Since 1999, New Mexico has used performance-based budgeting—the practice of applying programmatic results to inform decision-making—to drive a more effective and efficient government. To support this effort, the state’s Legislative Finance Committee (LFC) has developed and adopted various tools that enable it to track statewide and agency outcomes, as well as to identify cost-effective programs in which to invest state resources.
One tool includes a cost-benefit analysis model that allows the LFC to better understand the cost of the state’s social services programs, the returns on those investments, and cost-beneficial alternatives to existing programs. Using this tool, the LFC was able to calculate and show policymakers that investing in evidence-based programs proved to reduce recidivism could yield returns as high as $26 for every $1 invested.
After years of this outcomes-based effort, the committee created a Legislating for Results framework, which outlines a systematic approach to using research and performance data to inform the budget process. This framework contains five actions that LFC analysts take to help leaders better interpret and use research and analysis in their decision-making.
Through this process, the state has been able to systematically analyze and fund innovations within a number of high-priority policy areas. For example, after observing consistently low literacy rates among New Mexico’s children, LFC analysts reviewed data to determine the potential causes and propose programmatic solutions supported by strong research. The state identified prekindergarten as a good investment and conducted a program evaluation that demonstrated positive, substantial long-term results. Leaders expanded two pre-K programs, allocating $7.8 million to an extended pre-K program that served children for longer hours in fiscal year 2015 and an additional $2 million in fiscal 2016 to expand pre-K services to 3-year-olds. The committee then looked at short-term impacts and found that the percentage of participants reading at grade level in kindergarten and third grade had improved. The state will continue to track these investments and examine the longer-term impacts on grade school reading levels.
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