We developed an initial set of results-oriented agency budget practices by reviewing literature on performance management and budgeting and speaking to budget experts. Although some of the literature we reviewed focused on executive branch departments and agencies, much of it focused on the congressional budget process or on the budget processes of state and local governments and other countries. Where applicable, we adapted the information to describe how performance information could be used for budget formulation and implementation in federal agencies. We also drew on GAO reviews and other studies of agency budgeting. To supplement the literature we spoke to budget experts inside and outside of GAO about results-oriented agency budget practices. To test our initial findings from the literature and budget experts, we conducted a case study of budget formulation and implementation practices at the Small Business Administration. The case study helped us to refine the practices and begin to understand how the practices fit together as a framework. Finally, to obtain an operational perspective on the framework, we invited input from a panel of senior agency budget officials who commented on the importance of the practices for achieving agency goals and the challenges to implementing those practices. The panel consisted of seven senior budget officials from a judgmentally selected sample of federal agencies. The panelists represented one commission, two independent agencies, and four agencies from three departments. For the panel discussion, we provided the panelists with a questionnaire and asked them to rate each practice in terms of how important it is to an agency in achieving the agency’s goals and note if they thought the practice was difficult to carry out. We focused the panel discussion on areas where there was greater disagreement about the importance of a practice for helping to achieve agency goals or where the panelists believed a practice was difficult to carry out. We revised the framework to reflect the panelists’ operational perspective and described the practices in greater detail. The framework is organized into four themes that emphasize different dimensions of results-oriented agency budget practices. The first theme focuses on the budget process and asserts that performance should inform agency decisions during budget formulation and implementation. Themes 2 and 3 focus on an agency’s capacity to produce reliable budget estimates and to relate performance, budget, spending, and workforce information in a credible and useful manner. Theme 4 focuses on agency effectiveness and efficiency by emphasizing that an agency should continuously improve its programs and operations and seek approaches to maximize limited resources. Figure 1 depicts the framework for results-oriented agency budget practices. For each theme we lay out a series of agency practices—consisting of activities, processes, and capacities—that are intended to describe how an agency could better inform its budget decision-making and find ways to make better use of available resources to accomplish agency goals. We view the practices as desirable dimensions of budgeting that could be implemented in many different ways by agencies. The characteristics and circumstances that make organizations different from one another must be recognized when considering the applicability of the practices. In appendix I, we provide a more detailed description of the practices. Where relevant we have also noted specific laws, regulations, or other guidance that relate to the practice and apply to federal agencies generally. The framework does not reflect every aspect of the budget process. For example, there are other aspects of budget law and guidance, such as those related to fund control and accountability, that we treat as givens. Similarly, we assume that agencies will comply with appropriations and other laws and guidance and respond to OMB and department directions in formulating and implementing their budgets. The practices do not include those aspects of the budget process that are the primary responsibility of the department, such as coordinating the preparation of budget requests within the department. The framework is oriented toward agency rather than department budget practices because there is a closer connection between performance and the day-to-day management of resources at the agency level. However, since agency budgets are the building blocks of departmental budgets, some aspects of the framework may also apply at the department level. Finally, the framework is an attempt to describe the contribution that the budget function can make to an agency’s capacity to manage for results. It is not intended to be a comprehensive treatment of all the management functions that contribute to agency results. Clearly, the budget function should work in concert with program management and other management functions, such as human capital management, accounting, procurement, and information technology management to achieve agency goals. Overall the panel reacted positively to our efforts to develop a framework and generally agreed that the practices were important for achieving agency goals. In this section we list and briefly describe the practices for each of the themes. The panel also identified practices that were more difficult to implement and discussed the various challenges to implementation, which we summarize at the end of this section. The challenges are significant. Our subsequent work will focus on the progress agencies are making toward overcoming these challenges to better manage for results. The first theme focuses on the budget process and asserts that performance should inform agency resource decisions during budget formulation and implementation. Infusing performance information into budgetary deliberations may improve