The fundamental principle of performance-based management and budgeting is to allocate resources to achieve specific, measurable outcomes. In this scenario, the agency's goal is street maintenance, and its key indicator is pavement rating scores. Additional funds should be directed to where they can make the most impact on this indicator. Allocating the $5 million to "lane miles with unmet needs"—those with the lowest pavement scores—is a data-driven approach that directly addresses the most critical deficiencies. This ensures the new resources are used efficiently and effectively to improve the overall condition of the street network, maximizing the return on investment.

A. The number of intersections is an inventory metric, not a direct measure of pavement condition or maintenance need.

B. Historical budgeted amounts reflect past priorities and may not align with current, data-driven needs for pavement repair.

C. Allocating funds to lane miles already rated as acceptable is an inefficient use of resources intended for maintenance and improvement.

1. Federal Highway Administration (FHWA). (2012). Pavement Management Guide (Publication No. FHWA-HIF-11-010). U.S. Department of Transportation. In Chapter 6, "Priority Setting and Optimization," the guide explains that a Pavement Management System (PMS) uses pavement condition data to "identify, prioritize, and select the most cost-effective projects" (p. 6-1). This directly supports allocating funds based on identified needs (i.e., poor pavement scores).

2. Government Finance Officers Association (GFOA). (2020). Best Practice: Budgeting for Outcomes. GFOA's framework emphasizes allocating resources based on the results or outcomes citizens value. It states that governments should "identify the results that are most important to citizens" and "price the strategies that will achieve those results." In this case, the outcome is improved streets, and the strategy is to repair the ones with unmet needs.

3. Poister, T. H., Aristigueta, M. P., & Hall, J. L. (2015). Managing and Measuring Performance in Public and Nonprofit Organizations (3rd ed.). Jossey-Bass. Chapter 8, "Using Performance Information in Managing for Results," discusses how performance data, such as infrastructure condition ratings, should be used to inform resource allocation decisions to target areas of greatest need and improve program effectiveness.