to share with people the results of what we're getting.”
Smith said he is frequently approached by Vermonters who question whether state government provides a necessary service. He urged the committee to devise ways to make it easy for residents to understand the value of the services taxpayers buy.
“The concern I have is often people's perceptions are colored by anecdote, not by analysis,” Smith said. “What we perceive as good work is not shared by the citizens of Vermont.”
Smith, who is a proponent of outcomes-based budgeting, gently criticized the Challenges effort as a too-all-consuming effort. He advised the lawmakers consider focusing their efforts on one area of state government – the Agency of Human Services, which represents half of the state's budget.
“We have, in some instances, tried to bite off more than we could chew and tried outcomes-based throughout the entire budget,” Smith said. This too broad approach has undercut the state's attempts to make the budgeting process more accountable, he said.
The biggest barrier to incorporating the principles of performance based budgeting into the culture of the state, Smith said is overreaching and implementing the approach in a “half-assed way.”
The committee, which meets quarterly, spent much of the daylong meeting discussing ways in which to measure the value of government services. Lawmakers analyzed sections of the 2006 Vermont Well Being “social indicators source book” and the last quarterly report for the Challenges and determined that they needed to combine charts and graphs that describe programs outcomes with budgetary information.
Rep. Ann Manwaring, D-Wilmington, asked if the Legislature had money to hire an expert to create a template that would conflate budget and program evaluation measurements. Smith said it would be useful for Vermont to consider looking at models developed by states like Virginia and Iowa.
Manwaring, an enthusiastic proponent of the Challenges, described Vermonter who use government services as “customers.”
“This is a reframing of how we have to do business as a government,” Manwaring said. “Government hasn't taken up the tools of private industry to make efficiencies. We need to do things that implant systems thinking into the way we do business.”
Smith said the outcomes-based budgeting approach isn't about “demonstrating we haven't been doing a good job.” Policy makers, he said, have a perception problem to overcome.
“We need to explain what we're doing in an environment in which doing a pretty good job isn't enough,” Smith said. “We're going to have to be constant striving to do better.”
Rep. Donna Sweaney, D-Windsor, said budgeting with outcomes in mind is not a “fly by night” plan. “This is going to be an ongoing and hopefully embedded in the system,” Sweaney said.
It could be 2013 (and the fiscal year 2014 budgeting cycle) before the state is prepared to implement performance-based budgeting practices, according to Mike Clausen, deputy secretary of the Agency of Administration.
Clausen said the new approach could be incorporated into the $5 million computer software the Department of Finance and Management is purchasing. Installing the software is one thing; changing the culture of state government and the budgeting process, he said, is another.
He said the conversion will take three to four years for the legislature and the administration to change the way budgets are created and evaluated.
Shumlin's Cabinet is in the process of developing a long-term strategic plan for state departments and agencies. Cynthia Eisenhower, of Public Strategies Group, will be on hand to advise the governor, commissioners and agency secretaries. Minnesota-based Public Strategies Group created the original Challenges for Change template the state put in place in 2010.
The next Government Accountability Committee meeting will be July 11. Lawmakers will consider the next quarterly Challenges for Change report at that time.