U.S. GOVERNMENT PRINTING OFFICE

63–672 CC WASHINGTON : 2000

THE RESULTS ACT: STATUS OF PERFORMANCE

BUDGETING PILOT PROGRAMS

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

INFORMATION, AND TECHNOLOGY

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

FIRST SESSION

JULY 1, 1999

Serial No. 106–106

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform

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COMMITTEE ON GOVERNMENT REFORM

DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York

CONSTANCE A. MORELLA, Maryland

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

STEPHEN HORN, California

JOHN L. MICA, Florida

THOMAS M. DAVIS, Virginia

DAVID M. MCINTOSH, Indiana

MARK E. SOUDER, Indiana

JOE SCARBOROUGH, Florida

STEVEN C. LATOURETTE, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

BOB BARR, Georgia

DAN MILLER, Florida

ASA HUTCHINSON, Arkansas

LEE TERRY, Nebraska

JUDY BIGGERT, Illinois

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

HELEN CHENOWETH, Idaho

DAVID VITTER, Louisiana

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, JR., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, Washington,

DC

CHAKA FATTAH, Pennsylvania

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

ROD R. BLAGOJEVICH, Illinois

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

JIM TURNER, Texas

THOMAS H. ALLEN, Maine

HAROLD E. FORD, JR., Tennessee

JANICE D. SCHAKOWSKY, Illinois

———

BERNARD SANDERS, Vermont

(Independent)

KEVIN BINGER, Staff Director

DANIEL R. MOLL, Deputy Staff Director

DAVID A. KASS, Deputy Counsel and Parliamentarian

CARLA J. MARTIN, Chief Clerk

PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY

STEPHEN HORN, California, Chairman

JUDY BIGGERT, Illinois

THOMAS M. DAVIS, Virginia

GREG WALDEN, Oregon

DOUG OSE, California

PAUL RYAN, Wisconsin

JIM TURNER, Texas

PAUL E. KANJORSKI, Pennsylvania

MAJOR R. OWENS, New York

PATSY T. MINK, Hawaii

CAROLYN B. MALONEY, New York

EX OFFICIO

DAN BURTON, Indiana HENRY A. WAXMAN, California

J. RUSSELL GEORGE, Staff Director and Chief Counsel

MATTHEW EBERT, Policy Advisor

GRANT NEWMAN, Clerk

FAITH WEISS, Minority Counsel

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C O N T E N T S

Page

Hearing held on July 1, 1999 ................................................................................. 1

Statement of:

Harper, Sallyanne, Chief Financial Officer, Environmental Protection

Agency; Olivia A. Golden, Assistant Secretary, Administration for Children and Families, Department of Health and Human Services; and

Jesse L. Funches, Chief Financial Officer, Nuclear Regulatory Commission ................................................................................................................. 50

Lee, Deidre, Acting Deputy Director for Management, Office of Management and Budget; and Paul L. Posner, Director, Budget Issues, U.S.

General Accounting Office, accompanied by J. Christopher Mihm, Acting Associate Director, Federal Management and Workforce Issues ....... 6

Letters, statements, et cetera, submitted for the record by:

Funches, Jesse L., Chief Financial Officer, Nuclear Regulatory Commission, prepared statement of .......................................................................... 77

Golden, Olivia A., Assistant Secretary, Administration for Children and

Families, Department of Health and Human Services, prepared statement of ........................................................................................................... 68

Harper, Sallyanne, Chief Financial Officer, Environmental Protection

Agency:

Information concerning reinventing environmental information .......... 63

Prepared statement of ............................................................................... 52

Horn, Hon. Stephen, a Representative in Congress from the State of

California, prepared statement of ................................................................ 4

Lee, Deidre, Acting Deputy Director for Management, Office of Management and Budget, prepared statement of ................................................... 9

Posner, Paul L., Director, Budget Issues, U.S. General Accounting Office,

prepared statement of ................................................................................... 20

Turner, Hon. Jim, a Representative in Congress from the State of Texas,

prepared statement of ................................................................................... 93

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THE RESULTS ACT: STATUS OF PERFORMANCE BUDGETING PILOT PROGRAMS

THURSDAY, JULY 1, 1999

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, INFORMATION, AND TECHNOLOGY, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 2 p.m., in room 254, Rayburn House Office Building, Hon. Stephen Horn (chairman

of the subcommittee) presiding. Present: Representatives Horn and Turner.

Staff present: J. Russell George, staff director/chief counsel; Mat- thew Ebert, policy advisor; Jane Cobb, professional staff member,

Committee on Government Reform; Grant Newman, clerk; Justin

Schlueter and John Phillips, interns; Faith Weiss, minority counsel; and Jean Gosa, minority staff assistant.

Mr. HORN. The Subcommittee on Government Management, In- formation, and Technology will come to order. I should warn our

witnesses, bear with us. We have a lot of votes coming up this

afternoon so we will probably have to go into recess on a number

of items. We have H.R. 10 before us later in the afternoon, and

right now we have the Y2K litigation conference report that will be

voted on soon.

For decades, widely publicized examples of waste, fraud and

error in Federal programs eroded the American public’s trust in

Government. In 1993, Congress attempted to address this by enacting on a bipartisan basis the Government Performance Results Act,

otherwise known as the Results Act. The act’s goal is to improve

the efficiency and accountability of Federal programs by shifting

the focus of the Federal budget process from its longstanding concentration on Government spending to the results of its programs.

A key expectation of the Results Act is that Congress will gain

a clearer understanding of what is being achieved in relation to

what is being spent. To accomplish this, the act required that beginning in fiscal year 1999, agencies must prepare annual performance plans with goals covering the program activities in their budget requests. In addition, these plans must outline the funding level

being applied to achieve each performance goal.

The General Accounting Office assessment of fiscal year 1999

performance plans found that most of the agencies it reviewed

showed some progress in linking planning and budgeting structures and presentations. However, most of the plans did not explain how the funding would be allocated to achieve performance

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goals. Much remains to be done if performance information is to be

more useful for budgetary decisions and programmatic decisions,

including the completion of another requirement of the Results Act:

Performance budgeting pilot programs.

With the enactment of the Results Act when agencies make

spending decisions, they are required to make closer and clearer

linkages between the processes of allocating resources on the one

hand and expected results to be achieved with those resources on

the other. This management practice of aligning spending decisions

with expected performance is commonly referred to as performance

budgeting. The Results Act required that pilot programs be used to

test performance budgeting in agency budget requests.

The act required the Office of Management and Budget to designate at least five agencies to conduct pilot programs in fiscal

years 1998 and 1999. These agencies were expected to develop

budgets that show how performance would change if the agency received more or less allocations than requested. The office of management and budget was to include these pilot performance budgets as an alternative presentation in the President’s budget for fiscal year 1999. In addition, a report is required to be transmitted

to Congress and the President no later than March 31, 2001.

The performance budgeting pilot programs were scheduled to

start in fiscal year 1998 so that they would begin after agencies

had sufficient experience in preparing strategic and performance

plans. On May 20, 1997, the Office of Management and Budget announced that pilot programs would be delayed for at least 1 year.

In September 1998, the Office of Management and Budget solicited

agencies’ voluntary participation for these pilot programs, but no

agencies were selected. At present, the Office of Management and

Budget has no definite plans for proceeding with the performance

budgeting pilot programs, at least that this committee is aware.

Meanwhile the American public continues to lack confidence in

the executive branch of the Federal Government because of the

widespread waste and inefficiency in Federal programs. The Results Act represents a genuine attempt by Congress to restore this

trust by ensuring accountability and effectiveness in Federal agencies and their programs. The Office of Management and Budget’s

continual delay in implementing the performance budgeting pilots

called for by the Results Act greatly concerns us as well as the

leadership in this chamber. We hope that experience to date with

respect to the pilot designation does not suggest that some of the

statutory requirements of the Results Act will simply be ignored.

On our first panel today, representatives from the Office of Management and Budget and the General Accounting Office, will discuss the delay and determine its implications for the implementation of the Results Act and performance budgeting in the Federal

Government.

Our second panel includes witnesses from three Federal agencies

that have made considerable progress in performance budgeting.

They will describe the obstacles to overcome in the process, the lessons that have been learned and the future expectation of performance budgeting within their respective agency. I welcome our witnesses and look forward to their testimony.

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I think this is one of the most important hearings we will be having this year and we will keep at it in terms of measurement of

programs. New Zealand and Australia have done this 10 years ago.

We should not be such a laggard. South Carolina, Minnesota, the

State of Oregon have been doing it. Oregon in particular is the one

ahead of everybody else. So the Federal Government certainly

ought to catch up with Oregon, I would hope.

[The prepared statement of Hon. Stephen Horn follows:]

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Mr. HORN. We have on panel one the Honorable Deidre Lee, Acting Deputy Director for Management, Office of Management and

Budget; Mr. Paul L. Posner, the Director for Budget Issues of the

U.S. General Accounting Office, a part of the legislative branch;

and he is accompanied by Mr. Christopher Mihm, the Acting Associate Director, Federal Management and Work Force Issues in the

U.S. General Accounting Office.

You know the routine, ladies and gentlemen. Stand up, raise

your right hands.

[Witnesses sworn.]

Mr. HORN. The clerk will note all three witnesses have affirmed.

We thank you very much for coming, and we will start with Ms.

Lee on behalf of the administration.

STATEMENTS OF DEIDRE LEE, ACTING DEPUTY DIRECTOR

FOR MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET;

AND PAUL L. POSNER, DIRECTOR, BUDGET ISSUES, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY J. CHRISTOPHER MIHM, ACTING ASSOCIATE DIRECTOR, FEDERAL

MANAGEMENT AND WORKFORCE ISSUES

Ms. LEE. Good afternoon, Chairman Horn. I appear before you

today to discuss the Government Performance and Results Act,

commonly referred to as GPRA or the Results Act. It’s a very difficult acronym. The Results Act of 1993 established a number of

new major requirements for the executive branch with one overriding objective: To improve agency performance and get better program results for the taxpayers. This has been a high priority for

the administration. The Results Act outlines several objectives. Key

among them is to clearly present what results the taxpayers get for

dollars spent. To accomplish that, the Results Act delineated several progressive steps including the concept of performance budgeting. There is quite a bit of background on GPRA and on the performance budgeting objectives in the GAO report dated April 12,

1999, which I know you are very familiar with. I have also briefly

outlined the process in my testimony.

