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Office of Program Policy Analysis and Government Accountability

Florida's Unit Cost Initiative Shows Promise, But Needs Development, Report No. 01-05, January 2001
 
Full report in PDF format

Program Evaluation and Justification Reviews


  • As part of its initiative to use performance–based program budgeting to improve program efficiency, the Florida Legislature requires agencies to report their unit costs.
  • Unit costs are the costs of producing an output or outcome. These costs can be calculated in a number of ways, the most common of which are the
  • Direct costs of producing one unit of output and
  • Allocated costs, using a methodology that assigns indirect or overhead costs to each unit.
  • Direct, indirect, and allocated costs provide important information for managers and policy makers, and the type of cost data used depends on the purpose of the analysis. Direct costs that are separated from indirect costs are most useful for budgeting purposes and privatization decisions. However, cost comparisons are best done with allocated costs.
  • The categories that agencies are using to report costs are useful for budgetary purposes. However, the precision of agency cost estimates will vary. The estimates of agencies that structure their organizations around business practices will be more accurate than the cost estimates of agencies that structure their organizations in other ways.
  • In some programs, problems with the manner in which the outputs have been defined may limit the accuracy and usefulness of these unit costs. The extent to which this occurs needs to be determined by analyzing each agency’s long-term program plan.


What other OPPAGA-related materials are available?

  • Report No. 96-77B Performance-Based Program Budgeting in Florida: Current Status and Next Steps, published in April 1997.
  • Report No. 96-77A Performance-Based Program Budgeting in Context: History and Comparison, published in April 1997.
  • Report No. 00-15 PB2 Status Report, Recent Initiatives Strengthen Florida's Performance-Based Budgeting System, published in November 2000.
  • Report No. 98-45 PB2 Status Report, Fiscal Year 1998-99: Performance-Based Budgeting Has Produced Benefits But Its Usefulness Can Be Improved, published in January 1999.

Copies of this report in print or alternate accessible format may be obtained by telephone (850/488-0021), by FAX (850/487-9213), in person, or by mail (OPPAGA Report Production, Claude Pepper Building, Room 312, 111 W. Madison St., Tallahassee, FL 32399-1475).
e-mail address: oppaga@oppaga.fl.gov


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