DUE 4/4

PlannIng, ProgrammIng, budgetIng system

(PPbs) format

Program budgeting (PPB) is planning oriented; its main goal is to rationalize policy making by providing (1) data on the costs and benefits of alternative ways of attaining proposed public objectives, and (2) output measurements to facilitate the effective attainment of chosen objectives.

(Allen Schick 1966, 250–251; 1980, 56)

Putting objectives first, alternatives second and choices third is inefficient as a method of calculation, ineffective in relating thought to action and inappropriate as a design for learning. . . . The [line-item] approach is more efficient for resolving conflicts . . . because . . . it does not require its practitioners to discover all or most possible conflicts and to work out answers to problems that may never materialize.

(Aaron \Wildavsky 1979b, v, 166–167)

Program budgeting, including the Planning, Program, Budgeting System (PPBS) 1 seeks to increase the effective use of public resources by budgeting to clearly defined objectives. It broadens the line-item (object code) format’s preoccupation with expenditure control to a concern for program- matic accountability for results. It is hailed by advocates as a great advance in expanding the values that need to be taken into account in promoting the public interest. But it is also severely criticized by critics who argue that it consumes large amounts of time and resources to carry out, and that it empowers career administrators to use large amounts of discretionary power to “cook up” programs in response to problems that are not supported by strong political constituencies (Wildavsky 1979b, 167). Finally, by configuring expenditure allocations into sets of programmatic activities that have clearly identifiable outcomes, program budgeting tends to exacerbate political conflict among those who benefit or are disadvantaged by these outcomes during times of budget cuts. In this chapter, we will show why both the proponents and opponents of program budgeting are correct, and in doing so, demonstrate the conflicting objectives that democratic government needs to accommodate.

ORIGINS AND PURPOSE OF PROGRAM BUDGETING

Program budgets organize expenditures around the activities performed by an agency or program to meet defined objectives. It focuses the attention of managers on the results achieved by the expenditure of public funds, not on attempts to control all of the individual expenditures needed to accomplish a given set of activities. Controlling the amount of money spent on personnel, materi- als, and supplies does not necessarily produce effective outcomes. For example, we can control the amount of money spent by a contractor to build a new house, but doing so will not ensure that the house is well built or meets the standards in the architect’s drawings.

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324 EXPENDITURE FORMATS FOR DECISION AND CONTROL

Program budgeting has been advocated by local government reformers for nearly a hundred years. In fact, it was first advocated by the New York City Bureau of Municipal Research in 1917. The bureau argued that public budgets should include “all the details of the work plans and speci- fications of cost of work” (quoted in Schick 1980, 52). Program budgeting, as we know it today, gained popularity as a distinct budgeting innovation in the 1960s under the moniker planning, programming, budgeting system (PPBS). Robert McNamara, as secretary of defense, brought PPBS with him from the Ford Motor Company, where, as company president, he had introduced the system to significantly improve the company’s performance.

In his role in the Kennedy and Johnson administrations, Secretary McNamara used PPBS to help settle the competition among the various armed services for costly missile defense systems, extended range bombers, nuclear submarines, and upgraded conventional forces. At the height of the Cold War with the Soviet Union, how was a secretary of defense to manage this kind of escalating and competing demand for more military weaponry by each of the separate services? The massive size of the Department of Defense budget and the contrasting cultures of the different services challenged any attempt to bring order to the department’s budget. Added to the interservice strife, congressional pressure to protect the “home-town” benefits of military spending made it difficult to rationally prioritize military expenditures. Further compounding the challenge, the development and procurement of a major weapons system was (and remains) a multiyear process that touched off a cascade of fiscal commitments lasting far beyond the initial fiscal year. Initial research and development of a weapons system led to expenses for prototype development and testing, pro- curement, manufacturing, use in the field, repair and maintenance, rebuilding and upgrading, and retirement. The useful life of a weapons system often lasted several decades, and budgeting needed to recognize the full, long-term implications and commitments of its procurement.

The Department of Defense budgeting system presented McNamara with a final challenge. The budget was structured around intermediate activities such as maintenance and supply, and around object code line-items, but not around final objectives, goals, or outcomes. The budgeting structure conflicted with the operational decision making used by military leaders (Lyden and Lindenberg 1983). There was no way to identify and contain duplicative or unnecessary programs, and terminating ineffective programs was extremely difficult. To counteract the politics, and to identify priorities and best allocate resources, McNamara needed a strategic plan. Such a plan would clarify department needs and priorities, and it would provide a rational basis for decision making that could help fend off political pressures.

Budgeting to a strategic plan is not a new idea. Alexander Hamilton, in his 1791 “Report on Manufactures,” established a precedent for “budgeting to a plan” (Hamilton 1791/1966). Ham- ilton, in his role as secretary of the U.S. Treasury, presented an elaborate, well-argued, and well- documented long-term plan to Congress as the cornerstone of his strategy for obtaining members’ support for public funding of the U.S. financial and transportation infrastructure.

Plans and planning are the essence of program budgeting (Novick 1992; U.S. Department of Defense 1984/2003). Budgets may carry a program budget label, but unless there is a concrete plan that connects program expenditures to a set of objectives, which in turn are connected to goals, a true program budget does not exist. Many agencies organize their budget into functional categories or sets of activities that may carry the program label. But without knowing the plan behind these functional categories and programmatic activities, it is difficult to tell what purposes the object code line-item categories composing the larger set of program activities are intended to serve. That was the problem McNamara’s PPBS system was intended to solve: the need to budget to a plan and then to link that plan systematically to programs to create a three-legged stool that integrated: (1) planning, (2) programming, and (3) budgeting. If these three organizational activi- ties were successfully linked, a manager would be able create an integrated budgeting system, thus the use of the phrase planning, programming, budgeting system (PPBS).

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 325

EXAMPLE OF PPBS: COMMUNITy CORRECTIONS

The example in Exhibit 12.1 presents a simplified application of PPBS for one department in a larger county government organization. This hypothetical county community corrections department provides probation and parole services to adult offenders following incarceration, and administers home and community monitoring for offenders. The example illustrates how a mission statement and goals established through a strategic planning process are causally and hierarchically linked to the achievement of a concrete set of objectives that have specified budgetary consequences. The instrumental nature of this linkage process cannot be accomplished without careful and time- consuming planning. In practice, describing the full department’s activities would require 8 to 12 goals, each with a set of subordinate objectives.

