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Performance Measurement in
Budgeting: A Study of County
Government
ARTICLE in PUBLIC BUDGETING &AMP FINANCE DECEMBER 2002
DOI: 10.1111/0275-1100.00022

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Performance Measurement in Budgeting:

A Study of County Governments
XIAOHU WANG

This article focuses on the use of performance measurement in public budgeting.

Based on a national survey of county governments, it finds that governments use performance measurement in a wide range of budgeting areas. The results also show that
performance measurement users are experiencing technical obstacles in conducting
performance analysis and obtaining support from legislatures and citizens. The article
concludes that analytical competency and political support increase the use of performance measurement in budgeting, which leads to a more efficient, effective, and accountable government.

The use of performance measurement in budgeting has been advocated at various levels
of government.1 Efforts have been made to incorporate performance measures in reporting, management, budgeting, and strategic planning processes.2 However, performance
measurement programs do not always achieve their expected results. Case studies show

XiaoHu Wang is Assistant Professor in the Department of Public Administration, University of Central
Florida. His research and teaching interests include public budgeting and financial management. His
works have been accepted for publication in Public Administration Review, Public Productivity & Management Review, Journal of Public Budgeting, Accounting & Financial Management, and many other public administration journals.
1. Broom Cheryle and Lynne A. McGuire, Performance-Based Government Models: Building a
Track Record. Public Budgeting and Finance 15 (Winter 1995): 317; Leithe, Joni, Implementing Performance Measurement in Government (Chicago: Government Finance Officer Association, 1997); Melkers,
Julia and Katherine Willoughby, The State of States: Performance-Based Budgeting Requirements in 47
of 50. Public Administration Review 58 (1998): 6673.
2. Tigue, Patricia and Dennis Strachota, The Use of Performance Measures in City and County Budgets
(Chicago: Government Finance Officers Association, 1994); Mascarenhas, R. C., Searching for Efficiency
in the Public Sector: Interim Evaluation of Performance Budgeting in New Zealand. Public Budgeting
and Finance 16 (Fall 1996): 1326; Jones, L. R. and Jerry McCaffery, Implementing the Chief Financial
Officers Act and the Government Performance and Results Act in the Federal Government. Public
Budgeting and Finance 17 (Spring 1997): 3555.

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Public Budgeting & Finance / Fall 2000

that governments fail to use performance measurement in making resource allocation decisions.3 Performance measurement produces information that confuses, rather than reinforces, decisionmakers and the public.4 In fact, some governments have reduced the use of
performance analysis that seeks to determine the effectiveness of governmental activities.5 Thus, the same question still haunts public budgeting scholars and practitioners: Is
performance measurement a reform that has substantial impact on budgeting practice, or
does it merely imitate many previous budgeting reforms (such as the Planning-Programming-Budgeting System and Zero-Based Budgeting) that eventually lose their momentum and substance?6
Performance measurement studies are often case studies that focus on federal and
state governments, the pioneers in this area. Recently, some studies on local governments
have emerged, but few studies discuss the use of performance measurement in local budgetary processes.7 This article attempts to answer the following questions. (1) To what extent do governments use performance measurement in their budgeting processes? (2)
What are the obstacles perceived by governments to the use of performance measurement in budgeting? (3) What are the possible political and technical factors that influence
the use of performance measurement in budgeting? (4) What is the impact of performance measurement? The author hopes that this article can identify or articulate the conditions necessary to sustain the momentum of performance measurement as a budgeting
reform.
This article is based on a national survey of the county governments that use performance measurement in budgeting. Counties surveyed had populations over 50,000.
Counties have been relatively little researched in recent times, although continuing inter-

3. Congressional Budget Office, Using Performance Measures in the Federal Budget Process. (Washington: Congressional Budget Office, 1993); Mascarenhas, R. C., Searching for Efficiency in the Public
Sector: Interim Evaluation of Performance Budgeting in New Zealand. Public Budgeting and Finance 16
(Fall 1996): 1326.
4. Harris, Jean, Service Efforts and Accomplishments Standards: Fundamental Questions of an
Emerging Concept. Public Budgeting and Finance, 15 (Winter 1995): 1837; Jones, L. R. and Jerry
McCaffery, Implementing the Chief Financial Officers Act and the Government Performance and Results Act in the Federal Government. Public Budgeting and Finance 17 (Spring 1997): 3555.
5. Lee, Robert, A Quarter Century of State Budgeting Practices. Public Administration Review 57
(1997): 133140.
6. Lessons about the Planning-Programming Budgeting System and Zero-Based Budgeting can be
found in the following sources: John Mikesell, Fiscal Administration: Analysis and Applications for the
Public Sector (Belmont, CA: Wadsworth Publishing Company, 1995); Irene S. Rubin, The Politics of Public
Budgeting: Getting and Spending, Borrowing and Balancing (Chatham, NJ: Chatham House Publishers,
Inc., 1997). Aaron Wildavsky, The Politics of The Budgetary Process (Boston: Little Brown, 1979).
7. Poister, Ted and Gregory Streib, Performance Measurement in Municipal Government: Assessing
the State of the Practice. Public Administration Review, 59 (4): 325335. Leithe, Joni, Implementing Performance Measurement in Government (Chicago: Government Finance Officers Association, 1997); Tigue,
Patricia, and Dennis Strachota, The Use of Performance Measures in City and County Budgets (Chicago:
Government Finance Officers Association, 1994).

