Program -Based Budgeting:Has the PBB been instrumental in allocating resources in an efficient and effective manner? Abstract.

The Government of Mauritius recently introduced the concept of Program

Based Budgeting in a bid for a better control on expenditure and the effective and efficient allocation of the limited resources available. The PBB was first launched in parallel with the Line-Item Budgeting in the year 2007/2008 and as from July 2008 the budgeting process is now entirely prepared on a program basis level. Has the PBB proved to be the long awaited solution to wastage and inefficiencies that has characterised the now defunct Line Budgeting process? This survey is an attempt to reply to this question from the point of view of those directly or indirectly concerned in the preparation and implementation of the budget.

Introduction
There have been many types of operating budgets that have been used and tested over the years in the most developed countries especially in the US and not only by the Government but also by private companies. In fact it was The Texas Instruments Inc which first popularized the concept of Zero-based budgeting although the first application of this concept was by the US Department of Agriculture in 1962.Then we have the Performance Based Budgeting but what we are concerned with in this survey is the Program-Based budgeting (PBB). This concept is entirely different from the line-item approach in that it is not focus on what we are going to spend but rather on the end results that will be produced. The emphasis is more on the outcome. Basically it says if I am investing money in something I ought to get something in return which of course may not be in monetary terms but whether this investment has produced a desirable output according to what was forecasted. Additionally the PBB is usually prepared on a long term basis.In Mauritius the PBB is prepared over a period of 3 years known as the MTEF (The Medium Term Expenditure Framework). The major aspect of the PBB is that it is based on a program. Its no longer on an incremental basis like in Line-Item budgeting. There is no question of incremental expenditure if you cannot provide proof that the outcomes expected from last year expenditure have been achieved.If a program does not performed it should be scratched or corrective measures taken to avoid

resources being tied up unnecessarily when it can be used more productively in another program. Benefits and disadvantages of the PBB The benefits of using the Program Based budgeting are many and include, among others, the following: It Helps clarify Policy priorities. It allocates resources more tightly on strategic priorities. It helps to identify the causes of good and bad performance It encourages more coordination between the various sectors of Government. It facilitates cross-institutional working. It helps motivates Top management and supporting staff to have a genuine interest in improving performance. There are also some disadvantages of PBB like the forceful justification of expenditure and the high level training that is required to make it successful. An Audit review. The National Audit Office has produced a document on the Program Based Budgeting in which it gives its empathetic support to the introduction of the PBB but also listed a number of weaknesses observed in its implementation.The weaknesses listed are: The lack of training and even the lack of knowledge on the part of the trainers and management.Without themselves being involved before in any PBB application they are called upon to train and guide the trainees to implement the requirements of a stand alone PBB. The time frame for its implementation is judged too short.The NAO being in favour of a parallel run with the Line- Budgeting rather than a stand-alone PBB.It is argued that broad-based reform involve a longer time horizon so as to give sufficient time to diagnose and address the problems. The formulating of the program.The NAO has critised the fact that some programs are only a change of appellation from what it was in 2

the Line-Item budgeting.Some units or departments have been straight away labeled as programs. Objective of the Survey. So given the benefits that can be derived for the implementation of the Program-Based Budgeting and the criticisms it has already generated, we felt that it would be interesting to get the feedback of those who are directly or indirectly involved in the implementation of the PBB.The main objective of this survey is to establish from a practical point of view the benefits and problems associated with the PBB and its acceptability or rejection by the public sector at large. The survey tried to explore several dimensions like the familiarity, the support as well as the benefits that might be expected and the problems arising in the implementation of the PBB. Sample and Method The survey has been carried out on a face-to-face basis whereby respondents were requested to fill in a questionnaire starting with a closed format question on the length of service,some leading questions on management and the PBB ,a likert question on the level of support,two importance questions on the problems and benefits of the PBB and finally an open-ended question at the end on the measures to be taken to make the PBB successful. The sample consists of 20 officers from 4 ministries ,the Ministry of Agriculture, The Ministry of Housing, The Police Department, and the Electoral Commissioners Office.The Officers have been selected from the various sections of the Ministries/Department as follows:6 from the Finance Section 4 from the Administrations 4 from the Stores 3 from the Technical Section 3 from the Human Resource section.

