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A Conversation with J. Christopher Mihm: Managing Director, Strategic Issues U.S. Government Accountability Office

Tuesday, October 7th, 2008 - 14:56
Posted by: 
J. Christopher Mihm is the managing director for strategicissues at the U.S. Government Accountability Office (GAO).In this role, he is responsible for GAO’s crosscutting work,

Senate Hearing on Transition

Tuesday, September 16th, 2008 - 14:32
A Senate subcommittee held a hearing last week on what the executive branch is doing to prepare for the upcoming transition.  A House subcommittee plans a similar hearing next week, on the 24th. 

Sharing an Understanding of Shared Services

Saturday, April 12th, 2008 - 16:58
Posted by: 
A Brief Snapshot of What FM and HR Service Providers Are Offering Federal AgenciesManagment

Transition: Role of Think Tanks in 2000

Monday, March 24th, 2008 - 16:43
Here’s where this becomes a true blog.  I know only part of the story and hope that you can add what you know to what happened, or correct what I remember! . . . . the full story is more complex than what I know without doing a lot more research, so this is a work-in-progress. . . .

Make No Small Plans

Thursday, December 27th, 2007 - 17:02
GAO’s released another timely report this past week that helps frame some of the management challenges facing the next President.  What a Christmas present!

Filling Empty Boxes

Tuesday, December 18th, 2007 - 15:36

Forum Introduction: Key Ingredients for Successful Performance Management

Wednesday, April 12th, 2006 - 16:50
It has been 13 years since the passage of the Government Performance and Results Act of 1993.This law requires agencies to develop multi-year strategic plans, annual performance plans,measures of performance, and annual reports that publicly assess agency progress toward the goalsset in their plans. A key purpose of this law was to create new sources of performance informationthat would “improve federal program effectiveness and public accountability by promoting a

Building a Performance-Based Organization from the Ground Up

Wednesday, April 12th, 2006 - 16:40
Posted by: 
Before he was selected as the first chief operating officer (COO)of the Federal Aviation Administration (FAA), Russell Chewmanaged operations at American Airlines’ central controlcenter. Yet unlike most executives who make the transition togovernment from the private sector, Chew was able to takeover a new type of government organization with “customers”and “owners” and a “performance-based” culture.

A Conversation with David M. Walker

Wednesday, April 12th, 2006 - 16:34
Posted by: 
The IBM Center for The Business of Government hosted a“Perspectives on Management” luncheon late last winter withDavid M. Walker, comptroller general of the United States.Mark Abramson, executive director of the IBM Center forThe Business of Government, and Jonathan Walters, journalistand co-author of the Center report “The Transformation of theGovernment Accountability Office,” moderated the session.

Phyllis Scheinberg interview

Friday, November 4th, 2005 - 20:00
Phrase: 
Phyllis Scheinberg
Radio show date: 
Sat, 11/05/2005
Intro text: 
Scheinberg discusses how her office works with DOT's 12 operating components, including the Federal Aviation and Federal Highway Administrations, on budget and program issues. In her four and a half years at DOT, Scheinberg has helped appoint a CFO in...
Scheinberg discusses how her office works with DOT's 12 operating components, including the Federal Aviation and Federal Highway Administrations, on budget and program issues. In her four and a half years at DOT, Scheinberg has helped appoint a CFO in each of the operating components. Scheinberg talks about how her input on the selection, performance evaluation, and budget of the DOT CFOs is essential to maintaining a "dotted line" relationship with DOT's 12 operating units.
Complete transcript: 

Wednesday, October 26, 2005

Arlington, Virginia

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, your host and managing partner of The IBM Center for The Business of Government. We created the center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the center by visiting us on the web at www.businessofgovernment.org.

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Phyllis Scheinberg, assistant secretary for budget and programs, and chief financial officer for the Department of Transportation. Good morning, Phyllis.

Ms. Scheinberg: Good morning, Al.

Mr. Morales: And joining us in our conversation, also from IBM, is Debra Cammer. Good morning, Debra.

Ms. Cammer: Good morning, Al.

Mr. Morales: Phyllis, as I look at the Department of Transportation organizational structure, it looks a lot like a holding company. Can you give us a little insight into the activities of its 12 operating components?

