21st Century Challenges: How Performance Budgeting Can Help
Published: 2007-09-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As part of its work to improve the management and performance of the federal government, GAO monitors progress and continuing challenges in using performance information to inform budgetary choices (performance budgeting). In light of the nation's long-term fiscal imbalance and other 21st century challenges, we have reported that the Government Performance and Results Act of 1993 (GPRA) and performance budgeting can support needed reexamination of what the federal government does, how it does it, and who does it. GAO remains committed to working with Congress and the Administration to help address these important and complex issues.
section_title: What GAO Found
paragraphs: Reexamining the base of all major existing federal spending and tax programs, policies, and activities by reviewing their results and testing their continued relevance and relative priority for our changing society is an important step in the process of assuring fiscal responsibility and facilitating national renewal. Reexamination can arm decision makers with better information on both individual program results and entire portfolios of programs and tools-- encompassing a wide range of discretionary, entitlement, tax, and regulatory approaches--addressing common goals. GPRA provided a foundation for strengthening government performance and accountability. The President's Management Agenda and the Program Assessment Rating Tool (PART)--OMB's framework for assessing federal program performance--continue to build on GPRA's foundation. Properly done, these and future efforts--along with a set of Key National Indicators (KNI)--could provide a strong basis to support the needed review, reassessment, and reprioritization process. Moving forward, for performance budgeting and program reviews to hold appeal beyond the executive branch and actually have an impact on legislation, congressional buy-in on what to measure and how to present this information is critical. In addition, tax expenditures result in forgone revenue that in some years has approximated the size of total discretionary spending. Yet relatively little is known about the effectiveness of these provisions, which are often aimed at policy goals similar to those of federal spending programs. To date, PART has generally not been applied to tax expenditures. GAO continues to urge as a next step a more comprehensive and consistent approach to evaluating all programs relevant to common goals. This would require assessing the performance of all programs related to a particular goal--including tax expenditures--using a common framework.

section_title: Letter
paragraphs: I am pleased to be here today to discuss performance budgeting as a way  to help government meet the pressing challenges of the 21st Century by  prompting review of federal activities and programs. The federal  government is in a period of profound transition and faces an array of  challenges and opportunities to enhance performance, ensure  accountability, and better position the nation for the future. A number of  overarching trends—including the nation’s long-term fiscal imbalance— drive the need to reexamine what the federal government does, how it  does it, and who does it. The term “performance budgeting” encompasses  a range of approaches, activities, and processes but they all have in  common the idea of more explicitly linking resources to results. As such it  holds promise as a means for facilitating a reexamination effort.  Reexamination can enhance the government’s capacity to assess  competing claims for federal dollars by arming decision makers with  better information both on the results of individual programs as well as on  entire portfolios of programs and tools—encompassing a wide range of  discretionary, entitlement, tax, and regulatory approaches—addressing  common goals.
Through the President’s Management Agenda (PMA) and its related  initiatives, including the Office of Management and Budget’s (OMB)  Program Assessment Rating Tool (PART), the Administration has taken  steps in the right direction by calling attention to successes and needed  improvements in federal management and performance. As we have  previously reported, PART itself has certain weaknesses we believe  should be addressed and several strengths on which future efforts should  build. Whatever approach is taken in the future, however, it will be  important to include not only those programs and activities run through  the spending side of the budget but also those run through the tax side.  Any reexamination or performance budgeting effort that fails to include  tax expenditures in the review of federal activities and whether they are  achieving their intended policy goals will fall short of its potential.
In my testimony today I will focus on three main points:    The extent of our long-term fiscal and governance challenges necessitates  a thorough reexamination of government programs and spending;    Performance budgeting can help accomplish the goal of reexamination;    Congressional support and comprehensive crosscutting program  assessments are critical to reexamination.
In addition, I offer some ideas for moving forward.
