GAO

United States General Accounting Office

Report to the Chairman, Committee on 

Governmental Affairs,

U.S. Senate

April 1999 PERFORMANCE 

BUDGETING

Initial Experiences 

Under the Results Act 

in Linking Plans With 

Budgets

GAO/AIMD/GGD-99-67

United States

General Accounting Office

Washington, D.C. 20548 Letr

Page 1 GAO/AIMD/GGD-99-67 Performance Budgeting

GAO

Accounting and Information

Management Division Letr

B-282035 Letter

April 12, 1999

The Honorable Fred Thompson

Chairman

Committee on Governmental Affairs

United States Senate

Dear Mr. Chairman:

The Government Performance and Results Act of 1993 (the Results Act) 

seeks to strengthen federal decision-making and accountability by focusing 

on the results of federal activities and spending. A key expectation is that 

the Congress will gain a clearer understanding of what is being achieved in 

relation to what is being spent. To accomplish this, the act requires that, 

beginning for fiscal year 1999, agencies prepare annual performance plans 

containing annual performance goals covering the program activities in 

agencies’ budget requests. In addition, Office of Management and Budget 

(OMB) guidance states that agency performance plans should display, by 

program activity, the funding level being applied to achieve performance 

goals.1 Plans that meet these expectations can provide the Congress with 

useful information on the performance consequences of budget decisions.

Our assessment of fiscal year 1999 performance plans found that agencies 

generally covered the program activities in their budgets, but most plans 

did not identify how the funding for those program activities would be 

allocated to performance goals.2

 To enhance the Congress’ understanding 

of issues that may affect agencies’ abilities to relate budgetary resources 

and results, you requested that we review selected fiscal year 1999 

performance plans to (1) describe agencies’ approaches to linking 

performance goals and budgetary resources, (2) examine characteristics 

that might be associated with different approaches to linking performance 

goals and budgetary resources, and (3) identify implications for future 

efforts to clarify the relationship between budgetary resources and results. 

More clearly describing and analyzing the approaches agencies developed 

to link funding requests with performance expectations can be an 

1OMB Circular A-11, Preparation and Submission of Budget Estimates, Sec. 220.9(e), June 23, 1997. 

2

Managing for Results: An Agenda to Improve the Usefulness of Agencies’ Annual Performance Plans

(GAO/GGD/AIMD-98-228, September 8, 1998). For a discussion of key practices for improving the usefulness of annual performance plans, see Agency Performance Plans: Examples of Practices That Can 

Improve Usefulness to Decisionmakers (GAO/GGD/AIMD-99-69, February 26, 1999).
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important foundation as the Congress reviews agencies’ fiscal year 2000 

performance plans.

To respond to your request, we selected 35 fiscal year 1999 performance 

plans for review that covered entire agencies or large subordinate bureaus, 

services, or administrations.3

 We developed a methodology to characterize 

each plan’s structure and method of linking program activities and 

performance goals, and we gathered information on each agency’s budget 

structure. We also identified agency plans in which program activity 

funding was allocated to performance goals—a key criterion for useful 

plans.4

 We analyzed how characteristics differed among agencies that 

made such allocations and those that did not to determine which, if any, of 

the characteristics were statistically significant in making these 

allocations. We provided a draft of this report to OMB for comment and 

also discussed selected aspects of this report with staff from the Senate 

and House appropriations committees. See appendix I for a detailed 

discussion of our objectives, scope, and methodology.

Results in Brief In their first Results Act performance plans, agencies experimented with a 

variety of approaches to connect budget requests with anticipated results. 

Although most agencies reviewed (30 of 35) defined some type of 

relationship between the program activities of their proposed budgets and 

the performance goals of their plans, far fewer (14 or 40 percent of the 

plans reviewed) translated these relationships into budgetary terms—that 

is, most plans did not explain how funding would be allocated to achieve 

performance goals. Such allocations are a critical first step in defining the 

performance consequences of budgetary decisions. We found that 

agencies with budget and planning structures of widely varying complexity 

made these allocations, but some common approaches were used. 

Agencies were significantly more likely to have allocated funding to 

program activities if they (1) showed simple, clear relationships between 

program activities and performance goals (as illustrated by eight agencies 

3We generally focused on bureau-level plans for each department but limited our review to the three 

largest bureaus with discretionary spending over $1 billion and/or the two largest bureaus. For a list of 

plans reviewed, see table I.1 in appendix I.

4

While an allocation of funding requests to performance expectations is important, plans must also 

have other attributes to be fully useful. In addition to showing the performance consequences of budget 

decisions, useful plans need to contain results-oriented goals, clear strategies, and credible 

performance information. See GAO/GGD/AIMD-98-228, September 8, 1998 and GAO/GGD/AIMD-99-69, 

February 26, 1999.
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in our review); (2) fully integrated performance plans into congressional 

budget justifications (as illustrated by five agencies); or (3) had changed 

their program activity structures to reflect their goal structures (as 

illustrated by three agencies). 

Agencies’ first-year experiences show progress in bringing planning and 

budgeting structures and presentations closer together, but much remains 

to be done if performance information is to be more useful for budget 

decision-making. Continued efforts are needed to (1) clarify and 

strengthen links between planning and budgeting structures and 

presentations and (2) address persistent challenges in performance 

planning and measurement and cost accounting. The progress that has 

been made, the challenges that persist—including the indefinite delay in 

the performance budgeting pilots called for by the act—and the Congress’ 

interest in having credible, results-oriented information underscore the 

importance of developing an agenda to ensure continued improvement in 

showing the performance consequences of budgetary decisions. 

Therefore, we recommend that the Director of OMB assess the linkages 

between performance goals and program activities presented in the fiscal 

year 2000 plans and develop a constructive and practical agenda to further 

clarify the relationship between budgetary resources and results.

The Results Act and 

Performance 

Budgeting

The Government Performance and Results Act of 1993 is a key component 

of a statutory framework that the Congress put in place during the 1990s to 

promote a new focus on results.5

 Finding that waste and inefficiency in 

federal programs were undermining confidence in government, the 

Congress sought to hold federal agencies accountable for the results of 

federal spending through regular and systematic performance planning, 

measurement, and reporting. Among its several purposes, the act is 

designed to improve congressional decision-making by providing more 

objective information on the relative effectiveness and efficiency of federal 

programs and spending. That is, with regard to spending decisions, the act 

aims for a closer and clearer link between the process of allocating 

resources and the expected results to be achieved with those resources. 

5

For a fuller discussion of this framework, see Managing for Results: The Statutory Framework for 

Performance-Based Management and Accountability (GAO/GGD/AIMD-98-52, January 28, 1998).
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The Concept of 

Performance Budgeting

The concept of linking performance information with the budget is 

commonly known as performance budgeting.6

 Within the past 50 years, 

initiatives at the local, state, and federal levels of government as well as in 

other nations have sought to link performance expectations with specific 

budget amounts. In essence, the concept of performance budgeting 

assumes that a systematic presentation of performance information 

alongside budget amounts will improve budget decision-making by 

focusing funding choices on program results. Specifically, performance 

budgeting seeks to shift the focus of attention from detailed items of 

expense—such as salaries and travel—to the allocation of resources based 

on program goals and measured results. In this sense, the Results Act is the 

most recent of a series of federal initiatives embodying concepts of 

performance budgeting. 

At the federal level and elsewhere, performance budgeting initiatives have 

encountered many challenges.7

 Key challenges include a lack of credible 

and useful performance information, difficulties in achieving consensus on 

goals and measures, dissimilarities in program and fund reporting 

structures, and limitations of information and accounting systems. For 

example, some prior initiatives used new and unfamiliar formats that were 

layered onto existing budget and appropriations processes, compromising 

the goal of integrating performance information into the budget process. 

Specifically in the federal government, past performance budgeting 

initiatives resulted in unique and often voluminous presentations 

unconnected to the structures and processes used in congressional budget 

decision-making.8

When viewed collectively, these past initiatives suggest three common 

themes. First, any effort to link plans and budgets must explicitly involve 

the executive and legislative branches of our government. Past initiatives 

often faltered because the executive branch developed plans and 

performance measures in isolation from congressional oversight and 

6

In this report, we use the term “performance budgeting” to refer generally to the process of linking 

expected results to budget levels, but not to any particular approach.

7See Performance Budgeting: State Experiences and Implications for the Federal Government

(GAO/AFMD-93-41, February 17, 1993). For a discussion of past federal initiatives—including the 

Planning-Programming-Budgeting-System (PPBS) and Zero-Based Budgeting (ZBB)—and the evolution 

of the concept and techniques of performance budgeting, see Performance Budgeting: Past Initiatives 

Offer Insights for GPRA Implementation (GAO/AIMD-97-46, March 27, 1997). 

8

See GAO/AIMD-97-46, March 27, 1997. 
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resource allocation processes. Second, the concept of performance 

budgeting will likely continue to evolve. Past initiatives demonstrated that 

there is no single definition of performance budgeting that encompasses 

the range of needs and interests of federal decisionmakers. Third and 

perhaps most importantly, past initiatives showed that performance 

budgeting cannot be viewed in simplistic terms—that is, resource 

allocation cannot be mechanically linked to results. The process of 

budgeting is inherently an exercise in political choice—allocating scarce 

resources among competing needs—in which performance information 

can be one, but not the only, factor underlying decisions. Ultimately, the 

promise of any performance budgeting initiative, including the Results Act, 

lies in its potential to more explicitly infuse performance information into 

budgetary deliberations, thereby changing the terms of debate from simple 

inputs to expected and actual results.

Performance Budgeting 

Under the Results Act

The Results Act differs from earlier performance budgeting initiatives in 

several key respects but can be viewed as a continued evolution of the 

concept.9

 At its most basic level, the act requires agencies’ annual 

performance plans to directly link performance goals and the program 

activities of their budget requests. Testifying on the Results Act before its 

passage, the Director of OMB characterized this linkage as a “limited—but 

very useful—form of performance budgeting . . . .”10 The act also requires 

that another form of performance budgeting be tested during performance 

budgeting pilots. 

The Results Act requires an agency’s annual performance plan to cover 

each program activity in the President’s budget request for that agency. 

Subject to clearance by OMB and generally resulting from negotiations 

between agencies and appropriations subcommittees, program activity 

structures are intended to provide a meaningful representation of the 

operations financed by a specific budget account. Typically, the President’s 

annual budget submission encompasses over 1,000 accounts and over 3,000 

program activities. As the committee report accompanying the act noted, 

however, the program activity structure is not consistent across the federal 

9See GAO/AIMD-97-46, March 27, 1997.

10Government Performance and Results Act of 1993, Committee on Governmental Affairs, United 

States Senate, S. Rpt. No. 58, 103d Cong. 1st Sess., p. 19 (1993).
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government but rather is tailored to individual accounts.11 The committee 

report further cautioned that agencies’ annual plans should not be 

voluminous presentations that overwhelm rather than inform the reader. 

