Performance-Based Budgeting

What Is Performance-Based Budgeting?

Performance-based budgeting is the allocation of funds based on programmatic results that contribute to organizational goals. For governments, performance-based budgeting uses evidence to maximize the allocation of funds toward programs that work and away from those that don’t. Performance-based budgeting is not intended to punish or reward departments or agencies, but instead to focus on progress toward measurable goals during the budget process. This approach allows cities to make and justify budgetary changes that meet community needs and advance citywide priorities, instead of defaulting to the status quo.

After hearing the call for a new way to budget, Johns Hopkins University Center for Government Excellence has created this guide, detailing performance-based budgeting and describing how it can be tied into new or existing performance management and analytics programs. By learning from the experiences of other cities and following the steps described in this guide, cities will have a greater understanding of performance-based budgeting and be well on their way to rethinking how budgeting can work for them.


What GovEx refers to as performance-based budgeting is known by a variety of names: outcome-based budgeting, results-based budgeting, or priority-based budgeting. All of these terms indicate a focus on increasing the use of data and evidence to improve the allocation of resources and achieve programmatic and community goals. This guide uses performance-based budgeting for the sake of clarity and consistency.

Performance-based budgeting allows cities to strengthen the budgetary process in light of competing claims for resources by using objective criteria to:

  • determine resource allocation;
  • ensure accountability among those responsible for management;
  • shift the budget focus to city priorities rather than department- or agency-specific goals;
  • make the budget process more transparent; and
  • engage the community in the budgeting process.

Especially in times of fiscal constraint, performance-based budgeting helps cities focus on funding programs that advance progress on the determined goals and priorities.

Cities with established performance management systems are well-positioned to take on performance-based budgeting. Cities can incorporate performance budgeting into existing performance management programs, linking budgetary requests to their publicly stated performance goals to truly align resources with results. The guidelines below are not meant to replace a city’s budget process, but are proposed as components that can be integrated into the budget process to more closely align budgeting with city priorities and goals.

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