1. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Success Through Proactive Leadership: Using Performance Information to Achieve Results Terry Carnahan Managing Director, KPMG LLP

2. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Introduction and Agenda  Open Government Framework  High Performance Management Structure  Performance Management Legislation and Guidelines  Selecting a Measure  Using a Measure 2

3. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Open Government Framework 3 Transparency Participation Collaboration

4. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. High Performance Management Structure 4

5. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Budget and Spending Planning  After areas of improvement have been determined, budgeting can be adjusted accordingly.  Without monitoring internal performance, budgeting is mostly guesswork.  So much more than “just compliance”. 5

6. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Government Performance and Results Act  Enacted in 1993 following Congressional findings of waste and inefficiency in the government.  Purpose:  increase management accountability and public confidence in the government.  Why is measuring performance vital to effective and efficient management? 6

7. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. GPRA Modernization Act of 2010  Required Strategic Plans and Performance Goals be made publicly available online.  Description of how each Performance Goal ties into the higher level Agency Goal.  Transparency as to how data for each Performance Goal is obtained and assessed.  More specific instruction as to what is reported and how. 7

8. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. GASB  In 2010, GASB published guidelines for voluntary reporting of Service Efforts and Accomplishments (SEA) Performance Information.  More specifically tailored to State and Local Governments.  Established four key components and six qualitative characteristics of an effective SEA report.  Also provides guidance on effective performance measures. 8

9. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. SEA Guidelines  Components  Purpose and Scope  Major Goals and Objectives  Key Measures  Results and Challenges 9

10. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. SEA Guidelines  Characteristics  Comparability  Consistency  Relevance  Reliability  Timeliness  Understandability 10

11. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. SEA Performance Measures  Measure of Service Efforts  Input Measures − Cost of road maintenance.  Measure of Service Accomplishments  Output Measures − Number of lane-miles of road repaired.  Outcome Measures − Percentage of roads in good or excellent condition.  Measures Relating Efforts to Accomplishments  Efficiency Measures − Cost per lane-mile of road maintained.  Cost-Outcome Measures − Cost per lane-mile of road maintained in good or excellent condition. 11

12. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. SEA Performance Measures  Independently of each other, these measures do not provide much information.  When integrated within the agency plan and to each other, these measures act as complements and can be very useful.  So much more than “just compliance”. 12

13. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Selecting the right Measure  Measures should be:  Outcome based.  Easily and objectively measurable.  Understandable.  Directly linked to agency goals.  Able to provide a meaningful frame of reference.  Comparable with previous years and/or other agencies. 13

14. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Outcome Based  Rather than “output” or “input” (spending) based.  Measures the desired outcome rather than a quantity of output.  In previous example, “percentage of roads in good or excellent condition,” more useful than “number of lane- miles of roads repaired”. 14

15. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Objectively Measurable  All terms in the measure should be objectivity defined.  Once defined, data can be easily measurable.  In road example, “good or excellent condition” would need a definition.  Perhaps based on user survey of road conditions. 15

16. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Understandable  Since the users of this data are the general public, measures should be clearly stated and defined.  Example –  “Percentage of roads in good or excellent condition” is easy to understand, whereas “lane-miles” might not be as accessible. 16

17. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Directly Linked to Agency Goals  Each measure must be linked to a higher level goal, all the way up to the top agency goals.  Road example –  maybe the departmental goal is to “maintain a road system in good condition”.  Agency goal “achieve a top 10 statewide infrastructure score”.  Clear how maintaining the roads in good/excellent condition ties back to both of these goals. 17

18. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Provide Frame of Reference  Use of “percentage” or “percentage of total” or “percentage of eligible” provides usable data.  Avoid “number of” measures.  Example –  510 roads are in excellent condition.  Not clear how many roads are being measured.  Extremely poor performance if this is New York City.  Extremely good performance in a more rural area with 520 total roads. 18

19. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Comparable with Previous Year and/or Agency  Comparing data period by period or year by year shows trends.  Comparing data to another agency or state highlights relative performance.  Example –  90% of roads in good/excellent condition in current year.  If this figure was 95% in the previous year, this number should be a cause for concern.  If, however, the next best state uses the same measure and has a number like 80%, clearly our agency is excelling. 19

20. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Using the Measure  A well constructed and defined measure is extremely valuable  Analysis of results can:  Identify areas for improvement within the agency.  Reveal the agency’s strongest performers.  Determine positive and negative trends from period to period.  Making results publicly available:  Increases accountability within the agency.  Improves public confidence in the government.  Gives the public a better general understanding of the uses of their tax dollars. 20

21. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Performance Measures Success  Leadership is a primary determinant  Managers use output measures  Data Calls are prevalent  Data driven reviews  So much more than “just compliance”. 21

22. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Building Consensus  Formulate implementation goals to advance the performance agenda  Build a performance community  Develop a performance management framework  Implement repeatable processes  Develop IT systems and tools  Collaborate with stakeholders  Showcase performance information 22

23. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Questions? 23

24. © 2012 KPMG LLP, a U.S. limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in the U.S.A. KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative. Contact Information Terry Carnahan Managing Director KPMG LLP Cell: 703-220-7181 Office: 703-286-8560 tcarnahan@kpmg.com 24