Accordingly, the act gives agencies the flexibility to consolidate, aggregate, 

or disaggregate program activities, as illustrated in figure 1, so long as no 

major function or operation of the agency is omitted or minimized. In 

addition to this flexibility, agencies also have the option to propose 

changing their budget structures, subject to concurrence from OMB and 

the Congress.12

Figure 1: Using the Results Act’s Flexibility to Align the Annual Performance Plan 

With the Budget Account and Program Activity Structure

aThese activities are created through disaggregation and would not necessarily appear in the list of 

program activities presented in the President’s budget.

11S. Rpt. No. 103-58, p. 31.

12OMB Circular A-11, Sec. 11.6(c), June 23, 1997.

Program activity 3

 Activity 3.1a

 Activity 3.2a

Performance goal 1

Performance goal 2

Performance goal 4

Performance goal 3

Consolidation

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Budget account 1

Program activity 1

Program activity 2

Program activity 4

Budget account 2

Program activity 1

Aggregation

Disaggregation
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OMB’s guidance regarding this provision of the act set forth an additional 

criterion: plans should display, generally by program activity, the funding 

level being applied to achieve performance goals.13 That is, OMB expected 

performance plans to show how amounts from the agency’s budget request 

would be allocated to the performance goals displayed in the plan.14 

In addition to mandating a linkage between budget requests and 

performance plans, the act required that pilot projects be used to test 

another approach to performance budgeting. OMB, in consultation with 

the head of each agency, was required to designate for fiscal years 1998 and 

1999 at least five agencies to prepare budgets that “present, for one or more 

of the major functions and operations of the agency, the varying levels of 

performance, including outcome-related performance, that would result 

from different budgeted amounts.”15 While the act required agencies to 

define goals consistent with the level of funding requested in the 

President’s budget, the act’s pilots would also show how performance 

would change if the agency received more or less than requested. OMB 

was to include these pilot performance budgets as an alternative 

presentation in the President’s budget for fiscal year 1999 and to transmit a 

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

the feasibility and advisability of including a performance budget as part of 

the President’s budget. This report is also to recommend whether 

legislation requiring performance budgets should be proposed.

The performance budgeting pilots were scheduled to start in fiscal year 

1998 “so that they would begin only after agencies had sufficient 

experience in preparing strategic and performance plans, and several years 

of collecting performance data.”16 In this context, and recognizing the 

importance of concentrating on governmentwide implementation in 1998, 

OMB announced on May 20, 1997, that the pilots would be delayed for at 

least a year. OMB stated that the performance budgeting pilots would 

require the ability to calculate the effects on performance of marginal 

changes in cost and funding. According to OMB, very few agencies had this 

capability, and the delay would give time for its development. In 

13OMB Circular A-11, Sec. 220.9(e), June 23, 1997.

14Subsequently, in its guidance on fiscal year 2000 plans, OMB noted that it expected to see “significant 

progress in associating funding with specific performance goals or sets of goals” in agencies’ plans.

1531 U.S.C. 1119(b).

16S. Rpt No. 103-58, p. 38.
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September 1998, OMB solicited agencies’ comments on these pilots, but no 

agencies have been designated as pilots. At present, OMB has no definite 

plans for proceeding with the performance budgeting pilots.

Agencies Linked 

Complex Planning and 

Budgeting Structures 

Using Many 

Approaches

The complexities that are the hallmark of today’s federal budget account 

structure and the diverse planning structures associated with broad federal 

missions were reflected in the approaches used to link budget and planning 

structures. The fiscal year 1999 performance plans we reviewed frequently 

depicted complex and imprecise relationships between these structures. 

Using the Results Act’s flexibility to aggregate, consolidate, and 

disaggregate existing program activities, most agencies generally linked 

their program activities to some level of a frequently complex planning 

hierarchy. These linkages were often presented in a performance plan that 

was separable from the agency’s budget justification. As a result, plans 

frequently depicted a relationship between program activities and 

performance goals that, while consistent with the act’s charge to cover 

program activities, proved difficult to translate into budgetary terms. 

However, 14, or 40 percent of the agencies we reviewed, built on these 

relationships to show how the funding from program activities would be 

allocated to achieve discrete sets of performance goals. These agencies, in 

effect, took the first step toward defining the performance consequences of 

budget decisions. 

The Complexity of Budget 

and Planning Structures

As we have previously reported, the federal government’s budget account 

structure was not created as a single, integrated framework but rather 

generally developed over time to respond to specific needs.17 As a result, 

budget accounts and program activities within the accounts vary from 

agency to agency. This complexity was evident for agencies included in 

this review. For example, the number of budget accounts associated with a 

given agency’s performance plan ranged from a low of 1 to a high of 118 for 

the agencies we reviewed, while the number of program activities to be 

covered by the plan ranged from 6 to 465. The median number of accounts 

for agencies that we reviewed was 9, and the median number of program 

activities was 32. Typically, program activity structures were unique not 

only to each of the agencies in our review, but also to each of the budget 

accounts within an agency. In only 2 agencies—EPA and the Department 

17Budget Account Structure: A Descriptive Overview (GAO/AIMD-95-179, September 18, 1995).
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of Defense—were the same program activity titles repeated across all or 

groups of an agency’s budget accounts. 

Agencies’ planning structures were similarly complex, comprised of widely 

varying numbers and layers of goals. The Results Act and OMB guidance 

give agencies flexibility in structuring strategic and annual performance 

goals. Annual performance goals are expected to measure progress in 

achieving longer term strategic goals. There is no required format or 

structure and no limitation on the number of goals that can be included in a 

performance plan. Our sample of performance plans presented a variety of 

planning structures and many different terms to describe those structures. 

Twenty-one of the 35 agencies we reviewed used a cascading hierarchy of 

goals to put their fiscal year 1999 performance in context—that is, these 

plans placed one or more layers of goals between their strategic and annual 

performance goals. For example, the Bureau of Land Management (BLM) 

plan contained a complex hierarchy of goals: 5 “General Goals,” supported 

by 17 “Strategic Goals,” that were supported by 43 “Performance Goals,” 

47 “Long-Term Goals,” and, finally, 64 fiscal year 1999 “Annual Goals.” 

Figure 2 shows the numbers and layers of goals associated with one of 

BLM’s five general goals. The remaining 14 agencies, however, had fewer 

layers of goals. For example, the U.S. Agency for International 

Development’s (USAID) six strategic goals were supported directly by 

performance goals with fiscal year 1999 targets. Figure 3 presents the 

performance goals associated with one of USAID’s strategic goals.
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Figure 2: BLM’s Fiscal Year 1999 Performance Plan Presents Many Goal Layers

Source: GAO analysis based on BLM’s fiscal year 1999 performance plan.

Strategic goals

Long-Term goals

BLM mission: To sustain the health, diversity, and productivity of the

public lands for the use and enjoyment of present and future generations

General goals

Annual goals

Performance goals

1.01. Provide opportunities for

environmentally responsible

recreation

1.02 1.03 1.04 1.05

 1.01.01. Manage outdoor recreation

activities to achieve and maintain public

land health standards

1.01.02 1.01.03 1.01.04

1.01.01.01. Encourage outdoor recreational users to

be better stewards for protecting BLM public lands

and waters by using multimedia environmental

education and interpretative information

1.01.01.02

1. By Sept. 30, 1999, increase

number of recreation sites in “good

condition” by 20 percent over 1997

2 3 4

1. Serve current

and future publics 2 3 4 5 6
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Figure 3: USAID’s Fiscal Year 1999 Performance Plan Links Strategic Goals Directly to Performance Goals

Source: GAO analysis based on USAID’s fiscal year 1999 performance plan.

To analyze these disparate planning structures, we developed and used a 

common framework that defined two layers of goals above the annual 

performance goals stated in the performance plans: (1) strategic goals, to 

reflect the first goal layer under an agency’s mission statement and (2) 

strategic objectives, to reflect the next subordinate level of goals under 

strategic goals.18 We found that, quantifying just these two layers, most 

agency plans involved relatively complex presentations. The number of 

strategic goals in plans we reviewed ranged from 1 to 47, with a median of 

5. Just over half of the agencies in our review placed an intervening layer 

of strategic objectives between strategic and performance goals. In plans 

Strategic goals

Performance goals

1. Broad-based economic

growth and agricultural

development encouraged

2 3 4 5 6

USAID mission: To contribute to the U.S. national interests by supporting the people of

developing and transitional countries in their efforts to achieve enduring economic and

social progress and to participate more fully in resolving the problems of their

countries and the world.

1. Average annual growth

rates in real per capita

income above 1 percent

2 3 4 5

18For our definitions of strategic goal and strategic objective, see characteristics six and seven in table 

I.2 of appendix I.
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where strategic objectives were used, the number of strategic objectives 

ranged from 5 to 122. Across our sample of agency plans, the median 

number of strategic objectives used was nine.

Variety of Approaches to 

Linking Budget and 

Planning Structures

The variety and complexity of agencies’ planning and budget structures 

necessarily resulted in a range of approaches to present and link this 

information. However, across this range, two approaches predominated: 

29 performance plans were presented separately from congressional 

budget requests, and 22 plans established complex linkages of multiple 

program activities related to multiple performance goals.

Although performance plans and budget requests—commonly referred to 

as justifications of estimates—are both transmitted to the Congress 

following the President’s budget submission in February, most agencies 

kept their plans physically separated from their budget submissions, either 

as entirely separate documents or as separate components appended to the 

justifications.19 Only 6 of the 35 plans we reviewed had been fully 

integrated into the agency’s budget justification (see appendix II). 

In addition to separating plans and budgets, almost all agencies retained 

the budget structure they had used in previous budget submissions. Only 

three agencies in our review—EPA, the Customs Service, and the Nuclear 

Regulatory Commission (NRC)—substantially changed their program 

activity structures, and all cited the Results Act as a factor in this change. 

Some others—such as the Bureau of Indian Affairs (BIA) and the 

Department of Veterans Affairs (VA)—noted that such changes were under 

consideration but proposed no changes in fiscal year 1999. For example, 

BIA stated that it would work with OMB and congressional committees 

to “simplify the budget format to mirror the strategic plan.”20 However, 

agencies very frequently took advantage of the act’s flexibility to 

modify—that is, to aggregate, consolidate, or disaggregate—program 

activities in order to show linkages with performance goals. The extent to 

which this flexibility was used varied greatly. For example, figure 4 

illustrates how the Administration for Children and Families (ACF) 

consolidated program activities before relating them to performance goals. 

19See appendix I for a discussion of how we categorized the degree of integration between agencies’ 

budget justifications and performance plans.

20BIA fiscal year 1999 performance plan, p. 2.
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Figure 5 illustrates how the Health Resources and Services Administration 

(HRSA) linked some performance goals to disaggregated program 

activities. 

