PERFORMANCE AND RESULTS FOCUSED MANAGEMENT Country experience – success stories and failures. France.

1. Philipe Debrosse Rapporteur à la Cour des comptes Riga August 2008 PERFORMANCE AND RESULTS FOCUSED MANAGEMENTCountry experience – success stories and failures. France.

2. The constitutional bylaw of August 1st, 2001 on budget acts (LOLF) • The aim of the new rules is to move from a resource-based to a results-based approach • Article 51 of th LOLF : State actions are presented having regard to « related costs, objectives pursued, actual results and results expected in the year to come, measured using precise indicators whose choice is substantiated ». • First application of this LAW since januar 1st, 2006

3. A budget organised around the purpose of expenditure • 47 missions describing the main areas of State policy • 150 programs defining responsability for policy implementation • 500 actions define program purposes in greater details.

4. Mission Program Program Program Action Action Action Action A clearer budget : new Budget architecture Mission= Voting unity Parliament’s debate and vote Operational management

6. Mission Designed to contribute to a specific public policy • Express public policy priorities, orientations and choices, • For instance : « Public development Aid », « Urban policy and housing » Departmental or interdepartmentalmissions • 9 interdepartmental missions • For instance : « Security »; contribution of Home affairs Ministry and Defence Ministry Program « Gendarmerie» (Defence Ministry) Program« the Police»(Home affairs Ministry) 6.267 M€ 7.917 M €

7. 132 programs in the general Budget A program covers appropriations for implementing a measure or a consistent set of measures (actions) • Programs are broken down in sub-programs : Actions • Actions constitute the operational means of implementing the program A program comes under the responsibility of one single ministry A program corresponds to a center of responsibility with objectives defined in the public interest and expected results subject to review

8. Parliament will debate and vote the budget in the light of the strategic objectives of each program • The strategy, indicators and objectives are presented to the Parliament in the annual performance plan appended to budget bills. • Each program’s strategy and the objectives are defined on the initiative of the relevant Minister with the help of the program manager. • The procedure is coordinated at Government level by the Finance Minister under the aegis of the Prime Minister. • Strategy and objectives are then debated by Parliament as part of the budget approval procedure.

9. Performance : a results-oriented budget • A strategy, objectives, indicators and target are defined for each program • The program manager uses the managerial flexibility bestowed by an overall budget to steer public management in accordance with the predefined objectives

10. Performance : a results-oriented budget • Result-based management should not be confused with objective-based budgeting which would involve first setting the desired objectives and targets, then determining the budget apropriation to achieve them • It’s impossible for two reasons: • There is a control on the total of the State budget. Appropriations are made between programs within an overall amount of budget. • There is no material link between budget appropriations and performance objectives.

11. The relevance and quality of performance related information is controlled • Parliament : members of Parliament and special rapporteurs will enjoy extensive powers of documentary and on-site control in the ministries. • State Audit Office : has to draw up an annual report on the results of budget and on will have to examine programes, objectives and results. • Interdepartemental Program Audit Comitee : has to audit the quality of information and analysis contained ine the annual progress reports. This comitee is chaired by an inspector general of finance and composed of members of general inspections or audit services of the different ministries.

12. How to define strategic objectives ? • Objectives should crystalise State priorities and should be in few numbers (ideally less than 6 per program). • Strategic objectives do not necessarily cover the entire scope of a program. • Strategic objectives are related to the most resource-hungry actions or concern the policy issues deemed to be most important.

13. How to define strategic objectives ? • A balanced choice of objectives that meet the expectations of citizens, users and taxpayers. • Objectives for socioeconomics effectivness indicate not what government does (its outputs) but the impact of what it does (its socioeconomics outcomes) • Service quality that affect users or, in some cases, for support pogrammes that could affect the department of a ministry • Managerial efficiency to increase public services outputs for the same level of ouput

15. Characteristics of the objectives • Clarity : objectives should simple, precise and easy to understand • Linked decisively to the program : Achievment of the objective must be attributable exclusively or primarily to the activity of the program • A contrario as example an objective like reducing unemployment cannot be assigned to a program of the ministry of Labour. Such an objective is to global and depends from too much external factors which are independant from the actions of the program

16. How to define strategic indicators ? • Indicators must be consistent with the objective • An indicator must relate to a material aspect of the expected result • An indicator must provide a basis for making a judgement • An indicator must not produce effects contrary to those sought

17. How to guarantee the usefulness of indicators ? • An indicator must be provided at regular intervals • It must lend itself to comparisons in time, space and between players • It must be immediately comprehensible or clearly explained • It must be immediately exploited by the agencies and services concerned

18. How to construct reliable indicators ? • An indicator must be durable and independent of organisational imponderables • It must be reliable beyond question (certainty of the measurment system and absence of bias or limited extent of known bias) • It must be drawn up at a resaonable cost • It can be verified and audited

19. Implementation and first results

20. The new budget law – LOLF - was introduced in january 2006 • A preliminary budget has been define for the 2005 budget, but the 2005 budget was realized with the rules of the previous budget law • Objectives and indicators have been prepared for the 2005 budget • Different institutions have analyzed these experimentations process (Parliament, Cour des comptes, general Inspections) which lead to some modifications in the program organisation and in the definition of objectives and indicators

21. Report of the Finance Commission of the National Assembly 2006 (extract) • The « performance » part of the PAP constitutes a main progress. • Globaly, the performance devices are successful, they are much better than those in the pre-PAP joined to the Project of Finance Law 2005.

