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[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

 
                      PERFORMANCE-BASED BUDGETING

=======================================================================

                                HEARING

                               before the

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

             HEARING HELD IN WASHINGTON, DC, JULY 20, 2005

                               __________

                           Serial No. 109-10

                               __________

           Printed for the use of the Committee on the Budget

                       Available on the Internet:
       http://www.gpoaccess.gov/congress/house/budget/index.html

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
22-571                      WASHINGTON : 2005
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                        COMMITTEE ON THE BUDGET

                       JIM NUSSLE, Iowa, Chairman
JIM RYUN, Kansas                     JOHN M. SPRATT, Jr., South 
ANDER CRENSHAW, Florida                  Carolina,
ADAM H. PUTNAM, Florida                Ranking Minority Member
ROGER F. WICKER, Mississippi         DENNIS MOORE, Kansas
KENNY C. HULSHOF, Missouri           RICHARD E. NEAL, Massachusetts
JO BONNER, Alabama                   ROSA L. DeLAURO, Connecticut
SCOTT GARRETT, New Jersey            CHET EDWARDS, Texas
J. GRESHAM BARRETT, South Carolina   HAROLD E. FORD, Jr., Tennessee
THADDEUS G. McCOTTER, Michigan       LOIS CAPPS, California
MARIO DIAZ-BALART, Florida           BRIAN BAIRD, Washington
JEB HENSARLING, Texas                JIM COOPER, Tennessee
ILEANA ROS-LEHTINEN, Florida         ARTUR DAVIS, Alabama
DANIEL E. LUNGREN, California        WILLIAM J. JEFFERSON, Louisiana
PETE SESSIONS, Texas                 THOMAS H. ALLEN, Maine
PAUL RYAN, Wisconsin                 ED CASE, Hawaii
MICHAEL K. SIMPSON, Idaho            CYNTHIA McKINNEY, Georgia
JEB BRADLEY, New Hampshire           HENRY CUELLAR, Texas
PATRICK T. McHENRY, North Carolina   ALLYSON Y. SCHWARTZ, Pennsylvania
CONNIE MACK, Florida                 RON KIND, Wisconsin
K. MICHAEL CONAWAY, Texas
CHRIS CHOCOLA, Indiana

                           Professional Staff

                     James T. Bates, Chief of Staff
       Thomas S. Kahn, Minority Staff Director and Chief Counsel

                            C O N T E N T S

                                                                   Page
Hearing held in Washington, DC, July 20, 2005....................     1
Statement of:
    Hon. Clay S. Johnson III, Deputy Directory for Management, 
      Office of Management and Budget............................     4
    Hon. Henry Cuellar, a Representative in Congress from the 
      State of Texas.............................................     7
    Hon. K. Michael Conaway, a Representative in Congress from 
      the State of Texas.........................................    13
Prepared statement of:
    Mr. Johnson..................................................     5
    Mr. Cuellar..................................................    10
    Mr. Conaway..................................................    14

                      PERFORMANCE-BASED BUDGETING

                              ----------                              

                        WEDNESDAY, JULY 20, 2005

                          House of Representatives,
                                   Committee on the Budget,
                                                    Washington, DC.
    The committee met, pursuant to call, at 10 a.m. in room 
210, Cannon House Office Building, Hon. Jim Nussle (chairman of 
the committee), presiding.
    Members present: Representatives Nussle, Sessions, Chocola, 
Bonner, Ryun, Diaz-Balart, Putnam, Mack, Lungren, Crenshaw, 
McHenry, Conaway, Spratt, Baird, Neal, and Cuellar.
    Chairman Nussle. The Committee will come to order. The 
subject of today's full Budget Committee hearing is 
performance-based budgeting.
    Good morning and welcome. Today, we are here to discuss 
that concept and how it may be applied to our own congressional 
budget process. I would imagine that performance budgeting is 
not a concept that is necessarily well understood or even well 
known by a majority of folks. So, as a first order of business 
today, and I am sure our witnesses will explain this, but let 
me try and give a quick, thumbnail overview of what 
performance-based budgeting is about, and then I am sure our 
experts will be a little bit more in depth in their 
explanation.
    In a nutshell, performance budgeting is an effort to tie 
the funding levels for government programs to the programs' 
actual performance. The intent is to ensure that performance is 
routinely considered in funding and management decisions and 
that programs achieve expected results and work toward 
continual improvement. The practice has been utilized in 
various forms and with a varying degree of effectiveness and 
success by many of the 50 States, including my own State of 
Iowa, as well as the Federal Government.
    On the Federal level, over the past decade Congress, the 
administration's Office of Management and Budget (OMB), and 
other executive agencies have worked to implement a statutory 
and management-reform framework to improve the performance and 
accountability of the Federal Government. Through measures such 
as the Government Performance and Results Act, the Chief 
Financial Officers Act, the Government Management Reform Act, 
and the administration's performance assessment rating tool 
(PART); these are the measures that have been employed to try 
and accomplish these ends.
    According to GAO (Government Accountability Office), this 
framework has helped. It has helped to establish a basic 
infrastructure for creating high-performing Federal 
organizations, with a possible next-step strategy for 
restructuring budgeting practices with a much heavier focus on 
performance and results during the budget deliberations. I will 
note that in the report accompanying this year's budget, we 
included language supporting the goals of performance 
budgeting. I will also note that there have been a few concerns 
raised over the years on this practice. Most notably that the 
use of performance budgeting could allow the executive branch 
to infringe on Congress's control over the purse; also that the 
practice might be used as a means to kind of pick and choose 
successful, or somebody's definition of ``unsuccessful,'' 
programs based on personal interest rather than actual 
performance.
    So today, we are here to take a good look at just what this 
practice is all about, not only its concept and intent, but 
also how performance criteria should be determined or are 
determined. Also how these criteria are used to measure the 
potential and actual success of programs and agencies and what 
measures in performance budgeting are already in use at the 
Federal level and what further implementation is needed or 
should be encouraged. Finally, what are some of the challenges 
of implementing performance budgeting at both the State and the 
Federal level?
    To help us in this discussion we will review the experience 
of State governments, what they have had with this process, 
particularly the State of Texas, a pioneer in performance 
budgeting. We will explore its impact on agency performance and 
funding in Texas, as well as implications of adapting such 
practices to the Federal Government. And that is a perfect 
segue to introducing our witnesses, all of whom are Texans and 
all of whom have experience in performance budgeting in the 
State prior to coming to Washington.
    First, we will hear from Clay Johnson, who is the Deputy 
Director for Management at OMB. Deputy Director Johnson, who 
served then-Governor Bush back in Austin, is now largely 
responsible for implementing the President's management agenda 
and the administration's plan for improving management and 
performance at the Federal Government level. In fact, it is his 
job, as the President wanted to put M back in OMB, it is Clay 
Johnson's job to try and accomplish that.
    One of the primary components of the plan is the program 
assessment rating tool, or PART, which uses the practice of 
performance budgeting to improve both monitoring of a program's 
performance and outcome measures.
    We also have two distinguished members from this committee 
from either side of the aisle: Mr. Cuellar from Texas, who has 
requested that we hold this hearing in the first place. We 
appreciate his leadership, he brought this to the attention of 
this committee during the markup process of the budget. He is a 
former State legislator who has extensively analyzed the 
various States' approaches to performance budgeting and really 
has given us the ability to hold this discussion today, and I 
appreciate that leadership. Also, Mr. Conaway from Texas, who, 
prior to serving in Congress, was a CPA, it is nice to have a 
CPA on the Budget Committee. He was chairman of the State board 
of public accountancy, a State agency that regulates the 
practice of accountancy in Texas, who brings a strong business 
perspective to this discussion. We appreciate your leadership 
on this issue as well.
    We welcome all of you, and we appreciate your willingness 
to testify before your own committee. We are pleased to receive 
your entire testimony, and we understand that you may have some 
questions for each other, which will be kind of an interesting 
roundtable today because you are members of the committee. It 
is unusual that witnesses get to ask questions of one another, 
but I know that we will learn more if we have a little bit more 
freewheeling process here today, so we will see if we can 
accommodate that.
    With that, I will turn to Mr. Spratt for any opening 
comments he would like to make.
    Mr. Spratt. Mr. Chairman, thank you very much, and thank 
you for calling this hearing on performance-based budgeting. It 
is an important tool for public management. It is still a very 
conceptual tool.
    I want to welcome all three of our witnesses but 
particularly give credit to Congressman Cuellar for initiating 
this hearing and for his effective advocacy here in Congress 
and back in Texas. Dr. Cuellar is an expert on performance-
based budgeting, having written his Ph.D. dissertation on the 
topic at the University of Texas and having been a tireless 
advocate of it, and this hearing is one example of that.
    Having a Federal Government that does more and costs less 
is a bipartisan objective. The Clinton administration began its 
business by instituting the National Performance Review, which 
made 380 recommendations for reinventing government after 
reviewing the operations of each executive department and the 
work of 11 reinvention teams and 22 agency redesign teams. The 
National Performance Review issued its recommendations in 
September 1993, and the President signed implementing 
legislation in 1994.
    President Clinton also signed into law the Government 
Performance and Results Act shortly after taking office. The 
GPRA required for the first time that every executive 
department and all Government agencies create strategic plans 
to support their missions and also to identify measures for 
determining the success or progress of the performance of those 
strategic plans and report annually on these measures.
    In its report examining the first decade of the GPRA, the 
General Accountability Office said, ``GPRA's requirements have 
established a solid foundation for results-oriented performance 
planning, measurement, and reporting in the Federal 
Government.'' That is the foundation that we would to build 
upon today, and that is the purpose of today's hearing.
    I want to thank, as I said, Clay Johnson for coming, and we 
look forward to working with you to put the M back in OMB--I 
think that is critically important--and Mr. Conaway as well; it 
is good to have your expertise at the Committee table today, 
and we look forward to your testimony and the questions 
afterwards. Thank you again for participating.
    Chairman Nussle. Thank you, Mr. Spratt.
    I ask unanimous consent that all members be allowed to put 
opening statements in this part of the record. Without 
objection, so ordered.
    To our witnesses, your prepared statements will be made 
part of the record, and you may summarize as you see fit.
    Let me first turn to the Honorable Clay S. Johnson, who is 
the Deputy Director for Management at OMB, and we welcome you 
to the Committee, and we are pleased to receive your testimony.

STATEMENT OF THE HONORABLE CLAY S. JOHNSON III, DEPUTY DIRECTOR 
        FOR MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Johnson. Mr. Chairman, thank you, and Ranking Member 
Spratt thank you very much for having me up here. As you 
stated, we all are very interested in spending the taxpayers' 
money more wisely every year. We have to be more effective 
every year at spending the taxpayers' money, particularly in 
this tight budget environment that we find ourselves in.
    Let me comment about a couple of things that I think are 
important to remember and to make sure we have as we try to get 
more for the taxpayers' money and then to raise a couple of 
caveats, things that are important to remember.
    To get more for the taxpayers' money, we have to have 
several things. We have to have a lot more information, a lot 
better information than we have now. We have to have good 
information about how programs are working; we have to have 
good, defined outcome measures; we have to have good efficiency 
measures; and we are in the process of providing that. We will 
get better and better at it every year. We have to have lots 
and lots and lots of transparency. We have to have all of this 
information be very public not only with the Congress but also 
with the American people. There has to be much more discussion 
and it has to be much more what we pay attention to, i.e., how 
programs are working and at what cost.
    We also have to have lots and lots and lots of 
accountability. The PART, the Program Assessment Rating Tool, 
has an accountability element. Programs are held accountable 
for the implementation of their recommended next steps for 
program improvement each year, whether the program is 
fantastic, medium, or not very good at all. The recent proposal 
for a Sunset Commission and a Results Commission to provide 
formal accountability for programs to come forward and explain, 
in the case of the Sunset Commission, every 10 years why they 
should continue to exist. There are various forms that 
accountability can take. Those are just two: the Results and 
Sunset Commissions.
    We are in the process of developing a Web site for the 
American people, to hear how all programs are working or not, 
in English, for the lay people, not in OMB form of English, but 
in English-English: Here is how programs are working, candid 
assessments of how they are working, and what we are doing to 
make them work better. There are many forms that accountability 
can take, and we can never have enough accountability.
    Two caveats I raise in the area of performance budgeting. 
It should not be true that performance is the only thing that 
drives budgeting. There are other considerations: priorities of 
the administration and the priorities of Congress. Maybe you 
have a program that works great, but it is dealing with the 
entire issue that needs to be dealt with, and more money is not 
called for. Alternatively, there could be a program that is 
working well, but it has served its purpose, and there is no 
more reason to fund that program. Occasionally, politics enters 
into it and we all understand that. There should be no slavish, 
automatic tie between performance and funding.
    The second caveat here is the approach to performance 
budgeting, the first approach, the first mind-set, and the 
first objective should be that we want programs to work. The 
reason to pay attention to programs is not to look for programs 
to get rid of. The first goal should be to ask does this 
program work or not? If it does not work, is there a reason why 
we should make it work? In other words, is it a proper Federal 
role? Is it an important priority for the country? And in most 
cases, the answers will be yes and yes, and the primary 
objective of determining, first and foremost, that it does not 
work is to figure out how to make it work better.
    At some point, we will decide we cannot make it work 
better, or there is somebody else that can do it better, that 
the role is better served by somebody else, and the decision 
will be made to reduce funding or eliminate the program. But 
the primary, going-in mind-set, our recommendation for using 
performance information is that it should be used primarily to 
make programs work better. Thank you for having me up here 
today.
    [The prepared statement of Mr. Johnson follows:]