Therefore, in the interest of brevity and trying to stay within my

5 minute limit——

Mr. HORN. We won’t limit you to the 5 minutes, folks. This is

very important, so if you want to take some more time feel free.

Ms. LEE. Good, I won’t talk so fast. In the interests of that, I will

move on to accomplishments to date and future plans for performance budgeting pilots.

Accomplishments to date. Performance measurement pilot

projects as required by GPRA were conducted during fiscal years

1994 through 1996; 28 departments and agencies were designated

as performance measurement pilots. These performance measurement pilots successfully demonstrated that Federal agencies could

prepare annual performance plans and annual program performance reports that met GPRA requirements. They also documented

that the time spent on the pilots was indeed a learning process and

helped lay the foundation for the full implementation of Government wide plans.

Following these pilots, we began to implement GPRA in earnest

across the Government in 1997. We are now in the 3rd year; and

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overall, the agencies have made very substantial progress. Over the

past 2 years about 100 departments, independent agencies and

Government corporations have prepared their initial strategic plan

and two sets of annual performance plans. Within the next 15

months, these agencies will prepare an updated strategic plan, two

more sets of annual performance plans and their first program report. All the while, the agencies have prepared annual budgets

and, as they will tell you in the next panel, they are clearly involved in the performance budgeting-like process of plan, budget,

results, report, and then integrate all of that.

Agencies continue to improve. As the GAO report indicates, the

continued success of this program will to a great extent depend on

its use and integration into the budget decisionmaking process both

internal and external to the agencies.

Specifically, regarding performance budgeting pilots. The GPRA

specified the the Director of OMB, after consultation with the agencies, would designate agencies or departments as performance

budgeting pilots. The pilots would test whether agencies have adequate performance and financial information from which to calculate the effectivness of varying funding levels on several or more

measures of performance. They would also determine whether

agencies can define in advance the changes in performance resulting from various funding levels, and they would describe and display the performance information in a manner that would allow decisions to be based upon it. And the performance budgeting pilot

would have OMB assess agency capabilities to perform a performance budget, including the cost, practicability and time needed for

preparation. These pilots were to have been conducted in the fiscal

year 1998–1999 with the report to Congress on the performance

budgeting pilots by March 31, 2001.

Let me add that as well as performance budgeting pilot assessment, the report is to address the overall implementation of GPRA

from 1997 through 2000 and provide a picture of what is working

well in areas of change or improvement.

Mr. Chairman, as noted by the then Director of OMB, Franklin

Raines, letter to this committee on May 20, 1997, the performance

budgeting pilots were delayed. Our priority, then as it is today, was

to bring about the successful implementation of GPRA throughout

the executive branch. Agencies have devoted a great deal of time

and effort to ensuring its strategic plans and annual plans were

timely and useful.

As with the performance measurement pilots, a foundation was

needed before the next steps. Challenges remain in performance

budgeting foundation as cited by the GAO. Some agencies still need

to clearly define their strategies, and the second set of strategic

plans is in process with congressional consultation this fall and

probably early next spring. Agencies still need to improve their capability to gather and use performance data—first reports due next

spring—and they also need to have more accurate and allocable

cost accounting systems. The FASBI standards are working, but

they too had experienced several years of delay.

I am acknowledging that challenges for performance budgeting

remain. However, during the fiscal year 2001 budget formulation

process, which is now beginning, OMB will select agencies and proVerDate 11-MAY-2000 11:14 Aug 01, 2000 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\63672.TXT HGOVREF1 PsN: HGOVREF1
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grams or projects within those agencies for performance budgeting

pilots. With the agencies, we will analyze these performance budgets to determine alternative levels of performance and the associated resources aligned with these performance levels. And we will

report in the March 2001 GPRA report the results and recommendations stemming from performance budgeting pilots. Although later than originally anticipated, we believe this proposal is

consistent with previous recommendations on Government performance and results, particularly in the relation to the need to set a

foundation. We look forward to working with the agencies, the

GAO, and the Congress in moving forward on this effort.

Mr. Chairman, the Results Act is bringing about a fundamental

transformation in how we prepare budgets, make and manage programmatic decisions, and become more accountable to the American public for how we spend their tax dollars. Any great change

is not accomplished overnight, but we have made a very good start.

And from this solid beginning the path to a true and useful linkage

of resources and performance can be realized in the months ahead

and we intend to work very hard to bring about that linkage.

Thank you.

Mr. HORN. We thank you for your statement. And as you know,

we will go to the next witness and then we will have a dialog on

this.

[The prepared statement of Ms. Lee follows:]

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Mr. HORN. Mr. Posner.

Mr. POSNER. Thank you, Mr. Chairman. I want to introduce

Chris Mihm on my left who heads all of GAO’s work on the Results

Act, and two people behind me, Mike Curro and Laura Castro who

have been instrumental in our own work in addressing the linkages

between resources and results which, as you so aptly noted, is critical to both improving budgeting and improving the outcome and

likelihood for successful transition to performance-based management at the Federal level.

What I thought I would talk about today is what is performance

budgeting, how is it defined by the Results Act, why it is important, where are we at the Federal level and what is the agenda for

the future.

Performance budgeting did not start with the Results Act. In the

report that we did, we noted the checkered history of performance

budgeting over the past 50 years at least from the Hoover Commission on through PPBS, ZBB, MBO and other acronyms too numerous to mention. In general, all of those initiatives tended to transform what the debate about resource allocations are all about, from

the debate about activities and inputs to a debate about results and

performance. Each one of them made some progress. I think the

Results Act promises to capitalize on some of those earlier initiatives and really push this much more completely.

The point in each of these efforts was to more systematically address performance as part of resource allocations, not necessarily in

a mechanical way where resources are adjusted every time performance goes up or goes down but to improve the way we conduct

the conversation about resource allocation. That’s clearly one of the

main goals we are talking about here.

The other main goal is to ground performance planning in budgeting to ensure that whatever performance goals we articulate are

firmly grounded in realistic assessment of what resources are available.

Against that general background, the Results Act has two approaches that attempt to solidify this relationship.

First, the performance plans and the annual plans that agencies

define must cover the program and activities in the Federal budget

itself on a comprehensive basis. OMB’s A–11 guidance goes further

and calls for transparency so that you know how much it is go

going to take in resources to implement the goals in the plans. The

point is to make the link between the goals in the performance

terms and the budgets that agencies have articulated elsewhere.

The second form of the performance budgeting, is what you noted

earlier, the performance budgeting pilots which were to take place

in fiscal year 1998–1999 where OMB was to choose five pilots to

show how performance varied based on funding levels and other

kinds of variables that were described. And the intent was to pilot

the resource linkage more systemically during the implementation

initially of the Performance Act.

We have already talked about why this is important. I think that

you could say that many of the previous reforms that we have undertaken, whether it is PPB, ZBB, or MBO, failed in part because

of the failure to make the analysis and plans relevant to the conversation about resources. These initiatives were launched with

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great fanfare, sometimes with unrealistic timeframes. I am reminded that under PPBS, agencies had 10 weeks to define the activities that we are giving them 7 years to define in Results Act

terms. It ultimately ground to a halt when these were not really

taken seriously in the resource allocation process.

So we learned from this and I think the designers of the Results

Act learned very well that if we want to make performance stick

in the Federal environment, we have to make it relevant to the one

process that is most critical to the agencies and the Congress, and

that’s the budget and appropriations process.

Now, where are we in articulating this linkage? As the study

that we have done for the Senate Governmental Affairs Committee

that we published, as has been stated here before, the two forms

of the linkage have been—we took a snapshot of them essentially

in April and found the following: That the performance budgeting

pilots themselves have not gone forward as of yet. We are heartened to hear that OMB is planning on moving ahead with some

performance pilots in the budget area. I think that the barriers

that OMB pointed to in the May 1997 letter were real and are still

real. The cost accounting is still in its beginning stages at the Federal level. Performance baselines and other kinds of tools necessary

to articulate and tighten this linkage are still in the developmental

stages so this is still very much a work in progress.

Notwithstanding the performance budgeting pilots, our reviews

show that nonetheless a far more basic but yet useful connection

is in the process of being articulated by the agencies at the Federal

level anyway. We think these constitute what we might call natural or grass-roots experiments and pilots in themselves that provide the foundation for moving ahead with this agenda of performance based-budgeting.

The point is that we found a variety of efforts under way by

agencies to incorporate and link performance into the budget presentations and show the implications for the budget of their performance goals. This is the first, and I will say in a few minutes,

necessary step but only the first step in the effort to really promote

this linkage in a more robust way.

As straightforward as this seems, it’s nonetheless a daunting

challenge. When we look at our budget, we know that there is a

tremendous disconnect between the way the budget accounts and

program activities are presented and the way that the performance

plans and goals are articulated. That’s the fundamental challenge

that we face. We have over 1,000 budget accounts that reflect a 200

year history of budgeting that have served very well the changing

needs of appropriators. They have a variety of orientations from object classes to organization to function and programs. The program

activities under them are over 3,000, and they also reflect a variety

of different orientations. They very well serve Congress’s control

purposes and Congress’s efforts to allocate resources among competing purposes.

The performance goals at agencies are more global. They are

more articulated as the act contemplates in outcome terms. So

there is a fundamental tension between the structures that we

found familiar use in budgeting and structures we find necessary

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to implement the results-oriented approach. Agencies have bridged

this tension in three predominant ways.

A few agencies, are actually redefining the budget structures to

accommodate an outcome or results-oriented perspective. You are

going to hear from some of them on the next panel. Others have

attempted to embed their performance results in their budget presentations themselves. Finally, the vast majority of agencies are developing a variety of informative and some noninformative crosswalks between these two structures at least at this stage of the

process. And to reprise the results of our study of the 35 agencies,

only 14 were able to for fiscal year 1999 translate their plan into

bedget form. In other words, what they were able to do was both

to identify the proposed funding level needed to implement the performance goals and describe specifically where that money could be

found in the budget.

