Expenditure Management Current Challenges, Future Directions

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Expenditure ManagementCurrent Challenges, Future
Directions

• David Moloney, Assistant Secretary
• Expenditure Management Sector
• FMI Presentation
• Nov 22nd, 2005

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Overview

• Background
• Context
• TBSs role in the Expenditure Management System
• Current Challenges
• Planning
• Implementation and Monitoring
• Reporting and Accountability
• Future Directions
• MRRS Implementation
• EMIS, Evaluation, Horizontal Expenditure
  Management, Management Reserve
• Improving Reporting to Parliament

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• BACKGROUND

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Context

• Canadians demanding greater accountability and
  transparency
• SFT priorities are significant horizontal policy
  and management issues (Climate Change,
  Aboriginal, security, etc).
• Commitments to change the way government works
• Increased role for Parliament
• Launch of ongoing ERC government-wide reviews and
  Budget 2004 reallocation targets
• Budget 2005 commitments and Modern Management
  Agenda

Making good on these commitments means
re-thinking the roles of TB and its Secretariat
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Our Management Action Plan

• Accountable government
• Enhancing Parliaments ability to hold the
  government to account
• Clarifying and reinforcing accountabilities of
  Ministers and Deputy Ministers
• Strengthening departmental management control
  systems
• Modernizing Treasury Board oversight
• Reinforcing compliance and promoting quality
  performance
• Increasing transparency

• Responsive government
• Providing seamless, responsive service
• Implementing Smart Regulation
• Tailoring programs to client needs
• Implementing shared internal services
• Improving procurement and real property
  management

• Innovative government
• Completing PSMA implementation
• Strategic HR planning and recruitment
• Professionalism and learning
• Improved expenditure management information
• Strategic approach to expenditure management in
  horizontal areas

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TBSs Expenditure Management Role
The current system presents certain challenges in
terms of moving to results-driven expenditure
management
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• CURRENT CHALLENGES

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Planning Challenges

• MC System needs improvement
• Lack of measurable objectives or results
  commitments
• Inadequate information from evaluation and
  measurement of results of existing programs
• Lack of robust costing of alternatives
• Need to implement consistent planning frameworks
  in and across departments program architectures
  linking planned spending and results

• Planning solution
• implementation of the MRRS Policy

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Implementation and Monitoring Challenges

• No ongoing, multi-year plan for reviews or
  criteria for reallocation of expenditures
• Reallocation made more difficult by lack of
  systematic evaluation of outcomes measured
  against planned results
• Reserves used to provide short-term solutions to
  program integrity pressures that require longer
  term policy solutions

• Implementation and Monitoring Solutions
• Expenditure Management Information System (EMIS)
  
• Renewal of Evaluation function government-wide
• Horizontal expenditure management (e.g., Climate
  Change)
• Implemented Management Reserve

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Reporting and Accountability Challenges
Pre-Budget Consultations (Sept - Dec) (HoC Cmte
on Finance Report due mid-Dec)
Planned spending and accounting methods differ
from main estimates
Budget (Feb)

Spending has already started
Winter
Supplementary Estimates A (Nov/Dec)
Main Estimates (Feb)
Spring
Fall
Unconnected to a whole of Government plan
Canadas Performance (Nov)
90 Departmental Reports on Plans and
Priorities (March)
Summer
Much detail unconnected to a whole of
Government plan
Supplementary Estimates B (February)
Little in-year information for parliamentary
engagement, but many ad hoc reports tabled all
year round
Spending has already started

• Reporting and Accountability Solution
• Options for transforming reporting to Parliament

Results not used as input for Budget
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• FUTURE DIRECTIONS

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Progress to date

• Better tools for improving departmental
  accountability
• MAF
• SFO sign-off
• MRRS means common government-wide approach to
  collection, management and public reporting of
  financial and non-financial information
• Improving information systems to support MRRS and
  expenditure management functions (EMIS)
• Knowledge of programs and horizontal issues
  (reviews)
• More transparent Estimates

But need to do more, and implementing the MRRS
Policy will provide the foundation for a renewed
system
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MRRS What is it?
All departments within the meaning of section 2
of the Financial Administration Act must.

• Develop a Management, Resources and Results
  Structure
• Program Activity Architecture
• Planned and actual information on resources and
  results at all levels and for all elements of PAA
• Governance structure
• Submit their MRRS to Treasury Board for
  consideration of the
• Allocation and control level (department)
• Accountability level (status quo Program
  Activity for Estimates and Public Accounts
  display accountability provision may ask for
  more)
• Information level
• Use their MRRS as the basis to report in
  Estimates and Public Accounts

Crown corporations are required to discuss with
TBS an appropriately modified application of this
policy
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MRRS A basis for all aspects of the Expenditure
Management System
MRRS Information
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Implementing the MRRS - Achievements

• The MRRS Policy has been approved by TB and is in
  effect 01/04/05
• Initial guidance on developing an MRRS and
  results information.
• Training sessions for results and financial info,
  and extensive one on one meetings with
  departments (over 80) to assist in developing
  results information.
• PAAs for 118 appropriated organizations (2005-06)
• Some horizontal tagging (i.e., Climate Change,
  Aboriginal, PSAT, International, etc) for 04-05
• On-going work on various horizontal frameworks
  (aboriginal, oceans, cities/communities,
  international, science/technology)
• An initial data collection of results information
• A process to amend 05-06 PAAs for the 06-07
  Estimates cycle-
• 38 amendments approved by TB (Aug. 30th 2005)

