Congressional concerns linger over performance-based budgets

Staff members of congressional appropriations committees support performance-based budgeting for federal agencies in concept, but remain critical of efforts to structure budget justifications around performance goals, according to a new Government Accountability Office study.

Congressional staffers interviewed by GAO between May 2003 and December 2004 said that budget justifications organized around performance tend to contain too much about broad management strategy and too little on workload, output and other factors traditionally considered in budget allocations.

Narrative information included in performance-based justifications is "too voluminous" and too "cumbersome and difficult to use," some staff members told GAO. Others "were concerned about what they described as insufficient consultation in developing the new budget structures," the report stated.

The Bush administration asked agencies to start submitting budget materials in new formats, including performance information, by fiscal 2005. But appropriators "for the most part continued to state a preference for and rely on previously established budget structures," the watchdog agency reported (GAO-05-117SP).

Appropriations staff members also told GAO that performance information in the reorganized budget justifications, intended to illustrate the policy outcomes that agencies could achieve at the requested levels of investment, isn't always reliable. Agency officials and outside observers shared that concern, the report said. Many agencies are still working to upgrade financial management systems that track the costs of various endeavors, and to better define performance metrics.

"Some . . . suggested that improving underlying financial and performance information should be a prerequisite to restructuring budgets," the report stated. "In their opinion, this step is more important to improving management and oversight than the recent budget restructuring efforts."

GAO's findings reflect reactions to performance-budgeting efforts at nine agencies: NASA, the Environmental Protection Agency, the Small Business Administration and the Departments of Commerce, Housing and Urban Development, Justice, Labor, Transportation and Veterans Affairs.

Managers at those agencies told GAO that they benefited from reorganizing their budget materials. At NASA, for instance, officials restructured the agency's budget request and appropriations accounts to reflect the full costs of running programs or clusters of similar programs, including associated administrative expenses. The revised structure enables managers to identify areas of excess and allocate resources more efficiently within programs, according to GAO.

But changes to the appropriation account structure, as opposed to the budget justification documents alone, can create difficulties, the report noted.

Some NASA managers told GAO they worried the reorganization would make it more difficult for the agency to transfer staff members among projects to respond to fluctuations in workload. But others argued that "since control over civil servants . . . moved from center managers to program managers, full cost budgeting would reduce some red tape in dealing with sudden needs or emergencies and that as a result, program managers could move full-time [workers] more quickly."

At the Veterans Affairs Department a proposal to split administrative expenses among accounts prompted a similar discussion, GAO reported. Currently the administrative expenses of various veterans benefits programs are pooled together in a separate account, allowing managers to shift administrative support money during the year as numbers of claims fluctuate.

Under the proposed structure, managers could see the full cost of individual benefits programs. But such a change would require the Veterans Benefit Administration to request transfer authority to move funds if needs for a particular benefits program change unexpectedly, the report said.