Performance Management in State Government

Rhode Island Public Expenditures Council


Performance Management in State Government

PROVIDENCE – On Monday, May 19, 2014, RIPEC released a report outlining a performance management framework for state government, specifically the Rhode Island Department of Business Regulation (DBR).  The report, which focuses on DBR’s Banking Division, discusses the challenges associated with measuring state government effectiveness, and includes a RIPEC-developed effectiveness index for DBR’s banking regulation. The full report is available here.

With the intent of enhancing overall efficiency and effectiveness, the DBR commissioned RIPEC to review its current performance measurement process in the context of neighboring states, and to develop a performance measure index intended to measure the effectiveness of the Department’s Banking Division. RIPEC’s review of similar state regulators found that while many northeastern U.S. states have transparent structures in place to report on performance in terms of output or outcomes, very few states report on performance indicators such as efficiency, and none report on agency effectiveness. For these reasons RIPEC’s index intends to further define effectiveness indicators for DBR’s banking division by aggregating various indicators into one index with three pillars: measuring the health of the banking industry in Rhode Island; the proficiency, or intrinsic ability of DBR; and the status of the environment being regulated.  Specifically, RIPEC’s index relies upon seven components to achieve these goals.

However, metrics like the index developed in this report, provide meaning only in context—either through historical development over time or by benchmarking to other entities. RIPEC encourages the continued use of this index, and other performance management monitoring by the state over time. As the demand on public resources grows, state and local governments will be required to be more efficient and effective with limited resources. Performance management frameworks, such as this, provide a quantitative-based tool for monitoring the accomplishment of this goal.

DBR intends to seek industry input on the index before fully implementing.  Since this is a new model for DBR, and since no other state is using such an index, it will be up to DBR to continuously monitor the index over time in order to develop the useful trend indicators to improve the Department’s effectiveness.