OECD Conference: Sequencing and Pacing of Performance Budgeting Reforms

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OECD Conference Sequencing and Pacing of
Performance Budgeting Reforms
Dustin Brown Deputy Assistant Director for
Management Office of Management and
Budget, Executive Office of the President, US
James Inder Director, Financial Support and
Training Office, Bureau of Resource Management,
US State Department, United States.
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Overview

• Program budget classifications
• How are program objectives decided?
• Presenting performance information in budget.
• Government-Wide Efforts
• Agency-Specific Efforts
• Program Assessment Rating Tool
• Organizational Steps to Improve Performance
  Budgeting
• Future Opportunities

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Program Objectives Defined By

• Legislative Branch - Congress
• Authorization Statute (periodic)
• Appropriations Committee (annual)
• Executive Branch the Administration
• Office of Management and Budget
• Agencies
• Grantees and Program Partners
• Other Stakeholders, Public

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Programs, Organizations and Budget Structures

• Typically budgets are program centric
• Agencies, Congress and OMB are used to it.
• Creating budgets by Strategic Goal, Long-Term
  Objectives or Problems will require a cultural
  and policy shift
• Horizontal problems with solutions by vertical
  programs would need this shift

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Agency Performance Planning and Reporting
(Government Performance Results Act, 1993)

• Strategic Plans
• General goals and objectives, including outcome-
  related goals and objectives, for the major
  agency functions for a period of not less than
  five years
• A description of how the goals and objectives are
  to be achieved
• Annual Performance Plans
• Establish performance indicators to be used in
  measuring or assessing the relevant outputs,
  service levels, and outcomes of each program
  activity
• Should be consistent with the agency's strategic
  plan
• Performance Budgets result from integration of
  budget information and agency annual performance
  plans.
• Annual Performance Reports
• Review the success of achieving the performance
  goals of the fiscal year
• Evaluate the performance plan for the current
  fiscal year relative to the performance achieved
  toward the performance goals in the fiscal year
  covered by the report .

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Performance Budget Structure

• Agency Strategic Goals (with budget trends)
• Strategic Outcome Goals
• Program Outcome Goals
• Program Output Goals
• Program Efficiency Measures
• Program Marginal Cost Estimates

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Budget and Performance Integration

• Agencies budget justifications are required to
  include full cost of achieving program
  performance
• Performances costs are interpreted as budgetary
  resources
• Changing to real costs would require a cultural
  change
• Programs costs can be tracked trough cost
  accounting or activity base costing
• Budgetary resources can be linked to expenditures
  via financial statements

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Budget and Performance Integration

• Agencies have developed models for determining
  programs marginal cost
• Current emphasis is in the use of marginal/unit
  cost as part of programs target setting
• Through the use of marginal, unit and full cost,
  budget and performance become better integrated
• Program assessments are used to inform agency,
  OMB, and Congressional decisions on resource
  allocations.
• Programs performance is only one of the factors
  for making budget decisions
• Government-wide budget contains little
  performance information

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Program Assessments

• Evaluate programs in a systematic, consistent,
  and transparent manner.
• Focus on program improvements that can include
  specific actions related to management,
  legislative or regulatory improvements, and
  funding.
• Over the past six years, agencies and OMB have
  completed 1,017 program assessments including 234
  reassessments.
• In 2002, the government could not show what
  results were being achieved by their programs and
  spending.
• After six years of completing program
  assessments, the federal government now has 6,516
  performance measures including 1,367 efficiency
  measures.
• This is the first time in history that we have
  assembled government performance measures in one
  database and reported them transparently on
  www.ExpectMore.gov.

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Program Assessments
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How to Increase Usefulness of Performance Plans
and Reports?

