Performance measurement not the GASB's concern. (Letter to the Editor).(Letter to the Editor)

I want to compliment GFOA President Tim Grewe for his excellent editorial in the October 2001 issue of Government Finance Review. The editorial summarizes GFOA's reasons for opposing any attempt by the Governmental Accounting Standards Board to mandate the incorporation of performance measurement (which it refers to as service efforts and accomplishments reporting) in external financial reports. As Mr. Grewe correctly points out, GFOA is not opposed to performance measurement; in fact, it has been a leading proponent of such efforts from the beginning. At least partially because of this support, many state and local governments have proactively engaged performance measurement without having it forced upon them.

Because performance measurement is a policy matter, it belongs in the policy arena--not in audited financial statements. Performance measures need to be directly linked to public policy goals, which, in a democracy, is the unique purview of elected officials. This makes the budget process--not external financial reports--the appropriate venue for performance measurement.

Let's be frank. There is no such thing as a "neutral" performance measure. For such measures to be of any value, the underlying assumption must be that what they measure is important. As such, what an agency measures should be tied directly to its unique goals, objectives, and policy concerns-not to a generic set of standards. In California, there are 476 cities for a reason: each of them has policy concerns that they believe are unique to their community. When it comes to performance measurement, one size will simply not fit all. Meaningful performance measures need to be tailored to community-specific goals.

Following GFOA's lead, the California Society of Municipal Finance Officers, which represents 1,200 municipal finance professionals throughout the state, recently adopted two important policy positions with regard to performance measurement:

* The CSMFO strongly supports the use of performance measures as part of the budget process based on the recommended best management practices of professional groups such as the Government Finance Officers Association, the International City/County Management Association, and the National Advisory Council on State and Local Budgeting.

* The CSMFO is equally strong in its opposition to the Governmental Accounting Standards Board's effort to require state and local governments to include service efforts and accomplishments reporting in external financial statements.

Since the GFOA editorial does an excellent job of making the case for opposing the GASB's intrusion into performance measurement, I will avoid the ...