Reforming Budget Ritual and Budget Practice: The Case of Performance Management Implementation in Virginia

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Reforming Budget ritual and

Budget practice: The Case
of Performance Management
Implementation in Virginia
a b
Herb Hill & Matthew Andrews
a
Virginia Department of Planning and Budget ,
Richmond, Virginia, USA
b
Public Sector Specialist, The World Bank, Europe
and Central Asia Region , Washington, DC, USA
Published online: 15 Aug 2006.
To cite this article: Herb Hill & Matthew Andrews (2005) Reforming Budget ritual and
Budget practice: The Case of Performance Management Implementation in Virginia,
International Journal of Public Administration, 28:3-4, 255-272, DOI: 10.1081/
PAD-200047319
To link to this article: http://dx.doi.org/10.1081/PAD-200047319
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The Case of Performance Management

Implementation in Virginia
Herb Hill
Virginia Department of Planning and Budget, Richmond, Virginia, USA
Matthew Andrews
Public Sector Specialist, The World Bank, Europe and Central Asia
Region Washington, DC, USA
Abstract: Virginia is accepted as one of the leading examples of performance-based

reform among US states. This article reports on some of the key factors that have
helped to ensure that these reforms have established performance as a basis for both
budget ritual and budget practice. Virginia’s strong record of implementation is
explained as the result of a consistent legislative basis for reform, effective reform lead-
ership by a core agency, the integration of results-oriented activities into all facets of
the financial management process, a focus on high levels of citizen engagement, and an
emphasis on ensuring that performance management systems are tailored to be useful.
INTRODUCTION
Governments continue to show interest in using some combination of strategic

planning, performance measurement, and program and performance budgeting.[1]
This interest is fueled by the belief that these systems can increase the
efficiency and effectiveness of government services and bolster citizens’ con-
fidence in government.[2] Despite their popularity, however, performance
management systems have not been as successful as initially projected. What
Frank Micciche stated about the federal Government Performance and Results
The opinions expressed in this paper are those of the authors and do not necessarily
reflect the positions or perspectives of the Virginia Department of Planning and Budget
or the World Bank.
Correspondence: Herb Hill, Virginia Department of Planning and Budget, Ninth Street
Office Building, 200 North 9th Street, Room 418, Richmond, VA, 23219; E-mail:
hhill@dpb.state.va.us
256 Hill and Andrews
Act (GPRA) enacted in 1993 could be repeated for many experiences with
performance management systems: “Despite seven years on the books, the
1993 Government Performance and Results Act (GPRA) is not used widely
among Capitol Hill decision makers.”[3]
The relatively lackluster showing of performance management efforts has
not dampened demand for such reforms, however. Governments wishing to be
perceived as operating in a “businesslike” manner have adopted the belief that
they must have the basic organizational infrastructure of a performance man-
agement system in place, including performance measures, program evalu-

ations, and performance budgeting processes. Such infrastructure is often
introduced to send a message that government is interested in producing
results. This kind of reform can amount to a “ceremonial activity” as des-
cribed by Meyer and Rowan and discussed at length in the sociological new
institutionalism literature.
Such activity may be considered completely meaningless by observers, but
in many ways it is vital to the achievement of change. In developing the mes-
sage that an organization is performance oriented, these reforms have the poten-
tial of entrenching a value system with performance concerns at its center. The
reforms thus have a “ritual significance” and “validate” an organizational form
or culture (in this case one of performance).[4] The challenge in such situations
is to translate the ritual into practice by providing relevant tools and processes
that yield the reform more than a message and give members of the organiza-
tion the opportunity to operate in accordance with the new value system.
In Virginia this challenge has informed the process of performance man-
agement implementation, especially as it pertains to budgeting. The current
article examines some of the factors that appear to have facilitated a level of
success in this implementation process. The first section discusses the basic
structure of the performance-based management approach in place in Virginia.
Following this, the focus falls on the process of reform implementation, with a
second section discussing the sources of information about this important sub-
ject and a third section identifying a number of factors seen to have facilitated
a high level of reform implementation in the state.
BACKGROUND
For most of the twentieth century Virginia’s budget process resembled that of
most other US states, focused on ensuring conformity to process, expenditure
control, and fiscal probity. In the 1980s and 1990s pressure mounted through-
out the United States to extend the focus of budgeting and financial manage-
ment systems to also include concern for performance. It not only mattered
that government entities had consistent expenditure controls and followed
standard procedures, they also needed to be accountable for the results of their
spending. It was argued that concerns about performance would enhance citizen
Reforming Budget Ritual and Budget Practice 257
trust in government, government accountability for their use of resources, and