Figure 4: The Administration for Children and Families Uses Consolidation to Link 

Program Activities to Strategic Objectives

Note: Dollars in millions. Numbers may not total due to rounding.

Source: GAO analysis based on Administration for Children and Families fiscal year 1999 performance 

plan and Budget of the United States Government Fiscal Year 1999—Appendix.

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Family support payments to states

account

1. State child support administrative

costs ($2,749)

2. Federal incentive/ hold harmless

payments to states ($469)

3. Access and visitation grants ($10)

4. Payments to territories

5. Repatriation

6. Aid to families with dependent children

benefit payments

7. Emergency assistance

Children’s research and technical

assistance account

1. Federal parent locator service ($30)

2. Training and technical assistance

3. Child welfare study

4. Welfare research

5. Evaluation of welfare to work

6. Evaluation of abstinence education

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Strategic goal:

Increase economic independence and

productivity for families

 Strategic objective:

 Increase parental responsibility ($3,257)

 Performance goals:

• Increase the paternity establishment percentage

among children born out-of-wedlock to 96 percent

• Increase the percentage of cases having child

support orders to 74 percent

• Increase the collection rate for current support

to 70 percent

• Increase the percentage of paying cases among

arrearage cases to 46 percent

• Increase the cost-effectiveness ratio (total dollars

collected per dollar of expenditures) to $5.00
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Figure 5: The Health Resources and Services Administration Uses Disaggregation 

to Link Program Activities to Sets of Performance Goals

Note: Dollars in millions.

Source: GAO analysis based on Health Resources and Services Administration’s fiscal year 1999 

performance plan and Budget of the United States Government Fiscal Year 1999—Appendix. 

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Strategic goals:

 1. Eliminate health care disparities

 2. Eliminate barriers to care

 3. Assure quality

Performance goals:

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Health resources and

services account

20 program activities including:

HIV/AIDS

Activity 1: AIDS emergency

relief grants ($490)

Activity 2: HIV care grants to

states ($670)

Activity 3: HIV early

intervention services ($86)

• Increase the number of clients served

by Title I grant programs by 7.5 percent

• 3 other performance goals

• Increase the number of clients receiving

anti-retro viral therapy to 57,500

• 5 other performance goals

• Increase by 5 percent the number of

clients receiving primary care services

• 4 other performance goals

4 other activities
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In addition to modifying or proposing changes to program activities, 

agencies in our review used three principal strategies to meet the Results 

Act’s expectation that annual plans would “establish performance goals to 

define the level of performance to be achieved by a program activity.”21 

• About half (13) of the agencies that made linkages22 between 

performance goals and program activities in their performance plans 

established this connection at the relatively high level of strategic goals 

or objectives. For example, as shown in figure 4, ACF linked 

consolidated program activities to strategic objectives, which, in turn, 

were subsequently associated with performance goals.

• About the same number of agencies (14) defined direct linkages to 

performance goals. Figure 5 illustrates how HRSA linked disaggregated 

program activities directly to its performance goals.

• Three agencies—the National Aeronautics and Space Administration, 

the National Science Foundation, and VA—linked program activities to 

something other than a statement of strategic goals, strategic objectives, 

or performance goals. For example, the VA plan contained 17 strategic 

goals and 25 strategic objectives. However, instead of linking program 

activities directly to these goals and objectives, VA linked both its 

program activities and performance goals to its 10 business lines. The 

business lines generally represented different agency functions such as 

medical care and education.

As the above discussion indicates, regardless of the strategy used, most 

agencies ended with the same basic relationship—many program activities 

were related to many performance goals (see appendix II). These 

imprecise, “many-to-many” relationships frequently resulted from agencies’ 

linking aggregated or consolidated program activities with strategic goals 

or other groupings of performance goals. For example, in figure 4, ACF 

consolidated program activities and linked them to the group of 

performance goals associated with a strategic objective, creating a manyto-many relationship between program activities and performance goals. 

In contrast, eight plans used a more direct and simple approach—typically 

linking a single program activity with multiple performance goals. Figure 5 

2131 U.S.C. 1115(a)(1).

22In addition, we could not determine linkages between program activities and performance goals from 

information provided in the performance plans of the following 5 agencies: the Department of Defense, 

the Immigration and Naturalization Service, the National Institutes of Health, the Rural Housing Service, and the Social Security Administration.
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shows that HRSA linked a single disaggregated program activity to multiple 

performance goals.

While 30 of 35 plans defined some relationship between program activities 

and performance goals, 16 of these did not build on that relationship by 

showing how the funding from program activities would be allocated to 

discrete sets of performance goals.

• Ten of these 16 plans did not present funding levels for any set of 

performance goals in their performance plans.

• Six of these 16 plans presented funding levels for some set of 

performance goals without explaining how those funding levels had 

been derived from program activities in their budget requests.

However, 14 agency plans, or 40 percent of those included in our review, 

both identified the funding for program activities and explained how that 

funding would be allocated to a discrete set of performance goals.23 In 

effect, these 14 plans, which will be discussed more fully in the next 

section, took the first step in defining the performance consequences of 

budget decisions.

Funding Was Allocated 

to Performance Under 

a Variety of Conditions 

But Using Some 

Common Approaches 

Our review of selected fiscal year 1999 performance plans indicated that 

agencies with budget and planning structures of widely varying complexity 

were able to develop approaches toward achieving a fundamental purpose 

of the Results Act—clarifying the relationship between resources and 

results. Figure 6 lists the 14 agencies in our review that allocated program 

activity funding to performance goals in their performance plans. We 

found that some of the approaches that these agencies used, alone or in 

combination, were more frequently associated with plans that linked 

program activity funding to performance goals. For example, agencies that 

(1) established simple relationships between program activities and 

performance goals or (2) fully integrated budget justifications and 

performance plans were significantly24 more likely to allocate program 

activity funding to performance goals. In addition, each of the three 

23The set of goals ranged in size and scope. For example, some of these plans presented allocations of 

funding to strategic goals or objectives, which represented discrete sets of performance goals.

24When “significant” is used in this report, we are referring to statistical significance at or around the 95 

percent confidence level. This significance means that we can be 95 percent certain that the association we find in our sample is not due to chance or random variation.
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Page 17 GAO/AIMD/GGD-99-67 Performance Budgeting

agencies that changed their budget structures to align them with their 

planning structures made these allocations. Conversely, plans 

characterized by imprecise, many-to-many relationships between 

performance goals and program activities and plans presented separately 

from budget justifications generally did not present such allocations.

Figure 6: Agencies Allocating Program Activity Funding to Performance Goals in 

Fiscal Year 1999 Annual Performance Plans

Source: GAO analysis.

Allocations Were Made 

Within a Variety of Planning 

and Budgeting Structures 

But Alignment of These 

Structures Was Significant

Our review generally found few differences in the budget structures of 

agencies that allocated program activity funding to performance goals and 

those that did not. For example, the number of an agency’s accounts or 

program activities was not significantly related to whether a plan presented 

funding allocations for performance goals. As table 1 shows, for example, 

the median number of accounts and program activities was nearly the same 

for agencies that did allocate program activity funding to performance 

goals and for those that did not. 

• Department of Energy

• Customs Service

• Environmental Protection Agency

• Food and Nutrition Service

• Internal Revenue Service

• Nuclear Regulatory Commission

• Small Business Administration

• Administration for Children and Families

• Employment and Training Administration

• Federal Bureau of Investigation

• Health Resources and Services Administration

• National Aeronautics and Space Administration

• Office of Personnel Management

• U. S. Agency for International Development
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Page 18 GAO/AIMD/GGD-99-67 Performance Budgeting

Table 1: Complexity of Budget Structure Was Not Significant in Allocating Funding 

to Performance Goals

Source: GAO analysis.

We also considered whether plans that allocated program activity funding 

to performance goals were more frequently associated with agencies 

having spending concentrated in one account. To determine if 

concentration of spending was a significant factor, we calculated the 

number of agencies for which 75 percent or more of requested spending 

was associated with a single account. Again, no significant relationship 

was observed (see figure 7). Four, or 36 percent, of the agencies with 

spending concentrated in one account allocated program activity funding 

to performance goals. Ten, or 42 percent, of the agencies with spending 

concentrated in multiple accounts allocated program activity funding to 

performance goals.

Low High Median

Agencies that allocated funding

Number of accounts 2 33 7

Number of program activities 6 119 32

Agencies that did not allocate funding

Number of accounts 1 118 10

Number of program activities 9 465 32
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Page 19 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 7: Concentration of Requested Spending Was Not Significant in Allocating 

Funding to Performance Goals

Source: GAO analysis.

Similarly, the complexity of an agency’s program activity structure was not 

a significant factor in allocating funding to performance goals. We 

considered whether a simpler program activity structure—that is, one in 

which program activity titles were repeated across budget accounts—was 

more frequently associated with allocating funding to performance goals. 

We found no significant difference in the number of agencies allocating 

7

4

14

10

0

2

4

6

8

10

12

14

Number of agencies

Did not allocate funding

Allocated funding

Spending concentrated

in one account

 Spending concentrated in

multiple accounts
B-282035

Page 20 GAO/AIMD/GGD-99-67 Performance Budgeting

program activity funding to performance goals. Thirteen, or 39 percent of 

the 33 agencies without common program activity structures, allocated 

program activity funding to performance goals (see figure 8). Although 

only two agencies—EPA and the Department of Defense—exhibited 

common program activity structures, EPA presented such an allocation 

and DOD did not.

Figure 8: Commonalities Within Agencies’ Program Activity Structures Were Not 

Significant in Allocating Funding to Performance Goals

Source: GAO analysis.

Although a particular account and program activity structure was generally 

not associated with allocating funding to performance goals, there was one 

significant but perhaps unsurprising exception. All three of the agencies 

20

13

1 1

0

2

4

6

8

10

12

14

16

18

20

Number of agencies

Did not allocate funding

Allocated funding

Uncommon program

activity structure

 Common program

activity structure
B-282035

Page 21 GAO/AIMD/GGD-99-67 Performance Budgeting

that proposed changing their program activities to be consistent with their 

planning structures—EPA, NRC, and the Customs Service—allocated 

funding to performance goals (see figure 9). For example, EPA proposed a 

uniform program activity structure across all of its accounts in which each 

program activity represented one of its strategic goals. Figure 10 illustrates 

how EPA used consolidation to allocate program activity funding to 

strategic objectives and their supporting performance goals.

Figure 9: Alignment of Budget and Planning Structures Was Significant for 

Allocating Funding to Performance Goals 

Source: GAO analysis.

Number of agencies

0

5

10

15

20

25

Did not allocate funding

Allocated funding

Used fiscal year

1998 structure

 Changed

structure

21

0

11

3
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Page 22 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 10: EPA Proposed Aligning Budget and Planning Structures

Note: Dollars in millions.

Source: GAO analysis based on EPA’s fiscal year 1999 performance plan and Budget of the United 

States Government Fiscal Year 1999—Appendix. 