• The right information for the right audience
• Three tiers of performance information
• Strategic Plans, Annual Performance Plans/Report
  (300-400 pages)
• Citizens Report (25 pages)
• Snapshot (2 pages)

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Dept. of Energy Citizens Report Summary
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Dept. of State Citizens Report Summary
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Mock-Up of Two-Page Snapshot
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Mock-Up of Two-Page Snapshot
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Presidential Executive Order 13450Improving
Government Program Performance November 13, 2007

• The EO makes it the official policy of the
  Federal Government to spend taxpayer dollars more
  effectively and efficiently each year.
• Established Performance Improvement Officers
  (PIOs) in each agency
• Established Performance Improvement Council (PIC)

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Performance Improvement Officers

• Continually Improve Program Goals
• Help Develop Program Improvement Plans
• Regularly Assess Program Performance
• Help Hold Managers Accountable for Results
• Effectively Communicate Agency Plans and Reports
• Increase Transparency

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Five Opportunities

• Active performance management
• Linking outcomes with operations (i.e. outcomes
  with outputs and strategies)
• Linking cost (not just budget) to performance,
  including marginal cost analysis.
• Linking organization and individual performance
• Focus on rigorous program impact evaluations
• Developing crosscutting analysis
• See Community Development Ex. In Background
• Greater transparency and accountability

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Background
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Illustrate Performance BudgetingPresidents
Emergency Plan for AIDS Relief (PEPFAR)
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Congress Authorizing Statute
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Congress - Appropriations Committee
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Department of State Budget FY 09
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Agency Congressional Justification
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Snapshot of Sample Grantee Report
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Performance and Accountability Report
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Inside the Citizens Report
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PART Summary
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PART Assessment Details
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Program Improvement Actions
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Program Performance Measures
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Program Performance Measures
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Program Performance Measures
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Program Performance Measures
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USAspending.gov
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Other Stakeholders

• ONE Campaign tracks U.S. commitments on global
  AIDS.

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Alternative Structure

• Arrange by Problems/Outcomes, not
  Agencies/Programs
• Example from Community and Economic Development

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1. Define the Problem

• High Poverty Rural areas
• 64 non-metropolitan counties have registered
  poverty rates higher than 30 percent for each
  Census from 1960 to 2000.
• High Poverty Urban Areas (vs. Metro Avg.)
• 2,886 high poverty neighborhoods in US cities
  with 8.4 million people living in them
• Homeownership rates are 33 percent lower.
• Male employment rates are 19 percent lower.
• Share without a high school degree is 24 percent
  higher.
• Share of families headed by single females is 25
  percent higher.

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2. Identify Federal Programs Addressing Problem

• USDA
• Community Facilities Direct Loan (300M loans)
• Community Facilities Guaranteed Loan (210M loan)
• Community Facilities Grants (17M)
• Rural Business Enterprise Grants (40M)
• Intermediary Relending Program (16M)
• Rural EZs/ECs (13M)
• Commerce
• Econ Devt Admin (320M)
• EPA
• Brownfield Assessment/Cleanup (121)
• HHS
• CSBG (495M)
• HUD
• CDBG (4,330M)
• EZs (15M)
• CD Loans (7M)
• Brownfields (7M)
• Rural Housing and ED (25M)

• Interior
• Land and Water Conservation Fund (94M)
• Regional Economic Development Agencies
• Appalachian Regional Commission (66M)
• Denali Commission (6M)
• Delta Regional Authority (2M)
• Small Business Administration
• 504 Loans (4,500M in loans)
• New Market Venture Capital (3M in loans)
• Treasury
• CDFI (43M)
• Bank Enterprise Award (5M)
• Neighborhood Reinvestment Corp (115M)
• Tax Incentives (5-year revenue loss)
• New Markets Tax Credit (3,500 M)
• EZ/Renewal Communities (6,800 M)
• Brownfield Tax Expensing (1,000 M)
• Work Opportunity Tax Credit (270M)

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2.a. List of Federal Designations Addressing
Problem

• Renewal Community
• Empowerment Zones
• Enterprise Community
• HUD Neighborhood Revitalization Strategy Area
• EDA Distressed Area
• Appalachian Regional Commission
• Delta Regional Authority
• Denali Commission Areas (Alaska)
• CDFI Investment Area
• New Market Tax Credit Low-Income Community
• BEA Distressed Community
• Brownfield Tax Incentive Zone
• SBA HUBZones
• FHA Revitalization Areas
• Rural Community Facility Areas
• HUD Underserved Areas

