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United States General Accounting Office:
GAO:
Report to the Ranking Minority Member, Committee on Governmental
Affairs, U.S. Senate:
January 2002:
Managing For Results:
Agency Progress in Linking Performance Plans With Budgets and
Financial Statements:
GAO-02-236:
Contents:
Letter:
Results in Brief:
Background:
Progress Made Linking Plans With Budgets but Nature of Linkages Could
Be Improved:
Efforts to Link Plans to Cost Statements Are Encouraging but
Improvements Are Needed:
Recent Initiatives by OMB:
Concluding Observations:
Agency Comments:
Appendixes:
Appendix I: Scope and Methodology:
Scope:
Methodology:
Tables:
Table 1: Agency Status in Linking Plans and Budgets, Fiscal Year 2002:
Table 2: Agencies That Linked Performance Plans With Net Cost
Statements, Fiscal Years 1999 and 2000:
Table 3: Performance Plans Reviewed:
Figures:
Figure 1: GPRA Performance Planning, Budget, and Net Cost Model:
Figure 2: Agencies Show Progress in Linking Plans and Budgets, Fiscal
Years 1999 Through 2002:
Figure 3: Change in HUD's Presentation of Performance Plan-Budget
Linkages, Fiscal Years 2000 and 2001:
Figure 4: HUD's Presentation of Performance Plan-Budget Linkages,
Fiscal Year 2002:
Figure 5: Agencies Used Multiple Approaches to Link Plans and Budgets:
Figure 6: ACF Used Aggregation and Consolidation to Link Program
Activities to Sets of Performance Goals:
Figure 7: EPA Consolidated Funding Allocations by Strategic Objective:
Figure 8: NRC Linked Program Activities and Funding Allocations by
General Goal:
Figure 9: Forest Service Linked Multiple Budget Accounts With Multiple
Strategic Objectives:
Figure 10: Agencies Used Multiple Approaches to Link Plans and Net
Cost Statements:
Figure 11: VA Reported Net Cost by Program Area:
Figure 12: NRC Associated Net Cost With General Goals:
Figure 13: DOE Associated Net Cost With General Goals:
Figure 14: DOE Used Subordinate Schedules to Report Costs for Each
General Goal Against Related Program Activities From Its Budget:
Figure 15: Treasury Showed Net Cost by General Goal in Its
Consolidated Statement:
Figure 16: Treasury Used Subordinate Schedules to Report Net Cost by
General Goal and Responsibility Segment:
[End of section]
United States General Accounting Office:
Washington, D.C. 20548:
January 4, 2002:
The Honorable Fred Thompson:
Ranking Minority Member:
Committee on Governmental Affairs:
United States Senate:
Dear Senator Thompson:
As you requested, this report updates our previous assessments of
agencies' experiences in linking performance plans and budgets under
the Government Performance and Results Act of 1993 (GPRA).[Footnote 1]
As agreed with your staff, we have also included in this report an
initial assessment of the approaches used by agencies to link
performance plans with their audited annual financial statements.
Pursuing a closer alignment between performance planning, budgeting,
and financial reporting is essential in supporting the transition to a
more results-oriented and accountable federal government. For example,
developing a discrete allocation between requested budget funding and
expected performance goals is a critical first step in defining the
performance consequences of budgetary decisions. Comparably, linking
performance and financial information is both a key feature of sound
management—reinforcing the connection between resources consumed and
results achieved—and an important element in presenting to the public
a useful and informative perspective on federal spending.
The trend information in this report can be useful for the Congress
and others in considering the administration's new management reform
agenda. As part of this agenda and the proposed Managerial Flexibility
Act of 2001, the Office of Management and Budget (OMB) has proposed
several steps to better achieve transparency in performance,
budgeting, and accounting and will attempt to integrate more
completely information about cost and program performance during the
fiscal year 2003 budget process.
We used the same universe of 35 agencies[Footnote 2] reviewed in our
previous reports to discuss the progress shown in making funding
allocations to performance goals and to identify the approaches used
to associate performance goals with budgetary requests. Specifically,
we determined whether each agency (1) linked its performance plans to
program activities[Footnote 3] in its budget, (2) presented funding
estimates for expected levels of performance, and (3) clearly
indicated how the funding estimates were derived or allocated from the
program activities in its budget request. In our two previous
assessments covering fiscal years 1999 and 2000, we focused solely on
the extent to which agencies described in their performance plans the
linkage between their goals and budget requests. However, for the
fiscal year 2001 and 2002 performance plans, we also looked at the
nature of the linkage—that is, the level of the agency's performance
planning structure (i.e., general goals, strategic objectives, or
performance goals)—related to the program activities in the agency's
budget.
To assess the extent to which performance planning and financial
statements were related, we reviewed the statement of net cost from
the fiscal year 1999 and 2000 audited financial statements for the 24
agencies covered by the Chief Financial Officers Act of 1990 (CFO
Act), as amended. The statement of net cost, a required component of
the annual financial statement, is expected under OMB's guidance to
present the net cost of operations based on the missions and outputs
described in the agency's performance plan and budget structure.
Fiscal year 1999 was the first year for which agencies could provide
both performance reports under GPRA and audited financial statements
under the CFO Act; fiscal year 2000 statements were reviewed to
indicate progress made by the agencies and also to assess the nature
of the linkages.
Appendix I provides additional details on our scope and methodology.
Results in Brief:
Over the first 4 years of agency efforts to implement GPRA, we have
observed that agencies continue to tighten the required linkage
between their performance plans and budget requests. Of the agencies
we reviewed over this period, all but three met the basic requirement
of the act to define a linkage between their performance plans and the
program activities in their budget requests, and most of the agencies
in our review had moved beyond this basic requirement to indicate some
level of funding associated with expected performance described in the
plan. Most importantly, more agencies each year—almost 75 percent in
fiscal year 2002 compared to 40 percent in fiscal year 1999—were able
to show a direct link between expected performance and requested
program activity funding levels—the first step in defining the
performance consequences of budgetary decisions. However, we have also
observed that the nature of these linkages varies considerably. Most
of the agencies in our review associated funding requests with higher,
more general levels of expected performance, rather than the more
detailed "performance goals or sets of performance goals" suggested in
OMB guidance.
Similarly, agencies' initial efforts to link performance plans to
their statements of net cost are encouraging and improving, but some
presentations were more informative than others. For fiscal year 2000,
13 of the 24 agencies covered by the CFO Act, compared to 10 in fiscal
year 1999, reported net costs in their audited annual financial
statements using a structure that was based on their performance
planning structure. However, a variety of approaches were used to
present this information, ranging from broad linkages of overall
agency costs to general goals to more specific descriptions of
component organization costs by strategic objective.
OMB's recent initiatives and guidance to agencies are consistent with
and reinforce our observations that agencies have made progress in
achieving the goals of GPRA and the CFO Act but that additional effort
is needed to clearly describe the relationship between performance
expectations, requested funding, and consumed resources. The uneven
extent and pace of development described in this report should be seen
as a reflection of the mission complexity and variety of operating
environments across federal agencies. Describing the planned and
actual use of resources in terms of measurable results remains an
essential action that will continue to require time, adaptation, and
effort on the part of all agencies.
Background:
Both GPRA and the CFO Act are key components of a statutory framework
that the Congress put in place during the 1990s to promote a new focus
on results and improved management.[Footnote 4] Among their
complementary purposes, both acts seek to improve congressional
decision-making by providing information on the relative effectiveness
and efficiency of federal programs and spending, and to help federal
managers improve service delivery by providing them with information
about program results, cost, and service quality.
Among its major purposes, GPRA aims for a closer and clearer linkage
between requested resources and expected results. The general concept
of linking performance information with budget requests is commonly
known as performance budgeting.[Footnote 5] GPRA establishes a basic
foundation for performance budgeting by requiring that an agency's
annual performance plan cover each program activity in the President's
budget request for that agency. GPRA does not specify any level of
detail or required components needed to achieve this coverage.
Further, the act recognizes that agencies' program activity structures
are often inconsistent across budget accounts for the purposes of the
act and thus gives agencies the flexibility to consolidate, aggregate,
or disaggregate program activities, so long as no major function or
operation of the agency is omitted or minimized.
OMB's original guidance regarding this provision of the act set forth
an additional criterion: Plans should display, generally by GPRA
program activity, the funding level to be applied to achieve
performance goals. OMB defined the term "GPRA program activity" to
mean that which results from the agency's consolidating, aggregating,
or disaggregating the program activities shown in the President's
budget submission. That is, OMB expected agency performance plans to
show how amounts from the agency's budget request would be allocated
to the performance goals displayed in the plan. In subsequent guidance
for fiscal years 2000 and 2001, OMB stated that "agencies should show
significant further progress in associating funding with specific
performance goals or sets of goals." As part of its preparation for
the President's fiscal year 2002 budget, OMB tasked each agency to
develop integrated performance plans and budgets. Agencies were asked
to assess their own progress on such issues as the method of
presentation of plans and budgets; the extent of alignment between
performance objectives, budget accounts, and program activity
structures; and the precision of funding allocations made to each of
the plan's objectives. Consistent with our recommendations in April
1999,[Footnote 6] OMB stated its intent to use this information as a
baseline for further discussions on efforts to improve the
relationship between performance planning and budgets.
