Problem:  The specificity of much government budgeting leaves 
little room for flexibility on the part of managers.  This often 
leads to inefficient operation and an exceccive amount of time 
being devoted to the budgeting process.

Proposed solution:  The President should begin the budget process 
with an executive budget resolution, setting broad policy 
priorities and allocating funds by function for each agency.
     Federal managers should focus primarily on the content of the 
budget, not on the process. A new executive budget resolution will 
help them do that. The President should issue a directive in early 
1994 to mandate the use of such a resolution in developing his 
fiscal year 1996 budget. It will turn the executive budget process 
upside down.  
     To develop the resolution, officials from the White House 
policy councils will meet with OMB and agency officials. In those 
sessions, the administration's policy leadership will make 
decisions on overall spending and revenue levels, deficit 
reduction targets, and funding allocations for major inter-agency 
policy initiatives. The product of these meetings--a resolution 
completed by August--will provide agencies with funding ceilings 
and allocations for major policy missions. Then, bureaus will 
generate their own budget estimates, now knowing their agency's 
priorities and fiscal limits.  
     Beginning with their fiscal year 1995 submissions to OMB, 
departments and agencies will begin consolidating accounts to 
minimize restrictions and manage more effectively. They will 
radically cut the number of allotments used to subdivide accounts. 
In addition, they will consider using the Defense Department's 
Unified Budget plan, which permits shifts in funds between 
allotments and cost categories to help accomplish missions. 
     OMB will simplify the apportionment process, which hamstrings 
agencies by dividing their funding into amounts that are 
available, bit by bit, according to specified time periods, 
activities, or projects. Agencies often don't get their funding on 
time and, after they do, must fill out reams of paperwork to show 
that they adhered to apportionment guidelines. OMB will also 
expedite the "reprogramming" process, by which agencies can move 
funds within congressionally appropriated accounts. Currently, OMB 
and congressional subcommittees approve all such reprogrammings. 
OMB should automatically approve reprogramming unless it objects 
within a set period, such as five days. 
     While understandable in some cases, such earmarks hamper 
agencies that seek to manage programs efficiently. Agencies should 
work with appropriations subcommittees on this problem.  

Evaluation:  Earlier uses of approaches similar to this have had 
positive results.
     Our own Environmental Protection Agency (EPA) tried a similar 
approach in the 1970s as part of a zero-based budgeting trial run. 
Although zero-based budgeting fell short, participants said, two 
important advantages emerged: a new responsiveness to internal 
customer needs and a commitment to final decisions. When 
participants voted to cut research and development funds because 
they felt researchers ignored program needs, researchers began 
asking programs managers what kind of research would support their 
efforts. EPA also found that, after its leaders had agonized over 
funding, they remained committed to common decisions. 
     Typically, federal organizations experimenting with such 
budgets have found that they can achieve better productivity, 
sometimes with less money.  
     During an experiment at Oregon's Ochoco National Forest in 
the 1980s, when dozens of accounts were reduced to six, 
productivity jumped 25 percent the first year and 35 percent more 
the second. A 1991 Forest Service study indicated that the 
experiment had succeeded in bringing gains in efficiency, 
productivity, and morale, but had failed to provide the Forest 
Service region with a mechanism for complying with congressional 
intent. After 3 years of negotiations, Washington and Region 6, 
where the Ochoco Forest is located, couldn't agree. The region 
wanted to retain the initial emphasis on performance goals and 
targets so forest managers could shift money from one account to 
another if they met performance goals and targets. Washington 
argued that Congress would not regard such targets as a serious 
measure of congressional intent. The experiment ended in March 
1993.
     When the Defense Department allowed several military bases to 
experiment with what was called the Unified Budget Test, base 
commanders estimated that they could accomplish their missions 
with up to 10 percent less money. If this experience could be 
applied to the entire government, it could mean huge savings.

Citation:  1993 National Performance Review, Chapter 1

Keywords:  budgeting efficiency