the agency’s ability to manage for results by increasing the likelihood that resource allocation decisions will reflect performance concerns. For example, performance information should be used to support claims for resources, to evaluate those claims, and to make decisions on tradeoffs between competing needs. For both budget formulation and implementation, Theme 1 practices emphasize communication and feedback between agency management and its program and other offices about the resources needed to achieve agency performance goals and objectives. During budget formulation, agency management should provide context in the form of general guidance to program managers on proposed agency goals, existing performance issues, and resource constraints. Theme 1: Performance Informs Budget Formulation and Implementation For budget formulation, agency management: provides general guidance to program officials on agency goals, performance issues, and resource requests input from program officials on the relative priority of new and existing programs and proposed changes to funding levels based on a review of changes in costs, performance issues, and other relevant factors; uses the input on relative priorities, changes in costs, performance issues, and other factors to weigh competing needs and decide funding levels for existing and new programs; communicates management’s decisions to program officials; and provides an opportunity to appeal the decisions; coordinates with other entities to achieve common goals and avoid duplication; justifies its budget request both within the agency and externally (e.g., with the department, the Congress, OMB) in terms of how requested funds will contribute to the accomplishment of agency informs its staff of departmental, OMB, and congressional actions on the budget request and obtains feedback from program officials on the implications of those actions for agency goals. For budget implementation, agency management: provides guidance to program officials on changes in agency goals, performance issues, and requests updated information from program officials on the relative priority of new and existing programs and proposed changes to funding levels based on a review of changes in costs, performance issues, and other relevant factors; uses the input on relative priorities, changes in costs, performance issues, and other factors to weigh competing needs and decide existing and new program funding levels; communicates its decisions about funding allocations; and provides an opportunity to appeal the decisions; allocates funding in a timely manner; routinely monitors performance, spending, and budgetary resources and adjusts allocations as necessary to maximize performance against goals; uses input from program officials on how changes in funding allocations will affect performance; coordinates program requests for postappropriations budget changes, requests input from program officials on the implications of those changes for agency goals, and communicates the results. Because program managers are in a position to understand the performance implications of different funding levels, management should obtain their input on desired funding levels based, in part, on how the funding addresses current and potential performance gaps and the relative priorities of their activities. Agency management should then use this information to evaluate competing needs and to determine funding levels to request and provide program managers an opportunity to appeal its decisions. In formulating the budget request, agency management should also seek input from outside the agency on issues affecting the agency’s performance. For example, the agency should coordinate with other entities with similar or complementary goals. The agency should justify its budget request in terms of how requested funding levels contribute to achieving agency goals and should inform staff of budgetary actions so that agency management can elicit feedback on performance issues. Similarly, when requesting postappropriations budget changes, the agency should communicate the results to program managers and determine the implications, if any, for achieving agency goals. During budget implementation an agency needs to reconcile appropriated funds and congressional priorities with its earlier budget request and current operating needs. For example, agency management should update its guidance on program goals, performance issues, or resource constraints to reflect significant changes since the formulation of the budget. An agency may need to revisit the priorities established during budget formulation to make informed decisions about how to allocate funding that may be more or less than requested. Similar to formulation, agency management should then use this information to evaluate competing needs and determine final program funding levels. To help managers meet their goals, after appropriations are enacted, the agency should allocate in a timely manner funds needed for program operations. To keep performance on track, the agency should routinely monitor performance, spending, and available resources and make adjustments as needed after obtaining input from program managers on the performance implications. In contrast to Theme 1, which is keyed to the annual budget cycle, the next two themes address an agency’s capacity to produce quality information for decisionmakers during the budget process. An agency’s costs and budgetary resources will change from year to year based on a variety of factors. Often, agencies must grapple with the challenge of achieving performance goals with flat or declining budgetary resources and increasing costs. Theme 2 practices focus on providing decisionmakers with reliable estimates of program costs and budgetary resources to build credible requests for the resources an agency needs to achieve its goals.