The CFO Act, as amended, sought to remedy the government's lack of
timely, reliable, useful, and consistent financial information. Twenty-
four agencies are required to prepare financial statements annually,
and have them audited. The statements include, among other required
presentations, a statement of net cost. Audited financial statements
are intended to improve accountability over government operations, and
the statement of net cost, in particular, is intended to provide
timely and reliable cost information to (1) help ensure that resources
are spent efficiently to achieve expected results and (2) compare
alternative courses of action. OMB guidance further states that
statements of net cost should both reflect an agency's major programs
classified by the missions and outputs described in its strategic and
annual performance plans prepared under GPRA and be consistent with
managerial cost accounting standards.[Footnote 7]
In March 2000, federal agencies issued their first performance reports
under GPRA, summarizing and discussing performance results for fiscal
year 1999. Thus, fiscal year 1999 offered the first opportunity to
link annual performance planning and reporting under GPRA with annual
audited financial statements under the CFO Act. OMB's guidance to
agencies on the preparation of annual performance reports did not
define a specific format.[Footnote 8] However, in its form and content
guidance for financial statements, OMB clarified the importance and
manner of linking performance report information with financial
statements.[Footnote 9] The guidance stated that performance
information in the annual financial statement's narrative overview
should be consistent with information previously included in the
agency's plans and budget documents and should be linked to the
programs presented in the statement of net cost.
Across the departments and agencies of the federal government,
performance plans, budget presentations, and cost accounting
structures can vary considerably, depending on the missions,
organizational arrangements, and other specific operating
characteristics of the entity. GPRA does not require a standard format
or establish expectations or limitations on an agency's number of
performance goals and objectives, but it does generally describe a
three-level performance planning architecture. An agency's strategic
and annual performance plans are expected to include:
* general goals, which define, typically in outcome terms, how an
agency will carry out its mission over an extended period;
* strategic (or general) objectives, which describe a more specific
level of accomplishment within a specific general goal to help assess
whether a general goal was or is being achieved; and;
* annual performance goals, which define a target level of performance
expressed as a tangible, measurable objective, in outcome or output
terms.
The federal budget structure is similarly diverse. The current account
structure was not created as a single integrated framework, but rather
developed over time to reflect the many roles it has been asked to
play and to address the diverse needs of its many users.[Footnote 10]
However, annual budget presentations can be generally described as
providing funding information (1) on an agency basis, (2) by budget
account within the agency, and (3) for separate program activities
funded within a specific budget account.
Finally, cost accounting information, to be useful, must rely on
consistent and uniform terminology for concepts, practices, and
techniques but also must allow agencies sufficient flexibility to
reflect their unique operating environments and to meet the needs of
different user groups. Toward this end, the managerial cost accounting
standard describes a common but generalized structure applicable to
all federal agencies to capture the cost of operations at three levels:
* on an entitywide (or agency) basis;
* by responsibility segment, defined as a component of the reporting
entity that is responsible for carrying out a mission, conducting a
major line of activity, or producing one or a group of related
products or services; and;
* by segment outputs, that is, the cost centers associated with the
separate types of outputs produced within each responsibility segment.
Figure 1 depicts these generalized planning, budgeting, and cost
accounting structures. Although these terms are not necessarily
analogous and will change in specific circumstances—for example one
agency may refer to its top-level goals as "business lines" while
another may use the term "strategic goals"—the model can provide a
useful comparative structure across unique agency adaptations. We use
it as such in this report. Nevertheless, while this model can be
useful in graphically portraying approaches and relationships across
agencies, it is important to emphasize that each structure is
independent and somewhat stylistic and becomes informative only when
adapted to a specific agency context.
Figure 1: GPRA Performance Planning, Budget, and Net Cost Model:
[Refer to PDF for image: illustration]
Budget:
Agency;
Budget Account;
Program Activity.
Performance Planning:
General Goal;
Strategic Objective;
Performance Goal.
Statement of Net Cost:
Agency;
Responsibility Segment;
Segment Output.
Source: GAO.
[End of figure]
Progress Made Linking Plans With Budgets but Nature of Linkages Could
Be Improved:
The agencies in our review continued to show the capacity for meeting
a basic requirement of GPRA: to "prepare an annual performance plan
covering each program activity set forth in the budget." In addition,
these agencies continued to show progress in translating these plan-
budget linkages into budgetary terms, thus indicating the performance
consequences of their budget proposals. For example, nearly 75 percent
of the agencies we reviewed for fiscal year 2002, compared to 40
percent in fiscal year 1999, were able to associate some level of
their performance plans with a specific allocation of requested
funding. Our review also showed, however, that there was substantial
variation in the manner—and therefore the resulting informative value—
in which these linkages were being achieved. For example, some
agencies related general goals to entire budget accounts while others
were able to associate sets of performance goals with GPRA program
activities.
Continued Improvement in Connecting Resources to Results:
Over the 4-year period of our review, fewer agency plans failed to
show how their performance goals covered the program activities in
their budget requests, and more agency plans clearly indicated
proposed funding allocations linked to performance expectations.
Figure 2 summarizes our assessments for fiscal years 1999 through 2002
while table 1 indicates our assessments by agency for fiscal year
2002. Figure 2 is displayed in percentage terms because, for fiscal
year 2002, our universe of agencies changed from 35 to 32. As of
August 15, 2001, the departments of Defense and Education, and the
Food and Nutrition Service of the Department of Agriculture had not
released fiscal year 2002 plans.[Footnote 11]
Figure 2 can be characterized as follows. Fewer agencies failed to
show a link between plans and budgets (group A); fewer agencies showed
a link but did not show funding information (group B); and fewer
agencies showed a link and indicated funding information, but did not
show how the funds were derived from the budget request (group C).
Thus, over the 4-year period in our review, more agencies established
links between their performance plans and their budgets and translated
those links into budgetary terms (group D).
Figure 2: Agencies Show Progress in Linking Plans and Budgets, Fiscal
Years 1999 Through 2002:
Fiscal years grouped by linkage: A: Did not link program activities to
performance plans;
FY 1999: 14% of agencies;
FY 2000: 17% of agencies;
FY 2001: 14% of agencies;
FY 2002: 9% of agencies.
Fiscal years grouped by linkage: B: Linked program activities to
performance but did not show funding levels needed to achieve goals;
FY 1999: 29% of agencies;
FY 2000: 9% of agencies;
FY 2001: 3% of agencies;
FY 2002: 3% of agencies.
Fiscal years grouped by linkage: C: Showed funding levels needed to
achieve performance but did not show how funding levels were derived
from program activities;
FY 1999: 17% of agencies;
FY 2000: 31% of agencies;
FY 2001: 20% of agencies;
FY 2002: 16% of agencies.
Fiscal years grouped by linkage: D: Translated links between program
activities and performance plans into budgetary terms by allocating
funding from program activities to expected performance;
FY 1999: 40% of agencies;
FY 2000: 43% of agencies;
FY 2001: 63% of agencies;
FY 2002: 72% of agencies.
Source: GAO analysis.
Note: For fiscal years 1999 through 2001 our universe was 35 agency
plans; for fiscal year 2002, 32 agency plans. For more information,
see appendix I, "Scope and Methodology."
[End of figure]
Group A in table 1 and figure 2 indicates agency plans for fiscal year
2002 that did not portray a clear link between the plan's goals and
the budget's program activities. It is worth noting that the agency
composition of this group has changed substantially over time as
agencies experimented with different presentation methods for their
plans.[Footnote 12] Also, although no linkage between the plan's
performance goals and the budget's program activities was described in
these agency plans, the 2002 performance plans for each agency in
group A did include general funding estimates.[Footnote 13]
Table 1: Agency Status in Linking Plans and Budgets, Fiscal Year 2002:
A: No link between program activities and performance goals:
* Commerce;
* Internal Revenue Service;
* State;
B: Linked program activities to performance goals:
* Occupational Safety and Health Administration.
C: Linked program activities to performance goals; showed funding
levels needed to achieve goals:
* Federal Emergency Management;
* Forest Service;
* General Services Administration;
* National Institutes of Health;
* Department of Veterans Affairs.
D: Linked program activities to performance goals, showed funding
levels needed to achieve goals, and allocated funding from program
activities to performance goals:
* Administration for Children and Families;
* Bureau of Indian Affairs;
* Agency for International Development;
* Bureau of Land Management;
* Customs Service;
* Employment Training Administration;
* Energy;
* Environmental Protection Agency;
* Federal Aviation Administration;
* Federal Bureau of Investigation;
* Federal Highway Administration;
* Federal Prison System;
* Health Resources and Service Administration;
* Housing and Urban Development;
* Immigration and Naturalization Service;
* National Park Service;
* National Aeronautical and Space Administration;
* National Science Foundation;
* Nuclear Regulatory Commission;
* Office of Personnel Management;
* Rural Housing Service;
* Small Business Administration;
* Social Security Administration.
Note: Column letters correspond to group letters in figure 2.
Source: GAO analysis.
[End of figure]
Groups B, C, and D in table 1 and figure 2 include those agencies
that, at a minimum, indicated how their performance plans covered the
program activities in their budgets—the basic requirement established
by GPRA. Groups C and D include agencies that went beyond this basic
requirement to also provide funding information. Group C shows
agencies that described a plan-budget linkage and also requested
funding levels to achieve expected performance. Group D indicates
those agencies that not only developed the required linkage and
provided an estimate of funding associated with expected performance,
but also clearly indicated how that funding was derived or allocated
from the program activities of their budget requests—the first step in
defining the performance consequences of a budget decision. As shown
in figure 2, there has been steady improvement in associating funding
information with expected performance (group C plus group D)—from 57
percent of the agency plans in our review in fiscal year 1999 to
nearly 90 percent in fiscal year 2002. More importantly, nearly 75
percent of the agency plans for fiscal year 2002, compared to 40
percent of the fiscal year 1999 plans, translated the linkages between
expected performance and budget program activities into budgetary
terms by allocating funding from their program activities to elements
of the performance plans (group D).
The Department of Housing and Urban Development (HUD) provides an
example of the progression depicted in figure 2. Figures 3 and 4 show
the approaches used by HUD in its last three performance plans. In
fiscal years 2000 and 2001, HUD used the same basic format in a
summary table to link its general goals to its budget accounts and
program activities; figure 3 depicts selected examples from each plan
for comparison. In the fiscal year 2000 plan, total requested funding
for each account or activity was indicated but was arrayed by general
goal by the use of an "x" rather than a specific dollar allocation. In
the fiscal year 2001 performance plan, HUD replaced the simple "x"
marks with funding estimates derived from its fiscal year 2001 budget
request. By using this approach, HUD was able not only to show the
linkage of its general goals to its budget request but also to
indicate more clearly the allocation—and thus the performance
consequences—of its fiscal year 2001 budget request. Subsequently, in
its fiscal year 2002 plan, the agency removed these summary charts
and, in the body of the plan, linked its budget request by account or
program activity to each of its five general goals. Figure 4 is an
excerpt of one page from the plan.
Figure 3: Change in HUD's Presentation of Performance Plan-Budget
Linkages, Fiscal Years 2000 and 2001 (Dollars in millions):
[Refer to PDF for image: illustration]
Fiscal Year 2000 Performance Plan:
Selected examples of accounts or program activities: Public Housing
Capital Fund;
Budget request: $2,555;
General Goal: Increase availability of decent, safe, and affordable
housing in American communities: [Check];
General Goal: Ensure equal opportunity in housing for all Americans:
[Empty];
General Goal: Promote self-sufficiency and asset development of
families and individuals: [Check];
General Goal: Improve community quality of life and economic vitality:
[Check];
General Goal: Restore the public trust in HUD: [Empty].
Selected examples of accounts or program activities: Community
Development Block Grants;
Budget request: $4,775;
General Goal: Increase availability of decent, safe, and affordable
housing in American communities: [Check];
General Goal: Ensure equal opportunity in housing for all Americans:
[Check];
General Goal: Promote self-sufficiency and asset development of
families and individuals: [Check];
General Goal: Improve community quality of life and economic vitality:
[Check];
General Goal: Restore the public trust in HUD: [Empty].
Selected examples of accounts or program activities: FHA: GI/SRI;
Budget request: $208;
General Goal: Increase availability of decent, safe, and affordable
housing in American communities: [Check];
General Goal: Ensure equal opportunity in housing for all Americans:
[Check];
General Goal: Promote self-sufficiency and asset development of
families and individuals: [Empty];
General Goal: Improve community quality of life and economic vitality:
[Check];
General Goal: Restore the public trust in HUD: [Empty].
Fiscal Year 2001 Performance Plan:
Selected examples of accounts or program activities: Public Housing
Capital Fund;
Budget request: $2,955;
General Goal: Increase availability of decent, safe, and affordable
housing in American communities: $2,069;
General Goal: Ensure equal opportunity in housing for all Americans:
$443;
General Goal: Promote self-sufficiency and asset development of
families and individuals: $148;
General Goal: Improve community quality of life and economic vitality:
$295;
General Goal: Restore the public trust in HUD: [Empty].
Selected examples of accounts or program activities: Community
Development Block Grants;
Budget request: $4,900;
General Goal: Increase availability of decent, safe, and affordable
housing in American communities: $1,470;
General Goal: Ensure equal opportunity in housing for all Americans:
$490;
General Goal: Promote self-sufficiency and asset development of
families and individuals: $980;
General Goal: Improve community quality of life and economic vitality:
$1,960;
General Goal: Restore the public trust in HUD: [Empty].
Selected examples of accounts or program activities: FHA: GI/SRI;
Budget request: $456;
General Goal: Increase availability of decent, safe, and affordable
housing in American communities: $456;
General Goal: Ensure equal opportunity in housing for all Americans:
[Empty];
General Goal: Promote self-sufficiency and asset development of
families and individuals: [Empty];
General Goal: Improve community quality of life and economic vitality:
[Empty];
General Goal: Restore the public trust in HUD: [Empty].
Source: GAO analysis.
[End of figure]
Figure 4: HUD's Presentation of Performance Plan-Budget Linkages,
Fiscal Year 2002:
[Refer to PDF for image: table]
HUD's FY 2002 Annual Performance Plan:
Resources supporting Strategic Goal 1: Increase the availability of
decent, safe and affordable housing in American communities:
Budget Authority (BA) and Staffing Levels (BA is dollars in millions):
Program: Community Planning & Development: Community Development Block
Grants Fund;
FY 2000 BA: $1,587;
FY 2000 Staff: 136;
FY 2001 BA: $1,687;
FY 2001 Staff: 133;
FY 2002 BA: $1,585;
FY 2002 Staff: 133.
Program: Community Planning & Development: HOME Investment Partnership
Program[A];
FY 2000 BA: $1,636;
FY 2000 Staff: 220;
FY 2001 BA: $1,796;
FY 2001 Staff: 216;
FY 2002 BA: $1,796;
FY 2002 Staff: 216.
Program: Community Planning & Development: HOPWA;
FY 2000 BA: $232;
FY 2000 Staff: 32;
FY 2001 BA: $257;
FY 2001 Staff: 31;
FY 2002 BA: $277;
FY 2002 Staff: 31.
Program: Community Planning & Development: Rural Housing;
FY 2000 BA: $25;
FY 2000 Staff: 18;
FY 2001 BA: $25;
FY 2001 Staff: 18;
FY 2002 BA: 0;
FY 2002 Staff: 18.
Program: Public and Indian Housing: Housing Certificate Fund[B];
FY 2000 BA: $7,095;
FY 2000 Staff: 168;
FY 2001 BA: $8,667;
FY 2001 Staff: 167;
FY 2002 BA: $8,383;
FY 2002 Staff: 167.
Program: Public and Indian Housing: Public Housing Operating Fund;
FY 2000 BA: $1,484;
FY 2000 Staff: 149;
FY 2001 BA: $1,530;
FY 2001 Staff: 148;
FY 2002 BA: $1,601;
FY 2002 Staff: 148.
Program: Public and Indian Housing: Public Housing Capital Fund;
FY 2000 BA: $2,884;
FY 2000 Staff: 86;
FY 2001 BA: $2,993;
FY 2001 Staff: 86;
FY 2002 BA: $2,293;
FY 2002 Staff: 86.
Program: Public and Indian Housing: HOPE VI;
FY 2000 BA: $316;
FY 2000 Staff: 61;
FY 2001 BA: $316;
FY 2001 Staff: 61;
FY 2002 BA: $316;
FY 2002 Staff: 71.
Program: Public and Indian Housing: Indian Housing Block Grant;
FY 2000 BA: $472;
FY 2000 Staff: 116;
FY 2001 BA: $486;
FY 2001 Staff: 115;
FY 2002 BA: $486;
FY 2002 Staff: 115.
Program: Public and Indian Housing: Indian Housing Loan Guarantee;
FY 2000 BA: $5;
FY 2000 Staff: 4;
FY 2001 BA: $5;
FY 2001 Staff: 4;
FY 2002 BA: $5;
FY 2002 Staff: 4.
Program: Housing: Sections 202/811 (elderly and disabled);
FY 2000 BA: $910;
FY 2000 Staff: 276;
FY 2001 BA: $894;
FY 2001 Staff: 274;
FY 2002 BA: $901;
FY 2002 Staff: 274.
Program: Housing: FHA MMI/CMHI;
FY 2000 BA: $430;
FY 2001 BA: $886;
FY 2001 BA: $430;
FY 2001 Staff: 878;
FY 2002 BA: $434;
FY 2002 Staff: 878.
Program: Housing: FHA GI/SRI[C];
FY 2000 BA: $262;
FY 2000 Staff: 531;
FY 2001 BA: $456;
FY 2001 Staff: 555;
FY 2002 BA: $375;
FY 2002 Staff: 644.
Program: Housing: Manufactured Housing;
FY 2000 BA: $11;
FY 2000 Staff: 12;
FY 2001 BA: $11;
FY 2001 Staff: 12;
FY 2002 BA: $17;
FY 2002 Staff: 12.
Program: Housing: Other Housing programs[D];
FY 2000 BA: 0;
FY 2000 Staff: 21;
FY 2001 BA: $0;
FY 2001 Staff: 21;
FY 2002 BA: 0;
FY 2002 Staff: 21.
Program: Ginnie Mae;
FY 2000 BA: $9;
FY 2000 Staff: 61;
FY 2001 BA: $9;
FY 2001 Staff: 66;
FY 2002 BA: $9;
FY 2002 Staff: 66.
Program: Healthy Homes & Lead Hazard Control;
FY 2000 BA: $80;
FY 2000 Staff: 25;
FY 2001 BA: $100;
FY 2001 Staff: 23;
FY 2002 BA: $110;
FY 2002 Staff: 23.
Program: Other HUD Staff[E];
FY 2000 BA: [Empty];
FY 2000 Staff: 228;
FY 2001 BA: [Empty];
FY 2001 Staff: 163;
FY 2002 BA: [Empty];
FY 2002 Staff: 64.
Program: Total;
FY 2000 BA: $17,438;
FY 2000 Staff: 3,030;
FY 2001 BA: $19,662;
FY 2001 Staff: 2,971;
FY 2002 BA: $18,588;
FY 2002 Staff: 2,971.
[A] HOME includes housing counseling staff in the Office of Housing.
[B] Housing Certificate Fund BA numbers represent program levels
instead of net budget authority (BA figures for this account are
significantly affected by rescissions and advanced appropriations).
Staff includes Office of Housing staff working with project-based
Section 8.
[C] FY 2001 BA total does not include supplemental appropriations.
[D] Includes programs that do not receive a discretionary
appropriation.
[E] Other staff include the Real Estate Assessment Center (REAC) and
the Office of Multifamily Housing Assistance Restructuring (OMHAR).
Source: HUD's fiscal year 2002 performance plan.
