Larry. N. Mitchell Finance & Policy Analyst (Local Government)

Larry. N. MitchellLarry. N. MitchellFinance & Policy AnalystFinance & Policy Analyst (Local Government)(Local Government)

The 7The 7thth Annual ‘Accountant in the Annual ‘Accountant in the Public Sector’Public Sector’ SeminarSeminar

Wellington April 2006 Wellington April 2006

An ‘Outcomes-Results’ © An ‘Outcomes-Results’ © performance measurement performance measurement

framework.framework.

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Larry. N. MitchellLarry. N. MitchellFinance & Policy AnalystFinance & Policy Analyst (Local (Local Government)Government)

Session Topics …. Contents

• Topics and Objectives

• Another Research Paper?

• Some ‘History’ of performance measurement

• ‘Good’ data

• Purposes of a performance measurement framework

• ‘Outcomes-Results’ ©

• A local government (applied) case study using

‘Outcomes-Results’

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Topics and Objectives of the Session

• This 45 minute session is intended to be a

‘learning’ experience … with inter action and

feedback amongst participants

• A ‘talking head’ show to start with … then a little

bit of history followed by …

• An introduction to concepts, an application, the

software/data of ‘Outcomes-Results’ then …

• A NZ Local Government case study

implementing a performance measurement

framework using ‘Outcomes-Results’

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‘Not another research paper … !’• This session was originally conceived as … ‘the usual

‘talking head’ (singular) based ‘upon the content of yet another research paper …’

• But then … not everybody (anybody?) reads research papers … as a result …

• ‘I changed horses in mid-stream when it came to preparing the material for this seminar.’

• I have prepared a research paper entitled ‘Outcomes Measurement’ which will be posted on my website www.kauriglen.co.nz and may be of interest to other policy analysts … along with sundry train spotters, pointy heads, insomniacs etc …

http://www.kauriglen.co.nz/




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‘Not another research paper … !’

• This session has evolved as a practical one … not just

a dissertation covering research paper content …

• And Why? …

• Because people in the NZ Local Government sector

need practical utilitarian tools to address the real time

(current) issues of setting a performance

measurement framework associated with the 2006

Long Term Council Community Plan (LGA 02 ‘LTCCP’)

‘Outcomes’ process.

• But first a ‘bit of history’ … about ‘performance’.

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A bit of History … of ‘performance’

• Where do you start with anything historical? … In this case you can go back to 1989 with the first performance related provisions of the (old) ’89’ ‘Act’.

• Then came the 1996 Local Government financial performance Treasury Management and Borrowing policy settings …

• During this period the NZSA (now ICANZ) promulgated some non-financial performance standards … cost, quantity, quality, location, and timeliness …

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• Implementation of performance was initially half hearted, perfunctory and overall was never given much importance or attention

• At worst, some Councils merely cited their opinion surveys calling them ‘performance measures’! …

• There were good performers (for example Hutt City) who did a good job with the public reporting of their largely engineering based performance measures

• So where are we now?

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• We are at the point … ‘where push has become shove’ … in so far as setting in place, proper performance measurement frameworks are concerned.

• For ‘as of now’ we have the epochal LGA 02 with its requirements for full blown performance measurement frameworks encompassing both financial and non-financial Council and Community ‘Outcomes’.

• Now is the time to ‘get serious’ … but Who says so?

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The OAG’s (the sector’s Auditor’s) Letter

‘Rip van Winkle’ .. the Auditor … and the regulator

has awakened from a 16 year long sleep … In

November 2005 he said …

‘I agree with Bruce’s (the Local Gov Deputy CAAG)

comments that there has been little progress in

performance reporting in the local government sector

for some time. The sector is well aware of what we

expect this year and while we doubt that everything will

be achieved this year, the new legislative requirements

are a good trigger to move the issue this year.’

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Another motivation for improved performance

Comment: Whilst the auditors are ‘stirring’, so too

is public opinion. There has not, in living memory

been a comparable period of local economic

growth to challenge the results of the years from

2000 to 2005. In this environment many Councils

are proposing double digit increases in their rates

and charges. It will not be sufficient in these

circumstances to justify such cost/rates increases

without principled attempts to demonstrate a

Councils cost effective performance.

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The need for ‘Good’ Data• ‘Good’ performance measurement practice requires

‘Good’ data

• Faced with the need to properly inform the local government performance measurement context with acceptable data (of all hues), what is to be done when the available data is largely, at least by purist’s standards … ‘deficient’ ?

• Often quoted perceived data ‘deficiencies’ are inter alia associated with the difficulties of obtaining data by TLA boundaries, the objections to the use of comparative data and a reluctance to fully participate in performance measurement (lip service) …

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• These issues must be worked around or met

head on

• In the face of the purist’s objections (real or

perceived) the need for ‘good’ (but not perfect)

data remains.

• To achieve useful performance measurement

and reporting we should use practical (not

purist) judgments when selecting appropriate

data

‘Good’ Data

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‘Good’ Data

• This involves using ‘good’ … acceptable LTCCP data

…

• ‘Good’ meaning (above all else) useful

• ‘Good’ also meaning available

• ‘Good’ also meaning economic and cost effective

• See the Research paper ‘First Principles of data’ ref;

www.kauriglen.co.nz/larry/marketing/LTCCPdataFirstPrinciples.doc

• ‘Good’ data, for use in this context does not mean

(nor is it required to be) data of statistical purity.

http://www.kauriglen.co.nz/larry/marketing/LTCCPdataFirstPrinciples.doc









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‘Good’ Data

• This is not merely due to an inability to obtain

‘pure’ data … it is in recognition of the fact that

LGA 02 Outcome reporting needs data to deal

largely with Outcome related subjective and

qualitative issues as opposed to ‘purist’s’ data

needed for dealing with rigorous hypotheses.

• Outcome reporting involves dealing with the so

termed QBL ‘well beings’, these often include

dealing with such (much less quantifiable or

‘rigorous’) issues such as ‘Community’s wish lists’

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• Community Outcomes are often ‘fuzzy’, but all still need to be informed with ‘Good’ but not essentially ‘pure’ data.

• Community Outcomes are even touchy feely (for example an environmental well being such as a desire to retain ‘the rural feel and character’ of a District). The selection of adequate ‘good’ data needs to deal with these circumstances and with this imprecision in proper terms …

‘Good’ Data

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‘Good’ Data is quantitative

• All Outcomes still require ‘good’ performance data

… ‘if they not merely to remain fuzzy and poorly

accounted for wish lists’

• At some point Outcomes need to nailed down

using adequate (‘good’) quantitative data …not

merely by using more opinion survey (touchy

feely) data as in the past

• Quantitative data is often the point … ‘where the

buck stops’ …

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‘Good’ Data

• What then could a real world response be to these data requirements? … that is, the requirements to obtain good, useable, available and quantitative data ‘fit for the purposes’ of LGA 02 Outcomes performance measurement? …

• The following case study incorporates consideration of ‘all of the above’

• The case study demonstrates the use in the above context of applying ‘Good’ data to these Outcome related circumstances.

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Everything … (Outcomes) comes down to the dollar

• The case study in using its ‘good’ quantitative data follows one distinctive (some might still say problematical) guiding principle.

• It is the principle that within the Outcomes performance measurement framework … including both Council and Community Outcomes, even the most qualitative of these ‘well being’ objectives invariably comes down to the dollar.

• For without the local (TLA) economic and other resources coupled with their resident’s ability to pay, that is a ‘local’ positive economic wellbeing … all (or at least most) Outcomes will not be achieved.

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Everything (Outcomes) comes down to the dollar

• If this ‘principle’ is accepted then in order of importance it may be stated that an emphasis should be given to the performance measurement of Outcomes relevant to the economic and financial well beings of a District.

• For ‘Outcomes’ will not be achieved … without paying the necessary attention to the local resource and economic capability issues.

• For these reasons ‘Outcomes-Results’ © … the case study, focuses upon the Outcomes associated with and informed by a TLA’s Income, Economic and Wealth ‘stats’ …

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What is the Purpose?A final pause for thought … Why does the Outcomes

context of LGA 02 involve ‘performance

measurement’?

The answers include …

• LGA 02 must (one would hope!) have economic

validation with a performance improvement objective

… otherwise all this ‘stuff’ would just become a dead

letter with no or low accountability … and

• As the OAG has stated, the LGA 02 - LTCCP

performance measurement framework for many, but

by no means only, the small to medium sized Councils

must now be addressed.

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What is the Purpose?

• As the OAG has stated, the LGA 02 - LTCCP

‘legislative’ performance measurement

framework must now this year be addressed.

• Comment re legal references:

It is worth pointing out that the local government sector’s ‘Outcomes’ performance measurement framework is a mandated one … ref; Local Government Act 2002, Sections 82 ‘Principles of Consultation’ and Section 90 … ‘Community Outcomes’ … and other sections.

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What is the Purpose?

• The question then becomes one of how to achieve

effective Outcomes reporting … cue … the

development of the ‘Outcomes-Results’ ©

application.

• This brings us to the local government case study.

Other public sector entities and agencies can draw

from this case study upon their own circumstances

and experiences of any relevant lessons … that is

the applicability (or more likely the concepts) of

the ‘NZLG’ model.

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Description of ‘Outcomes-Results’ ©

• ‘Outcomes-Results’ © is a reporting framework that is

designed to directly address LTCCP LGA 02 Outcome

measurement issues.

• The ‘Outcomes-Results’ © software and reports are

driven off the ‘NZLG Database’ see

www.kauriglen.co.nz/larry/NZLGDatabase.doc

• ‘Outcomes-Results’ © provides a ‘ready to run’ means

by which Councils are able to establish an LTCCP

Performance Measurement Framework.

http://www.kauriglen.co.nz/larry/NZLGDatabase.doc









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Description of ‘Outcomes-Results’ ©• The ‘ready to run’ capability of ‘Outcomes-Results’ ©

includes a ‘no pain’ … minimal involvement of busy LG

staff in collecting and entering data.

• The three ‘Outcomes-Results’ © measurement contexts

are the Income, Economic and Wealth (IEW) groupings• Individual IEW ‘composite’ indices are reported on a

septile …’7’ base, using a NZ wide sector, standard and

customised group ‘comparative’ basis.• The various indices can be evaluated separately (that is,

on a ‘I,E or W’ basis) or within the combined ‘composite

of composites’ – a whole of Council-Community context.

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Description of ‘Outcomes-Results’ ©

• The three measurement contexts of Income, Economic and

Wealth (IEW) groupings, the individual ‘measure’ level

(graphs) … and indices will give every Council the

capability of measuring and monitoring on a rolling annual,

three-yearly (and longer) LTCCP perspective as to how

their Council and their local ‘TLA’s’ Communities are faring.

• What is more! … Councils will be able to fully ‘locate’ their

performance by assessing not just how their TLA District is

faring locally but also how it is doing compared with its

‘peers’ and over the whole of ‘NZ Inc’ … or with Regional or

other grouped comparisons.

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‘Outcomes-Results’ © Structure Chart

Income + Economic + Wealth – Composite Index

Income Index Wealth Index Economic Index

Fixed Income Earners / Ratepayers

Variance in Household Expenditure

Land Transport Subsidy per Ratepayer

and 7 others

Building Consents Issued

Tourism Guest Nights

Rateable Valuation Proportion

and 7 others

Ratepayer Land & Capital Investment

Capital Creation

Debt per Ratepayer

and 7 others

‘Outcomes-Results’ – LTCCP Outcome Performance Measurement Framework

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‘Outcomes-Results’ © the Income and Economic Composite Indices

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‘Outcomes-Results’ © the Wealth and Composite Index Summary

Note; the septile comparative ranking concepts, (Apologies for small text … see handout notes for better readability).