Fourteen agencies in our review that showed how program activities were 

allocated to performance goals did not appear to have any common 

structural elements in their performance plans. Differences in plan 

complexity—defined in terms of number and layers of goals—were not 

significant between agencies that allocated program activity funding to 

performance goals and those that did not. As indicated in table 2, the 

median number of strategic goals and objectives was the same or similar 

between these two groups of plans.

$4

$13

$5

(3$ VWUDWHJLF JRDOV

VWUDWHJLF REMHFWLYHV DQG

SHUIRUPDQFH JRDOV

Strategic goal: clean air

Strategic objective: acid rain ($22)

Performance goals:

• Maintain 4 million tons of sulfur

dioxide reductions from utility sources

• Maintain 300,000 tons of nitrogen

oxides reductions from coal-fired utility

sources

• Launch the nitrogen oxides Emissions

and Allowance Tracking System for the

Ozone Transport Region

(3$ EXGJHW DFFRXQWV DQG

SURJUDP DFWLYLWLHV

Science and technology account

1. Clean air ($137)

2. Clean water

3. Safe food

4. Preventing pollution

5. Waste management

6. Global and cross border

7. Right to know

8. Sound science

9. Credible deterrent

Environmental programs and

management account

1. Clean air ($169)

• Other program activities corresponding to

EPA’s other strategic goals (similar to above)

State and tribal assistance grants

account

1. Clean air ($201)

• Other program activities corresponding to

EPA’s other strategic goals (similar to above)
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Page 23 GAO/AIMD/GGD-99-67 Performance Budgeting

Table 2: Planning Structure Was Not a Significant Factor for Agencies That 

Allocated Program Activity Funding to Performance Goals

Source: GAO analysis.

Two Approaches to Linking 

Budget and Planning 

Structures Were Significant

Although the complexity of an agency’s budget and planning structures 

generally was not significantly related to whether it linked program activity 

funding to performance goals, two approaches to linking these structures 

were. These approaches were (1) establishing simpler relationships 

between program activities and performance goals and (2) fully integrating 

budget justifications and performance plans. Whether used alone or in 

combination, these approaches were more frequently associated with 

agencies that were able to show the performance consequences of budget 

decisions.

A significant difference in allocating program activity funding to 

performance goals existed between agencies in which the performance 

plan was integrated with the agency’s budget justification and agencies in 

which the performance plan was not integrated. Agencies whose plans 

were fully integrated with the budget justification nearly always (five of six 

such plans) allocated program activity funding to performance goals (see 

figure 11). Conversely, about two-thirds, or 20 of the 29 agencies whose 

plans could be physically separated from the budget justification, did not 

allocate program activity funding to performance goals. For example, 

figure 12 shows how information traditionally contained in a budget 

justification, such as descriptions of accounts and their funding, was 

combined with performance information in the Internal Revenue Service’s 

(IRS) integrated budget justification and performance plan.

Low High Median

Agencies that allocated funding

Number of strategic goals 3 10 5

Number of strategic objectives 0 55 7

Agencies that did not allocate funding

Number of strategic goals 1 47 5

Number of strategic objectives 0 122 10
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Page 24 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 11: Integrating Budget and Planning Documents Was Significant for 

Allocating Funding to Performance Goals

Source: GAO analysis.

Number of agencies

20

9

1

5

0

2

4

6

8

10

12

14

16

18

20

Did not allocate funding

Allocated funding

Plan separable

from the budget

Plan fully integrated

with the budget
B-282035

Page 25 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 12: The Internal Revenue Service Integrates Its Budget Justification and 

Performance Plan

aIRS noted that this is a projection for budget purposes and is not used in the agency’s business review.

Note: Dollars in millions.

Source: GAO analysis based on the Internal Revenue Service’s fiscal year 1999 performance plan. 

We also found that plans showing a simpler relationship between program 

activities and performance goals were significantly more likely to show 

how funding was allocated to performance goals (see figure 13). That is, in 

all agencies in which the relationship between program activities and 

performance goals could be characterized as one-to-many or many-to-one, 

program activity funding was allocated to performance goals. For 

example, figure 14 shows that the allocation of funding to performance 

goals in the NRC plan was essentially automatic because each of the 

agency’s program activities generally align with a strategic goal and its 

supporting performance goals. However, where relationships were less 

precise—that is, when multiple program activities were related to multiple 

performance goals—allocations of program activity funding to 

performance goals were less common.

3URFHVVLQJ $VVLVWDQFH DQG

0DQDJHPHQW $FFRXQW 

Program activity:

submission processing

($888)

Performance measure:

Number of individual

refunds issued will equal

93.3 milliona

Performance measure:

Refund timeliness--paper

40 days

5 other performance

measures

Performance goal #1:

Improve customer service

Functions: This activity provides for the salaries, benefits, and related

costs to process tax returns and supplemental documents, account for tax

revenues, issue refunds and tax notices, develop and print tax returns and

publications . . . . Also included are resources to: process information

returns such as wage, dividend, and interest statements; provide for

payment of refunds . . . identification of possible non-filers for investigation;

and, provide tax returns for audits . . . .

Performance goal #2:

Increase compliance

Performance measure:

211.8 million primary returns

processeda

Performance goal #3:

Increase productivity

Performance measure:

19.5 percent of individual

returns filed electronically

Performance measure:

78.2 percent of dollars

received electronically

Performance measure:

70.9 percent dollars

received via third party

processors
B-282035

Page 26 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 13: Simple Relationships Between Program Activities and Performance 

Goals Were Significant for Allocating Funding to Performance Goals

Source: GAO analysis.

Number of agencies

0

2

4

6

8

10

12

14

16

Did not allocate funding

Allocated funding

16

6

0

8

Complex

relationship

 Simple

relationship
B-282035

Page 27 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 14: The Nuclear Regulatory Commission Aligns Budget and Planning 

Structures to Create a Simple Relationship Between Program Activities and 

Performance Goals

Note: Dollars in millions.

Source: GAO analysis based on Nuclear Regulatory Commission’s fiscal year 1999 performance plan 

and Budget of the United States Government Fiscal Year 1999—Appendix.

As indicated by the agencies profiled in the figures above, approaches that 

were individually significant in allocating funding were often used in 

combination. In fact, 6 of the 14 plans that allocated program activity 

funding to performance goals used two or more of the approaches 

identified above. For example, of the three agencies that changed their 

program activity structures, two either presented simple relationships 

between program activities and performance goals or fully integrated their 

performance plans and budget justifications.

The 21 plans in our review that did not allocate funding to discrete sets of 

performance goals were also generally characterized by common features. 

These plans (1) did not reflect any significant change in the agency’s 

account or program activity structures, (2) generally were separable from 

the justification of estimates, and (3) presented either no explicit 

15& VWUDWHJLF JRDOV DQG

SHUIRUPDQFH JRDOV

Strategic goal: nuclear reactor safety ($211)

Performance goals:

• Goal I.A - zero civilian nuclear reactor accidents

• Goal I.A.1 - maintain low frequency of events which

could lead to a severe accident

• Goal I.B - zero deaths due to radiation or

radioactivity releases from civilian nuclear reactors

• Goal I.B.1 - zero significant radiation exposures due

to civilian nuclear reactors

Strategic goal: nuclear materials safety ($49)

Performance goals:

• Goal II.A - zero radiation-related deaths due to

civilian use of source, byproduct, and special nuclear

materials

• Goal II.A.1 - no increase in the number of significant

radiation exposures due to loss or use of source,

byproduct, and special nuclear materials

• Goal II.A.1.a - no increase in the number of losses

of licensed material as reported to Congress annually

• Goal II.A.1.b - no accidental criticality involving

licensed material

• Goal II.A.2 - no increase in the number of

misadministration events which cause significant

radiation exposures

15& EXGJHW DFFRXQWV DQG

SURJUDP DFWLYLWLHV

Salaries and expenses account

 1. Nuclear reactor safety ($211)

 2. Nuclear materials safety ($49)

 3. Nuclear waste safety

 4. Common defense and security and

 international involvement

 5. Protecting the environment

 6. Management and support
B-282035

Page 28 GAO/AIMD/GGD-99-67 Performance Budgeting

relationship or a many-to-many relationship between performance goals 

and program activities. These features were a hallmark of plans that did 

not inform users of the performance consequences of budget decisions.

First-Year Experiences 

Demonstrate Progress 

and Continued 

Challenges

Our review of selected fiscal year 1999 performance plans presents a mixed 

picture. Certainly, some agencies were able to develop informative 

approaches to connect budgetary resources to results. These approaches 

are addressing some of the challenges that have plagued performance 

budgeting efforts prior to the Results Act. They can also be seen as the first 

step toward achieving a key objective of the act—a clearer understanding 

of what is being achieved for what is being spent. Paralleling these changes 

is growth in the Congress’ interest in performance information in its 

resource allocation and other oversight processes. Nevertheless, our 

review, as well as the delay of the performance budgeting pilots required by 

the act, indicates continuing challenges for achieving a clearer relationship 

between budgetary resources and results. 

A Year of Progress in 

Connecting Resources to 

Results

The fiscal year 1999 budget process marked an important beginning in 

more clearly showing the performance consequences of budget decisions. 

As indicated in the previous section, executive branch agencies developed 

a variety of approaches to link their performance plans and budget 

requests. But equally important, the Congress also showed an awareness 

of Results Act implementation efforts and a clear interest in obtaining 

credible performance information during its appropriations and oversight 

processes. 

Executive agencies have demonstrated that linking complex budget and 

planning structures demands adaptive approaches. The scope of the 

federal government’s missions, the variety of its organizational models, and 

the breadth of its processes—all subject to a multifaceted congressional 

oversight environment—suggest that many approaches will be developed 

to more clearly allocate requested funding levels to performance goals. 

Our review found that agencies reflecting the heterogeneity of the federal 

government—from direct service agencies (e.g., IRS) to agencies 

principally involved in grant or loan making (e.g., USAID) to regulatory 

agencies (e.g., NRC)—began to link budgetary resources and results. 

In the fiscal year 1999 performance plans, the agencies we reviewed 

developed several approaches to overcome a common problem of previous 

performance budgeting initiatives—planning structures and presentations 
B-282035

Page 29 GAO/AIMD/GGD-99-67 Performance Budgeting

that were unconnected to budget structures and presentations. These 

approaches include:

• changing budget structures to more closely align with performance 

plans. Three agencies proposed new program activities within existing 

budget accounts to generally reflect the strategic goals of their 

performance plan. These proposals sometimes facilitated a relatively 

simple relationship between program activities and performance goals 

that helped make connections clear.

• integrating performance information with budget justifications. In some 

cases, this took the form of fully integrating the performance plan with 

the agency’s budget justification, as in the IRS, the Customs Service, and 

the Federal Bureau of Investigation. Where plans were not fully 

integrated with budget justifications, some agencies used the 

justification to provide more detailed information on goals contained in 

their performance plan. For example USAID’s fiscal year 1999 budget 

justification contained “strategic support objectives” and “special 

objectives.” These objectives appear to further describe and support the 

performance goals expressed in USAID’s separate performance plan.