government incentives to spend efficiently and effectively.
Virginia’s performance management efforts date to the early 1980’s,
when state agencies were required to provide goals and measures as part of
their budget submissions. Virginia’s current performance management system
has been operational since 1995. It is comprised of four, linked processes: stra-
tegic planning, performance measurement, program evaluation, and perfor-
mance budgeting. The first three processes are primarily executive in nature,
while the last also involves the legislature (which ratifies the budget). Figure 1
shows the linkages between these four components. Because these processes
are designed to work together to manage the performance of state government,
this system is referred to as the Virginia’s “performance management system.”
Taken as a whole, these components provide multiple streams of informa-
tion that policy and decision-makers, the general public, and state employees
can use to manage strategy and to improve and communicate the performance
of government services. The components are interrelated in a way that is
meant to both entrench a performance orientation into the government culture
and to provide the tools necessary to operationalize such culture.
Strategic Planning in Virginia
To facilitate the development of a strategic mindset in Virginia and to help

agencies align their processes and plans with the strategic vision of the exe-
cutive (the governor), agencies are required to participate at least biennially
in the statewide strategic planning process. The planning cycle covers four years
(spanning two biennia), and is organized around the processes shown in Figure 2.
The first two strategic planning stages are internal to agencies and involve
completing an assessment of the issues an agency must address, identifying
agency goals, and developing an internal draft strategy for achieving such.
After completing the draft plan, each agency participates in a “strategic briefing.”
The strategic briefing allows representatives from the governor’s office, the
cabinet secretary, and the Department of Planning and Budget (DPB) to focus on
the current state of the agency and its draft strategic plan. The briefing provides an
Strategic Planning Performance Budgeting
Performance Measurement Program evaluation
Figure 1. Links between the components of Virginia’s performance management reform.

Figure 2. Strategic planning in Virginia.
opportunity for agencies to receive guidance and feedback from decision-makers

before developing their budget proposals, to clarify the governor’s and secretar-
iat’s priorities as they relate to the agency, and to facilitate consensus on critical
issues the agencies will address during budget development. Broad involvement
in this stage entrenches the view that agencies are located in a larger government
structure and that strategic goals matter in this structure. After completing the
strategic briefing, agencies finalize their strategic plans and submit them to the
DPB, detailing goals and activities that will be pursued to achieve such.
Performance Measurement in Virginia
Performance measurement is another important feature of Virginia’s perfor-

mance management reform. The Department of Planning and Budget currently
collects approximately 700 performance measures and associated results data
from over 100 executive and independent agencies. The department uses a web-
based system to collect and report performance data. The types of measures
include input, output, efficiency, quality, and outcome measures, and vary from
having a program-specific to an agency-wide focus. The 2000–2002 Budget Bill
(§4-1.03d) also required the development of performance measures for capital
projects, extending the “language of performance” to an area of management that
has traditionally not been performance oriented. Capital project measures include
measures tracking whether projects were completed on time and within budget.
Program Evaluation in Virginia
In the mid-1970s the Commission on Government Management recom-

mended greater emphasis on analyzing programs to determine their results
and costs. This kind of recommendation reflected the importance of a

“results” concern in the state government and ensured that there would be a
motivating factor (audits and evaluations) to facilitate the practice of results
management. Central agency staff as well as line-agency staff currently con-
duct most of the evaluation work.[5] To show the extent of evaluation entrench-
ment, however, some agencies have also developed evaluation and research
units in-house, while others use program staff to perform these duties. Several
large agencies, such as the Department of Transportation, Department of
Social Services, Department of Health, Virginia Lottery Department, Depart-

ment of Corrections, Virginia Commonwealth University, and Department of
Criminal Justice Services have dedicated program evaluation and/or audit
staffs. These staffs range in size from one to fifteen and routinely perform
evaluations to identify opportunities for program improvement and increased
efficiencies.
Performance Budgeting in Virginia
Having developed a performance focus in plans and created a supply of per-

formance information, Virginia could have stopped short and not connected
the performance concerns to core government processes. The state would have
been able to make claims of being performance oriented under such condi-
tions, but the reality would have been different. Instead, the state connected
the performance-oriented planning and performance generation steps to a cru-
cial government process—the budget process.
Beginning with the 1998–2000 biennium, most new budget requests were
accompanied by a performance measure indicating the results each agency
expected to achieve should the request be funded. Including performance
information in budget requests brings a results concern into a key government
process, “mainstreaming” the language of performance. Linkage between per-
formance measurement and the budgeting process was strengthened in the
2000–2002 budget development process, with agencies required to submit
performance measurement and strategic planning information in all budget
requests. Agencies were to indicate how budget proposals were tied to their
own (or the governor’s) strategic priorities, how the proposal related to
agency-wide performance measures tracked by DPB, and how the decision
package, if funded, would affect the measures’ targets. If the proposal did not
relate directly to a strategic planning priority, the agency was to explain why
not. If the proposal did not relate to existing performance measures, the
agency was to indicate how it would measure the success of the effort.
As performance measures have become more established throughout
Virginia state government, it is becoming increasingly possible to use perfor-
mance data to support the analysis and prioritization of budget decisions.
Establishing clear linkages between program performance and budget decisions
continues to be a significant challenge for all governments attempting to

implement performance management systems, however.
EXPLORING REFORM IMPLEMENTATION DETAILS:

A METHODOLOGY
Virginia’s performance management system has been generally accepted as a

“best practice” example. The General Accounting Office cites Virginia as a

“Leading Finance Organization.” The State’s case is used to show how
accountability goals and an effective control structure provide the basis for a
more results-oriented government.[6] The Government Performance Project
(GPP) described the State as one with “solid management systems across the
board,”[7] stressing links between the four major components described.[8]
Apart from being heralded as a success in such areas of the literature, the
Virginia performance-based budgeting reforms have been examined in the aca-
demic and practitioner literatures more broadly and are generally presented in a
very positive light throughout.[9] Studies in these literatures inform this article,
which does not attempt to duplicate an evaluation of the reform’s “success” but
rather analyzes some of the factors that stand out when considering how the
reform was implemented. Apart from studies in the literature, the core source
of information for the article is the experience of one of the authors in the bud-
get reform process. One author has been involved in the reforms since their
inception, with a particular focus on the executive stages in the budget process.
The story told here thus reflects direct experience in the reform process,
but is written with related studies in the literature in mind, so as to ensure a
high degree of reliability. The story can be verified by looking at state budget-
ing documents, which provide both cases of reform and details of reform
requirements.[10] Examples of such documents include those produced by the
Performance Management Advisory Committee, which can be accessed
through the Commonwealth’s automated performance management informa-
tion system.[11]
MAJOR FACTORS INFLUENCING REFORM IMPLEMENTATION

IN VIRGINIA
This section aims to provide some detail about outstanding factors influencing
Virginia’s effort to develop a performance management reform that would
change both budget ritual and practice. The main factors identified for discussion
are the legislative basis for reform; having a core agency to drive the reform
process; ensuring a highly integrated, results-oriented financial management
process; ensuring high levels of citizen engagement; and ensuring that the
performance management systems are tailored to be useful.
The Strong Legislative Basis for Reform
Virginia’s reform is largely based on formal orders and legislation. The earl-
iest mandate was a Governor’s Executive Order in 1995, which set the tone
for all reforms to follow and signaled the State’s intention to be performance
oriented. Legislation was also used in consistent fashion to ensure that the
reform gained momentum and to gradually entrench both the performance
mindset in government as well as practical processes facilitating performance-
based management in government. Examples follow:
• The Code of Virginia directs the Department of Planning and Budget (DPB)
to develop and operate a system of standardized reports of program and
financial performance for management. It also directs DPB to develop,
coordinate, and implement a performance management system involving
strategic planning, performance measurement, evaluation, and performance
budgeting within state government.
• House Bill 1065, 2000, amended § 2.1-391, established a Performance
Management Advisory Committee to “provide input regarding the direction
and results of the state’s performance management efforts.”
• House Bill 1847, 2001, amended § 2.1-391, of the Code of Virginia requires
DPB to submit annual reports of performance measurement results.
• House Bill 1003, 2002, amended § 30-133, of the Code of Virginia requires
the Auditor of Public Accounts to review certain policy, planning, and fiscal
information required of state agencies and to determine whether the agen-
cies are providing and reporting appropriate financial and performance
measures; determine the accuracy of the management system used by the
agency to generate the information and its report; and report the results of
the audits of state agencies annually to the General Assembly.
From this brief list, it is obvious that the State legislated along a
consistent reform line continuously over the first few reform years. This
created a legislative underpinning for reform that communicated the
state’s intention to successfully implement the reform. It also provided a
way for political representatives to show their support for reform and
ensured that issues arising in the reform process (such as the need for
reform audits in 2002) received formal attention. Legislation also protects
reform from periods of political change. While it does not replace the pos-
itive influence a supportive governor can have, it ensures continuity in
periods of executive change. In this light, Pennsylvania’s chief informa-
tion officer, Charles Gerhards, is correct in emphasizing the importance of
a strong and supportive executive in reform: “The governor can make
planets glide through the universe with predictability and precision.”[12]
We contend that he goes too far, however, in stating that “No gubernatorial
gravity means chaos.”
Certainly a non-supportive governor can cause reform chaos, but not in the
presence of established legislation, which create a protective institutional cocoon
for reform. At the 2002 Managing Performance Conference, Jim Chrisinger of
the Iowa Department of Management shared his experience in such situations.
He agrees that “Political transitions can pose particular administrative chal-
lenges” but also discusses how political change in Iowa did not derail perfor-
mance measurement reforms because these were highly institutionalized:
In Iowa, 30 years of executive control by Republicans ended in 1998 when

