NISPAcee Annual Conference on the theme “Government, Market and the Civic Sector: The Search for a Productive Partnership”, Latvia, May 10-12, 2001.

Draft paper for Working Group on ‘Better Quality Administration for the Public’.

Preliminary title: Comparing Local Government Performance – Cross-National Experiences and Perspectives.

By Bruno Lauritzen, Senior Consultant, RAMBOLL, Denmark

NOT TO BE QUOTED!

1.	Introduction

The ‘New Public Management’ thinking has for more than a decade been influential in setting the agenda for public sector reform virtually everywhere in the world. Most notably in the Anglo Saxon countries, but also for instance in the member states of the European Union and to some extent in the EU candidate countries of Central and Eastern Europe. As opposed to traditional or bureaucratic forms of organisational control, NPM’s objectives have focused on improvement of the “three E’s” (economy, efficiency, effectiveness), reducing public expenditure and diminishing the role of the state, enhancing the quality of the public services produced and increasing the transparency of public institutions.   

This agenda has also been instrumental in the restructuring of sub-national government services in many countries. This is not surprising given that the local government mandate typically includes most services that are delivered on a daily basis to the citizens. NPM thus emphasises the quality of public services and their responsiveness towards the needs and preferences of citizens (or rather the customer).  

The performance of local government services is in many countries increasingly being scrutinised, e.g. by means of performance indicators and benchmarking systems. Their performance is being measured in various ways, for instance by means of customer satisfaction surveys and other qualitative and quantitative performance indicators, presumably reflecting effectiveness, efficiency and quality measures. The design, implementation and use of performance measures may be initiated by local governments themselves or by national government. In the latter case, national uniform systems for comparing the performance of individual service providing organisations and institutions, or entire local government units, are sought developed. 

This paper will look at two examples of innovative development of systems aiming at measuring sub-national government performance leading to a ranking of sub-national government units. The first case is the development of a local government scoring system, which is being developed by the Danish Ministry of the Interior and includes all 275 municipalities in Denmark. The other case study is the Government Performance Project in the USA, which is not only directed at local government, but also at the 50 states and federal agencies. Both of these aim at measuring the performance of each unit as a whole on basis of which a ranking system or a ‘league-table’ of all units is being established. By supposedly focusing on performance variables concerned primarily with quality aspects of the sub-national governments’ performance, the information generated is intended to be of particular relevance to the end-users of these governments’ services as well as the tax-payers and the citizens at large. 

2.	Comparing local government performance: issues and perspectives

The introduction of new managerial methods, such as performance measurement, in the public sector is thought to increase performance by making public organisations, such as local governments, more accountable towards both the political decision-makers as well as the public. By developing systems that allow direct comparison of services – over time as well as between similar service providing organisations or jurisdictions – democratic accountability is increased. In Hirschman’s (1972) terminology the possibilities for exercising both exit and voice are, given certain circumstances, enhanced. In the case of sub-national government, citizens will be equipped with better possibilities for comparing the service providing institutions within their local authority as well as their local authority as a whole with the neighbouring authority, thereby enhancing the possibilities for exercising voice as well as exit possibilities.   

Local councillors will likewise be provided with more adequate information and data on services and performance, which will increase the possibilities for making informed policy-making and prioritisation of services. Citizens will in their capacity as end-users, voters or inter alia as school board members likewise be equipped with tools to exercise their watchdog role. 

When combined with free choice of services (i.e. a form of internal markets), the use and publication of performance indicators will increase competition. This competition may be exercised between service providing institutions, for instance schools, within and across local jurisdictions or even between sub-national governments. Supposedly such competition will result in increased performance and responsiveness towards the needs and preferences of the end-users to the extent that citizens and end-users have a choice of service providers and that the funding of service depend on the number of ‘customers’. The fact that performance indicators are made publicly available may in itself have an effect on service providing organisations, in particular those that are under-performing, the argument goes.