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Implementing the MRRS (Contd) Current
Information in MRRS

• Financial
• Planned spending at program activity level
  application for PAA and ARLU
• Actual spending in CFMRS now on PAA basis as of
  2005-06
• Non-financial
• Substantial work done by departments on
  performance information
• Most strategic outcomes are now more clearly
  defined than before the MRRS was implemented
• 40 of activities have expected results and
  performance indicators as of April 2005
• Many departments have since developed more
  results information
• The quality of data in this first tranche is
  encouraging
• Important to note that a growing number of
  departments are using the PAA to plan and manage
  for their own purposes, as well as to report

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EMIS as backbone for MRRS
Future
Past

• Management focus largely on
• dollars and inputs
• Weak performance information tied to inputs
  not outputs and results
• Reallocation and budgeting done on an
  incremental basis, usually across the board cuts
  
• Planning and information
• focussed largely at departmental
• level
• Little standardized information to support
  horizontal management
• Challenges in collaboration across departments on
  priorities

• More balanced perspective including priorities
  and performance
• Information systems link resources to results
• Continual review and realignment of resources to
  priorities
• Promote whole of government
• management system
• Comprehensive horizontal information
• Support for collective planning and resource
  (re)allocation

• ARLU and Mains now delivered through EMIS
• Phasing in of EMIS will enable analysis of
  consistent expenditure and performance
  information across government

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Renewal of the Evaluation Function

• Need to link Evaluations to Program Activities
  and to MRRS evaluations that are more strategic
• Evaluations need to provide information on the
  value-for-money of existing programs to guide
  allocation and reallocation

In 2006, TBS will renew the Evaluation Policy to
reinforce program evaluation
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Horizontal Expenditure Management

• TBS is building a horizontal performance
  management framework for all of the federal
  Governments programming for Aboriginal Canadians
  that outlines
• Common objectives across programs
• Program expenditures and results commitments
• This framework to be published via a special
  chapter in Canadas Performance 2005
• In Budget 2005, the Government committed to
  review all climate change programs before
  allocating new funds
• Currently 12 federal organizations deliver
  approximately 100 initiatives
• This review will also be completed using a
  horizontal framework
• Beginning in 2006, ministers will be provided
  with recommendations based on this horizontal
  review

This is a model for the review of other priority
areas with the same goal in mind increasing
transparency and delivering better results for
money invested e.g., Public Security and
Anti-terrorism programs
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New Management Reserve

• Management Reserve received TB approval on August
  30th
• Combines prior Operating Reserve and Program
  Integrity Contingency Reserve, with new funding
  announced in Budget 2005
• Compensation Reserve remains separate
• Reserve is managed in two streams
• Risk Management for urgent health and safety
  issues, critical program risks, and certain legal
  or contractual obligations
• Priority Investments for initiatives with
  positive and measurable returns (efficiency,
  savings) to the federal government

The MR will improve transparency, enable informed
decision-making, and build capacity to address
the root causes of financial pressures
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Reporting to Parliament a Renewed Commitment

• Improving reporting was reinforced in the last
  three Budgets and is an important element of
  Management in the Government of Canada A
  Commitment to Continuous Improvement under the
  pillar of Accountable Government
• The government committed, in consultation with
  parliamentarians, to
• seek ways to better reflect budget spending
  forecasts in the Main Estimates
• make the Public Accounts timelier and easier to
  use
• better communicate the governments overall
  strategic plan at the beginning of each fiscal
  year to help parliamentarians assess spending
  proposals
• use technology to make spending and performance
  information more accessible to parliamentarians

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Main Estimates and the Budget

• Issue
• Planned spending in the Main Estimates should
  reflect more of the Budget currently the Budget
  can exceed the Mains by several billions
• Furthermore, the Budget and Mains use different
  accounting methods accrual vs. modified-cash

• Options
• Consider timing of Mains to allow planned
  spending changes announced in the Budget to be
  incorporated and/or a fixed space between the
  Mains and the Budget
• Also consider including accrual information in
  the Main Estimates

Electronic Reporting to Parliament
Issue Developing technology could allow movement
from a static, annual, paper-driven approach to a
more dynamic, evergreen model
Option Consider enhancing electronic reporting
to support a sustained dialogue on the Business
of Supply, rather than the current emphasis in
the Spring Allow drill-down from the whole of
Government-level to department level to
program-level and allow simplification /
streamlining of RPPs/DPRs Providing
parliamentarians with a user-friendly web site
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Whole of Government Reporting

• Government has committed to better communicate
  its overall strategic spending plan
• This strategic spending plan could be akin to a
  whole of Government RPP
• Outlining plans for realizing priorities set out
  in the SFT and Budget
• Linking planned results to planned expenditures
• Logically, a fall whole of Government performance
  report could present the results and actual
  spending vis-à-vis such a Plan

These reports would need to be based on a stable,
whole of Government framework
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Whole of Government Planning and Performance
Framework (Based on the current MRRS)