Wang / Performance Measurement in Budgeting

103

est in local, municipal government among public budgeting scholars suggests that it is now
appropriate to consider this level of local government. Many counties have implemented
management and budgeting reforms.8 However, there is lack of systematic evidence about
budgeting practice in counties. This article contributes to understanding budgetary reform
in U.S. county governments.
During late 1998, a survey was mailed to county managers in 856 counties with populations over 50,000. 311 counties responded to the survey. Of those, 208 respondents indicated they used performance measurement in at least one budget stage (defined below),
and it is these 208 responses analyzed here. To determine the response rate for the counties that use performance measurement, a telephone survey was conducted of a random
sample of 106 counties that did not respond to the survey. Thirteen counties stated that
they used performance measurement: hence, [(856311) * 13/106 ] 67 counties that use
performance measurement did not respond to the survey. Hence, the survey effective response rate of counties using performance measurement is 75.6 percent (or, 208/(208
67)). Several randomly selected survey items were included in a follow-up telephone survey to compare responses. Non-response biases were not found. To ensure the validity of
the responses, the researcher also conducted follow-up telephone interviews in which
respondents were asked to verify their survey responses. Very few changes resulted. In addition, the researcher conducted in-depth telephone interviews with twenty county
officials who responded to the survey. These respondents were selected because they had
made quality comments on an open-ended survey question about the performance measurement practices in their counties. In the interviews, they were asked for specific examples about their jurisdictions achievements, obstacles, and capacities in performance
measurement. While this article mainly discusses the results of the mail survey, the findings from the interviews are occasionally used to flesh out the survey results.
PERFORMANCE MEASUREMENT IN THE BUDGET CYCLE
Performance measurement is defined as the measuring of levels of activities and achievements through a range of indicators. Governments can use performance measurement in
various stages of public budgeting. In budget preparation, central management agencies
can use performance indicators in budget instructions to demonstrate desirable performance levels. Individual service agencies can use performance indicators to show their
service achievements and assist with their budget estimates and requests. In addition, performance indicators in executive budgets often demonstrate expected service achievements and are used as a basis for legislative negotiation.9 In budget legislation, in which
8. Cigler, Beverly, County Governance in the 1990s. State and Local Government Review 27 (1995):
5570; Svara, James, The Possibility of Professionalism in County Management. International Journal of
Public Administration 16 (1993): 20512080.
9. Case studies have been used to describe the use of performance measurement in budget preparation. Joni L. Leithe presents cases in the cities of Sunnyvale (California) and Nags Head (North Carolina)

104

Public Budgeting & Finance / Fall 2000

legislators judge agencies budgets and performance, performance information specifies

the service quantity and quality expected by legislators. Thus, agencies are held accountable for their performances. Legislators can use performance information to assist in resource allocation decisions. In addition, since government performances often concern
residents, performance measurement can facilitate the communication between residents
and governments and involve residents in the budgetary decision making.10 In the process
of budget execution and evaluation, managers use specific performance measures to clarify broad and abstract management goals, monitor the achievement of these goals, detect
operational problems, and provide solutions. Uniform performance information provides
a standard for public managers to compare performances over time or across jurisdictions.
In addition, performance indicators are the essential parts of performance evaluation and
auditing that ensure efficiency and effectiveness of public programs.11

describing how performance measures can contribute to the formulation and justification of budget requests. See Joni Leithe, Implementing Performance Measurement in Government (Chicago: Government
Finance Officer Association, 1997). Richard Tracy and Ellen Jean show how managers and budget analysts in Portland (Oregon) develop performance information for the annual review of budget requests.
See Richard Tracy and Ellen Jean, Measuring Government Performance: Experimenting with Service
Efforts and Accomplishments Reporting in Portland, Oregon. Government Finance Review (December
1993): 1114. Also, for a detailed discussion about how to develop performance indicators in budget requests and executive budgets, see the Center for Accountability and Performances comprehensive workbook, Performance Measurement: Concepts and Techniques (Washington: American Society for Public
Administration, 1998).
10. Discussions about performance measurement in budget legislation are rich. First, there is a debate
concerning why and how legislators should be involved in performance budgeting. Advocates of legislative participation believe that performance measurement fails if legislators do not use performance information in budgeting. It is unwise to treat performance measurement as an administrations internal
management reform, as many former budgetary reforms did. A review of this debate can be seen in General Accounting Office, Performance Budgeting: Past Initiatives Offer Insights for GPRA Implementation
(Washington: General Accounting Office, 1997). A discussion about legislators motives in performance
budgeting can be found in Donald F. Kettl, Reinventing Government? Appraising the National Performance Review (Washington: The Brookings Institute, 1994). Also interesting is L. R. Jones and Jerry
McCafferys work that describes legislators use of performance information in the federal budgeting process: Implementing the Chief Financial Officers Act and the Government Performance and Results Act
in the Federal Government, Public Measurement. Public Budgeting and Finance 17 (Spring 1997): 3555.
The second area of budget legislation literature concerns the use of performance measurement in making
resource allocation decisions. Many researchers seem to believe that performance measurement is rarely
used as a sole source to make resource allocation decisions, but that it can help the decision-making process. For analyses and discussions concerning the challenges in this area, see the literature in Note 3 and
General Accounting Office, The Results Act: Assessment of the Governmentwide Performance Plan for
Fiscal Year 1999 (Washington: General Accounting Office, 1998).
11. The use of performance information in monitoring and examining budget execution is described
by many works including James Swiss Performance Monitoring System, in David Ammons (ed.) Accountability for Performance: Measurement and Monitoring in Local Government (Washington: International City/County Management Association, 1995); Joseph Wholey and Harry Hatry, The Case for
Performance Monitoring. Public Administration Review 52 (6): 604610 (1992). In addition, performance

