For over a decade, the Governmental Accounting Standards Board (GASB) has been engaged in a research endeavor to determine what kind of performance measures -- what GASB calls "reports on Service Efforts and Accomplishments (SEA)" -- state and local governments should employ. Earlier this year, GASB moved from this research phase to considering whether it should adopt some kind of standards or suggestions or regulations or guidelines for SEA reporting.
The Government Finance Officers Association (GFOA) is not amused. GFOA regards this as an invasion of its turf -- an effort by GASB to expand its mission from accounting into budgeting and politics. In fact, GFOA has called for the elimination of GASB. GASB responds that it is only doing its job -- helping state and local governments inform citizens about what it is accomplishing with their money.
GFOA's confederates in this fight include the "Big 7" associations of government officials such as the National League of Cities (NLC) and the National Conference of State Legislators (NCSL). They don't want GASB telling them how to report on performance.
Not that GASB doesn't have its own allies. The Security and Exchange Commission (SEC) wants to strengthen GASB and its own regulation of the municipal bond market. GFOA isn't happy with this either.
Stranger than fiction, you might say. Indeed, all of this intrigue would make a great political novel -- right up there with All the Kings Men and Advise and Consent -- if it weren't for the damn acronyms. If you haven't been following this initialism infighting, its probably because you don't have a copy of the program necessary to know who all the players are, let alone which team they are playing for. Who are the more intriguing adversaries: Willie Stark and Adam Stanton, or GASB and GFOA? What would you rather read about: SEA reports or Senator Brigham Anderson's suicide?
But this brawl over who should establish the criteria for performance reporting introduces a more fundamental question: Why should anyone establish such criteria?
The case for standards in financial reporting is clear. We need to know that government is using our tax dollars properly. Did government spend it on the people and things for which it was authorized to be spent? Specific accounting rules are designed to ensure that nefarious public officials can't hide their misdeeds (though that doesn't prevent some from trying). All government jurisdictions have this exact same requirement. And the question isn't how one jurisdiction compares with another -- was Springfield more honest than Greenville? -- but how they compare against the standard.
For reporting on performance, however, different public organizations may well need to report different indicators and against different standards. No one standard is the same for every government. Each jurisdiction, each agency, has a different performance deficit. Each needs to improve its performance in different ways, along different dimensions. Complying with some universal standard may distort or obscure the organization's steady progress or persistent failure.
The reporting of educational test scores illustrates the problem. All states have some kind of testing regime. And the performance of all districts and all schools is reported on precisely the same dimensions and precisely the same format. But with a little demographic data on each school district (say, average parental income), you can easily predict the relative ranking of the schools districts in your state. The test-score data doesn't tell you much new.
But what kind of signals do these annual performance indicators send, and what kind of incentives do they create?
For example, what do the test-score reports tell those in the urban school districts? Answer: "We're never going to be as good as the rich suburban districts." Even if an urban district or an urban school improves significantly, it will always appear to be a poor performer compared with its suburban peers. What incentives do these test-score reports suggest? Answer: "Why bother?" For those struggling to improve an urban school -- indeed, particularly for those succeeding in improving an urban school -- the annual test-score report can be demoralizing. For even if the teachers and administrators made significant progress, that success can easily be masked by the continuing, large and very visible differential with the suburban schools.
Meanwhile, in suburbia, what message do the test scores send? Answer: "We're doing well, but we better not relax or we might be embarrassed." And what are the incentives in suburbia? "We better keep our resources focused on the subjects in the statewide test." A principle in a wealthy suburban district can't afford to have the school's pass rate slip from 97 percent to 93 percent. The consequence is that, even in wealthy suburban districts, superintendents and school principals are switching resources from the chess club and band to the key subjects on the statewide test.
Last month, from a survey of 349 school districts, the Center on Education Policy reported that 62 percent of them were devoting more time in their elementary schools to English and/or math. And of those districts that did report spending more time, the average increase was 42 percent. So what gave? The answer is: social studies, science, art and music, physical education, lunch and/or recess.
If you are a parent of a child in an urban school, this may well be a big plus. But for suburban parents, this shift is a bummer. These parents have different needs and desires for their children; they want science, and history, and art. These school districts have very different performance deficits.
The real challenge of performance reporting is to convince public officials that they have an obligation (1) to determine several significant performance deficits for their jurisdiction or agency; (2) to set targets that, when achieved, will demonstrate that they are making meaningful progress in mitigating these deficits; and (3) to report periodically on their progress towards their targets.
For public officials, doing this is dangerous. For it gives stakeholder groups, nitpicking journalists, and professional scowls a perfect target. Such behavior does not emerge naturally from the public official's DNA.
But neither standards nor regulations nor rules can force public officials to define and attack their significant performance deficits with energy and intelligence. Mandates can't force good behavior. Yes, some organization can create a new rule. But sophisticated public officials will quickly figure out how to jump through this hoop, while completely circumventing the purpose behind the rule.
The challenge for GASB or GFOA or PPPP (a.k.a., the Plot to Promote Public Performance) is to foster a new norm for public officials. Public officials need to feel the responsibility for identifying the way in which their specific organization or jurisdiction needs to improve, to undertake to make those performance improvements, and to report on their results.
