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Agency Strategic Planning and Agency Strategic Planning and Service-Based BudgetService-Based Budget
Richard D. Brown
Director
Department of Planning and Budget
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1980:Program
Budgeting
1995-96:Agency strategic
planning and Performance
Measures
2005:Service
Planning & Performance
-Based Budgeting
Virginia’s budgeting system is evolving
3
Previous Budget Structure
Program structure Level of control
FunctionSubfunction
Program
Subprogram
ElementCost centerObject of expenditure
Central budget control
(by fund, by positions)
Agency budget control
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Previous Performance Budgeting Process
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The Task At HandCHALLENGES Management Scorecard RESULTS
Executive AgreementsVariation - expectations, Leadership Communique' Performance managementplanning language, metrics, activties are primarily:plan formats… DPB Planning & Budget
IT Planning - administrative in natureWorkforce Planning
Outcomes not precisely Capital Planning - targeted to stand-alonedefined reporting requirements
Various Improvement(Efficiency) Efforts - not integrated to support
Multiple planning/reporting enhanced performancerequirements and calendars Outsourcing l Legislation
Competition CouncilTransfer
Little or no formal assistance or training for Virginia Resultseffective performance Virginia Excelsmanagement Budget Document & Bill
NEW REQUIREMENTSStragegic PlanningPerformance-based
BudgetingRevised Service Structure
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Why Change?A Mandate for Change HB2097(03) (affecting § 2.2-2681 - 2.2-2687)“…each agency shall develop and maintain a strategic
plan for its operations” defined in the legislation as “the systematic clarification and documentation of what a state agency wishes to achieve and how to achieve it. The objective of strategic planning is a set of goals, actions steps, and measurements constructed to guide performance.”
HB1838(03) (affecting §2.2-1508) “The Executive Budget document is to include a
statement of “major goals, objectives, and specific outcomes related to expenditures for programs” in each agency.”
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Process Design – Strategic PlanService area structure is key:• Generally, “service areas” are what agencies do for the citizen or
for other agencies• They consist of allocations of resources toward a specific
objective• Each service area forms the basic unit of both budgeting and of
planning
Principal objectives of these plans are: • To provide agencies with a tool to assist them in self-
management• To give decision makers uniform and dependable data for
budgeting and accountability• To link state resources to results• To eliminate current fragmented processes of strategic planning,
budget development, workforce planning, capital planning, and technology planning
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Current Structure
Programs/Subprograms =
Future Structure
Service Areas =
Budgeting
Accounting System
Budgeting
Accounting
Strategic Planning
Performance Measurement
Activities =
Strategic Planning
Virginia Results
Service Area Structure
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Service Area StructureCurrent
Programs/Subprograms
Recommended Service Structure
Proposed Services = “*” Current Activity
Planning, Budgeting, and Evaluation Services (71500)
Planning, Budgeting, and Evaluation Services (71500)
Budget Development and Execution Services (715 02)
Budget Development and * Budget Execution Services*
Budget Development and Budget Execution
Legislation and Executive Order Review Service *
Legislative Review Service
Performance Management Service
Forecasting and Regulatory Review Services*
Regulatory Review Service
Program Evaluation Service *
Program Evaluation Service
Federal Budget Service
Executive Orders Service
Administrative Services (71598)
Administrative Services * Support Service
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Budget Bill Display
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Process Design
Council OnVirginia’s
Future
Governor&
CabinetGeneral
Assembly
Mandates
Citizens&
Community
BoardsLocal
Government
AGENCYSTRATEGIC PLAN
INPUTS
SERVICEAREAPLAN
SERVICEAREAPLAN
SERVICE AREA STRUCTURE
BUDGETService Area Plans Align To
Service Area Structure and Budget
.
.
InternalInputs
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Agency Strategic Plan ContentMISSION:
Customer Base
Statutory Authority
BACKGROUND INFORMATION:
VALUES: (Optional)
VISION:
Customers:
Anticipated Changes in base
Products and Services:
Current Products and Services
Factors Impacting Products and Services
Anticipated Changes to Products and Services
Resources:
Financial Summary
Human Resource Summary
Information Technology Summary
GOALS:
Goal
A. Information Technology
APPENDICES:
B. Additional Statutory Authority Information (Optional)
C. Organizational Structure (Optional)
Capital Investments Summary
.
.
.