Ms. Scheinberg: Certainly, and you're absolutely right, it is like a holding company. It's a very diverse department. We range from activities like the 24/7 air traffic control operation in FAA to pipeline safety inspectors and to $38 billion a year in the highway grant program. When people ask what the largest organization in the Department is, I have to ask, "What do you mean; what is your context," because FAA has most of our employees -- 47,000 out of the Department's total of 57, 000, but the Federal Highway Administration has the majority of the funding, $38 billion out of about $60 billion a year.

We also have several regulatory programs in NHTSA, FAA, motor carriers -- I don't know if you've heard of the Hours of Service Regulation -- this is for truck drivers and how long they can be on the road in any one week, and that's been very controversial, and FRA with the railroad regulation. So we get into a lot of regulations that affect the public, the traveling public and the working public. We also do a lot of inspections or control a lot of inspections: railroads, pipelines, motor carriers, aviation, airline inspections, and number one mission of the Department is safety. But this has always been the case, and this is really why we exist. Just another example is that we have four credit programs. Most people don't think of the Department of Transportation as a loan or a lending agency, but we do have four loan and loan guarantee programs. So when you look at that as a portfolio, clearly we have quite a diverse department.

Mr. Morales: Phyllis, I'd like to probe the four credit programs, because I wasn't aware of that, but before we do that, can you tell us about specifically the mission of your office, the Office of the Assistant Secretary for Budget and Programs and CFO within the Department of Transportation?

Ms. Scheinberg: Well, I work for the Secretary, Secretary Mineta, and my responsibility is to oversee the flow of all the funds in the Department, $66 billion this year. I'm responsible for the budget preparation and execution of our funds. Also responsible for the preparation of the consolidated financial statements and the coordination of the financial audit, which is going on right now, also the oversight of the Department's program performance. And it's my role to interact with OMB and the appropriations committees in the Congress.

Mr. Morales: Tell us a little bit more about your own specific role as assistant secretary.

Ms. Scheinberg: Well, I think of myself as a problem solver. One of the things that really is important to me is to help the staff, my staff and the financial staff throughout the Department, be able to do their job and help them get their job done. So I take on the role of solving the problems that are standing in the way and impeding the progress.

Another part of my job is to implement the President's agenda. Certainly, the President's Management Agenda and other policies that come out of the White House, and to support the Secretary; everything has a budget and finance component to it, so every time he testifies, speeches he gives, interactions with the White House when he goes to a cabinet meeting, and help him prepare and certainly any policy proposals that come up through the Department and go to the Secretary come through me for comment.

I consider my strongest role in the Department that of building a strong team of financial professionals throughout DOT; it's very important to me that we have a strong team and that the financial professionals see themselves as a component, not just that they're -- the individual operating administrations don't feel connected to each other.

Mr. Morales: And approximately how many professionals do you have in your organization?

Ms. Scheinberg: The office of the assistant secretary is about 55 people, but I have a dotted line relationship to the financial folks in each of the 12 operating administrations.

Ms. Cammer: Now, we understand that you came from or have some experience working with DOT programs when you were at GAO.

Ms. Scheinberg: Uh-huh.

Ms. Cammer: And that you evaluated transportation programs. How has that helped to prepare you for your current assignment?

Ms. Scheinberg: It was excellent preparation. I was at GAO for 11 years, working almost the whole time on transportation programs. My responsibility was, most of the time, surface transportation, and I became one of the directors of transportation issues at GAO. So in that capacity I managed program reviews that GAO did. These were not financial audits; they were program audits. And I was responsible for testifying before the Congress on those reports and on the subject areas, and I also did quite a bit of a speaking to conferences and interest groups.

What this did is gave me a level of knowledge of DOT programs, transportation programs, that I would never have been able to acquire just through a financial job or working on the budget. And so when I came to the Department, I was able to help people in the operating administrations in the program side of things, and I saw the connection -- I knew how their programs worked and I knew what they were trying to do and I could help them with the budget and the financing and put it together with the program knowledge.

My other experience was nine years -- before I went to GAO, I had spent nine years at OMB as a transportation budget examiner, and that experience was invaluable. I use that experience all the time. Knowing what goes on inside OMB and how OMB thinks is just really important when you work in a department CFO.

Ms. Cammer: And now I'd imagine in particular with those 12 operating units, the people who have dotted line responsibility, that that's particularly helpful when you work with them. Could you talk a little bit about what that's like to have a dotted line responsibility into those places?

Ms. Scheinberg: Yes, I'd like to very much, because that was not the case when I first went to DOT. I've been at DOT for 4-1/2 years, but I've been the assistant secretary for about five months. Before that I was the deputy assistant secretary, and when I first was there, we did not have this dotted line relationship. And in fact the capabilities in some of the modes were not what they are now.

One of the things that we have done is set up a CFO, a chief financial officer, in each of those 12 operating administrations. When we first went there, 4-1/2 years ago, the only operation that had a CFO position was the FAA, the Federal Aviation Administration. And it's only been recently that the Federal Highway Administration, with $38 billion in grants, has a chief financial officer.

So that was one of the goals that I and my predecessors have been able to implement, is to develop the caliber of staff and the professionalism of the staff in each of these operations. And in doing that, it was very important to me that these people have a connection to me, in addition to their connection to their administrator, and part of this is done through the selection process that I have approval and input into the selection of these folks. I have input into their performance ratings and I have input into their bonuses. These are the senior level financial folks in each of the operating administrations.

And I don't see this as a negative thing, I think this shows the connection, that these people want to work with me and I want to work with them and not just that there's some kind of a remote connection. They're really a part of my family and my team. So that's how we've been able to do that and all this has been accomplished in the last four years. So I'm very proud of that.

Ms. Cammer: It sounds like it's done wonders to strengthen the financial management at DOT. Now, you've mentioned how you were at GAO and at OMB in a career position, and now you're a political appointee. Could you talk about the significant differences between those two roles?

Ms. Scheinberg: If you don't mind, I'd like to tell you how this happened.

Ms. Cammer: That would be great.

Mr. Morales: Sure.

Ms. Scheinberg: It's kind of personal, but I'd like to share it with you, because it's something that's been very meaningful to me. I never had intended or had even any interest in becoming a presidential appointee. As I said, I worked at OMB as a budget examiner for nine years. I worked at GAO for 11 years. And while I was at GAO, and the beginning of this administration, the nominees for my current position, the assistant secretary for budget and the deputy secretary nominee, called me and asked me to come talk to them, and I assumed that they wanted to talk to me about what I knew about the Department, given my role at GAO, because I knew them and I knew people who -- we had friends in common and so the fact that they would call me would be logical. I had talked to the transition team and others.

And when I came for the meeting at DOT, I was immediately approached and they said, "We know that you know what our problems are, and we want you to come and help us solve them." And that was a very meaningful moment for me, because it made me realize that I could stay at GAO and audit these folks and review them and continue to throw arrows at them, or I could go and sort of put the money where my mouth was and actually address these issues.

So I made it a quick decision and made a quick move, but I did say I had one condition: That the position had been a political position, deputy assistant secretary. And I said I did not want to have a political position, I wanted to continue my long federal civil service career, and so they changed the position for me and made it a career. It was an optional kind of position and so I came to DOT 4-1/2 years ago as a career deputy assistant secretary, which is quite unusual, and worked in that capacity for four years.

I always felt part of the circle on the Secretary's team, so much so that last January, when Linda Combs was nominated to be the controller of the United States, Secretary Mineta asked me if I would consider replacing Linda. That's a quite a thrill when a cabinet secretary says, "I want you to do this." And, of course, I had been doing -- I'd been Linda's deputy and before her Donna McLean's deputy, and so I felt it was -- the Secretary knew what he was getting, and he asked me to this. He clearly knew who I was and what I would do and I said, "yes." And so I went through the White House process, was nominated and had a Senate hearing, a Senate Commerce Committee, and was confirmed by the end of April. So that was quite a thrill after 26 years of federal service to go through all that. It's been pretty exciting to have the top job for the last five months or so. And because I was in the office before -- it's the same, but different than it was before. It's always kind of a -- it's a neat experience for me.

Ms. Cammer: What things do you notice about the difference between being a presidential appointee and civil servant?

Ms. Scheinberg: Well, clearly, I'm involved in more issues, beyond the issues that I was involved in before, that I'm involved in issues that would not just be financial issues, and that's true for the White House and the President's priorities and the Secretary's priorities and how he fulfills his job, vis-a-vis the White House.

So I have a heightened awareness of what's going on in the White House and how the Secretary is interacting with that. And I also, as the assistant secretary and CFO, have a greater accountability for the work that we do in the office. I would say that I definitely feel that the buck stops at my desk. If, God forbid, we shouldn't get a clean audit, it would be my -- I would be the one who would have to go to the Secretary and explain what happened, whereas before I might have gone with the assistant secretary.

