In this way, the government does not focus on the necessary inputs to fulfill the obligations, but on the result obtained. This must satisfy the public interest, in a way that is useful to society. This type of budget is inspired by private enterprise.
Objectives of a results-based budget
A results-based budget (RBB) has a series of objectives that should be known.
- In the first place, get some budgets that really serve for management. Thus, a result orientation can help them to get closer to the citizen.
- On the other hand, effectiveness and efficiency. The public sector is at the service of society and that is why it must be effective, that is, be useful to society. In addition, it works with public money and that forces it to be efficient, so that it obtains results at the lowest cost.
- Avoid waste. This objective is closely related to the aforementioned efficiency. If we know where we want to go (the result), we will know where we don’t need to go. Therefore, we will be able to avoid unnecessary expenses that do not contribute anything to the public interest.
- As is the case in private companies, the PBR provides a detailed understanding of the processes and those responsible for them. In turn, this will allow proper management of incentives for each department or section.
PBR and SED
There are two concepts that are closely related. On the one hand, the one we are seeing today, PBR, on the other, the performance evaluation system (SED). The latter is essential as a complement to the former.
In this way, the SED would be the method that will make it possible to carry out a budget based on results. Thus, it will be made up of a series of programs and control systems based on evaluations of these results. All this without forgetting the feedback to improve.
Phases to implement a budget based on results
Let’s look at the phases a PBR must go through. Let’s not forget that it goes hand in hand with the SED and, therefore, it is part of the process.
- Establish the legal and institutional framework. This is the starting point, everything must be regulated. Everything in the administration must meet certain legal and institutional requirements that must be made clear from the beginning.
- Strategic planning. Once we are clear about where we want to go, it is time to plan. As in private companies, a series of external and internal analyzes will be carried out to provide relevant information for the strategies to be followed. Let’s not forget the orientation to the result.
- Once we know how to reach the objective, we must consider the necessary programs. In this phase the budget for each of them is essential. Once again, the objectives pursued and the orientation towards the citizen must be taken into account.
- Feedback-based control. Ultimately, we must be clear about how we are going to control compliance with what is established in the plan. What types of controls, who will do them and when. It is also essential to propose improvement plans in case of deviations.
Results-Based Budgeting Example
To finish, let’s see some examples of actions carried out by the municipality of Xalapa in the state of Veracruz (Mexico).
- In one of them, they measured the number of times that citizens were attended to in their queries at the Municipal Historical Archive. All this within a program of efficiency in the operation of the town hall.
- On the other hand, they measured institutional diffusion through metrics on radio programs, newspapers and other media such as the Internet.
- Another example would be the procedures for recruiting, selecting, training and promoting human resources.
As we have seen, a budget based on results can be useful for public administrations. In fact, the orientation to the citizen would allow a greater approach to society.