the state elected a Democratic governor. That change brought a significant
number of new state officials and employees into government, making vet-
erans uncertain how deep the change would permeate into ongoing pro-
grams and initiatives…. The use of strategies such as statutory authorization
for important programs, documentation of routine processes and identifica-
tion of important players helped ensure the continuation of performance
measurement through this transition and into the new political era.[13]
Due to the high degree of reform institutionalization in Virginia, perfor-

mance management now enjoys a high level of acceptability in many parts of
the State. The institutionalized nature of reform has been central to ensuring its
continuation even through times of budget austerity and political change.[14]
The Creation of a Core Agency to Drive the Reform Process
Performance-based budgeting legislation required that the central budget

agency develop a focus on results. This requirement intended to build on
previous institutional structures in the Department of Planning and Budget,
which had formally established its Evaluation Section in 1982. The Section
was merged in 1995 with the Planning and Performance Section to create the
Strategic Planning, Research, and Evaluation Section. The section is currently
comprised of five full-time staff members, who conduct reviews, evaluations,
and studies at the request of the governor, cabinet secretaries, and the General
Assembly. DPB staff and designated staff from evaluated agencies also serve
on project teams as appropriate. Analyses undertaken typically address
whether current policies and programs are appropriate, whether programs are
producing intended results, and whether alternative policies, programs, or
management strategies would be more appropriate.
Through such activities the DPB plays a vital role in bolstering the per-
formance orientation in the government by providing important practical lead-
ership to state entities. Since its inception, the Planning and Evaluation
Section has also played a vital role creating incentives for agencies to progress
with the performance-based reforms through its evaluation activities. The
Section has completed more than 75 studies of state agencies and programs.
Similarly—to contribute to the improvement of management in state govern-

ment agencies and to enhance managerial support for performance-based
management (by showing its value to managers)—a best management prac-
tices unit within DPB was created in 1999. This unit conducts extensive stud-
ies of executive branch agencies, which result in recommendations on how the
management of agencies can be improved and operations best managed based
on best management practices. The team members act as consultants to the
agencies to assist with operational improvements, once again ensuring that a
focus on performance and performance improvement is entrenched and pro-

viding practical assistance to entities.
Ensuring a Highly Integrated, Results-Oriented Financial

Management Process
The integration of strategic planning, budgeting, performance tracking, and

results-based decision-making is one of the strongest points of Virginia’s
reform.[15] Integrating these processes has ensured that performance-based
reform goes beyond budgeting and has quickened the process whereby perfor-
mance has been accepted in government. Many other experiences of reform
failure can be contrasted with Virginia in this respect, as reforms have been
developed within one or two narrow agencies and have thus not been effect-
ively integrated into the entire public management process.
Figure 3 shows a stylized model of the budgeting and financial manage-
ment process into which performance based management concerns have been
integrated. The process involves budgeters and planners, accountants, auditors,
and legislative oversight bodies. These groups have their own discrete roles to
play in the process, but accountability and effectiveness of financial manage-
ment depend a lot on their interaction. Reform implementation is also affected
by the degree to which the parties communicate and the reform integrated over
the process. In Virginia much energy has gone into ensuring that reform per-
tains to all the groups involved, such that the “language of performance” is
common throughout the process.
The role of the Department of Planning and Budget in performance-based
reform has already been discussed in this article. Many governments focus
their performance-based reforms in this kind of entity alone. In Virginia a
Planning and Accounting Auditing Legislative

budgeting oversight
Performance emphasis throughout the budgeting and financial management process
Figure 3. An integrated approach to performance-based reform.

results focus has also been developed in the activities of accounting and audit-
ing agencies and in legislative oversight bodies:
• The Department of Accounts (DOA) provides a uniform system of accounting,

financial reporting, and internal control adequate to protect and account for the
Commonwealth’s financial resources. One way in which DOA has supported
an increased focus on performance is through the dissemination of user-friendly
reports that inform the public about the Commonwealth’s financial condition.
• The Auditor of Public Accounts (APA) audits the accounts of every state
entity. APA’s staff conduct both financial and performance audits. The lat-
ter involve examining whether entities acquire, protect, and use resources
economically; causes of inefficiencies; whether entities comply with appro-
priate laws and regulations; and the degree to which entities achieve
intended results. The APA also regularly reviews performance measures
included in the state’s performance management system.
• Virginia’s legislative oversight agency, the Joint Legislative Audit and
Review Commission (JLARC), provides the General Assembly with infor-
mation for use in legislative decision-making, to monitor and report
whether state agencies and programs are in compliance with legislative
intent concerning appropriations and objectives, determine whether state
agencies and programs are operating efficiently and effectively, and com-
municate findings and recommendations in this regard.
The link between budgeting and accounting, auditing and legislative

oversight has meant that there is now a performance orientation in planning
and budget formulation, budget execution, and ex ante financial reporting and
evaluation. It certainly appears that this constant thread of reform has been a
vital factor facilitating success in implementation. The National Partnership
for Reinventing Government stresses the importance of this kind of integrated
approach to reform, as it relates to the advances Virginia has made in improving
the strategic quality of its budgets:
Virginia’s performance budgeting process fully integrates strategic