22. Report of the Finance Commission of the National Assembly 2006 • Observations: • A balance between the stability of the unit and the necessary adjustments should be kept. • About the objectives, among 132 programs of general budget, 94 have a strategic presentation and 118 have objectives. On the whole, the general budget have 629 objectives, with 1284 indicators, that is to say an average of 2 indicators per objective.

23. Report of the Finance Commission of the National Assembly 2006 • The following improvements should be adopted: • A better hierachisation of the objectives around some clear priorities • A reduction of the number of objectives (too many objectives harm to their legibility and to the services to reach them) • The clarification as much as it is possible of their name, avoiding objectives with a too general view, which can’t be measured by indicators (like: « french thesis about sustainable development »), or which escape from the influence of the program or the concerned mission (like: « building Europe » for the program « France action in Europe and in the World »)

24. Report of the Finance Commission of the National Assembly 2006 • Six orientations for the indicators: • Associate the performance indicators to every action or important mass of credits, which is not systematic yet. • Reequilibrate the distribution between the three existing category, while reinforcing the part reserved to the service quality and the management efficiency. In the 2006 PAP, 53% measured the socio-economic efficacity againt only 18% the service quality and 29% the management efficiency • Reduct the number of indicators – in coherence with the diminution of the number of objectives – by centering them on the strategic priorities of the programs. In the future, the number of indicators could be limited to 800, against 1284 now.

25. Report of the Finance Commission of the National Assembly 2006 • This reduction should lead to retain only the relevant and reliable indicators, in order to measure the performance of the concerned services. Some indicators need to be built, as for example the number of payed hours to the teachers compared to the hours spent in front of the pupils or the ratio cost/effiency of the initial formation streams. • All indicators have to be informed and to have a pluriannual aim value. They have to be based on an explicit, precise and clear methodology. • The indicators should finally allow to do as much as possible comparisons with other State services, even with services from other States. This is particularly the case for support functions in each ministry.

26. A new government : a new program organisation • The constitution of the Government in june 2007 has lead to modify the perimeter of the ministry attributions. • These evolutions lead to revise several missions of the General Budget in order to assure an agreement between the perimeter of the decrees of minitry attributions and the one of the missions and programs. • The new government took his function in june, but the program organisation will only be changed in january 2008 • During this period we organised some credits and personal transfers between ministries. The main limitation is due to the IT accounting system which is very difficult to modify during an accounting period.

27. A new government : a new program organisation • The evolution of the nomenclature of the missions and programs included in the Project of Finance Law 2008 aims to reconcile three objectives : • modification of the structure of the ministries related to the election of the President in mai 2007 and the new organisation of the ministries • Simplifications in some areas • New political priorities

28. 2008 - The General Budget of the State has 34 missions and 132 programs, that is to say about the same amount of missions and programs than in the Project of Finance Law 2007. This includes the creation of 7 new programs and the suppression of 6 existing programs.

29. Extract of the performance project 2008 • The taking into account of the Parliament observations has lead this year to: • Center the objectives and indicators in the main stakes of each program in order the Project of Finance Law to be more readable • Reequilibrate the different axis of the performance, with an increase of the number of quality indicators and efficiency indicators • Begin a convergence of the indicators of support function (informatics,Human Resources, real estate…) to compare different ministries • Improve the legibility of the objectives and indicators • Present a performance strategy which articulates the objectives, identifies the real priorities and gives a meaning to the performance step, and this is for each program • Engage in aims of results which means an improvement of each program performance.

30. During the presentation of the Project of Finance Law 2007, the Government has engaged itself that: • 95% of the Project of Finance Law 2008 indicators should be informed in previsions, • 55% of the indicators should have an aim-year in 2010 and beyond • The classification per category should be distributed as follow : • 46% for effectiveness • 22% for quality • 32% for efficiency

31. PFL 2008 statistics - indicators

33. A permanent audit trough the general inspections within the ministries and in an interministerial comitee for program auditing (ICAP-CIAP) • Annual report on budget execution through the Cour des comptes which includes some datas on the objectives and indicators

34. Methodology of work of the CIAP • The Interministerial Comity for Program Auditing (ICPA - CIAP) has finished during the last quarter of 2006 an auditing methodology and a methodology for the validation of the informations about the performance results presented in the Annual Performance Report (APR). • The objective was the necessary reorganization of the guide, in order to integrate this auditing methodology related to the APR at the latest in february 2007. • The new guide was approved in december 2006.

