The Results Act is aimed at improving performance of government programs by requiring agencies to clarify their missions, establish goals and strategies for reaching them, measure performance, and report on their accomplishments. Beginning with fiscal year 1999, the head of each agency is to prepare and submit to Congress and the president a report on program performance. The first of these annual reports is to be submitted no later than March 31, 2000. These reports are to contain two main parts: a report on the actual performance achieved as compared with the performance goals expressed in the performance plan and the plans and schedules to achieve those goals that were not met. If a performance goal becomes impractical or infeasible to achieve, the agency is to explain why that is the case and what legislative, regulatory, or other actions are needed to accomplish the goal, or whether the goal ought to be modified or discontinued. Finally, the reports should also relate performance measurement information to program evaluation findings, in order to give a clear picture of an agency’s performance and its efforts at improvement. To address our objectives, we relied on our large body of work on agencies’ performance data problems and related issues. We drew examples from our reviews of agencies’ efforts to implement the Results Act, such as our reviews of agencies’ fiscal years 1999 and 2000 performance plans, and products we have issued on major management challenges and risks, such as our performance and accountability series and high-risk series. Because this report is based primarily on our previously issued reports, we did not obtain agency comments. Our work on this report was done from October 1999 to January 2000, in Washington, D.C., in accordance with generally accepted government auditing standards. Agencies need reliable information during their planning efforts to set realistic goals and later, as programs are being implemented, to gauge their progress toward achievement of those goals. In our assessments of annual performance plans, we identified challenges that will affect agencies’ abilities to reliably report on the achievement of program goals and, in cases where goals are not met, either identify opportunities for improvement or whether goals need to be adjusted. For example, we concluded in our review of fiscal year 1999 performance plans that future plans would be more useful if they would, among other things, (1) more fully articulate how strategies and resources will lead to improved performance and (2) provide much greater confidence that performance information will be credible and useful for decisionmaking. Although, on the whole, the fiscal year 2000 plans showed moderate improvements over the fiscal year 1999 plans, we identified these two issues as continuing key weaknesses common among agencies’ plans. Most of the fiscal year 2000 plans related strategies and programs to performance goals; however, few plans indicated how the strategies would contribute to accomplishing the expected level of performance. Agencies need to understand and articulate how what they do on a day-to-day basis contributes to mission-related results. Such an understanding is important for agencies to pinpoint opportunities to improve performance and design and implement appropriate initiatives. This information is also helpful to congressional and other decisionmakers in assessing the degree to which strategies are appropriate and reasonable. The outcomes of many federal programs are the result of the interplay of several factors, and only some of these are within a program’s control.Further, on a daily basis, agencies do not produce outcomes, but rather outputs, such as activities, products, or services that are intended to contribute to outcomes. Thus, a key analytic challenge for agencies is knowing how their programmatic efforts contribute to their desired outcomes. The inconsistent attention to this critical element undermined the value of agencies’ performance plans and, unless addressed, it also will severely limit the value of their performance reports. In 1997, we reported that the Department of Justice’s Immigration and Naturalization Service (INS) lacked data on the overall effectiveness of its southwest border strategy. For example, data were insufficient to indicate whether illegal aliens were deterred from entering the United States, whether there had been a decrease in attempted reentries by those who had previously been apprehended, and whether the strategy had reduced border violence. We noted that, despite the investment of billions of dollars in the strategy, INS had amassed only a partial picture of the effects of increased border control and did not know whether the investment was producing the intended results. We reported that a comprehensive, systematic evaluation of the agency’s strategy to deter illegal entry along the southwest border would provide INS with information on whether its border enforcement strategy had produced the intended results. After our report, INS contracted with independent research firms for an evaluation. Another weakness that we identified in our review of agencies’ fiscal year 1999 and fiscal year 2000 performance plans was the limited confidence they provided in the credibility of performance information. Credible performance information is essential for accurately assessing agencies’ progress towards the achievement of their goals—the cornerstone of performance reporting. As shown in figure 1, our analysis of agencies’ fiscal year 2000 performance plans noted that most of the plans provided only limited confidence that performance information would be credible. Only the plans for the Department of Education, the Department of Justice, the Department of Transportation, and the Social Security Administration provided general confidence that their performance information would be credible. Decisionmakers must have assurance that the program and financial data being used will be sufficiently timely, complete, accurate, useful, and consistent if these data are to inform decisionmaking. However, like the fiscal year 1999 performance plans, most of the fiscal year 2000 plans lacked information on the procedures the agencies would use to verify and validate performance information. Similar to our findings with the fiscal year 1999 plans, we also found that, in general, the fiscal year 2000 plans failed to include discussions of strategies to address known data limitations. We reported that when performance data are unavailable or of low quality, a performance plan would be more useful to decisionmakers if it briefly discussed how the agency plans to deal with such limitations. Without such a discussion, decisionmakers will have difficulty determining the implications for assessing the subsequent achievement of performance goals that agencies include in their performance reports. In order to successfully measure and report progress toward intended results, agencies need to build the capacity to gather and use performance information. However, our work over the past several years has identified limitations in agencies’ abilities to produce credible performance data. Specifically, those limitations relate to program design issues that may make it difficult to collect timely and consistent national data, the relatively limited level of agencies’ program evaluation capabilities, and long-standing weaknesses in agencies’ financial management capabilities. In several program areas, devolution of program responsibility from the federal level and consolidation of individual federal programs into more comprehensive, multipurpose grant programs have shifted both program management and accountability responsibilities toward the states. These programs vary greatly in the kind and degree of flexibility afforded to state or local entities, distribution of accountability across levels of government, and availability of direct measures of program performance. In our report on grant program design features, we noted that relatively few flexible programs collected uniform data on the outcomes of state or local service activities. Collecting such data requires conditions—such as uniformity of activities, objectives, and measures—that do not exist under many flexible program designs. For instance, we reported that the block grants enacted as part of the Omnibus Budget Reconciliation Act of 1981 carried no uniform federal information and reporting requirements. States collected a wide range of program information, but the collection efforts were designed to meet the needs of the individual states. Congress had limited information on program activities, services delivered, and clients served. As a result, it was difficult, in many cases, to aggregate state experiences and speak from a national perspective on the block grant activities or their effects. Similarly, without uniform information definitions and collection methodologies, it was difficult to compare state efforts or draw meaningful conclusions about the relative effectiveness of different strategies. Education is one of many agencies where the interest in having enough information for accountability and federal program management continually competes with the aim of providing local agencies with the flexibility needed to implement their programs on the basis of their local needs. The Safe and Drug-Free Schools program, for example, allows a wide range of activities, such as drug prevention instruction for students; staff training; general violence-prevention instruction; and special one-time events, such as guest speakers and drug- and alcohol-free social activities.States are also permitted to define the information they collect on program activities and effectiveness. Under the Safe and Drug-Free Schools and Communities Act, Education oversees state programs and state agencies monitor local programs. Under the act, each state may establish its own reporting requirements for local education agencies. Although these requirements have some common elements, state requirements vary widely. With no requirements that states use consistent measures, Education faces, as our work has shown, a difficult challenge in assembling the required state reports to develop a nationwide picture of the program’s effectiveness. Because states, localities, or nongovernmental organizations operate many of its programs, the Department of Health and Human Services (HHS) experiences similar challenges. The Personal Responsibility and Work Opportunity Reconciliation Act dramatically altered the nation’s system for providing assistance to the poor. Among the many changes, the act replaced the existing entitlement program for poor families (Aid to Families With Dependent Children) with fixed block grants to the states to provide Temporary Assistance for Needy Families (TANF). Under the TANF block grant, states have flexibility in designing and implementing their own assistance programs within federal guidelines. Meanwhile, HHS has a broad range of responsibilities for ensuring accountability from the states. The welfare reform law gives HHS administrative and oversight responsibilities, the performance of which will rely on state-provided data. HHS needs to ensure that it receives comparable and reliable data from the states to help it fulfill its oversight responsibilities, which include ensuring that states enforce the federal 5-year time limit on receiving welfare benefits, meet minimum work participation rates, and maintain a certain level of state welfare spending.