 Prepared Statement of Hon. Clay S. Johnson III, Deputy Directory for 
              Management, Office of Management and Budget

    I contend that agencies are better managed and achieving greater 
results today with the help of the President's Management Agenda, but 
the opportunities for improvement are great. We want programs to work. 
We want to spend taxpayers' money better every year. We want to make 
sure that the taxpayer's get what they expect.
    One of our primary instruments for achieving this goal is the 
Program Assessment Rating Tool (PART). We use the PART to assess the 
performance of all Federal programs, to guide the action to improve 
their performance, and to make sure our funding proposals get the 
taxpayers the most for their money. With the PART, we are assessing 
programs to find out what works and what doesn't. We ask of every 
program:
     Does it have a clear definition of success, and is it 
designed to achieve it?
     Are its goals sufficiently outcome-oriented and 
aggressive?
     Is it well managed?
     Does it achieve its goals?
    In order for a program to be effective, it must have a clear 
definition of success and measures to determine whether it is achieving 
it. Each program assessed with the PART is required to develop clear, 
outcome-oriented goals and targets for improving both performance and 
efficiency. PART analysis also helps identify a program's strengths and 
weaknesses. In response to its PART assessment, a program identifies 
the specific steps it will take to improve its performance or overcome 
things that inhibit its performance. Under this model, all programs, 
both high and low performers, commit to improving each year.
    We have already begun to see success. As agencies have become 
better at demonstrating and focusing on results, PART ratings have 
improved. The percentage of programs rated Effective, Moderately 
Effective or Adequate rose from 57 percent in 2003 to 67 percent in 
2005. The percentage of programs rated Ineffective or Results Not 
Demonstrated fell from 43 percent in 2003 to 33 percent in 2005.
    The Administration is committed to holding ourselves--agencies and 
programs--accountable to the American people for achieving results. One 
way we do this is through the transparency of the PART process. 
Currently, anyone can see the all completed PART questions and answers 
online at OMB's website. We will also design a new website to more 
clearly communicate to the American people what programs are working, 
which ones are not, and what we are doing to make those programs 
better.
    We also need to enlist Congress more directly in holding agencies 
and programs accountable for their performance through a Sunset 
Commission, which provides regular scrutiny of Federal programs. This 
bipartisan commission would review each Federal program on a schedule 
established by the Congress to determine whether it is producing 
results and should continue to exist. Programs would automatically 
terminate according to the schedule unless the Congress took action to 
continue them.
    The Administration's efforts to get more results for the American 
people are not only aimed at programs, they are behind the 
Administration's effort to modernize the Federal Government's personnel 
system. The Administration will soon propose legislation to, among 
other things, ensure employees are recognized and rewarded for their 
performance relative to mission-relevant goals, rather than longevity. 
It will require managers to ensure everyone clearly understands what is 
expected of them, how they are performing relative to those 
expectations, and how they can grow professionally and become even more 
effective each year. Continuous program performance improvement is 
possible with such personnel reforms.
    Many programs don't achieve their intended results because they are 
hampered by uncoordinated programs designed to achieve the same or 
similar goal. That is why the Administration proposes the enactment of 
Results Commissions, which would review Administration plans to 
consolidate or streamline programs that cross departmental or 
congressional committee jurisdictional lines to improve performance and 
increase efficiency. Ordinarily, programs that cross such boundaries 
often are not subject to the usual performance review process, 
resulting in inefficiencies, lost opportunities, or redundancies. 
Results Commissions, made up of experts in relevant fields, would be 
established as needed to review consolidation proposals. The Congress 
would consider the Commission's recommendations through expedited 
review authority.
    The Administration has set a goal to reduce the deficit in half 
over the next 5 years and is working to stop growth in non-defense, 
non-homeland discretionary spending. In this context, it is even more 
imperative that we invest our resources in those programs that are 
performing well and those which hold the promise of performing well 
with reform. When we find that tax dollars can be invested with better 
result in another program, it is our responsibility to propose it. PART 
ratings of ``Ineffective'' or
    ``Results Not Demonstrated'' were a major factor in the decision to 
propose a number of reforms as well as the termination or reduction of 
29 programs. For instance:
    HOPE VI--The program was originally designed to address 100,000 of 
the severely distressed public housing units in the Nation's urban 
neighborhoods. Through 2004, 117,000 units have been demolished and HUD 
has approved the future demolitions of almost 50,000 more. The PART 
assessment found the program to be more costly than others and to take 
too long to produce results. So the budget redirects the funds other 
HUD programs.
    Juvenile Accountability Block Grants--Other than anecdotal 
information, there is little evidence the program reduces juvenile 
crime. The Administration proposes to redirect the program's funds to 
other higher priority law enforcement programs.
    Migrant and Seasonal Farm Worker Training Program--The PART 
assessment found that about 60 percent of participants receive no 
training and instead receive only low-cost supportive services that 
other Federal programs also finance. The Administration proposes to 
terminate the program, as it duplicates existing programs, does not 
focus sufficiently on job training, and has poor performance 
accountability for grantees.
    Just because we propose to terminate a program like the Safe and 
Drug Free Schools State Grants program doesn't mean we don't want safe 
and drug free schools. In fact, it is because we care so much about 
having safe and drug free schools, and independent evaluations show 
that the program doesn't help us achieve that, we propose to invest the 
program's dollars instead in a program that will hold grantees 
accountable for spending the money in areas with the greatest need on 
activities that have proven successful. We want programs to work. The 
PART helps us find out whether a program is working or not and, if not, 
what to do about it. In some cases, it may be that a program is such a 
low priority or performs so poorly that that program's funds should be 
allocated elsewhere. It is our responsibility to convince Congress we 
are right. If we are successful, the result will be more programs 
achieving the intended results on behalf of the American people.

    Chairman Nussle. Thank you for your testimony. We look 
forward to having a chance to visit about this further.
    Mr. Cuellar.

 STATEMENT OF THE HONORABLE HENRY CUELLAR, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Cuellar. Thank you very much, Mr. Chairman, Mr. Spratt, 
and members of the committee. Thank you for this opportunity 
where we are, all of us working toward the goal of making 
government more efficient, more effective, and more 
accountable.
    Before I get started, I certainly want to thank Clay 
Johnson for the work that he has done for the OMB. Improving 
the performance of our agency is a bipartisan issue that is a 
hallmark of good government, and I would like to thank him for 
furthering the work that got started back in 1993.
    I would also like to thank my friend and my fellow 
colleague, Mike Conaway, for all of his hard work that he has 
done on this particular project and the work that he did back 
in Texas.
    What I would like to do, Mr. Chairman, is to go over a 
couple of items. The first thing is, one of the basic premises 
that we have, what gets measured gets done. I would like to 
address today some of the items that I believe are important to 
shed some further light on our responsibility as Congress 
Members to provide a continuous level of government improvement 
for our fellow citizens. The answer is not complicated. It is 
not expensive. In fact, I believe very strongly that it does 
streamline government, encourages efficiency, and does reward 
effectiveness. The concept, of course, Mr. Chairman, like you 
have in your State, is performance-based budgeting or 
performance budgeting.
    Performance budgeting is a results-oriented budget tool 
that sets goals and performance targets for agencies and 
measures the results. Performance budgeting not only increases 
the capacity for legislative oversight, and I emphasize 
legislative oversight, but it also helps to increase the 
quality of services that our citizens receive. It is important 
that our legislative body should remain representative and 
responsive to the needs of the citizen.
    David Osborne and Ted Gaebler talked about the need for 
measurement in their book called ``Reinventing Government.'' 
Their basic premis is, if I can outline the basic premise, is 
what gets measured gets done. If you do not measure results, 
you cannot tell success from failure. If you cannot see 
success, you cannot reward. If you cannot reward success, you 
are probably rewarding failure. If you do not recognize 
failure, you cannot correct it, and if you can demonstrate 
results, then you can win public support for the work that you 
are doing.
    Their perspective is important because measuring the 
performance of a government agency is a fundamental part of our 
responsibility as a responsible Congress. Congress, in my 
opinion, has four exercises, four fundamental functions, if I 
can just outline the four functions of Government.
    One is law making and public policy making. Congress makes 
laws and sets public policy for the United States, No. 1.
    No. 2, we raise revenues; that is, the authority to levy 
taxes, fees, and the sale of bonds.
    No. 3, budgeting. Congress determines the activities and 
the purposes for which Government may spend money.
    The fourth one is something that is very important, and 
sometimes I believe we neglect it a little bit, and that is we 
certainly know the Constitution prohibits Congress from 
executing and enforcing the law, but Congress can independently 
gather information from the executive and judicial branches and 
provide this general oversight.
    Now, what do we mean by ``congressional oversight?'' There 
are four major purposes why we provide oversight. One is to 
protect public health and welfare. Two is to protect citizens' 
freedom and assure access to government. Three is to preserve 
public property. The fourth is one that I emphasize, is that we 
assure ourselves that public funds are properly spent and 
controlled.
    Performance management in State government is not a new 
idea. In the States of Iowa, Idaho, and most of the 50 States, 
most State governments have undertaken the challenge of 
implementing performance-based budgeting, to different degrees, 
I would say. Many of these are innovative programs that have 
led to improved efficiency, transparency, which is what Clay 
mentioned; and, of course, effectiveness. This push by the 
State legislatures across the United States, in my opinion, has 
made those legislatures more accountable in their oversight 
activities.
    States that have been experiencing budget oversight have 
used performance-budgeting principles to increase their quality 
of services that are given to citizens. Especially when you 
have those deficits, it is important to make sure that we are 
stretching out the dollars and providing the best quality 
service to our taxpayers.
    Of course, there are different States, and I do not want to 
point out any particular one, but you can look at the State of 
Delaware, and they are doing a good job of improving the 
benchmarking process. You can look at the State of Utah. They 
have excelled in information gathering, which is, again, what 
Mr. Johnson said, it is very important, that we have the right 
information. You can look at States like Virginia for their 
dedication toward making the important information accessible 
to the public. The Virginia Results Web site is an excellent 
example of government transparency in action, and I believe the 
OMB is also looking at creation of a similar Web site, which I 
personally would encourage them to do, to provide that valuable 
tool. And, of course, I would ask you to look at the State of 
Texas.
    In the State of Texas, what I am doing, Mr. Chairman, Mr. 
Spratt, members, I am just providing some information. We have, 
for example, strategic planning for agencies. We have the 
amendments that we added that make up the performance-based 
budgeting, which includes a provision on performance rewards 
and penalties; performance benchmarking; customer satisfaction 
assessment; activity-based costing, that is, what is the cost 
of a unit that you provide; a review of agency rules also to 
make sure that we get rid of any unnecessary rules and 
regulations. Again, to make government more effective; 
paperwork reduction also; and, of course, investment budgeting, 
which is, again, what Mr. Johnson talked about, is that you can 
have an agency that is efficient, but is it worthwhile having a 
particular agency? Also, there are copies of some documents on 
some of the priority goals, benchmarks, and performance 
measures on higher education, public safety, economic 
development--a series of items to give you a general idea of 
what we have been looking at.
    And then, finally, there is also a bill pattern from the 
1970s, 1980s, and 1990s in the State of Texas that I want to 
review in a few minutes, at least one of them, so you can get 
an idea as to how the legislature can use that information and 
how it leads to better oversight. If I can just talk about the 
bill pattern, if I can have the next item on here.
    The bill pattern is important. I think most States have 
gone into different types of what I call ``bill patterns.'' The 
first is in the 1970s, and I am looking at the department of 
insurance as an example. Most States, in the seventies and 
before that, had what we call ``line items.'' All they had was 
a line item and amount of dollars, and if you look at this type 
of information, you had money for travel, you had money for 
personnel, you had money for staff, for fire prevention 
coordinators; it was just a line item of information. Imagine 
yourself looking at this type of budget and what sort of 
questions would come up when an agency was coming in and asking 
for more money.
    If you look at the next slide also as an example, you will 
see the bill pattern evolution. Most States went through the 
same thing where they went from a line item to what they call a 
``program budget''; that is, you had different types of 
programs there, and it provided a little bit more information, 
a little bit more dialogue between the agency and the 
legislators.
    If you look at the next one, in the 1990s in the State of 
Texas and across the United States, you have what we call the 
``performance-based budgeting,'' and if you look at this type 
of budgeting, and this is what I want to emphasize, you can 
have information that is provided to the legislators, sent over 
to your office, but the question is, is it accessible? Is it in 
a format that you can use? I think that little point is very 
important because, otherwise, you will get the information, but 
it is not set in an easy way to understand that will lead to 
this.
    If you look at this bill pattern just as an example, first 
of all, you have a goal for the agency. After that, you have 
also the objectives of the agencies. Then you start going into 
performance measures also, and there, depending on what you 
want to add there, you will ask what are we doing to encourage 
fair competition in the insurance agency? What are the outcomes 
that you are looking at there? How fast are we doing the work? 
How are we providing that service? Who are we providing the 
service to? I would highly encourage the Members to start 
thinking about this evolution that I think we have seen across 
the United States.
    If I can go to the next part of it, you will see there that 
the outputs, how much money, what are we looking at, and it 
provides a different type of information that will lead to more 
questions. So when an agency is coming in and asking for more 
money, instead of just saying, ``Well, here is the line item. 
We gave them a million dollars last year. This time they are 
asking for $1.5 million,'' you can look at this information 
there and ask them, ``Well, what results did you get out of the 
$1 million? How are you going to do it better? Can we stretch 
the dollar a little better?'' Especially if we are in a 
deficit, this will help explain the work that we are doing and 
get more out of the agency if it is in a format where it is 
easy to be presented to the legislators.
    Now, one of the things that also I am providing here, and 
it is part of the handout also, is just a basic guide of 
performance information questions that any legislator can ask 
almost any agency, and as you can see, the question is, I asked 
the members and the chairman, how many times have we asked 
these types of questions to the agencies on a regular basis? 
How many times are the agencies ready to come in with their 
questions to be asked, not only the appropriations but in any 
of the other substantive committees that we serve? I believe if 
we look at these types of questions, and the agencies are ready 
to answer these types of questions, and it does not matter what 
committee you are in, I think this will lead to a results-
oriented type of government.
    In conclusion, Mr. Chairman, Mr. Spratt, and members of the 
committee, performance-based budgeting is a results-driven 
method which encourages not only better oversight by the 
legislature but also managerial improvement because if the 
agencies are able to use these results. They can go from the 
headquarters in Washington all the way down to the field 
offices to make sure that they are performing the work that 
they are doing and, therefore, will get better program results. 
We have a responsibility to our citizens, and the dialogue must 
start with us.
    The final point: What we want to have is a performance-
budgeting tool that is nonpartisan. It should not change when 
one administration changes over to another, and performance 
measures should not be under the influence of any partisan 
trends. In other words, it does not matter what administration 
is in office, it does not what majority or minority is running 
the different committees; we should have nonpartisan tools so 
we can provide the better results. We need to supply the 
congressional committees with information that is accurate and 
useful in the assessment of agencies.
    We should also use some of the States as laboratories. Your 
own State, Mr. Chairman, is a very, very good State that has 
done a lot of good work, and I think that using them as 
laboratories will help us do our job better and take the best 
of the work that has been done in different States.
    We need to encourage some sort of establishment of a 
performance structure for this form of congressional budget 
oversight. It is one of our constitutional duties and 
responsibilities to provide oversight. Ensuring budget 
oversight is a very important responsibility. And I think if we 
stand together and work together, I think, by working together, 
we will provide the results-oriented government that our 
taxpayers and our consumers want from us. Thank you, Mr. 
Chairman.
    [The prepared statement of Mr. Cuellar follows:]