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3. What is the purpose of the programs?
Tools/ Categories Housing Infrastructure Economic Development Technical Assistance/ Capacity Building Individual/ Family Assistance
Grants Community Development Block Grant (CDBG) Economic Development Administration (EDA) Community Services Block Grant (CSBG) HUD Rural Housing and Economic Development (RHED) HUD Empowerment Zones (EZ) Grants USDA Enterprise Community/EZ Grants HHS Rural Community Facilities HOME Investment Partnerships Neighborhood Reinvestment Corp. (NRC) EPA Brownfield Cleanup HUD Self-Help Homeownership HUD Native American Housing Block Grants HUD Indian CDBG Regional Commissions EDA CDBG CSBG HUD EZ grants Rural Business Enterprise Grants Rural EZ/EC HUD Brownfields HHS Community and Economic Development (CED) HUD RHED USDA Economic Impact Grants Regional Commissions SBA HUB Zone (procurement preference) HUD Indian CDBG HUD NCDI CDBG CDFI HUD RHED Rural Business Opportunity Grants USDA Economic Impact Grants Bank Enterprise Award (BEA) CDFI Native Initiatives CDBG set-asides NRC Regional Commissions CSBG CDBG HHS CED HUD EZ Grants CDFI CDFI Native BEA
Loans USDA Community Facilities (inc. grants) USDA Intermediary Re-lending HUD Section 108 loans SBA 504 loans HUD Section 108 loans
Tax Incentives New Markets Tax Credit (NMTC) Brownfields Remediation Single-Family Homeownership (proposed in 2006) NMTC EZ/EC/RC (wage credits and other incentives) Opportunity Zones (proposed in 2006)
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• 4. Where are the program strengths and weaknesses?

Program Purpose Design Strategic Planning Prog. Mgmt Results Total
All Federal Programs 85 70 79 47 63
Community Economic Development Programs 69 63 82 30 52
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5. How do these programs measure success?
GOAL Performance System/ Program High Level Tracking Indicators Program Outcome Measures Program Outputs
Examples of Community Development Metrics Examples of Community Development Metrics Examples of Community Development Metrics Examples of Community Development Metrics Examples of Community Development Metrics
Improve quality of life in a distressed area to make the target community self-sustaining CDBG None None (recently developed) Number of households assisted with housing assistance Number of jobs created or retained
Improve quality of life in a distressed area to make the target community self-sustaining EDA none Private sector dollars leveraged Number of jobs created or retained in distressed communities. Percentage of investments to areas of highest distress
Improve quality of life in a distressed area to make the target community self-sustaining USDA Community Facility none none Millions of rural residents served by community facilities financed by RHS Number of public safety, educational, and health care facilities financed
Improve quality of life in a distressed area to make the target community self-sustaining SBA 504 Certified Devt. Loan Program none none Estimated number of jobs created or retained Number of 504 loans guaranteed
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Sample Agency Performance Management Best
Practices

• Select limited number (20-30) of senior
  management measures for use in quarterly meetings
  (See Interior EPA).
• Include field offices in some quarterly meetings
  (See HUD, EPA, SBA).
• PIOs ensure PMA Initiative Leads and other
  leaders (CHCOs, CAOs, CFOs, E-Gov,) meet
  regularly to focus on program improvement and
  ensure common standards across Department (See
  HUD, Labor, EPA).
• Align PART and APP goals (See DOE).
• Has a continuing effort to benchmark itself
  against other government and non-government
  entities on performance management processes (See
  NASA, SSA, DOE).
• Establish centralized evaluation unit (if one
  does not exist) and evaluation agenda (See State,
  USAID).
• Program goals are basis for senior manager
  appraisal goals (See EPA and OPM).
• Post regular updates of quarterly meetings
  including performance and improvement actions
  online and has links to performance results on
  its homepage (See OPM, EPA, DOE).