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Traditionally, public entities vote budgets according to the previous year’s budget and a few adjustments. As a consequence, public budget (and public debt) dramatically increased over the years. For several years, policy-makers have been facing a dual pressure or “scissor effect” underlined by two contradictory trends:

  • On the one hand, citizens have increased their needs and expectations from the states; they ask for more and higher quality services.
  • On the other hand, public services have to do better with less resources.

Following our first attempt to define impact-based budgeting, this article takes the French case as an instance of impact-based budget model.

Adopted in August 2001, the LOLF[1] (Loi organique relative aux lois de finance) replaced the last legal framework enacted in 1959. In France, the budget is no longer presented by type of expenditure (resources, operations, investments, etc. ) but by public policies (security, culture, health, justice, etc.) now called missions.

The Parliament votes on the budget by mission (involving a single or several ministries) initiated by the Government. Missions are divided into programs so that the Parliament could change the distribution of expenditures between programs within the same mission.

Programs define the implementation of public policy frameworks and constitute comprehensive appropriations packages allocated to coherent set of actions entrusted to program managers.  The program manager can change the distribution of funds by action and by nature (see the fungibility principle).

Each program, associated with specific objectives and expected results, is finally fragmented into actions, which are indicative operational means to implement the program and to specify the intended destination of the credits.

With the LOLF, the concept of “A-based funding” (spending almost automatically renewed from one year to the next) is abolished. The services now explain in their annual performance projects how they plan to use the credits and human resources available.

Credits are presented with a “justification to the first euro “, which is an explanation of the requested appropriations by physical (number of users, business volume, etc.), “productivity ratios” and financial features (cost per unit, payroll, etc.).

September 22, 2016 the conference “Managing in OBL mode, 15 years later: tools and people” organized by Fondafip with the participation of Claude BARTOLONE (President of the French National Assembly) and Didier MIGAUD (First President of the French Court of Auditors) opened a debate regarding two questions:

  • “Which public managers to achieve the OBL objectives? “
  • “Are management tools adapted to the OBL expectations? “

Stakeholders of these round tables focused on the following points:

  • Managers are caught between a logic of efficiency, and institutional and political reflexes
  • Training deficiencies to public managers preventing creativity
  • Ambiguity of the concept of responsibility: accountability versus empowerment
  • Insufficient involvement of public managers in the reform of organizations
  • Lack of autonomy of program managers from politicians
  • Misuse of indicators to answer political logics
  • Lack of understanding of some of the indicators by teams concerned
  • Etc.

Authors:
Laetitia Chatain, Senior Consultant
Edouard Chambalu, Analyst
Francois Lanquetot, Partner

  • Sources

    [1] Guide pratique de la LOLF, Direction du Budget, Juin 2012