Section 35-3-24.1 of the Rhode Island General Laws requires that:

(a) Beginning with the fiscal year ending June 30, 1997, the governor shall submit, as part of each budget submitted to the general assembly pursuant to section 35-3-7, performance objectives for each program in the budget for the ensuing fiscal year, estimated performance data for the fiscal year in which the budget is submitted and actual performance data for the preceding two completed fiscal years. Performance data shall include efforts at achieving equal opportunity hiring goals as defined in the department's annual affirmative action plan. The governor shall, in addition, recommend appropriate standards against which to measure program performance. Performance in prior years may be used as a standard where appropriate. These performance standards shall be stated in terms of results obtained.

(b) The governor may submit, in lieu of any part of the information required to be submitted pursuant to subsection (a) an explanation of why such information cannot, as a practical matter be submitted.

As part of the development of the FY 1998 and FY 1999 Budgets, the Budget Office worked with many agencies in the development of performance objectives or measures for the majority of programs covered by the State Budget. The goals for FY 2000 are to complete the development of initial performance objectives and measures for the remaining program and to update and refine the measures included in previous budgets. In addition, agency budget meetings will focus on discussions of program performance as identified by measures already in use. The Strategic Planning, Monitoring and Evaluation Unit of the Budget Office will be responsible for this part of the budget process, and will work closely with each agency in developing or refining appropriate measures.

Current performance measures are reflected on the preprinted Technical Appendix pages, which are included in this package or on the Program Performance Measurement form (Form BR-11) in the case of new on significantly revised existing performance measures. Stated measures must be consistent with the objectives contained on the program narrative pages used in the published Budget document. In some cases this may require a restatement of the program objectives. The agency should describe how each program measure being reported on the form specifically relates to a given objective. More than one measure may be required to demonstrate program performance. In some cases it may be appropriate to use performance measures for subprograms to demonstrate program performance. To ensure consistency, both narrative pages and the performance measurements are due on September 16. Completed Program Performance Measure forms should contain the name, title and phone number of the indivi dual responsible for preparing and monitoring the program performance measure.

All performance measures must also be accompanied by defined quantifiable standards. In those instances where the agency is presenting new programs or program revisions, new or revised program performance measures may be required. These must be submitted to the Budget Office concurrently with program changes or revisions by August 12. The following sections provide definitions and guidance for designing or revising appropriate performance measures and standards.

Each department or agency is also required to report its progress towards meeting equal opportunity hiring goals using the same methodology and format as in the FY 1999 budget submission. A Program Performance Measurement form should be completed summarizing the data for minorities and females as a percentage of the workforce, with goals for the current and budget fiscal years. An example of this form is provided in the Forms section of these instructions. Please note that only full time employees should be included in the computation of percentages based upon guidelines provided by the State’s EEO office.

Background

Performance Based Management, a.k.a. managing for results, is taking hold at all levels of government in the U.S. and other countries. The motivation behind performance based government is the desire by administrations, legislatures and the public to know the results that government programs have on the lives of people. Thus, governments are increasingly determined to measure the value added to taxpayers’ dollars. This is not performance measurement for its own sake; the aim of these management initiatives is to improve government programs. Through strategic planning, monitoring and evaluation, and by tracking and reporting progress on identified performance measures, government becomes more publicly accountable for its efforts and activities. At the state level, departments and agencies are responsible for developing, implementing, monitoring, evaluating and reporting program performance as it relates to their missions and to the Governor’s poli cies, as well as to state and federal mandates.

Performance Measurement Systems

While specifics may vary, performance measurement systems share several common features. All involve identifying desired program outcomes; setting goals or objectives for programs; selecting measures or indicators; reporting results; and using outcome or performance information as a continuous management tool. Program outcomes normally are determined as part of a strategic planning process involving policy makers, program managers and clients. After clarifying the agency’s mission, goals are established for key programs that define the organization. This step answers the "Who are we and why are we here?" questions. Program goals and objectives are also established with input from policy makers and clients. They may be stated in terms of either final goals or intermediate goals and answer the "What do we want to accomplish and how will we know when we’ve succeeded?" questions. Program managers typically develop and oversee the implementation of ac tion plans. They also develop the methods used to measure results, monitor progress and ensure accountability and continuous improvement. These activities are both internal and external to the program and answer the "How do we get there and how do we measure progress?" questions. Performance measurement systems are not linear; rather they are continuous loop systems involving constant feedback and adjustment.