• crosswalking performance plans with budget structures. For example, 

ACF devised a crosswalk to identify the contribution of its over 60 

program activities to its 10 strategic objectives (see figure 4 for an 

excerpt from this crosswalk). The crosswalk identifies funding for 

accounts or program activities and—using consolidation and 

aggregation—relates an account or program activity to a strategic 

objective, and consequently, to the objective’s set of discrete 

performance goals. Account or program activity funding levels are 

summed to provide a proposed funding level for each strategic 

objective.

As executive agencies developed these approaches and presented their 

fiscal year 1999 budget submissions, the Congress also indicated an 

increasing interest in credible performance information to inform the 

resource allocation process.25 We reviewed fiscal year 1999 appropriations 

hearings and reports for the agencies in our review that allocated program 

25The Congressional Research Service recently documented the growth of congressional interest in 

performance information in its memorandum, “Performance Measure Provisions in the 105th Congress: 

Analysis of a Selected Compilation,” dated December 17, 1998. This analysis concluded “while the 

number of public laws with performance measure provisions nearly doubled from the 104th to the 105th 

Congresses, the number of committee reports containing performance measure provisions. . .nearly 

tripled.” 
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Page 30 GAO/AIMD/GGD-99-67 Performance Budgeting

activity funding to performance goals and observed that members of the 

Congress often made specific reference to the performance information 

contained in the agency’s justification and/or performance plan. Some 

notable examples include the following.

• ACF officials were questioned as to whether a 4 percent increase in 

children exiting foster care through reunification justified the 

appropriation being sought for these activities.26

• U.S. Customs Service officials were asked how the appropriations 

committee should evaluate performance and resource requirements for 

Customs’ marine mission, given an apparent lack of measures for its 

marine enforcement program.27

• NRC officials were asked what performance measures would be used to 

justify U.S. participation and funding in international nuclear safety 

programs and how requested budget increases were related to NRC’s 

mission.28

• Food and Nutrition Service officials presented data on the number of 

meals being served in the school lunch and breakfast programs and 

were asked how much additional budgetary resources would be needed 

to serve all eligible children.29

• The Conference Report on HUD’s Fiscal Year 1999 Appropriations 

directed the agency to revise its performance plan to incorporate 

measurable goals and outcomes for providing housing vouchers and 

certificates to assist families in transitioning from welfare to work.30

• A House Subcommittee on Appropriations was unwilling to recommend 

funding for a request for community-based technology centers in part 

26Departments of Labor, Health and Human Services, Education and Related Agencies for Fiscal Year 

1999, Hearings before a Subcommittee of the Committee on Appropriations, House of Representatives, 

105th Congress, 2d Sess., Pt. 2, p. 776.

27Treasury, Postal Service, and General Government Appropriations for Fiscal Year 1999, Hearings 

before a Subcommittee of the Committee on Appropriations, House of Representatives, 105th Congress, 

2d Sess., Pt. 1, p. 490.

28Energy and Water Development Appropriations for Fiscal Year1999, Hearings before a Subcommittee 

of the Committee on Appropriations, House of Representatives, 105th Congress, 2d Sess., Pt. 5, p. 1842.

29Agriculture, Rural Development, Food and Drug Administration, and Related Agencies 

Appropriations for Fiscal Year 1999, Hearings before a Subcommittee of the Committee on 

Appropriations, House of Representatives, 105th Congress, 2d Sess., Pt. 6, p. 399. 

30Making Appropriations for the Department of Veterans Affairs and Housing and Urban 

Development. . .for the Fiscal Year Ending September 30, 1999, Conference Report, Committee on 

Appropriations, House of Representatives, H. Rpt. No. 769, 105th Cong. 2d Sess. p. 237 (1998).
B-282035

Page 31 GAO/AIMD/GGD-99-67 Performance Budgeting

because specific performance measures for this new program were not 

presented.31

• The Treasury and General Government Appropriations Act of 1999 

stated that the Office of National Drug Control Policy could not obligate 

funds provided to continue its national media campaign until it 

submitted the evaluation and results of the campaign.32

Challenges Facing Future 

Performance Budgeting 

Efforts

Deliberations on agencies’ appropriations also indicate that making 

effective linkages between budget program activities and performance 

goals is one of many challenges that need to be addressed for performance 

information to be used in the budget process. Members of the Congress 

also questioned agencies about why goals were not more results-oriented 

and what steps were being taken to coordinate activities with other 

agencies. For example, Office of Personnel Management officials were 

asked if the agency’s performance plan could identify measures to help 

determine the agency’s progress toward a result of recruiting and retaining 

the federal workforce required for the 21st century. Members of the 

Congress were also concerned about agencies’ use of program evaluation 

and other techniques to ensure the validity and reliability of performance 

data. ACF officials were asked about their approach for evaluating the 

academic success of Head Start preschool participants after those students 

leave the program. 

These concerns demonstrate that agencies also need to adopt a broader 

agenda for improving performance plans that includes focusing on results, 

defining clear strategies, and improving their capacity to gather and use 

performance data. Translating the use of agency resources into concrete 

and measurable results will be a continual challenge that will require both 

time and effort on the part of the agency. The uneven pace of progress 

across government is not surprising; agencies are in the early years of 

undertaking the changes that performance-based management entails. 

Although some agencies, as indicated in our review, began to show the 

performance consequences of budget decisions, improvements can be 

made in the clarity and completeness of linkages between program 

activities and performance goals. Agencies must also balance the scope 

31Departments of Labor, Health and Human Services, and Education and Related Agencies 

Appropriation Bill, 1999, Committee on Appropriations, House of Representatives, H. Rpt. No. 635, 

105th Cong. 2nd Sess. p. 145 (1998).

32H.R. Conf. Rpt. No. 105-825 at 515 (1998).
B-282035

Page 32 GAO/AIMD/GGD-99-67 Performance Budgeting

and precision of funding estimates for performance goals with the 

usefulness of such estimates for resource allocation decisions. In addition, 

we believe weaknesses in the performance measurement systems 

described in agencies’ fiscal year 1999 performance plans need to be 

addressed.33

Linkages between plans and budgets must be supported by results-oriented 

and credible performance data to be useful. Our assessment34 of agencies’ 

fiscal year 1999 performance plans found most goals were focused on 

outputs, not outcomes. This presents a dilemma for future performance 

budgeting efforts. While outcome information is clearly useful for 

measuring performance, it may be more difficult to allocate funding to 

outcomes that are far removed from the inputs that drive costs. Allocating 

funding to outcomes presumes that inputs, outputs, and outcomes can be 

clearly defined and definitively linked. For some agencies, these linkages 

are unclear or unknown.35 For example, agencies that work with state or 

local governments to achieve performance may have difficulty specifying 

how each of multiple agencies’ funding contributes to an outcome. 

In addition to understanding how actions affect outcomes, allocating 

funding to outcomes also requires an ability to understand how costs are 

related to outcomes. Agencies are noting the importance of cost 

accounting and other management systems for success in allocating 

funding to performance.36 For example, the Department of Housing and 

Urban Development’s (HUD) fiscal year 1999 performance plan 

acknowledged that the agency “has no mechanism for tracking resources 

as they are applied to performance measures.”37 The plan noted that HUD 

33For additional discussion, see Major Management Challenges and Program Risks: A Governmentwide 

Perspective (GAO/OCG-99-1, January 1999), GAO/GGD/AIMD-98-228, September 8, 1998, and 

GAO/GGD/AIMD-99-69, February 26, 1999.

34See GGD/AIMD-98-228, September 8, 1998.

35Program evaluation is critical to understanding and isolating an agency’s impact on outcomes. For a 

discussion of performance measurement challenges, see Managing for Results: Measuring Program 

Results That Are Under Limited Federal Control (GAO/GGD-99-16, December 11, 1998), Program 

Evaluation: Agencies Challenged by New Demand for Information on Program Results

(GAO/GGD-98-53, April 24, 1998), and Managing for Results: Analytic Challenges in Measuring 

Performance (GAO/HEHS/GGD-97-138, May 30, 1997).

36Our recent Performance and Accountability series cited developing cost accounting systems as a key 

challenge in supporting the Results Act. See GAO/OCG-99-1, January 1999.

37HUD fiscal year 1999 performance plan, p. 6.
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Page 33 GAO/AIMD/GGD-99-67 Performance Budgeting

intends to develop a system that “will allow the Department to identify, 

justify, and match resource requirements for effective and efficient 

program administration and management.”38

Agencies are expected to develop such systems as they implement 

managerial cost accounting standards developed by the Federal 

Accounting Standards Advisory Board (FASAB).39 These standards 

require that agencies develop and implement cost accounting systems that 

can be used to relate the full costs of various programs and activities to 

performance outputs. Although these standards were originally to become 

effective for fiscal year 1997, the Chief Financial Officers (CFO) 

Council—an interagency council of the CFOs of major agencies—

requested the effective date be delayed for 2 years due to shortfalls in cost 

accounting systems. As FASAB recommended, the effective date was 

extended by 1 year, to fiscal year 1998, with a clear expectation that there 

would be no further delays. However, developing the necessary approach 

to gather and analyze needed program and activity-level cost information 

will be a substantial undertaking. While there is a broad recognition of the 

importance of doing so, for the most part agencies have just begun this 

effort. 

As discussed earlier in this report, agencies’ difficulties in developing 

performance planning and measurement and cost accounting systems were 

cited by OMB in its 1997 decision to delay the performance budgeting pilots 

required by the Results Act. To further discussion of those pilots, OMB 

recently suggested possible formats and time frames for the pilots in a 

September 1998 paper sent to federal agencies. In that discussion paper, 

OMB noted that pilot projects would not be designated unless they could 

“fairly test the [Results Act’s] concept of performance budgeting,” which it 

described as “the application of multi-variate or optimization analysis to 

budgeting.” The paper described three analytical alternatives that could be 

tested involving performance tradeoffs (1) in the same program with 

changes in program funding, (2) in the same program with no change in 

38HUD fiscal year 1999 performance plan, pp. 6-7.

39In October 1990, the nine member FASAB was established by the Secretary of Treasury, the Director 

of the OMB, and the Comptroller General of the United States to consider and recommend accounting 

standards to address the financial and budgetary information needs of the Congress, executive agencies, and other users of federal financial information. Once FASAB recommends accounting standards, 

the Secretary of the Treasury, the Director of OMB and the Comptroller General decide whether to 

adopt the recommended standards. If they are adopted, the standards are published as Statements of 

Federal Financial Accounting Standards by OMB and GAO.
B-282035

Page 34 GAO/AIMD/GGD-99-67 Performance Budgeting

total program funding, or (3) in several programs with shifts in intra-agency 

funding between these programs. 