In my statement here on page 13, we have one illustration, the

Nuclear Regulatory Commission. As you can see there, the NRC

not only indicated they would need $211 million to achieve a nuclear reactor safety performance goal or target in its plan, but explained that it had been derived from a single program activity in

its budget request. The point is the NRC plan indicates the estimated cost of a performance target and shows which goals would

be affected by the budget activity structure that you see there. I

have included in the appendix to the testimony several examples

from their budget-planned presentations of how other agencies

have articulated this linkage that is so critical.

In contrast to the 14 agencies, most of the other agencies we

looked at, such as the Department of Veterans Affairs, did not

identify the funding levels needed to achieve the goals.

Mr. HORN. If you wouldn’t mind, let me declare a recess so I can

make this vote. We will be in recess for 15 minutes and we will

try to be back and pick it up on page 13. So relax. Thanks.

[Recess.]

Mr. HORN. Recess is ended and we will continue with Mr.

Posner’s testimony, and we are about on page 13 in the examples.

Mr. POSNER. As I was saying, I was contrasting the 14 agencies

where you could tell how much money they were going to spend to

support their performance goals and those where you couldn’t,

which were the majority.

The Department of Veterans Affairs is one example where they

didn’t identify the funding levels needed to achieve the performance goals. And many agencies had the problem where they had

many goals linked to many program activities and the problem was

they would show the link, but they would not apportion how much

of the dollars from each of the activities were related to which goal.

So you really didn’t have a transparent kind of linkage there that

we have all wanted to move to. We will note that the VA is considering changes in its budget structure to improve this relationship.

We have been looking at the 2000 plans for the same 35 agencies

again for the Senate Governmental Affairs Committee. I would

note that we have noted little change in the overall number of

agencies that succeeded in relating resources to results. It appears

that some progress is being made in presenting the performance

consequences of budget decisions and that more fiscal plans in 2000

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were associating funding levels with specific goals, but they weren’t

able to say which program activities in the budget were related to

those goals.

What does the agenda look like here based on this study for the

future? In our view, we were heartened to find that there was continual experimentation in this very difficult but important relationship. We believe that the approaches being developed by some of

the agencies can provide a valuable foundation for further experimentation in this area. In light of the delay in the performance

budgeting pilots, in fact, we recommended in our April 1999 report

that the Director of OMB use these natural experiments, if you

will, as the basis to push forward the agenda of linking resources

and results.

We still think that this is relevant, that OMB should lead an effort to analyze which kinds of approaches make the most sense

under different circumstances, should work with the agencies in a

proactive way, perhaps through the CFOC council or the BOAC

councils as they have so successfully in some other areas like financial management reform, to promote more knowledge about best

practices in this area, to further promote the kinds of pilot projects

which we think are important here and to provide some good evaluation as to what the effects of these presentations have been.

Let me conclude at this point by noting that we are really at the

beginning of an important new stage for Results Act implementation and one that really will very well be critical in determining its

ultimate success. It’s important to note where we are and where we

are not.

What we are really working on is improving the kinds of presentations so that we can better align performance information with

budget information. This is a critical first step. We know that the

absence of this first step will surely frustrate the efforts to link resources and results. However, having achieved this as we have in

some cases is only the first step.

A few cautionary notes I think are in order here about the road

that we still have left to travel. The first is we need to be clear

about what our expectations are as I indicated earlier. What we

want, I think, is to enhance the kind of budget debate we have to

enhance the quality of budgeting itself to make it more performance based, but I don’t think that we should expect to promote the

kind of mechanical linkages where performance levels automatically in some way determine resource allocations. There are too

many values that we care about like needs, equity, and a variety

of other things to have a straightforward relationship as some

might expect.

Another thing to just caution about is that performance-based

budgeting won’t take the politics out of budgeting, as I am sure you

know, and necessarily shouldn’t. In fact, I think that you could

argue that performance-based budgeting will increase the stakes

involved with budget decisions. It will increase the importance and

the perceived importance of what we are making decisions about.

As a result, this, I think, increases the importance of the rest of

the GPRA Results Act implementation agenda because as the

stakes increase, so does the potential for distorting measures and

making decisions that may not be based on the right kinds of data.

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So this means that it’s more important than ever, in our view,

to ensure that there is a validation and verification process in place

on the performance goals and results that the agencies are reporting. It makes it more important than ever to ensure that the goals

that are articulated in performance plans are balanced and reflect

everything that is important that we care about in that agency to

avoid the kind of distortions that we might see from a purely quantitative approach to the decisionmaking.

It makes it more important to move on with the cost accounting

agenda that we just started this year. For the first time, agencies

have articulated cost accounting responsibility segments. This is

vital to comparing programs in like terms and the like. It’s probably also important to think about how our budget structures could

be ultimately better aligned with performance in the long run.

These are sensitive relationships. Congress has many issues at

stake in the appropriations process. But ultimately, as we have

seen in the past, we would hope that as results become a more

compelling way to make decisions, that ultimately the budget account structures and the program activity structures will change

accordingly. We have noticed this has happened in the past. It

wasn’t too long ago that positions were described in the budget as

line items, for example, in agency budget presentations 50 or 60

years ago. It no longer is the case. We note that the number of accounts has actually been reduced in the past 50 years. My colleague, Mike Curro, has done some pioneering studies of this. So

we have moved a long way in our budget account structures, and

we would hope that that would continue.

I think what this points to is that GPRA as an act was right in

concept, that budgeting is vital, and the act was right in recognizing that it vitally rests on the successful completion of the rest of

this agenda which is why performance budgeting was not introduced first, it was introduced last, it was deliberately piloted in a

development process. The linkage of resource to results makes the

implementation of this whole act important. As daunting as the

challenges are, we have no choice but to pursue it if we want to

improve both budgeting and performance in the Federal Government. Thank you.

Mr. HORN. Well, thank you. Mr. Mihm, do you have anything to

add? That was a very eloquent statement you had, Mr. Posner.

[The prepared statement of Mr. Posner follows:]

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Mr. HORN. Let me go to figure one just for a while before we

start the usual questions. Here you have on the left-hand side the

salaries and expenses account, fairly traditional. They took out of

this the first two items, nuclear reactor safety—which makes

sense—and nuclear materials safety. And then the next is nuclear

waste safety which might not affect some of the personnel but

might affect the neighborhood.

I would simply ask is this basically the chart that NRC has on

terms of strategic goals and performance goals or is this the GAO

interpretation of what they have?

Mr. POSNER. This is our analysis of that.

Mr. HORN. The question is very simple. Was there anything else

here beside—let’s take goal 1.A—zero civilian nuclear reactor accidents.

That often is going to be down the line and less—hopefully less

likely. Is there another measure that one could think about there

in terms of nuclear reactor safety? Would the accident, for example,

if one forgot some of the safety clothes they wear for a day or something, and might have had some exposure, is that checkmarked

under that accident? Is that basically an accident?

Mr. POSNER. Well, you are saying that that’s an ambitious goal,

if you will. I think there is some intermediate performance goals

there.

Mr. HORN. Well, do you know for several years? I guess that is

another thing I have got in my mind. When I look at that, if it’s

a nuclear accident and the employee didn’t say much about it, the

doctors didn’t have it as a case, and something might happen to

them 5, 10 years down the line that they did have an exposure. I

was just wondering how you would deal with something like that.

That’s a negative performance goal.

Mr. POSNER. I don’t know that in this context. I do know that

that’s a challenge that we face in measuring and tracking outcomes

in general. Oftentimes we don’t know for several years—at least—

whether we have been successful.

Mr. HORN. Then the goal 1.A.1 is maintain low frequency of

events which could lead to severe accident.

That probably can be done on a yearly—within a year’s basis.

Goal 1.B.—zero death due to radiation or radioactivity releases

from civilian nuclear reactors.

Well, can you understand the deaths. The question is what do

you tie it to if they have left the employment or whatever. How do

we deal with that?

Mr. MIHM. The key thing here, Mr. Chairman, without speaking

particularly to this example, the key thing that we have seen for

goals that are results oriented that will take several years before

we know whether or not we have met the goal or not is to have

a good sense of the intermediate goals or the steps that you would

use in order to measure progress. Often those are more output oriented in nature and then you can budget to those if you have a

good sense of what your ultimate result is. For example, in science

and R&D programs, in some of those programs, as people at the

NSF have put it to me, are trying to create scientists that will discover the disease that we don’t even know yet exists for the next

20 or 30 years.

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How do you develop an annualized performance goal for those

types of programs? Part of the answer here is to know what sort

of scientific programs will lead you to those types of results and

therefore you focus on making sure that you have those quality scientific programs in place. So you focus on intermediate goals—developing quality receives toward the longer term goals——

Mr. HORN. Well, that’s, of course, difficult and this agency has

great difficulties because this is something that you can’t easily see

if you have an exposure. You are in a traditional building trades,

a contractor putting up a sky scraper, there is often a sign in almost every plant you go into, it’s been 400 days since we have had

an accident, let’s say, on the assembly line or whatever it is.

You are pretty sure that you have caught most of those because

you have Workers’ Comp claims, you have all sorts of things. Sometimes a worker might be hiding something dumb they did because

they just don’t want to be thought of as being that dumb in a firm

that doesn’t have emissions popping out of a nuclear reactor. So,

I am sort of fishing around here for the long run bit as we agreed,

and how you really can measure this. Are there some cases where,

let’s say if you are an airline passenger. Some of us get a form

every once in a while presumably on a random airplane basis, are

you satisfied with the counter personnel, are you satisfied with the

airplane personnel and all of this. Obviously, that is a satisfaction

index. That makes a lot of sense to me. It is like a student evaluation of faculty. That makes a lot of sense to me. It didn’t make

much sense to the faculty, but it made a lot of sense to me. The

fact is those are valid data, and they do make a difference and you

can tell over a time line.