planning and performance measurement with agency and program
budgeting—and represents a major evolution in the state’s decade of
efforts in this arena. By integrating these three elements into a single pro-
cess, Virginia has been able to link agency mission, program priorities,
anticipated results, strategies for achieving results, and budgeting.[16]
Ensuring High Levels of Citizen Engagement
A major goal of performance-based budgeting is to improve the information

citizens have about government resource use. Citizens are particularly interested
in government performance and performance-based reforms thus have specific

significance to them. In light of this, Virginia’s reform was to involve citizens
at an early stage, meeting civic informational demands and generating civic
interest in the reform—to constitute a pressure group for reform implementa-
tion. With this intention, The Department of Planning and Budget developed a
results-oriented Internet site, named Virginia Results. Agency planning and
performance information is stored on the site. Decision-makers and citizens
can obtain this information directly through the web site.[17]
Ensuring Performance Management Systems are Tailored to be Useful
An important focal point in Virginia’s reforms has been the development of

useful performance information systems. Performance information access is
vital for performance-based reforms and is also centrally important in reform
implementation. If performance information is supplied in useful ways, it is
likely to yield reform support. If performance information is not supplied in a
useful way, or is supplied in a manner that threatens the interests of key stake-
holders, it is likely that performance-based reforms will be short-lived. Simply
having a performance management infrastructure in place for “ceremonial” or
symbolic purposes, providing performance information in an unfocused man-
ner, is inappropriate and can threaten reform success. Consistent with this
orientation, a recent GAO report on GPRA concluded:
Performance improvements occur only when congressional and execu-

tive branch decision makers use [performance information] – and the
management systems that generate them – to help inform decisions and
improve confidence in the accountability and performance of the federal
government.[18]
To ensure useful presentation of performance information, systems have

been designed to differentiate between policy users and service delivery users.
Table 1 lists the chief distinctions between performance management systems
useful for service delivery and those useful for policy-making—as they have
been seen to inform Virginia’s development of performance information
systems.
Table 1 shows how the design of Virginia’s performance information
system takes the different type of user in the state into account. Career civil
servants are typically the front-line individuals responsible for providing a
variety of government services directly to citizens. They are generally seen to
have received specialized training in their fields and in public administration
and management, and are assumed to have been competitively selected for
employment. The primary reason that service delivery staff use performance
information is to improve the quality, efficiency, and effectiveness of services
Table 1. Key factors of performance management systems
Key factors Service delivery Policy-making
Primary users Service delivery staff Policy-makers

Primary use of Improve service quality, Advocate and defend
performance information efficiency, effectiveness preferred policies
Type of information to That which tracks a That which tracks positive
communicate variety of results, accomplishments of
aspects of programs preferred policies

Timing of information Regular and frequent As needed, given emerging
collection and reporting political and policy-
making dynamics
How negative information Used as input for Disregarded, discredited,
handled improving programs or reinterpreted to support
policy positions
and how they are provided. In these contexts, performance management systems
need to be focused on specific, operational aspects of services to be useful.
Policy-makers are selected for employment through a political process
and usually are closely associated with a political party or leader. They may or
may not have expertise in the area of oversight, but have a clear ideological
orientation and understand how this orientation relates to policy priorities. To
support their advocacy efforts, their information needs are typically more stra-
tegic and political than operational in nature. The primary reason that these
individuals use performance management systems, it can be argued, is to
strengthen their position in the policy-making process and/or their opportuni-
ties for political advancement. Political landscapes can be highly competitive
with continuously shifting issues, and the economic and political conse-
quences of changes in policy-making influence can be significant. Savvy policy-
makers in these contexts naturally seek to minimize opportunities that provide
their opponents with useful information. Different strategies can be used in
this context to limit the distribution of performance information. For example,
policy-makers may officially classify more “sensitive” performance informa-
tion, thereby restricting its distribution and ability to be obtained through
Freedom of Information Act (FOIA) requests. The design of performance
information systems needs to take such strategic behavior into account.
The Virginia reform experience has placed great emphasis on early
determination of whether service delivery staff or policy-makers are the pri-
mary users of the system. The results of such identification process have been
complex, however, as the primary users of performance information are
numerous: the public, executive branch officials, legislative branch officials,
budget staff, and line agencies—all requiring specific types of information
for specific purposes.
To meet the needs of managers, for example, a performance management

