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Virginia Balanced Measures Study

Virginia has been implementing a fully integrated performance management strategy since the early 1990’s. Virginia’s Performance Budgeting Process represents a major evolution in the state’s past efforts in strategic planning and performance measurement by fully integrating strategic planning and performance measurement with agency and program budgeting. By integrating these three elements into a single process, Virginia has been able to link agency mission, program priorities, anticipated results, strategies for achieving results, and budgeting.

For Virginia, this performance budgeting process enhances the state’s financial management in three areas:

1. Accountability for program outcomes where outcome measures are linked to program goals;
2. A long term focus that links day-to-day operations to the key strategies identified in each agency strategic plan; and
3. Prioritization of resources which will result from being able to base budget decisions on the results to be achieved rather than on traditional baseline budgeting.

The performance budgeting process is designed to focus on customers and results. Each agency is required to identify the customers that are served by each service, program or process, and assess the expectations of their customers. Agency strategic plans are based on this customer analysis and resources are allocated to achieve the desired results.

Virginia’s performance budgeting process begins with a comprehensive strategic assessment in which each state agency analyzes its state and federal mandates, customers and customer service, agency mission and activities, organizational strengths, weaknesses, threats, and opportunities, as well as the critical issues facing the agency. Based on these analyses, each agency then develops strategies, goals, objectives, and strategies which constitute the agency strategic plan.

State agencies use these strategic plans to develop activity-based budgets and performance measures. Each state agency develops and submits several performance measures that relate to the agency’s highest priority activities. At least one measure is required to be an outcome measure focused on broad program results. Performance measures were published in 1996 along with baseline date and established targets. Progress toward each measure is reported to the public each December with the Governor’s budget document and this information is available on the Department of Planning and Budgets’ Web Site.

The budget document includes actual agency performance at the end of the fiscal year for selected measures (three to five for most agencies and six core measures for each institution of higher education). Of the 684 performance measures for agencies, there are 507 outcome measures, 91 output measures, 53 efficiency measures, and 33 input measures.

• Outcome measures indicate the extent to which an activity or program has met stated objectives, such as percent reduction in recidivism or parts per million of specific airborne pollutants.
• Output measures indicate the amount of work accomplished by a program or activity, such as the number of clients served.
• Efficiency measures generally express a resource utilized per unit of output, such as cost per lane mile paved or staff hours expended per case.
• Input measures indicate the resources that are invested in a program or activity, such as total dollars appropriated or staff hours expended.

Performance measures provide an invaluable internal management for agencies to monitor program performance and take corrective action for improving service to customers.

Virginia continues to expand the use of performance measures. In 1999, the Governor be completed a Statewide Strategic Plan which will link agency plans and budgets more closely to the Governor’s agenda. In addition, Virginia is also investigating the development of a set of societal measures to link performance to broader state circumstances.

Currently, Virginia’s performance budgeting process is best described as a very sophisticated and effective activity-based performance budgeting system rather than a scorecard of balanced measures. However, the development of the Governor’s Strategic Plan and the growing interest in identifying societal measures is raising both the strategic vision and organizational alignment issues that the balanced scorecard model has evolved to address.

As activity-based management and balanced measures approaches continue to evolve, Virginia’s performance budgeting process clearly represents a benchmark for any state that is interested in improving results and accountability.

Contact:
Herb Hill
Director of Strategic Planning
Research and Evaluation
Virginia Department of Planning/Budget
Hhill@dpb.state.va.us
www.state.va.us/dpb