Which approach seeks to link budgeting directly to performance outcomes?

The chosen answer, program budgeting, is recognized as a method that directly correlates budgeting with the specific outcomes of various programs. This approach emphasizes allocating resources based on the effectiveness and efficiency of programs in achieving desired results rather than merely adjusting previous budgets or following historical spending patterns.

Program budgeting involves identifying the objectives of programs, measuring their output, and assessing their impact. This creates a direct relationship between the budget and the performance of the specific programs, ensuring that funds are allocated to areas that deliver the most significant benefits to the organization or community.

In contrasting methods, line-item budgeting focuses on the separate expenses categorized by items, which does not inherently connect spending to performance outcomes. Incremental budgeting adjusts previous budgets by adding or subtracting a small amount, often based on historical data, without evaluating the effectiveness of the previous spending on outcomes. Zero-based budgeting requires justifying all expenses from scratch for each new period, which can involve performance considerations but does not inherently link budget decisions to performance outcomes in the systematic way that program budgeting does.

Thus, program budgeting is distinguished by its focus on aligning financial resources with measurable performance objectives, making it the correct approach in this context.