system has been developed to feed into formal, documented management
structures and processes, and sometimes even into the less formal day-to-day
interactions of management with each other or with citizens. This system pro-
vides information about specific, operational aspects of programs. Planning
and other performance-related information provided is thorough, balanced,
and specific. Detailed task-level data are used along with a variety of related
measures to shed light on resources and processes used to provide each ser-
vice, the efficiency of the processes, service quality, and the outputs and out-
comes of services. The intention is that the analysis of this information will
make the operation and results of the program as “transparent” as possible to
service-delivery staff. General planning statements and a few performance
measures pertaining to one or two aspects of services are insufficient for these
purposes.
To meet the needs of policy-makers, a performance management system
has been developed that allows politicians to assess performance in relation to
a specific policy or program in the mix of important economic, educational,
social, and environmental problems being debated. Policy-makers can use
information to identify and assess the performance of programs as they affect
key outcomes, aiding them in developing advocacy positions in relation to
budget items. This type of information rarely results in operational “transpar-
ency,” but should help inform perceptions about a set of policy priorities and
strengthen the political position of the policy-makers advocating them.
The process of user identification has been crucial to ensuring reform
implementation progress and reform usefulness in Virginia. As the system
has been developed and refined, more specific subgroups of users within
these two general categories have been identified and their information
needs, in turn, have influenced the specific structure and processes used by
the system. Apart from affecting decisions about the type of information to
provide, the concern over who is receiving information has influenced infor-
mation system design in relation to the timing of information collection and
reporting:
• One characteristic of effective performance information systems relevant to

managers, for example, is their ability to provide data on organizational and
program results systematically and regularly. A performance management
system useful in the service delivery context must frequently and regularly
collect and communicate performance data to key users. Annual or semi-
annual reporting cycles are insufficient for identifying and implementing
improvements and timely solutions to service delivery problems.
• To favorably position a policy, policy-makers have to respond quickly and
effectively to changes in political, economic, social, and other factors that
can and often occur according to erratic timetables and are always urgent.
Given the dynamic, often unpredictable environment in which policy-makers
operate, the precise information needs of policy-makers are often impossible

to predict well in advance. Performance information in the policy-making
context, as a result, should be collected and disseminated on an as-needed
basis rather than on a more consistent schedule as in the service delivery
context.
Dealing with “negative” information

Further related to the usefulness of data, reformers in Virginia have had to

deal with questions about the potential threats certain kinds of performance
data bring into the governance process—and how these could undermine
reforms. In an ideal setting, service delivery staff and as appropriate even their
customers, openly receive performance information that highlight less-than-
expected results. These individuals then analyze, question, and use this infor-
mation to identify improvement opportunities. In this context “negative”
information is considered as important and useful as “positive” information.
Not communicating this information openly and honestly is very counterpro-
ductive in this framework, as doing so limits the ability of staff and their cus-
tomers to make necessary, timely improvements in service delivery strategies,
resource allocations, training, and other areas. In the policy-making arena,
however, information about performance results that are less than desirable
need to be carefully controlled to ensure that policy priorities and political
leaders are favorably presented. Doing so minimizes chances that the policies
are perceived unfavorably and limits opportunities for opponents to use the
information to advance alternative policy agendas.
In general, policy-makers achieve this objective by (1) handling negative
performance information confidentially to refine communication strategies
and solve problems highlighted by the data; (2) discrediting such information
or presenting it as invalid; (3) ignoring the information (if not pointed out by
opponents), thereby made irrelevant; (4) reinterpreting the information to sup-
port a particular position; or (5) presenting the information at a time when
more compelling stories dominate the headlines, thereby making the informa-
tion less visible.
The Virginia reform experience shows the importance of developing a
strategic way of dealing with negative information that does not result in
policy-makers resorting to these kinds of strategies, which ultimately under-
mine the value of performance-based information generation. An example of
how Virginia has addressed the issue of negative performance information is
evident from the publication of a new scorecard for transportation projects
that shows whether projects are “on time” and “within budget.” Initial
reports were not overly flattering, yet Virginia’s transportation commis-
sioner made the information public and used the data to inform an improve-
ment strategy.
Ongoing Efforts to Make Sure Information Systems are Useful
The general thinking behind performance-based information system devel-

opment in Virginia has seen policy-making and service improvement as
very different foci that require different performance management systems
to be useful. It is argued that, if this distinction had not been made, the state
may have developed systems vaguely intended to support service delivery
that may more easily have been used solely for public relations purposes.
In these cases, the performance management system becomes a “good gov-

ernment” smokescreen behind which policy-makers advance their ideolog-
ical agendas. GPRA is one example where this may have occurred. In this
case, a performance management system developed for a small California
community (government workforce of 850) was grafted onto the entire fed-
eral government (government workforce of 2.7 million) as a multipurpose
tool to support policy-making, service improvement, performance budget-
ing, and other activities. GPRA’s lack of specific focus on either support-
ing service delivery or policy-making inevitably decreased its usefulness
for either purpose, while increasing its vulnerability to be co-opted for
political purposes. Consistent with this argument, OMB Watch recently
reported:
Although GPRA was conceived as a tool to strengthen government per-

