United States General Accounting Office

GAO Report to Congressional Requesters

August 1995 STATISTICAL

AGENCIES

Adherence to

Guidelines and

Coordination of

Budgets

GAO/GGD-95-65

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-260037 

August 9, 1995

The Honorable John Glenn

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

The Honorable Joseph Lieberman

United States Senate

This report responds to your request that we use selected guidelines developed by the National

Academy of Sciences to evaluate the performance of four statistical agencies—the Bureaus of

the Census and Economic Analysis in the Department of Commerce, the Bureau of Labor

Statistics in the Department of Labor, and the National Center for Health Statistics in the

Department of Health and Human Services. The National Academy of Sciences issued these

guidelines to describe an effective federal statistical agency and its operation. You also asked

that we provide information on the role of the Office of Management and Budget in

coordinating and overseeing the statistical activities of those agencies that constitute the

federal statistical system.

We are sending copies of this report to the Secretaries of Commerce, Labor, and Health and

Human Services; the Directors of the Bureau of the Census, Bureau of Economic Analysis, and

the National Center for Health Statistics; the Commissioner of Labor Statistics; the Director of

the Office of Management and Budget; and other interested parties. Copies will also be made

available to others on request.

If you have any questions concerning this report, please call me on (202) 512-8676. Major

contributors to this report are listed in appendix II.

L. Nye Stevens

Director, Federal Management

 and Workforce Issues
Executive Summary

Purpose The former Chairman of the Senate Committee on Governmental Affairs

and the former Chairman of its former Subcommittee on Regulation and

Government Information asked GAO to evaluate certain aspects of the

performance of four major statistical agencies—the Bureau of the Census,

the Bureau of Labor Statistics (BLS), the Bureau of Economic Analysis

(BEA), and the National Center for Health Statistics (NCHS)—using selected

guidelines developed by the National Academy of Sciences (NAS). The

requesters also asked GAO to provide information on the activities of the

Office of Management and Budget (OMB) to coordinate and oversee the

statistical activities of the agencies that constitute the federal statistical

system.

Background Seventy-two federal agencies each requested at least $500,000 in fiscal

year 1995 for statistical activities and constitute the federal statistical

system. Together these agencies requested a total of about $2.6 billion in

direct funding in fiscal year 1995 for statistical activities, such as data

collection and dissemination. Census, BLS, BEA, and NCHS represent a cross

section of the major agencies of the federal statistical system and

accounted for nearly 30 percent ($752 million) of the requested federal

budget for statistical activities in fiscal year 1995. Census publishes a wide

variety of data about the people and the economy of the nation, including

the decennial, economic, and agricultural censuses. BLS provides data on

the U.S. workforce, prices, and consumer expenditures. BEA primarily

analyzes data collected by other agencies in order to prepare the nation’s

economic accounts, such as the gross domestic product. NCHS specializes

in data on the U.S. population’s health status, lifestyle, and exposure to

unhealthful influences. OMB is responsible for coordinating the budgets

and activities of the agencies in the federal statistical system and issues an

annual report summarizing federal statistical activities for agencies with

funding levels of $500,000 or more for such activities.

In 1992, NAS published a report that outlined 11 guidelines that federal

statistical agencies should follow to operate effectively. GAO used seven of

these guidelines that GAO regarded as the most susceptible to objective

assessment to evaluate the four agencies. These guidelines called for

statistical agencies to (1) have clearly defined and well-accepted missions,

(2) cooperate with data users, (3) have established procedures for the fair

treatment of data providers, (4) be open about the data provided to users,

(5) widely disseminate the data, (6) coordinate with other statistical

agencies, and (7) have a strong measure of independence.

Page 2 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Executive Summary

Results in Brief The four agencies adhered, with only minor exceptions, to five of the

seven NAS guidelines GAO used in its review. In general, each agency had a

clearly defined and well-accepted mission statement, cooperated with data

users by soliciting their views on data quality, exhibited fair treatment of

data providers, openly described all aspects of its data to users, and widely

disseminated the data it produced.

However, the four agencies did not or could not adhere to all aspects of

two of the guidelines. First, although all of the agencies had procedures in

place to protect their independence from political interference, individual

agencies had not always sufficiently communicated these procedures to

data users. For instance, data users had questioned the integrity of BEA

estimates of first quarter 1991 Gross Domestic Product, although GAO

found no evidence that this integrity was actually compromised. Second,

the four agencies’ coordination with other federal statistical agencies has

been limited by statutes intended to protect the confidentiality of data

providers.

OMB is charged with ensuring that the activities of the statistical agencies

are in line with federal statistical policy by coordinating agency budget

requests and interagency groups working on statistical issues, issuing

statistical standards, and reviewing agency requests to collect information.

Currently, OMB’s Statistical Policy Branch prepares a summary report of

the budgets that statistical agencies submit to Congress. Many observers

have commented, however, that the Branch does not have a staff large

enough to do an effective job of coordinating federal statistical policy. OMB

officials acknowledged that resources for federal statistical activities

could be allocated more effectively if OMB changed its formal process for

reviewing statistical agency budgets. OMB is currently considering changes

to strengthen this process.

GAO’s Analysis

The Four Agencies

Generally Followed Most

Guidelines

GAO’s analysis of documentation provided by the four agencies showed

that each generally followed five of the seven selected NAS guidelines. The

documents indicate that each agency

• had a clearly defined and well-accepted mission that had been in effect for

a number of years;

Page 3 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Executive Summary

• cooperated with data users by soliciting their views on the relevance and

usefulness of the data the agency provided;

• established procedures for fair treatment of its data providers, including

procedures designed to protect the confidentiality of data providers;

• had procedures for openness with data users to make available a wide

range of data products to users and publish information on how the data

were prepared; and

• established policies for wide dissemination of data through release,

distribution, and preservation of statistical data.

According to the NAS guidelines, it is essential that a statistical agency

maintain credibility for itself and for its data and that both must be

perceived to be free of political interference and policy advocacy. This can

be difficult to achieve. For example, GAO found instances where allegations

of political manipulation had been made against BEA, although none of

these allegations were substantiated. In a March 1993 report1 GAO noted

that a collection of articles that appeared in the press from October 1991

through November 1992 alleged that BEA had manipulated its first quarter

gross domestic product estimates for political purposes. The report

concluded that the allegations were not substantiated and recommended

actions to avoid such allegations in the future. In response, BEA adopted a

“Strategy to Improve the Perceived Integrity of BEA’s Estimates,” which

calls for greater communication about BEA’s procedures and safeguards to

protect the integrity of its statistical data.

The NAS guidelines also stress the importance of federal statistical

agencies’ coordinating with each other as well as with state and local

statistical agencies. In addition, the NAS guidelines state that statistical

agencies are more effective and efficient when they are able to make use

of other agencies’ data and administrative records. However, GAO found

that the ability of federal agencies to share data for purely statistical uses

was impeded by laws and regulations intended to protect the

confidentiality of data providers. For example, agencies that paid Census

to collect data for them at times had only limited access to the data

because of confidentiality laws. OMB and several statistical agencies have

been exploring legislative options that would allow agencies to share data

for statistical purposes, and the National Performance Review has made a

recommendation on the subject with which GAO generally agrees. GAO

found that each of the four agencies cooperated with state and local

1

See Gross Domestic Product: No Evidence of Manipulation in First Quarter 1991 Estimates

(GAO /GGD-93-58, Mar. 10, 1993).

Page 4 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Executive Summary

governments to the extent necessary to obtain the subnational data they

needed.

OMB Is Responsible for

the Coordination of the

Federal Statistical System

Budget

Because so many federal agencies are involved in producing statistics,

coordination of their activities is essential for the effective and efficient

implementation of federal statistical programs. The Paperwork Reduction

Act of 1980 assigned OMB the responsibility for coordinating federal

statistical policy. The act specifically directed OMB to review statistical

agencies’ budget submissions to ensure that federal statistical activities

are coordinated. At the time of GAO’s review, OMB had assigned five

professional staff to its Statistical Policy Branch, which is responsible for

reviewing agencies’ budgets as well as other policy and coordination

functions. Published studies of OMB’s role in coordinating the federal

statistical system have noted that a staff of five is not sufficient to do the

detailed budget reviews necessary to ensure the coordination of federal

statistical policy. The Branch currently prepares a summary report of the

statistical budgets of individual agencies as submitted in the President’s

budget to Congress. Since the Branch was established, it has issued the

report after Congress has started to determine the agencies’ budgets.

OMB officials acknowledged that resources for federal statistical activities

could be more effectively allocated if OMB changed its formal process for

reviewing agency budget requests to ensure that the requests are more in

line with governmentwide statistical system priorities. OMB is in the midst

of strengthening the process for reviewing statistical agency budgets.

Recommendations GAO is not making any recommendations in this report.

Agency Comments BLS, NCHS, and OMB provided comments and the Department of Commerce

offered comments from Census and BEA on a draft of this report. Most of

the comments were suggestions for technical clarifications and

corrections, which have been incorporated as appropriate. BEA asked that

GAO note that the statistical agencies play an active role in enhancing data

sharing among themselves and that BEA has been actively soliciting input

from users as it reviews the performance of its economic accounts. GAO

revised the report to include discussions of statistical agency data sharing

and BEA’s review of its economic accounts. OMB said the draft did not

adequately reflect the full extent of its coordination of the federal

Page 5 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Executive Summary

statistical system. GAO expanded its discussion of OMB’s statistical budget

and policy coordination functions.

Page 6 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Page 7 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Contents

Executive Summary 2

Chapter 1 

Introduction

10

BLS, Census, BEA, and NCHS Are Part of the Federal Statistical

System

10

The Importance of Statistics Issued by Census, BEA, BLS, and

NCHS

12

Federal Budget Resources Devoted to Statistical Activities 13

National Academy of Sciences’ Guidelines 14

Objectives, Scope, and Methodology 16

Agency Comments and Our Evaluation 18

Chapter 2 

The Four Agencies

Generally Followed

Selected Guidelines,

With Some

Exceptions

20

A Clearly Defined and Well-Accepted Mission 20

Cooperation With Data Users 21

Fair Treatment of Data Providers 23

Openness About the Data Provided 25

Wide Dissemination of Data 25

Coordination With Other Statistical Agencies 26

A Strong Measure of Independence 30

Conclusions 36

Chapter 3 

Coordination of

Statistical Agencies’

Budgets Is Limited

37

Federal Statistical System Is a Large Collection of Interdependent

Agencies

37

OMB Is Responsible for the Coordination of the Federal

Statistical System Budget

42

Conclusions 48

Appendixes Appendix I: Listing of Federal Statistical Agencies With Budgets

for Statistical Activities of $500,000 or More

50

Appendix II: Major Contributors to This Report 52

Related GAO Products 55

Table Table 1.1: Total Requested Funding for the Four Statistical

Agencies and All Agencies in the Federal Statistical System for

Fiscal Year 1995

14

Page 8 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Contents

Figures Figure 3.1: Fiscal Year 1995 Reimbursable Services as a

Percentage of Total Funding Among the Four Agencies

38

Figure 3.2: Fiscal Year 1995 Purchases of Statistical Data as a

Percentage of Total Funding Among the Four Agencies

39

Figure 3.3: Actual Budgets for All Federal Statistical Activities

From 1981 Through 1995 in Current and Constant Dollars

40

Figure 3.4: Actual Budgets for All Federal Statistical Activities

From 1981 Through 1995 in Current and Constant Dollars

Excluding Decennial Censuses

41

Abbreviations

BEA Bureau of Economic Analysis

BLS Bureau of Labor Statistics

CNSTAT Committee on National Statistics

CPI consumer price index

CRS Congressional Research Service

GDP gross domestic product

NAS National Academy of Sciences

NCHS National Center for Health Statistics

NPR National Performance Review

OIRA Office of Information and Regulatory Affairs

OMB Office of Management and Budget

Page 9 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

Because of the federal statistical system’s decentralized structure, the

collection and issuance of statistical information depends on the effective

performance of many separate statistical agencies and programs. The

former Chairman of the Senate Committee on Governmental Affairs and

the former Chairman of its Subcommittee on Regulation and Government

Information asked us to (1) evaluate the performance of four prominent

federal statistical agencies using guidelines developed by the National

Academy of Sciences (NAS)1

 and (2) provide information on the role of the

Office of Management and Budget (OMB) to coordinate and oversee the

statistical activities of the agencies that constitute the federal statistical

system. The four agencies were the Bureau of the Census and the Bureau

of Economic Analysis (BEA) within the Department of Commerce, the

Bureau of Labor Statistics (BLS) within the Department of Labor, and the

National Center for Health Statistics (NCHS) within the Department of

Health and Human Services.