Exhibit 12.1

Cascade County Community Corrections Department PPBS* Example

Mission: To provide safe and productive incarceration for citizens who have been sentenced to prison or released on parole.

Goal 1: To rehabilitate clients on parole and probation so they can return as productive members of society.

FY2 Requested Expenditure

1. Objective 1.1 To increase FY2 employment references of clients by 10% more than FY1 levels with no budget increase over what was allocated for these activities in FY1. $__________

Activity Direct service delivery activities, staff positions, FTEs assigned, procurement, and contracts.

Activity Indirect and administrative support activities.

2. Objective 1.2 To double total mental health consultations experienced by clients in FY2 compared to FY1 at a cost of 1.0 FTE Mental Health Nurse. $__________

Activity Direct service delivery activities, staff positions, FTEs assigned, procurement, and contracts.

Activity Indirect and administrative support activities.

3. Objective 1.3 To limit FY2 parole and probation violations to 15% of Corrections clientele by introducing a bracelet monitoring program at a cost that does not exceed the total budget allocation expended in FY1 for parole and probation monitoring. $__________

Activity Direct service delivery activities, staff positions, FTEs assigned, procurement, and contracts.

Activity Indirect and administrative support activities.

Note: PPBS = Planning, Programming, Budgeting System.

The preceding example illustrates the planning steps of successful PPBS budgeting: creating a mission statement, setting goals, establishing objectives, determining the activities that need to be undertaken to achieve the objectives, and attaching a total cost of producing each objective. Objective level costs can then be aggregated to the goal and departmental levels. The integrated combination of plan intentions, resources, staffing, procurement, activities, and an expected cost is known loosely as a budget package, decision package, or simply a package. A package is one alternative for funding a goal or objective. Depending on the context and budget instructions, a package may cover funding for an entire department, a program, or just a portion of a program.

326 EXPENDITURE FORMATS FOR DECISION AND CONTROL

The PPBS hierarchy of mission, goals, and objectives builds out and gives structure to the strategic and operational planning concepts we discussed earlier in chapter 10. When measures of workload, effectiveness, or efficiency are included and considered in the selection of objectives and their service delivery activities (see chapter 13), we have a complete PPBS system. Including performance and expenditure information in PPBS lets analysts and decision makers consider the relative efficiency and effectiveness of different budget packages in meeting plan objectives. We will address the measurement element in the next chapter on performance budgeting. But in the sections that follow in this chapter, we will discuss each of the core elements that make up the PPBS approach to budgeting.

kEy ELEMENTS OF PROGRAM BUDGETING

PPBS is composed of the following four key elements organized into a hierarchical structure that clearly links means to ends: mission, goals, objectives, and activities. This structure aligns with the planning structure of many organizations and with the budget planning framework described in chapter 10. The mission statement is the product of the strategic planning level of the organization; goals specify how the strategic plan will be transformed into operational level sets of activities; objectives further specify how these sets of activities will take concrete form in the organization’s operational and business plans; and activities specify the tactical work that frontline workers will undertake to implement the mission, goals, and objectives. PPBS is flexible, however, and additional levels of subgoals or subobjectives may be added between the original four levels to accommodate greater organization size or special initiatives.

PPBS Element 1: Mission Statement

When someone says, “I’m on a mission,” we usually assume that the person is devoting all of her emotional, physical, and intellectual energy in the pursuit of a single-minded purpose. Similarly, when an organization sets forth its official mission, the single-minded focus is narrowed down to a concise statement of the worthwhile purpose that justifies its existence. Accordingly, mission statements describe what you do, whom you serve, and the values that guide the work of your organization. The goal of a mission statement is to let people inside and outside of the organiza- tion know what it is trying to accomplish and how it will do it.

There are different uses and types of mission statements. Some organizations use their mis- sion statement as a publicity tool for marketing and fundraising; others publish their mission statements in annual reports meant to be read by investors, donors, clients, and stakeholders; still others create mission statements that serve as a compass for leadership decisions and as a galvanizing force for employees. It is important to have a clear sense of the various audiences intended to be served by a mission statement before putting words to paper. A good mission statement answers three questions: (1) Why do you exist? (2) Whom do you serve? and (3) What values guide the work of your organization? Sometimes these multiple needs are divided up into three separate documents. A vision statement provides clarity about what success looks like. A beliefs and values statement sets forth the values that guide the work of the organization, and a mission statement focuses on the purposes that the organization hopes to achieve. All of these can be collapsed into one statement, but this usually requires three or four sentences, not just one. Together, these statements describe and define a “brand” of what makes the organization distinctive among its neighbors, peers, and competitors. The appearance of key descriptive words and the priority of their placement in these statements signals how an organization hopes to perform for its constituents and for the community. Following are some examples of mission statements. Determine whether you think the mission statement is sufficient

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 327

to stand alone or needs to be accompanied by a vision statement and by a beliefs and values statement.

Mission Statement Example 1

“The Self-Start Program, a broad-based collaborative community initiative, assists low-income mothers and their children to help themselves complete their education and achieve economic self-sufficiency through empowerment skills, access to affordable housing, child development ser- vices, health care, support services, and meaningful employment. Self-Start mothers and children develop positive self-esteem and clarify the values on which to build a successful life” (based on Executive Women International [EWI], Minneapolis, MN 2007).

Mission Statement Example 2

“The American Society of Public Administration’s (ASPA) mission is to be the leading public service organization that:

• Advances the art, science, teaching, and practice of public and nonprofit administration. • Promotes the value of joining and elevating the public service profession. • Builds bridges among all who pursue public purposes. • Provides networking and professional development opportunities to those committed to

public service values. • Achieves innovative solutions to the challenges of governance” (ASPA 2013).

Mission Statement Example 3

State Department of Public Safety

Mission: To protect human life and property by enforcing state laws, deterring criminal activ- ity, ensuring highway and public safety, and providing vital scientific, technical, and operational support to other criminal justice agencies.

Vision: To be a national model in providing ethical, effective, efficient, and customer-oriented state-level law enforcement services (Arizona Department of Public Safety 2013).

These examples illustrate the all-encompassing, strategic function that a mission statement serves for all of the subunits operating within the larger structure of organizational authority. For that reason, programs and suborganizational units commonly adopt the mission, values, and statement of beliefs that have been developed for the organization as a whole. In such cases, the burden of developing subordinate goals, objectives, and workload measures falls on each of the subprogram units within a department or agency.