At present, OMB has no definitive plans for proceeding with the 

performance budgeting pilots. OMB solicited agencies’ comments on the 

discussion paper and on their capability to produce the alternative budgets 

suggested in the committee report accompanying the Results Act. 

According to OMB, no agency has as yet volunteered to participate in the 

pilots. In its discussion paper, OMB stated that “the absence of designated 

pilots or having fewer designations than required would be an indication of 

agency readiness to do performance budgeting, and would be discussed in 

the OMB report to Congress.”

These developments reflect some of the broader tensions involved in 

linking planning and budgeting structures. On one hand, performance plans 

need to be broad and wide-ranging if they are to articulate the missions and 

outcomes that agencies seek to influence. Often these plans will include 

goals that the agency can only influence indirectly because of 

responsibilities assigned to other actors, such as state and local 

governments. On the other hand, budget structures have evolved to help 

the Congress control and monitor agency activities and spending and, as 

such, are geared more to fostering accountability for inputs and outputs 

within the control of agencies. 

Performance budgeting poses the daunting task to agencies of discovering 

ways to address these competing values that are mutually reinforcing, not 

mutually exclusive. Strategies for bringing planning and budgeting 

structures together must balance both sets of values. For example, some 

agencies might let their planning structures be the starting point for making 

connections and seek to crosswalk broad overarching goals to their many 

program activities. This approach is consistent with a results orientation 

but can obscure the impact of specific funding decisions. Other agencies 

might decide to use the budget structure as their starting point and 

integrate performance information into formats familiar and useful for 

congressional oversight. Although this approach may be helpful in 

focusing on the performance consequences of budget decisions, such 

strategies risk confining performance information to structures that may be 

too limited to fully address the broad mission and outcomes of the agency. 

Conclusions The fiscal year 1999 annual performance plans—the first called for under 

the Results Act—showed potential for providing valuable information that 
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can be used to better program performance. However, the linkage between 

requested funding and performance goals is just one of many elements that 

need improvement for these plans to be useful for improving program 

performance. Top management within agencies must provide the 

consistent leadership necessary to direct the needed management changes 

and to ensure momentum is maintained. Ultimately, performance-based 

management should become an integral part of an agency’s culture. The 

transition process must include proven “change management” approaches 

to be successful and sustained. In addition, congressional use of resultsoriented program performance and cost information in its decision-making 

about federal policies and programs will also spur agencies’ efforts to 

implement the statutory framework by sending the unmistakable message 

to the agencies that the Congress remains serious about performancebased management and accountability.

As we have noted in a previous report, one of the Results Act’s most 

conspicuous and useful features is its reliance on experimentation.40 This 

is certainly true regarding performance budgeting. The act calls for one 

form of performance budgeting by requiring that performance goals from 

an agency’s annual performance plan cover the program activities of the 

agency’s budget request while giving agencies flexibility in how this linkage 

is made. This requirement, when coupled with OMB’s guidance that plans 

reflect the funding levels being applied to achieve performance goals, 

constitutes the first governmentwide expectation to directly associate 

budgetary resources with expected results. In addition, the act also 

requires pilot projects to test a specific form of performance budgeting that 

presents varying levels of funding for varying levels of performance. The 

committee report accompanying the act noted that “this pilot approach is 

best because, while performance budgeting promises to link program 

performance information with specific budget requests, it is unclear how 

best to present that information and what the results will be.”41

The fiscal year 1999 performance planning and budgeting cycle produced a 

useful experimentation in connecting planning and budgeting structures 

that accommodated unique federal missions and structures. Some, but not 

all of the agencies we reviewed, began to develop useful linkages. 

Moreover, challenges in performance planning and measurement and 

40GAO/AIMD-97-46, March 27, 1997.

41S. Rpt. No. 103-58, p. 19.
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deficiencies in cost accounting systems continue to confront federal 

agencies. OMB has already cited these problems as the reasons why 

performance budgeting pilot projects were not being initiated. The 

progress that has been made and the challenges that persist underscore the 

importance of developing a specific agenda to ensure continued progress in 

better showing the performance consequences of budgetary decisions.42

The original goal for the act’s performance budgeting pilot projects was 

twofold: to allow OMB and agencies to develop experience and capabilities 

towards realizing the potential of performance budgeting, and to provide 

OMB with a basis for reporting to the Congress on next steps and needed 

changes. Although OMB stated in 1997 that agencies’ financial 

management systems were not capable of the specific form of performance 

budgeting called for in the act, our review demonstrates that some agencies 

were able to develop approaches to make perhaps a more basic, but still 

useful, connection between proposed spending and performance. These 

fiscal year 1999 efforts to link performance goals and program activity 

funding essentially constitute a first step toward achieving the intent of the 

performance budgeting pilots. They also provide a baseline from which 

OMB could assess future progress and determine what changes, if any, may 

be needed to the act and federal budget processes. 

In addition to its longstanding responsibilities regarding the formulation, 

review, and presentation of the President’s annual budget requests, OMB is 

the lead agency for overseeing a framework of recently enacted financial, 

information resources, and performance planning and measurement 

reforms designed to improve the effectiveness and responsiveness of 

federal agencies.43 As such, OMB is well-situated to assess (1) the 

practicality of performance budgeting pilots as currently defined in the law, 

(2) agency approaches and continuing challenges to linking budgetary 

resources and performance goals, and (3) options to encourage progress in 

subsequent planning and budgeting cycles.

42In Managing for Results: An Agenda to Improve the Usefulness of Agencies’ Annual Performance 

Plans (GAO/GGD/AIMD-98-228, September 8, 1998), we recommended that OMB develop an agenda to 

address five key opportunities for improving performance plans, including showing the performance 

consequences of budgetary decisions.

43The Results Act: Observations on the Office of Management and Budget’s July 1997 Draft Strategic 

Plan (GAO/AIMD/GGD-97-169R, August 21, 1997).
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Recommendation to 

OMB

In light of the indefinite delay of the performance budgeting pilots required 

by the Results Act and the experiences of agencies during the fiscal year 

1999 performance planning and budgeting cycle, we recommend that the 

Director of OMB assess the approaches agencies use to link performance 

goals and program activities in the fiscal year 2000 performance plans. 

OMB’s analysis, building on our review of fiscal year 1999 performance 

plans, should develop a better understanding of promising approaches and 

remaining challenges with respect to the concept of performance 

budgeting within the federal government. OMB’s analysis should address, 

for example:

• the extent of agencies’ progress in associating funding with specific or 

sets of performance goals,

• how linkages between budgetary resources and results can be made 

more useful to the Congress and to OMB,

• what types of pilot projects might be practical and beneficial, and 

• when and how those pilot projects would take place. 

On the basis of this analysis, we recommend that OMB work with agencies 

and the Congress to develop a constructive and practical agenda to further 

clarify the relationship between budgetary resources and results, beginning 

with specific guidance for the preparation of agencies’ fiscal year 2001 

plans. We further recommend that this analysis and the resulting agenda 

become the foundation for OMB’s report to the Congress in March 2001, as 

currently required by the Results Act, on the feasibility and advisability of 

including a performance budget as part of the President’s budget and on 

any other needed changes to the requirements of the act. 

Agency Comments On February 10, 1999, we met with the Deputy Director for Management 

and other OMB officials to discuss this report and our recommendations; 

on February 19, 1999, we provided a draft of this report to OMB for 

comment. At both our meeting and subsequently, OMB provided technical 

comments orally, which we have incorporated as appropriate. On March 

26, 1999, OMB informed us they would have no written comments on this 

draft.

As agreed with your office, unless you publicly announce its contents 

earlier, we plan no further distribution of this report until 30 days from the 

date of this letter. At that time, we will send copies to Senator Joseph 
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Lieberman, the Ranking Minority Member of your committee; other 

appropriate congressional committees; and The Honorable Jacob Lew, 

Director, Office of Management and Budget. We will also make copies 

available to others on request.

Major contributors to this report are listed in appendix III. Please contact 

me on (202) 512-9573 if you or your staff have any questions.

Sincerely yours,

Paul L. Posner

Director, Budget Issues
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Page 40 GAO/AIMD/GGD-99-67 Performance Budgeting

Contents

Letter 1

Appendix I

Objectives, Scope, and 

Methodology

42

Appendix II

Summary of Our 

Analysis

55

Appendix III

Major Contributors to 

This Report

57

Tables Table 1: Complexity of Budget Structure Was Not Significant in 

Allocating Funding to Performance Goals 18

Table 2: Planning Structure Was Not a Significant Factor for 

Agencies That Allocated Program Activity Funding to 

Performance Goals 23

Table I.1: Plans Reviewed 43

Table I.2: Characteristics and Associated Classification Frameworks 45

Figures Figure 1: Using the Results Act’s Flexibility to Align the Annual 

Performance Plan With the Budget Account and Program Activity 

Structure 6

Figure 2: BLM’s Fiscal Year 1999 Performance Plan Presents 

Many Goal Layers 10

Figure 3: USAID’s Fiscal Year 1999 Performance Plan Links 

Strategic Goals Directly to Performance Goals 11

Figure 4: The Administration for Children and Families Uses 

Consolidation to Link Program Activities to Strategic Objectives 13

Figure 5: The Health Resources and Services Administration Uses 

Disaggregation to Link Program Activities to Sets of 

Performance Goals 14

Figure 6: Agencies Allocating Program Activity Funding to 

Performance Goals in Fiscal Year 1999 Annual Performance Plans 17
Contents

Page 41 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure 7: Concentration of Requested Spending Was Not Significant 

in Allocating Funding to Performance Goals 19

Figure 8: Commonalities Within Agencies’ Program Activity 

Structures Were Not Significant in Allocating Funding to 

Performance Goals 20

Figure 9: Alignment of Budget and Planning Structures Was 

Significant for Allocating Funding to Performance Goals 21

Figure 10: EPA Proposed Aligning Budget and Planning Structures 22

Figure 11: Integrating Budget and Planning Documents Was 

Significant for Allocating Funding to Performance Goals 24

Figure 12: The Internal Revenue Service Integrates Its Budget 

Justification and Performance Plan 25

Figure 13: Simple Relationships Between Program Activities and 

Performance Goals Were Significant for Allocating Funding to 

Performance Goals 26

Figure 14: The Nuclear Regulatory Commission Aligns Budget 

and Planning Structures to Create a Simple Relationship Between 

Program Activities and Performance Goals 27

Figure I.1: Illustration of Characteristic 9 48

Figure I.2: Illustration of Characteristic 10 50

Abbreviations

ACF Administration for Children and Families

BIA Bureau of Indian Affairs

BLM Bureau of Land Management

CFO Chief Financial Officer

EPA Environmental Protection Agency

HRSA Health Resources and Services Administration

HUD Department of Housing and Urban Development

IRS Internal Revenue Service

NRC Nuclear Regulatory Commission

OMB Office of Management and Budget

USAID U.S. Agency for International Development

VA Department of Veterans Affairs
Page 42 GAO/AIMD/GGD-99-67 Performance Budgeting

Appendix I

Objectives, Scope, and Methodology ApIexndi

Our September 1998 report on agencies’ first performance plans 

establishes an agenda for improving several elements of agency plans, 

including showing the performance consequences of budget decisions. 