This testimony draws upon our wide-ranging work on the use of  performance information in government—including the Government  Performance and Results Act of 1993 (GPRA), PART, agency coordination  and collaboration, tax expenditures, and key national indicator (KNI)  systems. We conducted our work for this statement during August and  September 2007 in accordance with generally accepted government  auditing standards.
subsections: section_title: Long-Term Fiscal Challenge Provides Context and Impetus for Reexamining Federal Programs
paragraphs: As I have previously testified before this committee, known demographic  trends and rising health care costs are major drivers of the nation’s large  and growing structural deficits. The nation cannot ignore this fiscal  pressure: it is not a matter of whether the nation deals with the fiscal gap,  but how and when. Although it is the “big three”—Medicare and Medicaid  and to a lesser extent, Social Security—that drive this phenomenon on the  spending side, other federal spending cannot be ignored. Difficult as it may  seem to deal with these long-term challenges, policymakers must not only  address these entitlement programs but also reexamine other budgetary  priorities in light of the changing needs of this nation in the 21st century. It  will be necessary to work on several fronts at once. In fact, our history  suggests that all major spending and revenue programs and policies need  to be subject to periodic reviews and that exempting major areas can  undermine the credibility and support for the entire process.
These challenges would be difficult enough if all we had to do is figure out  how to fund existing commitments. But as the nation continues to change  in fundamental ways, a wide range of emerging needs and demands—for  example, evolving defense and homeland security policies, increasing  global interdependence, and advances in science and technology—can be  expected to compete for a share of the budget. Whether national security,  transportation, education, or public health, a growing population will  generate new claims for federal actions on both the spending and tax sides  of the budget. Many of our programs were designed decades ago to  address earlier challenges. Outmoded commitments and operations  constitute an encumbrance on the future that can erode the capacity of the  nation to better align its government with the needs and demands of a  changing world and society.
Accordingly, reexamining the base of all major existing federal spending  and tax programs, policies, and activities by reviewing their results and  testing their continued relevance and relative priority for our changing  society is an important step in the process of assuring fiscal responsibility  and facilitating national renewal. A periodic reexamination offers the  prospect of addressing emerging needs by weeding out programs and  policies that are redundant, outdated, or ineffective. Those programs and  policies that remain relevant often could be updated and modernized by  improving their targeting and efficiency through such actions as  redesigning allocation and cost-sharing provisions, consolidating facilities  and programs, and streamlining and reengineering operations and  processes.
We recognize that taking a hard look at existing programs and carefully  reconsidering their goals and financing are challenging tasks, as making  decisions about reforming programs and activities creates winners and  losers. Furthermore, given the wide range of programs and issues covered,  the process of rethinking government programs and activities may take a  generation to unfold. We are convinced, however, that reexamining the  base offers compelling opportunities to both redress our current and  projected fiscal imbalance while better positioning government to meet  the new challenges and opportunities of this new century.
section_title: Performance Budgeting Can Help Facilitate Reexamination
paragraphs: Performance budgeting can help enhance the government’s capacity to  assess competing claims in the budget by arming budgetary decision  makers with better information on the results of both individual programs  as well as entire portfolios of policies, tools, and programs designed to  address common outcomes. It is useful to start with a review of the  current landscape. The management and performance reforms enacted by  Congress in the past 15 years have provided some new ways to gain insight  into the financial, program, and management performance of federal  agencies and activities. With GPRA as its centerpiece, the statutory and  management framework laid out in the 1990s provided a foundation for  strengthening government performance and accountability. As our work  as shown, GPRA has succeeded in expanding the supply of performance  information and promoting institutionalization of a culture of performance  as well as providing a solid foundation for more recent budget and  performance initiatives.
As I have previously said, PMA and its related initiatives, including PART,  demonstrate the Administration’s commitment to improving federal  management and performance. Properly done, performance assessment  and performance budgeting information produced by GPRA and PART  could provide a strong basis to support the needed review, reassessment,  and reprioritization process. By calling attention to successes and needed  improvements, the focus that these initiatives bring is certainly a step in  the right direction toward providing the kind of information needed for  effective reexamination, and our work shows that progress has been made  in several important areas over the past several years. For example, we  have reported that the PART process continues to aid OMB’s oversight of  agencies and encourage improvements in executive budget formulation  and agency program management. The PART has helped to structure and  discipline OMB’s use of performance information for internal program  analysis and budget review, and made its use of this information more  transparent. Many agency officials told us that the PART helped to create  or strengthen an evaluation culture within agencies by providing external  motivation for program review and focused attention on performance  measurement and its importance in daily program management. Some  officials said that the PART and the PMA helped them move away from  “analysis by anecdote” and refocused their attention on the impact their  programs have, instead of largely on output measures. Others echoed a  similar sentiment—one indicated that the PART scores helped to create “a  new sense of urgency” about performance measures and completing the  changes to performance systems that were already under way.