Mr. Morales: That's great. What is the Transportation Center for Excellence and how does it impact financial operations? We will ask Transportation Assistant Secretary Phyllis Scheinberg to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Transportation Assistant Secretary Phyllis Scheinberg. Also joining us in our conversation is Debra Cammer.

Phyllis, now that you have been completing the financial statement audits by OMB's accelerated due date, can you tell us what you believe the keys to success are in getting a timely and clean opinion?

Ms. Scheinberg: Well, Al, as you know, OMB moved the due date for the financial audit from January 30th to November 15th. Last year was the first time we had to meet the November 15th date, and we were able to do that, but it used to take us four or five months to do this after the close of the fiscal year, and now we have to complete this whole process in 45 days.

In order to do this, we have four auditors at DOT and they focus the main part of their audits on our third quarter financial statements, which come out after June 30th. And they do just a rollup testing for the fourth quarter, in order to be able to finish the audit in time in this 45 days. So it is quite a compressed schedule and quite an intensive process.

One of the things that we developed in order to be able to do this, is that we developed through our Oracle financial system, a way to produce financial statements overnight at the end of each month and at the end of the fiscal year. So we were able -- when the fiscal year closed Friday, September 30th, Saturday morning we had all our financial statements except for FAA, and that FAA we had Sunday morning. This was just phenomenal compared to a couple years ago. So this helped us in meeting this accelerated schedule because we were able to turn our financial statements over to the auditors in less than a week.

The reality of all this is that now that one financial audit starts right after the next, that this is a year-round activity, not a seasonal surge. So on top of everything else we do, we do financial audits all year-round.

Mr. Morales: We understand that the Department of Transportation was the first cabinet level agency to have a single financial system for all of its operating units. How is DOT's new financial management system doing?

Ms. Scheinberg: It's doing great. Two years ago, that -- exactly, November 2003 was when DOT finished converting the last of the organizations within the Department to our new financial system, which we call Delphi.

DOT was the first cabinet level agency to finish converting to a state-of-the-art financial system using a commercial off-the-shelf software. In other words, we have a single production and it's very cost effective. The biggest advance is when -- one of the things I just mentioned is that we are able to develop our financial statements overnight every month. So we now have monthly financial statements and then also at the end of the year, able to produce financial statements quite quickly.

You wouldn't be able to do that if you had multiple systems, because we have to do a consolidated audit where all of the 12 components have to be combined into one financial statement. This past year, Congress reorganized part of DOT, and we have two new organizations. One is the Pipeline and Hazardous Materials Safety Administration and the other is the Research and Innovative Technology Administration.

When we had to set up the books for these two new administrations, we took a step back and looked at our chart of accounts and decided to update them to reflect all the lessons learned that we have accumulated during the last 5-1/2 years of implementing our new system. And we developed what we now call a model organization, and we set the new agencies up under that model organization, and we'll be gradually migrating all the other organizations to this new chart of accounts over the next couple years.

Again, we wouldn't be able to do that unless we were all on the same financial system. And we're planning to upgrade this software again in February '06. And we've successfully upgraded the software four times already, but it's important, we feel, to keep up with the new releases from the vendor.

Ms. Cammer: Now, all this talk about financial systems makes me think about internal controls. So could you talk about what DOT is doing to address the government's Sarbanes-Oxley requirements or A-123?

Ms. Scheinberg: Last spring we set up an internal controls working group to develop our plan for implementing OMB's updated circular A-123. And we have established a senior advisory team for internal controls this summer. What we're trying to do is use a centralized process and build on work that's already underway, not to duplicate what we've already done. We've hired a consultant to help us identify any gaps in our process, help us assess risks, and ensure that we have complete documentation for all of our controls.

As you probably know, we have a deadline, June 2006, that OMB has set for assurance statements. And so we have less than a year, it's about six months now, to reach that deadline, and the key here is upfront planning and identify the actions required, and we're going to use probably a three-year schedule to complete all the work and not try to do everything in one year, but it is quite an undertaking.

Ms. Cammer: Do you have any advice for any federal agencies just getting underway to address it?

Ms. Scheinberg: Well, I would say it makes sense to me for a large department to use a centralized process rather than have, in our case what would be 12 different agencies going their own way. And also to avoid duplication and try to do things in a way that you're building on what you've already done.