PPBS Element 2: Formulating Goals

Formulating goals and objectives is not an intuitively self-evident process, especially because we commonly use the two terms interchangeably. But in PPBS, goals and objectives have a hierarchical and causal relationship with one another. Goals define a destination, and objectives tell us how we are going to get there. In that sense, objectives are efficient causes, which, when systematically linked, produce the goal. If our goal is to build a rock wall, the objectives tell us the concrete steps that we will take, the expertise and people we will need, and the amount of time and the resources needed to complete the wall. The key to success in creating goals and objectives is the

328 EXPENDITURE FORMATS FOR DECISION AND CONTROL

clarity and certainty we have as to exactly how an objective is going to cause the achievement of the stated goal. If the relationship between the objectives and the goal is uncertain, fuzzy, or unknown, then we aren’t ready to include the objective within a PPBS plan. If we end up not be- ing able to create objectives that have this kind of causal clarity and certainty, then it may be time to reconsider the goal statement, which itself may be unachievable, too ambitious, or outside the orbit of organizational control. For example, a public safety goal of “reducing the fear of crime” may not be a goal that makes much sense within the context of a given community because the fear of crime is an artifact of external forces and socioeconomic conditions over which the police have little control. A border town that has high numbers of drug gang killings may not be some- thing that local law enforcement officials can control without lots of outside help and, even with the reduction in the number of drug- and gang-related killings, the fear of crime by residents may not be changed. In short, what is the objective data that provides the rationale for the choice of a given goal, and what is the objective data that supports the choice of a given objective as the best way to achieve this goal? These questions remind us that the goal- and objective-setting process is not just an intellectual exercise; it is a data-gathering and analysis exercise. This will become clearer as we elaborate more fully on the formulation of goals in this section and the formulation of objectives in the section to follow.

A goal is a statement of purpose directed toward an identified community need. A good goal statement has the following characteristics:

1. It expresses an important value to be sought. 2. It includes adjectival wording that defines a service approach. 3. It is related to an important community need. 4. It is timeless in terms of when it will be accomplished. 5. It helps to achieve the organizational mission. 6. It is capable of being achieved by the establishment of clear objectives.

Examine each of the following examples of goal statements in terms of the six criteria set forth above. What would you add, if anything, to strengthen each statement?

• Operate and maintain the sewage treatment facility in a dependable, safe, and efficient fashion such that the discharged effluent meets state and federal standards, protects the environment, (i.e., receiving streams), and safeguards the public health. (Wastewater Treatment)

• Manage the traffic system in order to reduce accidents, congestion, and negative environ- mental impacts. (Traffic Engineering)

• Assist the legislative body and agencies by the provision of timely, accurate, and relevant information for use in the development, implementation, and evaluation of state policies; assist agencies utilizing such information; recommend budgetary and managerial systems which can aid in the implementation of state policies and which can help to maintain the fiscal integrity of the state; and provide and promote opportunities for the continued professional development of staff members. (Budget Office)

• To provide timely and quality legal services at a reasonable cost to state/county agencies (Attorney General/County Attorney).

The development of good goal statements cannot be done in a vacuum or simply as a groupthink process. While it is important to cast a wide net in developing goal statements, especially to involve those who have leadership roles in meeting the goals, it is important that the processes be informed by objective data that answer the following kinds of questions: (1) Is the goal theoretically achievable at some future date? (2) Do we have the resources, or the

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 329

potential resources, to achieve the goal over an extended period of time? (3) How big a role does our organizational unit have in the achievement of this goal? (4) Can we develop the po- litical support necessary to achieve this goal? and (5) What qualities and characteristics do we want to express in achieving the goal? All of these questions require data gathering and data checking from a variety of sources. What follows are some strategies for acquiring this data and establishing work unit goals:

• Focus on outcome conditions that represent improvements in the community or to the client base (cf. Oregon Progress Board 2012).

• Review existing budget requests, especially the objective hierarchy section for the program.

• Interview governing body members, program administrators, managers, and supervisors. • Review legislative and governing body actions that mandate or authorize the program. • Review legislative and governing body budget hearings. • Review grant applications and federal mandates that fund a program. • Review what professional associations say the goals of a program should be. • Review “goal setting” efforts by other comparable departments in other jurisdictions and

organizations. • Review summaries of the job responsibilities for the major leaders/supervisors who are

responsible for the achievement of the goals. • Review complaints and concerns of residents in the community. • Review complaints and concerns of clients of the program. • Review the operating and service characteristics (particularly the various activities) of the

agency (what it is actually doing). • Review the results of previous program evaluations.

Exhibit 12.2 provides a summary framework that will result in the creation of meaningful, do- able, and affordable organizational goals. A goal should fully express and implement authorizing laws, but if a particular program or service is only tangentially authorized, it may signal the need to consider reprioritizing or discontinuing the activity. The questions in Exhibit 12.2 help to curb even well-intentioned mission creep and activities sustained by historic but outdated political agreements and policy interpretations.

The outcome focus of effective goals shifts attention away from a short-term focus on the next fiscal year and from protecting organizational turf and historical patterns of doing things simply out of inertia. Instead, attention is placed on the conditions needed to achieve substantial and practical results. This focus on the future may require a sustained commitment over many years or decades, or it may require the integration of a broad array of resources from many sources. Extended goals provide a long-term compass for short-term objectives and annual spending and investments. The outcome-driven focus of goals allows leadership to develop complex initiatives and programs that involve staff, capacity, and administration from several departments, divisions, or programs. Goals are boundary spanning, which contrasts with the fund structure and accounting- based rigidity of the line-item budget format. The boundary spanning ability of PPBS is especially helpful in larger organizations, where functional departments and their agencies are separated by different cabinetlike heads, legal authorizations, and reporting structures. For example, effective recovery of endangered Pacific Northwest anadromous salmon and steelhead fisheries may require program and budget contributions from agencies within the federal departments of the Interior, Commerce, Agriculture, Energy and Defense, as well as within state/local governments, tribes, and special districts. Formal coordination among these entities requires the vertical involvement of administrators from the field to the secretarial level and horizontally across many semi-sovereign

330 EXPENDITURE FORMATS FOR DECISION AND CONTROL

governing jurisdictions. PPBS structured goals provide a means of keeping the program focus on salmon and steelhead recovery, which may take decades of program commitment and hundreds of billions of dollars from dozens of jurisdictions and organizations in the public, private, and nonprofit sectors.