section_title: Congressional Support and Comprehensive, Crosscutting Program Assessments Are Critical to Reexamination
paragraphs: Even the best performance data are insufficient to achieve real  improvements in management and program results unless they are used by  decision makers and managers alike to inform policy and management  decisions. Key stakeholder outreach and involvement in developing  performance information is critical to encouraging the use of such  information in both performance budgeting and reexamination efforts.  Moreover, little is known about the performance of tax expenditures,  which are often aimed at policy goals similar to those of federal spending  programs, such as those intended to encourage economic development in  disadvantaged areas, finance postsecondary education, and stimulate  research and development. Yet tax expenditures and their relative  contributions toward achieving federal missions and goals are often less  visible than spending programs, which are subject to more systematic  review.
subsections: section_title: Lack of Congressional “Buy-in” and Participation Limits the Potential of Performance Budgeting Efforts
paragraphs: In order for performance budgeting and program reviews to hold appeal  beyond the executive branch, and to actually have an impact on  legislation, garnering congressional buy-in on what to measure and how to  present this information is critical. Without congressional involvement and  buy-in, these efforts are unlikely to play a major role in the authorization,  appropriations, and oversight processes. Although congressional support  is critical to sustain any major management initiative, Congress’s  constitutional role in setting national priorities and allocating the  resources to achieve those priorities makes it especially important for  performance budgeting and reexamination efforts. Lack of consensus by a  community of interested parties on goals and measures and the way that  they are presented can detract from the credibility of performance  information and, subsequently, its use. Fifty years of past executive branch  efforts to link resources with results have shown that any successful effort  must involve Congress as a full partner. We have previously reported that  past performance budgeting initiatives faltered in large part because they  intentionally attempted to develop performance plans and measures in  isolation from the congressional authorization, appropriations, and  oversight processes.
Some tension about the amount of stakeholder involvement in the internal  deliberations surrounding the development of measures used in budget  formulation and the broader consultations more common to the GPRA  strategic planning process is inevitable. Compared to the relatively open- ended GPRA process, any budget formulation process is likely to seem  closed. However, if performance information—and budget  recommendations based on such information—is to hold appeal beyond  the executive branch, congressional understanding and acceptance will be  critical. Moreover, any performance budgeting effort that does not involve  Congress will be limited in its ability to function as a tool to  comprehensively reexamine the entire scope of federal spending, as a  major player will be left out of the effort.
section_title: Performance Budgeting and Reexamination Require a Crosscutting Perspective
paragraphs: Existing performance budgeting initiatives provide a foundation for a  baseline review of federal policies, programs, functions, and activities.  Building on this foundation, several changes are in order to support the  type of reexamination needed. For example, PART focuses on individual  programs, but key outcome-oriented performance goals—ranging from  low-income housing to food safety to counterterrorism—are addressed by  a wide range of discretionary, entitlement, tax, and regulatory approaches  that cut across a number of agencies, levels of government, and sectors.  PART’s program-by-program approach fits with OMB’s agency-by-agency  budget reviews, but it is not well-suited to addressing crosscutting issues  or to looking at broad program areas in which several programs or  program types address a common goal. The evaluation of programs in  isolation may be revealing, but a broader perspective is necessary for an  effective overall reexamination effort. It is often critical to understand  how each program fits with a broader portfolio of programs, tools, and  strategies to accomplish federal missions and goals.
Such an analysis is necessary to capture whether and how a program  complements and supports other related programs, policies, and tools, or  whether it actually works at cross-purposes to such other initiatives. OMB  has reported on a few crosscutting assessments in recent budget requests.  We would urge as a next step a more comprehensive and consistent  approach to evaluating all programs relevant to common goals. Such an  approach would require assessing the performance of all programs related  to a particular goal—including tax expenditures and regulatory  programs—using a common framework.
