What is a performance-based budget?

What is a performance-based budget?

• A. It lists expenditures by category for each department.
• B. It ties resources to outcomes and performance indicators.
• C. It focuses exclusively on past expenditures without considering outcomes.
• D. It ignores performance data in funding decisions.

Answer: (B)

Performance-based budgeting ties the money allocated to a program directly to the results it achieves. It uses performance indicators and targets to guide funding decisions, so resources are allocated based on outcomes and value delivered, not just the amount spent or how the department is categorized. This focus on results helps ensure that funding supports programs that meet defined goals and improve performance. In contrast, listing expenditures by category describes traditional line-item budgeting, which centers on inputs rather than results; focusing only on past expenditures without outcomes ignores what those dollars actually achieved; and ignoring performance data in funding decisions rejects the whole idea of funding based on results.

Performance-based budgeting ties the money allocated to a program directly to the results it achieves. It uses performance indicators and targets to guide funding decisions, so resources are allocated based on outcomes and value delivered, not just the amount spent or how the department is categorized. This focus on results helps ensure that funding supports programs that meet defined goals and improve performance. In contrast, listing expenditures by category describes traditional line-item budgeting, which centers on inputs rather than results; focusing only on past expenditures without outcomes ignores what those dollars actually achieved; and ignoring performance data in funding decisions rejects the whole idea of funding based on results.