Managing the Cost of Government:

Building and Effective Financial Management Structure

AFMD-85-35: Published: Feb 1, 1985. Publicly Released: Feb 1, 1985.

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Federal finances are managed through an elaborate structure of decision processes and information systems. Many of these processes and systems, now obsolete face ever-increasing difficulties in coping with the demands placed upon them. The most visible evidence of difficulties is the enormous cost in time, energy, and public confidence involved in the annual search for consensus on the budget. Problems elsewhere in the structure that are less visible but equally real include: (1) the processes by which we decide how much to spend, and for what purposes, are cumbersome, repetitive, and time-consuming, (2) controls over how federal money is spend are detailed and burdensome, but they are routinely found to be ineffective in preventing abuses, and (3) budgeting, accounting, and management information stems often yield data that are unreliable, and all too often irrelevant.

The government must make a major effort to rebuild its financial management structure. Old computer systems must be replaced with more modern technology--a long, expensive process. At the same time, however, this updating creates the opportunity to build a structure that will serve the needs of government and the public in the last decade of the 20th century and beyond. A modern structure for managing government finances will not cause the budget deficit to disappear, nor will it make difficult budget decisions easy. But it can ensure that congressional and executive branch officials receive timely, reliable, and consistent information with which to make those decisions. This report explains why we believe a major overhaul is needed; it discusses some of the most important elements of a new system. Many of these ideas have been suggested before. We now attempt to unite them in a single, comprehensive framework. Building a more modern and effective financial management structure for the federal government is an ambitious goal, but it can be achieved if there is a broad consensus that the American taxpayer deserves no less.

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