What are the key features of Performance Budgeting?

• A. It includes performance goals and objectives and measures of workload, efficiency, and effectiveness for each program
• B. It focuses solely on line-item costs
• C. It ignores program outcomes
• D. It uses a purely incremental approach

Answer: (A)

Performance budgeting ties budgeting decisions directly to how a program performs. The key idea is to set performance goals and objectives for each program and to use specific measures of workload, efficiency, and effectiveness to judge how well resources are producing results. This approach makes funding contingent on outcomes, so decision-makers can see what a program accomplishes with the money it receives and adjust resources accordingly to improve service levels and value.

Why this is the best fit: it captures the essence of performance budgeting—linking resources to measurable results and using performance data to guide allocations. It moves beyond simply counting dollars and focuses on what programs achieve, how efficiently they operate, and the impact of their work.

Why the other options don’t fit: focusing solely on line-item costs ignores what the funds accomplish; ignoring program outcomes defeats the purpose of tying budgets to results; and a purely incremental approach concentrates on small year-to-year changes without necessarily using performance information to drive funding decisions.