Our federal tax system includes hundreds of billions of dollars of forgone  revenue annually. In some years, total tax expenditures have  approximated the size of total discretionary spending. Yet relatively little  is known about the effectiveness of tax incentives in achieving the  objectives intended by Congress. PART, OMB’s current framework for  assessing the performance of federal programs, has generally not been  applied to tax expenditures.
section_title: Tax Expenditures Have Doubled in Number and Represent a Substantial Federal Commitment
paragraphs: Tax preferences—which are legally known as tax expenditures—result in  forgone revenue for the federal government due to preferential provisions  in the tax code, such as exemptions and exclusions from taxation,  deductions, credits, deferral of tax liability, and preferential tax rates.  Excluding tax expenditures from program reviews is especially  problematic because tax expenditures represent such a substantial  investment in such a wide range of policy goals. Whether gauged in  absolute numbers, by revenues forgone, or in comparison to federal  spending, tax expenditures have been substantial over the last three  decades. Between fiscal years 1974 and 2006, tax expenditures doubled in  number from 67 to 161, as shown in figure 1. While some were dropped  over the period, considerably more were added.
Tax expenditures span almost all federal mission areas, but their relative  size differs across budget functions. As figure 2 shows, the sum of revenue  loss estimates was greater than federal spending in these budget functions:  energy, commerce and housing credit, and general government. For  example, the $42.4 billion in outlays for the Department of Housing and  Urban Development in fiscal year 2006 are far surpassed by the estimated  revenue losses of $68.3 billion from the mortgage interest deduction (the  second largest tax expenditure for that year). Moreover, as figure 3  indicates, revenue losses due to tax expenditures exceeded discretionary  spending for half of the last decade.
Much of the revenue loss due to individual income tax expenditures is  attributable to a small number of large tax expenditures. The six tax  expenditures shown in figure 4—each with an annual revenue loss  estimated at $40 billion or more—accounted for about 44 percent of the  sum of revenue losses for all tax expenditures for fiscal year 2006.
Tax expenditure estimates reflect federal income tax revenue forgone and  do not account for provisions that exclude certain earnings from payroll  taxes. As a result, this understates the total revenue forgone by the federal  government for some of the largest tax exclusions. If payroll tax revenue  losses were 50 percent of the $125 billion in income tax revenue loss  estimated by the Department of the Treasury, the combined revenue loss  associated with the exclusion of employer contributions for health  insurance premiums would be $187.5 billion in 2006.
subsections: section_title: Tax Expenditures Receive Little Scrutiny
paragraphs: So far, OMB has used PART to review tax expenditures in only a few  cases, such as the Earned Income Tax Credit (EITC) compliance initiative,  the New Markets Tax Credit, and the Health Care Tax administration.  Generally, these reviews assessed how well Treasury and IRS administer  the tax expenditures rather than the efficacy of the tax expenditures  themselves. Since tax expenditures represent a significant investment of  resources and in some program areas tax expenditures may be the main  tool used to deliver services, this is a significant gap. For example, in the  fiscal year 2006 budget request, OMB reported on a crosscutting PART  assessment for Community and Economic Development (CED) programs.  The CED crosscut examined the performance of 18 of the 35 federal  community and economic development programs that were identified by  OMB and that account for the majority of the $16.2 billion OMB estimates  is spent annually in this area. Although OMB identified three tax  expenditures in the CED portfolio, it did not assess all of them with the  PART instrument even though Treasury’s estimate of their combined  “cost” was nearly $1.4 billion, or about 57 percent of Treasury’s revenue  loss estimates for community development.
Periodic review and reexamination of programs—including tax  expenditures—is important to identify and mitigate against mission  fragmentation, overlap, and conflict, as well as service gaps. In the same  way that federal spending programs can work at cross purposes, tax  expenditures meant to address certain policy challenges may exacerbate  other key private sector and public policy challenges. For example, the  income tax exclusion of employer-paid health insurance premiums  reduces the after-tax cost of insurance for the beneficiary. However, the  exclusion offers no benefit to workers whose employers do not offer  health benefits or who purchase their own insurance. Further, this tax  benefit also leads people to obtain more comprehensive coverage than  they would otherwise and could increase the demand for health care to  the extent that it shields those insured from the full costs of health care,  complicating efforts to moderate health care spending. The exclusion also  tends to favor higher-income workers more likely to have employer- sponsored coverage. Another example is higher education: students  seeking federal grants and loans are penalized for having saved funds to  pay for their education although the Internal Revenue Code encourages  saving by exempting individuals from federal income taxation on interest  income used to pay for postsecondary education.