I am just wondering when you look at—this one is very difficult.

But when you look at other agencies without nuclear emissions,

what—do you have sort of a choice and a measurement operation

that GAO has ever put out as possible ways to measure a program?

Mr. MIHM. We have done a number of products related to that.

We have issued products that talk about the difficulty of measuring

some of these larger results. We have issued some guidance to

agencies on how to measure complex problems. We also have issued

quite a number of products that talk about the other half of your

equation, how do we know that the data we are getting is any good.

That’s an area that we have put a lot of emphasis in our reviews

of the annual performance plans. The Results Act require that the

agencies talk about how they are going to verify and validate the

performance information. Sadly, that’s also consistently one of the

weakest areas in annual performance plans, everything from absolute silence to how the agency is going to do it to plans that just

aren’t very clear.

The point, Mr. Chairman, that you are touching on is that if we

don’t have accurate information that we can be using to make decisions on, either in a budget context or nonresource allocation context, then the whole planning effort is really not worth its weight

we don’t have confidence in the results of the planning effort.

Mr. HORN. I would like a little exhibit in this record, without objection, of some of the choices that you have made over the years.

If you could just excerpt those, 10, 20 pages, put it in the hearing

at this point.

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Mr. MIHM. We will work with the staff to get that to you.

Mr. HORN. Thank you. Ms. Lee, what does the delay of the pilots

mean for the Government wide implementation of the Results Act?

What does it mean, anything?

Ms. LEE. I think what it tells us, Mr. Chairman, is timing as Mr.

Posner mentioned. There is a great deal of work to be done and we

wanted to make sure that the foundation was laid, the agencies

had begun the alignment of budgeting and resources and plans and

measurement. We think it was logical to delay that time until we

had a better structure. There still are going to be some challenges

in those tradeoffs.

Mr. HORN. It seems there is confusion between the general concept of performance budgeting as envisioned by some of the authors

of the Results Act back in 1993 and 1994 versus the specific language in the act that requires agency pilots to link varying levels

of performance with different budgeted amounts. Can you sort of

clarify this confusion for the record?

Ms. LEE. There are several options in some of the background in

the literature, everything from taking a budget level and determining what different levels of performance you can get for that same

budget amount versus different levels of performance for different

budget level amounts versus cost agency or even intraagency tradeoffs among—requirements and budget responsibilities. So what we

need to do from a piloting standpoint is look at these and say how

can we test those theories in various ways.

Mr. HORN. Can we agree on a general definition of performance

budgeting as envisioned by GPRA that would include the type of

performance budgeting required for the pilots? Is that pretty clear

for everybody, the pilots, are they singing from the same hymnal

of what they mean by performance budgeting?

Ms. LEE. I think we all agree that there needs to be a linkage

between plan, expected results and the various varying results or

budget levels. I think that’s the theory. But that is not to say specifically that every one will be the same. I think that we will see

variance across the pilots.

Mr. HORN. Is there an aim to get this variance? I’m not against

variance. I just am wondering if in, say, a small agency, a medium

size agency, a large agency just for the sake of it, that’s one typology. The question would be, can you have performance budgeting

in that relationship or is it just the simple things that we are

doing. I remember when we had one of these hearings, I thought,

good heavens, that’s not so difficult. We have got to do this so let’s

dump this on this poor soul or that poor soul volunteered was sort

of my feeling. What do you think about that in terms of definition

of performance budgeting?

Ms. LEE. What we try to do is consult with the agencies and try

to make sure that we have got somebody that is willing to step up

and work on this. Again, a solid definition of what we would like

to do is get the pilot that looks at both small, medium, and large

agencies, but also looks at those other tradeoffs. I don’t think we

want to just align it by agency size but we actually want to dig a

little deeper and say can we find someone who can do the tradeoffs

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grammatic tradeoffs. When we select those, I would think that they

would all look really quite different.

Mr. HORN. Now, these pilot programs are in some stage of being

undertaken, or are they?

Ms. LEE. We are in discussions with the agencies to say——

Mr. HORN. In other words, they haven’t started?

Ms. LEE. They have not started with them.

Mr. HORN. It seems to me as they are started down the line that

you might ask at the end of the first year if you don’t submit that

one to us, did they ever get rid of anything? Did they ever say this

is a stupid program? That would be a Federal Government first, I

realize.

Ms. LEE. I think we are actually seeing some of that in GPRA

when people have to align dollars are goals. Even if it is not performance budgeting, they have to actually sit there and say I have

these resources, what is my expected result. And we are beginning

to see a little bit of that tension deliver results as people need to

articulate the outcomes of various programs.

Mr. HORN. In your testimony you stated, Ms. Lee, that you would

select the agencies that will prepare a performance budget pilot

during the fiscal year 2001, 1 year really away from us. Budget formulation process, that’s under way now I think.

As you said, it’s now beginning. At what point during this process of the budget—which usually you are wrestling with three

budgets at a time—will the agencies actually be selected? Are we

talking about August or are we talking about November? When you

are going to select them?

Ms. LEE. We are going to do that within the next several months.

We wanted to go through a consultation process with the agencies.

If we have a ready willing volunteer early, that would certainly be

selected. In the meantime, there is going to be a little work and

discussion going on to determine exactly who the candidates are.

Mr. HORN. There would be few cynics that say, yes, I remember

zero-based budgeting. Nothing ever happened to that either. So

they will all say where did this goofy idea come from? It was a bipartisan Congress that submitted that goofy idea into law. We

think it’s pretty good.

Ms. LEE. There are some agencies as we discussed that are really

making some progress. Perhaps they would be willing to illustrate

the progress they have made.

Mr. HORN. Well, we hope so that—that would be the closeout optimistic panel, I am sure.

You agree with GAO’s recommendation that you should assess

agencies’ linkages between plans and budgets to determine an

agenda for future performance-budgeting efforts? Do you pretty

much buy what they have said on this?

Ms. LEE. Yes, I do.

Mr. HORN. Well, what are you and your program examiners

doing to ensure that the agencies’ performance plans meet the criteria you set out in the A–11 guidance on performance planning?

That is GAO testimony on page 4.

Ms. LEE. I was just telling Mr. Posner at the recess that we have

actually taken this report and distributed it among the Resource

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ticularly in some of the illustrations where it shows the alignment.

We have actually distributed that already to resource managers

and said, yes, start thinking about this as we go into the next set

of strategic plans and the next set of performance plans, and as we

work with the agencies to further develop those.

Mr. HORN. I am glad you say that because I hope that you will

stress to them that we are serious here, not only in this subcommittee but also increasingly in authorization committees and

also the subcommittees on appropriations. In the first testimony on

the update of this legislation several years ago, I suggested to the

majority leader, and whoever was majority leader will do the same,

we ought to create a war room in his suite where we put up the

strategic goals, and where we really watch this stuff.

He is taking it seriously. I am taking it seriously. Believe me, by

the time we are done all the appropriators will take it seriously.

Sometimes last year they didn’t. They were in the usual rush to try

to get the job done. It’s very difficult for people here as well as in

the executive branch sometimes to find something different that

they might think about rather than the routine that they have

been in and it’s so comfortable after a while.

So what I am saying is we have a number of places around here

where it won’t be too comfortable, and we hope they will take it seriously. If it’s good government, we ought to be for good government. It just seems to me that the satisfaction index is one way

to get at these things. I think the State of Oregon, somebody ought

to go out there and see how they do it.

They have been doing this for years. They actually get rid of

things, and they also improve things when something is worthwhile. And the citizens agree with that idea. I think that’s a worthwhile model that the Federal Government could look at. I realize

we are in a town somewhat like the New York Times, that if they

haven’t printed it or you haven’t done it, it hasn’t happened. They

are wrong. It happens all over the world. It is just somebody’s judgment as to what is printed. It is to someone’s judgment in this

town that, my heavens, we have to do something new around here?

The answer is yes. When the leadership is pretty serious about it,

I think it’s a good idea to move right along on some of these things.

When you issued your September 1998 discussion paper, what

formats and timeframes did you recommend for the pilot programs?

Ms. LEE. In September 1998, at that point were hoping to make

2000 budget. But as you know, we are now aiming for the 2001

budget.

Mr. HORN. What type of comments did you get back from the

agencies?

Ms. LEE. We didn’t have any outright volunteers.

Mr. HORN. Well, did you have any comments?

Ms. LEE. Yes, we did. Because of the complexity, we need a little

bit more time here. Some things that actually we have covered

here, we need a little more time to work on this piece or we are

still working on an alliance, cost accounting comments and things

along those lines. There also was some concern on the agencies’

part that said basically, does this put me in a spotlight that perhaps I don’t want to be in.

48

Mr. HORN. Well, maybe that will put them in a spotlight that

would allow us to give them some extra money. Could we dangle

that out there?

Ms. LEE. That tends to be an incentive.

Mr. HORN. Slowly but surely, $1 a carrot, but I would think of

that and what OMB could do creatively to say, hey, for your trouble and if you do a good job, we are prepared to give this or that

program some more budget authority.

In your testimony, Mr. Posner, you indicated that the GAO did

not assess the quality of the goals presented in agency performance

plans or independently verify the funding levels associated with

these goals.

Does this imply that the status of performance budgeting in Federal agencies is actually worst than depicted in your recent report?

Mr. POSNER. No, we just looked at the linkage itself. In this particular study, we didn’t look at the quality of the goals or the underlying data, but we are doing that in other studies that we have

been working on with the Congress across the board, really.

Mr. HORN. Well, obviously, our worry is are you gauging agency

progress on unreliable data?

Mr. POSNER. That’s one reason why we put that caveat in there.

We couldn’t vouch for the data itself so we put the footnote in that

we didn’t verify the funding levels associated with that at that

time. I think this is an area that does—the whole area as, I indicated, earlier of verifying not only the funding levels but, just as

important, the underlying performance results that are achieved is

going to be an emerging challenge.

Mr. HORN. It’s like Y2K reporting, it’s self-reported data. That

has a lot of problem sometimes.