Wang / Performance Measurement in Budgeting

105

TABLE 1
The Use of Performance Measurement in Budget Cycles
Budget Cycle

Percent of Use

Our jurisdiction uses performance measurement in . . .

Executive Preparation
Preparing departments budget requests
Preparing executive budgets
Preparing CEOs budget instructions
Average (Scale Statistics: Cronbach a 0.78)

197
190
195
194

77.7%
63.7
57.4
58.4

Legislative Review and Consideration

Helping county commission review the executive budget
Helping residents understand the budget
Deciding on funding levels for individual programs
Determining funding priorities across programs
Average (a 0.68)

193
193
191
195
193

66.8
62.2
57.6
53.3
60.0

Budget Execution and Evaluation

Monitoring the efficiency/effectiveness of services
Evaluating program results and achievements
Forcing discussion about service problems and solutions
Assessing service delivery alternatives
Ensuring the compliance of laws
Evaluating long-term financial impacts
Average (a 0.76)
Overall average (a 0.84)

192
194
194
190
192
191
192
193

79.7
75.3
62.9
53.7
46.9
46.6
60.9
59.8

Note:

Percentages are based on the counties that used performance measurement in budgeting.

This study shows that performance measurement is used in all stages of the budget cycle (Table 1). A large number of counties use performance measurement in agency requests (77.7 percent), while fewer counties use it in their executive budgets (63.7
percent). This result suggests a bottom-up reporting approach in which individual

measurement has been used in auditing and evaluating public programs. The literature in this area includes Richard Tracys Performance Auditing: Catalyst for Change, in David Ammons (ed.) Accountability for Performance: Measurement and Monitoring in Local Government (Washington: International
City/County Management Association, 1995). A more recent discussion can be found in the GAOs Performance and Accountability Series, which discusses how a good financial and performance information
system can detect management and operation errors or risks. General Accounting Office, Major Management Challenges and Program Risks: A Governmentwide Perspective (Washington: General Accounting
Office, 1999).

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Public Budgeting & Finance / Fall 2000

agencies develop their own performance indicators; they then report the information to
central management offices which determine whether the information will be included in
the executive budgets. Another finding is that many counties use performance measurement for budgetary communication purposes; fewer use performance measurement to
make resource allocation decisionsan objective of performance budgeting advocated
by scholars and practitioners.12 For example, 66.8 percent of counties use performance
measurement to help county commissions review the budgets, while 53.3 percent determine funding priorities with performance measurement. Our interviews with county administrators substantiate this finding. As one interviewee pointed out, There has been a
resistance from the County Commission to use the results as part of the allocation process. . . . Public budgeting is a political function. Letting the [performance] measures affect budget allocation would be a threat to power. The elected officials do not want a
central agency such as a finance department making decisions for them. This finding indicates that some governments are facing political resistance to the use of performance
measurement in making resource allocation decisions.
The survey also asked respondents to identify the primary participants in performance
measurement.13 Responses from 61.6 percent of counties indicated that at least one central management agency (county manager offices, budget offices, or finance offices) was
primarily responsible for performance measurement. The analysis shows that central
management involvement propels the use of performance measurement in budgeting.
When central management is involved, counties increase the use of performance measurement by 22.2 percent (measured by the number of budget functions that use performance measurement). The relationship between central management involvement and
use of performance measurement in budgeting is statistically significant (tau-c 0.230, p
0.01). However, only one-third of county managers offices are primarily responsible
for performance measurement (Table 2). This result indicates room for further improve12. Broom, Cheryle and Lynne A. McGuire, Performance-Based Government Models: Building a
Track Record. Public Budgeting and Finance 15 (Winter 1995): 317; Martin, Lawrence L., Outcome
Budgeting: A New Entrepreneurial Approach To Budgeting. Journal of Public Budgeting, Accounting &
Financial Management 9 (Spring 1997): 108126; Mascarenhas, R. C., Searching for Efficiency in the Public Sector: Interim Evaluation of Performance Budgeting in New Zealand. Public Budgeting and Finance
16 (Fall 1996): 1326.
13. The survey used a filter question to ensure that respondents did not confuse performance measurement, a practice based on organizational performance, with performance appraisal which evaluates
individuals. In this question, respondents were asked to identify four different types of performance measures used for their organizations. They were asked to choose workload, effectiveness, quality, and citizen/client satisfaction measures for seventeen major county service functions (e.g., police, fire,
transportation, etc.). The definitions of these measures were given in this question. This classification of
measures is different from a performance appraisal system which focuses on individual performance and
mainly uses subjective evaluations. The intent of this question was to provide respondents with a definition of performance measurement in the survey and to articulate the use of performance measurement in
respondents organizations. The respondents who did not answer this question were excluded from the
analysis.