If well designed and effectively implemented, tax expenditures can be an  effective tool and appropriate to further some federal goals and objectives.  Moreover, sometimes it may be cheaper and simpler to subsidize through  the tax code than by setting up a separate program using a different tool.  For example, the incremental administrative and compliance costs to  deliver the tax credit for child and dependent care expenses may be  relatively low compared to the costs of setting up a separate system for  processing child care applications and sending vouchers to those eligible.  However, tax expenditures may not always be efficient, effective, or  equitable; consequently, information on these attributes can help  policymakers make more informed decisions about resource allocation  and the most effective or least costly methods to deliver federal support.
Regular review could also provide needed scrutiny of certain expenditures  that have few controls. With some exceptions, tax expenditures generally  are not subject to reauthorization and therefore lack the opportunity for  regular review. Moreover, many tax expenditures—like mandatory  spending programs—are governed by eligibility rules and benefit formulas,  meaning funds are spent as required to provide benefits to those who are  eligible and wish to participate. Thus, because they are not as visible in the  budget as discretionary spending programs, tax expenditures run the risk  of simply being a form of “back-door spending” embedded in the tax code  and are effectively “fully funded” before any discretionary spending is  considered.
section_title: Future Performance Budgeting Efforts Must Continue to Build on Lessons Learned in Order to Facilitate Effective Reexamination
paragraphs: The federal government is in a period of profound transition and faces an  array of challenges and opportunities to enhance performance, ensure  accountability, and better position the nation for the future. In our  February 2005 report on 21st century challenges, we outlined a number of  approaches that could facilitate a reexamination effort. Agencies and OMB  will need to continue to focus on ensuring that the growing supply of  performance information is credible, useful, reliable, and used both in day- to-day program management and in formulating budget requests that focus  on outcomes that can be achieved with resources requested. Further, the  executive branch can help promote demand for and acceptance of  performance information by developing goals and measures relevant to  the large and diverse community of stakeholders in the federal budget and  planning processes and presenting this information in a way that is  tailored to the needs of congressional stakeholders. Engaging Congress  early in the process may help target reviews with an eye toward those  areas most likely to be on the agenda of Congress, thereby better ensuring  the use of performance assessments in resource allocation processes  throughout government. Lastly, taking a comprehensive and crosscutting  approach to program assessment by more strategically selecting programs  and policy areas for review—regardless of the agency in which programs  are housed, and inclusive of all tools (e.g., grant, credit, regulatory  programs, and especially tax expenditures) that bring resources to bear on  a particular program or policy area—will provide robust, rich information  about the performance of all tools aimed at federal and national  challenges. Moving forward will require actions by both the executive  branch and the Congress. Let me elaborate.
subsections: section_title: Executive Branch Actions
paragraphs: Although recent OMB efforts to assess programs in a crosscutting fashion  represent progress, to provide the kind of information that can be of  assistance in reexamining the base of government, we encourage a more  extensive and consistent approach to evaluating all programs relevant to  common goals. We recommended in 1994 and again in 2005 that OMB  design and implement a structure for conducting reviews of tax  expenditures’ performance. Our recommendation is consistent with  language in the Senate Committee on Government Affairs’ Report on  GPRA, which specified that the Director of OMB was to establish an  appropriate framework for periodic analyses of the effects of tax  expenditures in achieving performance goals. To significantly increase the  oversight and analysis of tax expenditures, the committee report also  called for a schedule for periodic tax expenditure evaluations.
Although incorporating tax expenditures into crosscutting reviews  presents significant analytical challenges, we do not believe such  challenges are insurmountable. Moreover, assessing the performance of  tax expenditures is critically important given that many function as  entitlement programs—although perhaps with even less transparency— and do not compete overtly in the annual budget process. Presenting tax  expenditures alongside outlays is a first step in providing the public and  policymakers with a more useful and accurate picture of the extent of  federal support and activities. In fact, in the tax expenditure chapter in  Analytical Perspectives, OMB has in the past included a section outlining  possible performance measures developed by Treasury, which could be  used to present information about the performance of tax expenditures.  Although this overview was initially introduced in the 1997 budget and  expanded in the 1999 budget, no performance information is actually  displayed. OMB states that the measure examples provided are  “illustrative” in nature, acknowledges that the performance measure  discussion “although broad, is nonetheless incomplete,” and notes that  many tax expenditures are not explicitly cited.
