Budget Formulation: U.S. Federal Executive Experience

1
Budget Formulation U.S. Federal Executive
Experience

• Bill Dorotinsky
• Seoul, Republic of Korea
• October 16, 2003

2
Outline

• The Office of Management and Budget
• Organization Chart
• Brief History
• Staffing
• Aspects of the Budget Process
• Budget Calendar
• Features of the Process
• Other actors
• Key Interactions
• Budget Documentation
• Sample
• Reference Slides

3
What is OMB?

• OMB is the staff office to the President
  responsible for helping the President carry out
  his Constitutional duties.
• Key OMB responsibilities include
• preparing the annual Presidents Budget
• funds and staffing limitations
• providing policy analysis and advice to the
  President
• government-wide management, including financial
  management and procurement
• budget execution monitoring and control of all
  Federal Government spending after its
  Appropriation by Congress
• review and approval of all Federal Government
  regulations and data collections
• reviewing and coordinating all Executive Branch
  legislative proposals, testimony (policy
  enforcement role)
• providing other staff support to the President,
  as necessary

4
OMB Organization Chart
5
Brief History of OMB

• OMB was created in 1921 as the Bureau of the
  Budget (BOB) within the U.S. Department of
  Treasury.
• In 1939, BOB was moved from Treasury to the
  Executive Office of the President.
• While BOB always played a role in agency and
  government-wide management issues, this role was
  formalized in 1970 when BOB was renamed the
  Office of Management and Budget.
• The most recent change OMB 2000. OMB was
  reorganized to combine the management and budget
  offices into Resource Management Offices.

6
Neutral Competence

• A critical point OMB staff are career staff to
  the Office of the President, providing neutral
  competence.
• Although referring strictly to OMBs management
  function, the following quote nicely summarizes
  the over-all nature of OMB
• The Budget Bureau must be humble. If it ever
  becomes obsessed with the idea that it has any
  work except to save money and improve efficiency
  in routine business, it will cease to be useful.
  Again I say, we have nothing to do with policy.
  Much as we love the President, if Congress, in
  its omnipotence over appropriations, and in
  accordance with its authority over policy, passed
  a law that garbage should be put on the White
  House steps, it would be our regrettable duty, as
  a bureau, in an impartial, nonpolitical, and
  nonpartisan way, to advise the Executive and
  Congress on how the largest amount of garbage
  could be spread in the most inexpensive and
  economical manner.
• General Dawes, 1st Director of Bureau of the
  Budget, 1921

7
OMB Staffing

• OMB employs roughly 535 staff
• approximately 35 of these staff are political
  appointees and staff, or 6.5 of all staff
• the remaining staff are career civil servants
• of these, over 50 are program examiners, who
  have responsibility for individual programs or
  agencies budgets.
• the remainder are staff in OMB-wide support
  offices or statutory offices.
• Most OMB professional staff have at least a
  Masters degree.

8
Aspects of the Executive Budget Process

• Preparation of the President's Budget typically
  begins in the spring (or earlier) each year,
• at least eleven months before the budget is
  submitted to Congress,
• about 17 months before the start of the fiscal
  year to which it pertains, and
• about 29 months before the close of that fiscal
  year.
• The early stages of budget preparation occur in
  federal agencies. When they begin work on the
  budget for a fiscal year, agencies already are
  implementing the budget for the fiscal year in
  progress and awaiting final appropriations
  actions and other legislative decisions for the
  fiscal year after that.
• The long lead times and the fact that
  appropriations have not yet been made for the
  next year mean that the budget is prepared with a
  great deal of uncertainty about economic
  conditions, presidential policies, and
  congressional actions.

9
Budget Calendar
Months Before Fiscal Year Activity
-22 Prepare macroeconomic estimates
-21 Revenue estimates Agency request preparation begins
-20 Broad expenditure estimates
-19 Fiscal Policy set
-18 Ceilings set, call circular to agencies
-17 Additional guidance to agencies
-16 Budget requests submitted
-16 to 14 Requests analyzed, advice provided, decisions taken Macroforecast updated
-14 Passback of decisions, appeals
-13 to 12 Preparation of Budget documents
-11 Budget transmittal to Congress
-6 Budget update to Congress reflecting macroeconomic changes
10
U.S. Federal Budget Features

• Multi-year projections
• Since 1974, OMB has been required to produce
  five-year estimates (budget year plus four years)
• Transparency of Policy Changes
• Beginning in 1974, OMB was required to submit two
  sets of budget estimates for every account
• Current Services estimate of budget authority
  necessary if current law and programs were
  continued with no policy changes.
• Presidents Policy actual budget proposed by the
  President for enactment
• Modified Cash Basis of Accounting
• Since 1956, OMB has been required to produce
  accrual-based budgets
• In practice, there are some significant
  exceptions
• Nonetheless, for each account OMB includes
  estimates of total obligations (incurred
  financial commitment), budget authority (new
  authority to commit resources), and outlays
  (cash).

11
Other Actors
12
Key Interactions
President
Congress
OMB
CBO
Line Ministries
13
Budget Documentation

• Budget of the United States Government. A
  summary of the Presidents budget proposals.
• Budget of the United States Government--Supplement
  . The budget message of the President and
  information on the Presidents proposals.
• Analytical Perspectives. Analyses designed to
  highlight specific subject areas, and to put the
  budget data in various perspectives. Includes
  detailed economic and accounting analyses
  information on Federal receipts and collections
  analyses of Federal spending by department,
  function, and program detailed information on
  Federal borrowing and debt the Budget
  Enforcement Act preview report current services
  estimates and other technical presentations.
• Historical Tables. Budget data of the Federal
  government from 1940 to present.
• Budget of the United States Government, Appendix.
  Contains detailed budget plans for the coming
  fiscal year.
• Performance and Management Assessments. Contains
  evaluations and analyses of programs and
  management at federal departments and agencies.
• Economic Report of the President. Detailed
  information and discussion o f the economic
  situation, forecasts, etc.
• Agency Budget Justifications. Detailed budget
  information for each agency.

14
Sample
15
Sample2
16
Reference
17
Sources of Fund 2003
18
Uses of Funds 2003
19
Executive Branch Management Scorecard 2003