Wang / Performance Measurement in Budgeting

107

TABLE 2
Agencies Primarily Responsible for Performance Measurement

County Managers Office

Office of Management and Budget
Finance Directors Office
Personnel Managers Office
Individual Departments
All of the above offices are equally important
Note:

Responsible Agencies

201
201
201
201
201
201

33.8%
31.8
15.9
16.4
71.6
9.5

Percentages are based on the counties that used performance measurement in budgeting.

ment in central management involvement in coordinating, standardizing, and sustaining

performance measurement.
Counties in Northeast use performance measurement more in budgeting.14 On average, nine of thirteen budgetary functions (listed in Table 1) adopt performance measurement in these counties, compared with 7.7 for the counties in West and 7.6 for the counties
in South and North Central. In addition, on average, counties with council-appointed administrators (61 percent of counties in the study) use performance measurement in 7.8
budgetary functions, compared with 8.1 in the counties that have commission-form (without administrator) and 7.9 in the counties with elected chief executive officers. Although
these differences are not statistically significant, commission-governed counties have a
larger standard deviation in the use of performance measurement (4.0, compared with 3.3
for the appointed-administrator and elected-executive form), indicating that the use of
performance measurement in these counties varies to a greater extent.15 Finally, no signif-

14. Counties were classified according to the states in which they were allocated. International
City/County Management Association (ICMA)s classification is used. States in Northeast include Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and
Vermont. States in North Central include Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri,
Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. South states include Alabama, Arkansas,
Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma,
South Carolina, Tennessee, Texas, Virginia, and West Virginia. States in West include Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. See International City/County Management Association, The Municipal Year Book, 1999
(Washington: International City/County Management Association, 1999). South provided 46.3 percent
(95) of counties in the study, West 19.2 percent, Northeast 12.3 percent, and North Central 21.7 percent.
15. One-way analysis of variance was performed on the differences in the use of performance measurement in budgeting, measured by the number of budgetary functions in which performance measurement is used, among the three forms of governments. The F statistic was 0.119 with a p-value of 0.888 for
179 counties that reported such information.

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Public Budgeting & Finance / Fall 2000

icant association between populations of counties and the use of performance measurement in budgeting was found.16
This article also finds that the counties in the study have used performance measurement for an average of 4.2 years, and it was noted that use of performance measurement
increases over time. For example, 48 percent of counties that use performance measurement for more than three years have used it to determine funding priorities, compared
with only 41 percent for the counties which have used performance measurement for
three years or less.
DEVELOPING PERFORMANCE MEASUREMENT
Implementing performance measurement in budgeting involves developing performance
indicators and conducting performance analysis. The implementation is futile without appropriate financial and technical support. This section discusses the findings concerning
these aspects of performance measurement.
Developing Performance Indicators and Conducting Performance Analysis
Governments use performance measurement to assess an organizations goal achievement.17 Thus, performance measurement depends on developing clear, consistent organizational goals. The findings in Table 3 show that most performance measurement users
can identify organizational goals (88.7 percent) and use performance measurement to
specify these goals (65.3 percent). However, fewer governments (49.0 percent) can use
performance measurement to assess conflicting goals that often pose a dilemma for public
organizations. Many public agencies have multiple goals that are contradictory to a certain extent. For example, a public librarys goal of serving more customers would lead to
library funding flowing into the areas with more literate populations. Accomplishing this
goal may be counterproductive to a goal of eliminating illiteracy, which requires library
funding in the areas with more illiterate populations. Likewise, a public safety goal of
fighting crime may compete for resources that are allocated to serve the goal of assisting
citizens.18 The contradiction in goal setting poses a challenge for public officials to develop proper performance indicators to evaluate the goals. Carefully designed performance indicators help public managers articulate the conflict and develop different

16. A correlation study was performed between the populations of counties in the sample and the
number of budget functions in which performance measurement is used. Pearson correlation coefficient
0.131, p 0.085, N 173.
17. General Accounting Office, The Results Acts: Assessment of the Governmentwide Performance
Plan for Fiscal Year 1999 (Washington: General Accounting Office, 1998).
18. A good discussion about the dilemma of using performance measures in setting contradictory
goals can be seen in F. Levy, Arnold Meltsner, and Aaron Wildavsky, Urban Outcomes (Berkeley, CA:
University of California Press, 1974).