In the same manner, PPBS outcome-driven goals can bring integration to local community problem solving. If local governments, state agencies, community foundations, consolidated in- termediary nonprofits, and service delivery organizations can concede at least to some degree on a common set of goals, then short-term objectives, annual funding, and performance responsibili- ties can be allocated to the different actors according to their strengths. For example, community organizations—including local government, community foundations, consolidated intermediary nonprofits, religious organizations, and service providers—may develop a 10-year initiative to stamp out homelessness in their community. Goals in a PPBS structure provide the outcome- driven vision of the conditions that need to be in place in order to ensure success. PPBS keeps the initiative of the various partners focused on the long-term outcome over the course of 10 or more fiscal years. PPBS also provides an umbrella of goals under which different loosely coupled organizations may work together to achieve a larger shared vision.

PPBS Element 3: Formulating Objectives

Much of what we have described for the formulation of goals in the previous section also applies to the formulation of objectives. An objective is a desired result in which the achievement is mea- surable within a given time frame at a specified level or increment of cost. The primary difference between a goal and an objective is that objectives more concretely describe the specific sets of activities that will be undertaken within a specified period of time and what it will cost to perform

Exhibit 12.2

Suggestions for Minimizing Problems in Establishing Work Unit Goals

The application of several caveats will help administrators and speed the development of program and work unit goals.

• Include members of the staff in the process. Interview as many of your staff as possible, at least through the supervisory level, for their ideas on what the goals of the organization are or should be.

• Review all of the major programs of service that subordinate organizational units provide to the community or to other agencies.

• Review goal statements of subordinate units that collectively are responsible for the achievement of the goals.

• Be sure the goal statements are broad enough to cover all the functions legally authorized for the organization or program.

• Be sure the goals statements are limited to the functions authorized for the organization or program.

• Be aware of duplication of goals among programs/divisions. In some instances, eliminating duplication may be in order; in others, duplication may enhance quality, effectiveness, and be legally mandated.

• Recognize that goals may be timeless because their accomplishment is continuous. Goals may also define an end state or final condition that may take an extended period to accomplish.

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 331

those activities. Objectives answer the question: How are we going to achieve a specified goal? Good objective statements answer the following four questions (City of Portland 1979):

1. What specific activities will be undertaken to achieve the goal? 2. When will these activities be accomplished? 3. How much will it cost to achieve these objectives? 4. How are we measuring the completion and achievement of our objectives?

Objectives should be stated in terms of a needed result or outcome conditions, not as a set of processes, a set of inputs, or a set of activities. Exhibit 12.3 provides several examples of ob- jective statements to illustrate this important point. In reviewing the examples, ask whether the objective statement answers each of the four questions we have set forth for a good objectives statement.

The examples in Exhibit 12.3 illustrate the importance of specifying the outcome and program detail for each objective. This includes a statement of what will be accomplished, how, and at what cost. Since governments characteristically provide service rather than produce products, outcomes are commonly expressed as levels of service provided by the government to its citizens and clients. A level of service defines the service delivery volume and service quality provided to citizens or clients. For example, a small city police department might define a level of police patrol services in one of its annual budget objectives. The department uses two measures to define the level of coverage: the amount of coverage as measured by the number of sworn officers per 1,000 population, and the quality of coverage as measured by service call response times. The department estimates that it can meet the objective and provide a specified level of service for a requested level of funds. The department may also recognize that the community has a stable population of relatively wealthy individuals. Gang activity and substance abuse crimes may be minimal, and the department may propose a service level of sworn officers per 1,000 at a rate below the national standard rate. The lower standard may be acceptable to the community and require less expense.

The level of service concept implies that changes in the criteria and specifications in a budget objective lead to a corresponding change in budget expenses or needed revenues. This opens up an opportunity for budget choice, as well as for the consideration of alternative service levels and alternative management configurations for providing those services. By working in terms of detailed objectives and activities with varying criteria, PPBS can help to effectively frame comparisons of service alternatives and expenses. The performance metrics and performance analysis techniques we discuss in the next chapter provide the tools for the analysis and comparison of service level alternatives. The capability of PPBS to compare the relative costs of different levels of service and alternative service delivery configurations was an important feature behind Secretary McNamara’s application of the system at the Pentagon.

The review of objectives during annual budget preparation also provides an occasion for program managers to reassess the construction of each objective as a planning element, program descriptor, and outcome or output measure. At the same time, managers and analysts can assess organizational progress in the achievement of program objectives by asking the following questions:

• Was the prior year’s objective achieved? • Was the objective overstated? If so, should the objective be reduced to conform more ac-

curately to the available resources, or should resources be increased to make it possible to achieve the overstated objective?

• Was the objective understated? If so, should the objective be increased to reflect increased productivity, or can resources be reduced?

332 EXPENDITURE FORMATS FOR DECISION AND CONTROL

Exhibit 12.3

Qualities of PPBS Objectives

Objectives should be results oriented Objectives should not be process or input oriented

In the next year install x number of traffic signals at 80% of the locations designated in the traffic master plan.

Complete x number of traffic studies.

Reduce by x % the level of congestion at y % locations by resetting the traffic timing intervals at z number of intersections.

Undertake traffic studies at the 10 most congested locations.

Specifies cost parameters Does not specify cost parameters

In the next year install x number traffic signals at 80% of the locations designated in the traffic master plan at a total cost of $y.

Install x number of traffic signals.

Reduce by x % the level of congestion at y % locations by resetting the traffic timing intervals at a cost no greater than 110% of what was spent last year (total requested cost = $z).

Complete x number of traffic studies.

Objectives should be realistic Objectives should not be unrealistic

Resolve x % of citizen and public agency complaints regarding traffic congestion within two weeks of receipt at a cost no greater than what was spent on such activities last year (total requested cost = $y).

Resolve x % of citizen and public agency complaints regarding traffic congestion within two weeks.

Ensure effective enforcement of code violations by reducing the number of violations from x % in FY1 to y % in FY2, at a cost no greater than 105% of what was spent for code enforcement last year.

To correct 80% of the violations by FY2.

Objectives should be specific Objectives should not be general

Increase available on-street parking space by x % in walking districts, y % in scooter districts, and z % in outlying districts, through effective enforcement of parking regulations ordinance in FY2 compared to FY1.

Increase parking spaces.

Increase the use of the auditorium for visual arts displays by increasing the percentage of time available for temporary visual arts displays by x % in FY2.

Increase the use of the auditorium.

