Item A: Budget Service Realignment

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In developing their responses, sellers need not, indeed cannot,the end of this process, the support of those above the line can take anything for granted. They must assume that for each resultcounterbalance the opposing arguments of those below. there will be many proposals from many potential sellers. If they 7.Negotiate performance agreements with the cho- expect to get funded, they have to offer up proposals that deliver Finally, frame the budget as a collection of per- sen providers. the needed results at a competitive price. Since an individual formance agreements. These should spell out the expected out- bidder may choose to submit multiple proposals (for its various puts and outcomes, how they will be measured, the conse- programs and activities), it is in a sense competing against itself. quences for performance, and the flexibilities granted to help This forces it to challenge its own practices, to make them as the provider maximize performance. As a result, accountability competitive as possible. is built into the budget. Sellers are not limited by the past; the process encourages them to come up with new approaches and creative twists. Some will LEADERSHIP THAT ÒCHANGES THINGS TO MAKE forge partnerships across departments or agencies, with other gov- THINGS BETTERÓ ernments, and with nongovernmental organizations. The bidding When Peter Hutchinson was superintendent of the process also encourages them to consider ways they could con- Minneapolis Public Schools, his favorite activity was visiting tribute to more than one of the priority outcomes. While it is chal- classrooms. One day, in a fourth grade classroom, the teacher lenging to bidders, the process also liberates them. stopped the class to introduce him. She explained that he was the superintendent of schools and asked the class if anyone After the offers are in, the 6.Buy the best,leave the rest. knew what a superintendent was. buyers must rank them in terms of results delivered per dollar, then move down the list, buying according to priority until avail- Hands flew into the air. (Fourth graders are so enthusiastic able funds have been exhausted. Then draw a line. Those propos- about learning that they will take a stab at any question.) The als above the line are in, the rest are out. This buying plan teacher called on an eager young man who proudly announced becomes the budget. It is a list of keeps, not cutsÑpositive choic- that the superintendent was the guy in charge of Super Nintendo. es for spending the citizensÕ resources to buy the citizensÕ results. The teacher allowed as how that was a very creative answer, then The diagram below, from the Washington budget presentation, explained that the superintendent was the leader of the schools. shows how this was done for the health result. ÒDoes anyone know what a leader is?Ó she asked. Hands flew again. The teacher called on a young girl in the back who was raising her hand so hard and high that Peter was afraid it might become detached from her body. She stood very straight and tall as she answered, ÒA leader is someone who goes out and changes things to make things better.Ó Hutchinson was stunned: A fourth grader had articulated perfectly what government needsÑand what people expect. ItÕs time for leaders to dismount the dead horse strategies that are taking us nowhere. Budgeting for Outcomes means saddling up to Òchange things to make things better.Ó Can we live up to that fourth graderÕs expectations? Given what is at stake, do we have any other choice? This article is adapted from The Price of Government:Getting the Laying out the budget this way is another radical departure. In Results We Need in an Age of Permanent Fiscal Crisis,a new book tough times, the traditional process makes us put 100 percent of by and (Basic Books, our time and energy into finding the 5 to 15 percent to cut. When DAVID OSBORNEPETER HUTCHINSON 2004).Both Osborne and Hutchinson are partners in the Public we are done, we publish the list and set ourselves up for attack by Strategies Group (www.psg.us),a consulting firm whose mission the interests directly affected. In Budgeting for Outcomes our ener- is Òtransforming governance.Ó gies go into deciding what to keep, and where to draw the line. At October 2004 14Government Finance Review |