Wang / Performance Measurement in Budgeting

109

TABLE 3
Developing Performance Measurement (PM)
N

Agreement

1. Developing Performance Indicators

Most departments in our jurisdiction can . . .
identify organizational goals
develop desirable performance level
quantify performance information
specify goals/missions with PM
develop outcome measures
assess conflicting goals with PM
distinguish between outputs and outcomes
Average

203
203
202
202
203
202
203
203

88.7%
80.3
66.8
65.3
59.1
49.0
48.8
65.4

2. Conducting Performance Analysis

Most departments in our jurisdiction can . . .
track performance over time
identify and locate performance data
compare program results with performance goals
acquire performance data in a timely way
collect performance data at low cost
compare performance with other jurisdictions
compare performances among departments/programs
determine the validity of performance data
determine the reliability of performance data
Average

203
203
203
203
202
203
202
203
203
203

72.4%
62.6
62.1
47.8
47.5
45.8
44.1
41.4
37.4
51.2

3. Building Performance Measurement Capacity

Most departments in our jurisdiction have . . .
cost-based accounting system
staff capable of analyzing performance data
management information system
sufficient funding for data collection
budgets for performance measurement
Average

198
202
203
201
202
201

59.6%
55.9
48.3
29.9
26.2
44.0

Note:

110

Percentages are based on the counties that used performance measurement in budgeting.

Public Budgeting & Finance / Fall 2000

strategies to achieve different goals. This finding shows room for the further use of performance measurement in assessing conflicting goals.
The findings in Table 3 also indicate that most counties have little difficulty locating
performance data (62.6 percent) and tracking performance over time (72.4 percent).
However, fewer than half of them can control the cost of data collection and acquire data
in a timely fashion. Many counties cannot compare their own performance data with
those of other jurisdictions. In addition, many cannot substantiate their performance results through assessment of the validity and reliability of these data. Interviews show that
performance measurement should emphasize the meaningful interpretation of performance data. Our interviewees were struggling hard to understand the meaning of collected performance data. What does it mean when a crime rate shows a reduction while, at
the same time, the resident satisfaction rate about policing is unchanged? What does it
mean when the number of approved legislative motions increases in commissioner meetings? A county manager asked for periodical (quarterly or even monthly), intensive, and
one-on-one performance analysis for targeted service areas, and suggested that performance measurement would lose its attraction to public managers if it were only a sound
good communication tool for elected officials to advertise their achievements.
These results are in line with the latest experiences of the federal governmentthe
front-runner in performance measurement because of the enforcement of the Government Performance and Results Act of 1993. Several recent evaluations of the General Accounting Office indicate that federal agencies are challenged to develop a set of goals and
measures that cover the variety of results that agencies are expected to reach. Agencies
discussions of strategies and resources are often general, not specific. There is limited confidence that performance measures collected by agencies will be credible.19
These findings indicate that operational issues in goal setting, development and refinement of measures, and performance analysis have become important in performance
measurement. Government should develop technical capacities in personnel, information
systems, and resource availability to deal with these issues. The face value of performance
measurement would fade away if these operational issues could not be resolved to public
officials satisfaction.
Obtaining Resources and Infrastructure for Performance Measurement
Performance measurement needs capacity building in accounting standards, information
systems, personnel, and most important, funding potential. In the survey, respondents

19. The GAO has consistently evaluated the progress of performance measurement in federal agencies. Some persistent obstacles in implementing performance measurement identified by the GAO are included in several reports. General Accounting Office, Major Management Challenges and Program Risks,
Performance and Accountability Series (Washington: General Accounting Office, 1999); General Accounting Office, Managing For Results: Opportunities for Continued Improvements in Agencies Performance Plans (Washington: General Accounting Office, 1999).

Wang / Performance Measurement in Budgeting

111

were asked to identify whether most of their departments have a cost-based accounting
system, staff capable of analyzing performance data, and management information
systems to collect performance data. Table 3 shows that about half of the counties that responded to the survey have these capacities. In addition, respondents were asked to indicate if their departments allocate sufficient funding for data collection and have
budgets for performance measurement. Table 3 shows that most performance measurement users feel the pressure to fund the initiative. Only a small percentage of governments have sufficient funding for data collection (29.9 percent), and even fewer
governments budget for the initiative (26.2 percent). Our interviews proved this point
when many interviewees cited tight budgets for county operations and some elected officials suspicious attitudes toward the effectiveness of performance measurement.
Sufficient funding for data collection is critical for the use of performance measurement in budgeting. Table 4 shows that funding is significantly associated with the use of
performance measurement (tau-c 0.332, p 0.01). The results also indicate that capable
staff and management information systems increase the use of performance measurement
in budgeting. For example, in the counties that have management information systems to
collect performance data, performance measurement is used for an average of 9.6 budgetary functions (of thirteen listed in Table 1), compared with 7.2 in those counties that do
not have such systems. Interestingly, and contrary to the literature, the adoption of a
cost-based accounting system does not increase the use of performance measurement in
budgeting.20 One explanation is that a cost-based accounting system only provides costs of
activities and effort, which departs from the requirement to use results, achievements, or
outcomes in the current performance measurement.21 Indeed, costs are often associated
with outputs to provide unit cost information. The linkage between costs and outcomes
could be difficult to establish (e.g., what is the cost to improve a citizen satisfaction rate by
1 percent?). A recent study of public sector benchmarking suggests that service outcome
measures may be lacking for inter-jurisdiction comparison in a project that focuses on cost
accounting alone.22