Prepared Statement of Hon. Henry Cuellar, a Representative in Congress 
                        From the State of Texas

 NEED FOR A RESULTS-ORIENTED PHILOSOPHY IN THE CONGRESSIONAL BUDGETING 
          PROCESS STRENGTHENING CONGRESSIONAL BUDGET OVERSIGHT

    Our constitutional obligations and legislative accountability have 
made the purpose of effective legislative oversight imperative.
    Chairman Nussle, the Honorable John Spratt and Members of the 
Committee, we are here today in pursuit of making government more 
efficient, effective, and accountable.
    Before I start I would like to thank Clay Johnson and the 
hardworking people at the OMB. Improving the performance of our 
agencies is a bipartisan issue that is a hallmark of good government, 
and I would like to thank them for furthering the work started back in 
1993. I would also like to thank my friend and fellow representative 
Mike Conaway for his dedicated work on this project.

                     WHAT GETS MEASURED, GETS DONE

    I address you today in order to shed further light on our 
responsibility to provide a continuous level of government improvement 
for our fellow citizens. The answer is not complicated or expensive; in 
fact it streamlines government, encourages efficiency, and rewards 
effectiveness. The concept that I refer to is Performance Based 
Budgeting. PBB is a results oriented budget tool that sets goals and 
performance targets for agencies, and measures their results. PBB not 
only increases the capacity for legislative oversight, but it also 
helps to increase the quality of services that our citizens receive. It 
is important for our legislative body to remain representative and 
responsive to the needs of our citizens.
    David Osborne and Ted Gaebler summarized the need for measurement 
their book, Reinventing Government: How the Entrepreneurial Spirit is 
Transforming the Public Sector (1992):
     What gets measured, gets done
     If you don't measure results, you can't tell success from 
failure
     If you can't see success, you can't reward it
     If you can't reward success, you're probably rewarding 
failure
     If you can't recognize failure, you can't correct it
     If you can demonstrate results, you can win public support 
(Osborne and Gaebler 1992, 146-155)
    This perspective is important, because measuring the performance of 
government agencies is a fundamental part of our responsibility as a 
responsible Congress.
    A Congress Exercises Four Fundamental Functions:
     Lawmaking and public policy making. Congress makes laws 
and sets public policy for the United States. This function includes 
fact-finding and analysis related to both governmental and non-
governmental activities.
     Raising revenues. Congress has authority to levy taxes, 
fees, and authorize the sale of bonds.
     Budgeting. Congress determines the activities and purposes 
for which government may spend money.
     General oversight of government. The Constitution 
prohibits Congress from executing or enforcing the law. But the 
Congress independently gathers information about the executive and 
judicial branches to aid it in its policy-making functions.
    And Congress Exercises its Oversight Powers to:
     Protect the public health and welfare,
     Protect citizens' freedoms and assure access to the 
government,
     Preserve public property, and
     Assure itself that public funds are properly spent and 
controlled.

              PERFORMANCE MANAGEMENT IN STATE GOVERNMENTS

    Performance Budgeting is not a new idea. Most state governments 
have undertaken the challenge of implementing Performance Based 
Budgeting in their own agency institutions. Many of these innovative 
programs have led to improved efficiency, transparency and 
effectiveness. This push has also allowed state legislatures to become 
more accountable in their oversight activities. States experiencing 
budget shortfalls have used PBB principals to increase the quality of 
services given to the public. A lot of wisdom has been gained through 
the trials in our states, and almost all of them are ahead of the 
Federal Government in PBB implementation. We need to implement policy 
examples from the best states, and we need to avoid our past mistakes. 
The information is at our fingertips, we owe our citizens their due 
diligence.
    I urge all of you to look at what Delaware is doing to improve the 
benchmarking process, or to take a serious look at how Utah has 
excelled in information gathering. We can also look for guidance in 
states like Virginia for their dedication toward making this important 
information accessible to the public. The Virginia Results website is 
an excellent example of government transparency in action. It is my 
understanding that the OMB has proposed the creation of a similar 
website, and I would like to personally stress the need for this 
valuable tool.
    Please refer to the companion materials for examples of the work 
done in Texas.

                         BILL PATTERN EVOLUTION

    One of the most important changes occurring through the performance 
budgeting process is the inclusion of performance information in the 
budget itself. Having performance information included in a manner that 
is appropriately organized and easily understandable is an important 
first step. When we have this type of information we have a useful tool 
for formulating benchmarks. This information can also be valuable in 
determining the true budgetary costs of each individual type of service 
that we provide to our citizens.
    Agencies can use this information to justify funding levels for any 
specific amount of output. Appropriators will also have a better idea 
of the connection between funding and the impact of their programs.

                               CONCLUSION

    Performance-based budgeting is a results-driven method which 
encourages managerial improvement and better program results. We have a 
responsibility to our citizens, and the dialogue must start with us.
     What we want to have is a performance budgeting tool that 
is Non-Partisan. It should not change when one Administration changes 
over to another and performance measures should not be under the 
influence of partisan trends.
     We need to supply Congressional Committees with 
information that is Accurate and Useful in the assessment of agencies 
and programs.
     We should use the States as Laboratories. A lot of wisdom 
has been gained through the trials in our States, and almost all of 
them are ahead of the Federal Government in PBB implementation. We need 
to implement policy examples from the best States, and we need to avoid 
our past mistakes. The information is at our fingertips, we owe our 
citizens their due diligence.
     We need to encourage the establishment of a formal 
structure for this form of Congressional Budget Oversight in the 
Legislative Branch. It is our responsibility to meet this challenge.
     We need to Stand Together and do what is best for our 
citizens. It is for this reason that we need to bring all of Congress 
together in the support of these necessary solutions.
    Thank you for the opportunity to testify. I will look forward to 
answering your questions.

    Chairman Nussle. Thank you. Can I just ask real quick while 
it is fresh in our minds, a question regarding your charts? For 
instance, there was a benchmark that in 180 days all cases 
would be settled. Who created that? Is that the governor, the 
legislature, or the department itself?
    Mr. Cuellar. What we did is we had the Governor's office, 
the executive branch, work with a body we call the Legislative 
Budget Board, and I have been thinking about who would be the 
agency to do that here at the Federal Government. They were our 
financial experts. They would work with the executive branch 
and basically negotiate what performance measures they would 
have. Then that information would be put in the bill pattern to 
us. Then the legislature would have to write and say, You know 
what? We think this is a little low, I think we ought to 
improve the measures up, or we think we ought to add this 
particular measure. So the legislature would come in and have 
the final product.
    Chairman Nussle. So it is statutory?
    Mr. Cuellar. Yes, sir.
    Chairman Nussle. The end result: It is statutory?
    Mr. Cuellar. The overall scheme is we started this by 
working on the appropriations bill, but it was part of the 
statutory and part of the appropriation process also.
    Chairman Nussle. All right.
    Mr. Cuellar. But it was basically a two-step thing where, 
finally, once you start talking to the Congress or to the 
legislature, and you had the legislature saying, ``You know 
what? We ought to change this. Why do you have these particular 
results?'' the budget oversight and the dialogue between the 
legislators and the agencies greatly improved.
    Chairman Nussle. Thank you.
    Mr. Conaway, welcome to your own Committee, and we are 
pleased to receive your testimony.

 STATEMENT OF K. MICHAEL CONAWAY, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF TEXAS

    Mr. Conaway. Thank you, Mr. Chairman and Ranking Member 
Spratt. I am happy to report that the witness chairs are no 
more comfortable than the Member chairs. For some reason, these 
things all slant forward.
    Chairman Nussle. Actually, they are very comfortable up 
here.
    Mr. Conaway. I suspect they are. At the eagle's nest, I 
suspect they are. This is an unusual view for me. I rarely see 
the folks behind me, so I am glad to be here.
    I have worn both hats in the Texas scenario, in the sense 
that I am a CPA. I have got 30-plus years' experience with 
dealing with budgets and strategic plans and, for the most 
part, watching them provide support for cobwebs and other 
things as they accumulate in the corner. I chaired the State 
Board of Accountancy, which is a regulatory agency that 
oversees the practice of accountancy in Texas. There are 55,000 
to 57,000 CPAs, 10,000 firms that this agency is responsible 
for overseeing, and it worked with the Texas legislature 
through three sessions in that process.
    The manufacturer fulfillment of this piece is the toughest 
part, and by that, I mean, do we really use this as a tool to 
effect better government? I think the evidence is pretty scant 
that we do, in fact, do that. Businesses maybe do a little bit 
better job of it, but even they have a hard time making this 
thing work.
    As an example, something that the Committee prepared talked 
about, as a result of the PART analysis, the President's budget 
for 2006 proposed to consolidate the CDBG grants and the 
economic development assistance grants. So the PART tool used 
to affect change in the budget--we did not get that done in the 
budgetary process. The political backlash, the whole ownership 
of those particular programs overran that analysis piece of 
what was going on.
    This whole process in Texas; I saw it work, like I say, 
pretty spotty, the fact that the very worst agencies were 
sometimes affected by the overall review process, the analysis. 
The best agencies were rarely rewarded, and the mediocre 
agencies, the folks in the middle--that is a bad phrase--all of 
the agencies in the middle just kind of kept pumping this stuff 
in, and I am not sure that the decision making--in Texas, it is 
much less partisan. The legislative budget board that my 
colleague mentioned, the Sunset Commission, or both, Members 
from both sides of the House, but when you are in front of them 
testifying, as I did several occasions, and I took the agency 
through the sunset process, which happens every 13 years as 
well, it is really not partisan at all. That does not weigh 
into it.
    Unfortunately, at our level, in this town, that is a 
reality we cannot ignore because we just simply will not make 
good decisions separate and apart from the partisan nature of 
how we conduct business up here.
    So the one point I would make before I shut up and answer 
questions is buy-in. In other words, it is easy to gloom onto 
these programs and to say, yes, we are doing this, but are we 
going to buy into it? Are we really going to run our business 
in this manner using these tools? And when we get the results 
from these tools that show us a direction, are we going to go 
that direction, or are we just going to simply ignore it? There 
will be occasions for ignoring it. Like Mr. Johnson said, 
sometimes you do not run everything on a dollars-and-cents 
basis, but that ought to be an informed ignore. It ought to 
have a rationale for saying, OK, our tools tell us this, but 
here are the reasons why we are not doing it, and those reasons 
for not doing it ought to be something other than just partisan 
politics and those kinds of things.
    So I think we ought to be about this process, we ought to 
be doing it, but unless we are actually going to use it. Back 
home in my barn, I have got a tool chest full of tools 
gathering dust. They are nice and pretty, and they look real 
fine, but if I do not use those tools in trying to get 
something done, then I am not doing it as efficiently as I 
might since I do have those tools to do it.
    So it is buy-in, and it is tough in this town to make that 
happen, given the tension between the executive branch and the 
legislative branch and then the further tension between the two 
parties that periodically swap places as to who gets to sit in 
the middle chair. So it is going to be a tough job to do, but 
we ought to be about it, but it will be hard. So with that, 
sir, I will yield back and be ready to answer questions.
    [The prepared statement of K. Michael Conaway follows:]

  Prepared Statement of Hon. K. Michael Conaway, a Representative in 
                    Congress From the State of Texas

                              INTRODUCTION

    First, I would like to thank Chairman Nussle and my colleagues for 
arranging this hearing and inviting me to testify before the committee.
    As my colleague Mr. Cuellar and the Honorable Clay Johnson will 
testify, Congress, the Office of Management and Budget and other 
agencies have worked to establish various forms of Performance Based 
Budgeting and oversight to improve performance and accountability 
within the Federal Government. Specifically, the implementation of the 
Government Performance and Results Act of 1993 (GPRA) and Program 
Assessment Rating Tool (PART) reflect efforts to advance this approach 
to the Federal budgeting process. These programs represent a solid 
first step in the evolving implementation of performance budgeting.
    Many States, specifically in my experience, Texas, have 
successfully implemented methods of Performance Based Budgeting and 
oversight, such as the Legislative Budget Board (LBB).
    My goal in testifying before the committee today is to bring to the 
table a general discussion, from my perspective, on how facets of state 
budgeting and ``business-like'' budgeting processes may be implemented 
in our own Congressional budget process.
    I have examined the budget process from a number of perspectives: 
as a private business owner, as an accountant and member of the Texas 
State Board of Public Accountancy, and as a Member of Congress.

