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United States General Accounting Office: 
GAO: 

Testimony: 
Before the Government Reform Subcommittee on Government Efficiency, 
Financial Management and Intergovernmental Relations, Rules 
Subcommittee on Legislative and Budget Process, House of 
Representatives: 

For Release on Delivery: 
Expected at 2:00 PM: 
Thursday, September 19, 2002: 

Performance Budgeting: 

Opportunities and Challenges: 

Statement of David M. Walker, Comptroller General: 

GAO-02-1106T: 

Mr. Chairman, Madam Chair, Members of the Subcommittees: 

I am pleased to be here today to discuss efforts to link resources to
results—what many have referred to as “performance budgeting.” Over the
past decade the Congress and several administrations have put in place a
structure for increasing the focus on and accountability for government
performance. Federal agencies have been working to carry out the
Government Performance and Results Act (GRPA), which requires the
development of periodic strategic and annual performance plans and
reports. This is part of a broader movement towards greater 
accountability in government and greater responsibility for 
results—both at the institutional and eventually at the individual 
level. 

GPRA requires linkages of performance plans to budgets, recognizing that
one of the ways in which the full acceptance and potential of 
performance management can be promoted is if this information becomes 
relevant for the allocation of resources. The current administration 
has made linking resources to results one of the top five priorities in 
the President’s Management Agenda. In this regard, the Office of 
Management and Budget’s (OMB) latest initiative, the Program Assessment 
Rating Tool (PART), has been designed to use performance information 
more explicitly in the federal budget formulation process by 
summarizing performance and evaluation information. The administration 
plans to apply this new tool to 20 percent of the programs to be 
included in the upcoming fiscal year 2004 federal budget. 

In my testimony today I make several points: 

* First, the long-term fiscal challenge facing our nation should serve 
to frame our discussion. Absent structural change in a number of major
entitlement programs, budgetary flexibility will continue to decline and
eventually disappear—while demands for new federal resources to address 
such emerging challenges as homeland security and other issues become 
more compelling and pressing. 

* Given our longer-range fiscal imbalance, there is also a need to 
broaden the measures and focus of the federal budget process to 
accommodate these goals. The nation’s fiscal challenges escalate 
rapidly just beyond the 10-year budget projection period. As a result, 
new metrics and mechanisms are needed to better highlight the longer-
term implications of existing programs and proposed new fiscal 
commitments. 

* Furthermore, in order to address emerging challenges it is necessary 
to address both retirement and health programs encumbering the nation’s
fiscal future in addition to reexamining the base of existing programs—
both discretionary programs and other entitlements—to free up resources 
to address new needs in a rapidly changing society. Such an examination 
should be cross-cutting and comprehensive in nature—all relevant policy 
tools and federal programs, including tax preferences, should be “on 
the table” in addressing such policy areas as low-income housing or 
health care financing and delivery. While such a comprehensive 
reassessment will take time and may have to be addressed in phases, it 
is critically important that it occur. 

* We are mindful that this kind of review will require a proper national
debate about how to make government relevant for the emerging 
challenges and needs of the 21st Century. Nothing less than an extensive
public education effort will be required to fully inform the American
people about the long-term outlook under the current policy portfolio as
well as the alternative choices that are available. 

Credible outcome-based performance information is absolutely critical to
foster the kind of debate that is needed. Linking performance 
information to budgeting carries great potential to improve the budget 
debate by changing the kinds of questions and information available to 
decision makers. However, performance information will not provide 
mechanistic answers for budget decisions; nor can performance data 
eliminate the need for considered judgment and political choice. If 
budget decisions are to be based in part on performance data, the 
integrity, credibility, and quality of these data and related analyses 
become more important. Moreover, in seeking to link resources to 
results, it will be necessary to improve the government’s capacity to 
account for and measure the total costs of federal programs and 
activities. 

GPRA expanded the supply of performance information generated by
federal agencies. OMB’s PART proposes to build on GPRA by improving the
demand for results-oriented information in the budget. It has the 
potential to promote a more explicit discussion and debate between OMB, 
the agencies, and the Congress about the performance of selected 
programs. Presumably, the PART will serve as a screen and will identify 
expectation gaps, questions, and areas where further inquiry and 
analysis would be most useful. 

Improved budgetary debates are always welcome, but caution is in order 
at this stage about expectations from this process—the accuracy and 
quality of evaluation information necessary to make the judgments 
called for in rating programs is highly uneven across the federal 
government. Moreover, many programs have multiple goals where a single 
score or performance assessment can mislead decision makers. Even where 
a sound basis exists to make performance assessments, performance 
results do not have automatic budgetary consequences. Poor evaluation 
results may lead to budget cuts or even program eliminations in some 
cases, but it may also prompt higher levels of investment in people or 
technologies and redoubled management improvements in other cases if 
there is general agreement that the activity involved is important to 
the nation. 