One of the key impediments to moving forward in conducting reviews of  tax expenditures’ performance is the continuing lack of clarity about the  roles of OMB, Treasury, IRS, and departments or agencies with  responsibility for related spending programs. Designing a structure and  approach for including tax expenditures in performance reviews will be  challenging, but it is important. Ideally, reviews would look at federal  involvement in a given policy area across related agencies and tools,  which means a decision would have to be made as to which tax  expenditures and which spending programs are relevant. The review  would need to involve the departments or agencies with related spending  programs, Treasury, and OMB. It might make sense for OMB and Treasury  to conduct some case studies of the proposed review structure to identify  (1) successful methods agencies devise for reviewing tax expenditures’  performance, (2) how best to report the results of these reviews, and   (3) how to ensure that adequate resources are available for such reviews.  This type of effort can both strengthen the budget process itself and  provide a valuable tool to facilitate a fundamental reexamination of the  base of government.
Reexamination is not a one-time activity. It must be a continuing process  and we should expect even the initial round to take several years. The  process could be helped by the governmentwide performance plan  required by GPRA, as well as a governmentwide strategic plan and a set of  KNIs. GPRA requires the President to include in his annual budget  submission a federal government performance plan. Congress intended  that this plan provide a “single cohesive picture of the annual performance  goals for the fiscal year.” The governmentwide performance plan could  help Congress and the executive branch address critical federal  performance and management issues, including redundancy and other  inefficiencies in how we do business. It could also provide a framework  for any restructuring efforts. Unfortunately, this provision has not been  fully implemented. Instead, OMB has used the President’s budget to  present high-level information about agencies and certain program  performance issues. The agency-by-agency focus of the budget does not  provide the integrated perspective of government performance envisioned  by GPRA.
In addition, we have previously said that a governmentwide strategic plan  could provide a framework to identify long-term goals and strategies to  address issues that cut across federal agencies. Such a plan for the  federal government, supported by key national outcome-based indicators  and a fully developed governmentwide performance plan to assess the  government’s performance, position, and progress, could be a valuable  tool for governmentwide reexamination of existing programs, as well as  proposals for new programs. Developing a strategic plan can help clarify  priorities and unify stakeholders in the pursuit of shared goals and is  therefore an important first step in articulating the role, goals, and  objectives of the federal government. A governmentwide strategic plan can  potentially provide a cohesive perspective on the long-term goals of the  federal government and provide a much needed basis for fully integrating,  rather than merely coordinating, a wide array of federal activities. The  development of a set of KNIs could both be used as a basis to inform the  development of governmentwide strategic and annual performance plans  as well as link to and provide supporting information for outcome-oriented  goals and objectives in agency-level strategic and annual performance  plans. Successful strategic planning requires the involvement of key  stakeholders and thus could serve as a mechanism for building consensus.  Further, it could provide a vehicle for the President to articulate long-term  goals and a road map for achieving them. In addition, a strategic plan can  provide a more comprehensive framework for considering organizational  changes and making resource decisions.
Fully implemented, governmentwide strategic and performance plans—if  developed in consultation with Congress—could also provide a framework  for congressional authorization, appropriation, and oversight processes.
section_title: Congressional Actions
paragraphs: Congress of course has a number of regular opportunities to provide its  perspective on specific performance issues and performance goals. When  you create a new spending program or tax provision, you have the  opportunity to say what you expect that program or incentive to achieve— and to direct that performance be tracked. I believe Congress should be  clear about what performance information it wants and should expect that  information to be provided. For discretionary spending programs, the  annual appropriations process provides an opportunity to ask about the  performance of an individual program and/or a group of programs within  the same agency or within the jurisdiction of the appropriations  subcommittee. When Congress considers the reauthorization of a program,  it should have information on that program’s performance—and on how  that performance compares with other tools addressing the same or  similar objectives. Reauthorization can—and should—be informed by  performance information and evaluations.