                               BACKGROUND

    By way of background, Texas works on a biennial budget and the 
Texas Constitution contains provisions that limit total state 
appropriations. Appropriations that exceed revenue may not be made 
except by a four-fifths vote of each house. Basically, if an 
appropriation exceeds the budget, it will not be implemented without 
the legislature's intervention. By taking this approach, the Texas 
Legislature has ensured that any piece of introduced legislation that 
will exceed budget limitations must be effective and important enough 
to garner votes.
    The Legislative Budget Board (LBB) was created in 1949 and requires 
all state agencies to submit their budget requests to the LBB for 
review and recommendations. The board is comprised of two joint 
Chairmen, the Lieutenant Governor and the Speaker of the House of 
Representatives; the Chairmen of the House Committee on Appropriations, 
House Committee on Ways and Means, and the Senate Finance Committee. 
Appointed members also include two House members and three Senate 
members appointed by the Speaker and the Lieutenant Governor 
respectively.
    Over the years, legislation has been enacted to expand the LBB's 
duties to include evaluation of agency programs, to estimate the costs 
of implementing legislation and to establish a system of state agency 
performance audits and evaluations. Results of these evaluations are 
then reported to the Texas Legislature. This report is also made 
available to the public through the Texas Budget Source.

                TEXAS STATE BOARD OF PUBLIC ACCOUNTANCY

    My interaction with the State budgeting process began as a member 
of the Texas State Board of Public Accountancy (TSBPA), a state agency 
that regulates the practice of accountancy in Texas. In 1995, then-
Governor George W. Bush appointed me to TSBPA. I served on TSPBA for 7 
years, including more than 5 years as Chairman. During my tenure, the 
Texas Legislature signed into law a bill to address the need for 
government to operate more efficiently. Under the Act, referred to as 
the ``Self-Directed Semi-Independent Agency Project Act'', the TSBPA 
became a self-directed semi-independent agency (SDSI). TSBPA and two 
other similar agencies are the focus of this pilot program to test the 
concept of deregulating regulatory agencies in order to enhance their 
efficiency. The project is expected to expire September 1, 2009. Under 
this transition, the TSBPA budget was effectively taken out of 
appropriations process. TSBPA believes this shift allows them to take a 
``business-like'' approach to budgeting. The SDSI structure is only 
appropriate for self funding agencies that receive no general revenue.
    Some points of this project are:
     To make regulatory agencies accountable to their 
stakeholders. The agencies are also charged with operating as a 
business.
     The regulatory agency establishes fees charged to cover 
all of its operations.
     Sovereign immunity remains intact for enforcement and 
disciplinary functions.
     Regulatory agencies in the project are removed from state 
appropriations.
     Applicable agencies continue to collect and remit the $200 
annual professional fee for the General Revenue Fund.
     Agencies continue to be audited by the Office of the State 
Auditor and pay the associated costs
     Oversight agencies, such as the LBB and the Governor's 
Office of budget and planning are relieved of oversight 
responsibilities and associated costs.
     Licensees become directly involved in evaluating the cost 
of operating the agency.
     Reduce the state budget.
     Reduce the number of state employees on the state payroll. 
(Source: Texas State Board of Public Accountancy Strategic Plan, FY 
2005-2009)
    The Texas State Board of Public Accountancy continues to implement 
its budgeting oversight measures. Most recently, under the ``Self-
Directed, Semi-Independent Agency Project Act'', the Board has begun to 
implement a review program whereby sponsor's courses are systematically 
examined for their quality. The first computerized examination was 
offered in April of 2004 and will occur at regular intervals in the 
future. In its Public Accountancy Strategic Plan for Fiscal Years 2005-
2009, TSBPA states that, ``It is the opinion of the Board that with the 
implementation of Self-Directed, Semi-Independent Status, the Board now 
has the flexibility to respond to the changing needs of a global 
profession. This will allow the Board to function in a more business-
like manner to meet the challenges of the twenty-first century.'' 
(Source: Texas State Board of Public Accountancy Strategic Plan, FY 
2005-2009)
    The appropriations process, including the periodic reviews of each 
state agency, treats all agencies the same. That process is essential 
for all state agencies that accept any general revenues or tax funding. 
The appropriations process is cumbersome and inflexible for certain 
regulatory agencies. The SDSI pilot is intended to demonstrate a system 
of operations which allows the pilot programs to function in a more 
business-like way. By completing the missions as assigned to those 
agencies by the state legislature, the legislative and executive 
oversight functions are set at appropriate levels to determine that 
agencies are run efficiently and that assigned missions are 
accomplished. Burdensome and redundant oversight procedures are 
eliminated by placing more trust in the governing board that is 
appointed by the Governor.

          IMPLICATIONS FOR THE CONGRESSIONAL BUDGETING PROCESS

    A state form of oversight is not feasible to implement on a whole 
at the Federal level; however, there are facets that we in Congress 
would benefit from examining.
    These components may include:
     An objective, timely, collection of accurate data from 
agencies
     Accountability
     Transparency to the public
     A periodic review of the need of Federal agencies
    There are obviously inherent differences between the budgeting 
structures of states versus the budgeting structure of Congress. In a 
business, you have one ``president,'' one goal. In the House, we have 
435 different actors, 435 different goals, and we all have different 
objectives for each State we represent. However, there is one goal that 
I would like to think all of my colleagues can agree upon: ensuring 
that Federal agencies are held accountable to the taxpayers. In the 
current era of fiscal restraint, it would be beneficial for Congress to 
continue to pursue these avenues.
    Once again, I would like to thank my colleagues for the opportunity 
to testify today. I would be happy to answer any further questions 
regarding my work on the Texas State Board of Public Accountancy or 
regarding my perspectives on performance budgeting in Congress.