BLS, Census, BEA,

and NCHS Are Part of

the Federal Statistical

System

The federal statistical system is not a system in the ordinary sense but

rather a designation for the numerous government agencies that collect,

process, analyze, and use quantitative data. Few federal agencies have

data collection as their sole or primary mission, but OMB in its annual

report identifies agencies as conducting statistical activities when they

devote $500,000 or more of their annual budgets to such activities.2

 If this

criterion is used for definition, the agencies in the federal statistical

system could change from year to year, although the list is quite stable

over time. For fiscal year 1995, 72 agencies met or exceeded the $500,000

budget level. Although the majority of these agencies produce statistical

information on a particular subject as a byproduct of their administrative,

regulatory, or operating responsibilities, several agencies have the

production of statistical information as their principal mission.

Some federal statistics are used by persons with varying information

needs; such statistics are frequently called general-purpose statistics.

Other statistics are special purpose in character and deal with one subject

matter (e.g., education or transportation); they focus on a particular

function of government and are primarily designed to aid program

1

By agreement with the Committee, we used NAS’ report, Principles and Practices for a Federal

Statistical Agency (Washington, D.C.: 1992), as the source of our criteria for evaluating the four

agencies’ performance.

2

See Statistical Programs of the United States Government: Fiscal Year 1995, OMB, Annual Report of

the Statistical Policy Branch (Washington, D.C.: 1995). Statistical activities include the development

and implementation of procedures and methods for collecting statistics; the classification,

presentation, and dissemination of statistics; and the administration of statistical programs.

Page 10 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

administrators and policymakers. The bulk of these other statistics relate

to specific federal programs and are essentially a byproduct of the

agencies’ administration or monitoring of these activities.

The four agencies whose conformance with the selected NAS guidelines we

evaluated are major, well-recognized multipurpose agencies3

 of the federal

statistical system. Census tabulates and publishes a wide variety of data

about the people and the economy of the nation. These data include the

Decennial Census of Population and Housing, the economic and

agricultural censuses, and data on U.S. merchandise trade. BLS collects,

processes, analyzes, and disseminates data on employment,

unemployment, characteristics of employment and employees, and prices

and consumer expenditures.

BEA is a research-oriented statistical agency that prepares, develops,

interprets, and publishes the U.S. economic accounts. BEA integrates large

volumes of monthly, quarterly, and annual economic data—ranging from

construction spending to retail sales—produced by other government

agencies and trade sources to produce a complete and consistent picture

of the national economy and its international and regional dimensions.4

NCHS specializes in health statistics, including vital statistics from

marriage, birth, and death certificates. It collects, analyzes, disseminates,

and carries out research on the U.S. population’s health status, lifestyles,

and exposure to unhealthful influences.

Although Census, BLS, BEA, and NCHS are responsible for a large portion of

the statistics produced by the federal government, they are only 4 of the 72

agencies that constitute the federal statistical system. For example, NCHS is

not the only agency that collects health statistics. Within the Department

of Health and Human Services, 13 agencies collect health statistics. The

largest of these are the National Institutes of Health and NCHS’ parent

organization, the Centers for Disease Control and Prevention. OMB’s

Statistical Policy Branch is responsible for coordinating the activities of

the 72 statistical agencies by reviewing agency budget requests, issuing

statistical standards, facilitating interagency working groups, and

3

The NAS report defines a federal statistical agency as a unit of the federal government whose

principal function is to compile and analyze data and to disseminate information for statistical

purposes.

4

In December 1991, the Department of Commerce began to use gross domestic product (GDP) as the

primary measure of economic performance, rather than the previous gross national product measure.

GDP measures the economic performance of all individuals and firms located in the United States. The

balance of payments is the statistical summary of all of the country’s international transactions.

Page 11 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

reviewing agency information requests. Appendix I lists by department the

names of the 72 agencies in the federal statistical system that are expected

to spend at least $500,000 on statistical activities in fiscal year 1995.

The Importance of

Statistics Issued by

Census, BEA, BLS,

and NCHS

Since the earliest days of the United States, statistics have been collected

and used to describe various facets of the national economy and

population. The Constitution, notably, mandates a decennial census to

count the population. Government policy and private decisions depend on

the availability of accurate and timely information. In addition, federal,

state, and local governments rely on statistical information to administer

programs under their jurisdictions. Census, BEA, BLS, and NCHS are

responsible for many of the statistics used by policymakers and those who

administer federal programs.

The statistical activities of these four agencies influence policymakers in

their formulation of national policies. For example, statistics are

fundamental to the federal government’s efforts to allocate its annual

budget. Federal income tax brackets and some benefit payments, for

instance, are adjusted to mitigate the effects of inflation.5

 Statistics are

also an important part of many presidential messages and reports. For

example, the annual Economic Report of the President contains extensive

statistical appendixes, and many of the policies and programs discussed in

the report are based on a statistical foundation provided by the four

agencies discussed in this report.6

 In addition, Census’ Decennial Census

of Population and Housing is the basis on which representation in

Congress is apportioned among the states.

The uses of federal statistics extend beyond the government. Decennial

census data are used widely by businesses and the media to examine

social trends. Much of the news on the business and financial pages of the

daily press comes from the release of statistics by BEA, BLS, and Census.

Business analysts regularly use statistics of economic conditions when

planning investments and operations in their own businesses. Labor

organizations and management use statistics on earnings, hours,

employment, and prices in their collective bargaining negotiations. BLS’

consumer price index (CPI), which measures the change in the prices of a

uniform “market basket” of goods and services, is widely used as the

5

See Economic Statistics: Measurement Problems Can Affect the Budget and Economic Policymaking

(GAO/GGD-95-99, May 2, 1995).

6

See Economic Report of the President, prepared by the Council of Economic Advisers (Washington,

D.C.: 1995).

Page 12 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

measure for “escalator clauses” in contracts. In employment contracts, for

example, such a clause might tie increases in wages and pensions to the

CPI to keep employee or retiree earnings in line with inflation.

The administration and Congress use statistics produced by these four

agencies as a basis for measuring the results of government programs.

Some data series are built directly into the administration of programs

such as BLS’ inflation and Census’ poverty indexes. For example, if the CPI

overstated inflation by as little as 0.2 percentage points annually from 1995

through 1999, an estimated $19.1 billion would be added to the deficit over

that 5-year period, according to OMB estimates.7

 In addition, current

defense industry contracts amounting to $90 billion include a purchases

and sales component that is adjusted by BLS’ producer price index. And

BEA, BLS, and Census produce local area unemployment, income, and

poverty statistics that are important components of formula programs that

allocate billions of dollars of federal funds to state and local governments.

The statistics that NCHS produces and disseminates offer many indicators

of the health of the nation’s population. From a public policy perspective,

NCHS data are critical in the government’s monitoring of cost and delivery

of health care. The use of these data in research also helps to bring about

improvements in the prevention or treatment of diseases. Because data are

usually published from each NCHS information system separately, the wide

range of NCHS’ data is sometimes not apparent. NCHS’ data systems are used

to obtain information from individuals, health care providers, and vital

records, such as birth, death, and marriage certificates; the data systems

are useful in studying public health.

Federal Budget

Resources Devoted to

Statistical Activities

According to OMB, the 72 agencies that had budgets of $500,000 or more for

statistical activities requested an estimated total of $2.6 billion in direct

funding for statistical activities in fiscal year 1995. Many of these agencies

also received reimbursements from other federal agencies, state and local

governments, and the private sector to perform requested statistical

activities. Of the requested funding for the 72 agencies combined, the 4

agencies’ share of direct funding was about $752 million (29.4 percent).

Table 1.1 shows the share that each of the four agencies requested for

statistical funding.

7

See GAO/GGD-95-99, May 2, 1995.

Page 13 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

Table 1.1: Total Requested Funding for

the Four Statistical Agencies and All

Agencies in the Federal Statistical

System for Fiscal Year 1995

Dollars in millions

Federal statistical agency

1995 direct

fundinga

Percent of total direct

funding for

governmentwide

statistical activities

1995 total

fundinga

Census Bureau $309.2 12.1% $463.2

Bureau of Labor

Statistics

310.8 12.2 381.5b

National Center

for Health

Statistics

83.4 3.3 100.6

Bureau of

Economic Analysis

48.6 1.9 49.4

Total four agencies $752.0 29.4% d

Total other agenciesc 1,804.7 70.6 d

Total federal

statistical system

$2,556.7 100.0% d

aDirect funding is from budget requests, and total funding is from budget requests plus

reimbursable and other funding provided by other sources to perform statistical activities.

bIncludes $56.3 million BLS receives in Treasury trust funds for state cooperative agreements.

cIncludes the 68 other federal agencies that have budgets of $500,000 or more for statistical

activities.

dCumulative direct and total funding is subject to double counting (e.g, BLS receives direct

funding it in turn pays to Census, where it is recorded as reimbursable funding); therefore, the

totals are not meaningful.

Source: OMB data.

National Academy of

Sciences’ Guidelines

The Committee on National Statistics (CNSTAT) of NAS developed guidelines

that it believed were essential for the operation of federal agencies that

conduct statistical activities.8 CNSTAT is composed of professionals in the

statistical field who have no direct relationship with the federal

government. Since its founding, CNSTAT has concentrated on reviewing

federal statistics on a selective basis. It also prepares reports on special

studies that are intended to improve the effectiveness of the federal

statistical system. Considering the diversity of the agencies that make up

the federal statistical system, it is difficult to devise standards against

which to measure the agencies’ performance. However, CNSTAT developed

8

NAS is a private, nonprofit society of scholars established by Congress in 1863 to advise the federal

government on scientific and technical matters. NAS organized the National Research Council in 1916

to combine the broad community of science and technology with NAS’ purposes of furthering

scientific knowledge and providing information to the federal government.