In the long run, sustaining a credible performance-based focus in 
budgeting will require significant improvements in evaluation 
capacities and information across federal agencies as well as the third 
parties that implement federal programs. Going forward, the focus of 
reexaminations should shift to broader national goals and outcomes, 
with assessments targeted on the range of programs and governmental 
tools supporting those outcomes. 

Finally, and most critically, the Congress must be involved in this 
debate, and the resulting decisions and follow-up oversight activities.
Congressional buy-in is critical to sustain any major management 
initiative, but even more so for performance budgeting given the 
Congress’ central role in setting national priorities and allocating 
the resources to achieve them. Going forward, we would encourage the 
Congress to develop a performance assessment process to target its 
oversight efforts. 

Long-term Demographic Trends Drive the Fiscal Future and Frame Current
Debates: 

Any discussion about the role of the federal government, about the 
design and performance of federal activities, and about the near-term 
federal fiscal outlook takes place in the context of two dominating 
facts: a demographic tidal wave is on the horizon, and it combined with 
rising health care costs threatens to overwhelm the nation’s fiscal 
future. The aging of baby boomers—and increased life expectancy—is a 
major driver of spending for Social Security, Medicare, and Medicaid. 
Absent structural reforms in these programs, budgetary flexibility will 
continue to shrink and eventually disappear. Our long-range budget 
simulations make it clear that the status quo is not sustainable. The 
numbers just do not add up. The fiscal gap is too great for any 
realistic expectation that the country can grow its way out of the 
problem. The failure to reexamine the retirement and health care 
programs driving the long term will put the nation on an unsustainable
fiscal course, absent major changes in tax and/or spending policies. In
addition, the failure to reprioritize other claims in the budget will 
make it increasingly difficult to finance the rest of government, let 
alone respond to compelling new priorities and needs. 

As figure 1 below shows, overall budgetary flexibility has been 
shrinking for some time. In the last 2 decades, mandatory 
spending—excluding net interest—has jumped by nearly 10 percentage 
points to consume more than half of the federal budget. 

Figure 1: Federal Spending for Mandatory and Discretionary Programs, 
Fiscal Years 1962, 1982, and 2002: 

[See PDF for image] 

This figure is a series of three pie-charts, illustrating federal 
spending for mandatory and discretionary programs, fiscal years 1962, 
1982, and 2002. The following data is depicted: 

Fiscal year: 1962; 
Discretionary: 68%; 
Mandatory: 26%; 
Net Interest: 6%. 

Fiscal year: 1982; 
Discretionary: 44%; 
Mandatory: 45%; 
Net Interest: 11%. 

Fiscal year: 2002*; 
Discretionary: 37%; 
Mandatory: 54%; 
Net Interest: 9%. 

* OMB current services estimate. 

Source: Budget of the United States Government, FY 2003, Office of 
Management and Budget. 

[End of figure] 

Our long-term budget simulations continue to show that to move into the
future with no changes in retirement and health programs is to envision 
a very different role for the federal government—a government that does
little more than mail checks to the elderly and pay interest on the 
debt. Figure 2 below shows the picture if the tax reductions enacted 
last year are not permitted to sunset and discretionary spending keeps 
pace with the economy. By midcentury federal revenues may only be 
adequate to pay Social Security and interest on the federal debt. (See 
fig. 2.) Importantly, we would still have a significant long-range 
fiscal gap even if the tax reductions do sunset as provided for under 
current law, although the gap would be smaller. While the long-term 
picture has not been pretty for a number of years, it is worsening and 
the long-term crunch is getting closer. Further, the shift from surplus 
to deficit means the nation will move into the future in a weaker 
fiscal position than was previously the case. 

Figure 2: Composition of Spending as a Share of Gross Domestic Product 
(GDP) Assuming Discretionary Spending Grows with GDP and the Tax Cuts 
Do Not Sunset: 

[See PDF for image] 

This figure is a combination line and stacked bar graph illustrating 
the composition of spending as a share of gross domestic product (GDP)
assuming discretionary spending grows with GDP and the tax cuts do not 
sunset. The vertical axis of the graph represents percent of GDP from 0 
to 40. The horizontal axis of the graph represents fiscal years 2000, 
2015, 2030 and 2050. The following data is depicted (percentages are 
approximated from the graphical depiction): 

Fiscal year: 2000; 
Net interest: 2%; 
Social Security: 5%; 
Medicare and Medicaid: 3%; 
All other spending: 8%; 
Total: 18%; 
Fiscal Year revenue: 21%. 