    Chairman Nussle. Thank you. Let me start by taking your 
example and then offering it to Director Johnson, and that is 
the CDBG block grant proposal that the President made, and it 
is only by way of example because actually the one I was going 
to use was Amtrak. You could use any, and no one should use 
this forum as a way to pick on one particular program. We are 
trying to learn, so it does not matter, but let us use the one 
that was brought up. I heard, not only from my own constituents 
but from a number of Members on both sides in developing the 
budget, that there was just no way we were going to be doing 
what the President suggested in his budget and what the PART 
came up with with regard to CDBG as an example.
    Is that a good example of where the process breaks down? 
Where you can do all of the good work in providing the 
information, judging its effectiveness, determining whether a 
program works, determining whether there is a better way for a 
program to be delivered or a policy to be implemented, and then 
it breaks down at the political level? Are there other examples 
of this?
    This has probably got to be the biggest challenge because 
you said, as an example, first determine whether it is the 
Government role, and that is a political decision. Mike said it 
is partisan, and it is often not. Take Amtrak and CDBG and farm 
programs and et cetera, et cetera, et cetera. That is more 
parochial than it is political, I would suggest. So is that 
where this process breaks down, is at that level?
    Mr. Johnson. Well, there are several ways it can break 
down. Taking CDBG, one of the reasons that broke down was a lot 
of Congressmen used to be mayors, and a lot of mayors remember 
getting that CBDG money with no strings attached, and the idea 
of having strings attached to CBDG money is not popular with 
mayors. If you had to come up with one simple reason why that 
proposal failed, it is for that reason.
    When the CBDG program was evaluated, there were four 
different categories. One of them is design purpose. The score 
for purpose of CDBG was zero. It was not a low number; it was 
zero. There was a lot of discussion about what CDBG was 
supposed to accomplish, and we have spent $110 billion in the 
last 25 years with no defined purpose. This was pointed out by 
the PART.
    So the proposal would let us be more specific about what we 
are trying to do with this CDBG money. Specifically, what the 
program is theoretically supposed to do. Is it is supposed to 
help create economic vitality in areas where it would otherwise 
not exist: low-income, low-socioeconomic areas? At the same 
time we were looking at that, there were a number of other 
programs that deal with CDBG-like goals, 30-some-odd programs, 
and they have different definitions of what success is, very 
different definitions of what economic vitality is, so they 
worked at cross-purposes; they were inconsistent with each 
other.
    So the idea was to let us take the opportunity not only to 
more clearly define what CDBG is about, but let us look at 
combining some things with CDBG, take it from 30 programs,--I 
think we were combining 14 programs together--get it down to 3, 
4, or 5 programs and rationalize them, be much more specific. 
And hold local municipalities accountable for what they spend 
their money on. If they can spend it on the very same things--
some cities spend it on building inspectors, which does not 
sound like it is directly related to creating economic 
vitality, but if that is what the city wants to spend it on. 
But they have to show, on an annual basis or whenever they have 
to come back for more money, how they spent the previous money 
and how they went about creating economic vitality with the 
money they got from the Federal Government.
    Cities were not interested in that and let their 
Congressmen know that, and the Congressmen who used to be 
mayors knew that they would not like that, and so huge 
disinterest in tightening up the specs and creating a more 
specific purpose for how we spend $4 or $5 billion a year. So 
that is one reason. People would rather have unfettered money, 
free money, than not free money. They would rather be held not 
accountable than accountable.
    A lot of money we give and spend in the Federal Government 
is given to other people to spend to do good things, and so a 
lot of the way we make programs work in the Federal Government 
is to hold local grant recipients, if you will, more 
accountable for how they spend their money.
    Adult literacy programs; we do not know what it costs to 
teach an illiterate adult how to read. We spend $500 million a 
year on adult literacy programs and cannot tell you what it 
costs. We have done this for years. We cannot tell you what it 
costs to teach an illiterate adult how to read. We do not hold 
local adult literacy programs accountable for taking this 
amount of money and producing a certain number of literate 
adults with that money, that is nuts. We need to figure out how 
we are spending this money, and if we are spending $500 million 
to teach illiterate adults how to read, we need to figure out 
how many people that should teach how to read and make sure it 
happens.
    So I think one overriding thing is recipients would rather 
get money where there is no accountability than get money where 
they have to be held accountable. So when you start trying to 
tighten the specs, they are going to let their Congressmen and 
their Senators know, and they are going to resist that, and it 
requires discipline, what Mike talked about. It requires 
discipline; it requires a commitment, and it requires it being 
a priority to really make it happen.
    This is a very long answer to your question. We PART'ed 20 
percent of the Federal programs each of the last 4 years. By 
the end of this year, we will have PART'ed 80 percent of the 
programs. And we get some appropriations subcommittees that 
have welcomed the use of performance information. Others have 
not only resisted it, they have tried to write into law that we 
are not allowed to send performance budgets to them.
    So there is a wide range of receptivity up here on the Hill 
to the use of performance information. One of the things I 
hear--I just cannot believe it--as one of the reasons why 
Members and Senators resist the use of performance information 
is they do not like the hassle of having to explain why we are 
funding programs that do not work. I refuse to believe that, 
but that is what some people contend.
    Chairman Nussle. It was a long answer, but it was a good 
answer. This is where the rubber really hits the road. It is 
great to have this conversation, but we have got to figure out 
how to----
    Mr. Johnson. It is what Mike talked about. There has to be 
the will to follow through. Somebody made the comment that it 
would take a generation to really fully realize this. This is 
not a one- or 2-year deal. I do not know about a generation, 
but we have been working at it for 4 years. We do not have 
performance information for all of the programs yet, but we 
will at the end of next year. But it takes an institutional 
commitment to make this happen.
    Chairman Nussle. Well, under the theory that every long 
journey requires the first step, if CDBG, Amtrak, or whatever 
one you want to use as an example is a poster child of where it 
maybe is not working very well, what would you suggest as a 
poster child of where it has worked well? Where you have been 
able to put this up, and Congress has responded, and effective 
change has been made, and you took it from a zero or a low 
number to a very high number?
    Mr. Johnson. The primary use and value of the PART to date 
has been in getting programs to work better where it does not 
require Congress----
    Chairman Nussle. [Laughter.]
    Mr. Johnson (continuing). Where we could change the focus 
of the program, where we could change the management of the 
program, where we could change what the definition of what 
``success'' is. It was not meant to be a negative comment about 
Congress.
    Chairman Nussle. You are going to put Congress through a 
performance review next.
    Mr. Johnson. No, no. That was not meant to be a negative 
comment.
    Some examples of several reasons, for instance, why a 
program might fail: The Even Start program is considered to be 
ineffective, however, it is working the way it is designed to. 
Things are happening the way it is designed to, but the belief 
is that these programs working with low socioeconomic families 
with children between the ages of three and seven, which has 
been studied three different times nationally, has been proven 
to be ineffective. It is a nice idea; it just does not work.
    And so because PART has been used to drive us to that firm 
conclusion that it just does not work, the Department of 
Education is looking to take that same money and put it to 
effective use somewhere else. The Department does believe that 
focusing on reading skills at an early age is an important 
thing to do, and they are taking those monies from Even Start 
and putting them into early reading programs, or they would 
make that budget recommendation.
    The Juvenile Accountability Block Grant program is also 
considered to be ineffective. The reason it is considered to be 
ineffective is there is no defined goal. There is a lot of 
language about how great it is to focus on juvenile problems, 
but there is no definition of ``success,'' and so the money 
goes out, and you do what you want to with it. The way to make 
that work is to have the Congress be tighter about what it is 
we expect to have happen, and once we have that in the 
legislation or in the enabling legislation--I do not know if it 
can be done by any other way--then you have measures with which 
to hold grant recipients responsible for how they spend the 
money.
    So, in one case, stopping the program would be the response 
to deal with ineffectiveness. The other case is let us tighten 
up the specifications, and that would be the recommendation for 
CDBG. Let us tighten up the specifications, and at the same 
time, we have all of these related programs that do not make 
any sense and are not clearly defined. Put all of those 
together, and make it easier for people to come and get money 
to use to accomplish their desired goal.
    The thing that the PART does, or the program assessment 
does, it causes not just Congress, not just the appropriators, 
not just the budgeters, not just the people in the executive 
branch; but it causes all of us to start off by saying, ``We 
are spending money. Does this work?'' And if the answer is no, 
or in a lot of cases, I do not know, then we are committed to 
go do something about it, to not let that pace, that situation, 
persist.
    It is inexcusable for all of us to continue to allow money 
to be spent if we know that it does not serve a purpose, or if 
we do not know what purpose is served. In both of those cases, 
we should be committed to do something about it, and the kind 
of information that Henry talks about helps us do that.
    I am glad you all could come to my testimony here. Some 
appropriations subcommittees are very accepting of performance 
information and like it and have made the transition. One way 
to do it would be to try to take one that really wants to do 
it, take one or two, or take some agencies, and have them be 
the models. Encourage them, support them to go way ahead to get 
to a really advanced state of this and to show the rest of the 
agencies and the rest of the subcommittees how this can be 
done. I bet that you could get some fantastic best practices 
out there in a year or two because a couple of them have 
already made the start. Some of them are still very resistant, 
but I will bet we could find a couple to get out ahead of the 
pack and report back, ``Come on in. The water is fine.''
    Chairman Nussle. And then, for my friends from Texas, my 
understanding is that one of the reasons why the Texas model 
and other State models seem to be somewhat more effective in 
accomplishing performance budgeting and using performance and 
results measurements as a way of making decisions is because 
there is an independent administrative board. There is a third 
entity that is helping to broker the decision-making process 
here that has power that is at least equal to or greater than 
the legislature or the executive in helping to manage this 
process, which we do not have. Unless you see a likelihood, I 
do not see a likelihood, of us creating yet another super 
agency, unless you do. Is that really the big difference 
between success here, that there is another agency that is out 
there?
    Mr. Cuellar. Mr. Chairman, if I can respond to that.
    Chairman Nussle. Please.
    Mr. Cuellar. This agency does not have more power than the 
legislature or the executive branch. They are part of the 
legislature. They work for the legislature. What they do is 
they work with the executive branch to work out the performance 
measures. That is all they do. They do that. Then we also have 
the State auditors office that comes in and verifies----
    Chairman Nussle. Right.
    Mr. Cuellar (continuing). That the information that has 
been provided is accurate because you do not want to get trash 
in and trash out. You want to make sure that the information is 
accurate. But the ultimate decision-makers are going to be the 
legislators. With all due respect to Clay, he is talking about 
the executive branch making a decision on their own agencies 
that are ineffective.
    To me, I believe that should fall on the legislature, on 
the Congress, because--if I can have one of the slides up 
there--we can talk about CDBG, Amtrak, or Even Start, any of 
the programs, and ask you if the legislature was ever asked any 
of the questions, the questions on the performance, the basic 
questions that should be asked by legislators, and I would ask 
any of the Members here if anybody ever asked any of those 
questions.
    For example, if you are talking about CDBG or talking about 
Amtrak or Even Start, did we ever ask, what is your program's 
primary purpose or purposes? If you ask anybody here, Mr. 
Chairman, and I might be wrong, but did anybody ever say, this 
is the purpose, and if it is not the purpose, that we start 
getting into the dialogue where we change the purpose. Which 
citizens are affected? What are the key results that are 
expected from this use of taxpayers' funds? What do we expect 
our cities to do? I do not think we are ever asked this.
    In Texas, we had contracts. Anybody that dealt with the 
State of Texas, we put performance measures. Any grants that 
went out to any of the local entities had performance measures. 
So we had performance measures to anybody that got State 
dollars, but I ask you, did anybody ask any of those questions? 
What were the results in the most recent years? How do you 
compare those results to your targets?
    When somebody comes in and tells me, and I do not mean this 
in a bad way, but says, ``CDBG is doing a bad job,'' or ``the 
Amtrak is doing a bad job,'' or ``the Even Start is doing a bad 
job,'' I appreciate their input, but I want to know that we, as 
a legislative body, ask those questions instead of somebody 
saying it is bad, it is ineffective, or it has out-used its 
purpose. I want to know why, or do we have an opportunity to 
change those goals or those primary objectives of that agency. 
I do not think we have done that. I really, sincerely do not 
think, and it is hard. I agree with Clay.
    Chairman Nussle. Take CDBG as an example. Even though the 
administration's score under the performance analysis is a 
zero, you cannot tell me that you cannot find anywhere in the 
country, and please do not misunderstand my point in saying 
this--it is not necessarily to be argumentative, but you cannot 
say that this has never worked anywhere at any time anywhere in 
the country. That is not the case. It is not the case, even 
though I can certainly, and I think a lot of Members, can say 
Amtrak needs to be reformed and all sorts of things, but you 
cannot say it is not serving at least somebody somewhere.
    So even though under somebody's results standard, which is 
subjective,--it is not ever objective, I do not think--it is 
always subjective, whatever standard--it is always in the eye 
of the beholder, whatever standard you put out there, but 
according to somebody's subjective standard, these programs are 
working, even Even Start. You cannot say that no child anywhere 
did not get at least some benefit from throwing money at Even 
Start or that no adult did not learn how to read under adult 
literacy programs. It may not be working as well as somebody's 
subjective standard, but you cannot say it has never worked for 
anyone anywhere. I do not think that is possible.
    Mr. Cuellar. Right. I understand, but the question is, you 
are talking about somebody's standards; I am talking about our 
standards, the Congress's standards. I think we ought to set 
certain standards so we can have a healthy debate to ask those 
questions. What are the standards that we are looking at? What 
are the measures that we are looking at? What is the true 
purpose of Even Start or CDBG? What results are we getting for 
those billions of dollars that we sent down there?
    I do not think it is right that we can say, ``Well, those 
mayors or those governors, all they want is the money, and we 
are just going to send it because they do not want any 
strings.'' I think we should still, for the billions of dollars 
we send out or millions of dollars that we send to a particular 
area, I think we should know what we are getting out of those 
billions of dollars. It is our oversight, and with all due 
respect to anybody else, but it should be the Congress's 
standards that we set here, and working with the executive 
branch, of course. It is a negotiated process.
    Mr. Johnson. No slight intended.
    Mr. Conaway. A part, though, of gathering the information 
and having the data is to understand what it costs. If it costs 
$100,000 a year to teach somebody to read, is there an 
alternative to that? Do we hire somebody for $20,000 for 5 
years to read whatever that person needs read? That is a 
ludicrous example, but if we do not know what things cost on a 