Performance Measures

Performance measures or indicators fall into four categories: input measures, output measures, efficiency measures and outcome measures. Each has its uses and all should be used in program management. Please bear in mind that the State’s statutes require the Budget Office to report outcome measures only.

• Input measures. Inputs are resources devoted to a program. They include dollars allocated and total employee-hours devoted to the program, activity or service.
  
• Output measures. These indicators report on the quantity of units produced or services provided. They may also report on the amount of effort expended to produce or deliver a product or service. Examples include the number of clients served, the number of permits reviewed, or the number of projects completed in given period of time. Output measures are often confused with outcome measures.
  
• Efficiency measures. These measures normally are used as an internal management tool to relate resource costs in dollars or employee time to unit of product or service output. Efficiency measures may also be used to measure cost-per-unit-of-outcome and, as such, may be considered an outcome measure when efficiency is a significant program objective. For example, the number of applications processes per employee is an efficiency measure.
  
• Outcome measures. These indicators report the results of activities or services. These tools measure the effectiveness of an agency’s performance and the public benefit derived. They represent the highest form of performance measures. Examples of outcome measures include the ratio of healthy births to total births; percent of reduction in recidivism for juvenile offenders; percent decrease of repeat complaints to a regulatory board; percent increase of tourists to new target markets; percent increase of third graders reading at third grade level; etc.

All of the performance measures described above are expressed in quantitative terms, usually as units, ratios, percentages or index numbers. A fifth category of measure, commonly referred to as Explanatory Information, may be expressed either quantitatively or qualitatively. This information deals with factors that affect an organization’s performance. Such factors may be outside the organization’s ability to control or within its control. Programs that require implementation by third parties, for example, may be beyond an agency’s ability to control directly. Nevertheless, the program performance measures for such a program are still valid representations of progress toward achieving stated goals and objectives. Explanatory measures may also involve factors over which the department does exercise direct control as in the case of staffing patterns. Explanatory Information should be incorporated in the notes section of the BR-11 form.

Reporting Requirements

For the purposes of preparing the FY 2000 Budget only outcome measures should be reported. The Budget Office, in meeting the statutory requirement, will not utilize other types of measures. Most departments and agencies completed development of initial program outcome measures with their FY 1999 submission. Others are continuing in their efforts to clarify their strategic missions, goals and objectives, and will present initial or revised program outcome measures for the first time. In all cases the process should be seen as iterative and continuous. Agencies with approved measures should review them to ensure that they are relevant to key agency goals and objectives as well as reliable and valid in terms of the information presented and the intent of the measure. It is especially important that agencies document what the program performance measures presented represent, what data sources are used, limitations on the measure, if any, and how the measure relates to the standards established.

Agencies that receive funding from federal programs that require the reporting of performance measures in support of the Government Performance and Results Act (GPRA) should attempt to use those measures as the basis for state program performance measures. In some cases, notably where state programs consistently exceed federal standards, program objectives and standards should be modified. In all cases, the goal here is to avoid creating separate program performance measures for state and federal reporting requirements.

An increasing number of departments and agencies are collaborating on programs, most notably those associated with the Children’s Cabinet. In those cases where an agency program performance measure supports Children’s Cabinet objectives it should be reported as such in an explanatory footnote.

Standards

Performance standards are quantifiable estimates of results expected for a given period of time. There are three basic methods for establishing standards: improvement on baseline performance, benchmarking and mandates. A baseline is usually established from the most recent measurement period available. If no data are available, industry or professional standards can be used. Benchmarking involves identifying best-in-class performance in other states or geographical regions and emulating it. State or federal mandates may be met or exceeded. Any of these three approaches is acceptable. Those who are accountable for the program, ideally with input from customers and stakeholders, should develop the standards. The best standards are those that are challenging but achievable and stretch the capacity and creativity of those involved.

For more information and assistance in developing appropriate performance measures, please contact your analysts,Robert Griffith or Bill McKenna of the Strategic Planning Unit of the Budget Office at 277-6300.