Mr. MIHM. Mr. Chairman, just to add on to that, to keep working

the Y2K analogy, the self-reported data is pretty bad now. It becomes a nightmare in the case of GPRA when we have the performance reports. In other words, there is an action forcing event when

the bad reports or bad promises will come home to roost in agencies. That’s why we have become quite adamant in focusing on verification and validation in the plans. It undermines the usefulness

of the plans now. It will be a real nightmare for agencies that

haven’t done a good job of this when it comes time to put together

the reports for next March.

Mr. HORN. There is a day of reckoning, you are saying somehow,

somewhere. OMB states in its testimony that agency budgets are

showing how performance is affected by increases and decreases in

funding levels. They also state that agency performance plans provide information on the budgetary resources associated with the set

of performance goals.

Is this a fair characterization of the status of Federal agency performance plans?

Mr. POSNER. Well, again, from our study, about less than half of

the agencies are associating performance plans with budgeted levels, but the rest have a long way to go in that regard.

Mr. HORN. Well in your testimony, you noted little change in the

overall number of agencies clearly relating resources to results between fiscal years 1999 and 2000. How do you account for this lack

of improvement?

49

Mr. POSNER. Well, we are still in the throes of analyzing that

ourselves. We would have liked to have seen greater progress. One

thing is it just shows how formidable the barriers are to executing

this kind of linkage because of the disparate nature of budget activity structures and program planning structures. We also think that

this could be aided and hurried along by some of the kinds of

things that we talked about earlier here, some more concerted effort among agencies to learn from one another and that kind of

thing.

Mr. HORN. In your testimony, you recommended that OMB conduct analysis that addresses what types of pilot projects might be

practical and beneficial and when and how these projects would

take place. What specific recommendations can you offer to OMB

to expedite this analysis?

Mr. POSNER. I think this really is the kind of thing that we think

calls for somewhat more of a proactive leadership role as their part

Governmentwide councils, of agency leaders and managers may be

a useful strategy for leadership in this regard to identify some of

these best practices. And frankly, I think it also calls for involvement of the program examiners in OMB. They have quite a bit of

background and knowledge on these agencies and budgets and they

need to—if they haven’t already to gain a stake in analyzing these

plans. And helping OMB figure out where the opportunities really

lie.

Mr. HORN. Any other comment you want to make, Ms. Lee?

Ms. LEE. Chairman Horn, the emphasis on Government Performance and Results Act has been presented several times to the

President’s management council which, as you know, is the deputy

secretaries.

I believe last month or the month before, a couple of agencies

came through and discuss, as we do this first report, how agencies

are working on their next strategic plan. They laid out their schedule for consultation with Congress. They also thought about how do

we write these performance plans and doing a little testing internally. So it is going on, but it is a difficult task.

Mr. HORN. Well that’s good news that the Deputy Secretary’s

undersecretaries are taking this seriously. That’s the only way it

is ever going to get done, is the chief operating officers of these

agencies doing it. The poor secretaries running around the country

and the world in planes to tell what the mission is. Somebody has

got to stay at home and make sure that this tough, dull, drudgery—which is crucial to outcomes—is done.

Ms. LEE. We are trying to tell them it’s exciting.

Mr. HORN. Well, you are a much more positive personality than

a legislative personality. We hope you are right. Let it be exciting,

let it be done. The next time you come here, you are going to have

all of those select models prepared. And how long is it going to take

them, one budget cycle to do it? And then see what happens?

Ms. LEE. I think we will use the budget cycle and see what happens and then say do we repeat this? Do we have enough information? Where do we go from there?

Mr. HORN. We look forward to that. Anything that the General

Accounting Office wants to say on this subject?

Mr. POSNER. We have said our piece.

50

Mr. HORN. Well, you have done a good job, all three of you.

Thanks for coming.

We now go to panel two, the Honorable Sallyanne Harper, Chief

Financial Officer of the Environmental Protection Agency, the Honorable Olivia Golden, Assistant Secretary, Administration for Children and Families, Department of Health and Human Services,

and Mr. Jesse L. Funches, the Chief Financial Officer of the Nuclear Regulatory Commission.

OK. If you would stand up and all of those who are going to feed

you information also stand up and raise your right hands. We have

three witnesses and five feeders.

[Witnesses sworn.]

Mr. HORN. The three witnesses have affirmed and so have the

five others with them, and the clerk will get all of the names and

make sure that they are in the hearing record.

So we will now start with the Honorable Sallyanne Harper, Chief

Financial Officer, Environmental Protection Agency. Thank you for

coming.

STATEMENTS OF SALLYANNE HARPER, CHIEF FINANCIAL OFFICER, ENVIRONMENTAL PROTECTION AGENCY; OLIVIA A.

GOLDEN, ASSISTANT SECRETARY, ADMINISTRATION FOR

CHILDREN AND FAMILIES, DEPARTMENT OF HEALTH AND

HUMAN SERVICES; AND JESSE L. FUNCHES, CHIEF FINANCIAL OFFICER, NUCLEAR REGULATORY COMMISSION

Ms. HARPER. Thank you, Mr. Chairman.

I appreciate this opportunity to appear before the subcommittee

to discuss EPA’s efforts to align planning and budgeting and to

manage for results. I particularly appreciate your interest in these

reforms and hope that EPA’s experience will help illustrate both

the benefits and the challenges we face in performance budgeting.

With the subcommittee’s permission I would like to submit my

written statement for the record.

Mr. HORN. They are automatically in the record. Maybe you were

not here. Once we introduce you, they all go in the record. You are

free to give us a summary and then we will have more time for a

dialog.

Ms. HARPER. Thank you, Mr. Chairman.

Mr. HORN. So don’t read it. We have read it.

Ms. HARPER. We are very proud to have been the first agency to

succeed in fully integrating our budget request with our annual

performance plan. EPA has benefited substantially from the structure, visibility, and credibility provided by the Results Act. It has

been a unique and exciting challenge for me to oversee EPA’s implementation of the Results Act because it fully supports our focus

on environmental outcomes and sound management of public resources.

The basis for many of EPA’s performance budgeting accomplishments has been our strategic plan and its architecture of 10 longterm strategic goals supported by a range of objectives representing

major steps toward those goals achievements. The architecture captures EPA’s many complex and interrelated mandates in a relatively simple structure and paves the way for linking planning

with budgeting. EPA’s new budget structure matches the architecVerDate 11-MAY-2000 11:14 Aug 01, 2000 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 C:\DOCS\63672.TXT HGOVREF1 PsN: HGOVREF1
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ture of our Results Act’s goals and objectives. Consistent with

GPRA requirements, we implemented changes in the fiscal year

1999 budget development cycle that identify fiscal year 1999 activities as incremental steps toward our longer term objectives.

These incremental steps were embodied in the annual performance goals and measures that made up our first annual performance plan under the Results Act. In other words, EPA specified

what it intended to accomplish in fiscal year 1999 with the requested resources at a level of specificity we had never attained in

the past.

We also have modified our financial structures to reflect the 10-

goal architecture. This was a massive undertaking and we are very

pleased to report that we have succeeded in putting the necessary

financial processes in place to support cost accounting in time for

the initial implementation in fiscal year 1999. We acknowledge the

need to discuss results and costs with comparable precision. To

that end, we are working to improve annual performance goals and

measures, making clear the connections between what we accomplish in a single year and what we hope to accomplish over the

longer term.

One promising effort is EPA’s National Environmental Performance Partnership system [NEPPS], which aims to strengthen our

ability, combined with that of our State partners, to improve environmental results. EPA’s annual performance plan contains core

performance measures, those that we have negotiated with our

partner States so that both NEPPS and the Results Act processes

reinforce each other.

We will summarize our 1999 accomplishments in our first annual

performance report to Congress in March 2000. The information we

developed through our accountability process will be a principal

input to both future planning as well as budgeting cycles.

There are some challenges that remain. We have not yet completed our first full year’s learning experience under the Results

Act. We must find ways to portray environmental results that are

the product of many efforts, including those of State partners, other

agencies and other stakeholders. We need to work to ensure the validity and the reliability of our performance data. Finally, many of

the environmental results we aim for may become apparent only

over long periods of time; and their full costs, including all funding

sources, will be difficult to assess.

In closing, I would like to reaffirm EPA’s support for performance

budgeting and the full range of Results Act activities that support

it. We count on your continued support as we tackle the challenges

that I have described to you as well as others that are bound to

appear along the way.

I thank you for the opportunity to discuss these important issues

with you today.

Mr. HORN. Well, thank you.

[The prepared statement of Ms. Harper follows:]

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Mr. HORN. This is a question that probably should be put to your

chief information officer. The State of California’s EPA several

years ago, maybe 6 years ago, had a very interesting development

in computing where they worked with business, and they set the

joint codes and definitions between the agency and the business

and most of their filing, was electronic. And, I just wondered to

what degree, while it stays in my brain, that EPA has done that

because I mentioned it to some of your assistant directors since I

sit on their review committee, Water Resources and Environment;

and I just wondered if they are doing any of that?

Ms. HARPER. Mr. Chairman, I am pleased to report that they are.

I am sure that our chief information officer can provide more detail

for the record, but one of the programs that we feel would be ultimately quite successful in following California’s example is our onestop reporting program. We are trying to synchronize with those

who report in to us one place where they bring in all of their data

rather than to our separate stovepipe elements, which we ask

sometimes for the same data in completely different formats or

slightly different variations.

The administrator is also establishing, and it should be in early

September of this year, a consolidation of our entire information

function at EPA into a new information office, one of its primary

goals is to do exactly what the State of California has been so successful in doing.

Mr. HORN. I am delighted to hear that. I know that you have a

very fine leadership there. That is just a good thing to do and I

think everybody is the better for it. I am glad to hear about it. If

you can just put a little exhibit at this point in the record without

objection, we will do that.

Ms. HARPER. Thank you.

[The information referred to follows:]

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Mr. HORN. We now go to the second witness, the Honorable

Olivia A. Golden, Assistant Secretary, Administration for Children

and Families, Department of Health and Human Services. We are

glad to have you here.