Ms. Cammer: Could you talk about what it means for DOT to be named as one of OMB's four Centers of Excellence for the federal government?

Ms. Scheinberg: DOT is very pleased to have been designated this last year as one of the four financial management Centers of Excellence. We call our center the enterprise service center, and it's located in Oklahoma City at the Mike Monroney Aeronautical Center. Being designated as a center of excellence recognizes that DOT is out in the front on financial management and has a great deal of experience and expertise to offer other federal agencies.

First new external customer was the National Endowment for the Arts, which started working with DOT in October 2004, so that was about a year ago, and just this September we've added two new customers who have selected to use our system and they are the Commodity Futures Trading Commission and the Institute for Museum and Library Services. And they'll start using our financial system in mid fiscal year 2006.

Ms. Cammer: Now, what are you doing to go out and market for customers and then how do you provide customer service to keep the ones you have.

Ms. Scheinberg: The way we're working on the marketing -- because clearly, there's several issues in this whole process, is that we cannot afford to take people away from working on our financial system to do the marketing. So we have awarded a contract to a private sector business partner who is helping us market to new customers, but is not costing us anything, because they will be paid by the customers that they bring on. So we're getting assistance without a cost, so we feel like that's a pretty innovative way to do the marketing. And as you can tell from the folks who have joined us, we're starting with smaller agencies. And part of that is because these agencies will be easier to absorb and work into our system before we would -- we are in discussion with some larger agencies, but I think this is the right way to go, to start with small agencies.

Ms. Cammer: Sounds like a good plan.

Mr. Morales: Well, certainly assistance without paying for it sounds like a best practice to me, also.

Ms. Cammer: Absolutely. Now, we understand that all the agencies under the transportation umbrella have recently migrated or are migrating to the new federal personnel and payroll system. Could you describe why the switch was made and how it's been going?

Ms. Scheinberg: A few years ago OMB looked around in the government and saw about 20 legacy payroll systems, and saw that they were mostly pretty getting old and needed to be rewritten into modern systems and the thought was instead of wasting money or spending money to rewrite basically the same payroll system 20 times, the thought was to consolidate to four centers. Again, this is like the center of excellence that we have for financial systems; this is a consolidated center for payroll. And OMB assigned DOT to the Department of the Interior's Federal Personnel and Payroll System, what we call FPPS. And last April DOT successfully migrated all of our organizations, except for the FAA, which as I have mentioned is most of our people, but we did successfully migrate 11 of our organizations to FPPS. And the transition was so smooth that most of our employees didn't even realize that it had happened.

This past month, we're finishing the job by migrating the Federal Aviation Administration's 45,000 employees to FPPS. We did two parallel tests before we migrated, and the whole process has gone exceptionally well. As part of this migration, DOT upgraded our time and attendance and labor distribution system to a modern web-based system that is interfaced with the FPPS payroll system and with DOT's financial system. We call our new system CASTLE. But what it does is let employees enter on a single screen both their time and what projects they've worked on. This supports our efforts to expand cost accounting throughout DOT.

Mr. Morales: How is Transportation staying green on the President's management agenda? We will ask Transportation Assistant Secretary Phyllis Scheinberg to share her secrets with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Transportation Assistant Secretary Phyllis Scheinberg. Also joining us in our conversation is Debra Cammer.

Phyllis, over the past several years George Mason University's Mercatus Center rated the Department of Transportation's performance and accountability report to be one of the best in government. Our listeners should note that these reports are required by the Government Performance and Results Act. What contributes to the success at DOT, and what advice would you give to agencies whose reports were not scored as well?

Ms. Scheinberg: Well, DOT tries to use some of these same criteria that Mercatus values in producing our PAR, the Performance and Accountability Report: transparency, the benefit to the public, and forward-looking leadership. Mercatus' criteria focused on the usefulness of the PAR to the public. That is, how well does it explain to the citizens of the country the outcome of the Agency's programs and activities. And DOT's PAR goes beyond the Mercatus expectations to reflect the Agency's fundamental commitment to improving organizational performance, which is a very strong goal of Secretary Mineta's. DOT leaders use a variety of performance metrics to support business decision-making, and we're constantly looking for opportunities to innovate and improve performance. Excellent data collection and analysis over time adds to our successful PAR, I believe.