Goal Summary & Alignment
EXECUTIVE PROGRESS REPORT:
.Current Service PerformanceProductivityMajor Initiatives & Related ProgressVirginia Ranking & TrendsCustomer Trends & CoverageFuture Direction, Expectations & PrioritiesImpediments
AGENCY STRATEGIC PLAN STRUCTURE
Partners: (Optional)
Objectives, Measures & Strategies (Optional)
MeasureMeasure Type
BaselineTarget
Strategies
Measure FrequencyData Source & Calculation
Measurement Information
Customer Base
Statutory Authority (Roll up to Agency Strategic Plan)
BACKGROUND INFORMATION:
Customers: (Roll up to Agency Strategic Plan)
Anticipated Changes in base
Products & Services: (Roll up to Agency Strategic Plan)
Alignment to Mission
Factors Impacting Products & Services
Anticipated Changes to Products & Services
Resources: (Roll up to Agency Strategic Plan)
Financial Summary
OBJECTIVES and MEASURES:
Description
Measure
Measure Type
Baseline
Target
APPENDICES:
A. Additional Statutory Authority Information (optional)
Alignment
Measurement Information
Strategies
B. Service Area Structure (optional)
SERVICE AREA PLAN STRUCTURE
Human Resource Summary (Optional)
.
.
Current Products & Services
Measure Frequency
Data Source & Calculation
Priority
Partners (Optional) (Roll up to Agency Strategic Plan)
Service Area Description
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LegislatorsLegislators
X objectives andmeasures submitted to
DPB/VaResults
X objectives andmeasures submitted to
DPB/VaResultsBUDGET
PROCESS
BUDGET
PROCESSProgramProgram
COVF Vision & Objectives Guiding Principles
COVF Vision & Objectives Guiding Principles
Agency Selects X objectives and
measures
Agency Selects X objectives and
measures
ProgramProgram
DPB
Data Repository
DPB
Data Repository
AgencyStrategic Plan
AgencyStrategic Plan
Agency Budget & Performance
Measures
Agency Budget & Performance
Measures
SER V I TC IE E DAR TE OA BS UT DR G C ET TU R E
SER V I TC IE E DAR TE OA BS UT DR G C ET TU R E
Service AreaService Area Budget Performance
Budget Performance
Service AreaService Area
Service AreaService Area
Service AreaService Area
Service AreaService Area
Budget Performance
Budget Performance
Budget Performance
Budget Performance
Budget Performance
Budget Performance
Budget Performance
Budget Performance
Old New Integrating Planning and Budgeting
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The Revised Budget System Will Foster Transparency By Linking Together Expected Results, Funding, and Actual
Performance For State Government Service
Product Contents
Agency Strategic Plan Establishes strategic and operational plan for the agency and its service areas
Service Area Plan Articulates expected results (objectives) for each service area and defines performance criteria to measure progress toward expected results (sets baseline and target data for results).
Budget Bill Allocates funding among the various service areas of state agencies
Budget Document Brings together and begins to explain relationships between expected results and proposed funding in the budget for service areas and state agencies
Budget Execution Accounts for actual spending by service area and monitors accomplishments and results though reporting system for performance measured data.
The Service Area is the link between all of the above. It is the common unit at which strategic planning, funding (budget), and performance
information (results) is presented.
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General Planning Submission Calendar
• Agency Plans are submitted to Secretaries / DPB in mid-summer (consistent with base budget)
• Plans are updated in September to ensure consistency with budget decision packages
• Plans are updated in January to ensure consistency with Governor’s submitted budget (Dec. 20)
• Plans are updated in May to reconcile with Appropriation Act (General Assembly action, veto session, etc.)
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Process Design
Council OnVirginia’s
Future
Governor&
CabinetGeneral
Assembly
Mandates
Citizens&
Community
BoardsLocal
Government
AGENCYSTRATEGIC PLAN
INPUTS
SERVICEAREAPLAN
SERVICEAREAPLAN
SERVICE AREA STRUCTURE
BUDGETService Area Plans Align To
Service Area Structure and Budget
.
.
InternalInputs
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The Council for Virginia’s Future• Impaneled by Code of Virginia 2.2-2684 to advise the Governor and
the General Assembly on the implementation of the Roadmap for Virginia's Future process, which is:
– developing a set of guiding principles that are reflective of public sentiment and relevant to critical decision-making;
– establishing a long-term vision for the Commonwealth;
– conducting a situation analysis of core state service categories;
– setting long-term objectives for state services;
– aligning state services to the long-term objectives;
– instituting a planning and performance management system consisting of strategic planning, performance measurement, program evaluation, and performance budgeting; and
– performing plan adjustments based on public input and evaluation of the results of the Roadmap.
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Long-Term Objectives for Virginia
• The Council on Virginia’s Future has articulated eight long-term objectives for the Commonwealth. These objectives constitute the backbone for all executive branch planning and budgeting activities.
• All agency plans are reviewed to ensure that agency missions, goals, and objectives align with one or more of these statewide objectives.