Objectives should be measureable in a defined time frame for accomplishment

Not measureable, lacks a defined time frame for accomplishment

For the one-year period of FY2, increase available on-street parking space by x % in walking districts, y % in scooter districts, and z % in outlying districts relative to FY1 levels, through effective enforcement of parking regulation ordinance.

Increase downtown parking spaces.

To eliminate x % of grass and weed violations at least once within the 120-day period between June 1 and October 31 in those neighborhoods identified as problem areas.

Improve the environment of the county.

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 333

• Should resources be shifted among programs or activities to achieve greater overall productivity?

• To what degree should annual objectives be adjusted upward or downward as a result of periodic reviews during the year?

These questions provide concrete illustrations of the importance of collecting extensive data prior to the creation of objectives, and of analyzing and discussing the significance of this data among those responsible for executing the activities associated with the objective statement. The same strategies we have outlined regarding data collection for the establishment of goals applies equally well to the setting of objectives.

There are at least three consequences of this data-driven process for setting objectives. First, it places a large amount of control of program budgeting in the hands of the doers, those who have access to the information related to operational success. Without using this knowledge to set ob- jectives, there’s little chance that the objectives will accurately reflect what is reasonably possible and doable. In addition, involvement provides the opportunity for incorporating and generating creative ideas and developing ownership of the process. This ownership becomes essential for the creation and accurate reporting of the performance data.

A second consequence of the data-driven process is that if the operational data does not ex- ist, then it needs to be collected and tested, which increases the amount of time it may take to implement PPBS. For instance, in developing performance measures, it may become apparent that some of the objectives need reworking. In listing activities and functions performed by an organization, it may become clear that the goal statements have been too narrowly defined or that previously listed objectives are no longer feasible. Or, there may be changes in the organization that need to be taken into account. As these and other problems surface during the program planning process, time needs to be factored in to make the necessary adjustments. These adjustments may also have important implications for the development of performance measures. An overriding concept to remember is that there should be flexibility in any program planning and performance measurement system.

A third consequence of the data-gathering focus of PPBS is that it can be threatening to those responsible for the operational achievement of the objectives. Frequently, managers become preoccupied with lingering fears (1) that the information may be used to punish the organi- zational subunits and individuals in leadership positions if an objective is not met, or (2) that these units and individuals will not be rewarded when an objective is met or exceeded. This fear factor cannot be ignored, which usually means that PPBS needs to be piloted on a trial basis for at least one year after it is put in place. Adjustments may be needed, and the organizational leadership must demonstrate that the system will be used for positive—not punitive or negative— purposes.

When all of the consequences of a data-based approach to objective setting are added together, it means that PPBS requires three to four years to develop, implement, and test. First, it takes at least a year to develop objectives if the data is readily available. If the data is not available, it may take two years to develop realistic objectives. Once the objectives have been developed, it takes another year to connect those objectives to the budget process. Then, another year is needed to allow for adjustments in the objectives that will alleviate the fear factor and ensure a high level of correspondence between the objectives and program operations. In many jurisdictions and or- ganizations, this lengthy process can lose steam as administrative and political priorities of both elected and appointed leaders change. To be successful, PPBS requires a sustained commitment from elected officials and senior administrative leaders over a period of several years.

In addition to using a data-driven approach to objective development, we offer a series of recommendations on the development of goals and objectives:

334 EXPENDITURE FORMATS FOR DECISION AND CONTROL

• Review and be familiar with organizational goals. Objectives should have a clear relationship to their respective goals.

• Interview governing board/legislative members, program administrators, managers, and supervisors.

• Review objectives established by other comparable agencies. • Establish organizational goals before attempting to formulate objectives. • Be sure objectives support the goal statement. • Carefully select the language of the objective statement to clearly state exactly what service

will be provided. The language should “screen out” those variables that may affect your organization’s performance but over which you have no control.

• Be sure that the objective is results oriented and deals with effectiveness (quality and/or quantity), efficiency (quantity-cost), a level of service, or a combination of the three.

• Include reasonable targets of performance in the objective statement. Review department historical data so realistic targets are established.

• List all activities and functions to guarantee that objectives cover everything the organiza- tion’s authorization and goals allow.

• Prepare objectives carefully, with an eye toward reducing the amount of time spent on de- veloping performance measures.

• Periodically review objectives: Objectives are not static.

PPBS Element 4: Determining Program Activities to Achieve an Objective

Activities perform the actual work of an organization and provide the critical link that connects the PPBS budget to program operations. Objectives cannot be established without a very clear understanding of the concrete organizational activities that need to be undertaken and sequenced in order to achieve them. Direct service delivery to external clients is the most evident form of activity, but some activities provide critical internal support to service delivery. For fire, police, and public safety departments, training programs are an activity in themselves. Training not only ensures high performance in service delivery but also lowers the organization’s performance li- ability. Support activities include procurement and purchasing, human resources, general counsel and legal services, finance, information technology, motor pool services, and radio/telecommuni- cations. While support activities do not actually deliver a service to external clients, they enable other programs to do so. Analysts and administrators may need to define several service delivery and training activities, and then link to several support activities provided by other organization units to fully implement a single objective. For example, increasing the responsiveness and ef- ficiency of a permit center may require linking several sets of program activities located in differ- ent departments, like planning, transportation, building services (inspectors), public utilities, and legal counsel. Support activities use the same detailed activity definitions and descriptions as do service delivery activities. A full definition of activities for an objective requires: (1) establishing work plans and workflow; (2) defining the direct service delivery activities; (3) recognizing and integrating training and support activities; (4) defining the role of contracts and partnerships; and (5) integrating capital equipment, information technology, and facilities. The integration and scheduling of all these different activities and resources into a coordinated program to meet an objective demonstrates the programming aspect of PPBS.

The detail for each activity should include the necessary staff positions, FTEs, and work team organization. The performance outcomes and criteria established in an activity should relate directly to the annual or biannual personal performance evaluation criteria of its work team members and administrators. A completed activity description includes a total expenditure estimate. This total estimate sums the expenditure estimates from all the component activities.

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 335

The PPBS focus on the activity as a unit of cost establishes a fundamental unit for analysis and budget construction. Rather than focus on aggregated categories of cost as in the line-item format, PPBS attempts to use the actual cost of providing an activity to develop cost projections for the parent objective. Complete cost development includes both directly attributable costs and an assigned share of the organization’s administrative overhead costs. Activity level costs make a critical contribution to performance measurement systems and to performance budgeting, as we will see in the next chapter. By focusing at the activity level, analysts can often separate low- and high-cost clients and then move away from a reliance on average annual costs. Activity based costing and its related tools form the basis of many performance analysis and measurement sys- tems (Stenzel and Stenzel 2003; Garrett and MacDonald 1996).

