Benchmarking the financial performance of local councils in Ireland

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Abstract

It was over a quarter of a century ago that information from the financial statements was used to benchmark the efficiency and effectiveness of local government in the US. With the global adoption of New Public Management ideas, benchmarking practice spread to the public sector and has been employed to drive reforms aimed at improving performance and, ultimately, service delivery and local outcomes. The manner in which local authorities in OECD countries compare and benchmark their performance varies widely. The methodology developed in this paper to rate the relative financial performance of Irish city and county councils is adapted from an earlier assessment tool used to measure the financial condition of small cities in the US. Using our financial performance framework and the financial data in the audited annual financial statements of Irish local councils, we calculate composite scores for each of the thirty-four local authorities for the years 2007–13. This paper contributes composite scores that measure the relative financial performance of local councils in Ireland, as well as a full set of yearly results for a seven-year period in which local governments witnessed significant changes in their financial health. The benchmarking exercise is useful in highlighting those councils that, in relative financial performance terms, are the best/worst performers.

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