Fiscal year: 2015; 
Net interest: 1%; 
Social Security: 5%; 
Medicare and Medicaid: 5%; 
All other spending: 9%; 
Total: 20%; 
Fiscal Year revenue: 19%. 

Fiscal year: 2030; 
Net interest: 3%; 
Social Security: 7%; 
Medicare and Medicaid: 7%; 
All other spending: 8%; 
Total: 25%; 
Fiscal Year revenue: 19%

Fiscal year: 2050; 
Net interest: 11%; 
Social Security: 7%; 
Medicare and Medicaid: 9%; 
All other spending: 10%; 
Total: 37%
Fiscal Year revenue: 19%. 

Source: GAO's August 2002 analysis. 

[End of figure] 

Metrics and mechanisms need to be developed to facilitate consideration 
of the long-term implications of existing and proposed policies or 
programs. We are currently doing work on how to describe the range and
measurement of fiscal exposures—from explicit liabilities such as
environmental cleanup requirements and federal pensions to the more
implicit obligations presented by life-cycle costs of capital 
acquisition or disaster assistance. 

Although they dwarf all other programs in long-term trends, Social
Security, Medicare, and Medicaid are not the only programs in the budget
where looking beyond the 10-year budget window presents a very different
cost picture. For example, federal insurance may appear costless in its 
first year, but when an insured event occurs, the budgetary impact can 
be significant. 

Improving Sustainability and Relevance of Government for the 21st 
Century: 

Social Security and health programs dominate our fiscal future but they 
are not the only reason to examine what government does and how it does 
it. Difficult as it may seem to deal with the long-term challenges 
presented by known demographic trends, policymakers must not only 
address these entitlement programs but also reexamine other budgetary 
priorities in light of the changing needs of this nation in the 21st 
century. Given the size of the long-term gap it will be necessary to 
work on several fronts at once. 

There is also a need to reexamine existing programs, policies, and 
activities. It is all too easy to accept “the base” as given and to 
subject only new proposals to scrutiny and analysis. As we have 
discussed previously, [Footnote 1] many federal programs, policies, and 
activities—their goals, their structures, and their processes—were 
designed decades ago to respond to earlier challenges. In previous 
testimony, [Footnote 2] I noted that the norm should be to reconsider 
the relevance or “fit” of any federal program, policy, or activity in 
today’s world and for the future. Such a review might identify programs 
that have proven to be outdated or persistently ineffective, or 
alternatively could prompt appropriate updating and modernizing 
activities through such actions as improving program targeting and 
efficiency, consolidation, or reengineering of processes and 
operations. This includes looking at a program’s relationship to other 
programs. 

Budgeting has been the primary process used to resolve the large number
of often-conflicting objectives that citizens seek to achieve through
government action. It provides an annual forum for a debate about
competing claims and new priorities. However, such a debate will be
needlessly constrained if only new proposals and activities are on the 
table. A fundamental review of existing programs, policies, and 
operations can create much-needed fiscal flexibility to address 
emerging needs by ferreting out programs that have proven to be 
outdated, poorly targeted, inefficient in their design and management, 
or superceded by other programs. It is always easier to subject 
proposals for new activities or programs to greater scrutiny than 
existing ones. It is easy to treat existing activities as “given” and 
force new proposals to compete only with each other. Such an approach 
would move the nation further from, rather than nearer to, budgetary 
surpluses. 

In looking forward it is important to reflect on how much things have
changed. We have a fiduciary and stewardship responsibility to today’s 
and tomorrow’s taxpayers to do so. For perspective, students who started
college this past fall were 9-years old when the Soviet Union broke 
apart and have no memory of the Cold War; they have always known
microcomputers and AIDS. We must strive to maintain a government that is
effective and relevant to a changing society—a government that is as 
free as possible of outmoded commitments and operations that can
inappropriately encumber the future. 

Debate about what government should do in the 21st century and how it
should do business is fundamental to achieving this objective. In 
rethinking federal missions and strategies, it is important to examine 
not just spending programs alone but the wide range of other tools the 
federal government uses to address national objectives. These tools 
include direct loans and loan guarantees, tax preferences (shown in the 
budget as tax expenditures), and regulations. Sometimes these tools 
work at cross purposes. The outcomes achieved by these various tools 
are in a very real sense highly interdependent and are predicated on 
the response by a wide range of other actors—including other levels of 
government and private employers whose involvement has become more 
critical to the implementation and achievement of federal policy 
objectives. These tools differ in transparency—spending programs are 
more visible than tax preferences. The choice and design of these tools 
are critical in determining whether and how these third parties will 
address federal objectives. Any review of the base of existing policy 
should address this broader picture of federal involvement. For 
example, in fiscal year 2000, the federal health care and Medicare 
budget functions included $37 billion in discretionary budget 
authority, $319 billion in entitlement outlays, $5 million in loan 
guarantees, and $91 billion in tax expenditures. (See fig. 3.) 