formance, it has increasingly been used as a partisan tool to push ideo-
logical perspectives. If the goal of good government performance is put
in the same hopper with political rhetoric and partisan polarization,
there is no possibility that GPRA will be anything more than another
failed attempt at government reform.[19]
This article asserts that GPRA, as well as other systems like it, could be
more successfully implemented if decision-makers explicitly clarified the pur-
pose of the performance management system as supporting service delivery or
policy-making and fashion it accordingly. This is a difficult challenge, given
that policy-makers are the senior decision makers in government, and can
exploit for political purposes the symbolic value of performance management
systems regardless of the system’s operational success or failure. The incen-
tives for clearly and explicitly defining the primary purpose of a performance
management system and structuring it accordingly are, therefore, relatively
weak. When such incentives are in place, however, the next step is to ensure
through the implementation process that different users find performance
information valuable.
To provide an ongoing assessment of the perceived value of perfor-
mance information, Virginia developed the Performance Management
Index (PMI). The Performance Management Index (PMI) was developed
to answer the following basic questions: To what degree are all state
agencies practicing the fundamentals of performance management? To

what degree are all state agencies committed to managing their performance
systematically? To answer these questions, the performance management
team at the Department of Planning and Budget asked executive agencies
participating in the statewide performance management system 10 basic
questions regarding their performance management practices (see Table 2).
Each of the questions addresses a fundamental practice of managing per-
formance or demonstrating a basic commitment to managing performance
systematically.
The PMI intended to provide a “quick look” at how state agencies are
doing with several basic processes an organization must implement to
manage performance systematically. In this sense, the PMI provides stake-
holders in the Commonwealth of Virginia with a general indication of the
level of statewide commitment and action concerning performance man-
agement. Providing this “snapshot” is intended to assist in developing an
understanding of reform implementation progress and success. It has been
vital in providing reformers with an assessment of reform implementation
and ideas on where reform should be re-focused and reform elements
strengthened.
Table 2. The Performance Management Index questions
No. Question
1 Does your agency have a set of agency-wide priorities?

2 Are the agency priorities formally documented?
3 Are the agency priorities communicated to all managers and staff in at least
two different ways (e.g., email, newsletter, web site, etc.)
4 Is there at least one performance measure designated to track the
achievement of each priority?
5 Are the performance measures referred to in Item 4 formally documented?
6 Does this performance measure documentation referred to in Item 5
include at least descriptions regarding the data source for the
measures and how they are calculated?
7 Is the actual, collected performance data for the measures referred to in
Item 4 reviewed at least annually for accuracy by someone other than
who collects the data?
8 Is actual performance data collected for the measures referred to in Item
4 reported to agency management in a format that also presents resources
used (money, staff, capital, information technology, etc.) to achieve the
agency-wide priorities (referred to in Item 1)?
9 Is actual performance data collected for the measures referred to in Item 4
reviewed at least quarterly by agency management?
10 Does the agency head routinely participate in the performance information
reviews referred to in Item 9?
CONCLUSION
This article has provided an overview of Virginia’s performance-based bud-

geting and management reforms. The idea behind these reforms has been to
change both the culture and practice of budgeting and financial management
in the state. In this light the experience is generally considered successful.
This is partly because of design features in the implementation process that
have ensured the reforms are effective, relevant, and enjoy a high level of
institutional acceptance.
The main factors that are suggested to have led to implementation success
are the strong legislative basis for reform; the creation of a core agency to
drive the reform process; the emphasis on ensuring reforms facilitate the
development of a highly integrated, results-oriented financial management
process; ensuring high levels of citizen engagement; and ensuring the perfor-
mance management systems are tailored to be useful. These factors all com-
bine to facilitate a setting in which participants in the budget and financial
management process have incentives to use the reforms and are pressured by
one another to do so. As such, performance management becomes both valu-
able as ceremony (accepted socially) and practice (accepted substantially).
REFERENCES
1. For the purposes of this article, performance management systems are

defined as organizational structures and processes that systematically use
some combination of strategic planning, performance measurement, pro-
gram evaluation, and performance budgeting processes. Performance
information, therefore, is any information that a performance manage-
ment system generates.
2. Liner, E.B.; Hatry, H.P.; Vinson, E.; Allen, R.; Dusenbury, P.; Bryant, S.;
Snell, R. Making Results-Based Government Work, The Urban Institute:
Washington, D.C, 2001.
3. Micciche, F.A. Future of Results Act Uncertain on Capitol Hill,
GovExec.Com. August 28, 2000. Available at: http://www.govexec.com/
dailyfed/0800/082800f1.htm.
4. Meyer, J.; Rowan, B. Institutionalized Organizations: Formal Structure as
Myth and Ceremony. In W.W. Powell & P.J. DiMaggio (Eds.), The New
Institutionalism in Organizational Analysis. London: The University
Press of Chicago, 1991; 55.
5. Central agencies that regularly conduct performance evaluations and
audits include the Department of Planning and Budget, the Joint Legislative
Audit and Review Commission, Department of the State Internal Auditor,
Auditor of Public Accounts, Department of Accounts, and the State
Council of Higher Education for Virginia.
6. General Accounting Office. Creating Value Through World-class Financial