We used the Mercatus ranking factors as the basis for creating and improving DOT's PAR every year. And agencies that are dedicated to using performance metrics to support their management processes have traditionally rated well with Mercatus.

Mr. Morales: How is DOT using financial and performance data to make decisions about programs and projects?

Ms. Scheinberg: The primary reason we have strong financial systems is to provide information to support business decisions about DOT's programs; that's really the reason we go through all this financial work, is to help our program managers make good decisions. Over the last year we've prototyped, piloted, and implemented the first phase of a dashboard that presents both financial and performance data on a single screen to help managers make better business decisions.

The first phase includes status of funds reports, and information on DOT's performance on OMB's metrics. These are for things like financial systems such as the percent of payments made on time each month and our travel card delinquency rate. And just for an example, we've lowered our travel card delinquency rate from double-digit several years ago, to less than one half of one percent in the last several months. And most of that was done because people became aware of it, and this is part of what a dashboard does as you become aware of these things and you can focus on it.

Now that phase one is in production, we're evaluating how well it's doing and planning how to grow and expand the dashboard by adding a variety of other information, including program performance information, human resource information, and information on contracts. When the budget is first being formulated, the Secretary considers many factors when he makes budget allocation decisions for each of the department's operating administrations.

Included in his decision making is program performance. That is how well programs are performing against pre-established targets. He looks at the results of performance measures that are tracked at the department level as well as program evaluation results from OMB's PART process. Following the President's lead, DOT wants to fund programs that are providing the greatest results for the taxpayers. And using performance information is an important factor in making those financial decisions.

Ms. Cammer: What are some of the challenges you've faced in linking the budget and the performance and the financial data together?

Ms. Scheinberg: Well, when we go and look and discuss linking budget performance and financial data, we first look to the Department's strategic plan, which highlights the Secretary's vision and priorities for the Department. And everything we do from a budget and performance perspective should link back to the strategic plan. Once the linkage is established, the Department's budget is where all of the budget performance and financial information come together.

In the budget in brief, the Department allocates its budget requests in two ways: It shows the amount of funding that is allocated to each of the strategic objectives as well as by the traditional appropriations accounts. At a more detailed level, each operating administration prepares an integrated performance budget that displays not only the resources being requested for each program, but also the performance goals and measures that will be used to track the progress. This combination of budget performance and financial information gives both OMB and the decision makers in the Congress the information they need to allocate and oversee DOT's use of taxpayer dollars.

DOT has faced several challenges in creating performance-based budget. Initially, we had to overcome the culture that was resistant to performance measurement. Most people's first reaction to being measured is to resist it, but once we demonstrated that the data being collected from performance measures was being used to help manage and improve our programs, and not being used to punish employees, people became more comfortable in using performance measures.

We also found that we could better justify our budget requests to OMB and the Congress when we presented program data and results to support our requests.

Ms. Cammer: What are some of the performance metrics that DOT uses to measure the progress of its programs?

Ms. Scheinberg: There's several tiers of performance measures that we use, some at the Department level, some at the operating administrations, and some at the program level. At the Department level, we track 40 performance measures to gauge progress. Performance measure results are published annually in our performance and accountability reports. I'll just name a few just to give you an example: One is on time performance of commercial air carriers, another is the fatality rate on our nation's highways, a third would be the pavement performance standards, and another is the number of rail stations and the number of bus fleets that are compliant with the Americans With Disabilities Act. This is just to give you a sense of the range of what we're looking at and how different they can be.

Department level measures are reviewed at quarterly PMA meetings and at other times of the year as appropriate. Each of our operating administrations track what we call supplemental measures to manage their own internal operations. Several of these publish these measures on their individual websites, and FAA posts performance results on a monthly basis. Program managers within each area of the Department also track costs, schedule financial and performance measures for their individual programs, and these are often reviewed on a daily or weekly basis.

Ms. Cammer: Phyllis, a lot of our guests have talked about the challenges of not only getting to green, but maintaining green on the President's Management Agenda. Could you talk about some of those challenges in staying green, and what steps that you're taking to ensure continuous improvement?

Ms. Scheinberg: Well, first I'd like to brag a little bit that we were the first agency to earn four greens on the status ratings for the President's management agenda. A lot of effort goes into meeting these OMB requirements, and to making sure that we keep our green scores as you mentioned. The one area that we're not yet green on is financial performance, which is one of my problems. Financial performance has a very high standard; it requires that you have no material weaknesses in our financial audit.