Figure 3: Relative Reliance on Policy Tools in the Health Care Budget 
Functions, Fiscal Year 2000 ($447 billion in total spending): 

[See PDF for image] 

This figure is a pie-chart illustrating the relative reliance on policy 
tools in the health care budget functions for fiscal year 2000 ($447 
billion in total spending). The following data is depicted: 

Mandatory outlays: 72%; 
Tax expenditures: 20%; 
Discretionary BA: 8%. 

Note: Includes both the health and Medicare budget functions. Loan 
guarantees account for about $5 million, or about .001 percent, of the 
approximately $447 billion in total federal health care resources. 

Source: Budget of the United States Government, FY 2001, Office of 
Management and Budget. 

[End of figure] 

Public Education Is Critical: 

Good information—which is more than just budget numbers—helps to
inform debate. This information, however, should be understandable not
only by government officials but also by the public. 

Homeland security is a good example of both the need for public 
education and the challenges presented by changing priorities. Zero 
security risk is not an attainable goal; proposals to reduce risk must 
be evaluated on numerous dimensions—their dollar cost and their impact 
on other goals and values. Decisions on the level of resources, the 
allocation of those resources, and on how to balance security against 
other societal goals and values are necessary. However, absent public 
information in understandable form, related decisions may not be 
accepted. There will always be disagreements on these issues, but 
public education and reliable information move the debate to a more 
informed plane. 

Before the events of last September no one could have reasonably
anticipated the array of new and challenging demands on federal programs
and claims on future budgets for homeland security concerns. These
compelling new budgetary claims illustrate the necessity of periodically
reexamining the base through a disciplined, performance-based process.
As you debate resources for homeland security—both how much and how
to allocate them—you will be making risk assessments; the initiatives
funded should be designed to achieve the most effective protection at a
reasonable and affordable cost. As you consider the portfolio of 
homeland security programs for the future, the homeland security 
challenge may also provide a window of opportunity to rethink 
approaches to long-standing problems and concerns. For example, we have 
previously noted [Footnote 3] the poor coordination and inefficient use 
of resources that occur as a result of overlapping and duplicative food 
safety programs, but it is the potential threat from bioterrorism that 
gives new meaning and urgency to this issue and the interrelationship 
of related federal programs. 

Finally, the challenges of financing the new homeland security needs may
provide the necessary impetus for a healthy reprioritization of federal
programs and goals. The current crisis might, for instance, warrant
reconsideration of the federal role in assisting state and local law
enforcement. Given the challenges associated with fighting terrorism, 
is it still appropriate to involve the federal government in what have
traditionally been state and local law enforcement responsibilities? 

The Role of Performance Budgeting: 

While this kind of oversight and reexamination is never easy, it is 
facilitated by the availability of credible performance information 
focusing on the outcomes achieved with budgetary resources. Performance-
based budgeting can help enhance the government’s capacity to assess 
competing claims in the budget by arming budgetary decision makers with 
better information on the results of both individual programs as well 
as entire portfolios of tools and programs addressing common performance
outcomes. Although not the answer to vexing resource trade-offs 
involving political choice, performance budgeting does promise to 
modify and inform the agenda of questions by shifting the focus of 
debates from inputs to outcomes and results. 

Over the last decade, the Congress enacted a statutory framework4 to
improve the performance and accountability of the executive branch and 
to enhance both executive branch and congressional decision making.
Through continued attention by the Congress and the executive branch,
some of the intended benefits of this framework are now beginning to
emerge. 

GPRA expanded the supply of results-oriented performance information
generated by federal agencies. In the 10 years since GRPA was enacted,
agencies have improved the focus of their planning and the quality of 
their performance information. However, developing credible information 
on outcomes achieved through federal programs remains a work in 
progress, as agencies struggle, for example, to define their 
contribution to outcomes, which in many cases are influenced only 
partially by federal funds. Linking performance to budgeting raises the 
stakes associated with the measures and performance goals developed by 
agencies. For performance data to more fully inform resource 
allocations, decision makers must feel comfortable with the 
appropriateness and accuracy of the outcome information and measures 
presented—i.e., that they are comprehensive and valid indicators of a 
program’s outcomes. Otherwise, decisions might be guided by misleading 
or incomplete information, which ultimately will discourage the use of 
this information in resource allocations. GPRA was premised on a cycle 
where measures and goals were established and validated during a 
developmental period before they were subjected to the crucible of the 
budget process. In working to strengthen the linkages between resources 
and results, efforts across the federal establishment must be redoubled 
to ensure that the measures used are grounded in a firm analytic and 
empirical base. A way should be found to provide independent assurance 
about both the choice of measures and the quality of the data used. 

