Certified Professional Public Buyer (CPPB) Practice Test

Which type of budget focuses on the evaluation of program results and efficiency?

1. Performance budget

2. Zero-based budget

3. Program budget

4. Results-oriented budget

The correct answer is: Performance budget

A performance budget is designed to assess the outcomes of programs and the efficiency with which they are executed. This type of budget links the allocation of funds directly to measurable results and performance metrics, emphasizing accountability and effectiveness in achieving set objectives. By focusing on both the inputs (resources allocated) and outputs (results achieved), performance budgeting helps organizations ensure that their financial resources are utilized in a manner that maximizes results and enhances overall program efficiency. In contrast, a zero-based budget starts from a "zero base" for each new budgeting period, requiring justification for all expenses, which does not inherently focus on evaluating results. A program budget organizes financial data by specific programs but is not solely focused on performance metrics. A results-oriented budget emphasizes outputs as well but may not have the structured approach for continuous evaluation that performance budgets incorporate. Thus, performance budgeting uniquely stands out for its direct connection between funding and performance results.