agencies were expected to set priorities based on the program results that could be achieved at alternative spending levels, one of which was to be below current funding.' According to Peter Sarant, the former director of management analysis training for the US Civil Service Commission during the Carter ZBB implementation effort, 'ZBB means 'different things to different people.' Some definitions are implying that zero-base budgeting is the act of starting budgets from scratch or requiring each program or activity to be justified from the ground up. This is not true; the acronym ZBB, is a misnomer. ZBB is a misnomer because in many large agencies a complete zero-base review of all program elements during one budget [5] period is not feasible; it would result in excessive paperwork and be an almost impossible task if implemented.' In many respects the 'common misunderstanding' of ZBB noted above resemble a 'sunset review' process more than a traditional public sector ZBB process.

#### Definition

According to Sarant, ZBB is a technique which complements and links to existing planning, budgeting and review processes. It identifies alternative and efficient methods of utilizing limited resources . It is a flexible management approach which provides a credible rationale for reallocating resources by focusing on a systematic review and justification of the funding and performance levels of current programs.' A method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one. ZBB allows top-level strategic goals to be implemented into the budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.

#### Components of a public sector ZBB analysis

In general there are three components that make up public sector ZBB:

- 1. Identify three alternate funding levels for each decision unit (Traditionally, this has been a zero-base level, a current funding level and an enhanced service level.);
- 2. Determine the impact of these funding levels on program (decision unit) operations using program performance metrics; and
- 3. Rank the program 'decision packages' for the three funding levels.

The process was also specifically intended to involve both program staff and budget staff in the process. In many cases, program staffers were asked to look for alternative service delivery models that could deliver services more efficiently at lower funding level. The US General Accounting Office (GAO) reviewed past performance budgeting initiatives in 1997 and found that ZBBs 'main focus was on optimizing accomplishments available at alternative budgetary levels. Under ZBB agencies were expected to: Set priorities based on the program results that could be achieved at alternative spending levels, one of which was to be below current funding.

- 1. In developing budget proposals, these alternatives were to be ranked against each other sequentially from the lowest level organizations up through the department and without reference to a past budgetary base.
- 2. In concept, ZBB sought a clear and precise link between budgetary resources and program results.'

Further, 'ZBB illustrated the usefulness of: