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Performance-based Funding Tools that Improve Accountability and Performance

Modesto E. Abety-Gutierrez, Catherine Raymond
PA Times, October 2011

Contract compliance monitoring is a common contract management activity. Unfortunately, the manner in which contract performance tools are often used (solely for compliance auditing) fails to realize their potential for improving funding decisions, accountability and contract performance.

Recently, The Children's Trust (The Trust) in Miami-Dade County, Florida developed an innovative performance-based monitoring and funding process through a major revision of their contract monitoring procedures.

Working collaboratively with contracted service providers (contractors), Trust staff revised contract performance tools to reflect The Trust's emphasis on: delivering results for children and families, fiscal accountability, and partnership with contractors. With these revised tools, The Trust has been able to link funding decisions (including reductions necessitated by reduced revenue) more closely to contract performance in a manner that is both equitable and transparent.

In addition to improved decision-making, this performance-based contract monitoring and funding process has resulted in increased accountability and a focus on improved contract performance. This article provides information about the development and utilization of the tools as well as the benefits realized by The Trust and their contractors.

Background on The Children's Trust
The Children's Trust is the largest of Florida's eight independent Children's Services Councils (CSCs), or special taxing districts, created under Chapter 125 of the Florida Statutes, which authorizes counties to put a question on the ballot providing authority to tax property to fund programs for children and families.

While the services offered and age groups served vary depending on the needs of the community, the primary focus of all CSCs is to invest in prevention and early intervention programs that produce measurable results. Many CSCs contract with agencies through a competitive procurement process. The Trust procures services in three-year funding cycles, with annual contract renewals based upon successful contract performance. The vast majority of contractors are 501(c)(3) nonprofit organizations but also include for-profit businesses and other government agencies.

The Trust, located in Miami-Dade County, FL (population 2,500,625 in 2009), was established as a dependent CSC in 1988. In September 2002, by voter referendum, The Trust became an independent CSC. As a special taxing district, The Trust receives its revenue from a 0.5 mil property tax assessment.

Operating under the guidance of a 33-member board of appointed and ex-officio members, The Trust's mission is "to partner with the community to improve the lives of all children and families in Miami-Dade County by making and encouraging strategic investments in their futures." The Trust's budget for fiscal year 2008 was $162 million during which The Trust funded and managed 460 contracts for programs including out-ofschool programs, school health, youth development, parenting and early childhood development, as well as several other smaller funding categories.

With steep declines in property values over successive years, The Trust's current 2011 budget is just under $110 million, with about 300 contracts. This drastic reduction in revenues has required difficult decisions about how to reduce investments in direct services.

Development of the Tools
The initial impetus for revision of The Trust's contract performance review process, begun in 2009, included:

• the necessity to make difficult budget reductions in light of declining local property tax revenues;

• dissatisfaction with the inability of previous contract performance tools and processes to provide adequate data to guide equitable, transparent funding decisions and continuously improve contract performance; and

• the desire for one easily interpretable, integrated and standardized contract performance score that would be comparable across The Trust's different funded program areas.

With a directive from the Board and The Trust leadership, the Research and Evaluation department convened a cross-departmental work group to spearhead the development of the revised processes and tools. In keeping with The Trust's collaborative partnership approach to contracting, Trust staff also engaged contractors in the revision process. Throughout the redevelopment, piloting, and implementation phases of the revision, feedback was obtained from Trust staff and contractors through meetings, focus groups and surveys to ensure all perspectives were considered. A web-based system to record scores was developed by the Information Technology department and standard reports were developed to clearly share the results with funded providers.

Additionally, Trust staff conducted analyses of the revised tools to assess any systematic variations in contractor performance scores that could indicate scoring bias in relation to contractor characteristics such as agency size, service type, contract size, first year contract status, or poverty levels of geographic service areas. No meaningful differences that could be attributed to these characteristics were detected.