And even though DOT has received a clean audit opinion for the last four years, and hopefully for this past year well, and we have fully implemented a new state-of-the-art financial system, and we have improved our business processes, and we have been named a financial management center of excellence, we still have not been rated as green, and that's because we have the last couple of material weaknesses on our financial audit that have still some work to be done before we can clear them out.

Mr. Morales: Phyllis, could you tell us about the marginal cost of performance initiative at DOT?

Ms. Scheinberg: We started with a pilot program involving four agencies to launch a marginal cost of -- initiative. This was spring of '04 and that was when we were building our FY06 Budget and OMB liked our model and so this past spring we made it a requirement for all of the DOT agencies for inclusion in the President's '07 budget. Some agencies have found it a challenge to think in terms of marginal costs, especially since we don't have a fully mature cost accounting system with a lot of historic data.

But we feel that attributing costs to a particular goal is only half of the equation. In order to use marginal costs effectively, you have to understand how your agency's daily activities contribute to your program goals, and how those goals in turn contribute to the Department's goals. One thing that made DOT agencies more comfortable with marginal costs was the recognition that in this time of static budgets, marginal cost has to be about increases and decreases, and when they submitted marginal cost scenarios showing what would happen to program performance if they received less money, then they saw the value in doing this.

We feel that our understanding and use of marginal costs will evolve over time, just as the federal government's understanding and use of performance management has evolved. We're proud to note that OMB has asked DOT to share its marginal costs model with the rest of the federal government at a best practices seminar this past spring.

Mr. Morales: What does the future hold for the Department of Transportation? We will ask Assistant Secretary Phyllis Scheinberg to peer into her crystal ball when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Phyllis Scheinberg, assistant secretary of the Department of Transportation. Also joining us in our conversation is Debra Cammer.

Phyllis, in our first segment, as you were describing the 12 organizations under the Department of Transportation, you had mentioned four credit programs. Can you tell us a little bit more about that?

Ms. Scheinberg: Sure. DOT has a couple of relatively new credit programs, and a couple of that we have had for years. The oldest one in the Department is called Title 11. This is a maritime loan guarantee program for shipbuilding, and that has been in place for many years.

A more recent program is called TIFIA; this has to do with intermodal surface transportation, and it is operated out of the Federal Highway Administration, but it's really an intermodal program that emphasizes public-private partnerships and places for projects that don't quite fit in the normal transportation funding program, so it's very interesting. We also have a relatively new program call in the railroad area, that came out of legislation just a couple years ago, and this was to help private railroads in capital investment. And the fourth program is a small and disadvantaged business program for making smaller loans and loan guarantees for small and disadvantaged businesses.

Mr. Morales: Great. Let me transition now to the future. What in your opinion are some of the key issues that will affect CFO and budget offices government-wide over the next year?

Ms. Scheinberg: I think meeting the requirements of OMB's updated circular 123 on management responsibility for internal controls is going to get a lot of attention over the next year, it's going to require a fair amount of work from all of us, and there's going to be a lot of attention. This is in response to the Sarbanes-Oxley legislation that the Congress passed and it's the government's response. So this is very important and it's very important for credibility in the government, and I believe that we all need to do a really good job on this.

One of the issues that some other agencies, maybe not DOT, is going to face is how to replace their outdated legacy financial systems. As we talked about, as a financial management center of excellence, DOT is ready and able to help out other agencies. And I think we will be hearing from some of those folks in the next few years.

Mr. Morales: Phyllis, on a broader basis, what do you see as some of the transportation-related challenges you foresee in the future for DOT, and how do you plan on overcoming them?

Ms. Scheinberg: In the larger transportation area we have quite a few challenges. I mean, certainly in the aviation community, the airlines in particular are facing major problems. We have three major airlines in bankruptcy, we have a merger going on, have rising fuel prices. Congestion is -- the aviation sector is faced with a lot of challenges.

On the safety issues, which are very important to us, especially the highway safety, where most of the fatalities occur -- while we've been able to make great successes in safety belt usage, it's that last 20 percent -- we've increased safety belt usage nationwide to 80 percent, but how to get that last 20 percent, and that is directly correlated to saving lives. And rebuilding the Gulf is a transportation issue. There are major roads that need to be rebuilt, and also the ports involved. I see those as some major transportation challenges.