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Long-Term Objectives for Virginia1. Be recognized as the best managed state in the nation.2. Be a national leader in the preservation and enhancement of our
economy.3. Engage and inform citizens to ensure we serve their interests.4. Elevate the levels of educational preparedness and attainment of
our citizens.5. Inspire and support Virginians toward healthy lives and strong and
resilient families.6. Protect, conserve, and wisely develop our natural, historical, and
cultural resources.7. Protect the public’s safety and security, ensuring a fair and
effective system of justice and providing a prepared response to emergencies and disasters of all kinds.
8. Ensure that Virginia has a transportation system that is safe, enables easy movement of people and goods, enhances the economy, and improves the quality of life.
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Agency Plans:Mission Statement
• The mission is a statement of an organization’s purpose and the legislative intent for the agency.
• A mission statement should be broad enough to provide organization-wide strategic direction, yet specific enough to communicate the reason for the organization’s existence to those not familiar with its work.
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Mission Statements An effective mission statement should meet the following
criteria:
• It is clear, concise, and realistic.
• It can be understood by a wide audience of the agency’s constituents.
• It reflects the agency’s mandates.
• It identifies the basic needs and distinct problems that the agency was designed to manage.
• It serves as the foundation for agency direction.
• It acknowledges the expectations of the agency’s primary constituents.
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Agency Plans: Vision The agency’s Vision is a concise declaration of the direction that an agency intends to take in the preferred future. It is a description of the ideal future state of the organization. A vision statement describes the organization at its best, i.e., where the organization intends to be in the future or where it should be to best meet the needs of stakeholders.
An effective vision statement should meet the following criteria: • It is not bound by time.• It depicts high-level and continuing purposes of the agency. • It can be directly related to the agency’s mission and describes how the agency will operate as it fulfills its mission.• It serves as a unifying foundation for the overall agency plan and service area plans
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Agency Plans: Values
Values are the principles that govern behavior and the way in which the organization and its members conduct business. It is optional to include values in the agency strategic plan.
Examples:• Customer focus• Integrity• Continuous Improvement• Personal Accountability
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The Executive Progress Report
• Current Performance
• Productivity
• Major Initiatives and Related Progress
• Virginia ranking
• Customer Trends and Coverage
• Future Direction and Priorities
• Impediments
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Background InformationOverall, the Background Information section summarizes keyinformation for reviewers and decision makers, and describes the overall environment in which the agency operates. This section explains and identifies:
• Why the agency exists
• Who the agency it serves
• What goods, services, or information the agency provides for its customers
• The partners and resources it uses to accomplish its mission.
Contents: Statutory authority, Customers, Partners, Products/Services, and Resource Summaries (HR, Financial, IT, Capital Investments)
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GoalsThis section of the plan consists of the following
elements:
Required:• Goal• Goal summary and alignment
Optional:• Objectives, Measures, and Strategies• Measure Information, including measure type,
frequency, data source, calculation methodology, baseline, and target
• Strategies
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GoalsA goal is a broad statement of the long-term results needed to accomplish the organization’s mission and achieve its vision. Goals will reflect the priorities of the agency. An agency’s set of goals should:
• Address issues faced by the agency, its customers, and its staff
• Be actionable and lend itself to being measured, but is not quantified
• Stretch and challenge the agency to better performance
• Be realistic and achievable
• Be easily understood by the general public
• Provide a clear direction for agency action
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Agency Strategic Plan Content
MISSION:
Customer Base
Statutory Authority
BACKGROUND INFORMATION:
VALUES: (Optional)
VISION:
Customers:
Anticipated Changes in base
Products and Services:
Current Products and Services
Factors Impacting Products and Services
Anticipated Changes to Products and Services
Resources:
Financial Summary
Human Resource Summary
Information Technology Summary
GOALS:
Goal
A. Information Technology
APPENDICES:
B. Additional Statutory Authority Information (Optional)
C. Organizational Structure (Optional)
Capital Investments Summary
.
.
.
Goal Summary & Alignment
EXECUTIVE PROGRESS REPORT:
.Current Service PerformanceProductivityMajor Initiatives & Related ProgressVirginia Ranking & TrendsCustomer Trends & CoverageFuture Direction, Expectations & PrioritiesImpediments
AGENCY STRATEGIC PLAN STRUCTURE
Partners: (Optional)
Objectives, Measures & Strategies (Optional)
MeasureMeasure Type
BaselineTarget
Strategies
Measure FrequencyData Source & Calculation
Measurement Information
Customer Base
Statutory Authority (Roll up to Agency Strategic Plan)
BACKGROUND INFORMATION:
Customers: (Roll up to Agency Strategic Plan)
Anticipated Changes in base
Products & Services: (Roll up to Agency Strategic Plan)
Alignment to Mission
Factors Impacting Products & Services
Anticipated Changes to Products & Services
Resources: (Roll up to Agency Strategic Plan)
Financial Summary
OBJECTIVES and MEASURES:
Description
Measure
Measure Type
Baseline
Target
APPENDICES:
A. Additional Statutory Authority Information (optional)
Alignment
Measurement Information
Strategies
B. Service Area Structure (optional)
SERVICE AREA PLAN STRUCTURE
Human Resource Summary (Optional)
.