35. Organization of work • The 4th auditing cycle of the ICPA was about 28 programs, proceeding from 18 different missions. • This has been established in concertation with the Cour des Comptes. • The audits have mobilized 64 auditors, members of different general inspections, divided in interministerial teams. • At the end of this 4th auditing cycle, 75 programs have been examined by the ICPA, of which 68 come from the General Budget. • These audits analyse the program organisation related to the ministry organisation, the budget and personal evolution, the cost analysis, and the different objectives and indicators.

36. ICPA report – examples of proposals • Program 182: legal protection of youth • The ICPA has recommended, for the indicator (1.2) related to the delay of the take-over of legal measures, to come from an average delay (which is not significant in term of performance measure), to a percentage of take-over delay superior than a aim delay, per measure category. • Moreover, a link would be established with the new law for justice disposals, which define an aim delay of 15 days for the whole chain of take-over, between the magistrate decision until its execution.

37. ICPA report – examples of proposals • Program 132: Employment development • The indicator of the employment growth in the Hotels-Cafés-Restaurants (HCR) presents three defaults : • Its evolution depends of more powerful employment creation factors in this sector • It compares the evolution of a service sector, which is protected by delocalization phenomenons, to the whole sector of the Economy • It does not reveal an important part of the aimed objectives by the measure, that is to say the improvement of the minimal wage and the suppression of the hidden work. In this sector • They recommanded to create an other indicator wich compare the amount of the global wages of the sector with the number of wage earners ot this sector

38. Objectives and indicators debates in the Parliament • The objectives and indicators are discussed in the Parliament • The main debate in the floor of the Chamber of Deputy are focused on the budget and the number of civil servants • But some analyses are prepared for the discussions in specialized comitees • Program directors are auditionned by the commitees and questionned on their objectives and indicators

39. Extract of the parlementary report on the 2008 budget project for Education • The measure of performance: reinforce the monitoring elements: • The program includes 17 indicators; 10 of these were not yet informed in the annual performance report for 2006, or only partially, not allowing the reading of the performance for the year 2006. Some indicators are also not in the annual performance project 2008.

40. Extract of the parlementary report on the 2008 budget project for Education • The only available indicator is the proportion of pupils entering in « sixième » with at least 1 year late. The reduction recorded in 2005 (-1,2 points) continues in 2006 (-0,9 point).

41. Extract of the parlementary report on the 2008 budget project for Education • The replacement rate increases • The 5 indicators corresponding to this objective are quantified; each one knows a considerable increase. • The proportion of inspected teachers has already reached the 2010 aim. • The reached levels are close to the objectives, taking account of the existing constraints (isolated schools, delay for signaling the absence). The forecast for 2008 leads to an increase to 92,5% of the replaced days of absence, in an annual average. • The output rate of the replacement has been getting better for ten years, but the progression is less strong than wished.

42. The implementation in the ministries • Different levels of implementation in the ministries • The implementation level depend of • the historical practice of the ministries • the caracteristics of the indicators • The administrative organization of the ministries • The capacity and the willingness of the ministers and of the top management in the implementation process

43. Fixing the targets • A yearly discussion on the objectives and indicators with the ministry of finance paralell to the budget negotiation • We try to introduce no direct link between indicators and the budget level, but in the fact it may help during the negotiation and for the debates in the Parliament

44. New debates • It may be necessary to introduce a flexible remuneration related to the indicators • Partly effective for the top program director • But for the other levels it’s more related to local or specific objectives (for example the objectives of the prefects are more related to the caracteristics and specific problems of there departments than to the global objectives of the ministry of interior)

45. New debates • Different Trade unions contest the introduction of remunerations related to the objectives and indicators with different arguments: • They contest the principle of an objective and indicator approach in some sectors (justice, education for example) • They attached importance to an equality between civil servants • They contest the validity and the objectivity of the individual evaluation

46. New debates • What is the responsability of the program directors ? • There is no responsability system for objectives and indicators • Only the ministries are responsible before the Parliament, even if the program directors are questionned by the Parliament • the financial responsability concerns only the accountants, • But the main program directors are nominated by the Government (and should be sacked without warning)

47. New debates • What is the cost of this new methodology ? • Impossible to have a global estimation today • It’s include in the ministries budget • The method lead to a evolution of the mentality of a majority of civil servants

48. Philipe Debrosse Rapporteur à la Cour des comptes Riga August 2008 PERFORMANCE AND RESULTS FOCUSED MANAGEMENTCountry experience – success stories and failures. France.