Page 14 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

guidelines that it believes are essential for the efficient operation of

federal agencies that conduct statistical activities.

NAS issued a CNSTAT report in 1992 entitled Principles and Practices for a

Federal Statistical Agency. CNSTAT prepared this report partially in

response to requests for advice from congressional and executive officials

proposing the creation of new statistical agencies, such as a Bureau of

Environmental Statistics and a Bureau of Transportation Statistics.9

 These

officials were interested in CNSTAT’s views on what constitutes an effective

federal statistical agency. CNSTAT also prepared the report because it was

concerned that federal statistical agencies might sometimes not meet what

it considered acceptable professional standards.

In the NAS report, CNSTAT outlined guidelines that it believes should be

followed by federal statistical agencies. According to NAS, the guidelines

contain principles and practices that are statements of “best practices,”

rather than legal requirements or scientific rules. The guidelines, however,

were intended to be consistent with current laws and statistical theory and

practice.

In the report, CNSTAT discussed the following three principles it found to be

essential for the effective operation of a federal statistical agency.

According to these principles, a federal statistical agency should

• be in a position to provide information that is relevant to issues of public

policy,

• have a relationship of mutual respect and trust with those who use its data

and information, and

• have a relationship of mutual respect and trust with respondents who

provide data and with all data subjects from which it obtains information.

In the report, CNSTAT also discussed the following 11 guidelines it found to

be essential for the effective operation of a federal statistical agency.

These guidelines are intended as specific applications of the three broad

principles. According to these guidelines, a federal statistical agency needs

• a clearly defined and well-accepted mission,

• cooperation with data users by soliciting their views on data quality,

• established procedures for the fair treatment of data providers,

• openness about the data provided to users,

9

The proposed legislation for the creation of the Bureau of Environmental Statistics was not enacted.

The Bureau of Transportation Statistics was established in 1991 by P.L. 102-240.

Page 15 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

• coordination with other statistical agencies,

• a wide dissemination of data,

• a strong measure of independence,

• commitment to quality and professional standards,

• an active research program,

• professional advancement of staff, and

• caution in conducting nonstatistical activities.

Objectives, Scope,

and Methodology

We undertook this review at the request of the former Chairman of the

Senate Committee on Governmental Affairs and the former Chairman of

its former Subcommittee on Regulation and Government Information. To

evaluate the four agencies’ performance, we compared their activities to

the seven NAS guidelines for the effective operation of a federal statistical

agency that we regarded as the most susceptible to objective assessment.

We did not include the other four NAS guidelines that are of a more

subjective nature. The original request for this review specified evaluating

Census, BLS, and NCHS. With the agreement of the requesters, we added BEA

to the review because of its key responsibilities for providing economic

data. The requesters also asked us to provide information on OMB’s role in

coordinating and overseeing the statistical activities of those agencies that

constitute the federal statistical system.

Our first objective was to determine to what extent the four statistical

agencies followed the seven NAS guidelines that we used for comparison.

Specifically, we examined whether the four agencies (1) had clearly

defined and well-accepted missions, (2) cooperated with data users,

(3) had established procedures for the fair treatment of data providers,

(4) were open about the data provided to users, (5) widely disseminated

the data, (6) coordinated with other statistical agencies, and (7) had a

strong measure of independence. To understand the context for these

guidelines, we interviewed CNSTAT officials to document the procedures

they used in preparing and issuing the guidelines. We also interviewed

executive branch officials and other knowledgeable experts about the NAS

guidelines; reviewed relevant literature, such as other NAS publications and

reports about the federal statistical system; and compared the NAS

guidelines to comparable international guidelines for statistical agencies.

To determine agency compliance with the selected NAS guidelines, we

interviewed officials from each of the four agencies and OMB and asked

them to provide documents to demonstrate their compliance. These

documents included information on missions, activities, and resource

Page 16 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 1 

Introduction

history; legal basis for agency organization and operations; data

dissemination; cooperation with data users; and coordination/contacts

with other governmental organizations and professional societies. In

general, our criterion for compliance with a guideline was whether

agencies had such documentation. We relied upon interviews and other

sources of data to ensure that we adequately understood the context of

this documentation. The agencies also provided us with background

briefing books, descriptions of statistical programs and publications,

agency orders and operational procedures, budget documents, and other

documentation. We attended meetings of selected agency advisory

committees and boards, meetings with independent groups, and

agency-sponsored user conferences. We also met with key agency officials

to discuss their programs and policies in the context of the selected

guidelines. For example, to determine if the agencies had clearly defined

and well-accepted missions, we discussed with agency officials the

process by which the mission statements were developed (i.e., through

planning conferences or other means) and compared the mission

statements to authorizing legislation and agency activities to carry out

their statistical missions.

Our second objective was to provide information on OMB’s role in

coordinating and overseeing the statistical activities of those agencies that

constitute the federal statistical system. To do so, we reviewed the

requirements contained in the Paperwork Reduction Act for OMB’s

responsibilities to coordinate the federal statistical system. We also

reviewed published studies on organization and coordination of the

federal statistical system. In agreement with the requesters, we

predominantly focused on OMB’s role in coordinating federal statistical

agencies’ budgets and did not address the other aspects of OMB’s role, such

as assessing the quality of statistical data, statistical standards, and

paperwork reduction. We reviewed OMB’s annual reports on statistical

activities of the U.S. government and the four agencies’ budget

submissions for fiscal years 1983 to 1995. We met with officials from OMB’s

Statistical Policy Branch, which is responsible for coordinating the

budgets and policies of the federal statistical system, to discuss the

Branch’s budget coordination mission and the resources it has to carry out

this mission.

We did our work between June 1992 and February 1995 in Washington,

D.C., in accordance with generally accepted government auditing

standards.

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Chapter 1 

Introduction

Agency Comments

and Our Evaluation

The Department of Commerce, BLS, NCHS, and OMB provided comments on a

draft of this report. Commerce’s written comments incorporated

comments from BEA and Census. All of Census’ and most of BEA’s

comments were suggestions for technical clarifications and corrections,

and we have incorporated these suggestions where appropriate. BEA said

that our report underscores the efforts statistical agencies have made to

operate effectively and to maintain user confidence in the data they

produce. BEA also noted that it agrees in principle with the NAS guidelines

and the way we applied them to the statistical agencies. BEA expressed its

appreciation for our portrayal of how it handled the integrity issues

involving previous GDP estimates. BEA also cited two issues that it believed

needed to be clarified in the report. First, BEA thought that we portrayed

the statistical agencies as passive participants in efforts to enhance data

sharing among themselves. This was not our intention, and we have

revised the report on page 27 to acknowledge an interagency task force

that was formed to develop proposals for enhanced data sharing. The

second issue raised by BEA involved our discussion of its efforts to get

input from data users. BEA felt we should have mentioned its Mid-Decade

Strategic Review and Plan, which is intended to maintain and review the

performance of BEA’s economic accounts. According to BEA, this review

includes seeking user input on how the accounts can be improved. We

have revised the report on page 21 to include a discussion of the

mid-decade review and plan.

On June 7, 1995, we met with the Chief Statistician and a senior economist

in OMB’s Office of Information and Regulatory Affairs. The officials

generally agreed with our evaluation of the four agencies’ adherence to the

selected NAS guidelines. However, the officials said that our report

appeared to indicate that coordination among the statistical agencies is

limited to their data-sharing arrangements. The officials noted that the

agencies coordinate in many ways, including through working groups on

statistical standards, survey design, and data collection. We did not intend

to convey the impression that agency coordination is limited to data

sharing, and we have revised the report on page 27 to clarify the extent of

coordination among statistical agencies.

The OMB officials also said that the draft did not adequately reflect the full

extent of the coordination activities performed by OMB’s Statistical Policy

Branch. We have revised the report on pages 43 to 45 to reflect the

description of the Branch’s budget coordination function, which includes

working with the major statistical agencies and the OMB program

examiners assigned to them to coordinate the statistical budgets of these

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Chapter 1 

Introduction

agencies. The officials also said that the draft did not adequately describe

the Branch’s role in the coordination of federal statistical policy. We agree

that the Branch plays an important role in the coordination of federal

statistical policy, but our report focused on its budget coordination

function. However, we have revised the report on pages 17, 18, and 43 to

clarify that the Branch has other responsibilities in addition to budget

coordination. The officials also offered suggestions for technical

corrections and clarifications, which we have incorporated where

appropriate.

BLS and NCHS provided oral comments on the draft report. On June 5, 1995,

we met at BLS with the Chief, Division of Management Functions and the

Chief, Division of Financial Planning and Management. The officials made

suggestions for technical corrections and clarifications, which we have

incorporated. On June 6, we spoke with the Chief of NCHS’ Planning,

Budget and Legislative staff, who also made suggestions for technical

corrections and clarifications, and these have also been incorporated.

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The Four Agencies Generally Followed

Selected Guidelines, With Some Exceptions

The four agencies adhered to five of the seven selected guidelines with

only minor exceptions. The agencies (1) had clearly defined and

well-accepted mission statements, (2) cooperated with data users by

soliciting their views on data quality, (3) treated data providers fairly,

(4) openly described all aspects of their data to users, and (5) widely

disseminated the data they produced.

However, we found that the agencies did not or could not meet all aspects

of the other two guidelines, which involved the agencies’ coordination

with other statistical agencies and their measure of independence. First,

although the agencies coordinated to some extent with other statistical

agencies, their coordination was limited by data provider confidentiality

statutes, and initiatives to modify the limitations through legislative

change have not yet succeeded. Second, the agencies themselves were

generally politically independent, but we have reported on one instance

when a statistical agency—BEA—had not been successful in conveying this

independence to data users, judging by allegations of political interference

in their work. In a March 1993 report1 GAO noted that a collection of

articles that appeared in the press from October 1991 through

November 1992 alleged that BEA had manipulated its first quarter gross

domestic product estimates for political purposes. The report concluded

that the allegations were not substantiated and recommended actions to

avoid such allegations in the future. Following our recommendation, BEA

has formulated a strategy to counter misperceptions on the matter of its

independence.

A Clearly Defined and

Well-Accepted

Mission

According to the NAS guidelines, a statistical agency should have “a clearly

defined and well-accepted mission.” The guidelines note that an agency’s

mission should be spelled out in legislation and used in implementing its

regulations so that there is “a clear understanding of the mission of an

agency, the scope of its program, and its authority and responsibilities.”

The NAS guideline on mission further states:

“An agency’s mission should include responsibility for assessing needs for information and

determining sources of data, measurement methods, and efficient methods of collection

and ensuring the public availability of needed data, including, if necessary, the

establishment of a data collection program.”

1

See Gross Domestic Product: No Evidence of Manipulation in First Quarter 1991 Estimates

(GAO/GGD-93-58, Mar. 10, 1993).

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Each agency provided us with statements that described the mission of the

agency, the scope of its program, and its authority and responsibilities. In

addition, officials from each agency described the process by which the

mission statements were developed (e.g., through planning conferences).

We found some mission statements contained in legislation; others were

issued by the agencies administratively, which is permissible under the NAS

guidelines for agencies that have only very general legislative authority.