In attempting to link resources to results, it also will be important to
measure the full costs of the resources associated with performance 
goals using a consistent definition of costs between and among 
programs. In looking ahead, the integration of reliable cost accounting 
data into budget debates needs to become a key part of the performance 
budgeting agenda. 

Although clearly much more remains to be done, together, the GPRA and
Chief Financial Officers (CFO) Act initiatives have laid the foundation 
for performance budgeting by establishing infrastructures in the 
agencies to improve the supply of information on performance and costs. 
Sustained leadership attention will be required to build on this 
foundation. In addition, however, improving the supply of information 
is in and of itself insufficient to sustain performance management and 
achieve real improvements in management and program results. Rather, 
the improved supply needs to be accompanied by a demand for that 
information by decision makers and managers alike. 

Integrating management issues with budgeting is absolutely critical for
progress in government performance and management. Recent history tells
us that management reforms of the past—Planning-Programming-Budgeting-
System, Management by Objectives, and Zero-Base-Budgeting— failed 
partly because they did not prove to be relevant to budget decision 
makers in the executive branch or the Congress. [Footnote 5] Such 
integration is obviously important to ensuring that management 
initiatives obtain the
resource commitments and sustained commitment by agencies needed to
be successful. Moreover, the budget process is the only annual process 
in the federal government where programs and activities come up for 
regular review and reexamination. Thus there is a compelling need to 
ensure that trade-offs are informed by reliable information on results 
and costs. Ultimately, performance budgeting seeks to improve decision 
making by increasing the understanding of the links between requested 
resources and expected performance outcomes. 

Although performance budgeting can reasonably be expected to change the
nature of resource debates, it is equally important to understand what 
it cannot do. Previous management reforms have been doomed by inflated
and unrealistic expectations, so it is useful to be clear about current 
goals. Performance budgeting can help shift the focus of budgetary 
debates and oversight activities by changing the agenda of questions 
asked in these processes. Performance information can help policymakers 
address a number of questions such as whether programs are: 
contributing to their stated goals, well-coordinated with related 
initiatives at the federal level or elsewhere, and targeted to those 
most in need of services or benefits. It can also provide information 
on what outcomes are being achieved, whether resource investments have 
benefits that exceed their costs, and whether program managers have the 
requisite capacities to achieve promised results. 

However, performance budgeting should not be expected to provide the
answers to resource allocation questions in some automatic or formula-
driven process. Since budgeting is the allocation of resources, it 
involves setting priorities—making choices among competing claims. In 
its broadest sense the budget debate is the place where competing 
claims and claimants come together to decide how much of the 
government’s scarce resources will be allocated across many compelling 
national purposes. Performance information is an important factor—but 
only one factor and it cannot substitute for difficult political 
choices. There will always be a debate about the appropriate role for 
the federal government and the need for various federal programs and 
policies—and performance information cannot settle that debate. It can, 
however, help move the debate to a more informed plane—one in which the 
focus is on competing claims and priorities. In fact, it raises the 
stakes by shifting the focus to what really matters—lives saved, 
children fed, successful transitions to self-sufficiency,
individuals lifted out of poverty. 

In this context, performance questions do not have a single budgetary
answer. Performance problems may well prompt budget cuts or program
eliminations, but they may also inspire enhanced investments and reforms
in program design and management if the program is deemed to be of
sufficiently high priority to the nation. Conversely, even a program 
that is found to be exceeding its performance expectations can be a 
candidate for budgetary cuts if it is a lower priority than other 
competing claims in the process. The determination of priorities is a 
function of competing values and interests that may be informed by 
performance information but also reflects such factors as equity, unmet 
needs, and the appropriate role of the federal government in addressing 
these needs. 

How would “success” in performance budgeting be defined? Simply 
increasing the supply of performance information is not enough. If the
information is not used—i.e., if there is insufficient demand—the 
quality of the information will deteriorate and the process either will 
become rote or will wither away. However, for the reasons noted, the 
success of performance budgeting cannot be measured merely by the 
number of programs “killed” or a measurement of funding changes against
performance “grades.” Rather, success must be measured in terms of the
quality of the discussion, the transparency of the information, the
meaningfulness of that information to key stakeholders, and how it is 
used in the decision-making process. If members of the Congress and the
executive branch have better information about the link between 
resources and results, they can make the trade-offs and choices 
cognizant of the many and often competing claims on the federal fisc. 

OMB’s Program Assessment Rating Tool: 

While budget reviews have always involved discussions of program
performance, such discussions have not always been conducted in a
common language or with transparency. This year, however, OMB has
introduced a formal assessment tool into the deliberations. The PART—the
Program Assessment Rating Tool—is the central element in the
performance budgeting piece of the President’s Management Agenda. 

