Agencies to receive more money, scrutiny, OMB chief says

Under the 2003 budget plan the Bush administration will submit to Congress next month, federal program managers can expect funding increases, but also more oversight of their operations, according to Office of Management and Budget Director Mitch Daniels.

Daniels outlined the administration's goals Thursday in remarks to federal finance and accounting personnel at a Washington conference sponsored by the Association of Government Accountants. In general, programs that contribute to national defense and homeland security will see substantial increases in funding. Most other programs will see slight spending increases, Daniels said. The new spending will come with a catch, however. Agencies will be under substantially more pressure to demonstrate how well their programs are performing. Daniels argued that previous budgets, which were organized by function or objective, blurred the responsibilities of specific agencies for achieving those objectives. The administration's 2003 budget will be organized by agency. That change "will begin the process of separating programs that work from programs that don't," Daniels said. As such, the budget "will take a long step forward toward governing with accountability." Additionally, future funding will depend on the ability of agencies to document the return on taxpayer investment, Daniels said. Presently, agencies lack meaningful financial data and in some cases, meaningful goals, he said. "We want to know which programs are producing a good return on investment. What do Americans get for their money?" Daniels said. Before agencies can answer those questions, many will need to substantially improve their finance and accounting operations, something most have struggled with for years. The administration intends to turn up the heat on those efforts as well. Beginning in 2003, agencies will be required to account for the full cost of their employee retirement programs--something few agencies currently do, an omission that obscures the true cost of operations. While administration officials say they are committed to improving management, substantial progress will be difficult to achieve. The Defense Department, the agency responsible for half of federal spending outside entitlement programs, is, in its own assessment, several years away from being able to balance its books. At the same time Daniels was describing a new era of accountability to his Washington audience, Defense Secretary Donald Rumsfeld was telling reporters at a Pentagon briefing that financial management was woefully inadequate at the department. Defense officials estimate it will be another year before they even have a blueprint for fixing the system. Another challenge for the administration is the fact that much of the work agencies do is difficult to quantify, something Daniels acknowledged: "Many of the thing government does are not susceptible to clear, crisp measurement. But difficulty cannot be an excuse for inaction."