Technical Terms

A

Asset Condition Index (ACI)
A standard means of determining an asset’s current and future physical condition. ACI is calculated by dividing the dollar amount needed for annual repairs by the amount that would be needed to replace the asset. There are three levels of condition: Good (0 to 5 percent); Fair (5 to 10 percent); and Poor (greater than 10 percent).

B

Benchmarks
Baselines against which the performance of government programs may be measured. The three most common types of benchmarks are: past performance levels of the program; performance levels of similar programs in other states or agencies; and performance targets established by law or policy. Other possible types of benchmarks include targets set by federal regulations; and standards prescribed by professional organizations.

Bidder Preference
Advantage given to vendors meeting specific criteria in the bidding process for state product or service contracts.

C

Capital budget
The spending plan for the year for building or acquiring major infrastructure projects, balanced against revenues or other financial resources. Although states often approve the capital budget separate from their operating budget, capital projects can also be funded in the operating budget. For each item in the capital budget, costs include those for the structure or land as well as related costs for original furniture and equipment.

Capital plan or Capital improvement plan
A financial plan for the improvement of state-owned infrastructure assets, including proposed projects for buildings, roads, bridges, parks, dams, land, etc., over several years.

Capital planning process
A formal assessment of a state’s future infrastructure needs. The review may consider demographics, service demand, public input, federal regulations, health and safety concerns, resource availability, and other factors.

Competency management system
A process by which an organization develops and manages specific models that include skills and behaviors needed for specific employee positions. These models may then be used in recruitment and hiring, performance appraisal criteria, and training and development.

Contracting
The process by which the state obtains necessary services from non-governmental vendors. (Note: We consider contracting for services different from procurement of goods or products.)

Cost of living adjustment (COLA)
An annual increase made automatically to employee salaries to account for rises in cost due to inflation.

Consensus forecasting
A process through which a panel of experts creates a forecast by the mutual agreement of everyone involved. For a state’s revenue forecast, included experts may include officials from the executive branch and legislature, as well as outside academic researchers, private consultants, or citizens.

E

Earmarked revenue
A source of revenue designated by law or state constitution to support a specific program or agency. By definition, “earmarked revenue” cannot include taxes imposed on specific goods, services, or businesses; taxes on sale of fuels other than motor fuels; or refunds of fuel taxes.

E-Procurement
A system utilizing Internet technology to streamline the purchases of goods and products to reduce costs.

I

Information technology plan
A statewide plan for the improvement of the state’s information technology systems, assessing future needs to achieve the state’s overall goals and objectives.

K

Knowledge Management System/Strategy
The process of gathering, organizing, sharing, and using the knowledge and experiences of employees within an organization to improve performance. Knowledge management includes a wide range of personal and technological approaches to sharing knowledge.

L

Leadership development program
A training and education program to prepare participants for leadership or senior management positions within the state or agency.

Life-cycle approach
An approach to infrastructure maintenance that aims to keep capital assets in good working order for at least as long as they were original designed to last.

M

Maintenance deferral
The act of postponing necessary operating and maintenance (O&M) spending on an infrastructure asset.

O

Operating budget
The annual spending plan for the state’s recurring expenses, including salaries, equipment, and repairs (as distinct from expenses to build or acquire permanent infrastructure.)

P

Performance
The accomplishments of an agency, program, or employee relative to stated goals and objectives.

Performance appraisal
An evaluation of how well an employee performs his or her job compared to a set of predetermined standards.

Performance-based compensation
A type of employee compensation based on demonstrated accomplishments on the job.

Performance audits
Audits that focus primarily on the effectiveness of an agency or program in meeting its objectives (rather than on legal or financial compliance issues).

Performance Management System
A comprehensive process used to measure, improve, and reward the performance of agencies, programs, or employees.

Performance measures
Indicators of progress toward meeting prescribed objectives. Common measures for evaluating performance include outputs, outcomes, and efficiency.

Procurement
The process by which the state obtains necessary goods or products from non-governmental vendors. (Note: We consider procurement of goods or products different from contracting for services.)

R

Rainy day fund
A type of contingency fund in which money is set aside to be drawn upon in case of a future budget deficit. It is often referred to as a budget stabilization fund.

S

Salary compression
Inequity in employee pay occurring when the range of pay between the highest- and lowest-paid employees is unfairly small compared to their range of skills and experience.

Strategic human capital plan
A plan for employing, developing, and evaluating the workforce of an organization to best achieve the organization’s strategic goals and objectives. The plan is typically broader than a strategic plan or workforce plan, though it contains elements of both.

Strategic plan
A comprehensive plan for accomplishment in relation to stated goals and objectives. Ideally, the plan should cover multiple years; include targets for expected accomplishments; and propose specific performance measures used to evaluate progress towards those targets.

Structural balance
A condition in which ongoing revenues exceed or meet ongoing expenses in a given fiscal year (excluding one-time expenses or revenues).

Succession planning
A process of systematically and deliberately preparing for future changes of leadership in key positions. The process may identify potential replacements and provide strategies for developing and/or hiring individuals to meet future needs.

T

Tax expenditure budget
A report showing the estimated reduction in state revenues attributable to tax credits, deductions, and exclusions included in the state tax code.

W

Workforce plan
A plan assessing the current and future capacity of a state government or agency workforce, including actions necessary to meet future workforce needs.