Performance Measurement, Accountability, and Transparency of Budgets and Financial Reports

INTRODUCTION The link between organizational performance and policy decisions that allocate resources are often difficult to assess. Public administrators understand that evaluating the performance of public agencies is difficult to measure quantifiably, and the incremental nature of public policy, as well as the budgeting processes makes the link between the evaluation of agency performance and the allocation of future resources difficult. Further, public administration scholars have long struggled with chicken-and-egg dilemmas of social conditions and government expenditures. Do crime-rates provide a rationale for police spending? Does the employment rate reflect the performance of departments of labor? In other words, is it appropriate or even possible to apply rational public policy models to the outcome measurement process that reflects both agency performance and broader socio-economic conditions? The discussion is further complicated in times of economic and social distress, as outcome indicators such as unemployment and income levels consistently decline. A recent review of performance data published by the City of New York indicates that 204 of the city's 519 performance indicators are currently declining (http://www .nyc. gov/html/ops/cpr/html/home/home. shtml). In an era when socio-economic outcome indicators are in decline, how are policy makers to integrate the information into their decision making process. What is the appropriate level of resource allocation when outcome indicators spanning multiple agencies decline? Such dilemmas inhibit public officials from effectively integrating objective performance data into public budget and financial decisions on a regular basis. However, an inability to bring performance information into the financial planning and analyses processes should not stop public administrators from attempting it. Without data on the performance of their agencies, policy makers cannot effectively make informed decisions, rendering any hope of continuous improvement impractical. Furthermore, accurate, timely and historically comparable performance data is vital to managers as they seek to hold their agencies accountable to the public. This paper assesses budget and financial reports in U.S. states to determine the extent to which they integrate performance data into their publicly available reports. First, we examine relevant literature in performance reporting. The paper then assesses budgets and popular annual financial reports in U.S. states to determine the extent to which they integrate performance data. We employ two complementary methodologies to conduct the content analysis. Drawing on the Governmental Accounting Standards Board's (GASB) criteria for performance reporting, a rubric is applied to both public budget and public financial reports. Second, a data dictionary or lexicon for performance measurement is developed and applied to the same documents to determine the extent to which the documents address performance measurement. Lastly, the relevance of performance measurement is examined in both planned and actual expenditures by assessing budget and financial reports. LITERATURE REVIEW Transparency, responsiveness and citizen engagement are common themes among public management scholars in performance measurement, e-government, as well as, public budget and finance. Open government has become a common trope of recent political actions; the public, especially in the remnants of the Great Recession, demands greater understanding of where their tax dollars go. Polls conducted by Gallup from 2001 to 2012 reveal that over 65% of the population considers economic issues to be the most important problem facing the United States (http://www.gallup.com/poll/1675/most-importantproblem.aspx). Until recently, few recognized the connection between technology, finance and performance, which all espouse the similar goals of engaging citizens and allowing policy makers to hold agencies accountable for productivity improvement (Justice et al. …