One issue that deserves further attention is that of ‘ownership’ and formulation of performance indicators. In decentralised systems of public administration, local governments and even individual service providing institutions are to a large extent given the responsibility for and autonomy to formulate the objectives of services.  However, insofar as performance indicators are formulated centrally and implemented in a top-down fashion the performance indicators may not be congruent with the objectives or ‘success criteria’ that have been formulated locally and which are supposed to reflect local needs and preferences. To illustrate, schools in Denmark are by the central government encouraged to develop and publicise – in the form of ‘service declarations’ – their particular pedagogical profiles, etc. However, at the same time the same schools’ performance is assessed according to national uniform yardsticks, as described below. Whether this conceptual contradiction reflects a real dilemma must be evaluated by a case by case examination. 

3.	The Danish case: ranking of municipalities

In Denmark, substantial decentralisation to local government has taken place since the Local Government Reform of 1970. Today, counties and municipalities enjoy a high degree of autonomy, which as an example is reflected in their share of total public spending. In 1998, local government spending accounted for 54 per cent of total public spending. Due to the high level of public spending, Danish local and regional authorities in fact spend the rough equivalent of 33 per cent of the total GNP. 

Given this considerable responsibility for the socio-economic development of the country, it is not surprising that central government show a considerable interest in local government performance. Due to demographic and competitive pressures, the possibilities for increasing funding and quality of public services by means of increased taxes is no longer a possibility. The background for the increasing interest in adopting various means of measuring and comparing local government performance, should also be seen against a backdrop of increasing public demands to local public services, e.g. schooling, child-care, care for the elderly, health care etc.

Many of the new developments concerning the measuring and publication of local government performance are currently being formulated centrally by the Ministry of Finance and the Ministry of the Interior in particular. In 1995, an amendment of the Local Government Act (Section 62) made counties and municipalities responsible for providing their citizens with information (so-called ‘service information’) on the quantity and quality of the main services provided by each county and municipality. 

Furthermore, the Ministry of Interior has started to further develop service information on services provided by individual local government institutions, such as kindergartens, schools, high-schools, nursing homes, etc. It is the purpose of this work to be able publicise information on the content, quantity and quality of the services delivered by each individual institution and to make the information available on the internet. The types of performance measures and indicators used are identified on basis on interviews of end-users of services as well as questionnaires.         

However, we will here focus on the efforts made at comparing and ranking whole local government units according to a range of objective performance criteria. This work builds on the so-called ‘Local Government Key Figures’, which since 1984 have been publicised annually by the Ministry of the Interior. These key figures have made it possible for citizens to compare individual local governments on a whole range of variables, including local government taxation, local government spending on various services (e.g. expenditure on education per pupil, etc.), user charges on various services provided, etc.

The data making up the local government ‘key figures’ are based upon the local government budgets reported on an annual basis to the Ministry of the Interior and typically consist of expenditure measures. Hence, the ‘quality’ indicators included in the key figures merely reflect that a relatively high level of spending on a particular service per produced unit is a measure of the quality of the service. This is obviously a weakness of the existing ‘key figures’, as such spending measures do not take into account inter-authority differences in efficiency or quality (Ministry of the Interior, 2000). The challenge is to provide data that are real indicators of the quality of the services in question.    

The Ministry of the Interior has on an experimental basis started developing a supplementary measure for the quality of local government services, namely an aggregated service score system, which was publicised for the first time in 2000. The publication of the scores is meant a demonstration of the method and as a vehicle for creating debate on the issue. The service score is based on the key figures and an additional set of data drawn from various statistical sources. The service score is an attempt to overcome some of the weaknesses of input measures mentioned above, as it is to some extent based on measures that to a larger extent relate to the actual quality and content of the services delivered. 

The score is an aggregation of the number of points achieved according to a range of criteria – input as well as output based. The measures making up the service score includes the following (examples only):

Child care
•	Total expenditures per 0-10 year old
•	Number of day-care places per 0-10 year old
•	Number of staff per 100 0-10 year old
•	Absence of waiting lists (YES / NO)
•	Free choice of child care service/institution in the municipality (YES / NO)
•	Monthly user charge for child care

Schools 
•	Staff per pupil 
•	Average number of lessons /teaching time per pupil
•	Average school size 
•	Private school places as a proportion of all school places  
•	School library expenditure per pupil

