Government Should Only Fund Programs that Actually Work
By Rep. Steve Mentzer (R-Lititz)
Performance-based budgeting is a process by which states make spending decisions based on specific benchmarks.

The idea is to use specific measures of past performance to assess whether a particular budget item, such as a welfare program or a new road, is worth the expense. Traditionally, spending decisions are dictated by population growth or predictions of what construction projects will be necessary in a coming budget year.

Last week, the House passed House Bill 410, legislation that would establish performance-based budgeting in Pennsylvania.

Under performance-based budgeting, lawmakers take into account how well the program performed previously — how many clients were served for how much money, for example — before they decide how much more or less funding to allocate for the program in the coming year.

The approach makes perfect sense — in theory. In reality, its success relies heavily on how vigorously state leaders push the idea and how receptive state agencies are to a process that often makes them work harder to produce real measures. And it works better for some areas of government than others, particularly those with easily measured milestones.

House Bill 410 would create the Performance, Accountability and Results Act, requiring state agencies to detail the cost of achieving the goal(s) for each program or activity they are undertaking with taxpayer monies. Also, in the subsequent budget year, they must report the actual outputs and outcomes achieved for each program activity in each agency and their actual costs.

No business owner can go to a bank and ask for a loan to expand his or her operations without showing a record of business success along with a detailed plan and projected expenses and revenue returns for the expansion for which he or she is requesting a loan. It is high time the taxpayers of Pennsylvania get that same protection for the expenditure of their hard-earned dollars.

Specifically, agencies would be required to detail program goals at the mid-level and lower levels of the agency, including performance indicators that define whether the agencies’ use of taxpayer monies has been successful. Descriptions of the strategies for how the goals are to be achieved include all of the following:

• The processes, skills, technology and other resources required to meet those goals.
• Any new initiative or program activity.
• Any new approaches or methods that will be adopted or revised.
• The means of avoiding unnecessary costs and expenditures.

The administration would be required to submit a budget that asks for no more money for each program than can be shown was a successful use of taxpayer money in the previous budget cycle. While the General Assembly would be free to lower or raise limits within the proposed budget, a paper trail of this nature allows investigators in the offices of the attorney general and the auditor general to get at the root of a particular problem instead of just blaming the head of the department.

Many instances of wasteful spending have origins that are deeply institutionalized and difficult to root out. With this legislation, those who appropriate money for state agencies and oversee their performance will have the documentation available to justify eliminating budget line items, or entire departments, if the facts warrant it.