20. General Accounting Office, Performance Budgeting: State Experiences and Implications for the
Federal Government (Washington: General Accounting Office, 1993); Leithe, Joni. Implementing Performance Measurement in Government (Chicago: Government Finance Officer Association, 1997).
21. For the differences between the current performance budgeting and previous performance budgeting efforts, see John Mikesell, Fiscal Administration: Analysis and Applications for the Public Sector
(Belmont, CA: Wadsworth Publishing Company, 1995).
22. Charles Coe evaluated two public sector benchmarking projects. An Institute of Government
(IOG) project at the University of North Carolina focused on creating a cost-accounting system. The
study did not provide all measures used in the project. However, the measures in the project seem to be
limited, and the measures in the examples are often output measures such as tons of garbage collected,
number of cases investigated, number of emergency and non-emergency calls. The author suggests that
more service measures should be used. See Charles Coe, Local Government Benchmarking Lessons
from Two Major Multigovernment Efforts. Public Administration Review 59 (2): 110123 (1999).

112

Public Budgeting & Finance / Fall 2000

TABLE 4
Association Between Performance Measurement Capacity and Performance
Measurement in Budgeting
Use of Performance Measurement in Budgeting
Capacity in
Performance
Measurement
Cost-based accounting
Staff capable of PM analysis
Management information system
Sufficient funding to collect data
Budgeting for PM
Aggregate Capacity Measure
(Cronbach a 0.62)

Preparation

Legislation

Execution/
evaluation

0.027
0.214**
0.255**
0.178*
0.222**
0.193**

0.087
0.168*
0.278**
0.282**
0.137*
0.264**

0.033
0.245**
0.306**
0.253**
0.232**
0.241**

Overall
0.021
0.248**
0.365**
0.332**
0.269**
0.295**

Notes:

(1) Analyses are based on the counties that used performance measurement in budgeting. The measure
of associations is Kendalls tau-c. (2) The use of performance measurement at a given budget stage is
measured by the number of budgetary functions (i.e., budget requests, budget instructions, etc.) that use
performance measurement at that stage. The overall use of performance measurement is measured as
the total number of budgetary functions that use performance measurement. (3) In measuring
sufficient funding to collect data, respondents were asked to specify whether most departments in
their jurisdictions allocate sufficient funding for data collection. Answers to this question depended on
respondents concept of sufficient funding.
*p 0.05; **p 0.01.

BUILDING POLITICAL SUPPORT

The use of performance measurement in budgeting means changes in governments operations, personnel, structures, and even cultures. These changes always lead to a power
struggle and power transfer and, thus, resistance from those who are negatively affected.
Some public officials do not feel the urgency of using performance measurement in budgeting; others see performance measurement as a threat to established budget norms
and processes. James Carroll argues that use of performance measurement is an essential
part of executive initiatives that are designed to shift power from the legislatures to the
executive branch.23 Legislators may resist performance measurement due to the fear of
losing power.24 Performance measurement can also empower some central management

23. Carroll, James, The Rhetoric of Reform and Political Reality in the National Performance Review. Public Administration Review 55 (3): 302311 (1995).
24. Jones, L. R. and Jerry McCaffery, Implementing the Chief Financial Officers Act and the Government Performance and Results Act in the Federal Government. Public Budgeting and Finance 17
(Spring 1997): 3555.

Wang / Performance Measurement in Budgeting

113

agencies because of their coordinators role in design and implementation.25 Individual

service agencies may also gain budgeting, personnel, and purchasing power delegated
from legislature and central management offices. The political impact of performance
measurement demonstrates that the implementation of this initiative needs the support
of political stakeholders.26
This article finds that performance measurement receives support from administrators
and elected officials (Table 5). In fact, 82.2 percent of respondents agreed or strongly
agreed that their jurisdictions had executives support. 79.5 percent agreed or strongly
agreed that their jurisdictions received department chiefs support. As for the support
from elected legislators, 71.0 percent of respondents agreed or strongly agreed that their
counties received such support, and 54.9 percent of respondents agreed or strongly agreed
that elected legislators in their counties understood performance measurement. This finding is consistent with several recent studies on municipal, state, and federal governments.27
In one study, Poister and Streib suggest that the reason that municipal elected officials
support performance measurement is that they are often the initiators of the performance
measurement system. However, this study shows that this may not be the case in county
governments. Only 32.5 percent of respondents agreed or strongly agreed that legislators
participated in performance measurement in their counties. Further, only 22.2 percent of
respondents agreed or strongly agreed that elected legislators in their counties provided
sufficient funding for implementation. These results indicate that legislative involvement
in performance measurement at the county level is not as strong as that at municipal, state,
and federal levels, as other studies suggest. Legislative support, although promised, has
not materialized. Interviews show that some legislators have concerns that the technocracy of using performance measurement may squeeze them out of management. Others
simply do not see the short-term benefits of performance measurement for their political
careers.