Care for the elderly
•	Expenditure per 67+ year old
•	Number of staff per 100 67+ year old
•	Professionally trained staff as a proportion of all staff
•	Number of recipients of home-help services per 100 67+ year old
•	Number of hours of home-help per week per recipient of home-help
•	Free choice of home-help provider (YES / NO)  
•	24 hour home-help / home-nursing service (YES / NO) 
•	Number of houses for elderly per 100 67+ year old
•	Maximum waiting time (waiting list) for home-help
•	Maximum waiting time (waiting list) for place in nursing-home 

The aggregate score for each local government is based on the national average for each criteria (some of which are mentioned above). Each local government is given a number of points depending on their score on each criterion as compared to the national average. The national average is defined at 100 points. All individual scores that are within a band of +/- 10 per cent of that average are also given 100 points. Municipalities that for a particular criterion have a value above 10 percent of the national average are given 200 points for that particular criterion. Municipalities that score less than 90 percent of the national average will be given 0 points. Hence, municipalities will for each criterion score either 0, 100 or 200 points. For those criteria that are not assessed numerically, but as either as a ‘yes’ or ‘no’, municipalities are given either 0 points (if ‘no’) or 200 points (if ‘yes’).

Within each service area, e.g. care for the elderly, each municipality’s aggregated points are calculated against the national average. Hence, a municipality that has an average service level, for instance in the area of care for the elderly, will get a score of 1,00 for that particular service. When calculating the aggregate service score each service area is weighted according to its relative proportion of the total gross expenditure nationally. For 2000, municipalities are ranking from 0,88 to 1,26. 

This form of ranking of performance has a certain appeal to it, although it is difficult to know exactly what lies behind the scores. But obviously it is also ridden with weaknesses relating to the data selection method, the choice of indicators and their relative weighting. Only a few of these problems will be mentioned here.  

Firstly, some of the criteria may appear arbitrary. For instance, why are small schools to be preferred above large schools? Are small, thinly populated municipalities not bound to achieve a higher score than large municipalities – simply because of the socio-geographic make-up? Also, it may seem puzzling that the proportion of private school pupils (as opposed to pupils in public sector schools) is taken as a negative indication of the performance of municipalities (i.e. an indication of the number of pupils making use of the exit option). This may thus have more to do with the socio-economic make-up of the municipality, rather than the performance of the municipal (public sector) schools. 

Secondly, many indicators cannot be included, as no data exist. As pointed out by the Ministry of the Interior in its publication on service scores, many relevant and wanted measures of quality are missing because of the lack of data, e.g. the number of PCs in schools per pupil.   

4.	The American ‘Government Performance Project’

In contrast to the Danish system of service scores, the Government Performance Project (GPP) is not based on ‘objective’ data or scores, but rather on a qualitative assessment of the states, agencies and cities in question. Also, it does not focus primarily on results as such, but rather on the management capacity thus holding government entities publicly accountable for the quality of management in their jurisdiction. What is being assessed is to some extent capacity for performance, rather than performance itself. The assessment is in all surveys carried out within five areas, which are seen as essential for public management: Financial Management, Human Resource Management, IT Management, Capital Management and Managing for Results. 

The project is sponsored by The Pew Charitable Trusts and carried out by the Maxwell School of Citizenship and Public Affairs of the Syracuse University. The project was piloted in 1996-97 during which GPP studies were conducted in two cities, two counties, four states and four federal agencies. In 1999 the 35 largest cities were probed and in 2001 the GPP will assess 40 counties across the USA. 

The criteria within the five areas have been developed by senior advisory panels consisting of academics and practitioners and have subsequently been refined based on feedback from governments that have been evaluated by the project. 

The criteria are as follows:

Financial Management
•	Government has a multi-year perspective on budgeting
•	Government has mechanisms that preserve stability and fiscal health
•	Sufficient financial information is available to policymakers, managers and citizens
•	Government has appropriate control over financial operations

Human Resource Development
•	Government conducts strategic analysis of present and future human resource needs
•	Government is able to obtain the employees it needs
•	Government is able to maintain an appropriately skilled workforce
•	Government is able to motivate employees to perform effectively in support of its goals
•	Government has a civil service structure that supports its ability to achieve its workforce goals

Information Technology (IT) Management
•	Government-wide and agency level IT systems provide information that adequately supports managers’ needs and strategic goals
•	Government’s IT systems form a coherent architecture
•	Government conducts meaningful, multi-year IT planning
•	IT training is adequate
•	Government can evaluate and validate the extent to which IT system benefits and justify investment
•	Government can procure the IT systems needed in a timely manner
•	IT systems support the government’s ability to communicate with and provide services to its citizens