Implementing regulations and official publication releases also mentioned

the missions of the four agencies. All of these agencies had mission

statements that had been in effect for a number of years.

Cooperation With

Data Users

The NAS guideline states:

“A statistics agency should consult with a broad spectrum of users of its data in order to

make its products more useful. It should:

—seek advice on data concepts, methods, and products in a variety of formal and informal

ways, from data users as well as from professional and technical subject-matter experts.

—seek advice from external groups on its statistical program as a whole, on setting

statistical priorities, and on the statistical methodologies it uses.

—endeavor to meet the needs for access to data while maintaining appropriate safeguards

for the confidentiality of individual responses.

—exercise care to make its data equally accessible to all potential users.”

We found each of the four agencies had policies for requesting and

receiving feedback from data users, including other statistical agencies, by

a variety of means. The agencies also cooperated with data users by

maintaining appropriate confidentiality safeguards of respondents and

making data available to all potential users.

Census, BLS, BEA, and NCHS have communicated with data users mainly

through formal advisory committees of users and statistical data centers of

individual state governments (such as the Census State Data Center

network). The agencies have consulted these advisory committees and

state government units on issues of users’ data needs, including the

frequency of surveys, content, geographic level, and type of product. For

example, in conducting its Mid-Decade Strategic Review and Plan, BEA

publicly reviewed the status of its economic accounts and actively

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Selected Guidelines, With Some Exceptions

solicited wide user input—including organizing a well-attended user

conference.

In addition to consulting formal advisory groups, all four of the agencies

have on occasion contracted with independent groups to receive advice on

the agencies’ respective methodologies. These contacts also helped make

data accessible to all potential users. For example, BLS contracted with the

American Statistical Association to conduct an independent review of BLS’

downward revision of the March 1991 benchmark for the monthly payroll

survey of employment estimates. Also, at the request of NCHS, NAS and the

Institute of Medicine convened a panel of experts to evaluate NCHS’ plans

for the National Health Care Survey.2 NAS also has convened two ongoing

panels of experts, which were formed at congressional and agency

request, to advise Census on the data requirements of the 2000 Decennial

Census and on possible methodological approaches that Census should

take to meet these requirements.

Employees of all four agencies frequently participated in statistical

conferences to exchange ideas with researchers and statisticians from

other federal agencies, universities, and private sector organizations. In

addition, agency employees take part in meetings with various

organizations and professional associations, such as CNSTAT, the American

Statistical Association, the American Economic Association, the National

Association of Business Economists, and other organizations and

associations that are relevant to their statistical activities and research.

Census, BLS, and NCHS have regular conferences with cooperating state

statistical agencies. On occasion, these three agencies also sponsor user

conferences. For example, BLS sponsored user conferences in 1994

concerning the major redesign of the Current Population Survey and NCHS

has biennial user conferences. In addition, other forms of contact with

data users can include agencies’ conducting OMB-approved surveys on

specific data measures. Comments from users are also sometimes solicited

through a published Federal Register notice.

As we noted in chapter 1, government agencies are extensive users of

federal statistics, and the statistical agencies maintain contacts with these

users and among themselves as well. For example, OMB chairs monthly

meetings with executive branch statistical agency heads to help

coordinate agencies’ statistical activities.

2

See Toward a National Health Care Survey: A Data System for the 21st Century, National Research

Council and Institute of Medicine, a report of NAS (Washington, D.C.: 1992).

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Fair Treatment of

Data Providers

The NAS guideline, in part, states:

“To maintain credibility and a relationship of respect and trust with data subjects and other

data providers, an agency must observe fair information practices. Such practices include:

— policies and procedures to maintain the confidentiality of individual responses. An

agency avoids activities that might lead to a misperception that confidentiality assurances

have been breached.

— informing respondents of the conditions of participation in a data collection and the

anticipated uses of the information.

— minimizing the contribution of time and effort asked of respondents, consistent with the

purposes of the data collection activity.”

We found that all four agencies had laws, regulations, or policies in place

to maintain the confidentiality of data providers. The confidentiality

provisions of Census, BEA, and NCHS are statutorily based. BLS relies on a

commissioner’s order, which is similar in language to a statutory

confidentiality provision, to state its treatment of the confidential nature

of BLS’ records.

Census is subject by law to strict confidentiality provisions controlling

data it collects.3

 The Census Bureau cannot “make any publication

whereby the data furnished by any particular establishment or individual

under this title can be identified.” The law also provides penalties for

inappropriate disclosure of information or for uses other than statistical

purposes and restricts access to data to Census employees.

Two statutes contain confidentiality provisions that apply specifically to

BEA. The provision in one statute broadly pertains to “any statistical

information furnished in confidence” to BEA and provides that the

information “shall be held to be confidential, and shall be used only for the

statistical purposes for which it was supplied.”4

 The provision of the other

statute—the International Investment and Trade Services Survey

Act—covers BEA’s direct investment and international services surveys.

The provision specifies that the individual company data collected under

the act can be used only for analytical and statistical purposes, and it

limits access to the data to officials and employees of government

agencies that are specifically designated by the president to perform

3

See 13 U.S.C. 9.

4

See 15 U.S.C. 176a.

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functions under the act. A 1990 amendment to the act permits BEA to share

data with Census and BLS to obtain those agencies’ more detailed,

establishment-level data for the foreign-owned U.S. enterprises that report

to BEA.

5

NCHS is bound by the Public Health Service Act, as amended. Under the act,

no information NCHS obtains in the course of statistical activities may be

used for any purpose other than that for which it was supplied, unless

authorized under regulations of the Secretary of Health and Human

Services.6

BLS relies on a commissioner’s order to state its treatment of the

confidential nature of BLS’ records. The order provides specific detail on

how data are to be safeguarded. BLS sought legislation in 1990 to codify

certain confidentiality protection, but Congress did not act on the

legislation.

We did not evaluate the effectiveness of statutory provisions or regulations

in maintaining the confidentiality of the four agencies’ data providers.

However, in 1993 NAS issued a report that dealt with confidentiality issues.7

The report concluded that opportunities existed for federal agencies to

improve data protection without diminishing data access. Specifically, the

report noted that unless pledges of confidentiality are backed by legal

authority, they provide an inadequate shield against unauthorized

administrative uses.

In addition, the four agencies provided us with documentation that shows

how they inform respondents of the conditions of participation in agency

data collection and the anticipated uses of the data. For example, the

agencies print on their questionnaires a notice of the confidential

treatment to be accorded the information provided by respondents. The

four agencies also attempt to minimize the time and effort asked of

respondents by following the processes established by OMB under the

Paperwork Reduction Act.8

 Under these processes, OMB must review and

approve data collection questionnaires to ensure that the paperwork

burden on the public is minimized.

5

See 22 U.S.C. 3104 (c); see also 22 U.S.C. 3144.

6

See 42 U.S.C. 242 m(d).

7

See Private Lives and Public Policies: Confidentiality and Accessibility of Government Statistics

(Washington, D.C.: 1993).

8

P.L. 96-511, see 44 U.S.C. 3501 et seq.

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Selected Guidelines, With Some Exceptions

Openness About the

Data Provided

The NAS guideline states:

“An agency should fully describe its data and comment on their relevance to specific major

uses. It should describe the methods used, the assumptions made, the limitations of data,

the manners by which data linkages are made, and the results of research on the methods

and data.”

We found that all four agencies had documentation that established

procedures for openness with data users in describing all aspects of the

agencies’ data. (We did not verify agency compliance with these

documented procedures.) Each agency makes a wide range of statistics

and related information available to users and provides publications

explaining the types of statistics it produces. Each agency also publishes

analyses that include the relevance, methodology, assumptions, and

results of the data. For example, monthly publications, such as BEA’s

Survey of Current Business and BLS’ Monthly Labor Review, contain

statistics and articles that describe how those statistics were compiled as

well as the limitations of the data. Each of the four agencies provided us

with documentation showing the procedures it is to follow for agency

operations and data dissemination, including publication policies, types of

data products, and publication and release schedules.

Wide Dissemination of

Data

According to the NAS guideline:

“— Dissemination of data and information (basic series, analytic reports, press releases,

public-use tapes) should be timely and public. Avenues of dissemination should be chosen

to reach as broad a public as reasonably possible.

— Release of information should not be subject to actual or perceived political interference.

— An agency should have an established publications policy that describes, for a data

collection program, the types of reports and other data releases to be made available, the

audience to be served, and the frequency of release.

— A policy for the preservation of data should guide what data to retain and how they are

to be archived for secondary analysis.”

In its guidelines, NAS included a series of steps that an agency should

follow in releasing and preserving the data for which it is responsible. We

found that the four agencies have policies in place for data dissemination

and preservation that would meet this guideline. However, one aspect of

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Selected Guidelines, With Some Exceptions

this guideline indicates that the release of data should be free of political

interference. As we discuss in the section on the NAS guideline for

statistical agency independence, our previous work9

 indicates that BEA has

been subject to unfounded accusations that its data have been politically

manipulated.

The four agencies disseminate statistics and information on those

statistics to the public. We found that all four generally choose methods of

dissemination of information to reach a broad public audience. The

processes and management of the distribution of statistical products (e.g.,

printed, microfiche, film, CD-ROM) are similar for each of the four

agencies. All of the agencies have publications that describe the types of

reports and other publications on statistical censuses and surveys that are

available to the public. The purpose of these publications is also to

introduce users to the data systems, to suggest research opportunities, and

to indicate how and when data are made available.

Each of these agencies has established orders and policies for the

publishing, release, and distribution of statistics. Each agency requires all

printed and electronic materials and speeches to be cleared by designated

offices (e.g., the Office of Publications and Special Studies in BLS) before

their release. The frequency of release of economic statistics for all federal

statistical agencies is covered by an OMB directive.

The processes and management regarding policies on archival

preservation and records management are also similar for each of the four

agencies. Each agency is subject to the standards established by the

National Archives and Records Administration and the General Services

Administration for records maintenance and the disposition of records

through transfer to federal records centers.

Coordination With

Other Statistical

Agencies

This NAS guideline emphasizes the importance of federal statistical

agencies’ coordinating with each other as well as with state, local, foreign,

and international statistical agencies when appropriate.10 The guidelines

indicate that the most important aspect of coordination among federal

agencies is the sharing of data. The statistical agencies have been active in

9

See GAO/GGD-93-58, March 10, 1993.

10Cooperation with foreign and international statistical agencies occurs, for example, when U.S.

agencies work with Canada to improve the accuracy of trade statistics or work with the United

Nations to standardize international reporting concepts for national accounts. See Measuring

U.S.-Canada Trade: Shifting Trade Winds May Threaten Recent Progress (GAO/GGD-94-4, Jan. 19,

1994).

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Selected Guidelines, With Some Exceptions

recommending and supporting efforts to enhance data sharing. For

example, for the past several years, the Statistics 2000 task

force—composed of members from the major statistical agencies—has

worked with OMB and Congress in developing proposals for enhanced data

sharing. However, we found that data sharing among federal agencies was

limited by the provisions designed to protect the confidentiality of

individual data providers. The guideline also states that federal agencies

should, when possible and appropriate, cooperate with state and local

statistical agencies in the provision of subnational data. We found that the

four agencies cooperated with state and local governments to the extent

necessary to obtain the subnational data they needed.

