How is a budget characteristic different in the public sector compared to the private sector?

In the public sector, the budget is not just a financial plan but also an important tool for performance measurement and accountability. Public sector organizations are often held to specific performance benchmarks that are established to ensure they meet the needs and priorities of the community they serve. This involves setting measurable goals to evaluate the effectiveness and efficiency of public programs and services. As a result, budgets in the public sector are closely tied to performance evaluations, which are influenced by public policy objectives and community expectations.

This contrasts with the private sector, where the focus is primarily on profitability and shareholder value. While private companies may have performance metrics, these are not defined by public accountability in the same way as in the public sector. Therefore, the emphasis on performance benchmarks in the public sector highlights its unique role in fulfilling public missions and being answerable to constituents, which is a critical characteristic of public budgeting.