The Movement Towards Government Performance (Third Sector Capital Partners)

By Sithara Kodali

Last month, the President signed the Evidence-Based Policymaking Commission Act of 2016 into law. Though the law itself is new, the ideas within it are not. The Act is the latest iteration in national trend towards performance-driven policy and practice, the same movement that is driving the pursuit of Pay for Success (PFS).

Below, we highlight some early initiatives in government performance, the progress the field has made, and the lessons earlier policies can teach us today.

Introducing Performance to Policy: Federal and Local Initiatives

In the early 1990s, all levels of government in the United States began to think seriously about measuring the effectiveness of public services. Bills like the 1993 Government Performance and Results Act introduced reporting requirements to federal agencies, while state and local governments began to introduce performance budgeting to their jurisdictions. These initiatives often ran into two fundamental difficulties of tracking performance:

1. Incentivizing ongoing performance improvement. While agencies were required to report on performance, the 1993 Government Performance and Results Act resulted in little means to remediate or address unsatisfactory outcomes. In the words of former deputy Labor Secretary Seth Harris, the required performance goals were seen as little more than a “report to report” rather than a constructive practice to improve government services.

2. Connecting rigorous performance data with funding. Data access is one challenge, and using data effectively is another. Determining which metrics matter, and how to distribute resources accordingly, is a difficult, ambiguous endeavor. A 2014 report by the National Association of State Budget Officers noted that the “process of actually tying performance information to funding decisions in an effective, meaningful, and practical manner continues to be a major challenge for all levels of government.”

FEDERAL

  • National Partnership for Reinventing Government: led efforts to translate private-sector efficiency practices into public-sector government services
  • Government Performance and Results Act (1993): obliged federal agencies to chart strategic plans, set annual goals with performance metrics, and regularly report on progress towards those goals
  • Government Performance and Results Modernization Act (2010): builds performance management resources with an interagency Performance Improvement Council

STATE/LOCAL

  • Performance Budgeting: A practice by which budgets and spending decisions are driven by performance information on benchmarks
  • Budgeting for Outcomes: A budget process focused on achieving key outcomes across government agencies or departments
  • Workforce Performance Contracts:Varios Localities from Minnesota to New York City have engaged with service providers to base service contracts on performance monitoring

PFS addresses these issues in two ways. First, the contracting model embeds evaluation directly into service contracts. By using rigorous evaluation to release payments, oversight and accountability are built into the contract from the first day of services. Second, PFS takes advantage of administrative databases to target outcomes over a multiyear period, an effort that would have been time-intensive and cost-prohibitive just a decade ago. Thanks to data infrastructure in government that has been built over the last two decades – computer entry of case files, online databases in government agencies – PFS can incorporate long-term outcomes in a way that performance-driven initiatives never previously could.

Moving Government Performance Forward

PFS is a powerful tool that can overcome the obstacles faced by performance-driven policy. However, the same lessons learned from early policy efforts still apply to today’s PFS initiatives.

1. PFS requires the same inter-agency buy-in as required by initial performance-based policy. The solutions the model offers mean nothing without true cooperation between agencies and executive branches. Each of the three projects Third Sector has launched has required close collaboration with multiple partners in government and the social sector – true buy-in – to achieve our goal of thoughtfully embedding accountability and feedback into government contracting.

2. Further, PFS requires robust data infrastructure to support performance-based decisions. In addition to careful contracting, the infrastructure that government agencies build for data collection, from software to databases, needs to facilitate how projects define and measure success. Though more data is available to decision-makers now than twenty years ago, the same rigorous approach to data and its use is just as important as before.

PFS projects are one way policymakers can tie payments to outcomes, but it is far from the only one. For example, government agencies like the Tennessee Department of Children’s Services have built outcomes-contingent payments into consolidated contracts, and service providers like Youth Villages have aligned incentives to focus on the outcomes of their programming. These efforts are promising: both PFS and other outcomes-driven initiatives advance the trend that began in the 1990s towards a performance-driven social sector.

The Evidence-Based Policymaking Commission Act of 2016 is the latest evidence that the government performance movement remains strong, and may lead to the wider implementation of outcomes-driven policy. As governments begin to realize improvements in the assessment of their social services, so too will individuals realize improvements in their own lives. After all, evaluating the performance of government is not only about making government programs more efficient for taxpayers. It’s also about making them more effective for the people they serve.

Sithara Kodali, Senior Associate, works from Third Sector's Boston office.

For more information, please contact Sithara here.