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‘Outcomes-Results’ © Economic Factors

Outcomes-Results Economic Factors

Stats!A730

Stats!A1040

Stats!A870

Stats!A1207

Building Consents IssuedVery High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Tourism Guest NightsVery High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Rateable Valuation Proportion - $ Value of Properties

Very High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Outcome Results - Composite Index of Economic Factors

2001 2002 2003 2004 2005

Very High

NeutralVery Low

High

LowExtremely Low

Extremely High

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‘Outcomes-Results’ © example of ‘graph’level data

Each of the (30)

selected ‘IEW’

criteria are

supported by a five

year (including

current year) graph

of the relevant data,

in this case Tourist

accommodation

‘guest nights’.

Your Ranking is 4 out of 9


359 331

1,180

37

427

0

200

400

600

800

1,000

1,200

1,400

RodneyDistrict Council

RodGrpAverage

RodGrp High RodGrp Low SectorAverage

Th

ou

san

ds

RodGrp High 996 1,113 1,102 1,180 1,180RodGrp Low 38 35 36 38 37

Ranking 5/9 5/9 5/9 4/9 4/9


267290 305

342 359

050

100150200250300350400450

2001 2002 2003 2004 2005

Th

ou

sa

nd

s

Tourism Guest Nights RodGrp Average Sector Average

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‘Outcomes-Results’ © Wealth Factors

Outcomes-Results Wealth Factors

Stats!A1070

Stats!A570

Stats!A1207

Ratepayer Land & Capital InvestmentVery High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Capital CreationVery High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Debt per RatepayerVery High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Ability to Pay - Composite Index of Wealth Factors

2001 2002 2003 2004 2005

Very High

NeutralVery Low

HighLowExtremely Low

Extremely High

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‘Outcomes-Results’ © another example of ‘graph’ level data

This is a very interesting graph amongst the sample case study data. It is the 2006 Rodney District’s data indicating their ‘property boom’ impact relative to ‘others’

Your Ranking is 2 out of 9


$817,558$693,458

$2,161,352

$354,500$537,350

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

RodneyDistrictCouncil

RodGrpAverage

RodGrp High RodGrp Low SectorAverage

RodGrp High $488,248 $489,282 $494,359 $821,272 $2,161,352RodGrp Low $205,407 $249,988 $257,223 $305,408 $354,500

Ranking 1/9 1/9 1/9 1/9 2/9


$488,248 $489,282 $494,359

$821,272 $817,558

$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

2001 2002 2003 2004 2005

Ratepayer Land & Capital Investment RodGrp Average Sector Average

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The whole of Council ‘Outcomes-Results’Outcomes Results - Composite Index of Income Factors

2001 2002 2003 2004 2005

Very High

Neutral

Very Low

High

LowExtremely Low

Extremely High

Outcome Results - Composite Index of Economic Factors

2001 2002 2003 2004 2005

Very High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Outcome Results - Composite Index of Wealth Factors

2001 2002 2003 2004 2005

Very High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

Outcome Results - Combined Composite Indices

2001 2002 2003 2004 2005

Very High

Neutral

Very Low

High

Low

Extremely Low

Extremely High

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An Example of use of the application

•An ‘Outcomes-Results’ © sample report with

LTCCP ‘pegs in the ground’ measurements is at

www.kauriglen.co.nz/larry see the ‘Resource’ tab.

•This example demonstrates the setting of 2006-

2009 LTCCP ‘Income Economic and Wealth’

Outcomes performance objectives.

http://www.kauriglen.co.nz/larry

End of Presentation … End of Presentation …

Questions and discussion.Questions and discussion.

Larry. N. MitchellLarry. N. MitchellFinance & Policy AnalystFinance & Policy Analyst (Local Government)(Local Government)

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Larry. N. Mitchell Finance & Policy Analyst (Local Government)