Following the issuance of that report, the Chairman of the Senate 

Committee on Governmental Affairs asked us to examine in more detail 

how the plans linked expected performance with budget requests. To do 

this, our objectives were to

• describe agencies’ approaches to linking performance goals and 

budgetary resources, 

• examine characteristics that might be associated with different 

approaches to linkage, and

• identify implications for future efforts to clarify the relationship 

between budgetary resources and results.

Scope To address our objectives, we selected 35 fiscal year 1999 performance 

plans for review from departments and agencies1

 covered by the CFO Act. 

We generally focused on bureau-level plans for each department but limited 

our review to the three largest bureaus with discretionary spending over 

$1 billion and/or the two largest bureaus.2

 Table I.1 lists the agencies 

whose plans we reviewed.

1In this report, we refer to a performance plan, whether of a department, agency, or bureau, as an 

“agency plan.” 

2

Discretionary spending levels were used as an indication of the bureau's relevancy to appropriators 

since discretionary funding is affected by appropriations actions.
Appendix I

Objectives, Scope, and Methodology

Page 43 GAO/AIMD/GGD-99-67 Performance Budgeting

Table I.1: Plans Reviewed

Data Collection To describe agencies’ approaches to linking performance goals and 

budgetary resources, we identified 12 characteristics that could be used to 

describe agencies’ planning and budgeting structures and the linkages 

between them. For each characteristic, we developed a classification 

framework for differentiating between plans based on that characteristic. 

These classification frameworks involved either straightforward counts of 

plan components (e.g., number of strategic goals) or judgments based on 

the content and structure of the plan. One staff member reviewed each plan 

and classified the plan on each characteristic. To ensure consistency in 

 1. Administration for Children and Families (Department of Health and Human

 Services)

 2. Bureau of Indian Affairs (Department of Interior)

 3. Bureau of Land Management (Department of Interior)

 4. Department of Commerce 

 5. Customs Service (Department of the Treasury)

 6. Department of Defense 

 7. Department of Education 

 8. Employment and Training Administration (Department of Labor)

 9. Department of Energy 

 10. Environmental Protection Agency 

 11. Federal Aviation Administration (Department of Transportation)

 12. Federal Bureau of Investigation (Department of Justice)

 13. Federal Emergency Management Agency 

 14. Federal Highway Administration (Department of Transportation)

 15. Federal Prison System (Department of Justice)

 16. Food and Nutrition Service (Department of Agriculture)

 17. Forest Service (Department of Agriculture) 

 18. General Services Administration

 19. Health Resources and Services Administration (Department of Health and Human

 Services)

 20. Department of Housing and Urban Development 

 21. Immigration and Naturalization Service (Department of Justice)

 22. Internal Revenue Service (Department of the Treasury)

 23. National Aeronautics and Space Administration 

 24. National Institutes of Health (Department of Health and Human Services)

 25. National Park Service (Department of Interior)

 26. National Science Foundation 

 27. Nuclear Regulatory Commission 

 28. Occupational Safety and Health Administration (Department of Labor)

 29. Office of Personnel Management 

 30. Rural Housing Service (Department of Agriculture)

 31. Small Business Administration 

 32. Social Security Administration 

 33. Department of State 

 34. U.S. Agency for International Development 

 35. Department of Veterans Affairs
Appendix I

Objectives, Scope, and Methodology

Page 44 GAO/AIMD/GGD-99-67 Performance Budgeting

judgments, another staff member also independently reviewed the plans 

and the assessment on each characteristic. Differences in judgments were 

addressed by having staff members jointly reevaluate the coding of the 

characteristic to resolve the difference. We then compiled our assessments 

on plan characteristics into a database that was used to profile agencies’ 

first-year approaches to linking budgetary resources with results.

These characteristics generally fell into two groups: characteristics 

describing agencies’ budget and planning structures (numbers 1 through 7 

in table I.2), and characteristics describing agencies’ approaches to linking 

these structures (numbers 8 through 12 in table I.2). Table I.2 presents 

additional detail on the characteristics used in this review.
Appendix I

Objectives, Scope, and Methodology

Page 45 GAO/AIMD/GGD-99-67 Performance Budgeting

Table I.2: Characteristics and Associated Classification Frameworks

Characteristic Description

 A. Characteristics describing budget and planning structures

(1) Number of accounts The number of budget accounts in the Appendix of the Budget of the United States 

Government, Fiscal Year 1999 from which agencies proposed to make obligations in fiscal year 

1999.

(2) Concentration of spending a) Single account—Agencies were classified as having a single account if they proposed to 

make 75 percent or more of their proposed fiscal year 1999 obligations from one budget 

account.

b) Multiple accounts—Agencies were classified as having multiple accounts if the amount of 

gross obligations proposed for each account was less than 75 percent of the agency’s total 

proposed gross obligations.

(3) Number of program activities The number of program activities shown in the Appendix of the Budget of the United States 

Government, Fiscal Year 1999 from which the agency proposed to make gross obligations in 

fiscal year 1999. When the Appendix does not list any program activities under a particular 

account, the account was deemed to have one program activity, reflecting the entire budget 

account. 

(4) Common program activity structure A common program activity structure means that most of the agency’s accounts contain 

program activities with the same titles.

(5) Budget structure used in 

performance plan

a) Changed structure—Agencies in this category proposed to substantially change their 

account and/or program activity structures in the Appendix of the Budget of the United States 

Government, Fiscal Year 1999 from those used in the previous year’s Appendix.

b) Used fiscal year 1998 structure—Agencies in this category generally used the same account 

and program activity structures as they did in the Appendix of the Budget of the United States 

Government, Fiscal Year 1998.

(6) Number of strategic goals The number of goals that are related directly to the agency’s mission without any intervening 

plan elements. According to the Results Act, agencies’ strategic plans are to contain general 

goals and objectives that elaborate on the agency mission statement and provide a set of 

programmatic objectives for the major functions and operations of the agencies. We defined 

the first layer of goals under the agency’s mission statement as “strategic goals” regardless of 

how they were labeled in the plan.

(7) Number of strategic objectivesa The number of strategic objectives, that is, goals that the plan related directly to the agency’s 

“strategic goals” as defined in (6) above. As in (6), we defined this layer of goals as “strategic 

objectives” regardless of how they were labeled in the plan.

B. Characteristics describing how agencies linked program activities with performance goals

(8) Integration of performance plan with 

the agency’s budget request

a) Full Integration—An agency embedded its performance plans in its justification of estimates 

such that the justification could not logically or readily be detached from the performance plan.

b) Separable—The agency’s plan was either (1) a separable component of the agency’s 

justification of estimates (e.g., an appendix) such that justification readers could either turn to 

or skip over the performance plan, but the plan would appear in the justification’s table of 

contents; or (2) an entirely separate document that may or may not have been transmitted at 

the same time as the justification. A user would need to read the plan, as opposed to the 

justification, in order to understand how the agency addressed Results Act requirements.
Appendix I

Objectives, Scope, and Methodology

Page 46 GAO/AIMD/GGD-99-67 Performance Budgeting

(9) Program activities linked tob, c Agencies were placed in one of five categories depending on the lowest performance planning 

structure to which the plan linked program activities. (See figure I.1 for an illustration.)

a) Strategic goal—Plan related program activities to strategic goals as defined in (6) above.

b) Strategic objective—Plan related program activities to goals that the plan related directly to 

the agency’s “strategic goals” as defined in (6) above. These goals may or may not have been 

labeled “strategic objectives” by the agency.

c) Performance goal—Plan related program activities to performance goals and/or measures. 

As defined in the Results Act, a performance goal means a target level of performance 

expressed as a tangible, measurable objective against which actual achievement can be 

compared, including a goal expressed as a quantitative standard, value, or rate. For plans in 

this category, a program activity was associated with each individual performance goal/

measure.

d) Other—Plan related program activities to a structure other than its strategic goals, strategic 

objectives, or performance goals. In many cases, this structure was a business line or some 

other unit for which a single goal statement was not expressed.

e) None—Agencies were placed in this category if the performance plan did not relate program 

activities to any of the above structures (strategic goal, strategic objective, performance goal, or 

other) in their performance plans.

(10) Plan associated dollars with Agencies were placed in one of six categories depending on the lowest performance planning 

structure for which the plan presented dollar amounts. (See figure I.2 for an illustration.)

a) Strategic goal—Plan presented dollar amounts for each strategic goal.

b) Strategic objective—Plan presented dollar amounts for each strategic objective.

c) Set of discrete performance goals—Plan presented dollar amounts for any set of 

performance goals presented in some combination other than as described in (a), (b), (d), or 

(e). 

d) Performance goal and/or measure—Plan presented dollar amounts for each performance 

goal and/or measure.

e) Other—Plan presented dollar amounts for a unit of analysis other than strategic goals, 

strategic objectives, or performance goals. 

f) None—Plan did not present dollar amounts for any performance planning or other type of 

structure.
Appendix I

Objectives, Scope, and Methodology

Page 47 GAO/AIMD/GGD-99-67 Performance Budgeting

aWhile we quantified strategic objectives as defined, the plan may have contained other goal layers 

between strategic objectives and annual performance goals.

bWe reviewed linkages between the program activities and performance goals presented in the plan. 

This characteristic did not assess whether all program activities were listed and covered in the 

performance plan.

c

If accounts were linked to the planning structure, the underlying program activities were also 

presumed to be linked to this structure.

dWhen a plan contained performance goals distinct from performance measures, reviewers 

considered whether this assessment would change if the word “measure(s)” was substituted for the 

word “goal(s).” If so, measure(s) were used as the unit of analysis instead of goal(s). If agencies 

linked program activities to a structure other than performance goals (i.e., an intervening structure 

such as a strategic goal or objective), the plan reviewer determined this relationship by examining how 

program activities were related to the intervening structure and how the intervening structure was 

related to performance goals.

eThe set of goals ranged in size and scope. For example, some of these plans presented allocations 

of funding to strategic goals or objectives, which represent discrete sets of performance goals. 

(11) Relationship of program activities 

to performance goals and/or measuresd a) One program activity to one goal—Agencies were placed in this category if a program activity was linked to one performance goal.

b) One program activity to many goals—Agencies were placed in this category if a program 

activity was linked to more than one performance goal.

c) Many program activities to one goal—Agencies were placed in this category if more than one 

program activity was linked to one performance goal.

d) Many program activities to many goals—Agencies were placed in this category if more than 

one program activity was linked to more than one performance goal.

e) Could not be determined—Agencies were placed in this category if the plan did not convey 

how program activities were related to performance goals.