The PART will be applied during the fiscal year 2004 budget cycle to
“programs” [Footnote 6] selected by OMB with input from and discussion 
with agencies. The PART includes general questions in each of four 
broad topics to which all programs are subjected: (1) program purpose 
and design, (2) strategic planning, (3) program management, and (4) 
program results (i.e., whether a program is meeting its long-term and 
annual goals). In addition to the general questions that apply to all, 
programs are subjected to more specific questions depending on which of 
seven [Footnote 7] mechanisms or approaches are used for delivery. OMB 
arrives at a profile for each program by reviewing information from 
budget submissions, agency strategic and annual performance plans, 
program evaluations, and other sources. OMB also makes an overall 
assessment whether the program is “effective” or “ineffective.” 

While the PART’s program-by-program approach fits with OMB’s agency-by-
agency budget reviews, it is not well-suited to addressing cross-cutting
issues or to looking at broad program areas in which several programs
address a common goal. Although the evaluation of programs in isolation
may be revealing, it is often critical to understand how each program 
fits with a broader portfolio of tools and strategies to accomplish 
federal missions and performance goals. Such an analysis is necessary 
to capture whether a program complements and supports other related 
programs, whether it is duplicative and redundant, or whether it 
actually works at cross-purposes with other initiatives. In such areas 
as low-income housing or health care, the outcomes achieved by federal 
policy are the result of the interplay of a complex array of tools 
including those on the spending side of the budget as well as the tax 
code and regulations. 

The PART does promise to build on GPRA by using the performance
information generated through the planning and reporting process to more
directly feed into budgetary decisions. Potentially, the PART can
complement GPRA’s focus on increasing the supply of credible 
performance information by promoting the demand for this information in
the budget formulation process. The recognition of the different types 
of performance issues associated with different governmental tools is
important and reflects the key role that tools play in shaping 
accountability and results. 

As with performance budgeting in general, no assessment tool can
magically resolve debates or answer questions. Rather, it is likely to 
be a useful screen to help identify programs for further evaluation. 
Its greatest contribution may turn out to be its use to focus 
discussions between OMB and the agencies about a given agency’s 
progress towards planned performance; about what progress has been made 
toward achieving specific goals and objectives of a given program or 
programs; and about what tools and strategies might be used to bring 
about improvements. Where the information provided is adequate, it has 
the potential to inform budget decisions with respect to particular 
programs. It is possible that a program may be a candidate for cuts or 
elimination—or for increases. However, these overall judgments will not 
define the process. For example, the PART section on program management 
may illuminate ways in which program operations could be improved. And 
the section on program design may identify design changes that could 
increase effectiveness, such as better targeting of existing funds. 
Using PART is likely to prompt a more robust discussion on program 
priorities and achievements between OMB, the agencies, and potentially 
with the Congress. 

The PART also may increase the attention paid to evaluation and
performance information among federal agencies and third parties
involved with implementing federal initiatives. As the information
improves, it may become more useful to the Congress, especially to 
budget, appropriations, and authorizing committees. To the extent that 
the assessment is an important factor in resource allocations, agencies 
are likely to increase the attention given to evaluation and the 
gathering and reporting of performance information. The fact that a 
program’s PART score suffers from the absence of information may 
provide added impetus for agencies to enhance their evaluation and 
information-gathering capabilities. As with other management reforms, 
it will be important that initiatives such as PART be sustained over 
time if they are to be taken seriously by both agencies and the 
Congress. 

At the same time, the PART contains inherent limitations. These will 
not be in-depth evaluations, and evidence suggests that information for 
many programs will be incomplete. While no assessment tool can provide
definitive answers to the question “should we continue this activity,” 
at the initial stage PART is likely to raise questions—that is, point 
to the need for further inquiry and analysis—rather than provide 
definitive answers. The profiles of a program across each section of 
the instrument are likely to be more informative than the total scores 
across the entire instrument. Caution should be taken in relying on 
“bottom line” judgments or ratings for programs with multiple 
performance goals and mixed performance records. 

Further, the achievement of federal/national policy goals often depends 
on the actions not only of the federal government but also of other 
levels of government and/or nongovernmental actors. GPRA required the 
President to prepare and submit to the Congress a governmentwide 
performance plan to highlight broader cross-cutting missions. 
Unfortunately, this was not done in the President’s fiscal year 2003 
budget; we hope that the President’s upcoming fiscal year 2004 budget 
does include such a plan. 

Over time the usefulness of PART will depend on what follows the initial
screens: how the results are pursued; whether the scope is broadened to
cover more tools; whether a cross-cutting approach is employed; and
improvements in evaluative, performance, and cost information on key
programs. Ultimately, success will be measured by how the results of the
more extensive analyses affect the resource allocation process and 
budget decisions over time. 