Data Sharing Limited by

Confidentiality Statutes

According to the NAS guideline:

“Data sharing and statistical uses of administrative records make a statistical agency more

effective as well as efficient.”

The issue of data sharing among federal agencies for statistical purposes

has been a long-standing and complicated problem. Because the federal

statistical system is decentralized, different agencies are sometimes

responsible for the various stages of statistics production. For example,

Census conducts the Current Population Survey, which is the source of

the nation’s monthly unemployment estimates, but BLS calculates and

releases these estimates. Decentralization also results in different

agencies’ obtaining data from the same source; for instance, both Census

and the Department of Agriculture survey farm owners.

However, agency confidentiality provisions discussed earlier that permit

data to be seen only by the employees of a single agency present a

formidable barrier to meeting the data sharing envisioned by the NAS

guideline. In some instances, to comply with confidentiality requirements,

agencies must duplicate the work being done by other agencies. For

example, the National Agricultural Statistics Service of the Department of

Agriculture must compile its own list of farms because it does not have

access to the list of farms compiled by Census for conducting the

agricultural census. Similarly, other agencies are not allowed access to

Census’ Standard Statistical Establishment List for statistical sampling

purposes. Because of provisions limiting access to Census records, other

statistical agencies at times have had only limited access to data the

agencies had paid Census to collect. While BLS and BEA have recently been

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Selected Guidelines, With Some Exceptions

allowed more access to these data from the Census Bureau, the problem

still exists for other statistical agencies, including NCHS.

Over the past decade, OMB has sought legislative changes that would allow

greater sharing of data and information on data sources among agencies,

but its efforts have met with little success. The Paperwork Reduction Act

of 1980 gave the Director of OMB the authority to direct a statistical agency

to share information it had collected with another statistical agency.

However, this authority was limited since it did not apply to information

that was covered by laws prohibiting disclosure outside the collecting

agency. In the early 1980s, the statistical agencies, under OMB’s leadership,

tried to further enable federal statistical agencies to share data. They

attempted to synthesize, in a single bill, a set of confidentiality policies

that could be applied consistently to all federal agencies or their

components that collected data for statistical purposes. This effort, known

as the “statistical enclave” bill, would have allowed statistical agencies to

exchange information under specific controls intended to preserve the

confidentiality of the data providers. A bill was introduced in Congress but

was not enacted.

During the Bush administration, OMB drafted legislation that would have

permitted disclosure of information to statistical agencies on a

case-by-case basis and only for statistical purposes. The legislation was

not introduced in Congress.

Some recent laws that established new statistical agencies or data

requirements do permit data sharing among federal statistical agencies.

The confidentiality provisions of the laws that created the National

Agricultural Statistics Service11 and the National Center for Education

Statistics12 allow these agencies to share their data with other agencies as

long as confidentiality is maintained. The National Agricultural Statistics

Service, for example, has used its statutory authority to facilitate data

exchange agreements with Census. Similarly, to improve the quality of

data on foreign direct investment in the United States, the Foreign Direct

Investment and International Financial Data Improvements Act of 1990

required BEA and Census to share data and required BEA to provide data to

BLS to develop establishment-level information on foreign direct

investment in the United States. The act stipulated that the agencies

maintain the confidentiality of data providers.

11See 7 U.S.C. 2276.

12See 20 U.S.C. 1221e-1.

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The National Performance Review (NPR) recommended the elimination of

legislative barriers to the exchange of business data among federal

statistical agencies, and we agree with this recommendation.13 The NPR

recommendation does not address the sharing of information on

individuals. The NAS guideline on data sharing does not distinguish

between data on businesses and data on individuals. Some officials of

statistical agencies and Members of Congress, however, have argued that a

distinction should be made between the sharing of business data and the

sharing of personal data about individuals. They note that breaches of

confidentiality protection for personal information may be more serious.

Federal Agencies’ Contact

With State and Local

Governments to Cooperate

in the Collection and

Dissemination of Data

Varies

According to the NAS guidelines:

“When possible and appropriate, federal statistical agencies should cooperate with state

and local statistical agencies in the provision of data for subnational areas.”14

Each of the four agencies had cooperative arrangements with state and

local governments for obtaining and disseminating statistical data.

However, the extent and nature of these relationships differed by agency.

BEA received most of the data necessary for its estimates on the domestic

economy from other federal agencies and, as a result, had less direct

contact with state agencies. BEA’s contacts with state and local

governments were entirely focused on data dissemination. BEA provides

state and county personal income estimates to over 200 state offices that

disseminate the data to users within each state. BEA also makes its

long-term regional projections of employment available before they are

finalized to state planning offices to aid them in preparing their own

projections.

Census has extensive contact with state and local governments to

cooperate in both disseminating and obtaining data. Census makes data

available to state and local governments through designated State Data

Centers at state statistical agencies or universities. Census also relies

13See Management Reform: GAO’s Comments on the National Performance Review’s

Recommendations (GAO/OCG-94-1, Dec. 3, 1993), p. 23.

14The NAS guidelines also note that statistical agencies should cooperate with foreign and

international agencies to exchange information and to develop common classifications and procedures

to promote international comparability of information. Because international cooperation is not

relevant to all of the agencies that are the subject of this review, we did not include a discussion of this

aspect of the guidelines in this report. However, in our previous work at Census and BEA, we found

several instances where these agencies worked with foreign and international statistical agencies. For

example, BEA and Census have been working with foreign statistical agencies through the United

Nations to develop a system of national accounts that would conform with international guidelines.

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heavily upon state governments as data sources for data needed for

population estimates, apart from the decennial census, and obtains

financial and employment data from state and local governments for the

economic census (including the Census of Governments) as well as for

current economic reports. It also obtains comments from state and local

governments on preliminary decennial census counts. Census does not,

however, provide funding to state and local governments for any of the

assistance they provide.

NCHS has extensive contact with states to cooperate in collecting and

disseminating health statistics. NCHS relies heavily on states for

health-related information from birth, death, and marriage certificates. In

1995, NCHS provided $12.9 million to states to support their health

statistical systems. NCHS also works with the states to develop designated

state centers for health statistics that collect and disseminate data, but it

does not provide direct funding for these centers.

BLS has had extensive contacts with states since 1917 when BLS

inaugurated its current employment statistics program. This program

encouraged states to develop their own statistical offices to standardize,

increase coverage of, and prevent duplication of data on the part of federal

and state governments. BLS relies on states to collect data for the Labor

Market Information program and the Occupational Safety and Health

Statistics program. BLS provides guidance, training, and federal funds for

operational expenses. BLS’ fiscal year 1995 budget proposed purchasing

$80.8 million in statistical services from state and local governments.

A Strong Measure of

Independence

This NAS guideline emphasizes that statistical agencies must be

independent in order to assure users that the data they produce are free

from political interference and policy advocacy. The NAS guideline on

independence states:

“Circumstances of different agencies may govern the exact form independence takes. Some

aspects of independence, not all of which are required, are the following:

— independence mandated in organic legislation or encouraged by organizational

structure. In essence, a statistical agency must be distinct from the enforcement and

policy-making activities carried out by the department in which the agency is located. To

be credible, a statistical agency must clearly be impartial. It must avoid even the

appearance that its collection and reporting of data might be manipulated for political

purposes or that individually identifiable data might be turned over for administrative,

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regulatory, or enforcement purposes.

— independence of the agency head and recognition that he or she should be

professionally qualified. Appointment by the President with approval by the Senate, for a

specific term not coincident with that of the administration, strengthens the independence

of an agency head. Direct access to the secretary of the department or head of the

independent agency in which the statistical agency is located is important.

— broad authority over scope, content, and frequency of data collected, compiled, or

published. Most statistical agencies have broad authority, limited by budgetary restraints,

departmental pressures, Office of Management and Budget (OMB) review, and

congressional mandates.

— primary authority for selection and promotion of professional staff.

— recognition by policy officials outside the statistical agency of its authority to release

statistical information without prior clearance.

— authority for statistical agency heads and qualified staff to speak on the agency’s

statistical program before Congress, with congressional staff, and before public bodies.

— adherence to predetermined schedules in public release of important economic or other

indicator data to prevent manipulation of release dates for political purposes.

— maintenance of a clear distinction between the release of statistical information and the

policy interpretations of such statements by the secretary of the department, the President,

or others.”

Since the guideline states that agencies need not meet all the aspects to be

independent, we generally examined how each agency safeguards its

independence. We found that for each agency laws and/or regulations

existed to protect the agency’s independence. However, we found that BEA

has had problems in one of the most important aspects of this

guideline—avoiding the appearance that its data are subject to

manipulation. Although we found no evidence that BEA’s data have been

subject to political manipulation, BEA at times has had to address

allegations that the data were politically tainted.

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Agencies Generally

Complied With Most

Aspects of the

Independence Guideline

Legislative mandates and organizational placement afford a degree of

independence to each of the four agencies. Each agency is organizationally

distinct from its department’s enforcement and policymaking activities.

Officials from each of the four agencies told us that the agencies were not

directly involved in their respective department’s policymaking or

program implementation. However, the agencies differ in their

organizational placement within their parent departments, ranging from

BLS at the highest organizational level to NCHS several levels lower. We

were unable to establish whether the level of organizational placement

affected the independence of the four statistical agencies.

The BLS Commissioner and the Census Director are appointed by the

president and confirmed by the Senate, while the directors of BEA and NCHS

are appointed within their respective departments and are not subject to

Senate confirmation. The BLS Commissioner reports directly to the

Secretary of Labor. Census and BEA are in the Economics and Statistics

Administration of the Commerce Department, and their directors report to

the Under Secretary in charge of that Administration. NCHS is a division of

the Centers for Disease Control and Prevention of the Public Health

Service, which are all within the Department of Health and Human

Services. From its inception in 1977 until 1987, NCHS was placed in the

Office of the Assistant Secretary for Health. Some observers argue that a

statistical agency is more appropriately placed at an assistant secretary

level, primarily because this is a higher level within the department and

can exercise more budgetary control. We were unable to determine the

amount of access the four agency heads had to the secretaries of the

departments in which their agencies are located.

According to members of the CNSTAT panel that wrote the guidelines, BLS

served as a model for CNSTAT in fashioning those aspects of the guideline

dealing with the process for appointing agency heads. The BLS

Commissioner is appointed by the president, confirmed by the Senate, and

has a 4-year term, which is renewable. The fact that the Commissioner can

be reappointed has helped BLS maintain its continuity of leadership over

the years. The previous Commissioner, who was appointed in 1979, served

three terms until December 1991. Since its inception in 1884, BLS has had

only 11 commissioners.

The Census Director is appointed by the president and confirmed by the

Senate, but the term traditionally has been concurrent with

administrations, and the director has served at the “pleasure of the

President.” The Director of NCHS is a career position and not a presidential

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appointment. The BEA Director also is a career position and is appointed

by the Under Secretary of Commerce for Economic Affairs.

Although the NAS guideline indicates that independence is best ensured

when a statistical agency head is appointed by the president and

confirmed by the Senate, BEA and NCHS have benefited from the continuity

of having career directors, particularly BEA. Throughout its history, BEA has

had stable leadership from career civil servants who have been experts in

the field of economic statistics. BEA’s first Director was also Director of

BEA’s predecessor, the Office of Business Economics, and he served from

1950 to 1964. The second BEA Director served from 1964 to 1985. The third

Director served until 1992, and the fourth Director, who left office this

year, previously served as Deputy Director.