25. Roberts, Alasdair, Performance-Based Organizations: Assessing the Gore Plan. Public Administration Review 57 (1997): 465478.
26. Bowsher, Charles A., Performance Measurement: An Important Tool in Managing For Results.
Testimony Before the Committee on Governmental Affairs, United State Senate (Washington: General Accounting Office, 1992); Gianakis, Jerry and Jeffrey Stone, Measuring the Performance of the Municipal
Organization: An Implementation Tale of Two Cities, Administrative Theory and Praxis 19 (3): 7387
(1997).
27. A recent study about performance measurement in municipalities indicates that city councils are a
major requester of performance measurement. It suggests that elected officials often initiate performance
measurement in cities. See Poister, Theodore H. and Gregory Streib, Performance Measurement in Municipal Government: Assessing the State of the Practice. Public Administration Review 59 (4): 325335
(1999). For some recent performance measurement practices in state and federal governments, see Julia
Melkers and Katherine Willoughby, The State of States: Performance-Based Budgeting Requirements in
47 of 50. Public Administration Review 58:6673 (1998); General Accounting Office, The Results Act: Observations on the Office of Management and Budgets July 1997 Draft Strategic Plan (Washington: General
Accounting Office, 1997).

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TABLE 5
Stakeholder Support for Performance Measurement in Budgeting

CEO support
Departmental chief support
Elected official support
Frontline manager support
Citizen supports
Employee support
Elected official funding
Notes:

Mean

Standard Deviation

195
202
203
202
202
203
203

5.98
4.90
4.87
4.61
4.32
4.30
3.51

1.20
1.28
1.43
1.15
1.31
1.19
1.71

(1) The figures in the table are based on the countries that used performance measurement in
budgeting. (2) The respondents were asked to evaluate several statements concerning stakeholders
support for performance measurement in their counties, using a seven-point scale (Strongly disagree
1 and Strongly Agree 7). For example, one statement is, The county managers office supports
the use of performance measurement. The mean score of 5.98 in the table indicates that, on average,
respondents almost agree (scaled as 6) with this statement.

Although on a limited scale, legislative activities significantly affect the use of performance measurement in budgeting. In fact, support from all governmental stakeholders is
significantly associated with the use of performance measurement in budgeting (Table 6).
This results again indicates that performance measurement is not only an internal management reform. Support from outside administration is also necessary. Performance
measurement should provide direct benefits to government stakeholders in exchange for
their support.

IMPACTS OF PERFORMANCE MEASUREMENT

Given the fact that many performance measurement programs are youngon average,
counties have used performance measurement for 4.2 yearsit may be too early to comprehensively evaluate their impact. However, it is informative to understand public officials perception about performance measurement, in part as a predictor of their
willingness to keep this practice alive. A positive perception about the impact is likely to
increase the chance that public officials will use performance measures in their management and budgeting practices.
Performance measurement can aid governments to determine organizational efficiency, which is defined as a service production for a given level of resource consumption.
Examples of efficiency measures include the number of arrests per police employee,
patrol miles per patrol officer in policing, and the number of students per teacher in
public education. These measures are often cost-related; they help governments identify
ways to reduce service costs. Other measures help governments determine organizational

Wang / Performance Measurement in Budgeting

115

TABLE 6
Association between Stakeholder Support and Use of
Performance Measurement in Budgeting
Use of Performance Measurement in Budgeting

Stakeholder Support
CEO support
Department chief support
Elected official support
Frontline manager support
Citizen support
Employee support
Elected official funding
Aggregate support
(Cronbach a .81)
Notes:

Preparation

Legislation

Execution/
evaluation

Overall

0.153*
0.178**
0.100
0.080
0.156*
0.131*
0.223**
0.220**

0.225**
0.171*
0.190**
0.157*
0.226**
0.123*
0.242**
0.285**

0.213**
0.251**
0.297**
0.267**
0.204**
0.216**
0.250**
0.379**

0.235**
0.237**
0.255**
0.229**
0.221**
0.218**
0.281**
0.352**

(1) Analyses are based on only those counties that used performance measurement in budgeting. (2)
The use of performance measurement at a given budget stage is measured by the number of budgetary
functions (i.e., budget requests, budget instructions, etc.) that use performance measurement at that
stage. The overall use of performance measurement is measured as the total number of budgetary
functions that use performance measurement. (3) The measure of associations is Kendalls tau-c. *p
0.05; **p 0.01