Performance Information Requirements and Evaluation Capacity: 

The basis for the effective application of the rating tool is the 
foundation of performance and evaluation information on federal 
programs. The gaps and weaknesses identified by the PART review 
exercise may help pinpoint aspects of the federal evaluation 
infrastructure that need to be strengthened. 

By highlighting available information on program performance, OMB’s 
rating tool should promote discussions of both what is known and what 
is not known about a program’s performance. Under GPRA, agencies 
expanded their store of data on program achievements and associated 
benefits for the American people. While this is necessary, it is not 
sufficient to answer all key questions about program effectiveness. 
Many programs are designed to be one part of a broader effort, working 
alongside other federal, state, local, nonprofit, and private 
initiatives to promote particular outcomes. Although information on the 
outcomes associated with a particular program may be collected, it is 
often difficult to isolate a particular program’s contribution to those 
outcomes. Moreover, some desired outcomes take years to achieve; 
tracking progress on an annual basis may be difficult. Additionally, 
where federal program responsibility has devolved to the states, 
federal agencies’ ability to influence program outcomes diminishes. At 
the same time, dependence on states and others for data with which to 
evaluate programs grows. The PART may be used to facilitate this kind 
of cross-cutting perspective. After programs have been filtered through 
the PART process, programs could be grouped into related categories for 
further evaluation in a more holistic fashion. Further understanding of 
these performance issues requires an in-depth evaluation of the factors 
contributing to the program results. Targeted evaluation studies can 
also be specifically designed to detect important program side effects 
or to assess the comparative advantages of current programs to 
alternative strategies for achieving a program’s goals. 

Unfortunately, there is reason to be concerned about the capacity of 
federal agencies to produce evaluations of their programs’ 
effectiveness. Many program evaluation offices are small, have other 
responsibilities, and produce only a few effectiveness studies 
annually. Even where the value of evaluations is recognized, they may 
not be considered a funding priority. Agencies struggled in the first 
years of performance reporting to provide measures of the outcomes of 
their program activities. Many have failed to address known weaknesses 
in the quality of their performance data. Our work [Footnote 8] has 
shown that systematic program evaluations—and units responsible for 
producing them—have been concentrated in a few agencies. Although many 
federal programs attempt to influence complex systems or events outside 
the immediate control of government, few studies deployed the rigorous 
research methods required to attribute changes in underlying outcomes 
to program activities. 

Increased evaluation capacity may require more resources, but over the
longer term, failing to discover and correct performance problems can be
much more costly. Therefore, the question of investment in improved
evaluation capacity is one that must be considered in budget 
deliberations both within the executive branch and in the Congress. 

More broadly, Mr. Chairman and Madam Chair, such investments need to
be viewed as part of a broader initiative to improve the accountability 
and management capacity of federal agencies and programs. The federal
government needs to undergo a transformation to meet the performance
expectations of the American public. Such an effort requires fundamental
shifts in current human capital policies, organizational structures,
governmental tools, and performance and financial accountability
approaches. 

Congressional Oversight Is Necessary to Achieve Results: 

Fifty years of past efforts to link resources with results has shown 
that any successful effort must involve the Congress as a partner. In 
fact, the administration acknowledged that performance and 
accountability are shared responsibilities that must involve the 
Congress. It will only be through the continued attention of the 
Congress, the administration, and federal agencies that progress can be 
sustained and, more importantly, accelerated. The Congress has, in 
effect, served as the institutional champion for many previous 
performance management initiatives, such as GPRA and the CFO Act, by 
providing a consistent focus for oversight and reinforcement of 
important policies. Ultimately, the success of the PART initiative will 
be reflected in whether and how the Congress uses the results of these 
reviews in the congressional budget, appropriations, authorization,
and oversight processes. As a key user, the Congress also needs to be
considered a partner in shaping the PART review process at the outset. 

More generally, effective congressional oversight can help improve 
federal performance by examining the program structures agencies use to 
deliver products and services to ensure that the best, most cost-
effective mix of strategies is in place to meet agency and national 
goals. As part of this oversight, the Congress should consider the 
associated policy, management, and policy implications of cross-cutting 
programs. 

Given this environment, the Congress should also consider the need for
mechanisms that allow it to more systematically focus its oversight on
problems with the most serious and systemic weaknesses and risks. At
present, the Congress has no direct mechanism to provide a congressional
perspective on governmentwide performance issues. The Congress has no
established mechanism to articulate performance goals for the broad
missions of government, to assess alternative strategies that offer the 
most promise for achieving these goals, or to define an oversight 
agenda targeted on the most pressing cross-cutting performance and 
management issues. The Congress might consider whether a more 
structured oversight mechanism is needed to permit a coordinated 
congressional perspective on governmentwide performance matters. Such a 
process might also facilitate congressional input into the OMB PART 
initiative. For example, although the selection of programs and areas 
for review is ultimately the President’s decision, such choices might 
be informed and shaped by congressional views and perspectives on 
performance issues. 