Ms. GOLDEN. Thank you, Mr. Chairman. I am Olivia Golden, Assistant Secretary for Children and Families at HHS, and I want to

say how much I appreciate your invitation to speak with you today

on the topic of performance budgeting under the Government Performance and Results Act of 1993.

The Administration for Children and Families [ACF] is the lead

agency in the Department for programs serving America’s children,

youth, and families. Our programs are at the heart of the Federal

effort to strengthen families and give all children a chance to succeed. ACF is responsible for almost 50 Federal programs, including

Temporary Assistance for Needy Families or welfare reform, child

support enforcement, Head Start, child care, and child welfare and

adoption services.

Our partners in delivering these services are the State, territories, local and tribal governments, other Federal agencies, and

the private sector.

We are pleased with the recognition we have received for our

work, particularly our consensus building with our partners and

our approach to linking performance measures to the budget. There

were several critical steps that we took early on to lay the groundwork for implementing the Results Act.

In 1994, shortly after the enactment of the Results Act, the Office of Child Support Enforcement and the Office of Refugee Resettlement became our Results Act pilots. At the same time, we initiated an agency wide process to define the vision, values, and goals

of ACF. In 1995, we released our first report card on achieving success for children and families based on the goals we identified.

Over the next 2 years, a number of senior staff members, including myself, taught more than 20 2-day partnership collaboration

sessions with our staff, including how to work differently with our

partners and how to focus on results. And to encourage cross-organization learning, we asked our early Results Act pilots to present

their successes and failures to our whole senior staff.

We have continued to build on these efforts, and our current performance plan includes agreed upon measurable outcomes for all of

the ACF programs. These activities occurred in a legislative environment that also has supported a focus on results. For example,

the Child Support Performance and Incentive Act of 1998 established a performance-based incentive system that will reward

States on the basis of their performance on 5 results measures.

The Adoption and Safe Families Act created the adoption incentive program under which States will receive incentive funds tied

to their success in increasing the number of children adopted from

the foster care system. This new program is the first in child welfare to tie outcomes to funding, and we look forward to making the

first payments later this summer.

GAO has called useful the way ACF’s plan displayed goals and

related program activities, and has used our budget linkage approach as one example of how to consolidate program activities and

relate them to performance goals.

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In our fiscal year 2000 performance plan presented to Congress

with the fiscal year 2000 President’s budget, ACF created a table

to crosswalk our four strategic goals and 10 objectives to over 60

program activities and line items. The plan provided a narrative

about program context and strategies along with the program’s performance measures, goals and targets and information on data

sources, validation and verification.

Over the past several years, ACF has experienced increasing demands resulting from newly enacted programs in changing statutory requirements while working in an environment of decreasing

staff and tight budgets. Our Results Act plan has been a key tool

to help us manage our resources more effectively and focus our financial investments on our goals and priorities.

I believe that we have learned many important lessons from our

experiences to date. First the performance measures must include

measures of outcomes and results. Process measures provide an important piece of the overall picture, especially where research

shows that they are linked to outcomes but they should not standalone.

Second, it is both difficult and critically important to develop outcome measures through consensus with partners.

Third, it is not possible to create in a short period of time a mature set of performance goals and data collection strategies. It

takes considerable time to bring partners to the table, develop

shared priorities and goals, and address weaknesses in data collection and the shortcomings of the available measures.

Fourth, establishing measurable goals and outcomes leads to opportunities for cross-program collaboration and new program initiatives.

And fifth, performance measurement is one of a number of tools

along with research and evaluation that can help us, over time, do

a better job of taking results into account in difficult budgetary

choices.

In conclusion, ACF is firmly committed to the principles of performance measurement and the utility of the Results Act. We believe that performance measures are most effective when developed

through a collaborative process with partners and that investments

in data collection, as you have seen several times today are an important element of success. Results measurement can produce information that will inform the budget process and it can motivate

Federal, State, local and community partners to work together to

improve results for children.

Thank you and I would be pleased to answer any questions.

Mr. HORN. Well, thank you. That was a very helpful statement,

especially on the lessons learned. We can all benefit from that.

[The prepared statement of Ms. Golden follows:]

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Mr. HORN. Mr. Funches, we are delighted to have you here. You

are the Chief Financial Officer for the Nuclear Regulatory Commission, a very important agency.

Mr. FUNCHES. Thank you, Mr. Chairman. On behalf of the Nuclear Regulatory Commission, I welcome the opportunity to testify

today on our successes and continued progress toward implementation of the Government Performance and Results Act. My specific

focus today will be in the area of performance budgeting.

NRC’s progress in implementing the performance budgeting has

been recognized by the General Accounting Office as positive and

significant.

Let me first note that a major factor in our success has been the

strong support exhibited by the Commission for transitioning the

agency to a more performance-based organization. Key to reaching

this goal was the initiation of the NRC’s strategic assessment and

rebaselining initiative in 1995. This internal effort provided a solid,

reliable foundation on which to develop the NRC’s first strategic

plan and subsequent performance plan.

We have found that few areas are more crucial to implementing

GPRA than the implementation of an integrated planning budgeting, and performance management process. We are implementing

such a process. The result has been the establishment of one, a

sensible, reliable process for defining goals and establishing strategic direction; two, cost effective strategies for achieving these goals;

three, and the ability to determine the resources needed to achieve

the goals, and last, the ability to measure and assess our progress

and overall performance. A recent contract evaluation of our process found that it is sound, and it has been a catalyst in improving

integrated planning and budgeting.

Thus far, we have used this process to produce the NRC’s fiscal

year 1999 performance plan and fiscal year 2000 performance plan

and budget. We are also applying this process in revising our strategic plan.

A key strategy that we have used to transition to a more performance-based agency is to integrate the various components of

planning and budgeting.

We agree with GAO’s findings that the following three approaches facilitate linking budget requests to anticipated results.

First, change the program structure to reflect goal structures. Second, there should be a simple, clear relationship between the program activities and performance goals. Third, the performance plan

should be fully integrated with the congressional budget justification.

The NRC’s fiscal year 1999 performance plan encompassed two

of the three approaches.

First, the NRC substantially changed its program activity structure to be consistent with its planning structures. We identified

strategic arenas which comprised our major mission responsibilities. Funding for programs was identified for each strategic arena

which corresponded to a specific strategic goal and associated performance goals and measures. This represented our initial steps to

transition from an organizational budget which emphasized individual office outputs to a more performance-based budget that emphasizes mission-related outcomes.

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With respect to the second approach of establishing a simple relationship between program activities and performance goals, we

created such a relationship by linking a single program activity

with multiple performance goals. We did not fully integrate performance information with the budget justification in our initial

performance plan in fiscal year 1999, but we have for fiscal year

2000 where we combined the performance plan and the budget.

This improvement contributed to the integration of planning and

budgeting. At the same time, we were able to communicate a more

complete picture of what actions the agency was planning to take

and the resources needed to get the job done.

During the past 18 months, we have taken additional actions to

support our continued conversion to a more performance-based organization.

Improving the use of outcomes and deciding which programs to

pursue and subsequently allocate our resources continues to be an

agency priority. We are not able to create a direct mathematical relationship to calculate incremental change in outcomes relative to

an incremental change in resources. However, we were able to

evaluate activities relative contributions to performance outcomes.

To date, an application of this concept has been in our Office of Nuclear Reactor Regulation which is responsible for oversight of nuclear reactors.

Proposed and existing work were evaluated in terms of how they

leveraged the outcomes. By linking key activities and specific performance goals and then judging the relative contributions to the

outcomes, we identified new initiatives that need to be undertaken,

determine work that could be eliminated without impacting outcomes, and identify work that should be continued.

We are currently revising our strategic plan. Our goal is to identify performance goals that more directly relate to what the agency

wants to achieve and how the agency will be managed. We will

identify key strategies for achieving these performance goals, and

identify performance measures that demonstrate our progress in

achieving each performance goal. The challenge, especially for a

regulatory agency like the NRC, is to find the right balance between information related to our own performance and operation,

and information on the industry we regulate. Inherent in that challenge is the need to verify and validate, on a sound sampling and

auditing basis, information generated by the industry we regulate

and by ourselves.

The NRC intends to continue to provide Congress with an integrated budget and performance plan. We are currently examining

how best to integrate performance reporting with the performance

plan and budget.

In conclusion, we are making progress in performance budgeting.

However, we recognize we are not where we need to be. We need

to evolve to a point where we are able to clearly articulate that we

are doing the right work, and we are doing it right. The transition

to a performance-based organization is an iterative process that requires our continued attention to manage toward outcomes.

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Thank you for the opportunity to summarize the status of our

performance budgeting efforts. This concludes my remarks, and I

am pleased to answer any questions you might have.

Mr. HORN. Thank you very much.

[The prepared statement of Mr. Funches follows:]

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Mr. HORN. All three of you have given us helpful statements.

Does that mean all three of you want to be a model? You are part

way there it seems to me in really grappling with some of these

problems.

While you are thinking on that, I am going to yield time to my

ranking member, and we are delighted to have him here. He takes

a great interest in these projects, and Mr. Turner of Texas for

questioning the panel.

Mr. TURNER. Thank you, Mr. Chairman. I am a strong supporter

of performance budgeting because we embarked on that in Texas

when I was a member of the legislature there some years ago, and

I think it has proven to be very helpful. It is a very difficult system

to implement and sometimes the relationships between funding

and performance and outcomes are difficult to refine and make

meaningful, but one of the things that I would like to inquire of

each of you because obviously, even though I didn’t see any of you

raise your hands on volunteering to be a pilot, it does seem that

you have taken the matter seriously.

I would just like to know a little about your own experiences

with your own staff about the attitudes that exist in your agency

toward performance budgeting. Is it viewed as a pain that somehow you have to go through the paperwork and show all of this on

paper so it looks good or is there—is there some significant commitment and significant belief in the validity of performance budgeting? Any of you can begin. Ms. Harper.

Ms. HARPER. Congressman Turner, I would be delighted to start.

EPA has never treated performance budgeting as a paper exercise.

