- 1. Defining and presenting alternative funding levels; and
- 2. Expanded participation of program managers in the budget process.'

The federal ZBB budgeting system had the following components: 'Budget requests for each decision unit were to be prepared by their managers, who would (1) identify alternative approaches to achieving the unit's objectives, (2) identify several alternative funding levels, including a 'minimum' level normally below current funding, (3) prepare 'decision packages' according to a prescribed format for each unit, including budget and performance information, and (4) rank the decision packages against each other.' ZBB was officially eliminated in federal budgeting on August 7, 1981. 'Some participants in the budget process as well as other observers attributed certain program efficiencies, arising from the consideration of alternatives, to ZBB. Interestingly, ZBB established within federal budgeting a requirement to:

- 1. Present alternative levels of funding; and
- 2. Link (them) to alternative results.'

#### Defining the government program zero-base

As noted earlier, there is often considerable confusion over the meaning of zero-base budgeting. There is no evidence that public sector ZBB has ever included 'building budgets from the bottom up' and 'reviewing every invoice' as part of the analysis. In discussions of ZBB, there is often confusion between a ZBB process and a sunset review process. In a sunset review the entire function is eliminated unless evidence is provided of program effectiveness. This confusion ultimately leads to the question: what is a zero-base? Sarant's definition of the zero - base based on the federal training experience is: 'A minimum level is actually the grass roots funding level necessary to keep a program alive. Therefore, the minimal level is the 'program or funding level below which it is not feasible to continue a program… because no constructive contribution can be made toward fulfilling its objective.' Identifying this level of program funding has been subjective and problematic. Consequently, 'some states have selected arbitrary percentages to insure that an amount smaller than last year's request in considered. They do this by stipulating that one alternative must be 50 or 80 or 90 percent of last year's request.' This equates to analyzing the impact on program operations of a 10, 20 or 50 percent reduction in funding as the 'zero base' funding level.

#### Importance of performance measures

Performance measures are a key component of the ZBB process. At the core, ZBB requires quality measures that can be used to analyze the impact of alternative funding scenarios on program operations and outcomes. Without quality measures ZBB simply will not work because decision packages cannot be ranked. To perform a ZBB analysis 'alternative decision packages are prepared and ranked, thus allowing marginal utility and comparative analysis.' Traditionally, a ZBB analysis focused on three types of measures. 'They (federal agency program staff) were to identify the key indicators to be used in measuring performance and results. These should be 'measures of:

- 1. effectiveness,
- 2. efficiency, and
- 3. workload for each decision unit.

Indirect or proxy indicators could be used if these systems did not exist or were under development.'

#### Impact of ZBB on Government Operations

According to the National Conference of State Legislatures: