Measuring what matters in local government: a Municipality Sustainability Index

This paper focuses on “measuring what matters” in local government and presents a new evaluation model called Municipality Sustainability Index (MSI) based on the integration of a municipality’s financial performance with community sustainability and governance. Using Multi-criteria Decision Analysis methodology (MCDA), we develop an additive evaluation model which aggregates 25 indicators across four dimensions of performance to assess local government sustainability. A decision-making group (DMG) composed of representatives drawn from a network of stakeholders involved in local government- provided information on the requirements needed for a precise evaluation of the performance of any municipality along with prescriptive guidelines for a better local government decision-making. The MSI is used as a tool for local government evaluation and municipal strategic management. In order to illustrate the operation of the model, we applied it to Lisbon and to the sub-region of Leziria do Tejo in Portugal in order to assess performance, financial sustainability and governance. The Portuguese MSI model thus constitutes integrated instrument for local government evaluation.