# Presentation: 534983

## Budget and Performance Integration 

- Ava Lee and
- Lisa Greenwood

## “We want to make sure that when we spend money, that it meets needs....that’s what the American taxpayer expects.  They expect results and I expect results.”
				President George W. Bush
						     April 9, 2002

- 				President George W. Bush
- 						     April 9, 2002

-   Governing with Accountability

**Notes:**
Performance and Accountability have been central themes of this Administration from its beginning.  While quotes like this can be found in previous Administrations, I think the senior-level focus at OMB and in the agencies that has been placed on the initiatives in the President’s Management Agenda set it apart from previous efforts.

## President’s Management Agenda

- _Objective:_  To improve the management and performance of the Federal government by targeting the most apparent deficiencies where the opportunity to improve performance is the greatest
- Five inter-related, government-wide initiatives

**Notes:**
The primary means to ensure these issues remain a top priority of OMB and the agencies is the President’s Management Agenda.  The Agenda is comprised of 5 government-wide initiatives.

## President’s Management Agenda

- Government-wide initiatives:
- Strategic Management of Human Capital
- Competitive Sourcing
- Improve Financial Management
- Expanded E-Government
- Budget and Performance Integration

**Notes:**
All are interrelated.  All are designed to give, in one form or another, program managers the ability to deliver services more effectively.  

The stoplight approach – “red”, “yellow”, “green” ratings on each Agenda initiative used to measure progress and status of each agency.  Rather simplistic, but it has been very effective in getting agency attention.  

The fifth element of the President’s Management Agenda – Budget and Performance Integration – stresses making budget decisions based on results.

## At the Start: Budget and  Performance Were Not Integrated

- Past and planned results were not shown with budget requests, let alone linked in a cost-and-results relationship
- Program managers responsible for achieving results often did not control the resources they use or have flexibility to use them efficiently
- Performance and cost data were recorded in separate systems and not integrated to provide timely, analytical feedback to decision-makers and mangers
- Americans could not readily assess program results, and could not compare performance and cost across programs

**Notes:**
What are the problems this initiative is intended to address?

## Purpose of Budget and Performance Integration

- Identify desired _outcomes_ and the _full costs_ of programs to achieve them
- Provide greater focus on _performance_ and _accountability_
- _Reinforce_ high-performing programs and _reform or terminate_ non-performing activities

**Notes:**
How will it address these problems?
Providing a clear picture of what we are trying to accomplish and what resources are being spent to accomplish it

Providing a greater focus on developing measures to evaluate whether we are actually making progress towards achieving the outcomes and holding those responsible accountable for performance.

This accountability includes funding allocations based on results and performance evaluations based on results.

## Integrate Budget and Performance Reporting

- _Strategic plans_ to achieve outcomes
- _Performance budgets_ presented by strategic goal, with annual performance targets linked to resources
- _Accountability reports_ that summarize year-end performance and financial results

**Notes:**
We are also trying to improve reporting of performance information.

The government produces around 13,000 pages of program performance information each year.   

Strategic Plan.  The agency’s strategic plan should capture the overarching purposes of the agency in a limited number of strategic goals.  It should have outcomes that measures progress toward the goals and should explain how each program contributes toward the desired outcomes.

Performance budget.  The agency should develop a performance budget, organized like its strategic plan, that matches resources with outputs and justifies resources requested by their effectiveness at influencing desired outcomes.

Finally, agencies should report on whether they accomplished what they set out to do. This is accomplished through the Performance and Accountability Report.

## Five Criteria for Getting to “Green”

- Collaboration
- Among planning, budgeting, financial, and program staff
- Objectives/Goals/Targets
- Performance-based budgets
- Alignment
- Budget presented by goal and objective
- Full Cost
- All resources identified with achieving goal/objective
- Validation
- Established linkages between results and resources

**Notes:**

These standards were reviewed by outside experts and approved by the President’s Management Council – the Chief Operating Officers of the major agencies.

Collaboration: ensuring that all relevant part of the organization communicate.

Objective/Goals/Targets: establish end points and ways to measure accomplishment 

Alignment:  present resources in a way that makes the linkage to the goals transparent, for both the program managers and the general public

Full cost: not only the direct costs of a program, but the full costs of support goods and services, and an allocation of overhead to programs.  The Administration is also seeking changes to charge the full cost of retirement benefits to Federal employees to the agencies and programs (Civil Service Retirement Service and Foreign and Intelligence service costs).  It’s also considering options to cover other costs, notably estimated future hazardous waste cleanup expenses. 

Validation: demonstrating that the agency is actually making resources decisions based on performance. 

## Major Areas Needing Improvement

- Lack of valid program performance information
- Focus on outputs, not outcomes
- Linkage between available performance data and budget decisions
- Incomplete cost allocations

**Notes:**
Several areas are directly related to the capabilities and quality of the department’s information management systems.

Outcomes are uncontrollable, yet people expect the government to try and influence them: reduce health risks, improve environmental quality.  Such outcomes are difficult to attain and evaluate agency contribution to improvement.

## Coming Together

- Performance and cost information will be integrated in the performance budget and accountability report
- Presentation and incentives will support greater program effectiveness

**Notes:**
Performance and cost information will be integrated in the performance budget and accountability report 
Presentation and incentives will support greater program effectiveness.

## Mercatus Center Rating

- Rating indicates how well the agencies’ reports inform the public about the results they produced so that policymakers and citizens can make informed judgments about results
- Significant improvement for USDA—ranked 4th in FY 2003; up from 12th for FY 2002

## In Conclusion.....

- On integrating management and budget:
- ...this will be a long-term project.  And here, there’s probably no more graphic difference or chasm between public and private decisionmaking... I often remark that in every other endeavor, it’s absolutely assumed that budgets and performance will be tightly linked together – whether it’s your family’s budget, any for-profit enterprise, and most non-profit enterprises... We have to begin insisting – wherever possible – [that] metrics and measurement occur... and that we become comfortable and skilled at redeploying funds from programs that don’t work...to those that do.
- 					OMB Director Mitch Daniels
- 					The Business of Government, Fall 2001