Management. Executive Guide 00-134, April 2000, 11.
7. Government Performance Project. Management Matters and Performance
Counts, State Grade Report 2001. Available at: http://www.maxwell.syr.edu/
gpp/grade/
8. Governing. The Government Performance Project Report Card for Virginia.
2001. http://www.governing.com/gpp/2001/gp1va.htm.
9. See, for example, Andrews, M.; Hill, H. The Impact of Traditional
Budgeting Systems on the Effectiveness of Performance-Based Budget-

ing: A Different Viewpoint on Recent Findings. International Journal of
Public Administration, 2003, 26 (2).
10. Documents are available at http://www.dpb.state.va.us.
11. See http://www.dpb.state.va.us/VAResults/VRHome.html
12. Sostek, A. People Power. Special Conference Report, Governing’s Managing
Performance 2002. Available at: http://www.governing.com/mgt2cr.htm
13. Sostek, A. Supra note 12.
14. Some of these tensions are discussed in the GPP report on Virginia in
2001. It is interesting to note that the report does not talk at all about
reform derailment because of these tensions. See Governing. The Govern-
ment Performance Project Report Card for Virginia. 2001. Available at:
http://www.governing.com/gpp/2001/gp1va.htm
15. National Partnership for Reinventing Government. Balancing Measures:
Best Practices in Performance Management. August 1999. Available at:
http://www.orau.gov/pbm/links/npr1.html
16. National Partnership for Reinventing Government, Supra note 15.
17. Virginia Results, Supra note 11.
18. General Accounting Office, Supra note 6; 1.
19. Taylor, Ellen. Seven Years of GPRA: Has the Results Act Provided Results?
OMB Watch, July 20, 2000. Available at http://www.ombwatch.org/article/
articleview/851/1190.

Reforming Budget Ritual and Budget Practice: The Case of Performance Management Implementation in Virginia

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Reforming Budget ritual and

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Reforming Budget Ritual and Budget Practice:

The Case of Performance Management

Abstract: Virginia is accepted as one of the leading examples of performance-based

Governments continue to show interest in using some combination of strategic

agement system in place, including performance measures, program evalu-

trust in government, government accountability for their use of resources, and

Strategic Planning in Virginia

To facilitate the development of a strategic mindset in Virginia and to help

Strategic Planning Performance Budgeting

Performance Measurement Program evaluation

Figure 1. Links between the components of Virginia’s performance management reform.

Figure 2. Strategic planning in Virginia.

opportunity for agencies to receive guidance and feedback from decision-makers

Performance Measurement in Virginia

Performance measurement is another important feature of Virginia’s perfor-

Program Evaluation in Virginia

In the mid-1970s the Commission on Government Management recom-

and costs. This kind of recommendation reflected the importance of a

Social Services, Department of Health, Virginia Lottery Department, Depart-

Performance Budgeting in Virginia

Having developed a performance focus in plans and created a supply of per-

continues to be a significant challenge for all governments attempting to

EXPLORING REFORM IMPLEMENTATION DETAILS:

Virginia’s performance management system has been generally accepted as a

“best practice” example. The General Accounting Office cites Virginia as a

MAJOR FACTORS INFLUENCING REFORM IMPLEMENTATION

The Strong Legislative Basis for Reform

based management in government. Examples follow:

In Iowa, 30 years of executive control by Republicans ended in 1998 when

Due to the high degree of reform institutionalization in Virginia, perfor-

The Creation of a Core Agency to Drive the Reform Process

Performance-based budgeting legislation required that the central budget

Similarly—to contribute to the improvement of management in state govern-

focus on performance and performance improvement is entrenched and pro-

Ensuring a Highly Integrated, Results-Oriented Financial

The integration of strategic planning, budgeting, performance tracking, and

Planning and Accounting Auditing Legislative

Performance emphasis throughout the budgeting and financial management process

Figure 3. An integrated approach to performance-based reform.

• The Department of Accounts (DOA) provides a uniform system of accounting,

The link between budgeting and accounting, auditing and legislative

Virginia’s performance budgeting process fully integrates strategic

Ensuring High Levels of Citizen Engagement

A major goal of performance-based budgeting is to improve the information

in government performance and performance-based reforms thus have specific

Ensuring Performance Management Systems are Tailored to be Useful

An important focal point in Virginia’s reforms has been the development of

Performance improvements occur only when congressional and execu-

To ensure useful presentation of performance information, systems have

Table 1. Key factors of performance management systems

Key factors Service delivery Policy-making

Primary users Service delivery staff Policy-makers

aspects of programs preferred policies

To meet the needs of managers, for example, a performance management

• One characteristic of effective performance information systems relevant to

operate, the precise information needs of policy-makers are often impossible

Dealing with “negative” information