effectiveness and reveal service results for government stakeholders scrutiny. These measures (so-called outcome measures) address service results and impacts (such as crime
rate and victimization rate), as well as stakeholder perception for services (such as resident satisfaction rating for public safety).
In this article, respondents were asked to evaluate several questions concerning these
impacts of performance measurements. Questions included whether performance measurement has increased ability to determine service efficiency, has increased ability to
determine service effectiveness, and has improved accountability of program performance. The majority of respondents agree with these statements (70.6 percent for efficiency, 65.1 percent for effectiveness, and 65.4 percent for accountability). The results in
Table 7 show a significant relationship between the use of performance measurement in
budgeting and its impact on organizational efficiency, effectiveness, and accountability,
suggesting that the use of performance measurement in budgeting improves governments capacities in these aspects.
This finding suggests that county administrators are generally optimistic about performance measurement. In our in-depth telephone interviews, some county administrators
believed that performance measurement improved efficiency of services. More interview-

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Table 7
Impacts of Performance Measurement

Impacts
Efficiency
Effectiveness
Accountability
Aggregate Impact
Notes:

Agreement
(%)

Association with the use of

PM in Budgeting

205
205
205
205

70.6
65.1
65.4
67.0

0.274**
0.311**
0.397**
0.333**

(1) Statistics in the table are based on the counties that used performance measurement in budgeting.
(2) The use of PM in budgeting is the overall use of performance measurement that is measured by the
total number of budgetary functions that use performance measurement. (3) The measure of
associations is Kendalls tau-c. * p 0.05. ** p 0.01.

ees believed that performance measurement helped them gauge what they were doing
and what the service expectations were. Performance measurement helped them articulate their goals and objectives. Agencies and employees had a better sense of expectation
for their performance. One chief administrator in the interview pointed out that performance measurement provided a growing awareness of what is going on and that everything is being done. Another interviewee believed that [with performance
measurement,] elected officials and county administrators look to see if the goals and objectives have been met more than the numbers (money). This is a complete reverse of the
past.

CONCLUSION
First, performance measurement is used in various stages of public budgeting in county
governments. It is evident that this much-advocated initiative is popular as an accountability tool among government stakeholders and as a managerial tool in monitoring and evaluating service delivery procedures. However, the intent to use performance measurement
to allocate budget resources, which is the key component of performance budgeting,
needs to be explored with caution. Government is surrounded by a complex political environment in which a variety of players seek interests from it. This characteristic of public
budgeting determines that budget allocation decisions are based on stakeholders power
struggles and political wills. Performance measurement plays a role in budget allocation
decisions only if it fits into this political environment.
Second, a government needs to develop technical capacities for performance measurement in budgeting. Governments seem to understand the fundamental purpose of performance measurement: the assessment of organizational goals. However, matters become
less straightforward when this practice is applied at operational levels. Performance mea-

Wang / Performance Measurement in Budgeting

117

surement needs an organizations technical and financial capacities to move it forward.

For example, there are more than 300 possible outcome measures for local police departments alone.28 What measures should be used in a local police agency? How can valid and
reliable performance information be obtained? How can performance be tracked over
time while still keeping the data-collection costs under control? What is the correct interpretation of performance results? More important, how can we persuade legislators to allocate or continue the funding? The history of managerial and budgeting reforms tells us
that the fate of a new initiative often does not depend on logical concepts, good intentions,
and sound values. The operational issues of how well people solve practical problems and
whether they can solicit continued support determine the momentum and fate of a reform. This article provides empirical evidence that supports this point. Technical capacities are highly associated with the use of performance measurement in budgeting.
Third, strong and consistent political support from government stakeholders is critical
for performance measurement in budgeting. A managerial or budgeting initiative inevitably affects all branches of government. There is no such thing as internal management reform that limits its impact to within an administration. Legislative and citizen
understanding and involvement are critical but were often neglected in previous initiatives.29 This new wave of performance measurement may be experiencing the same neglect. Citizen and legislative involvement in performance measurement design and
implementation is not prominent, and legislative funding support is lacking. To further
performance measurement in budgeting, a government needs to involve all stakeholders
in establishing performance goals, developing performance indicators, monitoring performance process, and evaluating performance results. Evidently, development of such an
open system takes a large amount of resources; however, without it, performance measurement will face the risk of losing momentum, and government will lose another chance
to further citizen government.
Finally, the use of performance measurement in budgeting is perceived to have positive
impacts on organizational performance. Most public officials we interviewed had genuine
enthusiasm about this approach. Performance measurement helps government specify organizational goals/achievement, monitor management practice, and in some cases, make
budget allocation decisions. Many professional organizations (e.g., Governmental Accounting Standards Board, American Society of Public Administration, National Academy of Public Administration, Government Finance Officers Association, just to name a
few) are making an effort to proliferate the use of performance measurement. If the obstacles to implementation are overcome, performance measurement can leave a positive
mark in the history of budgeting reform.

28. Tigue, Patricia and Dennis Strachota, The Use of Performance Measures in City and County Budgets (Chicago: Government Finance Officers Association, 1994).
29. General Accounting Office, Performance Budgeting: Past Initiatives Offer Insights for GPRA Implementation (Washington: General Accounting Office, 1997).

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