In contrast to BEA, the recent experiences of Census and BLS illustrate that

presidential appointment and confirmation procedures can take a year or

longer, leaving an agency without a formal head for extended periods of

time. For example, for the last 15 years Census has had an acting director

for 42 months (23 percent of the time); in the last 5 years, Census has had

an acting director for 23 months (38 percent of the time). The position of

Director of the Census Bureau was vacant from January 1993 until

October 1994. Similarly, BLS was without a Commissioner from the

previous Commissioner’s retirement in December 1991 until the current

Commissioner’s confirmation in October 1993. Currently, BEA and NCHS

have acting directors.

The recent heads of the four agencies have professional qualifications for

their positions. Each had advanced degrees in statistics, economics, or

other relevant fields (e.g., medicine). Each also came from a profession

that entails extensively dealing with statistical data and measurement

issues.

Congress is a major user of the statistics produced by all four of the

agencies. The heads of the agencies testify before congressional

committees about the results of their statistical activities and to explain

their budget requests. The agency heads also appear regularly at user

conferences to discuss aspects of their statistical programs.

As the NAS guideline indicates, one of the ways in which the federal

statistical system can guard against the perception of political interference

is by carefully controlling the release of important statistical data. The

release of economic statistical data produced by Census, BLS, and BEA is

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governed by OMB Statistical Policy Directive No. 3. (Because NCHS produces

health and not economic data, it is not subject to this policy directive.)

Statistical Policy Directive No. 3 provides guidance to federal statistical

agencies on the compilation, release, and evaluation of principal federal

economic indicators. The directive establishes the authority of the

agencies to release statistical information without prior clearance or

policy interpretations. Procedures established by this directive were

designed to ensure that key economic data that are the basis for

government and private sector actions and plans are released promptly

and on a regular schedule, that no one benefits from “inside” access to the

data before they are available to the public, and that there is public

confidence in the integrity of the data. Also, the directive does not limit the

authority of the agencies over the scope, content, and frequency of

economic data collected, compiled, or published.

Statistical Policy Directive No. 3 has established procedures to protect

against manipulation of the timing or content of major economic data. The

procedures are also designed to defend against accusations of political

interference.15

NCHS also controls the release of its data, makes the data available through

the National Technical Information Service, and publishes its data in other

federal publications (e.g., Census’ Statistical Abstracts).

Each December, OMB publishes a schedule of the major economic

statistical releases for the next year. For example, OMB has announced

release dates for quarterly data, such as the GDP and personal income,

before the beginning of each calendar year. The agencies responsible for

economic statistics provide the information on release schedules to OMB in

accordance with the directive. Because most major federal statistics are

released according to a set schedule, the four statistical agencies do not

need to seek clearance from policy officials in their respective

departments. Similarly, these release schedules help to maintain a

distinction between the four agencies’ statistical releases and the policy

interpretations of the statistics by department or administration officials.

The four agencies, for the most part, adhere to the other aspects of this

guideline. According to officials from each of the agencies, their agencies

have some authority over the scope, content, and frequency of data

collection, compilation, or publication. However, this authority is limited

15See GAO/GGD-93-58, March 10, 1993, p. 24.

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by budgetary constraints and federal regulations, such as those intended

to reduce paperwork burdens on businesses and individuals. Officials

from the four agencies also noted that the heads of their agencies had

primary authority for selection and promotion of professional staff.

Accusations of Political

Interference Occasionally

Occur

Data such as those issued by the four agencies shed light on economic and

social conditions prevailing in the country. The press and public use these

data as indicators of the impact of the policies of the administration in

office. Political leaders recognize this impact and have occasionally

considered attempting to control the release of statistical data in

advantageous ways. It is therefore important that the data released by

statistical agencies not be manipulated for political purposes nor tainted

by a perception that such manipulation may have occurred. However, we

noted in our 1993 report16 that some BEA and BLS actions may have

contributed to the perception of interference.

In this 1993 report, we examined how BEA had come to be falsely accused

of manipulating economic data and how it dealt with these allegations.

The incident began in October 1991 when an article appearing in Barron’s

alleged that BEA, in order to inflate the first quarter 1991 GDP for political

purposes, did not incorporate BLS’ downward revision of employment

levels into its estimates of state personal income growth. Another Barron’s

article appeared in December 1991 asserting that BEA increased other

components of the GDP to ensure that there was no economic impact from

the employment revision in the GDP. Through the rest of 1991 and 1992, the

press continued to raise questions and concerns about the integrity and

accuracy of BEA’s economic statistics as well as BLS employment data.

Our 1993 review revealed no evidence of political interference or

manipulation of the first quarter GDP estimates. We found that BEA had

properly incorporated employment revisions in its GDP estimates. We also

noted that both BEA and BLS followed their standard data release policies

and that the integrity of the GDP statistics was sound. However, we

concluded that BEA had not adequately publicly documented or explained

its procedures for incorporating employment data into its GDP estimates.

We also concluded that BEA had not responded to the allegations when

they first occurred, which fueled suspicions that the estimated GDP had

been manipulated. We recommended that BEA formulate a strategy to

provide better explanation and documentation of its procedures to general

16See GAO/GGD-93-58, March 10, 1993, which contains an appendix on the chronology of events for

first quarter 1991 data.

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users and assure Congress and the general public of the integrity and

credibility of its estimates. Fulfilling this recommendation in May 1993, the

Director of BEA forwarded to the Secretary of Commerce “A Strategy to

Improve the Perceived Integrity of BEA’s Estimates.” This strategy calls for

BEA to communicate more clearly and widely about technical factors

affecting its estimates through a combination of new technical notes,

testimony, briefings, and availability of the Director to talk with the media.

This strategy is to include greater communication about BEA’s procedures

and safeguards to protect the independence and integrity of its statistical

estimates.

Conclusions All four statistical agencies generally followed most aspects of the NAS

guidelines discussed in this report. Each agency had a clear and

well-defined mission and procedures designed to enhance cooperation

with data users. Each agency had procedures to maintain the

confidentiality of data providers, inform respondents of data collection

rights and uses of the data, and minimize the time and effort asked of

respondents. In addition, each agency was open with data users in

describing the statistics available, methodology used, and related

information. We found that the four agencies had policies that generally

provided for the dissemination and preservation of their data.

One of the NAS guidelines calls for coordination among federal statistical

agencies. Although the four agencies generally followed this guideline,

coordination among federal agencies was sometimes hampered by legal

restrictions designed to protect the confidentiality of data providers. OMB

and the statistical agencies have unsuccessfully sought legislative changes

that would lessen data-sharing restrictions among federal agencies.

Finally, while each agency has policies and procedures to ensure its

independent authority to release statistical information, we found that a

statistical agency can sometimes communicate data in such a way that

may leave users with the misperception that the data had been

manipulated for political purposes.

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NAS’ guidelines focused on the principles and practices that NAS determined

were essential for the effective operation of federal statistical agencies.

However, these agencies do not carry out their statistical activities in

isolation but as part of an interdependent federal statistical system. An

interdependent system requires good coordination to operate effectively.

Such coordination is especially important considering funding limitations

faced by all federal agencies. Legislation requires that OMB, among other

responsibilities for the statistical system, coordinate the budgets of the

statistical agencies to ensure that the budgets conform to governmentwide

statistical priorities.

Federal Statistical

System Is a Large

Collection of

Interdependent

Agencies

Many of the agencies in the federal statistical system produce statistics to

aid only in the administration of mission-related programs for which they

are responsible. However, several, including the four agencies that are the

focus of this report, produce statistics as their primary missions. Since no

one agency is responsible for the collection and production of all of the

nation’s statistical needs, agencies often must work together to ensure that

these statistical needs are met efficiently. Thus, agencies that collect

information in a particular statistical area often must coordinate with the

agencies that analyze and disseminate this information. For example, BLS

relies on Census to conduct the monthly Current Population Survey from

which BLS derives monthly unemployment statistics. Similarly, although

the U.S. Customs Service collects information on the country’s imports

and exports, Census is responsible for analyzing and disseminating this

information as the nation’s merchandise trade statistics. The agencies of

the federal statistical system also must share the limited funds available

for performing statistical activities.

Agencies in the Federal

Statistical System Are

Financially Interdependent

The financial interdependence of the federal statistical system is

illustrated by the flow of funds among the four agencies and between

these and other agencies throughout the government. For example, NCHS

pays Census to conduct NCHS’ National Health Interview Survey, which is a

source of much of the health data that NCHS issues. Similarly, BLS pays

Census for a major part of the cost of the Current Population Survey,

which BLS uses to produce unemployment estimates. BEA relies greatly on

the data provided by BLS, Census, and other agencies to produce the

National Income and Product Accounts.1 OMB estimated in the President’s

1995 budget that federal agencies provided $467 million to the federal

1

The National Income and Product Accounts provides a statistical depiction of the production,

distribution, consumption, and saving undertaken in the U.S. economy.

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statistical agencies through reimbursements for statistical work, such as

conducting surveys. This amount represents about 15 percent of total

federal funding for the 72 statistical agencies. Moreover, these statistical

agencies were collectively budgeted $232.5 million, which is 9.1 percent of

their total direct funding, to purchase, through reimbursable agreements,

statistical services from each other. Figures 3.1 and 3.2 show fiscal year

1995 reimbursable services and purchases of statistical data, respectively,

as a percentage of total funding among the four agencies discussed in this

report.

Figure 3.1: Fiscal Year 1995

Reimbursable Services as a

Percentage of Total Funding Among

the Four Agencies

Percent

0

10

20

30

40

50

60

70

80

90

100

Census BLS BEA NCHS

Note: According to OMB budget-scoring rules, BLS’ reimbursable services includes $56.3 million

that it receives in Treasury trust funds for state cooperative agreements. Excluding these trust

funds would result in BLS’ reimbursable services being 3.8 percent of its total funding.

Source: OMB estimates.

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Figure 3.2: Fiscal Year 1995 Purchases

of Statistical Data as a Percentage of

Total Funding Among the Four

Agencies

Percent

0

10

20

30

40

50

60

70

80

90

100

Census BLS BEA NCHS

Source: OMB estimates.

Funding for Statistical

Activities Limited

In the past few years, limited funding has been available for all statistical

activities, and, as discussed earlier, some statistical agencies reimburse

other agencies for performing statistical services. Figure 3.3 shows actual

budgets for all federal statistical activities, including decennial censuses,

for the period from 1981 through 1995 in current dollars2

 for the year when

the budgets were approved and in constant 1995 dollars3

 to adjust for

inflation over time. Figure 3.4 shows the same information, excluding the

10-year cycle of spending for decennial censuses, which peaks during the

year the census is conducted. (The 10-year cycle of the decennial Census

of Population and Housing is not the only periodic cycle in the data.

Several other Census programs, such as the Economic Census and the

Census of Agriculture, are conducted on a 5-year cycle, including 1992.)

2

The term current dollars refers to the value of a good or service in terms of the time under

consideration, which reflects the then-prevailing prices of the good or service.

