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Tuesday, December 11, 2012
The IBM Center is releasing an update to its 2009 “The Operator’s Manual for the New Administration” for the use of new executives in the federal government. This updated chapter provides insights on how executives can improve budget management in their agencies’ programs.



In the federal government, the budget process is not simply a bean-counting game. The budget process shapes policy—and it inevitably reduces all decisions down to a dollar denomination. The process, including upfront strategic and long-range planning and performance targets, is where policy and strategic decisions are made in the federal government

Obtain Resources in a Challenging Environment

One of the secrets that only the initiated know is that budget numbers are the keys to the doors of everything. Spending for everything the government does—whether it is foreign aid, biomedical research, or education—and revenues from every source are all reflected, recorded, and battled over in numbers. And the sum of those numbers, and who gets how much, is fiscal and economic policy. If it matters, there are numbers that define it. For that reason, you need to understand the mechanics of the numbers process. And you have to give these resource numbers meaning—to put them in the proper context at the right time and know what every important player is trying to do to them or with them and the reasons for the different pressures.

Manage the Resources You Receive

Managing resources means more than simply keeping the books straight and helping to ensure that funds are not misspent. Resources need to be invested and deployed  strategically based on reliable, timely, high quality information that helps policy makers and program officials make difficult choices in a highly complex environment. Understanding costs and measuring program performance are critical to effective decision making and need to be part of the policy and program development process.

While legislation has been put into place to strengthen the role of the federal chief financial officer (CFO), oversight responsibilities for CFOs in the federal government vary from agency to agency. While CFOs are responsible for the financial management activities of their agency, not all CFOs are responsible for budgeting and planning. Similarly, some CFOs share responsibility for implementation of financial management systems with their agency chief information officer (CIO). Moreover, in some agencies, the CFO is responsible for many other agency activities, including human resources, asset management, procurement, facilities, bankcards, and general administration in addition to financial management. In other words, there are no standard practices for federal CFO responsibilities.

Show Results from What You Spend

You and your organization will be under increasing pressure to produce—and to demonstrate—results in terms of your goals and mission. Integrating performance and results with decision making for budget resources has long been a goal of the U.S. federal government. You are coming into government at a time when much progress has been made on obtaining and using performance management information for government decision making. Initiatives have been launched to more effectively link budget and performance.

A focus on results and outcomes can help enhance government’s capacity to assess competing claims for budgetary resources by arming decision makers with better information both on the results of individual programs as well as on entire portfolios of policies and programs addressing common goals. The use of performance information is not an end in itself, but rather a means to support better decision making and lead to improved performance and accountability. While performance budgeting will never resolve the

vexing resource trade-offs involving political choice, it does hold the promise of modifying and informing policy decisions and resource allocation by shifting the focus of debate from inputs to the program outcomes and results.

Plan for Constrained Uncertainty – the New Normal

The Budget process that you must address has two overriding realities.  First, the congressional appropriations process has not been done by the beginning of a fiscal year in several decades – “continuing resolutions” have become commonplace annual events.  This reality means that for several months of the year, you will live in a budget largely limited by whatever amount your program area received last year.  The IBM Center recently released a report from Philip Joyce that discusses the impacts of late appropriations over long periods of time; these include uncertainty about when new starts can be made to programs, a much shorter window for contracts to be awarded during the months following the CR which places stress on the acquisition system, and a shorter window to plan for future years budgets with knowledge of current year enacted levels.  Recognizing that this annual cycle may be more likely rather than less can help you to plan for the timing of activities in each year.

Second, regardless of the outcome of current discussions regarding the “fiscal cliff”, the underlying reality of constrained discretionary spending (and possible reductions in entitlement programs) means that you should continuously seek ways to make your program dollars last longer.  Good management can help – moving to shared services, consolidating redundant IT infrastructures, and implementing more of a self-service web presence can all contribute to cost savings in how your program operates.  The IBM Center’s report Strategies to Cut Costs and Improve Performance has more information about steps to operate programs more efficiently that have been proven effective in the private sector.



Additional Resources


The Costs of Budget Uncertainty: Analyzing the Impact of Late Appropriations by Philip Joyce – 2012

By analyzing historical events and interviews with participants, Dr. Joyce describes the effects of late appropriations on federal operations over the last 35 years, and explains how federal managers have attempted to address increasingly greater levels of budget uncertainty. He also describes in compelling detail the effects—and costs—on government operations of the recent congressional practice of relying on continuing resolutions (CRs) to temporarily fund government for increasingly longer amounts of time.


