OMB to rate 20 percent of all federal programs in next budget

The Bush administration will use performance analyses to help make spending decisions for one fifth of all federal programs in its next budget proposal, Office of Management and Budget Director Mitch Daniels announced in a recent memorandum to agency heads.

Daniels' April 24 memorandum said OMB would expand its effort to base budget decisions on program performance in its fiscal 2004 budget submission. This year, OMB used performance analyses to inform its funding decisions for more than 100 programs. OMB officials are working to develop better criteria to rate programs, Daniels said.

"OMB has already begun an extensive effort to identify a subset of programs and evaluation metrics for these programs," he wrote in the memo. "Effectiveness ratings for approximately 20 percent of your programs will be published in the president's fiscal year 2004 budget."

Daniels also directed agencies to submit their fiscal 2004 budget requests at fiscal 2003 levels. Any proposed spending increases must be justified with "credible" performance information and offset by cuts elsewhere, he wrote. Additionally, agencies must find room in their budgets to fully fund the administration's 5-point management agenda. One of these initiatives--OMB's competitive sourcing program--can involve substantial startup costs for civilian agencies that have never held public-private job competitions before.

Budget planners will also rate programs in six areas where jurisdiction is shared among multiple agencies, such as job training, which is administered through 48 programs spread across 10 agencies. For example, job programs in the Labor, Education and Housing and Urban Development departments could be evaluated by how many people they place in jobs, or by how much it costs to place someone in an education program. Program managers can then use this information to share best practices or to redirect funding to other areas, according to a description of the initiative attached to Daniels' memo.

OMB will study programs in six governmentwide areas: low-income housing assistance, job training, wildfire management, flood mitigation, disaster insurance and health care. Agencies can volunteer for the studies by contacting OMB.

Daniels' directive shows that OMB is serious about making program evaluations a standard part of the budget process, said John Mercer, a consultant who helped write the 1993 Government Performance and Results Act. But Congress must also consider this performance information in budget decisions, he said.

"There has been a big missing piece, and that is Congress' interest in using program performance in authorization and appropriation decisions," Mercer said.