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A major part of maintaining a well-managed performance measurement system in local government is providing the infrastructure for performance management. The problem is that local officials often struggle with moving from adopting performance measures to actually using them for improving services and for making resource allocation decisions. This article responds to this struggle by presenting information on the relationships between efficiency and effectiveness measures across six local government service areas, with the goal of providing guidance on using performance measures to support strategic resource management. Our research suggests that stronger correlations exist between efficiency and effectiveness measures associated with local services that possess private good characteristics, concluding that performance measures associated with market-oriented services lend themselves more readily to making resource allocation decisions.

While the passage of Statement No. 34 by the Governmental Accounting Standards Board (GASB, 1999) created a more robust financial reporting model, local officials continue to struggle with defining financial condition, interpreting it from annual financial statements, and communicating it in a systematic way. This review presents a framework for analyzing, interpreting, and communicating financial condition within the fund and government-wide reporting structure. It specifically responds to the void in the public administration literature for a manageable, yet comprehensive, approach to financial condition analysis. The goal is to help local officials conceptualize financial condition from the interpretation of resource flow and stock as presented in annual financial statements.

Local government budget processes have changed substantially since the early 1990s, due in part to an expanded emphasis on performance accountability and the availability of information technology. We present evidence that local government budget outcomes also have changed over the same time period when disaggregated at the functional level. Though we do not assert a causal relationship between the two, our findings indicate that the normative-descriptive gap in budget theory described by Rubin (1990) deserves new scholarly attention. Our profession’s attraction to incrementalism may have blurred the success of budget reform in local government.

The purpose of this paper is to understand the impact of the Great Recession on the capital assets being depreciated and the capital assets condition ratio for the governmental activities of the government-wide financial statements, while identifying possible socioeconomic and financial variables that help explain capital investment behavior in local government.

Based on capital spending from fiscal year 2005–2006 (FY06) to fiscal year 2012–2013 (FY13) for the governmental activities of 471 North Carolina municipalities as reported on their government-wide financial statements, the authors use a fixed effects model to test our two hypotheses.

The authors find that most municipalities consistently invested in capital assets before, during, and after the Great Recession but were not able to maintain pace with depreciation. The authors also find that the capital assets being depreciated is affected by numerous socioeconomic and financial variables, while the capital assets condition ratio is not.

The study continues to build on previous research, demonstrating that different results are produced when the analysis is based on local data rather than sub-national data.

An implication from our study that expands across research and practice is that capital investment and capital value are two different dimensions of capital management in local government, which drives research in terms of how this multidimensional concept is specified and drives practices in terms of how this multidimensional concept is approached within annual capital budgets and capital improvement programs.

The study represents one of the first studies that focuses on capital spending in local government based on data from the government-wide financial statements.

Research has demonstrated that public organizations commonly adopt performance measurement systems to assess the operational accountability of service delivery. This same research, however, has revealed that public managers struggle with using performance measures for improving service performance and for determining long-term budget needs. One plausible explanation for the limited use of performance statistics is found in the strategic management literature on the evolutionary theory of routine. It suggests that private firms make decisions by identifying alternatives to base routines for process innovation rather than relying on the traditional theory of profit maximization. By applying the routines-based perspective to public organizations, this article presents a model of results-based management where performance of service delivery represents our proxy for profit and where performance measures serve primarily to monitor the performance of selected service dimensions. The results of output, outcome, and efficiency measures are then used to support performance, financial, and strategic management, including the selection and implementation of strategies to alter the base routines of service delivery. These new routines, created under the boundaries of rational choice, often have substantial budgetary implications over time when they change the calculus between resource consumption and service provision.

Previous research has indicated that municipalities regularly collect performance data. A survey of medium-to-large southeastern cities supports that conclusion, but cautions that limited emphasis is placed on performance during budget construction. Prior-year expenditures drive the budget at the preparation phase. Performance information is added at the presentation phase for explication and to conform norms promulgated by professional budgeting organizations.

Benchmarking is a management tool that promotes process improvement. By comparing service units across jurisdictions, best practices can be identified and used to enhance less efficient and effective operations. However, the lack of generally accepted criteria to compare service costs for local government has hindered benchmarking initiatives. One of the key components of the North Carolina Local Government Performance Measurement Project (NCLGPMP) is the full-cost accounting model developed to ensure that localities employ the same methodology to collect and report cost data associated with performance measures. This article presents an overview of the development and implementation issues associated with that model and highlights the areas of direct costs, indirect costs, and capital costs. It is argued that accuracy and comparability of performance and cost data are the fundamental ingredients of a benchmarking and performance measurement project.