The Partnership Fund for Program Integrity Innovation: Expanding Ways to Provide Cost-Effective Services -  Jonathan C. Tucker – 2011

In 2010, Congress and the President enacted the Partnership Fund for Program Integrity Innovation (Partnership Fund) to develop and assess pilot projects that meet this goal; the U.S. Office of Management and Budget (OMB) administers the Partnership Fund’s $32.5 million appropriation authorized through FY 2012.  The National Academy of Public Administration, the Partnership for Public Service and the IBM Center for The Business of Government worked with OMB to convene a Roundtable of leading federal, state, local and academic, and private sector experts for a discussion of concrete steps that can be taken to improve human service delivery and identify even more strategies for successful innovation. The Roundtable identified key areas where the Partnership Fund can look to develop new ideas for pilots. Moreover, the discussion pointed to longer term opportunities for expanding the goals of the Fund and Presidential Memorandum.


What We Know Now: A Look into Lessons Learned Implementing Federal Financial Systems Projects - Debra Cammer Hines and Angela  - 2010

The Office of Management and Budget (OMB) issued Memorandum 10–26, which establishes government-wide policies associated with financial systems modernization. This paper presents ten principles designed to provide insight into effective and efficient strategies on how to best deploy financial management systems in alignment with OMB’s goals and policies, with a focus on optimizing resources and information. We offer these principles based upon lessons learned from multiple financial management system deployments throughout the public sector domestically and abroad.


Strengthening Control and Integrity: A Checklist for Government Managers - James A. Bailey – 2010

With the enactment of the American Recovery and Reinvestment Act (ARRA) of 2009 and the extensive reporting requirements stemming from this new legislation, government managers are faced with even greater demands for fiscal accountability and transparency. The report by Professor Bailey provides valuable information to public officials across the nation, from senior management to staff responsible for overseeing day-to-day operations, in managing financial and ethical risks inherent in most governmental activities. The best practices examples from local governments and financial oversight and integrity checklists contained in the report provide sound guidance to facilitate the strengthening of financial controls and integrity across government.


Realizing the Full Potential of XBRL in Government: Case Studies of XBRL Implementation - Yu-Che Chen – 2010

XBRL, simply stated, is an open-source language that can enable the standardization of vast quantities of financial and business data and make the data easier to collect, organize, compare across legal entities, and use in making more timely and meaningful strategic and tactical decisions. Professor Chen examines six major XBRL implementation efforts in five countries and draws a number of important lessons to help executives realize the full potential of XBRL. Early XBRL implementations, driven principally by government financial regulators, have proven that the potential of XBRL is real.


Managing a $700 Billion Bailout: Lessons from the Home Owners' Loan Corporation and the Resolution Trust Corporation' - Susan M Hoffman and Mark K Cassell – 2009

Professors Cassell and Hoffmann observe that the public debate to date over the Troubled Asset Relief Program (TARP) has focused primarily on the policy issues involved, with significantly less attention paid to operational issues. Their report focuses on the challenges the federal government now faces in implementing a series of financial relief programs. To gain insight into how the federal government might act upon these operational challenges, they took an historical look at how the federal government responded to previous financial crises.


Strengthening Government's Ability to Deal with the Financial Crisis - Thomas H. Stanton – 2009

As the administration and Congress take actions to address the immediate financial crisis, determining how to place the government's response on a stronger organizational footing is a key step to reducing the likelihood that the nation will experience a similar financial crisis in the future. In his report, Stanton points out the need to address past policies' inconsistencies, lack of transparency, and shortcomings in organizational capacity. In order to do so, he recommends a number of steps to: ensure a perception of legitimacy of the response effort; enhance government’s institutional capacity to respond effectively; and to supplement current policies to ensure the flow of credit and assist communities to cope with foreclosed homes.


Read about our efforts to update the Operator's Manual.

Read our other Operator's Manual Blog, an update of Chapter Two: Performance.

Read our update of Chapter Eight: Collaboration

Read the original chapters of the Operator's Manual.

Read materials related to Governing in the Next Four Years.


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