A Study Of Performance Budgeting Systems

The reforms of Performance Budgeting(PB) are complex. This paper examines the theory of public expenditure efficiency, makes in-depth research on the theories of PB, and then sums up the characteristics and the institutional constraints of PB. By doing so this paper will provides insights into identifying problematic areas in PB practice and get the explanations of the predicament of the reforms. Based on these examinations, it will then bring forward the solutions to the problems and predict the possible sally ports of the reforms.This paper focuses on PB theories and practices. By using of Public Choice Theory,X-efficiency Theory , Principle-agency Theory and New Public Management Theory, adopting the analytical method as relating theory to practice, history to reality and quantitative to qualitative, and placing PB in the wider political and institutional context of China, this paper will identify some challenges with the practice ,device an meaningful ,useful and sustainable PB systems, and discuss the prospect of PB for years to come.Firstly, on the bases of the introducing the theoretical underpinnings of PB, this paper ,for the purpose of exploiting the theories to obtain some useful clues to the practice, makes in-depth research on the relationship between PB and related theories. According to the research, allocative efficiency of public expenditure relates mostly to the demand of public goods, and can be improved by perfecting the decision-making procedures in political system. Whereas productive efficiency of public expenditure relate mostly to the supply of public goods, and can be improved by introducing PB into executive system where political power is relatively weak. Consequently the analysis has drawn a conclusion: there is an inverse relationship between performance management effectiveness and political intensity, thus the sally ports can only be selected from the areas where political control is weak. Furthermore, this paper clearly describes the feature of PB, namely result-oriented management, decentralization, and held accountable for results, by using relative theories during the research of PB. Remembering these features is essential as far as the successful reforms are concerned.Secondly, on the base of theoretical analysis, this paper urges to initiate performance reforms throughout the planning, monitoring and reporting phases of budgetary management, and puts forward detailed measures of the reform. According to the research, performance reforms of budget compilation system involve adopting CBA/CEA in the allocation of resources and increasing the use of performance information(PI) in decision making. In this paper I also give some examples on how to use CBA/CEA. Performance reforms of budget implementation system involve innovating accounting, assets, procurement and auditing system according to the demand of performance management. To increase the chance of success, traditional implementation control system should be perfected firstly and then the result-oriented control system can be introduced in. Performance reforms of budget reporting and accountability system involve establishing reporting system that can match the demand of performance management. That is to say, transparency is the core of the reforms. And meanwhile, accountability system and incentive system should also be established and perfected gradually. This paper also discusses performance measurement, as it is an important technique appliance of performance management. To establish a performance measurement framework, at least three aspects as organization system, indicator system and method system should be considered. A few key points such as the balance of performance and accountability, non-expected-results laws and comprehensive utilization of varieties of indicators should also be attached important to.The third, this paper makes research on the institutional confliction between PB and traditional context which give rise to the difficulties and predicament of the practice. By doing this, this paper criticizes the behaviors that simplify PB reforms and emphasizes the importance of getting an insights into the institutional environments. All these point of view embody general thinking of harmonizing the development of PB and the institutional environments therein which, according to the paper, is of great significance to the success of reforms. Meanwhile, how to integrate PI into the budget process is always the focus of PB. This paper develops a framework of integration, that is: stresses the integration in the monitoring and reporting phases of budgetary management and in planning phase, PI is meant to inform but not determine budget allocations, the linkage between PI and funding is loose and indirect.And at the end, the paper turns to analyses PB reforms in China. The analysis evolves in a specially political, cultural and budgetary context of China, trying to reveal the influence and constraint of the environment to the reforms. After summarizing the experience of experimental units, the paper points out the advantages and disadvantages of PB reforms, and then proposes to take a series measures to promote this undertakings. Starting form the basic consciousness of the inverse relationship between performance and political intensity, the paper draw a conclusion that local expenditure and program expenditure are the most suitable areas to performance management, because these two areas have less political influence and are closer to the citizens, thus increase the chance of success and should be the sally ports of the reform and stand for the future directions.