[End of figure]
While the approaches portrayed in figures 3 and 4 show steady progress
in developing clearer linkages, it should be noted that HUD linked the
highest levels of the HUD performance plan— general goals—to program
activities. Linking funding allocations to more specific performance
goals or sets of performance goals, as called for under OMB guidance,
would make the presentations still more informative. HUD's 2002
strategic plan recognizes this and notes, "In the following years, HUD
will further link our budget with the strategic planning and
performance measurement processes." HUD has already attempted to
extend linkages to the strategic objective level. For example, in its
fiscal year 2000 and 2001 plans, HUD used "x" marks to describe the
linkages between its budget program activities and the strategic
objectives within each general goal. In the fiscal year 2002 plan, HUD
replaced these "x" marks and showed funding allocations by strategic
objective, although we have reported that the presentation could be
improved.[Footnote 14]
Agencies Have Developed Many Ways to Link Plans and Budgets:
The HUD example demonstrates that, notwithstanding the progress
agencies have made in associating plans and budgets, there remain many
challenges in achieving presentations that are sufficiently clear and
precise to be useful and informative. Agencies are taking advantage of
the flexibility available to them under GPRA to establish plan-budget
linkages, and it is unlikely, given the nature of missions and
operating environments, that any one approach will fit all
circumstances. Nevertheless, it is clear that some associations are
more informative than others in clarifying the performance
consequences of budgetary decisions.
Our assessment indicates that during these first years of GPRA
implementation, agencies have developed many methods to link their
plans with their budgets. Figure 5 portrays the variety of
associations used by agencies to develop performance plans that
covered the program activities in their budget request. Overall,
agencies have associated higher or more general levels of their
performance plans with lower or more specific levels of their budget
structures. Of the 29 agencies in our review that linked their plans
and budgets (groups B, C, and D in table 1), only 5 established
connections at the performance goal level—the most specific goal level
in the plans. The remaining 24 agencies were evenly split between
links to general goals and strategic objectives. Conversely, none of
the 29 agencies established links to agencywide budget totals—the most
general level in a budget presentation—and only nine defined links at
the next level, budget accounts. The remaining 20 agencies established
connections to budget program activities—the more detailed level of
the budget presentations. The following examples demonstrate more
specifically some of the associations portrayed in figure 5.
Figure 5: Agencies Used Multiple Approaches to Link Plans and Budgets:
[Refer to PDF for image: illustration]
* 4 agencies linked program activities to (sets of) performance goals;
* 8 agencies linked program activities to strategic objectives;
* 8 agencies linked program activities to general goals;
* 1 agency linked accounts to performance;
* 4 agencies linked accounts to strategic objectives;
* 4 agencies linked accounts to general goals.
Performance Planning:
General Goal:
* Strategic Objective 1;
- Performance Goal 1.1;
- Performance Goal 1.2;
* Strategic Objective 2;
- Performance Goal 2.1;
- Performance Goal 2.2.
Budget:
Agency:
* Account:
- Program Activity 1;
- Program Activity 2;
* Account:
- Program Activity 1;
- Program Activity 2.
Source: GAO analysis of fiscal year 2002 performance plans.
[End of figure]
The Administration for Children and Families (ACF), within the
Department of Health and Human Services, is an example of an agency
that linked allocations of requested program activity funding to sets
of performance goals in its fiscal year 2002 performance plan. As
shown in figure 6, ACF aggregated and consolidated program activities
from multiple budget accounts and linked the associated funding
information to sets of performance goals, which it referred to as
"subobjectives," such as child welfare and youth programs.
Figure 6: ACF Used Aggregation and Consolidation to Link Program
Activities to Sets of Performance Goals (Dollars in millions):
Agency: ACF;
Account: Children and families services programs;
Program Activity:
1. Adoption initiative ($43);
2. Adoption opportunities ($27);
3. Child abuse state grants ($21);
4. Child abuse discretionary ($18);
5. Abandoned infants assistance ($12);
6. Community-based resource centers ($33);
7. Child welfare training ($7);
8. Child welfare services ($292);
(plus 20 other program activities associated with other goals);
General Goal: Improve healthy development, safety, and well-being of
children and youth (5-7);
Strategic Objective: Increase safety, permanency, and well-being of
children and youth;
Subobjective: Child welfare ($7,726.4);
Performance Goal: 3 Performance goals, including for example:
Safety: Decrease the percentage of children with substantiated reports
of maltreatment who have a repeated substantiated report within 12
months;
Permanency: Increase the percentage of children who exit care through
adoption within 2 years of placement.
Agency: ACF;
Account: Payments to states for foster care and adoption assistance;
Program Activity:
1. Foster care ($5,055);
2. Adoption assistance ($1,426);
3. Independent living ($200);
General Goal: Improve healthy development, safety, and well-being of
children and youth (5-7);
Strategic Objective: Increase safety, permanency, and well-being of
children and youth;
Subobjective: Child welfare ($7,726.4);
Performance Goal: 3 Performance goals, including for example:
Safety: Decrease the percentage of children with substantiated reports
of maltreatment who have a repeated substantiated report within 12
months;
Permanency: Increase the percentage of children who exit care through
adoption within 2 years of placement.
Agency: ACF;
Account: Promoting safe and stable families;
Program Activity:
1. Grants to states and tribes ($489);
2. Training and technical assistance ($6);
3. State court assessment activities ($10);
4. Mentoring children of prisoners ($67);
General Goal: Improve healthy development, safety, and well-being of
children and youth (5-7);
Strategic Objective: Increase safety, permanency, and well-being of
children and youth;
Subobjective: Child welfare ($7,726.4);
Performance Goal: 3 Performance goals, including for example:
Safety: Decrease the percentage of children with substantiated reports
of maltreatment who have a repeated substantiated report within 12
months;
Permanency: Increase the percentage of children who exit care through
adoption within 2 years of placement;
Subobjective: Youth Programs;
Performance Goal: 6 Performance Goals.
Agency: ACF;
Account: Children's research and technical assistance;
Program Activity:
1. Child welfare study ($6);
2. Training and technical assistance ($14);
(plus 3 other program activities associated with other goals);
General Goal:
Strategic Objective:
Performance Goal:
General Goal: Improve healthy development, safety, and well-being of
children and youth (5-7);
Strategic Objective: Increase safety, permanency, and well-being of
children and youth;
Subobjective: Child welfare ($7,726.4);
Performance Goal: 3 Performance goals, including for example:
Safety: Decrease the percentage of children with substantiated reports
of maltreatment who have a repeated substantiated report within 12
months;
Permanency: Increase the percentage of children who exit care through
adoption within 2 years of placement;
Subobjective: Youth Programs;
Performance Goal: 6 Performance Goals.
Source: GAO analysis of ACF fiscal year 2002 performance plan.
[End of figure]
Figure 7 presents a different approach. The Environmental Protection
Agency (EPA) linked strategic objectives to its program activities.
The EPA presentation is aided by its decision to define for each of
its budget accounts a uniform program activity structure-10
activities, as shown under the Science and Technology budget account
in figure 7. These 10 activities, which correspond to EPA's general
goal structure, are applied, as appropriate, across each of its budget
accounts. Figure 7 portrays how EPA is able to consolidate and
allocate funding from multiple budget accounts using the "clean air"
program activity—and general goal—to the strategic objective "acid
rain."
Figure 7: EPA Consolidated Funding Allocations by Strategic Objective
(Dollars in millions):
Agency: EPA;
Account: Science and technology;
Program Activity:
1. Clean air ($152) ($4 to Acid Rain);
2. Clean water;
3. Safe food;
4. Preventing pollution;
5. Waste management;
6. Global and cross border;
7. Right to know;
8. Sound science;
9. Credible deterrent;
10. Effective management.
General goal: Clean air;
Strategic objective:
Acid Rain ($18.9)
By FY2005, reduce ambient nitrates and total nitrogen deposition to
1990 levels. By 2010, reduce ambient sulfates and total sulfur
deposition by up to 30 percent from 1990 levels.
Performance goal:
Maintain or increase annual SO2 emission reduction of approximately 5
million tons from the 1980 baseline. Keep annual emissions below level
authorized by allowance holdings and make progress towards achievement
of 2010 SO2 emissions cap for utilities. 2 million tons of NOx from
coal-fired utility sources will be reduced from levels that would have
been emitted without implementation of Title IV of the Clean Air Act
Amendments.
Agency: EPA;
Account: Environmental programs and management;
Program Activity: 1. Clean air ($188) ($13.9 to Acid Rain);
Other program activities corresponding to EPA's other strategic goals
(similar to above);
General goal: Clean air;
Strategic objective:
Acid Rain ($18.9)
By FY2005, reduce ambient nitrates and total nitrogen deposition to
1990 levels. By 2010, reduce ambient sulfates and total sulfur
deposition by up to 30 percent from 1990 levels.
Performance goal:
Maintain or increase annual SO2 emission reduction of approximately 5
million tons from the 1980 baseline. Keep annual emissions below level
authorized by allowance holdings and make progress towards achievement
of 2010 SO2 emissions cap for utilities. 2 million tons of NOx from
coal-fired utility sources will be reduced from levels that would have
been emitted without implementation of Title IV of the Clean Air Act
Amendments.
Agency: EPA;
Account: State and tribal assistance grants;
Program Activity:
1. Clean air ($199) ($1 to Acid Rain);
Other program activities corresponding to EPA's other strategic goals
(similar to above);
General goal: Clean air;
Strategic objective:
Acid Rain ($18.9)
By FY2005, reduce ambient nitrates and total nitrogen deposition to
1990 levels. By 2010, reduce ambient sulfates and total sulfur
deposition by up to 30 percent from 1990 levels.