The extension and programming of objectives into activities is not particularly esoteric or uniquely demanding. It is what good managers and supervisors do. The difference in effective PPBS is that the management and supervision is guided by a clear and mutually shared under- standing among all who have leadership responsibility of the objectives that every one of the individual activities is intended to accomplish. This is a group ownership model that may not fit easily with many conventional bureaucratic models designed on the basis of individual roles and responsibilities. How does one square this individual-centered model of responsibility with group ownership and group responsibility? Our answer is coproduction.

Coproduction is a group and team process of building agreement on the goals and their im- portance to the organizational unit. Once there is agreement on the goals, then there needs to be a deliberative process that explores all of the pathways to achieve the objectives, with agreement on which pathways should be given the highest priority for a given period of time. This delibera- tive process of constructing agreement on the ends and the means to get there enables those with official role responsibilities in the bureaucratic hierarchy to maximize the achievement of the agreed-upon goals and objectives, as illustrated in Exhibit 12.4.

ORGANIZING OBJECTIVES INTO A PROGRAM

Our discussion of PPBS so far suggests that the program budgeting model is a top-down linear and instrumentally rational process. By starting with a mission and then proceeding in a linear fashion from goals to objectives, one moves from the larger purposes to ever narrower instrumental and operational issues involving the best way to achieve these purposes. The ideal setting for under- taking PPBS is in the initial stages of defining a new initiative or starting a new program. This ideal, however, is exceedingly rare and not the normal circumstance that prevails in most public organizations. Typically, activities in a given organizational program are added incrementally, without any well-thought-out plan or rationale that connects all of the parts to a larger whole. How can PPBS be put into place in an environment where this is the norm? What happens when there is no incentive to do PPBS from the top? Conversely, what happens when there is such an initiative, but you have existing collections of activities that don’t lend themselves very well to the PPBS format? We will address these two questions in the paragraphs that follow.

It is important to remember that the PPBS protocol can be applied to any set of cohering activities. For example, a Parks Department or the larger jurisdiction may have no interest in creating a formal system of PPB. But those in charge of a given park or a given set of activities (like after-school, summer, and other programs) can apply the PPBS technique to all or a portion of their portfolio of activities. If PPBS can assist you in making better decisions and involving your staff in a more productive way in the planning, implementation, and overall decision-making process, then use it.

Much like organizing multiple partners into community initiatives and programs, PPBS also can be used to help rationalize a hodgepodge of existing programs and collections of activities that have developed over time without a clear strategic plan. In fact, the American political process operates

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338 EXPENDITURE FORMATS FOR DECISION AND CONTROL

in large part in this way, especially at the state and national levels of government. Over the past several decades, most members of state legislatures have experienced budget and staff limitations, which means that there may not be much analysis or time invested in figuring out all of the details of a proposed piece of legislation. Elected officials seize on windows of opportunity to push legisla- tion with the understanding that “we will figure out the details later.” The “we” is often the career administrators who are responsible for managing programs that don’t quite fit what they are already doing. Under such circumstances, PPBS can be used to reconstruct legislative intent or intentions, with the goal of getting greater clarity about how a program needs to be managed. The enacted statute and accompanying legislative committee reports may serve as the PPBS “plan” by providing the key elements for an agency and program mission statement, goal statements, and even objectives.

PPBS can also be used periodically to gain a better understanding of how the existing array of loosely coupled programs might be better reconfigured to work more efficiently and effectively. The goal- and objective-setting process is a useful exercise in data gathering. It helps illuminate where there might be potential synergies among existing sets of activities, and whether these activities could be put to higher and better use through some organizational realignment. Under this scenario, PPBS is used to jump-start a strategic planning process, rather than serving as the end product of a process. With this kind of occasional use of PPBS, there is no reason to assume that one needs to tie the process permanently into the larger organization’s budget process.

PROGRAM BUDGET EXERCISE

By completing a program budgeting exercise, one can gain an appreciation for the utility, complex- ity, and potential disadvantages of PPBS. In the exercise presented in Exhibit 12.5, you are asked to develop a hypothetical PPB structure for a small program or small portion of your organization. The textbook website (www.pdx.edu/cps/budget-book) offers a more complete exercise in PPB hierarchy development. As you work, remember the importance of tightly linking the objectives to the goals and developing objective statements that specify which activities will be undertaken, at what cost, and within what specified time period.

Completing a PPBS exercise requires you to be very specific in establishing goals and in breaking down these goals into achievable and measureable objectives that are causally linked back to your goal statement. The PPBS exercise gives you a better appreciation for the power of program budgeting, but it also makes clear that a considerable amount of time and the heavy involvement of operational staff are needed for its successful completion. Time limitations are especially constraining when PPBS is conducted on an annual basis.

ADVANTAGES AND DISADVANTAGES OF PROGRAM BUDGETING

Program budgeting offers three sets of advantages to public administrators, particularly at the local level of government. First, it focuses the attention of managers on the effectiveness of administrative work. As we have already pointed out, PPBS was originally designed as a tool to help managers improve the effectiveness of their organizations, especially those having several operating units that provide dissimilar services. How does the department head of a public health unit determine whether money should be cut from public education and outreach in order to support more direct service to vulnerable populations? Program budgeting is intended to help answer this question by creating clearly defined goals and objectives. Goals and objectives, when tied directly to budgeted resources, represent an overall plan for operating units and their parent agency or department.