Capital Management
•	Government conducts thorough analysis of future needs
•	Government monitors and evaluates projects throughout their implementation
•	Government conducts appropriate maintenance of capital assets

Managing for Results
•	Government engages en results-oriented strategic planning
•	Government develops indicators and evaluative data that can measure progress toward results and accomplishments 
•	Leaders and managers use results data for policymaking, management, and evaluation of progress
•	Government clearly communicates the results of its activities to stakeholders

In 1999, the GPP assessed the management capacity of the largest (by revenue) 35 U.S. cities. The survey was conducted by researchers and reporters at the Governing magazine in collaboration with professors and graduate students at Syracuse University. Comprehensive surveys (one for each of the five focus areas mentioned above) were sent to each of the 35 cities. The completed questionnaire instruments and accompanying documents were analysed and hundreds of interviews were in the meantime conducted with respondents inside and outside city government, e.g. officers and managers, auditors, academics, etc. By combining the two processes final grades were given for each of the 35 cities in each of the five categories. On Human Resources, for instance, grades were ranging from A in Phoenix and A- in Austin and Indianapolis to D in Memphis. No fails (“F’s”) were recorded! 

Although the exercises conducted under the GPP are costly, it is the intentioned to repeat the assessment at regular intervals. As a one-off exercise, the GPP would have a limited value. So far, the ‘examination’ of the 50 states, which was first made in 1999, is the only component that has been repeated. Governing.com reports that Alabama, which had the worst average grade of all 50 states in 1999 with a D average, improved its performance in four of the five categories in the 2001 survey landing at a C-. 

5.	Concluding remarks

The national systems of assessing performance of sub-national government looked at above are only two examples of how it may be done. Many more examples exist, such as the system of ‘league tables’ that have been developed in Britain during the past ten years. But they offer, despite their methodological weaknesses, inspiration and new interesting methodologies to be used.

The GPP has received much attention and press coverage, but is expensive. The Danish example of municipal services scores, is less ambitious and inexpensive to conduct, provided that a sophisticated computerized data reporting system and a uniform and well-functioning local government budgeting system is in place. 

The perspectives for the possible usage and application of the systems are many. In the USA, the mere publication and attention that the GPP has attracted has triggered initiatives in individual states and cities in order to improve or maintain performance, as the example from Alabama illustrates. The immediate relevance for citizens is perhaps less than in the Danish example, as the GPP is not directly concerned with performance understood as the quality or effect of delivered services. 

In Denmark, there is no doubt that one of the interesting perspectives of the service score and ranking of municipalities is concerned with the possibilities of establishing some system for rewarding those sub-national governments that perform well or fulfil certain minimum criteria. Such a funding mechanism may in the longer term be developed alongside the current state grant system, which is based on taxation bases and objective expenditure requirements. Whether such a system would counteract the decentralised local government service delivery is open for debate. It could be argued that the chosen criteria are only a set of minimum criteria based on the lowest common denominator and that locally formulated priorities will not and should not be in conflict with these.  Who would for instance disagree with “the number of hours allocated to home-help for elderly persons” is a reasonable measure of quality of the services provided for the elderly?            

Literature

Greve, C. (2000): Fornyelse i forvaltningen ‘the American Way’, in Administrative Debat, Nr. 3, september 2000. 

Hirschman, A. (1972): Exit, Voice and Loyalty. Cambridge. 

Indenrigsministeriet (2000): Sammenlignelig brugerinformation. Betaenkning nr. 1399. Copenhagen.

Indenrigsministeriet (2000): Kommunale Noegletal 2000 – Maal for serviceniveau – et debatoplaeg. Copenhagen. 

Indenrigsministeriet (1998): Serviceredegoerelser. En rapport om serviceinformation til borgerne. Copenhagen.

Indenrigsministeriet (1999): Kommunerne som borgernes indgang til det offentlige. Copenhagen.

Lauritzen, B. & Hague, B. (1993): Performance Measurement and Social Citizenship: An Anglo-Danish Comparison. University of Teesside. 

http://www.governing.com.htm

http://www.maxwell.syr.edu.htm