Performance goal:
Maintain or increase annual SO2 emission reduction of approximately 5
million tons from the 1980 baseline. Keep annual emissions below level
authorized by allowance holdings and make progress towards achievement
of 2010 SO2 emissions cap for utilities. 2 million tons of NOx from
coal-fired utility sources will be reduced from levels that would have
been emitted without implementation of Title IV of the Clean Air Act
Amendments.
Source: GAO analysis of EPA fiscal year 2002 performance plan.
[End of figure]
The Nuclear Regulatory Commission (NRC) is an example of an agency
that linked program activities to general goals. Like EPA, NRC defined
a program activity structure that is identical to its general goals,
thus creating a direct linkage and allocation of its funding request.
However, unlike EPA, the NRC plan defines only two performance
planning levels—-general goals and performance goals. For each program
activity, the plan includes more specific funding information on
related "program areas"—in effect, disaggregated or subprogram
activities. The plan includes specific requested funding allocations
for each program activity and subprogram activity as shown in figure
8. Within each general goal, the plan crosswalks each subprogram
activity to one or more of the performance goals.
Figure 8: NRC Linked Program Activities and Funding Allocations by
General Goal (Dollars in millions):
[Refer to PDF for image: illustration]
Agency: NRC;
Account: Salaries and Expenses;
Program Activities:
1. Nuclear reactor safety ($231.4):
- Reactor licensing ($57.8);
- Reactor license renewal ($15.7);
- Reactor inspection and performance assessment ($74.3);
- Reactor incident response ($6);
- Reactor safety research ($58.7);
- Reactor technical training ($9.2);
- Reactor enforcement actions ($1.7);
- Reactor investigations ($4.1);
- Reactor legal advice ($2.6);
- Reactor adjudication ($1.4);
2. Nuclear materials safety MIS program area;
3. Nuclear waste safety program area;
4. International nuclear safety support program area;
5. Management and support program area;
General goal: Nuclear reactor safety ($231.4);
Strategic objectives: None listed;
Performance goal: Maintain safety, protection of the environment, and
the common defense and security. Increase public confidence.
Make NRC activities and decisions more effective, efficient, and
realistic. Reduce unnecessary regulatory burden on stakeholders.
Source: GAO analysis of NRC fiscal year 2002 performance plan.
[End of figure]
Figure 9 portrays an agency that clearly indicated in its plan
requested funding levels at the strategic objective level, and broadly
associated budget accounts, program activities, and disaggregated
program activities with these strategic objectives, but did not
clearly indicate how or where the requested funding was allocated.
This is an example of an agency assessed as belonging in table 1 as
group C, rather than group D. As shown in figure 9, the Forest Service
associated multiple budget accounts, program activities, and
subprogram activities with multiple strategic objectives, and it was
not clear how the funding information shown in the performance plan
was derived from the budget request.
Figure 9: Forest Service Linked Multiple Budget Accounts With Multiple
Strategic Objectives (Dollars in millions):
Agency: Forest Service;
Account: National forest system;
Program Activity (disaggregrated):
1. National forest system $1,332);
a. Wildlife ($132);
b. 9 other subprogram activities ($1,200);
2. Reimbursable program ($66);
General goal: Ecosystem health;
Strategic objective:
Provide ecological conditions to sustain viable populations of native
and desired nonnative species and to achieve objectives for Management
Indicator Species (MIS) focal species ($130);
Performance goal: 4 performance goals.
Strategic objective:
Increase the amount of forests and grass-lands restored to or
maintained in a healthy condition with reduced risk and damage from
fires, insects and diseases, and invasive species ($1,038);
Performance goal: 5 performance goals.
General goal: Multiple benefits to people;
Strategic objective:
Improve the capability of the nation's forests and grasslands to
provide diverse, high-quality outdoor recreation opportunities ($188);
Performance goal: 1 performance goal.
Agency: Forest Service;
Account: State and private forestry;
Program Activity (disaggregrated):
1. International forestry ($5);
2. Forest health management ($68);
3. Cooperative fire protection ($33);
4. Cooperative forestry ; ($146)
5. Reimbursable program ($2).
Six other program activities spread among 2 accounts are also
associated with these strategic objectives. General goal: Ecosystem
health;
Strategic objective:
Provide ecological conditions to sustain viable populations of native
and desired nonnative species and to achieve objectives for Management
Indicator Species (MIS) focal species ($130);
Performance goal: 4 performance goals.
Strategic objective:
Increase the amount of forests and grass-lands restored to or
maintained in a healthy condition with reduced risk and damage from
fires, insects and diseases, and invasive species ($1,038);
Performance goal: 5 performance goals.
General goal: Multiple benefits to people;
Strategic objective:
Improve the capability of the nation's forests and grasslands to
provide diverse, high-quality outdoor recreation opportunities ($188);
Performance goal: 1 performance goal.
Source: GAO analysis of Forest Service fiscal year 2002 performance
plan.
[End of figure]
Each of the above examples portrays methods used by agencies to
achieve GPRAs required linkage between performance plans and budgets.
However, as discussed above, most agencies in our review tied funding
estimates from their budget requests to the higher level general goals
or strategic objectives in their performance plans rather than the
more specific performance goals or sets of goals expected under OMB
guidance. Thus, although there have been improvements since fiscal
year 1999 in structurally relating performance expectations to
requested budgetary resources, there is substantial variation in the
nature of those relationships and resulting differences in how
informative and useful the linkages may be. Nevertheless, the fact
that some agencies have been able to achieve more informative
presentations, and the general progress that has been made since 1999,
indicate that potential exists for achieving an important goal of
GPRA: to demonstrate the performance consequences of budget decisions.
Efforts to Link Plans to Cost Statements Are Encouraging but
Improvements Are Needed:
Similar to the findings in our assessment of plan-budget linkages,
agency efforts to more clearly associate results with resources
consumed have improved from the fiscal year 1999 financial statements
to those for fiscal year 2000. For example, 13 of the 24 agencies
required to prepare financial statements used some element of their
performance planning structure in structuring their statement of net
cost, compared to 10 of 24 in 1999.[Footnote 15] Table 2 lists those
agencies that reflected their performance planning structure in their
statements of net cost. Also similar to the findings in our assessment
of plan-budget linkages, the usefulness of these presentations varied
significantly, with most agencies linking costs to the highest levels
of their goal structure. (See figure 10.)
Table 2: Agencies That Linked Performance Plans With Net Cost
Statements, Fiscal Years 1999 and 2000:
Fiscal Year 1999 Statements of Net Cost:
* Department of Commerce;
* Department of Energy;
* Department of Justice;
* Department of Labor;
* Department of State;
* Department of the Treasury;
* Department of Veterans Affairs;
* National Aeronautical and Space Administration;
* Nuclear Regulatory Commission;
* U.S. Agency for International Development.
Fiscal Year 2000 Statements of Net Cost:
* Department of Commerce;
* Department of Energy;
* Department of Health and Human Services;
* Department of the Interior;
* Department of Justice;
* Department of Labor;
* Department of State;
* Department of the Treasury;
* Department of Veterans Affairs;
* Environmental Protection Agency;
* National Aeronautical and Space Administration;
* Nuclear Regulatory Commission;
* U.S. Agency for International Development.
Source: GAO analysis of fiscal years 1999 and 2000 financial
statements.
[End of table]
Figure 10: Agencies Used Multiple Approaches to Link Plans and Net
Cost Statements. Performance Planning:
[Refer to PDF for image: illustration]
* VA reported costs by "program" (i.e., structure used to summarize
performance goal);
* AID, DOI, EPA, and NRC reported costs by general goal;
* DOE and NASA reported costs by general goal and also linked each
goal's net cost to the budget's program activities;
* DOC, DOJ, HHS, State, and Treasury reported costs by responsibility
segment and general goal;
* DOL reported costs by responsibility segment and strategic objective;
Performance Planning:
General Goal:
* Strategic Objective 1;
- Performance Goal 1.1;
- Performance Goal 1.2;
* Strategic Objective 2;
- Performance Goal 2.1;
- Performance Goal 2.2.
Statement of Net Cost:
Agency:
* Responsibility segment:
- Segment Output;
- Segment Output;
* Responsibility segment:
- Segment Output;
- Segment Output.
Source: GAO analysis of fiscal year 2000 financial statements.
Note: Agencies portrayed are: Department of Commerce (DOC), Department
of Energy (DOE), Department of Health and Human Services (HHS),
Department of the Interior (DOI), Department of Justice (DOJ),
Department of Labor (DOL), Department of State (State), Department of
the Treasury (Treasury), Department of Veterans Affairs (VA),
Environmental Protection Agency (EPA), National Aeronautical and Space
Administration (NASA), Nuclear Regulatory Commission (NRC), and U.S.
Agency for International Development (AID).
[End of figure]
Figure 11 shows the Department of Veterans Affairs (VA) statement of
net cost from its fiscal year 2000 financial statements. VA structured
its statement of net cost around its "programs," such as medical care,
compensation, and education. In its performance plan, VA defined these
"programs" as the GPRA program activities created by aggregating,
disaggregating, or consolidating the program activities in its budget
request and then linked its annual performance goals to this program
structure. Thus, by showing the net cost of operations for the
department against the same structure used to summarize its annual
performance goals and measures, VA was able to establish a direct link
between results achieved and resources consumed.
Figure 11: VA Reported Net Cost by Program Area:
[Refer to PDF for image: illustration]
FY 2000 Consolidated Financial Statements:
U.S. Department Of Veterans Affairs:
Consolidated Statements Of Net Cost (Dollars In Millions):
Net Program Costs (Note 19):
Medical Care:
Year Ended September 30, 2000: $19,072;
Year Ended September 30, 1999: $17,573.
Medical Education:
Year Ended September 30, 2000: $782;
Year Ended September 30, 1999: $830.