per unit basis or a per example basis or a per outcome basis, 
we do not make as informed decisions as we might.
    The legislature also has to resist overriding the 
situation. As an example, we did our budget there at the State 
agency I helped with--it is an accountancy board, so you would 
expect the budgets to be pretty precise--on our travel. We do 
have meetings we are going to have next year. We knew who was 
coming and where they were coming from and whether they were 
spending the night or not. So we had this pretty detailed 
analysis of what our budget number was, and we submitted that 
as a part of our appropriations request. One of the agencies 
somewhere in the system sent 15 board members to Alaska for a 
national meeting, and it offended some in the legislature.
    So after all of the work was done, all of the scrubbing by 
the Legislative Budget Board, all of the scrubbing by the 
Governor, all of the scrubbing by the Senate finance, all of 
the scrubbing by the House Appropriations Committee, somebody 
added a rider right at the last minute that said, no matter 
what you spent last year, you can spend only 90 percent of that 
number, not what you budgeted, not what you thought your costs 
were going to be, but just a 10-percent haircut, not for the 
agency that did the dirty deed, every agency. So I rarely 
spanked all four of my kids at the same time. I would spank one 
of them, and the other three would become angels. I will 
probably get in trouble. Yes, I use corporal punishment.
    Mr. Cuellar. Your wife is here.
    Mr. Conaway. Spare the rod, spoil the child, and I do not 
have spoiled children, exactly.
    So the legislature has to be careful in that you set this 
elaborate process that ought to get the results, and then, with 
all due respect,--he was probably there--a knee-jerk reaction 
to one agency run amok, let us go after them. So the 
legislature has got to be careful about putting in overrides to 
the system that are not informed overrides.
    Chairman Nussle. Well, I want to thank you. My only point 
in this--I like the concept--my only point in this is that we 
are talking about the results, the results, the results, and 
the results are based on measurement. I agree with--I think it 
was Edward Demmings that said, ``If you can measure it, you can 
improve it,'' and I agree with that concept. The issue, 
however, is who gets to hold the ruler, and what is the unit of 
measure? If that is up to me, it is going to be a perfect 
system, to me, but it may not be to Mr. Spratt or to you or to 
somebody else.
    So I think how you hold the ruler and what the ruler unit 
of measure is, is a huge stumbling block here, I would assume, 
in getting this. I will give you the last word, Mr. Johnson, 
and then we will move on.
    Mr. Johnson. I do not want to dominate the last word, but I 
do have a comment on a couple of things that were said.
    Chairman Nussle. My last word, at least.
    Mr. Johnson. OK.
    Chairman Nussle. I will give you my last word.
    Mr. Johnson. Thank you. There has to be a stated purpose. 
On the CDBG, it was the purpose score that had a zero; it was 
not that the program overall was zero. It was well managed and 
so forth, but there has to be a stated purpose to begin with, 
and a lot of our programs do not have clearly defined, stated 
purposes. In those clearly defined, stated purposes, the 
intended goal can be defined, and you can, from there, lay out 
the appropriate metrics. It starts with the legislature. So it 
is not some other entity that decides what the goals are; we 
will decide. We, together, will decide.
    The other point is we, in some businesses, do things that 
are very hard to measure. How do you measure the success of the 
Drug Enforcement Agency? It is not the number of interdictions. 
Is it the quality of drugs? Is it the price? It is very hard to 
measure. But shame on us if we are not always trying to find 
better and better ways to measure how we are spending the 
money, and we are going to come up with some measures on these 
PART scores. Some of them are really good. Some of them are 
good first steps, and next year we will find better measures 
and next year.
    That is why it is an ongoing process. It is a commitment to 
a way to run the railroad. There will be some programs that are 
more clearly defined where the metrics are better than other 
programs, but it is a mind-set more so than it is a specific 
series of acts that has to take place, and it takes that 
commitment that this is the way we want to run this 
``railroad,'' and it is a journey, not a destination and you 
get better and better at it every year.
    Chairman Nussle. Thank you. Mr. Spratt.
    Mr. Spratt. Let me share with you a little experience I 
have had with this topic that you are struggling with today or 
grappling with. Years ago, I served in the Army as a young 
officer in the Department of Defense working for the assistant 
secretary of defense. Mr. Laird was the Secretary of Defense, 
and he came up here to testify. This was near the end of the 
Vietnam War, and there were huge overruns on a procurement, 
major weapons systems, but there was not ability by which to 
measure those overruns because there was no baseline to begin 
with. Nobody had defined a baseline for scheduled performance 
or cost.
    Mr. Laird had seen something that had been done just 
experimentally by Booz, Allen & Hamilton, and he told the 
Senate when he was pressed that he felt sure that they could 
implement an acquisition process whereby there would be 
variance reporting: schedule, cost, performance. He did not 
know what he had bitten off until he got back to the Pentagon 
and found out what he had seen was just one small piece of a 
much, much bigger problem, but he was committed to it, and he 
stuck by it. I think Laird and Packwood were the best team that 
ever managed the Defense Department.
    I happened to work in the office where the SAR, selected 
acquisition report, was developed. When I came here to Congress 
about 12 years later, one of the first things I did when I got 
on the Armed Services Committee was to go down and pull the SAR 
to see how the SAR was doing. And of interest to me, it looked 
exactly the same way it did 12 years before, and I eventually 
found out that because we did not use it here, partly because 
it was not useful, it did not become more useful. There is a 
circularity to it, and when it is used, it becomes more useful 
because we see what works and what does not work, which 
information is useful and valuable and which information is 
not, and it gets honed down to being an effective instrument.
    One of the problems I have with PART and, I think, with the 
GPRA (Government Performance Results Act) system, too, is 
Congress is not wired into it. So one of the principal users of 
it does not use it. We do not resort to it frequently. If we 
did, we would say, ``This is no good. This is not the goal we 
set. This is not what we are trying to achieve. These numbers 
are not credible,'' or ``This is useful. Hey, this is good 
information. This is working. This is not working. This is 
where we should allocate scarce resources.''
    Let me ask you, Mr. Johnson, about DOD and OMB. Are you 
working in any way to perfect their information reporting 
systems and, in particular, that cost performance and schedule 
variance report?
    Mr. Johnson. Well, I do not know about that particular 
report, but, for instance, a whole a lot of GAO's high-risk 
items involve DOD, and one of the things we are doing is 
working with DOD and GAO to take each one of those items, and 
let us clearly define some of the things we have been talking 
about today. What is success? Supply chain management? What is 
the desired state of affairs for supplying chain management? 
What do we want it to look like, be like, smell like, so forth? 
What do we have to do to get there? What are the action steps 
we have to take to get there, and who is accountable for each 
one of those action steps?
    So lots of clarity, lots of accountability, and then make 
sure there is rigorous, every 6 months, every quarter, 
whatever, oversight that we are, in fact, proceeding along that 
action plan as designed. We have done that with supply chain 
management, and GAO is pleased with the product, and OMB is 
pleased with the product.
    Mr. Spratt. How does it interface with GPRA? How does PART, 
your assessment system, results oversight system, interface and 
integrate with what was already in place?
    Mr. Johnson. OK. I agree with David Walker that GPRA has 
not lived up to its full potential, but it can. As you said, it 
has laid a foundation. The PART, in my mind, is the tool that 
helps us take this focus on accountability to the next level. 
In general, I think that looking at the effectiveness of an 
entire agency is not the proper unit of measure because of an 
accumulation of programs, a wide diversity of programs. So I 
think the real way to look at how an agency is doing is to look 
at how its most relevant units of measure are doing, i.e., the 
programs.
    So, to me, the PART, which focuses on programs, provides 
information that allows us to go into an agency and go down to 
the relevant unit of measure and start looking at this piece 
works, this piece does not work, we can do this to make this 
work better, we can keep this the way it is, and so forth. So I 
think it allows us to take GPRA, the focus on results, to a 
more meaningful level of detail, as you said, build on the 
foundation that has been laid in the last 10 years with the 
development of strategic plans by agency.
    Mr. Spratt. Don't you think somehow Congress should be 
wired into it so, No. 1, we are encouraged at the outset of 
inaugurating some new program or some new agency to define its 
goals so that we can have a baseline to come back and measure 
its performance against, and we sort of share that with you so 
you would have your goals, we would have our goals.
    Mr. Johnson. Yes, sir. I agree totally with that. We all 
need to be looking at one set of goals. I agree totally with 
that.
    Four years ago, we assessed 20 percent of the programs, so 
there was a little bit of performance information around, and 
so you could not sit down with a committee or an appropriations 
subcommittee and talk about HUD (U.S. Department of Housing and 
Urban Development) or talk about Interior because you only had 
a little bit of information. So what has happened is we are now 
getting a critical mass of performance information to do 
exactly what you have talked about where we can look at all of 
the programs at an agency and start looking at the potential 
use of this information, and one of our big stumbling blocks 
initially which made it sort of not appropriate to start 
dealing with Congress was we had resistance within the 
agencies.
    They were reluctant to focus on results because their 
feeling was--there was a lot of skepticism, and the thinking 
was all we want to do is to get rid of programs. They came to 
understand, after about 2 years, that it was about getting 
programs to work better, which is what they are for. So now 
they have embraced the use of performance information. So now 
that they are integrally involved and fully involved in 
developing good performance measures; now it is the time to 
work with Congress to get us to come together on agreement on 
what these goals are, now that we have good goals to even talk 
about or good performance measures to talk about.
    So I agree totally with what you are calling for. I think 3 
or 4 years ago, it would have been inappropriate to do that 
because it would not have been a very long conversation.
    Mr. Spratt. I notice, if our numbers are correct, that of 
the 607 program assessments that PART has undertaken, only 23 
apply to the Department of Defense. Are you sort of letting 
Defense do its own internal management? Is there adequate 
oversight?
    Let me give you an example. We are building now the next-
generation carrier, and it will cost at least twice, probably 
more than twice, what the previous carrier cost. To justify 
that kind of hike in the expenditure, we need to get lots of 
utility, lots of useful life, and lots of our cost savings out 
of manning levels and things like that in the new carrier. Is 
OMB looking over DOD's shoulder to see that, No. 1, a baseline 
is established based upon what is being represented that the 
new carrier will do, and somebody is holding those responsible 
for pushing these expensive new systems accountable?
    Mr. Johnson. I do not know specifically about the carrier, 
but we do work with DOD to make sure they have defined goals, 
defined purposes, and how the costs match up to the benefits. I 
do know that we were helpful to get DOD to the point--I think 
it was 2 years ago--where they actually canceled a weapons 
system.
    Mr. Spratt. Which one?
    Mr. Johnson. It was the Comanche helicopter system. I do 
not know when the last time a weapons system was canceled. It 
does not happen very often, but the stated purpose for that 
helicopter system no longer existed, and it was decided that it 
could be met with other weapons systems, exactly the thing you 
are talking about that is hard to do at DOD. But we are working 
with them to do the kind of thing you are talking about, and 
there are a lot of influences that go into whether a weapons 
system is canceled or not, as you know, and performance and 
stated purpose is one of them.
    Mr. Spratt. Well, take a look at the selected acquisition 
report. As I understand it, DOD, the Office of the Secretary of 
Defense, really has its own system. It does not rely on the 
SAR. They give us a SAR, which is sort of like giving us crumbs 
from the table. See if you think there is an adequate cost 
variance and schedule, information reporting system at DOD. I 
would love to talk with you.
    Mr. Johnson. Their whole acquisition process is one of the 
high-risk items, and it is a lot of money. That is one of the 
areas that we will lay out and work with them to define a 
successful state of affairs that we want to get to and 
determine an appropriate time frame to get there or a 
reasonable or realistic or aggressive, or whatever it will be, 
time frame for getting there because they want all of those 
items to be low risk, not high risk. They are very complex, as 
you know way better than I, and we need clarity about where we 
are trying to go with each one of them and accountability, lots 
of clarity, and lots of accountability.
    Mr. Spratt. Mr. Cuellar, you showed some interesting 
presentations when you put your display up about how 
information was presented to the Texas State legislature. How 
would you adapt that kind of experience to our experience here 
so that we have a format--you would probably have to vary it 
from program to program, but we have a format that would elicit 
the kind of information that would be useful to us, the 
appropriators, the authorizers, in deciding which should be 
pulsed up, which should be eliminated, and so forth?
    Mr. Cuellar. Well, I think that the basic premise that we 
have got to look at is if we do not find a mechanism--I think 
this is what the chairman was also alluding to a few minutes 
ago--if we do not find a mechanism to get the legislature 
involved and working on setting those goals and those measures, 
then we are not going to know if those programs are being 
effective or efficient, whether we are getting the best bang 
for the dollar. The whole key is going to be how do we--I think 
your terms were, how do we get wired in in this work that we 
are doing? If we do not get wired in or connected in this 
process, then it is not going to work. We can have all of the 
will and all of the commitment, but if we cannot get connected 
and make sure that we play a role in this, it is not going to 
work.
    Just by the list of the questions that I gave, just a show-
and-tell, the list of questions there, if we just asked every 
single agency those questions, we would be amazed. I think that 
probably the first one would probably bring a lot of debate. 
What is your primary purpose? If you asked that question, the 
agency might tell you something, and somebody at OMB might say 
something else. We might feel that it is a different purpose. 
If we cannot even get past that first question, it is going to 
be hard to get the rest of the work done also in providing our 
legislative oversight.
    Mr. Spratt. Well, we have got Mr. Conaway and Mr. Johnson.
    Mr. Conaway. Mr. Spratt, one of the things that works in 
Texas, and I hate to keep bringing it up, but that is our 
example today, is a Sunset Commission. Now, built into the 
statute of every agency is a drop-dead date whereby, after 12 
or 13 years, if the legislature does not renew that function, 
that agency, or whatever, then it goes away. Two years before 
that sunset date goes through, each agency is put through a 
very rigorous review of everything they do, all of their 
purposes, all of their standards that they are supposed to be 
meeting, all of their regulations that they have written, all 
of those kinds of things.
    Kevin Brady has got a bill that would create a Federal 
sunset commission or Federal sunset board that would help us 
start. Part of the problem is we have got an awful lot of stuff 
going on, $2.56 trillion worth of stuff going on. Where do we 
start? Well, one way is to put every agency through a very 
rigorous self-examination, as well as an examination by a 
bipartisan group, that would force them to justify their 
existence and allow the legislature, this Congress, to take a 
look at each one of them and say they ought to stay alive or 
should not. So it is a helpful program. It is not perfect, by 
any stretch of the imagination. You run into all kinds of 
problems with it, but at least it gives a chance.
    The other thing it does is it allows that group to help 
agencies share best practices--the chairman mentioned best 
practices a while ago--across agencies because they become 
little fiefdoms among themselves and have resistance to some of 
the improvements that other agencies have made without 
reinventing the wheel. So there are a lot of positives that 
would help set the stage to go forward if we ran every agency 
through this program.
    Mr. Spratt. Mr. Johnson.