Ms. Cammer: You mentioned the Gulf as something that is a transportation challenge, but could you talk more about how the events of 9/11 and the recent hurricanes overall have affected your office and how you plan to carry out the functions related to those?

Ms. Scheinberg: Yeah, they've had major impact on us as they have for many people in the government. I would say for my office, one of the most important things is the importance of internal controls, and this has folded right in with our attention to A-123, but we have to keep extra vigilance on keeping everything up-to-date, making sure that when we have these influxes of money and the speed at which we have to respond in some of these situations, that we are following all the internal controls and at the same time that we're responding quickly.

After 9/11, as you probably know, the Transportation Security Agency was established within DOT, and what not everybody understands is how that was done. It was basically established in the Office of the Secretary. We went from having no TSA to having a 60,000 employee TSA in just a few months, and that was all done within the Office of the Secretary, and that means it was done using my office, using the Secretary's procurement office, and just the folks on the 10th floor basically creating this from ground up. And we again tried to take advantage of the best practices in doing it the right way instead of having to fix a lot of, and update a lot of systems and processes of the older agencies. We said, "Let's do it right the first time." So we had very little time, but I think we really made an effort to set up the accounting practices, the procurement practices, in TSA in the very short time that we had; we tried to do it the right way the first time.

Ms. Cammer: Now, during this show you've talked a lot about the increased internal controls requirements around A-123 and the increased pressures around generating financial statements more quickly. Can you talk about the human resources aspect of how you're managing your financial organization?

Ms. Scheinberg: One of the biggest challenges in what we're trying to do is in the human resource area. I would say the biggest challenge is attracting and keeping quality staff. The staff need technical skills, and the workload is very demanding as we talked about with the year-round financial audit.

Good staff get burned out, they just get tired and they get stolen; that's really the basic truth. There are two key skill mixes that I deal with closely, and that's the budget analyst and the financial management folks and accountants in particular.

And on the budget side, it's just really hard to find a lot of people who are interested and trained to be federal budget analysts. We work hard, and you have to be a certain kind of person to want to do that. On the financial side, especially for accountants, we're competing with the private sector, who pay a lot of money for accountants, and we need different skill sets than we have in the past. We really do need CPAs and accountants, whereas in the past we might not have needed too many folks with that level of expertise.

I try to deal with these issues by creating a team environment, just to reinforce the fact that we're supporting the President's and the Secretary's priorities; we're not just doing backroom work that is invisible. I do this through recognizing achievements and contributions to the DOT's missions. And Secretary Mineta has been wonderful, and really shown his appreciation to the staff who make these contributions on the budget and financial side and how important it is to him and to the Department's goals.

Mr. Morales: Phyllis, you've had a wonderful career in the public service. In summary, what advice could you give a person who's interested in a career in public service?

Ms. Scheinberg: Well, I have enjoyed every minute of it; I just think the public services is a fantastic way of giving back to the government and learning -- it's a continuous learning process. I think that I would tell folks, you need to build your skill technical skills and your expertise, that is the key to getting ahead, is having strong technical skills. Also to be a team player, which means be reliable, be dependable, be ready and willing to pitch in. People need sometimes to, you know, volunteer to do the Xeroxing. It's just a matter of getting whatever it has to get done. If the budget is due and you have to get it over to OMB, you know. Yeah, we have to all chip in and roll up our sleeves. But it's a lot of hard work, but I think it's tremendously rewarding.

Mr. Morales: That's fantastic, and that's great advice.

We've reached the end of our time, and that will have to be our last question. First, I want to thank you for fitting us into your busy schedule today. Second, Debra and I would like to thank you for your dedicated service to the public and our country in the various roles you've had at the Treasury Department and now as assistant secretary for budget and programs and chief financial officer for the Department of Transportation.

Ms. Scheinberg: Thank you very much for inviting me, and I've enjoyed our conversation.

Mr. Morales: This has been The Business of Government Hour, featuring a conversation with Phyllis Scheinberg, assistant secretary for budget and programs, and chief financial officer, at the Department of Transportation. Be sure to visit us on the web at www.businessofgovernment.org. There you can learn more about our programs, and get a transcript of today's fascinating conversation. Once again, that's www.businessofgovernment.org. As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad, who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales, thank you for listening.

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