Medical Research:
Year Ended September 30, 2000: $718;
Year Ended September 30, 1999: $650.
Compensation:
Year Ended September 30, 2000: $19,584;
Year Ended September 30, 1999: $18,520.
Pension:
Year Ended September 30, 2000: $3,161;
Year Ended September 30, 1999: $3,249.
Education:
Year Ended September 30, 2000: $1,084;
Year Ended September 30, 1999: $944.
Vocational Rehabilitation and Employment:
Year Ended September 30, 2000: $496;
Year Ended September 30, 1999: $509.
Loan Guaranty:
Year Ended September 30, 2000: ($423);
Year Ended September 30, 1999: $1,251.
Insurance:
Year Ended September 30, 2000: $100;
Year Ended September 30, 1999: $71.
Burial:
Year Ended September 30, 2000: $253;
Year Ended September 30, 1999: $224.
Net Program Costs Before Changes In Veterans Benefits Actuarial
Liabilities[A]:
Year Ended September 30, 2000: $44,827;
Year Ended September 30, 1999: $43,821.
Changes in Veterans Benefits Actuarial Liabilities (Note 13):
Compensation:
Year Ended September 30, 2000: $62,600;
Year Ended September 30, 1999: ($94,127).
Burial:
Year Ended September 30, 2000: ($100);
Year Ended September 30, 1999: ($822).
Subtotal:
Year Ended September 30, 2000: $62,500;
Year Ended September 30, 1999: ($94,949).
Net Non-Va Program Costs:
Year Ended September 30, 2000: ($17);
Year Ended September 30, 1999: $10.
Net Cost Of Operations (Note 19):
Year Ended September 30, 2000: $107,310;
Year Ended September 30, 1999: $51,118.
[A] The 2000 and 1999 changes in Veterans Benefit liabilities were
reclassified in order not to distort the program cost being reported
in the compensation and burial activities.
Source: VA fiscal year 2000 financial statements.
[End of figure]
Figure 12 excerpts the statement of net cost from the NRC fiscal year
2000 financial statements. In this approach, the net cost of
operations was shown for each NRC general goal. As discussed above,
the NRC fiscal year 2002 performance plan defined only two performance
levels—strategic (general) goals and performance goals. In addition,
NRC defined a structure in which its program activities were identical
to its general goals, so it became straightforward to display
requested budget amounts by goal. By structuring its statement of net
cost around the same general goals, NRC was able to create a clear
link between performance and requested funding, and between resources
consumed and results.[Footnote 16]
Figure 12: NRC Associated Net Cost With General Goals:
[Refer to PDF for image: illustration]
Statement Of Net Cost:
For the year ended September 30, 2000 (in dollars):
Nuclear Reactor Safety:
Intragovemmental: $103,796,213;
With the public: $226,621,251;
Total: $330,417,464;
Less earned revenue: $390,400,624;
Net cost of Nuclear Reactor Safety: ($59,983,160).
Nuclear Materials Safety:
Intragovemmental: $27,707,063;
With the public: $73,502,935;
Total: $101,209,998;
Less earned revenue: $55,011,902;
Net cost of Nuclear Materials Safety: $46,198,096.
Nuclear Waste Safety:
Intragovemmental: $14,856,560;
With the public: $48,319,530;
Total: $63,176,090;
Less earned revenue: $14,547,764;
Net cost of Nuclear Waste Safety: $48,628,326.
International Nuclear Safety Support:
Intragovemmental: $7,892,108;
With the public: $8,033,704;
Total: $15,925,812;
Less earned revenue: $3,077,698;
Net cost of International Nuclear Safety Support: $12,848,114.
Net Cost of Operations (Note 12: $47,691,376.
The accompanying notes to the principal statements are an integral
part of this statement.
Source: NRC fiscal year 2000 financial statement.
[End of figure]
The Department of Energy (DOE) took an approach similar to NRC's, but
then went a step further. First, like NRC, DOE used its consolidated
statement of net cost to report summary, agencywide cost information
for each of its "business line goals"-—the general goals for the
agency. Second, DOE then used separate notes to the consolidated
statement to present the net cost for each business line goal and its
associated budget program activities. The separate notes report net
cost of operations for a specific general goal using the program
activity structure in the DOE budget request. Figure 13 displays the
consolidated statement and figure 14 presents one example of a
separate note dealing with the business line goal "NNSA and other
National Security Activities."
Figure 13: DOE Associated Net Cost With General Goals:
[Refer to PDF for image: illustration]
Consolidated Statements of Net Cost For the Years Ended September 30,
2000 and 1999 (in millions):
Costs:
Energy Resources: Program Costs;
2000: $5,317;
1999: $4,938.
Energy Resources: Earned Revenues;
2000: ($3,815);
1999: ($3,238).
Net Cost of Energy Resources Programs:
2000: $1,502;
1999: $1,700.
NNSA and Other National Security Activities: Program Costs;
2000: $5,824;
1999: $5,391.
NNSA and Other National Security Activities: Earned Revenues
2000: [Empty];
1999: ($6).
Net Cost of NNSA and Other National Security Activities:
2000: $5,824;
1999: $5,385.
Environmental Quality: Program Costs;
2000: $2,283;
1999: $750.
Environmental Quality: Earned Revenues;
2000: ($459);
1999: ($303).
Net Cost of Environmental Quality Programs:
2000: $1,824;
1999: $447.
Science: Program Costs;
2000: $2,673;
1999: $2,633.
Science: Earned Revenues;
2000: ($7);
1999: ($9).
Net Cost of Science Programs:
2000: $2,666;
1999: $2,624.
Other Programs: Program Costs;
2000: $2,414;
1999: $2,372.
Other Programs: Earned Revenues;
2000: ($2,184);
1999: ($2,159).
Net Cost of Other Programs:
2000: $230;
1999: $213.
Costs Not Assigned to Programs:
2000: $11,136;
1999: $21,722.
Net Cost of Operations:
2000: $23,182;
1999: $32,091.
Source: DOE fiscal year 2000 financial statement.
[End of figure]
Figure 14: DOE Used Subordinate Schedules to Report Costs for Each
General Goal Against Related Program Activities From Its Budget:
[Refer to PDF for image: illustration]
19. Supporting Schedule of Net Cost for NNSA and Other National
Security Activities (in millions):
Stockpile stewardship:
FY 2000: $1,818;
FY 1999: $1,789.
Stockpile management:
FY 2000: $1,737;
FY 1999: $1,837.
Secure transportation asset:
FY 2000: $436;
FY 1999: $73.
Nonproliferation and verification research and development:
FY 2000: $224;
FY 1999: $239.
Arms control and nonproliferation:
FY 2000: $269;
FY 1999: $253.
Nuclear safeguards and security:
FY 2000: $119;
FY 1999: $105.
Fissile materials disposition:
FY 2000: $130;
FY 1999: $110.
International nuclear safety and HEU transparency:
FY 2000: $111;
FY 1999: $94.
Naval reactors:
FY 2000: $693;
FY 1999: $638.
Emergency management/preparedness:
FY 2000: $27;
FY 1999: $35.
Emergency response:
FY 2000: $78;
FY 1999: $91.
Uranium programs - downblend of HEU at Portsmouth:
FY 2000: $5;
FY 1999: $20.
Worker and community transition:
FY 2000: $52;
FY 1999: $50.
Intelligence:
FY 2000: $35;
FY 1999: $38.
Counterintelligence:
FY 2000: $35;
FY 1999: $13.
Cerro Grande tire activities:
FY 2000: $55;
FY 1999: [Empty].
Russian origin uranium sales: Cost of sales:
FY 2000: [Empty];
FY 1999: $5.
Russian origin uranium sales: Less earned revenues:
FY 2000: [Empty];
FY 1999: ($6).
Total net costs for NNSA and other national security activities:
FY 2000: $5,824;
FY 1999: $5,385.
Source: DOE fiscal year 2000 financial statement.
[End of figure]
Finally, figures 15 and 16 excerpt the statement of net cost from the
Department of Treasury fiscal year 2000 financial statements. Treasury
reported net cost of operations on its consolidated statement for each
of three program areas—the three "missions" or general goals in its
performance plan (see figure 15). Treasury noted that the complexity
of its organizational structure required this approach, with
supporting schedules used to report the net cost of each program area
(general goal) by bureau. In figure 16, the subordinate schedule for
the three program areas are shown. Because Treasury's annual
performance plan is also organized by bureau ("responsibility
segment"), this approach allowed them to associate net costs not only
with general goals but also with each bureau—and therefore each
bureau's strategic objectives.
Figure 15: Treasury Showed Net Cost by General Goal in Its
Consolidated Statement:
[Refer to PDF for image: illustration]
Consolidated Statement of Net Cost:
For the Year Ended September 30, 2000 (In Millions):
Costs: Program A - Economic: Promote Prosperous and Stable American
and World Economies:
Intragovemmental Costs: Production:
Combined: $209;
Elimination: -$7;
Consolidated: $202.
With the Public: Production:
Combined: $3,854;
Elimination: $0;
Consolidated: $3,854.
Total:
Combined: $4,063;
Elimination: ($7);
Consolidated: $4,056.
Less Earned Revenues:
Combined: $2,138;
Elimination: ($832);
Consolidated: $1,306.
Net Program A Costs:
Combined: $1,925;
Elimination: $825;
Consolidated: $2,750.
Costs: Program B - Financial: Manage the Governments Finances:
Intragovemmental Costs: Production:
Combined: $6,187;
Elimination: ($2,271);
Consolidated: $3,916.
With the Public: Production:
Combined: $9,700;
Elimination: $0;
Consolidated: $9,700.
With the Public: Nonproduction:
Combined: $10;
Elimination: $0;
Consolidated: $10.