A second advantage of PPBS is that the exercise of preparing goals and objectives enables an organization to periodically revisit what it intends to achieve as a result of changes in the external environment. Without realistic goals and objectives, it is difficult for an organization to know and to communicate to others whether it is functioning efficiently and effectively or even if it is pro- viding those services to the community approved by the board, council, or legislature. Goals and

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 339

Exhibit 12.5

Program or Small Organization PPBS Self-Assessment Exercise

Mission Statement:

Program Description:

Goal No. 1: ________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Goal Aggregated Total Cost Estimate: $________________________

(Obj. 1 cost + Obj. 2 cost)

Objective No. 1: _____________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Aggregated Objective 1 Total Cost Estimate: $________________________

(Sum of No. 1 activity costs)

Object No. 1 Activities:

Activity 1.1 (Direct service delivery or task): _______________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Activity 1.1 Total Cost Estimate: $________________________

Activity 1.2 (Training, supporting, or overhead): ____________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Activity 1.2 Total Cost Estimate: $________________________

Objective No. 2: _____________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Aggregated Objective 2 Total Cost Estimate: $________________________

Object No. 2 Activities:

Activity 2.1 (Direct service delivery or task): _______________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Activity 2.1 Total Cost Estimate: $________________________

Activity 2.2 (Training, supporting, or overhead): ____________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

Activity 2.2 Total Cost Estimate: $________________________

340 EXPENDITURE FORMATS FOR DECISION AND CONTROL

objectives provide a visual way for everyone in a community to see the correspondence between what is intended by a government, nonprofit, or foundation’s policy board and the actual translation of those intentions into concrete program activities. This kind of objectification of intentions also provides a rationale for budget approval, and, if adopted, a contract for assessing accountability/ effectiveness. This accountability feature of program budgeting has made it very popular with grant funders and contractors. It enables them to define a clear scope of work and hold grantees and contractees accountable for performance. Many nonprofit organizations use some form of PPBS budgeting (in addition to line-item budgeting) because (1) they are frequently required to do so by funders, and (2) it provides a clear way of communicating to board members and the larger public the bundles of activities which are being undertaken for specific target populations.

In addition to providing clarity about the goals and objectives of an organization, a third advantage of PPBS is that it provides the structure for determining the costs of services and the relative importance of activities carried out by employees within the organization. The relation- ship between the hierarchy of goals and objectives developed by departments and programs on the one hand, and the dollars budgeted to achieve them on the other, reveals what is important and why. This information has become increasingly important—in fact, essential—for programs that are expected to be self-supporting from the fees that are charged for services. For example, it is increasingly common practice to charge fees for various types of building permits and inspec- tions (i.e., construction, electrical, engineering, and plumbing). It has also become common to charge fees for recreation programs, for access to public lands, and for the purchase of services like water, electricity, sewer, fire, and similar kinds of public goods. In these cases, the provision of public services may be conducted on a cost of service basis. This simply means that individuals are charged for what it costs to collect, produce, and distribute the water they have consumed, or to perform the code compliance inspection they have received, or to maintain the public lands and facilities that recreation users are enjoying (i.e., maintenance of trails, campsites, toilets, and boat ramps). In such cases, it is essential for program managers to keep track of the cost information to deliver a specified set of services. This information serves as the basis for establishing fees that can be defended. State and federal utility commissions that license private-sector suppliers to provide electricity, water, wastewater management, and other public goods rely heavily upon program budgeting techniques and protocols for documenting requests for fee increases and adjustments.

Another example of the importance of program-level information to managers is illustrated in Exhibit 12.6. Once programmatic information is available, it becomes clear that most of the responses to calls by fire departments has less to do fires than with the demographics of America’s aging popu- lation. Fire departments around the nation spend more time responding to 911 calls from health care facilities and aging residents than they do to fires. This information raises important questions about whether the service delivery system is best aligned to deliver the most efficient and effective services to the clients in question. Line-item budgeting systems would obscure this information.

A traditional line-item budget, aggregated to the department (organizational) level, is still use- ful for internal management. In keeping with our fire example, emergency response is provided by firefighter/paramedics who are cross-trained for both fire and medical emergencies, and who drive fire trucks to medical calls. But for budget policy decision making, it is helpful to aggregate line-item expenses to the program level. In some cases, this requires some analysis to break apart line-items by asking questions like, What percentage of the time are firefighter/paramedics responding to fire calls, and what percentage of the time is a fire truck being used to respond to medical calls?

In this example, the program budget reveals to the public and to policy makers (the fire district board or city council) that the fire department is really functioning as a public health department— information that is hidden in the traditional line-item/organizational budget.

Aside from the internal advantages that PPBS provides to the organization, the information gener- ated by the PPB process provides important management information to the council, board, or legisla-

PLANNING, PROGRAMMING, BUDGETING SYSTEM (PPBS) FORMAT 341

ture. Information on the objectives of departments and the degree to which the objectives are achieved can reduce the element of risk taking in council, board, or legislative decisions. Understanding the potential for accomplishment is important in making policy and resource decisions. After two or three years of budgeting by objectives, the board, council, or legislature will have accumulated historical cost information on services provided by a department. This information can aid the governing body in budgetary decision making and show the direction in which a department is moving.

In addition to providing managers and the governing body with aids for decision making, another advantage of program budgeting, especially when coupled with performance data, is that it can provide citizens with information on the levels of services provided by agencies and, after council approval of the budget submissions, the costs of those services. Citizens are becoming increas- ingly interested in what their tax dollars are buying, including the productivity and the efficiency of the provision of government services. One of the purposes of both program and performance budgeting is to enable citizens to have easier access to usable information.

But there can be clear disadvantages in relying mainly on program-based budgeting informa- tion. First, the lack of detailed line-item historical information can obscure frequent subprogram changes and information on the efficiency of a program’s operation. This is especially the case in larger units of government, where the definition of program may be so broad that it covers most of a unit’s activities. Changes within these units may be significant over time but never show up in the budget process for much centralized review because the name of the program and the total dollar amount being spent from year to year hasn’t appeared to change very much. For example, a police department may have a patrol or community policing program, but over the years the composition of the patrol function may have shifted away from responding to all calls to responding only to those where there is an immediate threat to life and property. Or the community policing function may have shifted away from an emphasis on developing neighborhood watch programs to the prevention of gang violence. The department or organization may not even fully recognize that the shift in purpose has occurred. Periodic review of the department mission and goals pro- vides one remedy to organizational drift.