(12) Funding allocated to a discrete set 

of goals and/or measurese Plans that allocated funding to a discrete set of goals 

(a) generally showed how program activities and their requested funding were allocated among 

performance goals/measures or sets of performance goals/measures (plans met this criteria 

even if only discretionary funding was allocated) and

(b) used sets of goals/measures that were unique (i.e., a single performance goal/measure is 

related to only one strategic objective or strategic goal).
Appendix I

Objectives, Scope, and Methodology

Page 48 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure I.1: Illustration of Characteristic 9

Example 9(a)

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Strategic objective 2

 Performance goal 3

 Performance goal 4

Strategic goal 2

 Strategic objective 3

 Performance goal 5

 Performance goal 6

 Account 1

Program

activity 1

Program

activity 2

Program

activity 3

Program

activity 4

Program

activity 5

Example 9(b)

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Strategic objective 2

 Performance goal 3

 Performance goal 4

Strategic goal 2

 Strategic objective 3

 Performance goal 5

 Performance goal 6

 Account 1

Program

activity 1

Program

activity 2

Program

activity 3

Program

activity 4

Program

activity 5
Appendix I

Objectives, Scope, and Methodology

Page 49 GAO/AIMD/GGD-99-67 Performance Budgeting

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Strategic objective 2

 Performance goal 3

 Performance goal 4

Strategic goal 2

 Strategic objective 3

 Performance goal 5

 Performance goal 6

 Account 1

Program

activity 1

Program

activity 2

Program

activity 3

Program

activity 4

Program

activity 5

Example 9(c)
Appendix I

Objectives, Scope, and Methodology

Page 50 GAO/AIMD/GGD-99-67 Performance Budgeting

Figure I.2: Illustration of Characteristic 10

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Strategic objective 2

 Performance goal 3

 Performance goal 4

Strategic goal 2

 Strategic objective 3

 Performance goal 5

 Performance goal 6

Example 10(b)

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Strategic objective 2

 Performance goal 3

 Performance goal 4

Strategic goal 2

 Strategic objective 3

 Performance goal 5

 Performance goal 6

Example 10(a)
Appendix I

Objectives, Scope, and Methodology

Page 51 GAO/AIMD/GGD-99-67 Performance Budgeting

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Performance goal 3

Strategic goal 2

 Strategic objective 2

 Performance goal 4

 Performance goal 5

 Performance goal 6

Example 10(c)

Strategic goal 1

 Strategic objective 1

 Performance goal 1

 Performance goal 2

 Strategic objective 2

 Performance goal 3

 Performance goal 4

Strategic goal 2

 Strategic objective 3

 Performance goal 5

 Performance goal 6

Example 10(d)
Appendix I

Objectives, Scope, and Methodology

Page 52 GAO/AIMD/GGD-99-67 Performance Budgeting

Data Analysis To determine which characteristics of agency planning and budgeting 

structures were associated with linkages that showed an allocation of 

budgetary resources to results, we prepared contingency tables depicting 

the relationship between characteristic 12 in table I.2, “Funding allocated 

to a discrete set of goals or measures,” and each of the other 

characteristics. To assess whether the relationships in the tables were 

statistically significant, we performed two statistical techniques. When one 

characteristic in the table contained numeric values (e.g., characteristic 6, 

which measured the number of strategic goals), we used logistic regression 

techniques. The logistic regression technique involved regressing the odds 

on funding being allocated to a discrete set of performance goals on each 

characteristic and determining—using likelihood ratio chi square tests—

whether the characteristic was associated with significant differences in 

those odds. 

When a characteristic had nonnumeric values (e.g., characteristic 11, which 

had five discrete categories), we used standard contingency tables to 

analyze the data. The contingency table techniques involved calculating the 

percentages of agencies that allocated funding to a discrete set of goals 

across the categories of the other characteristic and computing likelihoodratio chi square statistics to determine whether differences in those 

percentages were statistically significant.3

 In addition to computing the 

likelihood ratio chi square statistic, we also computed Fisher’s exact test to 

assess whether a characteristic was significantly related to characteristic 

12. Fisher’s exact test was used to confirm the likelihood ratio chi square 

results because of the small number of observations in many of our tables. 

In most of our analyses, the likelihood ratio chi square and Fisher’s exact 

test yielded similar conclusions. Where they did not, the differences 

appeared negligible given our sample size.4

When a statistically significant association was identified in a table where 

one or both characteristics being analyzed had more than two categories, 

we conducted a series of additional chi square tests before and after 

grouping various categories of those characteristics to discern whether our 

3Criterion for statistical significance was set at about the 0.05 or less probability level. If the two characteristics were independent of each other (i.e., unrelated), it would be unlikely that probability values at 

or less than 0.05 would occur. If such extreme probability values do occur, the null hypothesis that 

there is no association is rejected.

4

We report those results as significant where one of the statistical tests yielded a probability level that 

was slightly above 0.05 and the other was at or below 0.05.
Appendix I

Objectives, Scope, and Methodology

Page 53 GAO/AIMD/GGD-99-67 Performance Budgeting

description of the relationship of that characteristic with characteristic 

12 could be simplified. Appendix II presents a summary of our analysis.

The intent of our statistical analyses was to quantitatively identify and 

explore associations of various plan characteristics with plans that did or 

did not allocate funding to a discrete set of goals and/or measures. 

However, the following qualifications apply to our analysis. 

• Although the results of our analyses apply to the plans we reviewed, our 

plan selection procedures preclude generalizing the results to agency 

plans not included in our population.

• For those characteristics we identified as having a significant 

association with characteristic 12, it is possible that this result occurred 

because of the close association of that characteristic with one or more 

of the other characteristics that were related to characteristic 12. The 

small number of plans reviewed precluded our use of statistical 

approaches that would enable us to assess the relationship of two or 

more characteristics simultaneously on characteristic 12. To provide 

some rudimentary insight into the extent to which characteristics 

significantly related to characteristic 12 were related to each other, we 

examined whether there were significant associations among those 

characteristics using the same procedures described above. Significant 

associations were found between (1) characteristics 5 and 8,5

(2) characteristics 8 and 10,6

 (3) characteristics 8 and 11,7 and 

(4) characteristics 10 and 11.8

• Aspects of agencies’ linkages not specifically mentioned in table I.2 

were not assessed. For example, we did not assess whether all agency 

program activities were listed and covered in the performance plan. 

This assessment was made in our September 1998 report.9

• Our analysis focused on linkages between performance goals and 

program activities in performance plans. We did not assess other 

5The probabilities associated with the likelihood ratio chi square and Fisher’s exact test were 0.04 and 

0.07, respectively.

6

The probabilities associated with the likelihood ratio chi square and Fisher’s exact test were 0.01 and 

0.03, respectively.

7

The probabilities associated with the likelihood ratio chi square and Fisher’s exact test were 0.02 and 

0.03, respectively.

8The probabilities associated with the likelihood ratio chi square and Fisher’s exact test were both less 

than 0.00.

9

See GGD/AIMD-98-228, September 8, 1998.
Appendix I

Objectives, Scope, and Methodology

Page 54 GAO/AIMD/GGD-99-67 Performance Budgeting

elements of the performance plan, such as the quality of any goals 

presented in the plan. We also did not independently verify the funding 

amounts that agencies allocated to performance goals. We did not 

systematically assess other documents, such as agency budget 

justifications.

• Our review focused on the 12 characteristics mentioned above. 

However, there may be other characteristics that might be associated 

with agencies’ linkages. For example, although our previous work has 

noted that account and program activity orientation may be important 

factors in making linkages, the subjective nature of this characteristic 

prevented its inclusion in our analysis.

Finally, to identify implications for future performance budgeting efforts, 

we gathered information on congressional perspectives. In addition to 

discussing the plans’ linkages between budgetary resources and results 

with selected appropriations staff, we also reviewed the House Committee 

on Appropriations’ hearing records on agencies’ fiscal year 1999 

appropriations, giving special attention to how lawmakers reacted to the 

performance information presented in performance plans and budget 

justifications. We discussed the status of performance budgeting pilots 

with OMB. We requested comments on a draft of this report from the 

Director of OMB or his designee and incorporated OMB’s comments as 

appropriate. We conducted our work in accordance with generally 

accepted government auditing standards from August 1998 to February 

1999.
Page 55 GAO/AIMD/GGD-99-67 Performance Budgeting

Appendix II

Summary of Our Analysis ApIexndi

Nonnumeric characteristics

Allocated program 

activity funding to 

performance goals

Did not allocate 

program activity 

funding to 

performance goals Total Probabilities

Number Percent Number Percent Number Likelihood 

ratio

Fisher’s 

exact

Concentration of spending 0.766 1.000

Spending in multiple accounts 10 42 14 58 24

Spending concentrated in one account 4 36 7 64 11

Program activity structure 0.768 1.000

Not common 13 39 20 61 33

Common 1 50 1 50 2

Budget structure used in the performance 

plan

0.015 0.056

Proposed change in structure 3 100 0 0 3

Used fiscal year 1998 structure 11 34 21 66 32

Integration of performance plan 0.016 0.028

Separate from budget justification 9 31 20 69 29

Fully integrated with budget justification 5 83 1 17 6

Program activities linked to 0.199 0.375

Strategic goal 3 50 3 50 6

Strategic objective 3 43 4 57 7

Performance goal 7 50 7 50 14

Other 1 33 2 67 3

None 0 0 5 100 5

Plan associated dollars with a a

Strategic goal 5 71 2 29 7

Strategic objective 3 50 3 50 6

Set of performance goals 4 100 0 0 4

Performance goal 0 0 1 100 1

Other 1 50 1 50 2

None 1 7 14 93 15

Relationship of program activities to performance goals 0.000 b 0.001 b

Simple relationship 8 100 0 0 8

Complex relationship 6 27 16 73 22
Appendix II

Summary of Our Analysis

Page 56 GAO/AIMD/GGD-99-67 Performance Budgeting

aAlthough the probabilities for this characteristic were 0.05 or less, our analysis revealed the source of 

statistical significance was the difference between the “none” category and all of the other categories 

shown for this characteristic combined.

bWe could not determine the relationship between program activities and performance goals for 5 

agencies. Therefore, we determined whether there were significant differences among the remaining 

30 agencies.
Page 57 GAO/AIMD/GGD-99-67 Performance Budgeting

Appendix III

Major Contributors to This Report

ApIexndi

Accounting and 

Information 

Management Division, 

Washington, D.C.

Michael J. Curro, Assistant Director

Laura E. Castro, Evaluator-in-Charge

Linda F. Baker, Senior Evaluator

Toni J. Wehman, Evaluator

General Government 

Division, Washington, 

D.C.

Thomas M. Beall, Senior Social Science Analyst

Douglas M. Sloane, Supervisory Social Science Analyst

(935292) Lret
Appendix III

Major Contributors to This Report

Page 58 GAO/AIMD/GGD-99-67 Performance Budgeting
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