Total:
Combined: $15,897;
Elimination: ($2,271);
Consolidated: $13,626.
Less Earned Revenues:
Combined: $7,928;
Elimination: ($107);
Consolidated: $7,821.
Net Program B Costs:
Combined: $7,969;
Elimination: ($2,164);
Consolidated: $5,805.
Costs: Program C - Law Enforcement: Safeguard Our Financial Systems,
Protect Our Nation's Leaders, and Secure a Safe and Drug Free America:
Intragovemmental Costs: Production:
Combined: $915;
Elimination: ($193);
Consolidated: $722.
With the Public: Production:
Combined: $2,437;
Elimination: $0;
Consolidated: $2,437.
Total:
Combined: $3,352;
Elimination: ($193);
Consolidated: $3,159.
Less Earned Revenues:
Combined: $177;
Elimination: ($92);
Consolidated: $85.
Net Program C Costs:
Combined: $3,175;
Elimination: ($101);
Consolidated: $3,074.
Costs Not Assigned to Programs: Intragovernmental:
Combined: $165;
Elimination: ($46);
Consolidated: $119.
Costs Not Assigned to Programs: With the Public:
Combined: $819;
Elimination: $0;
Consolidated: $819.
Total:
Combined: $984;
Elimination: ($46);
Consolidated: $938.
Less Earned Revenues Not Assigned to Programs:
Combined: $603;
Elimination: ($462);
Consolidated: $141.
Net Cost Of Treasury Operations:
Combined: $13,450;
Elimination: ($1,024);
Consolidated: $12,426.
Federal Debt Interest:
Combined: $366,496;
Elimination: ($1,068);
Consolidated: $365,428.
Less Interest Revenue From Loans:
Combined: $12,132;
Elimination: ($2,068);
Consolidated: $10,064.
Net Federal Debt Interest Costs:
Combined: $354,364;
Elimination: $1,000;
Consolidated: $355,364.
Federal Debt Buyback Loss:
Combined: $5,519;
Elimination: $0;
Consolidated: $5,519.
Other Federal Costs:
Combined: $8,403;
Elimination: $0;
Consolidated: $8,403.
Net Cost Of Treasury Operations, Federal Debt Interest, Federal Debt
Buyback Loss, And Other Federal Costs:
Combined: $381,736;
Elimination: ($24);
Consolidated: $381,712.
Note: The Combined Statement of Financing does not include intro-
agency eliminations.
Note 20 provides additional cost information by Treasury reporting
component.
The accompanying notes are an integral part of these statements.
Source: Department of Treasury fiscal year 2000 financial statement.
[End of figure]
Figure 16: Treasury Used Subordinate Schedules to Report Net Cost by
General Goal and Responsibility Segment:
Department of the Treasury:
FY 2000 Accountability Report:
Economic: Promote Prosperous and Stable American and World Economies:
Program/Costs:
Suborganization: Alcohol, Tobacco and Firearms;
Intra-Governmental: $6;
With the Public: $51;
Total Costs: $57;
Earned Revenues: $0;
Net/Total Program Costs: $57.
Suborganization: Bureau of the Public Debt;
Intra-Governmental: $2;
With the Public: $14;
Total Costs: $16;
Earned Revenues: $0;
Net/Total Program Costs: $16.
Suborganization: Community Development Financial Institutions Fund;
Intra-Governmental: $6;
With the Public: $100;
Total Costs: $106;
Earned Revenues: $1;
Net/Total Program Costs: $105.
Suborganization: Departmental Offices;
Intra-Governmental: $9;
With the Public: $36;
Total Costs: $45;
Earned Revenues: $0;
Net/Total Program Costs: $45.
Suborganization: Exchange Stabilization Fund;
Intra-Governmental: $6;
With the Public: $1,878;
Total Costs: $1,884;
Earned Revenues: $1,592;
Net/Total Program Costs: $292.
Suborganization: Office of the Comptroller of the Currency;
Intra-Governmental: $55;
With the Public: $334;
Total Costs: $389;
Earned Revenues: $402;
Net/Total Program Costs: ($13).
Suborganization: Office of Thrift Supervision;
Intra-Governmental: $15;
With the Public: $146;
Total Costs: $161;
Earned Revenues: $143;
Net/Total Program Costs: $18.
Suborganization: Treasury International Assistance Programs;
Intra-Governmental: $110;
With the Public: $1,295;
Total Costs: $1,405;
Earned Revenues: $0;
Net/Total Program Costs: $1,405.
Suborganization: Total;
Intra-Governmental: $209;
With the Public: $3,854;
Total Costs: $4,063;
Earned Revenues: $2,138;
Net/Total Program Costs: $1,925.
Financial: Manage the Government's Finances:
Suborganization: Alcohol, Tobacco and Firearms;
Intra-Governmental: $7;
With the Public: $62;
Total Costs: $69;
Earned Revenues: $1;
Net/Total Program Costs: $68.
Suborganization: Bureau of Engraving and Printing;
Intra-Governmental: $59;
With the Public: $412;
Total Costs: $471;
Earned Revenues: $476;
Net/Total Program Costs: ($5).
Suborganization: Bureau of the Public Debt;
Intra-Governmental: $60;
With the Public: $253;
Total Costs: $313;
Earned Revenues: $9;
Net/Total Program Costs: $304.
Suborganization: Customs Service;
Intra-Governmental: $692;
With the Public: $1,000;
Total Costs: $1,692;
Earned Revenues: $126;
Net/Total Program Costs: $1,566.
Suborganization: Departmental Offices;
Intra-Governmental: $3;
With the Public: $23;
Total Costs: $26;
Earned Revenues: $0;
Net/Total Program Costs: $26.
Suborganization: Federal Financing Bank;
Intra-Governmental: $3,437;
With the Public: $0;
Total Costs: $3,437;
Earned Revenues: $3,371;
Net/Total Program Costs: $66.
Suborganization: Financial Management Service;
Intra-Governmental: $143;
With the Public: $312;
Total Costs: $455;
Earned Revenues: $87;
Net/Total Program Costs: $368.
Suborganization: Internal Revenue Service;
Intra-Governmental: $1,718;
With the Public: $6,588;
Total Costs: $8,306;
Earned Revenues: $155;
Net/Total Program Costs: $8,151.
Suborganization: Mint;
Intra-Governmental: $68;
With the Public: $1,068;
Total Costs: $1,128;
Earned Revenues: $3,703;
Net/Total Program Costs: ($2,575).
Suborganization: Total;
Intra-Governmental: $6,187;
With the Public: $9,710;
Total Costs: $15,897;
Earned Revenues: $7,928;
Net/Total Program Costs: $7,969.
Law Enforcement: Safeguard Our Financial Systems, Protect Our Nation's
Leaders, and Secure a Safe and Drug-Free America:
Suborganization: Alcohol, Tobacco and Firearms;
Intra-Governmental: $45;
With the Public: $419;
Total Costs: $464;
Earned Revenues: $18;
Net/Total Program Costs: $446.
Suborganization: Customs Service;
Intra-Governmental: $357;
With the Public: $611;
Total Costs: $968;
Earned Revenues: $65;
Net/Total Program Costs: $903.
Suborganization: Departmental Offices;
Intra-Governmental: $54;
With the Public: $9;
Earned Revenues: $63;
Total Costs: $0;
Net/Total Program Costs: $63.
Suborganization: Federal Law Enforcement Training Center;
Intra-Governmental: $19;
With the Public: $102;
Earned Revenues: $121;
Total Costs: $28;
Net/Total Program Costs: $93.
Suborganization: Financial Crimes Enforcement Network;
Intra-Governmental: $7;
With the Public: $21;
Earned Revenues: $28;
Total Costs: $0;
Net/Total Program Costs: $28.
Suborganization: Internal Revenue Service;
Intra-Governmental: $93;
With the Public: $535;
Earned Revenues: $628;
Total Costs: $56;
Net/Total Program Costs: $572.
Suborganization: Secret Service;
Intra-Governmental: $254;
With the Public: $695;
Total Costs: $949;
Earned Revenues: $10;
Net/Total Program Costs: $939.
Suborganization: Treasury Forfeiture Fund;
Intra-Governmental: $86;
With the Public: $45;
Total Costs: $131;
Earned Revenues: $0;
Net/Total Program Costs: $131.
Suborganization: Total:
Intra-Governmental: $915;
With the Public: $2,437;
Total Costs: $3,352;
Earned Revenues: $177;
Net/Total Program Costs: $3,175.
Source: Department of Treasury fiscal year 2000 financial statement.
[End of table]
As these examples illustrate, agencies are making progress in
presenting their cost of operations in performance terms. While it is
unlikely that a single approach to relating performance and financial
reporting will fit the variety of organizational contexts, missions,
performance planning, and financial management structures present—and
developing—in federal agencies, some presentations are more
informative than others.[Footnote 17] Moreover, even the most
meaningful linkages between performance results and resources consumed
are only as good as the underlying data. As we have reported, agencies
must first address long-standing problems within their financial
systems in order to ensure confidence in the completeness and accuracy
of annual financial statements, including the required statement of
net cost.[Footnote 18]
Recent Initiatives by OMB:
During the last 2 years, OMB completed performance budgeting pilots
required under GPRA and has continued to revise and sharpen its
guidance to federal agencies on linking plans, budgets, and financial
reporting. An important development is OMB's announcement of the
administration's intention to more completely integrate information
about cost and performance during its annual budget review process.
The administration also has proposed a new initiative—the Managerial
Flexibility Act—to better link budget and management decisions to
performance by showing the full cost of program operations with the
output produced in that year. Each of these efforts is consistent with
and reinforces the basic observations in this report—that although
agencies have shown progress in their efforts to achieve the goals of
GPRA and the CFO Act, continued attention is needed to clearly show
the relationship between performance expectations and budgetary
resources, and between performance results and resources consumed.