One possible approach would involve developing a congressional 
performance resolution identifying the key oversight and performance
goals that the Congress wishes to set for its own committees and for the
government as a whole. Such a resolution could be developed by modifying
the current congressional budget resolution, which is already organized 
by budget function. Initially, this may involve collecting the “views 
and estimates” of authorization and appropriations committees on 
priority performance issues for programs under their jurisdiction and 
working with such cross-cutting committees as the House Committee on 
Governmental Reform and the House Committee on Rules. Obviously, a 
“congressional performance resolution” linked to the budget resolution 
is only one approach to achieve the objective of enhancing 
congressional oversight, but regardless of the approach taken, the 
Congress should assess whether its current structures and processes are 
adequate to take full advantage of the benefits arising from the reform 
agenda under way in the executive branch. Ultimately, what is important 
is not the specific approach or process, but rather the intended result 
of helping the Congress better promote improved fiscal, management, and 
program performance through broad and comprehensive oversight and 
deliberation. 

Concluding Observations: 

Broad and periodic reexamination of federal government priorities,
programs, and activities is an important responsibility of both the 
Congress and the executive branch to maintain the public’s confidence in
government and to ensure the government’s capacity to deliver on its
promises and meet current and emerging needs. However, effective 
oversight is difficult work. It requires taking a hard look at existing
programs and carefully reconsidering the goals those programs were
intended to address—and whether those goals are still valid. It involves
analyzing the effectiveness of programs and seeking out the reasons for
success or failure. It involves navigating through the maze of federal
programs and activities, in which multiple agencies may operate many
different programs to address often common or complementary objectives. 

However, the task of revising and reforming current programs and
activities that may no longer be needed or that do not perform well is
fraught with difficulties and leads to real “winners” and “losers.”
Notwithstanding demonstrated weaknesses in program design and 
shortfalls in program results, there often seems to be little “low 
hanging fruit” in the federal budget. In fact, some argue that because 
some programs are already “in the base” in budgetary terms, they have a
significant advantage over new initiatives and new demands. 

This is an opportune time for the executive branch and the Congress to
carefully consider how agencies and committees can best take advantage
of and leverage the new information and perspectives coming from the
reform agenda underway in the executive branch. Prudent stewardship of
our nation’s resources—whether in time of deficit or surplus—is 
essential not only to meet today’s needs but also for us to deliver our 
promises and address future needs. 

This concludes my prepared statement. I would be pleased to answer any
questions you or the other members of the Committees may have at this
time. 

Contacts: 

For future contacts regarding this testimony, please call Paul L. 
Posner, Managing Director, Federal Budget Issues, at (202) 512-9573. 

[End of section] 

Footnotes: 

[1] U.S. General Accounting Office, Budget Issues: Effective Oversight 
and Budget Discipline are Essential—Even in a Time of Surplus, GAO/T-
AIMD-00-73 (Washington, D.C.: Feb. 1, 2000) and U.S. General Accounting 
Office, Budget Issues: Long-Term Fiscal Challenges, GAO-02-467T 
(Washington, D.C.: Feb. 27, 2002). 

[2] U.S. General Accounting Office, Homeland Security: Challenges and 
Strategies in Addressing Short- and Long-Term National Needs, GAO-02-
160T (Washington, D.C.: Nov. 7, 2001), GAO/T-AIMD-00-73, and GAO-02-
467T. 

[3] GAO-02-467T. 

[4] U.S. General Accounting Office, Managing for Results: The Statutory 
Framework for Performance-Based Management and Accountability, 
GAO/GGD/AIMD-98-52 (Washington, D.C.: Jan. 28, 1998).

[5] For further information see U.S. General Accounting Office, 
Performance Budgeting: Past Initiatives Offer Insights for GPRA 
Implementation, GAO/AIMD-97-46 (Washington, D.C.: Mar. 27, 1997). 

[6] There is no consistent definition for the term program. For 
purposes of the PART, the unit of analysis (program) should have a 
discrete level of funding clearly associated with it. 

[7] The seven major categories are competitive grants, block/formula 
grants, capital assets and service acquisition programs, credit 
programs, regulatory-based programs, direct federal programs, and 
research and development programs. 

[8] U.S. General Accounting Office, Program Evaluation: Agencies 
Challenged by New Demand for Information on Program Results, GAO/GGD-98-
53 (Washington, D.C., Apr. 24, 1998). 

[End of section] 

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