Vermont State Auditor Tom Salmon issued a report today that says the state can do more to set goals for programs and to track actual results. In audits of the Department of Buildings & General Services, the Department of Motor Vehicles and the Department of Economic Development, results indicate that agencies have established goals, but fall short in setting up relevant performance indicators, targets and methods to track actual results.
“Part of our fiscal challenge in state government is to get a better handle on which programs are working well and which aren’t,” Salmon said in releasing an audit report on the performance measurement systems at three key state agencies. Salmon noted that governments use performance data to weed out expensive programs that are underperforming and to more effectively deliver programs that show good results and potential.
Salmon said, “Unless we’re doing a good job of setting goals and actually tracking results, we’re not going to do a good job in budgeting.”
Salmon said his office has begun to do more performance audits with the realization that most state governments are entering “a state of permanent fiscal crisis.” As part of his new accountability approach, Salmon approved a series of audits to learn if departments have adequate performance measurement systems in place.
Auditors determined there were three vital ingredients to a well-functioning performance measurement system:
1. a department or agency must establish relevant goals for major programs, and it must set up measures or “indicators” to help monitor the effectiveness and efficiency of those programs;
2. a department or agency should track actual results against its performance targets and also make sure that the results are accurate and reliable; and
3. a department or agency must report to the Governor, Legislature and the public on a regular basis about whether or not it is meeting key goals.
Using these three broad standards, auditors researched other organizations and States and developed 21 “best practices” to meet these standards. Best practices [included below] included common-sense notions such as:
· Program goals should be consistent with those in the agency’s strategic plan.
· Each goal should have one or more measures or “indicators.”
· Actual results should be tracked, with documentation to support the actual results.
· Strategies being used to meet goals, and actual results, should be reported to the Legislature each year.
Salmon said three audit reports have been posted to his website:
Department of Buildings and General Services: Performance Measurement System Could Be Improved
Department of Motor Vehicles: Performance Measurement System Could Be Enhanced
Department of Economic Development (and Vermont Economic Progress Council): Enhancements to Performance Measurement Systems Could Be Made
Each report is available online at: www.auditor.vermont.gov and can be accessed by clicking on “Audits & Reports” and then on “Special Audits.” Reports can also be requested by calling the Auditor’s toll-free number, 877-290-1400.
Auditor Salmon noted that since 1994[1] departments and agencies have been required to submit performance measurement information with their annual budgets. Salmon said, “This was a well-intentioned, valuable legislative exercise that never matured. It will now require a level of sustained attention over the next 3-5 years to fully implement. The grave financial situation we face over the next decade demands fact based measurement of performance.” The information submitted should include:
· a statement of mission and goals;
· a description of indicators used to measure output and outcome; and
· a description of the means and strategies for meeting the needs of the agency or program, including future needs for achieving the goals.
“As budgets for important state programs come under pressure, we all have to do a better job of tracking and reporting the results of programs,” Salmon said. “State program managers are working hard on day-to-day aspects of their jobs, and they need more guidance and support to improve their performance measurement system. Investments here will pay off,” Salmon said.
Salmon said he hopes the performance measurement concept will get more scrutiny by the Legislature, too. “The state budgeting process can’t simply be about how much funding an agency gets,” Salmon said, “but it must include solid data on performance so that Legislators and the public can re-focus budget decisions on results.”
21 RECOMMENDED PRACTICES for Performance Measurement in Local & State Government
General Standard 1: Goals and Measures Are in Place
The operating organization has goals and measures that gauge the effectiveness and efficiency of major programs and operations. Best practices include:
1.1
The organization has established one or more goals that describes what it is trying to achieve.
1.2
The organization’s goals and major programs and operations are aligned.
1.3
The organization's goals were developed through a strategic planning process that resulted in a written plan.
1.4
The organization’s current goals are consistent with those in its strategic plan.
1.5
All goals have one or more relevant measures.
1.6
The organization has a mix of measures, such as outcome, intermediate outcome, output, and efficiency measures, that demonstrate progress towards intended results and the economic use of resources.
1.7
The organization’s measures are quantified or quantifiable.
General Standard 2: Actual Results Are Tracked
The organization tracks actual results against performance targets and validates the reliability of such data. Best practices include:
2.1
Suitable numerical targets are established for every measure at least annually.
2.2
The organization tracks actual results for each measure.
2.3
The organization compares actual results to targets on at least an annual basis.
2.4
The organization has identified the methods and sources for the collection of actual results, including relevant limitations.
2.5
The organization has documentation that supports its actual results.
2.6
The organization has processes to validate that actual performance results are accurate and reliable.
General Standard 3: Results Are Reported
The organization is regularly reporting performance measurement data for each of its goals [to a Select Board, School Board, or other public oversight body, citizen group, etc.]. Best practices include:
3.1
As part of performance report(s) the organization includes one or more goals related to its major programs or operations.
3.2
As part of performance report(s) the organization includes a description of the strategies that it will be pursuing to meet its goals.
3.3
As part of performance report(s) the organization includes measures that are linked to reported goals.
3.4
As part of performance report(s) the organization includes a variety of measure types, such as outcome, intermediate outcome, output, and efficiency measures.
3.5
The goals and measures reported are generally consistent from year to year.
3.6
As part of performance report(s) the organization includes future targets for each reported measure.
3.7
As part of performance report(s) the organization includes a comparison of its prior years’ numerical targets to its actual results for each reported measure.
3.8
As part of performance report(s) the organization incorporates a narrative explanation of its results, including, when applicable, (1) an analysis of why a target was not met and corrective actions being taken and (2) relevant data limitations.
[1] See 32 V.S.A. §307(c).
Source: Salmon's office. 9.18.2009.