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This first appeared as a PATImes column in March 2007.
Federal
Agencies Ratchet Up Focus on Performance
by John M. Kamensky
Federal agencies have submitted their proposed budgets to Congress for 2008, and their spending proposals are more clearly linked to what they propose to do, than ever before.
In the past, Congress has complained about such links, but in some cases, Congress has offered encouragement. Last year, for example, one appropriations report even encouraged one agency to mimic another’s reporting format: “The Department of Labor shall submit its fiscal year 2007 congressional budget justifications . . . in the format and level of detail used by the Department of Education. . .” In this case, Education’s format has been touted as one of the most performance-focused budgets across the government.
Progress occurs in small steps!
OMB’s Steady Push to Integrate Performance Information in Budgets
The roots of this steady change started a number of years ago, but momentum has built in the past few years. The Office of Management and Budget (OMB) contributed to this momentum through a series of initiatives.
Budget and Performance Integration Initiative. As part of the President’s Management Agenda (PMA), OMB crafted a set of criteria each agency should meet in order to be rated a “green” on the PMA scorecard. These criteria include:
The objective, according to the President’s fiscal year 2008 budget, is to ensure taxpayers have “clear, candid, and up-to-date information about each program’s successes and failures.” At the end of December 2006, fifteen of the 26 agencies rated by OMB met these criteria, which shows that “getting to green” on this element of the President’s management scorecard – after nearly six years of effort – is more difficult than most had originally anticipated.
Program Assessment Rating Tool (PART). Another major element of the PMA budgeting initiative is the rating of each agencies’ major programs based on a set of questions in the PART. The questions are used to assess program design, planning, management, and performance. OMB started rating 200 programs each year five years ago, and this year largely completed the task. Nearly 1,000 programs have been rated and OMB judges that about 80 percent contain acceptable performance measures and have achieved their annual goals. OMB’s deputy director for management, Clay Johnson, noted that PART needs to be “the instrument that the chief operating officers of each agency use to meet with program managers and with bureau heads to talk about and drive continuous performance improvement.”
The President’s Budget. The budget the President submits each year to Congress has steadily increased the amount of performance information associated with its initiatives. In addition, OMB has been working with agencies to restructure their budget account structures to more closely align with the outcomes described in agencies’ strategic plans. For example, in the budget account for the Federal Aviation Administration, instead of the traditional display of budget account information by “off-setting collections,” “outlays,” or “budget authority,” the account for Research, Engineering, and Development is organized by categories such as: “improve aviation safety,” ”improve efficiency of the air traffic control system,” and “reduce environmental impact of aviation.”
More Detailed Budget Justifications to Congress Prepared by Each Agency. Possibly even more significant than the President’s Budget is the restructuring of the more detailed budget justifications that each agency must submit to Congress. In recent years, OMB has directed agencies to restructure their budget justifications around the goals in their strategic plans. The appropriation committees have pushed back, demanding information be provided in more traditional formats. In fact, one subcommittee attempted to legislate that agencies must “provide congressional justifications in the traditional format,” and that agencies may not “develop alternative congressional justifications.” Congressional committees even asked the Government Accountability Office (GAO) to examine the more performance-oriented approach used in at least one agency and GAO supported the performance-oriented approach.
Department of Education: Harbinger of Promising Practices?
The Department of Education has been lauded by OMB as one of the best in developing an integrated performance budget presentation. Tom Skelly, the department’s budget director, recognizes the competing pressures from both OMB and Congress in how it prepares its budget justification. As a consequence, the department chose to present its performance information in three ways:
For example, one of Education’s strategic goals is to increase academic achievement of all high school students. In its fiscal year 2008 performance budget, Education proposes increasing a budget item from $32 million to $122 million to increase students’ access to Advanced Placement testing. This would increase testing from 1.7 million to 2.2 million students in 2008, and set the foundation for further increases in the future, with specific targets for increases among minorities and students in low income families.
In a November 2006 overview of Education’s approach, Skelly noted that the congressional appropriators he works with appreciate Education’s approach because it gives them information they need in both the traditional format as well as the performance-oriented format.
What’s Next?
What does the President -- and likely his successors -- face as their continuing performance management challenges? Some say specific initiatives sponsored by President Bush will not outlast his Administration, but there seem to be two trends that likely continue to evolve, regardless who is President.
Trend 1: Tying the Performance Threads Together. The first trend is an effort to tie the different “performance” threads together. Linking budget to performance information is but one step. Other steps toward a more results-oriented approach include aligning other management systems within an agency: linking performance to employee pay, linking contracts to performance, linking grants to performance, and ensuring a clear connection between budgets and financial systems. Crafting a broader performance management framework that reaches beyond the budget is beginning to happen in agencies as diverse as the Patent and Trademark Office, the Defense Finance and Accounting Service, the IRS, the Postal Service, and the Air Traffic Organization. To get these efforts underway required strong leadership, but extending this trend from ad hoc “islands of excellence” to a systematic effort across the rest of the government will be a challenge.
Trend 2: Linking Performance to Outcomes Across Agencies. The second trend is linking the performance of different agencies to each other – and possibly other levels of government or the private and non-profit sectors -- so they can collaborate to achieve common outcomes. Again, ad hoc efforts are underway, and models for how to do this are evolving. For example, in the past year, OMB sponsored a cross-cutting analysis of the government’s 109 math and science programs to identify the extent to which there is quantitative evidence of achieving their goals. A governmentwide council that inventoried these programs on behalf of OMB “agreed on common goals for the programs” but recognized that they needed to gather more evidence in order to determine what activities are “most effective at achieving common goals.”
The trend toward budget and performance integration has momentum and the tools needed to make it a reality continue to evolve. A new book, “Integrating Performance and Budgets: The Budget Office of Tomorrow,” co-edited by Jonathan Breul and Moravitz, was recently published by the IBM Center for The Business of Government, begins to address these new tools and includes a helpful set of tips and practical recommendations.