Discretionary spending programs may be looked at in the annual  appropriations process or when they are up for reauthorization. Although  some entitlement programs require reauthorization and so offer up  opportunities for evaluation and reexamination, others do not. With few  exceptions, programs run through the tax code—tax expenditures— generally are not subject to reauthorization; as a result no review or  evaluation of their effectiveness is triggered. For many mandatory  spending programs and tax expenditures, congressionally initiated  oversight may be the vehicle for evaluation. I would suggest that Congress  specify the kind of performance information it would like for these  programs and use that in crosscutting reviews.
The institutional challenge before you is to find a way to broaden your  assessment beyond individual programs or agencies or even committee  jurisdiction. It is not uncommon for multiple tools or programs— administered through more than one agency—to address a similar goal or  national priority. Although this may make sense, it also complicates the  task of evaluation, oversight, and reexamination.
We have previously suggested that Congress consider the need to develop  a more systematic vehicle for communicating its top performance  concerns and priorities; develop a more structured oversight agenda to  prompt a more coordinated congressional perspective on crosscutting  performance issues; and use this agenda to inform its authorization,  appropriations, and oversight processes. Just as the executive branch  needs a vehicle to coordinate and address programs and challenges that  span multiple departments and agencies, Congress might need to develop  structures and processes that better afford a coordinated approach to  overseeing agencies and tools where jurisdiction crosses congressional  committees.
In the past we have also suggested that one possible approach could  involve developing a congressional performance resolution identifying the  key oversight and performance goals that Congress wishes to set for its  own committees and for the government as a whole. Such a resolution  could be developed by modifying the current Congressional Budget  Resolution, which is already organized by budget function. I note that this  year your Committee took the first step by including in this year’s Budget  Resolution a directive that Committee “Views and Estimates” reports  include recommendations for improved governmental performance based  on “committee performance reviews of programs within their jurisdiction.”  I hope this Committee remains interested and continues to urge and  support the other Committees in this effort.
You may also wish to consider what kind of structures will facilitate cross- cutting reviews. If a performance resolution or some other mechanism  specifies areas for reexamination in any given year, what structure will  enable you to look across agencies and at both programs run through the  spending side of the budget and those run through the tax side?  Challenging as this task may be, I believe it is critical to the successful  assertion of Congress’ role in setting the goals and objectives to be  achieved with the programs it establishes and the resources it provides.
section_title: Concluding Observations
paragraphs: Much is at stake in the development of a collaborative performance  budgeting and reexamination process. This is an opportune time for the  executive branch and Congress to consider and discuss how agencies and  committees can best take advantage of and leverage the new information  and perspectives coming from the reform agenda under way in the  executive branch. Through PMA and its related initiatives, including  PART, the Administration has taken important steps in the right direction  by calling attention to successes and needed improvements in federal  management and performance. Some program improvements can come  solely through executive branch action, but for any performance  budgeting or reexamination effort to meet its full potential the  assessments it generates must also be meaningful to and used by Congress  and other stakeholders. I cannot stress this point enough—to make a  difference, performance information must be useful and used. Hence I  believe it is important for Congress to develop structures and processes  that are flexible, adaptable, and inclusive of various perspectives to  conduct successful performance reviews on those issues that cross  jurisdictional boundaries. GAO stands ready to assist Congress in  addressing the much needed baseline review of existing federal programs,  policies, functions, and activities.
Mr. Chairman, this concludes my prepared statement. I would be pleased  to answer any questions you or the other Members of the committee may  have at this time.
For future information on this testimony, please contact Michael Brostek,  at (202) 512-9110 or brostekm@gao.gov or Susan J. Irving at (202) 512-9142  or irvings@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  testimony. Individuals making key contributions to this testimony were  Jacqueline M. Nowicki, Assistant Director; Elizabeth Curda; Edward  Nannenhorn; Amy Rosewarne; and MaryLynn Sergent.
This is a work of the U.S. government and is not subject to copyright protection in the  United States. It may be reproduced and distributed in its entirety without further  permission from GAO. However, because this work may contain copyrighted images or  other material, permission from the copyright holder may be necessary if you wish to  reproduce this material separately.