    Mr. Johnson. Congressman, the questions that Henry talked 
about; almost all of those questions are asked as a part of the 
PART process. What is your purpose? How are you serving your 
customer? How do you measure success? What are your results? 
Almost all of those questions are asked as a part of the PART 
process. All of that information is available to the public, 
the answers to all of those questions. They are on an OMB Web 
site. You have to be able to speak our version in English, but 
it is all there.
    Are there better ways to ask the 26 questions? There are 
about 25 or 30 questions. Is there a 26th question? Certainly. 
We will figure it out, and we will get better. The PART is a 
good first step in the direction of trying to provide that 
information for us to talk about, agree on, and go from.
    Mr. Cuellar. And what I am saying, Mr. Chairman, if you 
would allow me, is the work that they are doing is good. Clay 
has been doing an excellent job. My whole point here today is--
--
    Mr. Johnson (continuing). How to use it.
    Mr. Cuellar (continuing). How do we get the legislature to 
use that information and ask it? All of that information is 
available somewhere, but the question is, when we are making 
the decisions on those agencies, are we asking those questions 
there? If we can somehow get connected with the OMB where we 
can get that information from Clay in an easy format that is 
easy to understand instead of, and I am sure you will not do 
that to us, providing us 2 or 3 inches of information, but in 
an easy format, that will go a long way for us to do the 
constitutional duty that we have, the budget oversight.
    Mr. Spratt. Thank you very much, all three of you, for your 
testimony. I have got to go to another meeting, but I have 
learned a great deal from this, and I hope this is a beginning. 
We can talk about it further.
    Chairman Nussle. Mr. Chocola.
    Mr. Chocola. Thank you, Mr. Chairman. I appreciate you 
holding this meeting. I have not been in Congress long, but 
this is the first time that the discussion has reminded me of 
my previous life as a business owner, with performance 
measurements and so forth. One of the things I learned--maybe 
you just answered the question, but one of the things I learned 
in my previous life was there are different elements to the 
budget process. There is developing the budget, and there is 
executing the budget, and you can only conduct those efforts 
successfully if you have good information.
    And so using Mr. Conaway's example, is there a barn with a 
dusty toolbox around here somewhere that Members of Congress 
can access? I mean, it is hard to get information on our MRA, 
timely, accurate information as to how we can manage our own 
office, let alone the entire U.S. Government. So is there 
someplace that you can direct us, as a Member of Congress, 
where we can get usable, timely information? Mr. Johnson.
    Mr. Cuellar. Let me just say, that is the whole point I 
have been making today, is that the information is out there, 
and I am sure that Clay would say and Mr. Johnson would say 
that information is out there. There is a way that we can get 
it timely so when we are making the decisions, instead of 
saying, ``Well, somebody go check a Web page somewhere,'' or 
``Somebody send me the books over here,'' there is a way that 
we can put this in an easy format for us to ask those questions 
and get that information, good information, then I think that 
would make our job easier because I think that is the problem. 
And I am just in my first 6 months here, so, with all due 
respect, my perspective is that I do not think we have that 
information in an easy format where we can look and make those 
decisions.
    If you recall, the budget format, as an example, the 1970s, 
1980s, and the 1990s, in the 1990s format that information is 
there,--the purpose, the goals, the objectives, the performance 
measures--and like Clay said, it is a continuous refinement of 
those performance measures. They keep changing on it, but that 
is where the dialogue comes in with the Congress and the 
agencies.
    Mr. Chocola. Mr. Johnson.
    Mr. Johnson. There is no one place. It does not exist like 
that, no one place. The answers to some of those general 
questions like what is the purpose, and what are your results 
versus your goals and so forth, that exists on a Web site for 
ready access. We are creating a lay version of that to try to 
bring public transparency to it all, again, to sort of help 
drive the dialogue about it. But more specific customer 
satisfaction numbers and turnaround time numbers; that exists 
in various places.
    I was having breakfast yesterday with a Senator, and he was 
complaining that on one of the agency Web site's most recent 
performance information they have is from 2001, and it was just 
driving him nuts. Now, the information is nice, but it is 4 
years old. It is like there is almost a purposeful goal to not 
give them anything that they could use to make a decision one 
way or the other.
    I think it would be fantastic if Congress said, ``We want 
more information with which to make these decisions. Let us 
figure out how we can establish recency standards, level-of-
detail standards, customer satisfaction, all of that and build 
toward it.'' That would not be done overnight, but that would 
be a huge statement by all of us that it is that important, and 
we want to factor all of that into our decision-making process.
    Mr. Chocola. When is the Web site going to be available 
that you mentioned?
    Mr. Johnson. Well, we hope to do it this fall. In fact, we 
have focus groups next week to actually go talk to people to 
see if people other than ourselves think it is a great idea. We 
hope to do it this fall.
    Mr. Chocola. Just one other thing.
    Mr. Johnson. Excuse me. But the information, in OMB terms, 
exists today and has for the last 4 years.
    Mr. Chocola. Just one other thing. In my previous life, all 
of our incentives were around identifying problems and getting 
rid of the problem, solving a problem. In government, it seems 
that the incentive is to perpetuate problems because God forbid 
that we solve a problem because we will not fund that effort 
anymore. Will performance-based budgeting, do you think, 
effectively address that?
    Mr. Johnson. It can be. Again, what would you like to stop 
doing, and what would you like to start doing? These kinds of 
questions you ask drive actions, and that can be structured any 
way we want.
    Mr. Chocola. Do you think a 2-year budget would assist in 
this effort in spending a year going through the budget and at 
least a year in oversight, which I agree that we do not focus 
on enough around here?
    Mr. Johnson. Yes. We support the notion of biannual 
budgeting.
    Mr. Chocola. Thank you, Mr. Chairman.
    Chairman Nussle. What is the Web site that you have now? 
You said it is on the Web site now?
    Mr. Johnson. Right. It is OMB.
    Chairman Nussle. Is it OMB?
    Mr. Johnson. It is www.omb.gov.
    Chairman Nussle. OK.
    Mr. Johnson. We can send that to you, if you want.
    Chairman Nussle. We are linked to it.
    Mr. Johnson. Very good.
    Chairman Nussle. Mr. Neal.
    Mr. Neal. Thank you, Mr. Chairman, very much. This has been 
very helpful.
    These are hardly new concepts, I think. Certainly, 
President Carter embraced the notion of zero-based budgeting. 
Secretary McNamara at the Defense Department during the 
Kennedy-Johnson years, he embraced the notion of planned 
program budgeting. I used it in my former life, my youth, as 
the mayor of Springfield, MA. But I guess----
    Mr. Johnson. I did not mean any negative comment about 
mayors. I was just kidding, sir.
    Mr. Neal. Believe me, if you are served in those jobs, 
there is nothing anybody could say that would hurt your 
feelings. [Laughter.]
    But I guess I would dispute a couple of issues based upon 
the notion of the way our system is supposed to work in the 
constitutional galaxy.
    I think of CDBG because I know that mayors and governors 
tend to like CDBG, and one of the reasons it has worked so 
well, and I would defend it arduously, is that President Nixon 
had the right idea. The democratic majorities in the Congress 
had the right idea. On the issue of housing, it is a national 
problem, but it may well be different in Springfield, MA, than 
it is in San Diego, CA. Therefore, the Federal Government would 
acknowledge the national problem, but mayors, governors, and 
neighborhood groups would help with the remedy.
    Now, I think you can measure CDBG. If a community like 
Springfield had, in 1973, 14,000 substandard units of housing, 
and 15 years later had 3,000 substandard units of housing, I 
think that is a very precise and exact measurement. If you can 
drive down the cost of dental problems by using some of that 
money to pay for a voluntary fluoride rinse program in the 
public schools, I think, for poor children, that is the way to 
do it. Since there is not a lot of support for putting fluorine 
in the water supply, you can do it with a voluntary program and 
use those dollars, and if you can determine that fewer children 
end up in a Medicaid program with dental needs, I think that is 
a success.
    I think you can measure the COPS (Community Oriented 
Policing Services) program that was wildly popular across the 
country as a success, largely because crime rates did go down, 
and even the smallest towns across the country were able to 
purchase new technology for doing a better job of combating 
street crime on a daily basis.
    Now, having said that, I acknowledge that police visibility 
is in dispute as to whether or not that does drive down crime, 
and that is a very difficult measurement. But my point, I 
think, here is that there are exact measurements. Community 
development block grant money has worked very well, and it is 
very popular with mayors and governors across the country. If 
you had Democratic mayors sitting in this room, they would say 
it is great. They would say save that. If you had Republican 
mayors sitting in this room, they would say, if they only had 
one program they could save, it would be community development 
block grant money because it allows them some solutions.
    Now, I also think it is important to point out that there 
are other issues where there is difficulty in measuring it, 
abstinence-only programs. The jury really is out, but the 
Congress keeps pushing money in that direction, and we have not 
seen the sort of success there based upon the investment, and I 
think that there would be some agreement on that. But the 
philosophy takes over, and instead of coming to an initiative 
that might work, we insist on pushing money toward something 
that does not work only to satisfy ourselves in a philosophic 
vein.
    So I think what you are talking about is very desirable, 
and it should be the continued goal of all of us here in the 
Congress, but I do want to defend performance initiatives as 
they relate to community development block grant money. I think 
you can measure it. There are some problems, sure, and I think 
Mr. Conaway mentioned something that was interesting. He said, 
those people who took off, some 15 people, to Alaska for a 
conference; well, you can measure that because the press wrote 
a very bad story about it, I assume. Congress reacted, perhaps 
overreacting, as we typically do, as you know, but, 
nonetheless, that builds in the accountability that we all 
desire, and I am happy to hear from you on substandard units of 
housing, abstinence only, COPS programs. I think you can 
measure those things.
    Yes, sir. Mr. Johnson.
    Mr. Johnson. I think you can measure. The problem with CDBG 
is it required no measurement. It did not require 
municipalities to report back and say, ``Here is how I impacted 
these low socioeconomic areas with my money. Here is how much I 
spent, and here is the good I did with it.'' It was not that 
kind of accountability. HUD has very much agreed with that, and 
so they are tightening those specs, and what the CDBG proposal 
was about was tightening those specs but also taking these 
other programs and instead of having all of these disparate 
programs, bringing them together where it could be managed 
effectively. We agree totally that they are measurable, but the 
program, as it was structured, did not call for reporting on 
what was happening as a result of the money.
    Mr. Neal. Well, I thought that there is, if you hang around 
in political life long enough, a certain level of justice that 
is reached because I used to point out to those HUD auditors 
that used to regularly review the CDBG program during my time 
as mayor that they used to audit me and ask me a lot of 
questions, and I subsequently got elected to Congress, and then 
I audited and investigated them. So, in that sense, the system 
worked quite effectively, and there was a sense of justice as 
it played out.
    Mr. Cuellar. Mr. Chairman, I do not know if the gentleman 
is here, John Mercer, who used to be the mayor of Sunnyvale. 
Sunnyvale, CA, was probably one of the first cities that 
started doing performance-based budgeting. They were able to do 
the measurements as to the streets, how much work they did on 
paving. There is a series of areas where you can get ideas as 
to what sort of measurements you can get. I know that the 
National Conference of State Legislators just came out with a 
book called Legislating for Results that pretty much lays out 
the steps as to what staff is supposed to be doing, what the 
legislature is supposed to be doing, that could provide some 
sort of framework for the work we are doing. There are ways of 
doing this.
    I remember when I added the performance measurements for 
all of the agencies in the State of Texas--this was started 
under Governor Ann Richards, and the big question was, when 
Bush was going to come in, was he going to keep that system? He 
kept, and, in fact, he improved the system with Albert Hawkins 
and some of the other gentlemen, other folks, up there also. 
When Rick Perry came in, the same thing: It got extended, and 
it got improved.
    So it really does not matter if it is the Democrats or the 
Republicans, sir; it is a commitment that Mike talked about, 
making sure that we keep focused on the measurements.
    But the bottom line, just to give you an example, there are 
ways to measure things. When I first added the first 
measurements to all of the State agencies, the people who wore 
robes were the ones who had complaints about this, the 
academicians and the judges. Judges used to say, you cannot 
measure justice. Well, there are things that you can measure in 
the work that they do, the output that they do. Academicians 
also said, well, you cannot measure us. Well, of course, you 
can measure education. What are the retention rates? What are 
the graduation rates? There are a lot of things that you can 
look at.
    So there are a lot of measurements that are being used out 
there that we can use ourselves. Instead of reinventing the 
wheel, there are measurements we can use out there. Of course, 
it is up to us to decide what measurements and what goals and 
what purposes should be out there for that. So I agree with 
you, Mr. Neal. There are a lot of things we can measure out 
there; it is just up to us to decide what to use.
    Mr. Neal. Thank you, Mr. Chairman.
    Chairman Nussle. Mr. Ryun.
    Mr. Ryun. Mr. Chairman, first of all, I want to thank you 
for holding this hearing. I think we are all very interested in 
a common goal, and that is how to get more bang for our buck 
and to help those who watch programs develop.
    My question relates to how do you keep from rewarding 
failure? Now, most programs here are geared towards, you know, 
something that we start with good intentions of helping people, 
and ultimately the budget continues to grow, and then there 
comes that moment of how do you then wean somebody off a 
program that they have become accustomed to.
    So my question relates to, and I guess I will start with 
Mr. Johnson, how do you address the problem that somebody with, 
again, good intentions to help someone, now that is no longer 
necessary, but the program is there, and they are still 
expecting that? How do you wean them off of it?
    Mr. Johnson. I will bet the answer is different for every 
program, but, in general, I think, the biggest issue is not 
what are we trying to do but how do we go about doing it; it is 
that tough transition period. My suggestion would be to leap 
past the transition that you are going to have to figure out 
how to do.
    Go out 5 years and define the new state of affairs we want 
to exist 5 years from now or 8 or 4 or something years from now 
and get everybody sort of wrapped around and enamored with that 
goal and excited about what the new state of affairs can be, 
and then say, ``All right. That is where we want to go. Now, 
how do we get from here to there?'' So all of a sudden you have 
got a vision, a long-term vision, that gets people excited, and 
all of a sudden the difficulty of getting from here to there 
becomes a little less.
    You get people a little bit more enamored with how to make 
those tough calls and how to manage through that tough weaning 
process. But in terms of specifically how you wean somebody, I 
think, at some point, you can give him interim things to go to, 
but, at some point, you just have to stop.
    Mr. Ryun. It is a lot easier probably said than done, 
though, because once you get dependent upon something, it is 
pretty hard to let go of it.
    Mr. Johnson. Right.
    Mr. Ryun. Yes, sir?
    Mr. Cuellar. Six points, Mr. Ryun. What gets measured gets 
done. If you do not measure results, you cannot tell success 
from failure. Right now, what we are doing in Congress--what 
are we doing? We are putting money into the agencies, and we do 
not know if the money that we are putting in really works. We 
have some indicators that show that maybe it is, maybe it is 
not.
    The third point is if you cannot see success, you cannot 
reward it.
    The fourth point is if you cannot reward success, you are 
probably rewarding failure, and if you cannot recognize 
failure, you cannot correct it. You do not know if you are 
doing the right thing if you cannot recognize failure.
