Wednesday, November 21, 2012

Relevance First - Wisdom from the Results Based Budgeting Act of Alberta, Canada

The Center for Priority Based Budgeting is honored to contract with the Province of Alberta, to help implement Results Based Budgeting as the process has been initiated across the entire Provincial Government. It is the largest initiative CPBB has ever been involved with, and we’ll be anxious to share the stories and lessons we learn along the way.
“Result-based budgeting is about outcomes. The process is a comprehensive three year review that will look at all government programs and services, ensuring each one aligns with the outcomes that Albertans have identified as priorities. This review will ensure that government programs and services are meeting their intended goals and are being delivered in the most efficient and effective way possible. 
Results-based budgeting is not about reducing budgets to meet an arbitrary spending reduction target, although savings are expected. It’s about budgeting to achieve results, rather than adding incrementally to the prior year’s budget. The focus is as much about effectiveness as it is about efficiency. Significant value will not come from simply making an ineffective program run efficiently.”

Relevance First (then Efficiency)
Earlier this year, the Province launched Bill 1: The Results Based Budgeting Act. The Act stipulated that over a 3-year period, every program across the Government of Alberta would be evaluated through the Results Based Budgeting process.
But Bill 1 also did something incredibly significant (and this is the first take-away we want to share with you). Bill 1 established an “order” to their Results Based Budgeting Process - a hierarchy to the steps of their implementation. We believe that their philosophy is exactly on target.
"WHEREAS the Government of Alberta is committed to ensuring that its programs and services are the right programs and services delivered in the right way to achieve the results that Albertans expect, in the most efficient and effective manner"
The very first question that any Priority Based Budgeting approach should ask is whether or not our programs are relevant – are we offering “the right programs?” Relevance comes first.
Effectiveness, our course, is tied implicitly to relevance. A “relevant” program is a program that can demonstrate “effectiveness” towards meeting many of the Province’s Results. A program will only become “relevant” if it can show it is highly “effective” towards achieving the Province’s results.
Efficiency is critical, but it is the necessarily the third step, not the first. As we cited in the Province’s report toward the beginning of this blog, “Significant value will not come from simply making an ineffective program run efficiently.”
In our work across the US (and now into Canada), we have witnessed the significant pressure that communities are facing to try and produce cost savings. Discussions of outsourcing, process improvement, and in a word, “efficiency” abound. These are critically important discussions, we agree. But they are discussions that come best when we know that the programs we offer are the most relevant programs to the results we’re trying to accomplish, and that we’re the best provider of the service in our community.
Think about the order in reverse – what if efficiency came first? Efficiencies could very well be identified and achieved across the entire organization. However, as relevance is assessed, we might find that programs we’ve just spent a great deal of time making more efficient, are programs we’re not certain we want to continue providing. We might find that there are programs we’d be better off to create a partnership with another service provider, or getting out the business of providing all together if the program is of such low relevance. We might find that for moderately less relevant programs, we simply want to reallocate the resources previously devoted to that program, to a new and more highly impactful program that never existed before. When efficiency precedes relevance, we assume first that we want to preserve the status quo.
When the issue of relevance comes first, we allow ourselves to focus on what we're in business to do, answering the fundamental questions of our time:
- What is the role of local government within a community?
- What is local government uniquely qualified to provide, for the maximum benefit to citizens, for the tax dollars they contribute?
- How does local government position itself among all of a community’s service providers, all of a community’s “resources” (public and private sectors, non-profits and volunteers), to achieve “success” in a community (where “success” is the unique definition of that community)?
- How does local government go about allocating scarce resources to achieve the community’s highest priorities? And how, in this challenging era of economic uncertainty, can this be accomplished in a way that most can agree on?
As Bill 1 has done, Priority Based Budgeting gives us an opportunity to frame the breakthrough conversations we need to have, in the order that we need to have them. 

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