Analysis of the Survey 1) Familiarity with the PBB Whereas one HR officer claims to be very familiar,7 officers(around 35 %) states that they are familiar with the PBB. Another 5 are fairly familiar with only 2 officers saying that they are only just a bit familiar. Familiarity with PBB Very Familiar Familiar Fairly Familiar Just a bit Familiar Not Familiar Number of Officers 1 7 5 2 0 Percentag e 6.6% 46.66% 33.3% 13.3% 0%

Very Fam iliar Fam iliar Fairly Fam iliar Just a bit Fam iliar

Figure 1 Familiarity with PBB

The two officers who are just a bit familiar are from the HR and Administrations whereas the familiar group consist of a majority of 4 Finance officers which is not surprising and quite logical.

2) Level of Support of the PBB

Table 1

Support for PBB Very Supportive Mildly Supportive Neutral Mildly Opposed Strongly Opposed

No of Officers 6 5 3 0 1

Percentag e 40% 33.3% 20% 0% 6.66%

The level of support for the PBB is over 73% from being mildly supportive to Very Supportive with over 40% being very supportive. Only one officer from Stores is strongly opposed.This can be explained by the additional work load for stores officers to keep record on program based.Sometimes this can be very frustrating more so when they have to reallocate stores. On the whole however it shows that public officers prefer PBB to the line-item budgeting.
6 5 4 3 2 1 0 Very Supportive Mildly Supportive Neutral Mildly Opposed Strongly Opposed

Figure 2 Support for PBB

3) How far has the PBB been successful in allocating resources?

Table 2

Just Very Fairly Slightly Well Good Well Well Has it been successful in allocating resources? 1 6 7 0

Not at all 1

4) Dichotomous questions about the performance of the PBB itself.

Table 3

Yes Is the program aligned with the goals and Objectives of the Ministry? Has the PBB demonstrated adequate progress in achieving long term outcomes? Has the PBB taken meaningful steps to address its strategic planning? 12 11 11

No 3 4 4

It is very obvious from the above that the respondents view the PBB as having been quite successful.Over 14 out of 15 are saying that under PBB the allocation of resources has been successful and by an overwhelming majority of more than 73% the respondents are of the opinion that the programs are aligned with the goal and objectives of the ministry/Dept, that the outcomes are being achieved and that the PBB has been able to address the strategic planning of the Ministry/Dept. This is in complete agreement with the fact that over 73% voice their support for the implementation of the PBB. It would seem that the pubic officers are very enthusiastic with this new concept of Program-based Budgeting.In fact, as it would be revealed in our next question on the problems encountered, many think that the problems with the implementation of the PBB are due rather to a lack of training and insufficient planning .
Table 4 : Problems encountered

Problems encountered / Weightage (1 being the most important problem) Insuffficient Planning Lack of Training Establish program outcomes and performance indicators Resistance to change on the part of Top

1 4 9 5 1

2 7 2 1 3

3 1 3 7 3

4 2 0 1 3

5 0 0 0 4

Mean Total Rank 29 1.93 22 1.46 2.13 32 48 3.20

Management Resistance to change on the part of Officers

52

3.46

The interesting fact about Table 4 is that the respondents consider that there is resistance more on the part of Management that from Officers.This can be explained by the fact that under the Line-item budgeting, it was the Finance Section which had the whole responsibility of preparing the estimates and the management just had to vet and give their approval whereas now management has to be involved from start to finish.Moreover the fact that the PBB is more result-oriented put some pressure on Management.They know now their performance is being monitored and this explain why there is more resistance from Management. On the other hand when we consider the response in respect to the benefits or advantages of the PBB most of the respondents assigned a high rate to each of the benefits giving an average of 7 on a scale of 1-10.(Table 5 refers)
Table 5 Benefits of the PBB

1 2 3 4 Clarify policy priorities Allocate resources more tightly on strategic priorities Motivate Top Management and supporting staff to have a genuine interest in improving performance Identify the causes of good and bad performance Facilitate cross-institutional working 5 3

6 7 8 9 1 0

77 79

66 70 62