3

A constant dollar value is measured in terms of prices of a base period to remove the influence of

inflation. The resulting constant dollar value is the value that would exist if prices had remained the

same as in the base period.

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Figure 3.3: Actual Budgets for All Federal Statistical Activities From 1981 Through 1995 in Current and Constant Dollars

(Dollars in Millions)

0

500

1000

1500

2000

2500

3000

3500

4000

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95

Fiscal years

Current dollars

Constant dollars

Note 1: Constant dollars are in 1995 dollars.

Note 2: Amounts for 1994 and 1995 are estimated for both current and constant dollars.

Source: OMB data.

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Figure 3.4: Actual Budgets for All Federal Statistical Activities From 1981 Through 1995 in Current and Constant Dollars

Excluding Decennial Censuses (Dollars in Millions)

0

500

1000

1500

2000

2500

3000

3500

4000

81 82 83 84 85 86 87 88 89 90 91 92 93 94 95

Fiscal years

Current dollars

Constant dollars

Note 1: Constant dollars are in 1995 dollars.

Note 2: Amounts for 1994 and 1995 are estimated for both current and constant dollars.

Note 3: Totals include funding for the 5-year Agriculture and Economic Censuses. The total cost

for the 1992 Agriculture and Economic Censuses were $80 million and $162 million, respectively.

Source: OMB data.

Funding for federal statistical activities, excluding the 10-year large

spending cycle for decennial censuses, has increased in the past 10 years

in constant dollars, from $1,947 million in 1986 to an estimated

$2,508 million in 1995. However, the increase was less than the amount of

funding that federal statistical agency officials believed would have been

needed to adequately maintain the federal statistical system, given the

changes in the economy and society. In 1990, the Bush administration

introduced the Economics Statistics Initiative to improve the coverage and

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quality of economic statistics.4 In fiscal years 1993 and 1994, Census, BLS,

and BEA collectively received 51 percent of their requests for funds for

Economics Statistics Initiative work. In its 1993 budget message, the Bush

administration noted that, because parts of the Economics Statistics

Initiative were not funded by Congress, some statistical activities had to

absorb reductions in order to provide funding for limited improvements in

economic statistics. The message went on to state that further

improvements in economic statistics would require more resources.

The Clinton administration also supported improving economic statistics,

and its budget included improvement initiatives proposed by Census, BLS,

and BEA. In its fiscal year 1995 budget, the administration requested

$38.3 million in additional funding for economics statistics improvements.

The budget states:

“Our measurements of economic performance are perforated with gaps in areas of vital

importance, areas of public policy concern are poorly measured if measured at all, the data

gathering system imposes too great a workload on both the agencies that gather the data

and the firms that provide it, and the resulting product goes underutilized in a world in

which timely and accurate information is often the key to competitive business success.”

As a consequence, the budget proposed increases of $8.6 million for

Census, $17.2 million for BLS (including $5.2 million for its 10-year CPI

revision), $8.1 million for BEA, and $4.4 million for other statistical

agencies.

The two administrations requested a total of $94 million for fiscal years

1990 through 1994 for improving the quality and coverage of economic

statistics; Congress appropriated about $49 million.

OMB Is Responsible

for the Coordination

of the Federal

Statistical System

Budget

Because agencies often share responsibilities for the production of federal

statistics, it is important that they closely coordinate their efforts to the

extent permitted by law so that the quality of the end statistical product is

maintained. It is also important that the efforts of these agencies be

coordinated in order to avoid duplication and to ensure that the limited

funding available for statistical activities is used as effectively and

efficiently as possible. The Paperwork Reduction Act of 1980 assigned

responsibility for coordination of the federal statistical system to OMB.

Budget reviews are one way to ensure such coordination among statistical

agencies. The Statistical Policy Branch in OMB is responsible for, among

4

See Economic Statistics: Status Report on the Initiative to Improve Economic Statistics

(GAO/GGD-95-98, June 7, 1995).

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other responsibilities, coordinating the budgets of these agencies. The

Branch prepares a consolidated report on budgets for agency statistical

programs that have recently been submitted to Congress after it has begun

acting on individual agency budgets. In many respects, this is due to the

difficulty in determining resources allocated for statistical programs in the

60 or so agencies that are not primarily statistical in character.

Consequently, Congress has not had a current consolidated picture of

federal statistical activities during its budget deliberations that would

provide a basis for setting priorities and allocating funding accordingly.

The Paperwork Reduction Act of 19955

 reauthorizes OMB’s budget

coordination responsibilities for statistical activities.

OMB Is Responsible for

Coordinating Statistical

Budgets

OMB and its predecessor, the Bureau of the Budget, have been responsible

for oversight of the federal statistical system by coordinating federal

statistical agency budgets for decades. During the 1960s, OMB’s Statistical

Policy and Coordination Office had a staff of about 50 and was responsible

for setting statistical policy and budgetary priorities. The broad-based,

detailed budget reviews by the Bureau of the Budget, and later by OMB,

were in part intended to determine if agency budgets supported these

priorities. OMB also prepared an analysis of budgetary needs for the federal

statistical system that was included in the Presidents’ budgets when they

were submitted to Congress in January every year. The Statistical Policy

and Coordination Office at OMB was abolished in 1977, and its functions

and some staff were transferred to the Department of Commerce. While at

the Department of Commerce, staff attended OMB decision sessions, but

they had little input in decisionmaking. Before the functions were

transferred, the office employed 25 staff. In 1980, the Paperwork

Reduction Act returned to OMB the statistical policy and coordination

functions and the staff to carry them out. Currently, OMB’s Statistical Policy

Branch is responsible for these functions and has a professional staff of

five.6

 The act does not determine the number of employees needed to

carry out these functions. The former broad-based, crosscutting review of

statistical programs was not part of the budget process after the 1980 act

was implemented.

The need for strong oversight and coordination of the decentralized

federal statistical system was recognized in law by the enactment of the

5

P.L. 104-13.

6

For a detailed history, see Griffith, Jeanne E., “Oversight of Statistical Policy,” Office of Management

and Budget: Evolving Roles and Future Issues, Senate Committee on Governmental Affairs (Senate

Print 99-134, Feb. 1986), pp. 245-255.

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Paperwork Reduction Act of 1980.7 The act created the Office of

Information and Regulatory Affairs (OIRA) in OMB and assigned the Director

of OMB and the Administrator of OIRA the responsibility for overseeing the

federal statistical system and coordinating its activities. OIRA’s Statistical

Policy Branch functions include the following:

• developing and reviewing long-range plans for the improved coordination

and performance of federal statistical activities and programs;

• reviewing agencies’ budget proposals to ensure that the proposals are

consistent with the plans;

• coordinating the functions of the federal government that concern

gathering, interpreting, and disseminating statistical information;

• developing and implementing governmentwide policies, principles,

standards, and guidelines concerning data sources, data collection

procedures and methods, and data dissemination;

• evaluating statistical program performance and agency compliance with

governmentwide policies, principles, standards, and guidelines; and

• integrating these functions with other information resources management

functions of the government.

The Statistical Policy Branch is headed by a chief statistician who is

appointed by the Administrator of OIRA. The Statistical Policy Branch

currently has a professional staff of four working with the chief

statistician, whose professional responsibilities are divided as follows:

• An economist is responsible for economic statistics, statistical policy

directives, standard industrial classification, standard occupational

classification, and the definition of poverty and serves as the BEA

paperwork clearance desk officer.

• A mathematical statistician is responsible for methodology; natural

resource, energy, environment, and agriculture statistics; and statistical

legislation and serves as the Bureau of the Census’ economic surveys

paperwork clearance desk officer.

• A policy analyst is responsible for international statistical coordination;

health and education statistics; the Survey of Income and Program

Participation; the Branch’s annual report, Statistical Programs of the U.S.

Government; a schedule of release dates for principal economic

indicators; and classification of race and ethnicity.

• A statistician is responsible for demographic statistics, the decennial

census, metropolitan areas, and the Federal Committee on Statistical

7

P.L. 96-511.

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Methodology and serves as Census’ demographic surveys paperwork

clearance desk officer.

Previous Studies Cited

Concerns About OMB’s

Resources for Statistical

Coordination

The resources OMB devotes to carrying out its statistical policy

responsibilities have been a subject of controversy since the Paperwork

Reduction Act returned these responsibilities to OMB in 1980. Before the

act established the chief statistician position in OMB, a commission

appointed by President Carter to study the reorganization of the federal

statistical system recommended that the responsibility for coordinating

the system be placed in an office in the Executive Office of the President.

The commission further recommended that such an office should have a

staff of about 200 to carry out this coordinating function. After the act

returned responsibility for both policy and statistical coordination of the

federal statistical system to OMB, several members of the statistical

community voiced concern that the professional staff of five OMB assigned

to its Statistical Policy Branch lacked the capacity for such a challenging

task. For example, the Executive Director of President Carter’s

commission wrote in 1983 that:

“The greatest industrial nation in the world with the largest, most complex society and

economy now lacks effective capacity for central coordination of its statistical activities.

This is a crippling loss since ours is the most decentralized, if not fragmented, statistical

system in the industrial world.”8

In the decade since this statement was made, the controversy over the

ability of the Statistical Policy Branch to adequately coordinate the federal

statistical system has continued. According to an Office of Technology

Assessment report:

“Economic policy will require the best possible measure of the factors critical for growth

and an awareness of areas where uncertainty prevails. Serving the needs of policy makers

in a time of change will require a coordinated response of the Nation’s statistical agencies.

The present management of the statistical agencies makes such a response difficult.”9

In a 1991 report, NAS noted that in addition to budget and staffing

constraints, the interagency coordination of the federal statistical system

in the previous decade had suffered a reduction in its ability to draw on

8

Bonnen, Dr. James T., “Federal Statistical Coordination Today: A Disaster or a Disgrace?” The

American Statistician, Aug. 1983, vol. 37, no. 3.

9

Office of Technology Assessment, Statistical Needs for a Changing U.S. Economy (Washington, D.C.:

1989), p. 1.

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and integrate information from a range of databases, particularly

administrative records, and a lag in the reporting of the classification of

business categories, such as the service industry.10 NAS concluded that the

results of this reduction and lag were reductions in the timeliness,

quantity, and quality of policy-relevant data and an inaccurate portrayal of

the nation’s economy.

In a 1992 report, the Congressional Research Service (CRS) came to a

similar conclusion. It characterized the coordination of the federal

statistical system as “an opera without a conductor.”11 CRS stated that one

of the major barriers to coordinating the statistical system was OMB’s

insufficient funding to maintain adequate staff to carry out this

coordination responsibility. CRS noted that OMB’s responsibilities for the

oversight and coordination of the statistical system and those for the

reduction of paperwork competed against other OMB responsibilities for

funding and staff.

OMB Compiles Statistical

Agency Budgets

As part of its responsibility for coordinating the federal statistical system,

the Statistical Policy Branch is to coordinate the statistical agencies’

budget requests, which it does in detail for the 10 largest statistical

agencies. The budget process can be one of the primary tools for ensuring

that the nation’s statistical needs are being addressed effectively and

efficiently by federal statistical agencies. However, according to published

studies of OMB’s coordination role, including those by CRS, the Office of

Technology Assessment, and NAS, the Branch does not do the detailed,

systemwide budget reviews required by the act. These reviews are to

enable OMB to determine if the budgetary resources available for statistical

programs are being directed where they are most needed.

