OMB to expand program performance assessments next year

During the next budget cycle, the administration will rate 40 percent of federal programs on their performance and will use those assessments to make budget decisions, the Office of Management and Budget announced Tuesday.

OMB's method of evaluating federal programs will remain largely unchanged, according to a new set of guidelines for agency program managers submitting information to OMB for the fiscal 2005 assessments. For the fiscal 2003 and fiscal 2004 budget cycles, the administration asked some federal program offices to demonstrate results by submitting performance data with their budget requests.

On average, the president's 2004 budget proposal rewarded programs deemed "effective" with a 6 percent funding increase, and held those "not showing results" to less than a 1 percent increase, according to Carl DeMaio, president of the Performance Institute, an Arlington, Va.-based think tank.

OMB analysts use the information collected in OMB's Performance Assessment Rating Tool (PART) questionnaire to determine if programs are "effective," "moderately effective," "adequate," "results not demonstrated" or "ineffective" at meeting goals established the previous year. The administration considers the ratings when drawing up budget requests.

OMB will continue to enhance and develop the rating tool as planned, despite the imminent departure of Director Mitch Daniels, a driving force behind the assessments, according to spokesman Michael Toth. "The plan still holds," he said. "It was put in place with a long-term vision."

In the fiscal 2004 budget process, 234 programs, about 20 percent of all federal programs, received ratings. Each year, OMB plans to add another 20 percent of programs to the list of those evaluated, with all programs undergoing analysis by fiscal 2008, Toth said.

This year's questionnaire is "very similar" to last year's, but contains some clarifications and simplifications, according to OMB's guidelines. For instance, the fiscal 2005 guidelines allow program directors to demonstrate results by measuring outputs, such as the number of people served or quantity of brochures published, rather than outcomes.

"Most of the changes are adjustments [OMB] has been talking about all along," said Jonathan Breul, an associate partner with IBM Business Consulting Services and a former senior advisor at OMB. "What they really indicate is a consistent and continued push to relate performance to the budget."

The streamlined fiscal 2005 guidelines should make it easier for agencies to fill out the PART questionnaire, Breul added. "This is an exercise most of the agencies can deal with now, as long as they're in a position to demonstrate results."

By OMB's analysis, 5 percent of the 234 programs rated during the administration's fiscal 2004 budget process , were "ineffective." For another 50 percent, agencies couldn't demonstrate results. Thirty percent of programs were rated as either "effective" or "moderately effective" and 14 percent were deemed "adequate."

For example, an "ineffective" Health and Human Services' Health Professions competitive grants program would receive $82 million under the fiscal 2004 budget proposal, a 14 percent decrease from fiscal 2003 funding levels and a nearly 80 percent decrease since fiscal 2002. OMB determined that the program, which provides grants to educate health professionals, failed at its attempts to encourage health professionals to serve in poor or rural areas.

In contrast, the National Health Services Corps, another HHS program, was more successful at moving health care providers into underserved areas, leading President Bush to suggest a 12 percent budget boost, Daniels said in February.

The Bush administration used similar performance analyses to make funding decisions for more than 100 federal programs in its fiscal 2003 budget proposal. That budget proposal marked the first time an administration has formally linked federal spending to program performance.

OMB's commitment to assess an additional 20 percent of programs next year demonstrates that there will be "ongoing review, and ongoing consequences, for performance and lack of performance," DeMaio said.