Daniel K. Seto
October 1, 2001
"Budgeting is the process by which we as a nation resolve the large number of often conflicting objectives that citizens seek to achieve through government action."
For at least the last 35 years, Congress has wrestled with the process of how to fairly allocate revenues. In other words, how to rationally decide which programs to initiate, which to expand, and which to terminate. And yet, by looking at past budget reform efforts, Congress seems reluctant to admit that the budget is a political document, and as such, may reflect decisions where performance information may be one, but not the only, factor taken into account.
Recent Major Budget Reform Efforts
Each of these budget allocation processes sought to replace the purely political decision making of the past. Yet, by trying to insulate the formation of the budget, from political considerations, each was doomed to failure. I will briefly describe the advantages and disadvantages of each below.
PPBS arose during a time where systems analysis reigned supreme, with special emphasis in the RAND studies of the 1960s. PPBS's value lay in its attempt to integrate long-range planning, program execution, and budgeting. Some of its faults lay in the detailed information required by this system. For example, goals, objectives, and activities, stated in measurable terms, need to be generated by the programs. Then reams of data need to be collected by those same programs to show the progress towards the goals and objectives. Soon, the forest of details makes it difficult to remember what the original tree was supposed to look like.
In addition, the data to judge the progress made toward the objectives are typically accumulated and reported by the same people to be judged, that is, the managers themselves. This leaves open the door to creative reporting. Especially when managers see the legislative branch apparently giving little notice to the reports they so carefully prepared. Is it then not hard to understand that managers typically view this system as just another hoop to jump through while they do what they were going to do anyway?
PPBS is also a conservative force. Namely, there is little, if any, review of the base budget and the assumptions underlying it. Hence, existing programs may continue on, year after year, without a review of their need or effectiveness and new programs are simply incrementally added on top of the existing ones.
Further, in no case is direct public input allowed. The budget is proposed, reviewed, and refined behind closed doors. It sees first light when released by the executive branch for review by the legislative branch. But by then, it may be too late for effective public comment, much less comprehension of the details. But in no sense of the word, is it a transparent document or process.
III. Management by Objectives
MBO endeavors to objectively identify the quality, quantity, and timeliness of work by developing performance agreements that specify deliverables. In addition, feedback on the performance of the program is continually polled to provide timely information. If the emphasis is on meeting objectives, then the critical component will be deciding what the objectives are. Herein lies the problem. Specifically, when the public is barred from being part of the conversation on what the objectives should be, an essential voice is lost - essential because a more nuanced and more fulsome objective may be created when all of the stakeholders participate.
IV. Zero-Base Budgeting
In times of dramatic change, ZBB can be a force for such change by questioning the basic assumptions about existing programs. Where PPBS is conservative, ZBB radically forces programs to constantly justify themselves, or be deleted.
In practice, ZBB is tempered by the amount of wasted time and paper required to justify a program's existence. So much so, that in a true ZBB system, program managers would probably spend most of their time justifying what they do, rather than doing it.
But as in PPBS, there is no role for the public citizen until the budget is submitted to the legislative branch. While some would say, this is as it should be; others would say the executive branch should be no less open to public input than the legislative. Indeed, some would say the executive branch needs to be even more transparent, and less resistant to public input, than the legislative because, out of the thousands of executive employees, only the president is elected. Hence, the ability to have effective public input is extremely narrow.
V. Government Performance and Result Act
The GPRA requires programs to establish missions, goals, and performance measures as well as clear linkages between resources and results. As such, it is a melding of previous reforms. For example, from PPBS comes an emphasis on creating measurable goals and objectives, and from MBO comes its focus on outcomes and outputs.
However, unlike the earlier reforms, the "GPRA requires all federal agencies to set strategic goals in consultation with the Congress and key stakeholders…"
Even at this late date, however, it is unclear whether GPRA will be an enduring change or end up on the junk heap of past budget reforms. Of the 35 agency plans for FY 2000, reviewed by the General Accounting Office, less than half (15) could show how activity funding would be allocated to achieve their performance goals.
Previous budget reform efforts tried to minimize, if not completely substitute, science for open political discourse. All failed, in major part because of this.
But despite the fact that its been over seven years since the enactment of the GPRA, it is still unclear whether it will be successful in reforming the budget process. However, the GPRA, because it melds the best of the previous reforms, and provides for at least some participation by all stakeholders, supplies the basis for some optimism.
 Irving, Susan J. Assoc. Director, Budget Issues, Accounting and Information Mang. Div., US General Accounting Office, in testimony before the Committee on the Budget, US House of Representatives (GAO/T-AIMD-96-129), July 11, 1996, at 1.
Posner, Paul L. Director, Budget Issues, Accounting & Information, Management Division, US General Accounting Office, July 30, 1999 memo to the Honorable Fred Thompson, Chairman, Committee on Governmental Affairs, (GAO/AIMD-99-239R), at 2.