A second disadvantage of PPBS is related to the political consequences of organizing the ex- penditure of public funds around programmatic activities. The establishment of program goals and objectives identifies the political stakeholders much more clearly than is the case with line-item budgeting. Stakeholders seldom organize around the object codes of “personnel,” “materials and supplies,” “capital outlay,” and “interfund expenditures.” But they do organize around programs that serve specific target populations or that deliver defined sets of services. As a result, this makes it much harder to cut program budgets than it is to cut line-item budgets. There are two reasons for this: First, it is much easier to see who the losers are when there are program cuts than is the

Exhibit 12.6

Program Budget for a Fire Department

Organizational Units

Total by ProgramPrograms Administration

Emergency Response Training Vehicle Fleet

Fire Suppression $200 $2,000 $250 $100 $2,550 Emergency Medical Service

$1,650 $17,900 $250 $880 $20,680

Prevention $150 $100 $20 $270 Total by Organization Unit $2,000 $20,000 $500 $1,000

342 EXPENDITURE FORMATS FOR DECISION AND CONTROL

case with across-the-board monetary cuts in a line-item budget. It takes a while to see exactly what the consequences of a given set of line-item budget cuts will be. For example, if the organization must make permanent cuts in the number of full-time employees, the program consequences of these cuts may not be known until the final decision is made and until all of the employee rights of seniority have played out within the organization. The delayed implications emerge as the remaining individuals move from one position to another and from one program to another as a result of exercising their seniority bumping rights under the union contract and civil service rules. Second, budget cuts are more difficult to make with PPBS than under line-item budgets because PPBS recognizes and responds to the integration and interconnectivity of the whole organiza- tion. PPB requires this kind of preplanning and sustained integration over a period of years. Once goals and objectives have been carefully decided and linked through time-consuming analysis and discussion by program managers and their staff, it is very hard to disassemble one of the parts without affecting the whole. Aaron Wildavsky has likened PPB to buying a complete suit of clothing, including perfectly matching accessories. This kind of wardrobe makes it difficult to make adjustments if one of the parts is lost or becomes worn (Wildavsky 1978, 503). With PPBS, there is less flexibility in making adjustments, and the political transaction costs of making the adjustments may be high compared to line-item budgeting.

In Exhibit 12.7 below, we provide a summary overview of the advantages and disadvantages of PPB from the perspective of the various actors in the budgeting process. From this summary, one gains an appreciation of why PPB was unable to be successfully applied across all federal departments (DeWoolfson 1975; Harper, Kramer, and Rouse 1969; Schick 1973; Lyden and Lindenberg 1983, 92). The PPB experience has been more successful at the state and local levels (Howard 1973; O’Toole and Stipak 1988, 1992) and in a few federal departments, such as the Army Corps of Engineers (Lord 2005).2

Why? Primarily because PPBS requires a great deal of time, commitment, and political and administrative leadership to ensure development and implementation. PPBS works well for the Army Corps of Engineers because the Corps is legally required, for many of its activities, to budget by programs that show cost-share matches with local partners. Professional managers in local jurisdictions, with part-time elected officials, can make use of PPBS because they have lon- ger time-horizons and a stable of known services. This is not the case for many senior managers working in a more mercurial political and policy environment at the state and federal levels of government. Merewitz and Sosnick argue that for these reasons, it is “unwise to impose program accounting, to tabulate future expenditures for established programs, to prepare statements of purpose, to defend budget requests without referring to the size of previous appropriations, or to undertake quantitative evaluation of alternatives whenever possible” (1971, 12). However, they do defend the value of pursuing the purposes of program budgeting on a selective basis and in other ways, as we have argued above.

A second reason that PPBS has not been a vast success is that it is misaligned with the interest group nature of the American public policy process (Wildavsky 1979b, 1984, 1992). This process places a premium on compromise, taking advantage of windows of opportunity and the mobiliza- tion of political support. The public policy process does not thrive on, or depend on, extensive systematic analysis and data collection. In fact, such analysis can inject additional complexity and controversy to the process (Wildavsky 1979b, v, 166–167). Local governments, especially those that operate on a nonpartisan basis, provide a much better enabling environment for PPBS as a long-term budget strategy. Moreover, for nonprofit organizations, PPBS is especially important for demonstrating accountability to grantors and contractors.

The application of PPBS marked a quality improvement in local government and nonprofit bud- geting. Budget instructions and organizational leadership prescribe the exact application of PPBS in annual budget preparation, but even a partial application of the system helps to provide ground-

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ing and context to the finance-centered line-item budgeting format. The PPBS format explains to the community what its money is purchasing and what activities government or a nonprofit will produce over the coming fiscal year. The planning and programming aspects of PPBS provide important value to public budgets, and when coupled with performance information, the approach provides a whole new level of benefits. We turn to the addition of performance data in the next chapter.

STUDy qUESTIONS

The textbook website (www.pdx.edu/cps/budget-book) provides budget data and organizational information that may be helpful in answering one or several of the following study questions.

1. What does the term program budgeting mean? When, why, and by whom was PPBS first used extensively in the public sphere? Examine the budgets (e.g., Budget Data and Plan) on the textbook website (www.pdx.edu/cps/budget-book). Which of these budgets provides a good example of “program budgeting”?

2. What is the role of the chief executive and the legislature in undertaking PPBS? How does PPBS affect the balance of power between the executive and deliberative branches of government?

3. What conditions are necessary for the implementation of PPBS? 4. Which budget and organizational actors tends to gain and to lose in adopting PPBS? 5. What efforts have been made by your agency in recent years to implement a PPBS sys-

tem? What have been the results of that experience? 6. Why is PPBS effective in budgeting for multiyear, multidepartment programs and orga-

nizational initiatives? 7. Why has it been said that PPBS has failed? Based on your organizational experience

and your experience with PPBS (including completion of budgeting exercises), do you believe the reasons for the failure of PPBS in public-sector organizations are justified? Why? Why not?

8. What organizational and leadership factors contribute to the relatively successful imple- mentation of PPBS at the state or local level of government? Are these factors present or absent at the federal level of government?

9. What are some reasons you might use PPBS concepts and formats even if you would not adopt it as an annual part of your agency/department budgeting process?

10. Identify a PPBS budget from a government or nonprofit in your region or state. Compare the budget to your own organization’s budget regarding its ability to explain and justify public expenditures and to build public confidence.

11. Practice program and PPBS budgeting with exercise 12.1 PPBS Program Budgeting from the textbook website (www.pdx.edu/cps/budget-book).

NOTES

1. Planning, Programming, Budgeting System (PPBS) is a particular version of program budgeting that was popularized by Secretary of Defense Robert McNamara in the 1960s. Like all program budgeting, it breaks budget expenditures out by types of activities. But unlike simple program budgeting, PPBS empha- sizes linking these activities systematically to goals and budgets so that the three parts function together as an integrated system. When we use the term program budgeting throughout the chapter, we are using it the strong PPBS sense.

2. For a local government example of a PPBS/line-item hybrid budget, consult Tualatin Valley Fire and Rescue district budgets at www.tvfr.com (accessed October 22, 2012). For a historical summary of the U.S. Army experience with PPBS and extensive detailed guidance on how the army implements PPBS in the setting of an extremely large federal agency, consult Lord 2005 (www.globalsecurity.org/military/library/ report/2005/htar2005ch9.pdf).