The Branch’s current role in coordinating federal statistical agency

budgets consists of reviewing budget submissions from the major

statistical agencies and coordinating with OMB Resource Management

Offices responsible for individual agency accounts to promote compliance

with the administration’s funding priorities for statistical agencies. The

Branch also reviews some other budget requests on an ad hoc basis

determined by the importance of the statistical product being funded. For

10Citro, Constance F. and Hanushek, Eric A., Improving Information for Social Policy Decisions: The

Uses of Microsimulation Modeling, National Academy Press (Washington, D.C.: 1991).

11Morrison, Sylvia, Federal Economic Statistics: Would Closer Coordination Make for Better Numbers?

(92-784E), Congressional Research Service, 1992.

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example, the Branch reviews budget requests relevant to data feeding into

National Income and Product Accounts estimates.

The Branch also compiles agency budget requests for an annual report to

Congress on funding for statistical activities. However, this report is

basically a compilation of the budgets for the statistical agencies approved

by Congress and the current budget requests that the administration sent

to Congress for statistical activities. The report is not the product of a

systematic review of statistical activities. Since the Branch was

established in 1981, it has delivered the report several months after the

individual statistical agencies have submitted their budgets to OMB and

then to Congress. According to OMB officials, the delay is attributable to

delays in getting necessary data from agencies whose statistical functions

are incorporated in other programs. The officials note that such data are

readily available for the approximately 10 agencies that are the major

components of the federal statistical system. Thus, congressional

committee deliberations have already begun or even, as in fiscal year 1995,

have ended before Congress has received the report. Therefore, Congress

has not had a current, comprehensive picture of all resources the

administration has requested for statistical activities during budget

deliberations. As a result, Congress is handicapped in its ability to direct

funding where it is most needed, particularly with respect to funding for

agencies that are not among the major statistical agencies.

As noted earlier, for a staff of five, the Statistical Policy Branch has broad

responsibilities. Consequently, according to Branch officials, the

Statistical Policy Branch is sometimes required to adjust its priorities on

the basis of such factors as the imposition of new administration

initiatives or a general shortage of staff.

Statistical Policy Branch officials told us that resources for federal

statistical activities could be allocated more effectively if a strengthened

process were instituted for reviewing statistical agency budgets. The

officials said that they would like OMB to reinstate its crosscutting review

of statistical agency budget requests to help the administration make any

necessary reallocation of resources within the federal statistical system.

Until 1978, such a review appeared when the president’s budget was

submitted to Congress. As the federal government continues to face

budget constraints, it is likely that there will be an increasing need to

reallocate the limited funding available for statistical activities. In a speech

at a recent symposium sponsored by BEA, the Vice Chairman of the Federal

Page 47 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 3 

Coordination of Statistical Agencies’

Budgets Is Limited

Reserve Board called for a reallocation of funding for statistical activities.12

He noted that as a policymaker, he recognized the importance of accurate

statistics on the economy. He went on to state that reallocating funding

resources could help close some of the gaps in economic statistics,

particularly gaps in statistics on the increasingly important service sector.

OMB is currently settling into a major reorganization, OMB 2000, that is

partly designed to encourage crosscutting reviews of federal programs. It

remains to be seen whether OMB 2000 or other actions will result in the

Statistical Policy Branch leading a crosscutting review that would

coordinate the analysis of statistical agency budget requests. The

Paperwork Reduction Act of 1995 reauthorizes (1) OMB review of statistical

agencies’ budget proposals to ensure that the proposals are consistent

with long-range plans and (2) the development of an annual report to

Congress summarizing and analyzing statistical activities. However, the act

does not necessarily provide additional staff to OMB to perform these

responsibilities.

Conclusions The federal statistical system is a collection of agencies with interrelated

responsibilities for meeting the nation’s statistical needs. For the federal

statistical agencies to work effectively, it is important that they closely

coordinate their activities. The Paperwork Reduction Act of 1980 assigned

OMB the responsibility for, among other things, coordinating the federal

statistical system. The act specifically directed OMB to review statistical

agencies’ budget submissions to ensure that the proposals are consistent

with systemwide priorities.

OMB’s Statistical Policy Branch currently reviews the major statistical

agencies’ budget submissions. It also prepares a summary of individual

agencies’ statistical budgets as submitted in the president’s budget to

Congress. Since the Branch was established in 1981, the report has been

issued after Congress has already started to determine the agencies’

budgets. To adequately coordinate the systemwide activities of federal

statistical agencies, OIRA would also need to closely review budget

submissions of the smaller statistical agencies before they are sent to

Congress. Such reviews could identify such inefficiencies as duplication of

effort and help to ensure that the limited federal funds for statistical

activities are spent as effectively as possible.

12Remarks by Alan S. Blinder, Vice Chairman of the Federal Reserve Board, before the Symposium on

Mid-Decade Strategic Review on Economic Accounts, reprinted in Regulation, Economics and Law,

Bureau of National Affairs, Washington, D.C.: (Mar. 21, 1995).

Page 48 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Chapter 3 

Coordination of Statistical Agencies’

Budgets Is Limited

OMB’s current reorganization is intended to improve its ability to review

federal programs. Recent legislation also addresses OMB’s responsibilities.

Because of the reorganization, recent legislation, and the fact that we did

not analyze the many other priorities competing for OMB’s attention and

resources, we are not making any recommendations in this report.

Page 49 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Appendix I 

Listing of Federal Statistical Agencies With

Budgets for Statistical Activities of $500,000

or More

Department Agency

Agriculture Economic Research Service 

Foreign Agricultural Service 

Food and Nutrition Service 

Forest Service

Human Nutrition Information Service 

National Agricultural Statistics Service 

Soil Conservation Service

Commerce Bureau of Economic Analysis 

Bureau of the Census

International Trade Administration

National Marine Fisheries Service

National Oceanic and Atmospheric Administration

Office of Business Analysis

Defense Army Corps of Engineers 

Defense Manpower Data Center 

Office of the Secretary of Defense,

 Deputy Assistant Secretary for Administration

Education National Center for Education Statistics

Energy Energy Information Administration

Office of Energy Research 

Federal Energy Regulatory Commission 

Office of the Assistant Secretary for Environment, Safety

 and Health

Health and Human Services Administration for Children and Families

Agency for Health Care Policy and Research 

Administration on Aging 

Substance Abuse and Mental Health Services

 Administration 

Agency for Toxic Substance and Disease Registry 

Centers for Disease Control and Prevention 

National Center for Health Statistics

Health Care Financing Administration 

Health Resources and Services Administration 

Indian Health Service 

National Institutes of Health (16 components reporting) 

Office of the Assistant Secretary for Planning and

 Evaluation 

Social Security Administration

Housing and Urban

Development

Community Planning and Development

Office of the Assistant Secretary for Housing

Office of the Assistant Secretary for Policy Development

 and Research

Office of Fair Housing and Equal Opportunity

Interior Bureau of Mines 

United States Fish and Wildlife Service 

Minerals Management Service 

National Park Service 

United States Geological Survey

(continued)

Page 50 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Appendix I 

Listing of Federal Statistical Agencies With

Budgets for Statistical Activities of $500,000

or More

Department Agency

Justice Bureau of Justice Statistics 

Bureau of Prisons 

Drug Enforcement Administration 

Federal Bureau of Investigation

Immigration and Naturalization Service

Labor Bureau of Labor Statistics 

Employment Standards Administration

Employment and Training Administration 

Mine Safety and Health Administration 

Occupational Safety and Health Administration

Transportation Bureau of Transportation Statistics 

Federal Aviation Administration 

Federal Highway Administration 

Federal Transit Administration 

Maritime Administration 

National Highway Traffic Safety Administration 

Office of the Secretary of Transportation 

Research and Special Programs Administration

Treasury United States Customs Service 

Internal Revenue Service 

Statistics of Income Division

Veterans Affairs Department of Veterans Affairs

Other Agency for International Development 

Consumer Product Safety Commission

Equal Employment Opportunity Commission 

Environmental Protection Agency

National Aeronautics and Space Administration

National Science Foundation

Small Business Administration

Source: OMB.

Page 51 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Appendix II 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

James M. McDermott, Assistant Director

Patrick R. Mullen, Evaluator-in-Charge

Edward J. Laughlin, Senior Evaluator

Kiki Theodoropoulos, Communications Analyst

Page 52 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Appendix II 

Major Contributors to This Report

Page 53 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Appendix II 

Major Contributors to This Report

Page 54 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Related GAO Products

Economic Statistics: Status Report on the Initiative to Improve Economic

Statistics (GAO/GGD-95-98, July 7, 1995).

Economic Statistics: Measurement Problems Can Affect the Budget and

Economic Policymaking (GAO/GGD-95-99, May 2, 1995).

Implementation of the National Performance Review’s Recommendations

(GAO/OCG-95-1, Dec. 5, 1994).

Measuring U.S.-Canada Trade: Shifting Trade Winds May Threaten Recent

Progress (GAO/GGD-94-4, Jan. 19, 1994).

Management Reform: GAO’s Comments on the National Performance

Review’s Recommendations (GAO/OCG-94-1, Dec. 3, 1993).

Decennial Census: Focused Action Needed Soon to Achieve Fundamental

Breakthroughs (GAO/T-GGD-93-32, May 27, 1993).

Gross Domestic Product: No Evidence of Manipulation in First Quarter

1991 Estimates (GAO/GGD-93-58, Mar. 10, 1993).

Census Reform: Major Expansion in Use of Administrative Records for

2000 is Doubtful (GAO/T-92-54, June 26, 1992).

Decennial Census: Opportunities for Fundamental Reform (GAO/T-GGD-92-51,

June 10, 1992).

Decennial Census: 1990 Results Show Need for Fundamental Reform

(GAO/GGD-92-94, June 9, 1992).

Formula Programs: Adjusted Census Data Would Redistribute Small

Percentage of Funds to States (GAO/GGD-92-12, Nov. 7, 1991).

1990 Census: Reported Net Undercount Obscured Magnitude of Error

(GAO/GGD-91-113, Aug. 22, 1991).

Expanding the Role of Local Governments: An Important Element of

Census Reform (GAO/T-GGD-91-46, June 15, 1991).

1990 Census Adjustment: Estimating Census Accuracy—A Complex Task

(GAO/GGD-91-42, Mar. 11, 1991).

Page 55 GAO/GGD-95-65 Guidelines and Coordination of Budgets
Related GAO Products

The Decennial Census: Potential Risks to Data Quality Resulting From

Budget Reductions and Cost Increases (GAO/T-GGD-90-30, Mar. 27, 1990).

1990 Census: Overview of Key Issues (GAO/GGD-89-77BR, July 3, 1989).

Decennial Census: Local Government Uses of Housing Data

(GAO/GGD-87-56BR, Apr. 8, 1987).

Status of the Statistical Community After Sustaining Budget Reductions

(GAO/IMTEC-84-17, July 18, 1984).

(243038) Page 56 GAO/GGD-95-65 Guidelines and Coordination of Budgets
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