We had initiated our move toward performance budgeting as a result of a very critical study by NAPA on how we set priorities to

get environmental results. The Administrator, Carol Browner, took

that study very seriously and established a senior leadership team

of her top career officials of the agency to respond to this and assess how we were going to change.

The net result of it was that we went through a major reorganization. We formed a new Office of the Chief Financial Officer. We

put planning with it as well as budgeting, accountability financial

management and services, and an analysis function to focus solely

on bringing up performance budgeting in the agency. This is our

first full year of implementation with our 1999 budget. In actuality,

the Deputy Administrator just finished meeting in May with each

of our goal leaders each of the goals that we have got to assess

their progress against both their annual performance goals and

measures as well as their long-term. How are we doing against the

long-term strategic plan? Where are our data gaps? Where are our

performance gaps? How does this reflect in terms of what we have

budgeted, and where we are going?

So I believe that at EPA there is top political support for this,

and the career leadership has endorsed this fully and take it quite

seriously.

Ms. GOLDEN. Congressman Turner, what I am very excited

about, at the Administration for Children and Families, is that not

only have ACF staff invested in performance and end results but

also our partners in State and local government have made these

investments. And I think the reason is that a focus on results has

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contributed today to results for children which is the reason people

are in the business. The example I wanted to give you is an example where we had a pilot in the area of child support for our work

on child support enforcement and paternity establishment and

work with fathers.

We are very proud of the overall result that 1.5 million paternities were established in 1998. It has tripled the number in 1992,

and it is well above our GPRA target for 1999. That happened because when you get a very vivid focus on a result, people really do

buy into it and think about it.

What happened with us, I think, initially was the early anxiety

among our staff about how our State and local partners would

react to measurements. I am sure you can imagine, people were

worried if they talked to Texas and said, we are going to need you

to reach this number and it is going to be pretty public and pretty

vivid. There was lots of worry about how that would play out. We

focused both on our staff and our partners from the beginning.

What we found is that you really have to, in our kind of work—

where everything depends on local and State governments—focus

on both those things; and then you can get very strong buy in.

Now, I think the next step which may be a topic we want to come

back to is that we have buy in. We have data that is improving

year by year, but we also have lots of data gaps we need to continue to fill for the future, and I think that maintaining buy in requires that you keep working on credible data so people don’t get

worried that they will get measured for the wrong things. They

have to feel good that they will be measured for the right things.

Mr. FUNCHES. At NRC, I would say it is definitely not an effort

to produce a report or produce a plan that is not being used. From

the beginning, we had strong support by our commission which is

the head of our agency. They had a very strong interest in it with

the idea that it would improve management. It would improve the

allocation of resources within the agency. We have an executive

council comprised of the executive director for operations who is responsible for all programs, the chief information officer, and myself;

and we all participated very heavily in the establishment of the

goals. And we meet often to talk about where we are in implementing our plan and measurement process.

We have now moved to the next level and one of the largest offices have implemented and have become very excited about it.

They see that it is a way of making decisions, bringing rationale

to the decisions by looking at the outcomes they want to achieve.

We are transitioning this to the different levels of staff by using

different planning techniques.

One of the items that we will have is an operating plan which

will be at a lower level than our performance plan which is at the

agencywide level. But again, we will focus on the outcomes.

So, I think, we have a lot of excitement within the agency, and

a lot of interest in doing it. And, in fact, while recognizing that

GPRA was there, we would have started something very similar to

this independent of the GPRA.

Mr. TURNER. It takes not only a commitment at each agency for

it to be meaningful, but the people on the other end at OMB that

are putting together the President’s budget, the appropriators, and

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the Congress, I think they have to have a clear understanding of

performance budgeting and its limitations. Sometimes things reflect inaccurately on what is really happening, and we have to understand that.

But I guess I would like to ask each of you has your experience

in performance budgeting thus far seemed to have impacted either

the OMB in drawing up the President’s budget or have you seen

it impact the appropriators and Congress to really ultimately make

this successful those who are deciding how the money is allocated

and spent in the Congress and the office of the President, those

people have to use this data. And I would like to ask you if you

have seen any tangible examples of an appropriation decision having been based upon some of the performance-based indicators that

you have generated?

Ms. HARPER. Congressman Turner, for EPA we have found that

at least our budget examiners have not been shy about engaging

in the Results Act discussions during the budget preparation period.

As you may know, internally there are a number of hearings that

take place as we prepare for a budget submission, and each of our

program managers participates with OMB and a panel of OMB examiners during each of those hearings. During each of those hearings there was extensive discussion. What are the performance results? What does this mean in terms of what you are proposing to

us? How does this differ from last year? And how does it track? It

is difficult to trace how that will impact decisions sometimes. We

know that it is raised. We know that OMB is focused on it when

we get inquiries back, but it is hard right now so early in the process to understand how that translates into final budgetary decisions. It is difficult.

The appropriation committee staff that we deal with on VA–HUD

are extremely knowledgeable about the agency. They have worked

the agency budget for many, many years. The transition to the new

budget structure, which is aligned with our goals and objectives, as

well as our new finance and accounting process that was match our

Results Act structure, is difficult for them because they are worried

about losing the tracking capability built over time.

They know our programs extremely well, and in the new architecture they want to make sure that they have not lost pieces of

program information. To facilitate the transition, we have provided

crosswalks back to the old budget structures that we have had and

engaged in extensive discussions. That said, in our report language

consistently over the last 2 years, on both the House and the Senate side from the Appropriation Subcommittees, there have been

extensive notes on our GPRA implementation. The subcommittee

requested information or what was going well and what was not

and areas that we needed to focus on. So it is certainly taken very

seriously. It hasn’t been a flawless presentation on the agency’s

part to the subcommittee in terms of being able to walk them

through the changes in the structure.

Ms. GOLDEN. I agree completely that it is very important that

both within the administration and the Congress, the results information gets taken seriously, and we are part way there. There are

a couple of examples in my testimony where we are very pleased

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that as a result of bipartisan work between the administration and

the Congress, in the area of adoption and in the area of child support, we have been able to work out incentive strategies where dollars go to States in a way that is driven by results. We are well

on our way to our goal of doubling the number of adoptions from

the child welfare system by fiscal year 2002. And incentive legislation is not the only reason, there are other reasons for focusing on

results besides the budget, there is the issue of leadership and

technical assistance.

Another example would be in the Head Start program where we

have made major investments in research and data collections so

that we can do both what we want to do and what the Results Act

requires—which is really to look at a sample of programs and talk

about the results for children. I do think that the fact that we are

doing that and are serious about it, helped us last year in achieving the full amount of the President’s request for Head Start, and

I certainly hope it will this year as well. We obviously don’t know

the answer yet.

Mr. FUNCHES. I would say definitely that the appropriating committees are very aware of outcome-based budgeting that we are

looking at. We do have discussion with them about the outcomes.

Likewise with our OMB analysts, there are questions about outcomes. I can give you a couple of examples that may help illustrate

the types of discussions that we are having.

Nuclear power reactors are licensed for 40 years. One of the

issues that is very important for the nuclear industry and for the

country is the renewal of those licenses. During the past year,

there has been a lot of discussion about what outcome do we want

and how do we know if we are successful. Ultimately we came to

the conclusion that one of the keys was the time that it would take

to renew such a license. We interacted with the appropriators, et

cetera. We came up with a time, and I think, that this definitely

supported getting adequate resources to meet those time lines in

terms of the outcome goal of having a review completed. So far, I

am pleased to say that we are meeting the outcome goal that we

have set.

During the past year we have also made the effort to reform our

regulatory processes, in order to address concerns which have been

expressed. We worked with the Congress in trying to determine the

outcomes that we want as a result of this. We now provide Congress with a report that talks about the outcomes. It is very consistent. They have been looking at it, and I am sure that we it will

be an input to their decision on the appropriation bill this year.

Mr. TURNER. Well, I am impressed to see that there seems to be

a sensitivity not only within the agencies but on the part of OMB

and the appropriators and the staff of the appropriators to trying

to make it work.

I am one who—through our experience in Texas, I came to understand that it is really—over a period of years of applying it,

have seen that it becomes meaningful. In fact, in the earlier stages,

it can be very misleading. And there are always going to be decisions made that won’t solely be based upon performance measures.

But over time, as you refine the data collection and the methodolVerDate 11-MAY-2000 11:14 Aug 01, 2000 Jkt 000000 PO 00000 Frm 00091 Fmt 6633 Sfmt 6633 C:\DOCS\63672.TXT HGOVREF1 PsN: HGOVREF1
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ogy, then you begin to get comparisons 1 year to the next to the

next, and then I think it becomes a very useful tool.

So I am pleased to see all of you have embraced it, and I think

positive attitude about it is essential to being sure that it actually

ends up working. Thank you, Mr. Chairman.

Mr. HORN. Well, you are quite welcome. That is a very good exchange. Some of these questions might be duplicative of Mr. Turner, but just for the record, do you feel it is necessary to have a second comment period with OMB before establishing the pilot programs? All three of you seem to be pretty far advanced in terms

of looking at the performance in relationship to the budget? What

is your feeling on this?

Ms. HARPER. Mr. Chairman, I think that it is necessary to have

a second comment period with OMB. One of the dilemmas that we

face, I would say probably all three of us, is that we have taken

our lead and gone on, and I would say that there might be some

concern about whether diverting attention to one portion of the

agency’s implementation in terms of setting up a pilot might detract from the critical mass we need to keep the whole of it moving.

At least for EPA, it is the entire agency that is moving forward

with performance budgeting.

We have under taken it across the entire agency already. And

the pilots call for components of an ongoing to look at the different

levels of budget and the expected results, which, I think, is actually

a very valuable exercise; but since we chose to go with the whole

restructuring, I wonder if that might not be the best way for us

right now. Budget restructuring is a massive undertaking. It is a

very big change for our programs, for our State partners and for

us on the fiscal side.

Mr. HORN. Well, I can understand that. We had that in the university when we were way ahead of everybody else, pretty soon

they had a system that said, hey, everybody else has to do it; but

we didn’t want to do some little piece of it when you are already

doing the whole works, so I can appreciate your situation.

