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A New Game of “Twenty Questions” by John M. Kamensky
Regis Philbin, move over! Mitch Daniels, Director of the federal Office of Management and Budget (OMB), has some questions for agencies about the performance of their programs, and answering them may need a lifeline in some cases. While the television game show, “Who Wants to Be a Millionaire,” may be facing oblivion, Daniels has a captive audience for his version of the game among federal agencies.
In an April memo to agency heads, Daniels transmitted the usual guidance on preparation of the following fiscal year’s budget (This is a bit confusing. Congress is currently deliberating the fiscal year 2003 budget, due October 1st The Daniels memo addresses the fiscal year 2004 budget, to be submitted to Congress in February 2003 to go into effect in October 2003). As usual, the memo stresses the need for tight budgets, etc., but this year, there’s a twist. It includes two managing-for-results-related items. First, the budget guidance identifies six programmatic areas where OMB will work with agencies to develop cross-program common measures, and provides detailed background information to begin the development of common measures. The six areas include: low-income housing assistance, job training and employment, wildland fire management, flood mitigation, disaster insurance, and health. The guidance states “A powerful way of evaluating and improving performance is to develop common performance measures for programs with similar goals.”
Second, and probably more significantly, the memo states that OMB will assess the performance of 20 percent of each agencies’ programs. OMB did this for the first time for a handful of programs in each agency as part of the fiscal year 2003 budget submitted in February of this year. The assessment approach was seen as ad hoc. But the Daniels memo conveniently includes a “Program Assessment Review Tool.” This tool, with an accompanying worksheet and a scoring system, is comprised of 20 questions arrayed around four dimensions: (1) purpose/relevance/federal role, (2) strategic planning, (3) program management, and (4) program results. Each of these dimensions is weighted (e.g., “Program Results” is worth 50 percent), for a total of 100 percent.
Questions include: “Does the program make a significant, unique contribution to solving the problem?” And OMB says a “yes/no” answer isn’t sufficient. In this question, for example, it goes on to define the elements of a “yes” answer would include a description of the efforts of state and local governments or the private and non-profit sectors, and an assessment as to whether the federal contribution is significant or only an incremental contribution over the efforts of others. This will be a tough question for many federal programs!
OMB is working with each agency to identify those programs to be assessed in the fiscal year 2004 budget using this new tool. The plan is to expand the number of programs assessed in coming years.
One of the keys to success of this exercise will be to clearly and consistently define what is a “program.” Absent a clear definition, different players in the budget process will be unable to make any decisions based on performance. Currently, the only consistent factor in the budget process is the “budget account.” And even there, much discretion applies. Funds are appropriated to budget accounts, but these accounts often do not correspond to agency programs nor to agency goals.
Ideally, resource decisions should be made around what programmatic goals agencies intend to achieve with the money. But the account structure is often idiosyncratic, evolving over generations, and rarely related to what agencies claim they want to accomplish. In the late-1990s, the General Accounting Office (GAO) inventoried the budget account structure (2.6MB). This work, when compared to agency Results Act performance plans, shows there is a stark disconnect between the goals agencies had outlined and how their money is appropriated and accounted for. Since President Bush says he wants to integrate budget and performance, sorting out the budget account vs. program structure becomes the front line of the battle for program budgeting. How this is resolved will vary agency-by-agency, but developing a consistent unit of analysis used by an agency, its home department, OMB, and Congress will be key to this effort. Eventually, these programs may become the basis for how agencies, OMB, and Congress make their budget decisions – rather than the traditional approach of appropriating by budget account line item. It also becomes the basis for addressing a related OMB initiative – charging back all costs to where they occur – in each program.
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Two other managing-for-results related events occurred in the past month. While not directly related to the Daniels memo, they are relevant.
First, GAO released a report on the quality of agency performance data. Agencies were to conduct an assessment and report for the first time on their data quality. This, of course, is highly relevant to potential users of the data (such as budget decision-makers). It found that, out of the 24 largest agencies, the inspectors general in 11 questioned the validity of the performance data reported.
Second, the Mercatus Center released its third annual assessment of agency annual performance reports – and concluded there was virtually no improvement over the prior year. By law, agencies report their prior year’s performance (as compared against what they promised to deliver in that year’s performance plan) six months after the end of the fiscal year. So, agencies recently released their fiscal year 2001 performance reports.
The Mercatus Center assesses how well the reports issued by the 24 largest agencies communicate their mission and results. This is the third year the agencies have released reports under the requirements of the Results Act, and Mercatus has been scoring agencies using the same set of criteria over this period. It concludes that “The average score of the 22 reporting agencies was 12 percent lower for FY 2001 reports compared to the average for FY 2002.” The Department of Transportation topped the scorecard. At an event to release the report, Mercatus Center staffer Maurice McTigue hypothesized the reason agencies did worse than the previous year was the change in Administrations. Comptroller General David Walker participated in this event as well.
While the GAO data quality report and the Mercatus performance scorecard seem to be discouraging signs, the Daniels performance assessment initiative outweighs them. As program performance becomes more important in the budget decisionmaking process, the quality of data and the clarity of how performance is reported will increase because agencies will see that investing in both is in their best interests.
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