Description and Utilization of Contract Performance Tools
In their newly revised performance-based contract monitoring and funding process, The Trust utilizes three tools to conduct two formal contract performance reviews per contract year: a mid- and an end-of-year (EOY) review. The purpose of these reviews is threefold: monitoring contract implementation, guiding funding decisions, and assisting in continuous quality improvement efforts. For each review, Trust staff generate an overall performance score for each contract utilizing the results of three contract performance tools. These tools are available to contractors (and the general public) on The Trust's website and are briefly described below.

• On-site monitoring Tool, completed once per year approximately mid-way through the contract by the assigned contract manager, focuses on observation of service delivery and review of participant and administrative documentation.

• Results and Accountability Tool, completed twice per year by Trust research staff, focuses on contract performance measures including assessment of data collected by contractors on the quantity and quality of services delivered and participant outcomes achieved.

• Fiscal Results Tool, completed twice per year by Trust fiscal staff, focuses on compliance with contract fiscal requirements (e.g., invoicing, audits, fiscal viability).

The overall contract performance score generated from these tools has three elements: service quantity and quality reflecting the extent to which the contractor achieved the quantity of services and the performance measures as specified in the contract (50 percent of score), fiscal strength reflecting the extent to which the contractor met the fiscal requirements of the contract (25 percent), and contract compliance reflecting the extent to which the contractor met the administrative, safety standards and reporting requirements of the contract (25 percent).

Trust staff and board utilize the results from the mid-year reviews in making annual contract renewal decisions. Over the past two years, contracts scoring below 70 on the 100 point performance score were not renewed. For remaining contracts, renewal funding levels were reduced based on the performance score (i.e., scores of 70-79 had a 12 percent cut; 80-89 had an 8 percent cut; and 90-100 had a 4 percent cut).

Mid-year results also serve as a data-driven "early warning" system to identify potential problems and areas for improvement at the level of individual contracts or groupings of contracts (e.g., small contracts, first year contractors, or a newly launched initiative) so that Trust staff can address problems with contractors. Reflecting The Trust's partnership approach to contracting, contractors have the opportunity to meet with Trust staff to discuss and/or question their performance score. In some cases, this process may lead to a score adjustment.

Benefits
Trust staff report that implementation of this performance-based contract monitoring and funding process has resulted in a number of benefits to both The Trust and their contractors including:

• Increased equity and transparency in decision-making–funding decisions are made "in the sunshine" as scores are reviewed by the Board and publicly available upon request

• Increased internal consistency–all contractors across different funding initiatives are assessed using the same tools that now have less redundancy and duplication, and Trust staff are trained to complete each tool reliably

• Increased fiscal accountability–contract performance is assessed and results are utilized in funding decisions ensuring the effective use of public dollars

• Improved contract performance–contractors know the criteria by which they will be assessed and are incentivized to perform well knowing that performance is directly linked to future contract renewal and funding levels

• Targeted capacity-building–deficiencies in contract performance are identified by mid-year and standard guidelines were established for development of contract Program Improvement Plans (PIPs) that outline clear action steps when needed

• Improved partnership between The Trust and contractors–Trust staff openly shared the development process with contractors and actively sought their feedback on the tools and process; collaborative development facilitated acceptance and use of the revised tools by Trust staff and contractors

• Improved planning and policy-making–the revised tools provide additional data that enable data-driven planning and policymaking by The Trust's staff and board. For example, the staggered levels of performance-based funding reductions would not have been possible within previous contract review methods

• Additionally, in a survey of contractors, a majority of contractors reported the tools assisted them in assessing their contract performance and in many instances to make improvements in data collection and management

For more information about The Children's Trust's performance-based contract performance monitoring and funding process or for a copy of the contract performance tools, contact: Dalia Garcia at This e-mail address is being protected from spambots. You need JavaScript enabled to view it , or visit www.thechildrenstrust.org/forms

Modesto E. Abety-Gutierrez is president and CEO of The Children's Trust. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Catherine Raymond is president of Raymond Consulting, Inc. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it