.
Current Products & Services
Measure Frequency
Data Source & Calculation
Priority
Partners (Optional) (Roll up to Agency Strategic Plan)
Service Area Description
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Service Area Plans: Background Information
The Background Information section is comprised of the following elements:
• Service Area Description
• Alignment
• Statutory Authority / Mandates
• Customers – including Customer Base and Anticipated Changes
• Partners (optional)
• Products and Services – including Current Products, Factors Impacting Products, and Anticipated Changes
• Resources – including Financial Summary and an optional Human Resources Summary
All of these elements (except the first two) can be “rolled up” to the Agency Plan level.
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Service Area Plans: Objectives and Measures
Where “goals” can be defined as broad, general statements of the long-term results needed to achieve the mission and vision, “objectives” are a bit more specific.
Just as goals move the agency toward achieving its mission, objectives move an organization toward its stated goals. Frequently, an agency must pursue multiple objectives to address a single goal. An objective could have one or more of the following key characteristics.
• Describes results needed to accomplish the goal• Measurable• Usually begins with an action verb• Supports multiple initiatives or strategies• Collectively addresses key business areas
Do not get hung up splitting hairs on definitions. The focus should be on consistency and alignment between the objectives, goals, mission, and overallorganizational (statewide) objectives.
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Service Area Plans: Objectives and Measures
Three types of measures currently used in state system:
• Input Measure: A measure that describes the amount of resources used to conduct an activity, produce an output, or provide a product or service, usually consists of a single numeric value (e.g. $2,000 spent on conference fees,); a type of workload measure.
• Examples: Number of hours used to analyze a new software package. Amount of money invested/spent.
• Output Measure: A measure that describes the amount of work completed or output produced; usually consists of a single numeric value (e.g. 47 people trained,); a type of workload measure.
• Examples: Number of service calls closed. Number of customer calls received.
• Outcome Measure: A measure that describes the results achieved by an activity compared to the activity’s intended purpose, the extent to which a service or activity has impacted its intended audience.
• Examples: Problem resolution rate. Customer satisfaction rate. Employee retention.
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Keys to Developing Good Performance Measures
• Make them important. If an activity is worth doing, it is worth doing well. Measure those things that we are going to rely on to judge ourselves as managers and as an agency. After developing our measures, we should be able to look at the list and be confident that, if we excel at everything on the list, we have been successful in meeting the needs of our customers and good stewards of resources.
• Make them outcome oriented. This would seem self-explanatory, but is easy to overlook. There are five basic types of measures: inputs, which look at resources expended; outputs, which look at the number of iterations of work; efficiencies, which look at the cost per client served (input per output;) outcomes, which look at the results of the effort; and quality measures, which indicate the degree of attainment of excellence (as defined by the customer).
• Make them singular. Consider the reason you are performing a task -- what is it your client really desires? It’s not just the production of the budget. It’s the production of the budget within a given time frame, with a given degree of detail, with a given degree of accuracy, with a given degree of clarity, etc. What is most important? Base your measure on the most important dimension, or set up several measures to capture the whole picture.
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Keys to Developing Good Performance Measures
• Make them measurable. Qualitative data are fine for learning about customer needs and feedback, but quantifiable information is required to really determine the degree to which we meet client needs.
• Make them valid. If we want to be judged on, say, the morale level of our staff, don’t agree to measure this dimension using, say, attendance rates. The two may or may not be correlated, but the latter is probably not an indicator of the former.
• Make them reliable. We must be able to track our performance in a consistent way over time. Measures don’t need to require complex measurement techniques or statistics. They do need to allow us to come back at a later point in time and review performance data in the same manner we do today.
• Make them manageable. If data collection to support a measure is extremely cumbersome, look for another indicator of performance. If none exists, perhaps the outcome that needs to be measured is whether we can develop the necessary information sources prior to the next submission.
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Performance Budgeting
Funding is in part dependent upon the case
the agency makes for the effectiveness of its provision of products and services.
Clear measures, reliable data, aggressive
targets, and concise strategies are key to
communicating with the council, the
legislature, and the public.
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Performance budget process integrates budgeting, planning, and performance measurement
Strategic Strategic PlanningPlanning
Budget Budget DevelopmentDevelopment
PerformancePerformance MeasurementMeasurement
dpb.virginia.gov