    And then the last point is if you can demonstrate results, 
then you can get public support for the results that you are 
doing.
    The bottom line is the way I see this is we are pumping 
billions of dollars. We have got what, a $2.7 trillion budget 
or somewhere around there----
    Mr. Johnson. Six.
    Mr. Cuellar (continuing). A $2.6 trillion budget. How do we 
know that the dollars that we are spending are for successful 
programs or programs that are not working or programs that have 
extended their lifetime already? We do not know unless we ask 
those questions.
    Mr. Conaway. Mr. Ryun, a couple of things. One, on the 
front end, as we begin to develop new programs or new 
initiatives, that ought to be a part of the development 
process. What is the end game? In other words, is there a point 
in time where we expect this program to have done its job, and 
if it does not get that job done, then it is going to go away? 
So help the recipients and the folks who are trying to get it 
done understand that there is an end in sight.
    But I would also harken back to the sunset issues for 
programs that we think are going to be going on forever, that 
they ought to get better every year and do a better job, but I 
would try to help set the standards up front as to what the 
drop-dead date of a particular program ought to be.
    Mr. Ryun. I think we can all agree that, you know, that we 
have programs that started with good intentions. They have 
arrived at maybe somewhat of a destination, but there is not 
the will within Congress to say it is time to bring closure. I 
think that is a problem that we, as Members, need to deal with. 
It is a hard reality, but, nevertheless, one that we need to 
address.
    A final just kind of a broad question. We have all nibbled 
around the edges on this. We, as Members, want to have good 
information, and yet that becomes difficult. A moment ago, you 
brought up the example of a Senator saying, ``Well, that is 
good information, but it is 4 years' old.'' I think we are 
accustomed to, as Members, kind of dealing in sound bites. We 
are actually able to deal with more than just that, but my 
point is we need real-time information when dealing with an 
issue. Any suggestions as to how we can get that on a very 
quick basis, and especially our staffs because they are the 
ones that are going to help feed us with a lot of information?
    Mr. Johnson. Well, I think it would be a wonderful 
challenge to have to rise to. If a subcommittee or the full 
Committee said, ``Let us do this. We cannot do it government-
wide all at one time, but let us take a subset of some agencies 
and figure out what is a good set of performance information to 
provide to the members of the relevant committee--it may be 
Budget or Appropriations--and let us decide on what the 
information is and how timely it ought to be, and figure out 
what that is and come up with something, and then try to 
demonstrate its usefulness or not.'' But go from there and try 
to determine that it is worthwhile doing for the rest of the 
Federal Government. That would be a really exciting thing for 
us to work on.
    Mr. Cuellar. And I agree. You cannot ask for all of the 
information that is available. What we have got to do as a 
legislature is we have got to selectively decide here is what 
we want from the agencies, and this is the timing that we need 
this information, and if we are able to selectively ask what 
measures we want to look at and on a timely basis, then I would 
tell you it should not be 4 years' old, and we should be able 
to get that information on a more accurate and more timely 
basis.
    Mr. Ryun. Mr. Conaway.
    Mr. Conaway. Again, just asking those questions and setting 
those parameters up ahead of time; it would be helpful to get 
that done for all new programs. For existing programs, it is 
going to take a different level of activity, level of 
intensity. But I like Mr. Johnson's idea about creating some 
sort of a pilot project, a test, that would allow the 
development of it so you could create somewhat of a template 
for all of the agencies, although they would always have to be 
modified for the specifics of any one agency.
    Mr. Ryun. Thank you, Mr. Chairman.
    Chairman Nussle. One idea, or just a thought. You said this 
Web site will be available in 4 months?
    Mr. Johnson. Well, the information exists now. What we are 
doing is creating a Web site that assumes that the audience is 
John Q. Citizen, John Q. Taxpayer. That is what will be 
available in several months. We are trying to go through the 
issue of how to structure it and how to phrase things and how 
to simplify things. In the PART, for instance, there are 25 to 
30 questions, depending on the nature of the program, that we 
ask of the sort that Henry talked about. That information 
exists on the Web now for every program that we have assessed, 
which is 600 as of last year and 850 as of a month and a half 
from now.
    Chairman Nussle. It may actually be more beneficial, 
because that is like drinking out of a fire hose when you are 
600. It could be that when you roll this out, we may want to do 
some kind of an informal demonstration up here at the committee 
for Members and their staffs. It would be a good way to get 
some information about this.
    Mr. Johnson. On the PART information, there might be a 
focus on two or three key performance measures, but the kind of 
thing, I think, that you all and the appropriators would need 
is the kind of information that Henry is showing up here, which 
is much more detailed, quarterly updates. So it would start 
with this, but then it would be much more extensive, I think. 
The kind of information that exists now on OMB's Web site is 
not the level of detail that you all would need to make even 
more intelligent budget decisions. We would need to decide what 
that is and then make it available.
    Chairman Nussle. Mr. Diaz-Balart.
    Mr. Diaz-Balart. Thank you very much, Mr. Chairman. I 
actually also want to thank you for having this hearing. I 
think it is a very important hearing. I also want to thank you 
particularly for this distinguished panel. The three gentlemen 
that are speaking to us today--Mr. Johnson, Mr. Cuellar, and 
Mr. Conaway--have not only a reputation of protecting 
taxpayers' dollars, but I think, very clearly, they have a very 
strong record of achievement in protecting taxpayers' dollars, 
so what they have to say is very important for all of us to 
listen to.
    Mr. Chairman, you know, but I do not know if others know, 
that my years in the State legislature could be defined as what 
I did for performance-based budgeting and for priority-based 
budgeting, and in order to try to get it done, because 
obviously the bureaucracies do not want to do it, and it is 
heavy lift for everybody, I came up with a rather dramatic, I 
understand, way to do that.
    I, basically, as chairman of the Ways and Means Committee, 
which in the State senate in those days was appropriations, 
budget, ways and means, and finance and tax together, I told 
every agency that they had to come up with a plan to cut 25 
percent of their budgets. I did not say that I was going to cut 
25 percent of their budgets, but I wanted a list of priorities 
and a list of their lowest priorities and look at ways to cut 
administration, look at ways of cutting waste, and they did not 
want to do it, and it was heavy lifting. I actually still have 
one of the posters that was distributed throughout the capitol 
when I was doing that. The only part that upset me was the 
picture because it was not a very good picture. But, I mean, 
ultimately, it was a heavy lift, but we succeeded in doing some 
of the things, and I think, by the way, Florida is number one 
in job creation and still continues to be number one in job 
creation.
    To give you an idea as to how we were able to do that, 
spending increases in appropriations before those days were 
close to 10 percent increases annually. After that, as a 
result, I was able to decrease it to about 1 percent, an 
increase of 1 percent, rather dramatic. And also, because we 
did performance-based budgeting and priority-based budgeting, 
we were also able to fund things that were never funded even 
with 10-percent increases.
    Mr. Chairman, I just want to add that I am really impressed 
with what this administration is doing with PART. It is kind of 
hard to read through sometimes. My staff has done a really good 
job of doing it.
    Chairman Nussle. It is not purposeful?
    Mr. Diaz-Balart. No, I understand. It is complicated stuff, 
but it is there, and I think we also need to commend, for 
example, the chairman of the Appropriations Committee and the 
appropriators. They have done a pretty good job of applying 
some of the information that you, Mr. Johnson, and the 
administration have provided.
    In this appropriations cycle, the House has terminated 99 
programs, and that is a savings of $4.6 billion. Where I am 
from, $4.6 billion is real dough, and that is, I think, a huge 
tribute to what this administration is doing and also the fact 
that there is some coordination, obviously, with the 
appropriators.
    I think Mr. Spratt was right when he talked about that 
there has got to be a tie-in with the legislature, and I think 
Mr. Cuellar was talking about what some of those issues that we 
have to look at are: Can we do a better job in tying in with 
the appropriators of the Budget Committee to make sure that 
also when those standards are being developed through the PART 
process, that the legislature is involved in that process? From 
what I hear from Mr. Cuellar, that is pretty much what happened 
in Texas. There was a negotiative process as to what some of 
those measures should be, and that is really where the tough 
part comes. What can we do to do a better job there? How can we 
improve on that, because I think the information is available? 
You are right. It needs to be in a little bit more easy-to-
understand English. But what can we do to improve that 
communication not only after you have done the PART reviews, 
Mr. Johnson, but also maybe before that so that there can be 
buy-in, so that there can be a better understanding? When you 
buy in, you are more likely then to make the tough decisions, 
and these are tough decisions.
    Mr. Johnson. I think that if we had walked up 4 years ago 
and said, ``Let us work together and come up with outcome goals 
for each program and efficiency measures and so forth, and we 
can use it to better budget, and we do not want to get rid of 
programs; we want to work better,'' we would have been told to 
skedaddle. I think we have information now that is a good 
starting point. We can sit down and say, working with agencies, 
``Here is a good first cut. Now, what do you, Members of 
Congress, or this committee like about this? What is missing? 
What needs to be added or subtracted?'' We have a good starting 
point.
    The fact that there is interest in getting buy-in in 
Congress is a really positive sign. I do not think there would 
have been any interest in ``let us agree on what this is'' 4 
years ago, but I think the fact that there is a critical mass 
of performance information is a good first step. In a couple of 
months, 80 percent of all of the programs will have performance 
information. We can have a really good conversation on the 
programs, and we can get the kind of buy-in you are talking 
about. We all have to agree on what the desired outcomes are 
for each of our programs.
    Mr. Diaz-Balart. Mr. Chairman, if I may also, to Mr. 
Conaway, once the information is available, what we are really 
talking about here is legislative will, are we not? That is 
really where the rubber meets the road.
    Mr. Conaway. Sure. That is exactly right. You know, Chris 
was talking earlier about his business life. In the business 
world, you have got a CEO that gets all of the input he wants 
and then makes a decision that is made. That is not the model 
we have here, and trying to be able to look your constituents 
in the eye and say, ``I know you like that program, and I know 
you think it is doing well because you are getting money out of 
it,'' whether it is CDBG, or you are in love with Amtrak, or 
whatever the thing is, it is having the will to say, ``I 
disagree with you, and we are going to have to go a different 
direction.'' It is much easier said than done, obviously.
    Mr. Diaz-Balart. And, Mr. Chairman, if I may, last question 
to Mr. Cuellar, I do not know if you found this, but one of the 
things that I found in the State legislature is usually the 
least-effective program, the one that can show less results, or 
the lower-priority programs seem to have the loudest advocates 
and the more aggressive advocates. Maybe that is why because 
that is how they got there in the first place. Is that 
something that you found as well?
    Mr. Cuellar. Yes, you do. But, again, by having 
measurements in place, you can certainly have a better dialogue 
with those people. Instead of them just coming in, ``We need 
this, and we need that,'' at least, if you have that 
information, and you have that information available to you in 
an easy format, then you certainly can have a better dialogue, 
especially when you are making budgetary decisions.
    The wonderful thing about the whole thing is, and, I think, 
Clay just hit it, Mr. Chairman, members, we have got all of the 
information available. I think we have got buy-in because, I 
think, at the State legislature and different places, agencies 
were usually afraid because they felt that the Congress or the 
State legislature was going to use this information to cut 
through programs, go after them to punish them. There is a 
punishment-and-reward system that should be in place, but I 
think, from what I am hearing, is we are having more agencies 
that understand that this can be a good managerial tool for 
them.
    You have got more buy-in by the agencies, and if that 
information is available, then I think it is up to us to figure 
out how do we make that connection with the legislature, with 
the Congress? What information do we use because it is out 
there? And I think the buy-in, which is very important because 
there is what I call an ``institutional resistance'' can be 
very difficult, and I think that you all did the hard work to 
get them to buy in, and now it is up to us to buy ourselves 
into this process because it is important to do it.
    But I think, whether it is a mayor or whether it is a State 
legislature, I think all of us have done this in a previous 
life. Now is how do we use that experience from the previous 
lives that we have seen that has been successful? How do we do 
it here in Congress?
    Mr. Diaz-Balart. Thank you, Mr. Chairman.
    Chairman Nussle. Thank you. I would not underestimate the 
level of distraction. The mere fact that you have been on that 
Web site and have traversed through does not mean that all or 
most or even a majority of Members have done that or staff, and 
I will be the first to admit, since maybe no one else will, 
that I have not for a long time. I have been on the Web site, 
but it has been a long time since I have done that, and that is 
why I am wondering if some level of in-your-face is in order 
here.
    I think what you are suggesting here that is coming out in 
4 months, because Members tend to fly at about 30,000 to 40,000 
feet. I understand that all of the details to make intelligent 
decisions are down in the weeds, but if you are not even 
looking at the information at 30,000 or 40,000 feet it is even 
worse. I do think your rollout of that key information to 
citizens, all of us of course being citizens as well, and 
understanding or reacquainting ourselves to that information, 
would be a good thing to do.
    Do you see an advantage to having a rollout in addition to 
what you are doing at OMB and with the administration, but also 
here on the Hill? I would be willing to offer, with Mr. 
Spratt's acquiescence and participation and all of our Members' 
and staffs' participation some type of rollout where you can 
demonstrate this for Members and staff and for other key people 
who want to be interested in taking a look at this.
    Mr. Johnson. That is a fantastic idea and opportunity. As 
we have thought about the potential use of this, the one 
potential use of this site that we come back to is a 
Congressman's town hall meeting or a Senator's town hall 
meeting where they stand up and they say, ``I am interested in 
how we are spending the money. It is not a game of perfect, but 
we are working to get better, and here is a place to go to see 
this.'' It is exactly that kind of thing, that little image 
that we have had in our mind in our efforts to try to construct 
this.
    Chairman Nussle. Well, we have got the equipment here to do 
something like that, so we will----
    Mr. Johnson. That is a wonderful idea.
    Chairman Nussle (continuing). Be in touch, and your 
communication folks can be in touch, and we will try to do 
that.
    Mr. Johnson. That would be great.
    Chairman Nussle. I do not have any other questions, and I 
do not see any other members on the dais that have any 
questions. Mr. Cuellar or Mr. Conaway, I understand you may 
have had some questions you wanted to be able to pose for the 
record, if you have done that during your--then that is fine.
    I want to thank you very much for this opening salvo of 
discussion. It was your leadership, Henry, as I stated during 
the markup, that brought us to this point. It is, as Mr. 
Johnson stated, a journey; it is not a destination. I think we 
have learned that today, if we have learned anything. I do hope 
that we have taken some of the first steps on that journey. 
Even though it may not be with a very clear map of where 
exactly we are going to end up, at least, I think it is a 
worthwhile endeavor.
    So thank you for your leadership on this. We look forward 
to working with you, and we may be back here at some point in 
time this fall to look at the next iteration of this. So if 
there is nothing else to come before the Committee, without 
objection, we will stand in recess.
    [Whereupon, at 11:53 a.m., the Committee was adjourned.]

                                  
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