Ms. Golden.

Ms. GOLDEN. I think the biggest issue for us is that we have

made this process that we are enormously proud of. I told you

about some of the results that we have forward in child support,

adoption, and some of the other areas, but for us there are big next

steps in terms of data collection, verification, data investments, and

also working with our partners as we go through each step. Just

to take the example of child support where I told you about the

progress on paternities and 80 percent increase of collections, we

are very proud of those; but as we move into the next step which

is implementation of the bipartisan legislation, I mentioned where

the incentives are going to go to States, we are having to work with

States, very closely on their data systems. And some of the interpretations of performance budgeting I don’t think any of us would

want to be in a situation where we were telling Texas or California

that they didn’t get dollars because their data just was not up to

speed. We would much rather be developing information systems

and data collection systems for the States and local governments

to provide us with information. And so we need to make sure that

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that comes along as we make each step, and I think that is the big

lesson that we have learned.

Mr. HORN. That is very good. Now, were you in Massachusetts

when the Debt Collection Improvement Act went on the books, the

Federal one at all?

Ms. GOLDEN. I believe I was here. What year was that?

Mr. HORN. This would have been 1996.

Ms. GOLDEN. No, I was in Washington.

Mr. HORN. I just wondered because Commissioner Adams happened to phone me up the day it took effect. He said you made my

day. I said, What do you mean?

He said I am going to be able to collect a lot of money with that

act.

Ms. GOLDEN. That is correct.

Mr. HORN. And that was an act that Mrs. Maloney and I put in

the omnibus bill that year, and it was really drafted by many of

the Chief Financial Officers in the Federal Government. So I was

just curious how you thought that was working because he felt that

he could bring millions home of deadbeat dads’ payments.

Ms. GOLDEN. I know that this is not the subject of the hearing

so I won’t take too long, but I do think, the numbers on collections

for 1998 are $14.4 billion which is an 80 percent increase over

1992. I think that it has happened for many reasons. It has happened because of a bipartisan commitment that involved investment in computer systems. It has happened because I think the

part that is tied to the Results Act has been really important in

focusing our efforts on outcomes. And then I also believe—that is

partly why I mentioned the paternity establishment result here—

that part of what we need to do is ensure that fathers are connected to their children and to their families.

Part of this is about making sure that both parents are part of

the child’s upbringing, and I think that the extraordinary increases

in father’s voluntarily acknowledging paternity early, which people

thought couldn’t be done, are a really important part of what we

have accomplished. So I do want to say thank you to the Members

of Congress from both parties who have really had a sustained

commitment to that set of issues.

Mr. HORN. The Debt Collection Act of 1996 does permit the agency to put some of the money back in for better computing things.

I don’t know if you have taken advantage of that within HHS or

not. Right now I don’t have in my mind where they had debts.

As I understand it, when the agency discussions occurred with

OMB in September 1998, three specific approaches to performance

budgeting were suggested from what the GAO informs us. What

approach, if any, do you prefer? Do you have any thoughts, Ms.

Harper, on that? Were you in that meeting?

Ms. HARPER. Actually, Mr. Chairman, I don’t have any thoughts

on that. I don’t recall which of the three approaches EPA supported

or spoke to.

Mr. HORN. How about you, Secretary Golden?

Ms. GOLDEN. I think we have been focusing most on that first

step that GAO described which is making sure that you can really

see what results you get for the dollars; we have been focusing beyond that not only on how the Results Act plays out on the budget

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side but how it plays out on the management and the leadership

side. So I think we have been focusing across those areas rather

than looking into those particular three approaches.

Mr. HORN. Mr. Funches.

Mr. FUNCHES. We have been doing the same thing. What we

have focused on is trying to look at how we can evaluate our activities in terms of leveraging against the outcomes as opposed to trying to figure out the incremental pieces. I think we have come up

with some methods to do that. I was not in the meeting with OMB

and GAO when they looked at the different approaches, but we

have focused on trying to look at how we can examine the relative

merits of the different activities as measured against the outcome,

recognizing some of the activities that we do will support more

than one outcome.

Mr. HORN. Did you have a chance to look at figure 1 of the GAO

testimony.

Mr. FUNCHES. Yes, I did.

Mr. HORN. Is that fairly accurate as to what you would like to

do?

Mr. FUNCHES. You are absolutely correct, the top goal that we

talk about is a very long-term goal that you measure over time.

What we did was to create what we call some intermediate goals.

In the second level goal, we are trying to say we can’t wait until

there is a death or an accident. What we want to do is look at intermediate measures which give us an indication that something

might happen.

The second tier goal, which looks at the increases or changes in

probability of an accident, is what we created to give us an indication on a yearly basis whether we were on a trend in the wrong

direction. But you are absolutely right, many of the outcomes that

we have cannot be measured immediately. They are long-term outcomes, and what we try to do is create something that will give us

an indication that things were going in the wrong direction.

Mr. HORN. I see we are about to have a vote. I think we have

5 more minutes. I have a few more questions.

I would be curious as to your plans succeeding in aligning programs and activities and strategic goals and objectives and that is

very impressive. How does this affect the day-to-day management

of the agency? Is this just an exercise for Chief Financial Officers

and Assistant Secretaries or do your colleagues—we will do it the

same way that we have been doing it for 20 years?

Ms. HARPER. I think that the introduction of cost accounting, Mr.

Chairman, has very much helped to bolster the fact that this is a

paper exercise, because we aligned our budget structure under our

Results Act structure, of goals and objectives. That is how we are

budgeting. It is also how we are doing our accounting. Cost accounting means that we are collecting our costs against the goals

and objective also, so on a real time basis we have an understanding, and the program managers do as well, of what they are spending against the new Results Act structure.

As I mentioned to Congressman Turner, the deputy administrator just finished meeting with each of the program managers as

part of a midyear review on where they were in their performance

against their annual and longterm performance goals and their

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measures, and so it is something that we are deeply engaged in as

a management process within the agency and with our State partners. We have included in our annual performance goals and measures core performance measures that were negotiated with our

State partners, and we also monitor them.

Mr. HORN. Go ahead.

Ms. GOLDEN. To me, the focus on results is central and the reason it is important is not because of paper, it is because that is the

way you leverage change for children and families. It is especially

important to us because our world is so complicated. That is for our

dollars to lead to a change in a child’s life, it passes through a

State agency, perhaps a nonprofit, and so being focused and clear

about results is a way of making that happen. And that is the reason that you said earlier something about the secretaries are traveling on planes and their deputies need to focus.

I actually try to talk about results in my travels when I talk to

people, as well as here because I do think that the reason we have

accomplished those results in child support, Head Start, the doubling of adoptions is because of being able to crystallize some clear

results indicators and I think that the challenges, as I was saying

to Congressman Turner, is for our partners and for our staff, once

you raise the stakes, once you make it really important, the quality

of the data and the measurement becomes especially important so

we have to keep improving that.

And the one thing that I wanted to tell you because I know you

have highlighted Oregon which has, in fact, done many impressive

things, is that we are very proud that the measurement strategy

we developed for Head Start—the sample of programs, and the assessment both of programs and of children. They have been looking

for a good way to look at outcomes in early childhood, and we expect that they will be adopting what we have developed and so we

are very pleased to have that working relationship.

Mr. FUNCHES. I think it is very important for us to move forward

on what we use internally. And I am pleased to say that our program managers are very excited about it, and they are using it. So

our vision is that it become part of our day to day management approach.

Mr. HORN. The General Accounting Office discussed the performance to the performance budgeting of agency compliance with cost

accounting standards as set forth in the FASAB, otherwise known

as the Federal Accounting Standards Appeals Board. Can you comment on this assertion and tell us where you think your agency is

with regard to accommodating and complying with the Federal Accounting Standards Appeals Board?

Ms. HARPER. Mr. Chairman, EPA initiated cost accounting this

year, at the start of fiscal year 1999. We are also doing our cost

accounting in accordance with our Results Act structure that is

aligned with our budget structure and our accounting structure. It

has been difficult. We have not had difficulty in terms of the mechanics of it because we were able to handle that, but having the

agency understand that this is how they need to accommodate

their costs has taken a lot of time and effort. I am pleased to report

that we seem to be making good progress. I am anxious to see how

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we fare at the end of the year. We are close. Three quarters of the

year is done. And we seem to be on track.

Mr. HORN. How about you?

Mr. FUNCHES. We are not where we would like to be. We are able

to get some costs. We are putting in a new labor cost distribution

system, including a cost accounting system. We expect the labor

cost distribution system to be up in the February timeframe. We

are not where we would like to be. It is very important and a key

element. We will get another piece of the performance report and

marriage of outcomes and costs. But it is an important thing that

we are focusing on.

Mr. HORN. One quick question for the two Chief Financial Officers. Are you part of the chief administrator of your agency’s cabinet when she calls people together?

Mr. FUNCHES. Yes, sir. As I mentioned before, we have an executive council at the Nuclear Regulatory Commission?

Mr. HORN. So the answer is yes?

Ms. HARPER. Yes.

Mr. HORN. There will be some questions on both sides. Because

of the vote we don’t have the time to ask any more questions and

you have all given excellent testimony. We appreciate that.

I want to thank the following people that are related to this

hearing. I don’t see our staff director, Russell George, and chief

counsel. On my immediate left, your right, is Matthew Ebert, policy

adviser for a good part of this panel and Jane Cobb was involved

with that for the full committee, and Mr. John Phillips, an intern

worked very hard on this, Bonnie Heald, our director of communications, Grant Newman, our clerk, Justin Schlueter, another intern, and Lauren Leften, intern. You can see we use a lot of free

labor from colleges during the summer months.

And Faith Weiss who is not an intern, minority counsel, and we

will be sorry to see her leave. And staff assistant for the minority

is Jean Gosa and the court reporters are Randy Sandefer and Doreen Dotzler, and with that we thank all of you and we are adjourned.

[Whereupon, at 4:15 p.m., the subcommittee was adjourned.]

[The prepared statement of Hon. Jim Turner follows:]

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