Budget formulation needs sharper tools than spreadsheets, scholars say

The federal budget process is stuck in an era of convoluted Excel spreadsheets, and could benefit from more sophisticated planning and analysis technology to meet the growing demand for integration with data on program performance, according to two budget scholars.

In a new book on "the budget office of tomorrow," Jonathan Breul, a senior fellow with the IBM Center for the Business of Government, and Carl Moravitz, a managing consultant with the center, argued that Internet-based "performance scoreboards" and "dashboards" that give instant, dynamic readouts of key business information are the kinds of budget tools needed to inform federal officials' day-to-day decisions.

The authors pointed to the traffic-light-style score card used in the President's Management Agenda as an example of a quick-read tool that synthesizes complex program information. They said more and more complex options are in demand.

"These techniques have eliminated many ad hoc data calls and the back-and-forth exchange of electronic spreadsheets to populate congressional, [Office of Management and Budget] and departmental data calls," they wrote. The authors said the best systems collect financial and nonfinancial historical data, and allow managers to model and test potential decisions by entering them into the systems as planning assumptions.

The work that falls to budget offices has greatly expanded over the last 20 years, largely because of new requirements contained in legislation such as the 1993 Government Performance and Results Act and the 1990 Chief Financial Officers Act, Moravitz said. But budget processes have remained largely the same, he said.

Moravitz, who served as budget director at the Internal Revenue Service and then the Treasury Department between 1990 and 2003, said his office routinely handled more than 2,000 questions from Congress and OMB, gathering information on a one-time basis to respond to a particular question. As budget chief, he tried to integrate more of the frequently requested data into the regular process so there would be less of a scramble when it came time to find answers quickly, he said.

More sophisticated tools would help managers answer such questions quickly and easily by dynamically tracking key data points, eliminating the need to dig through spreadsheets and potentially update numbers to answer questions.

Breul said OMB has increasingly focused on the integration of budget and performance data -- through the Program Assessment Rating Tool for example. But it is also important to link performance with backward-looking program costs, as well as forward-looking projections, he said.

Information technology providers who offer cost accounting systems are increasingly ready to take on the budget formulation side of the ledger as well, the authors said.

Based on a 2005 study of nearly 900 chief financial officers at public and private organizations, they argued that the implementation of standard policies, common processes, process simplification and best practices is more rapid at high-performing organizations than at lower-performing ones. "The need for and benefits of these sorts of changes are every bit as applicable to budget officers as they are to finance organizations," they wrote.

"The important end state is to tie together the total process of developing, securing and managing budget resources" to support decision making and resource management, they said.