Streamlining Zero-Base Budgeting Will Benefit Decisionmaking

PAD-79-45: Published: Sep 25, 1979. Publicly Released: Sep 25, 1979.

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The Federal budget process plays a major role in Government decisionmaking. Zero-based budgeting was assessed as a tool for analysis and decisionmaking. Managers using this concept: examine current objectives, operations and costs; consider other ways of carrying out their program or activities; and rank different programs or activities by order of importance to their organization.

It was found that often both private and public sectors hastily applied a rigid, mechanical zero-base budgeting process. This led to problems which resulted in: expectations and results differing at different management levels; duplication of effort; useless information; lack of incentives to cut waste; and frustrations created by having few visibe results to show for the resources committed. Zero-base budgeting concepts should be incorporated into an organization's planning, budgeting, and reassessment processes so as to strengthen and streamline all of these analyses and decisionmaking functions. Implementing the budgeting concepts into the Federal budget process has added useful information on managers' priorities, but it has also increased the workload of preparing the budget. Linking executive and legislative information should make it more useful to various decisionmaking bodies, because they would all be using more consistently structured information. If public and private organizations adopt the broad definition of zero-base budgeting and the implementation approach that GAO suggests, they should be able to streamline the process to their individual needs.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director, OMB, should require that the Federal zero-base budgeting process be streamlined, retaining the basic concepts and reducing the process and paperwork aspects. This should include: (1) identifying the essential information needs of each agency, OMB, the President, and Congress that can be provided by zero-base budgeting and eliminating other reporting requirements; (2) phasing the planning, budgeting, and reassessment and providing firm links between the phases; (3) incorporating flexibility into the process so that agencies find the budgeting advantageous in formulating operational plans; (4) achieving agreement between OMB and the agencies on what programs/activities will receive comprehensive budgeting treatment during the upcoming budgeting cycle; (5) developing comprehensive information for policy and program review only on those agreed upon programs; (6) developing the minimum information necessary on all other programs for comprehensive ranking; (7) unifying or linking the budgeting program lists with the President's, the agencies', and authorizations and appropriations committees' lists to the maximum extent practicable; and (8) requiring agencies to promptly design their accounting systems to provide data necessary to support the adopted budgeting structure. OMB should realize that success requires: (1) clearly defined rules; (2) design responsibility at sufficiently high levels to bring about change; and (3) incentives for managers to view the budgeting as an opportunity to win.

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