Benchmarks: A (Better?) Way to Measure Supply of Public Goods

According to Fisher, there are three primary ways of measuring the supply of public goods produced by state and local governments. Output can be measured by:

1. Amount of money spent (expenditures).
2. Directly produced outputs (number of recycling facilities per household).
   
3. Results (recycling rate by weight).

Expenditures are the most commonly used measure for state and local governments. However, just calculating expenditures alone might not be enough. That is why it is important to also track and measure the results of the public goods that governments are responsible for providing.

This concept of a results-driven approach is generally known as benchmarking and is being used by many levels of government. According to our text, Mississippi shifted to use benchmarking in the 1990s so that results would drive the budgeting process.

Mississippi is not alone in this effort. Here in Minneapolis, the city government has created an entire website to not only measure results but share the results with residents. The purpose of their website is to help the City in their "continual quest to become a more results-driven and transparent municipality." All of the City goals are listed, with graphs and data about each measure. One example is the goal: "Lifelong Learning Second to None". While tracking the amount of money spent on the public school system could be one way to measure local government inputs, another way would be to track the high school graduation rate:

Ultimately, local and state governments hope that this way of measuring inputs will be useful for allocating resources. Essential to benchmarking is the ability to accurately track and measure all of the results. Furthermore, results need to be shared--both across departments within local governments but also with other governments to make comparisons.

The National Neighborhood Indicators Project is a project by the Urban Institute and local partners (one of which is CURA, based here at the Humphrey Center) whose aim is to provide neighborhood level data that makes tracking possible. According to their website, "NNIP partners have built advanced information systems with integrated and recurrently updated information on neighborhood conditions in their cities," a major breakthrough. Without this type of data, tracking benchmarks would not be as valuable or meaningful to local governments.

Indicator projects are useful in helping local governments share information and collect the data that is necessary to use benchmarks, which can provide local governments with more information than a graph of their expenditures. Results tracking is valuable in not only helping determine how much resources certain public good need but also in how those resources should be spent. For example, if our spending remains consistent, we might not notice that our graduation rate has steadily decreased over time. Knowing the graduation rate can help identify problem areas in the public goods that local government provides and thinking critically about how to improve these important services. This is valuable both to local governments, that have the responsibility of providing the services, and to residents, who receive the services.