Performance Budgeting :: American Government, Budgeting Initiatives

This paper examines the expediency of performance based budgeting as a practical theory of aptitude for government programming. Confronted by fiscal limitation and demand for improved humankind services, government agencies atomic number 18 utilizing the budget as a nitty-gritty to parent government accountability and efficiency, rather than simply as a means for distributing funds and controlling expenses.Performance based budgeting has been defined as a system wherein managers are provided with the flexibility to utilize agency resources as required, in return for their commitment to achieve certain performance results. (Brewer, 3) Performance budgeting is a system of planning, budgeting, and evaluation that emphasizes the relationship between money budgeted and results expected. (Government of Alberta, 1) Performance budgeting signifies an authorized divergence from habitual line period budgeting. A line item budget is mainly a tool for controlling exp conclusionitures it characteristically indicates the union of spending permitted for particular purposes. As a fiscal year progresses, departmental spending must remain within the budgeted amounts unless formal budget amendments are approved. Under line item budgeting spending in one fellowship can non automatically be used to supplement another category. (Government of Alberta, 2)While conventional budgets can be useful in assisting managers with internal control, they are not typically as useful as a policy or decision making tool. Line-item budgets assure elected and administrative officials that money is cosmos spent only for approved purposes, but they do not expose what is being accomplished with the money. (Government of Alberta, 3) Additional drawbacks to line-item budgets involve the promotion of indolence, due to the barbarian modifications made to budget planning each year. Line-item budgeting can result in ineffective and costly actions because management is not allowed the fl exibility to address changing situations. (Virginia Society of Certified Public Accountants, 7) Many government programs are a lot forced to use funding, or lose funding at the end of a program year these restrictive processes have the potential to suck in micromanagement and impede the fulfillment of program objectives. (Government of Alberta, 3) In comparison, performance budgeting has more of a policymaking orientation it links plans, measures, and budgets and it pushes administrators and policymakers to contemplate the big picture. (Brewer, 23) Performance budgeting provides useful instruction about the impact of budget decisions on people and gives departments increased budgetary flexibility. Additionally, performance budgeting allows for ongoing monitoring and strengthens legislative decision making and oversight.