OMB Performance Budgeting Pilots Useful, but Challenges Remain:
GPRA required OMB to report on the feasibility and advisability of
including a performance budget as part of the President's budget, and
on whether legislation requiring performance budgets should be
proposed. The act defined a performance budget as that which presents
varying levels of performance resulting from different budgeted
amounts. OMB initially deferred these pilots—originally to be
designated in fiscal years 1998 and 1999—to give federal agencies time
to develop the capability of calculating the effects of marginal
changes in cost or funding on performance. When begun in August 1999,
OMB designed the pilots as case studies prepared by OMB staff to
demonstrate how performance information could be used to compare
alternatives and to develop funding recommendations for incorporation
into the President's fiscal year 2001 budget submission.
On January 18, 2001, OMB reported the results of five performance
budgeting pilots that explored agencies' capabilities of more formally
assessing the effects of different funding levels on performance
goals. OMB selected the pilots[Footnote 19] to reflect a cross section
of federal functions and capabilities so that a representative range
of measurement and reporting issues could be explored. In its report,
OMB concluded that legislative changes were not needed. OMB reported
that the pilots demonstrated that assuring further performance
measurement improvements and steadily expanding the scope and quality
of performance measures is paramount, and that the existing statute
provides sufficient latitude for such improvement.
The pilots also highlighted other issues that have and will continue
to challenge efforts to more closely link desired performance with
annual budget requests. For example, for those activities where output
performance was of principal interest (e.g., military recruitment,
continuing disability reviews, and premarket reviews and inspections),
OMB observed that agency information was generally available and
useful in developing a funding request. However, where outcome
performance was of greater interest, OMB noted that "recommending a
particular funding level is not the primary focus of the analysis or
decision making process." Rather, "the focus is on how funds will be
allocated among different uses to achieve program goals and what
criteria are used to make allocation decisions." For example, OMB
observed that the HUD severely distressed housing program:
is a "buy-by-the-pound" program. Provide an appropriation and HUD can
approximate how many units can be removed and replaced in relation to
the funding level, because per unit demolition, construction and
voucher costs are readily available and simple to quantify. However,
since the program is assessed on whether it achieves broader outcomes—
such as creating stable, economically integrated communities—that do
not correlate directly with funding levels, the Administration cannot
systematically budget for the results it wants to see.
Overall, OMB concluded that the pilots raised several key challenges
regarding performance budgeting at the federal level including, for
example, the following:
* In many instances, measuring the effects of marginal, annual budget
changes on performance is not precise or meaningful.
* While continuing to change from an almost total reliance on output
measures to outcome measures, it will be much more difficult to
associate specific resource levels with those outcomes, particularly
over short periods of time.
* Establishing clear linkages between funding and outcomes will vary
by the nature of the program and the number of external factors.
* Delays in the availability of performance data, sometimes caused by
agencies' reliance on non-federal program partners for data
collection, will continue to present synchronization problems during
budget formulation.
Continued Refinement of Guidance to Agencies:
OMB has continued to sharpen and clarify its guidance to agencies
regarding the alignment of performance planning, budget formulation,
and financial reporting. Both the fiscal year 2002 and 2003 budget
guidance included more specific expectations about the extent of
linkage between performance planning and budget formulation. Also, in
September 2001, OMB issued revised form and content guidance for
financial statements that was intended to achieve better integration
between execution, financial reporting, and performance reporting.
As described above, OMB's guidance for the President's fiscal year
2002 budget process called for agencies to prepare an integrated
performance plan and budget, in which the plan would display the
amount budgeted for each GPRA program activity. If an agency was
unable to develop this presentation, it was expected to provide to OMB
a timetable that would describe the steps to be taken to develop the
capability of aligning plans and budgets. Subsequently, in July 2001,
OMB clarified this guidance for the fiscal year 2003 budget process.
[Footnote 20] While noting that agencies had made progress in aligning
plans and budgets, OMB instructed agencies that the fiscal year 2003
performance plan "should describe the culminating steps and schedule
for completing a full alignment of resources with performance." OMB
noted that this alignment could be phased, with budget information
initially linked to general goals and strategic objectives and
subsequent annual plans providing greater detail "until a budget
amount can be shown for each GPRA program activity."
Also, in September 2001, OMB issued revised guidance on the form and
content of agency financial statements. While the revised guidance did
not substantially change the statement of net cost, it does
significantly alter expectations regarding performance and financial
reporting. Beginning with the fiscal year 2002 reporting cycle,
agencies are expected to issue a single "performance and
accountability report." This report is intended to integrate what are
typically stand-alone financial reports under the CFO Act and stand-
alone performance reports under GPRA into a single, consolidated
report, now permanently authorized by the Reports Consolidation Act of
2000 (P.L.106-531). The performance and accountability report is
expected to provide to the Congress and the public a comprehensive and
integrated picture of each agency's performance. In addition, OMB has
accelerated reporting dates. For example, fiscal year 2000 reports
were generally due at the end of March; but under this revised
guidance, fiscal year 2001 reports will be due by the end of February
2002, and fiscal year 2002 reports by February 1, 2003. OMB expects
that consolidated and accelerated reporting will provide more timely
and reliable information to measure and affect performance.
The President’s Management Agenda:
Lastly, as announced in the Fiscal Year 2002 Budget, OMB released in
August 2001 the President's Management Agenda, which by focusing on 14
targeted areas-5 governmentwide goals and 9 program initiatives—seeks
to improve the management and performance of the federal government.
One of the governmentwide goals, Budget and Performance Integration,
seeks to capitalize on the progress made by agencies and to
operationalize the revised guidance described above.
According to the President's Management Agenda, as part of the fiscal
year 2003 budget process, OMB plans to formally integrate performance
reviews with its budget decisions and "to begin to produce performance-
based budgets starting with the 2003 Budget submission." OMB expects
to "work with agencies to select objectives for a few important
programs, assess what programs do to achieve these objectives, how
much that costs, and how effectiveness could be improved." These
actions are expected to produce near-term results such as shifting
resources among programs devoted to similar goals to emphasize those
that are most effective, budgeting for the full costs of retirement
and health care programs, and, over time, to allow nonperforming
activities to be reformed or terminated. Also, because this goal is
part of a broader agenda, OMB expects other long-term results. For
example, control over resources used and accountability for results by
program managers will be mutually reinforced by the interaction of
this goal with the President's strategic management of the human
capital goal, which increases staff and responsibility at the "front
line" of service delivery and links rewards to performance.
Concluding Observations:
Aligning performance goals with all key management activities—
budgeting, financial management, human capital management, capital
acquisition, and information technology management—is an essential
step in the implementation of GPRA.[Footnote 21] While alignment is
not sufficient to guarantee results-based accountability, it is a
necessary action to achieve two key purposes of the act—to improve
congressional decision-making and to help federal managers improve
service delivery by providing them with information on program
results. Clearer and closer alignment between an agency's performance
goals and objectives and its key management activities is an important
and practical means to emphasize and reinforce results-based
accountability in the oversight and day-to-day management of programs.
With respect to the management activities discussed in this report,
aligning performance plans with both budgeting and financial
management offers different but complementary perspectives. Linking
plans with budgets offers the potential for more clearly infusing
performance information into separate budgetary decisions, both in the
Congress and in agency management. Certainly, congressional budget
decisions are and will remain an exercise in political choice, in
which performance can be one, but not necessarily the only, factor
underlying decisions. But clearer and closer association between
expected performance and budgetary requests can more explicitly inform
budget discussions and focus them—both in the Congress and in agencies—
on expected results, rather than on inputs or transactions solely.
[Footnote 22] Linking performance goals with cost information
addresses a related but different question: How much has been spent
for what was achieved? Clearer and closer alignment between
performance results and the reported net cost of agency operations can
assist management by relating total resources consumed with actual
results achieved. In sum, the closer the linkage between an agency's
performance goals, its budget presentation, and its statement of net
cost, then the greater the reinforcement of performance management
throughout the agency and the greater the reliability of budgetary and
financial data associated with the performance plans.
Our assessments indicate that progress has been made. Agencies are
developing approaches to better link performance plans with budget
presentations and financial reporting. Progress has been demonstrated
both in establishing linkages between performance plans and budget
requests and in translating those linkages into budgetary terms by
clearly allocating funding from the budget's program activities to
performance goals. Progress can also be seen in agencies' initial
efforts to link annual performance reporting with annual audited
financial statements. Agencies have developed approaches that allow
them to better describe their net cost of operations in performance
terms.
But our assessment of the nature of the resulting associations also
suggests that additional effort will be needed. Most of the alignments
we have observed, as shown in figures 5 and 10, were at relatively
high levels of performance planning—general goals or strategic
objectives—rather than the more detailed "performance goal or sets of
goals" target defined in OMB guidance. As OMB has noted in its most
recent guidance, additional refinement is needed. For critical
management functions to successfully emphasize, support, and reinforce
the introduction of results-based accountability throughout agencies,
they will need to address performance goals and measures that are
meaningful to managers.
To be sure, GPRA and the entire management agenda prompted by the
statutory reforms of the 1990s present many daunting challenges to
agencies. As we have noted,[Footnote 23] the finding of progress made
by agencies in these initial years of implementation must be tempered
by recognition of the continuing performance management demands, such
as needed improvements in:
* developing and articulating a clear sense of intended results,
* ensuring that daily operations contribute to results,
* coordinating crosscutting programs,
* building the capacity to gather and use performance information, and
* addressing mission-critical management problems.
The approaches being developed by federal agencies to more clearly
associate performance expectations, budgetary requests, and financial
reporting demonstrate the kind of unique adaptations that will be
needed to ensure sustained success. The uneven extent and pace of
development revealed in our assessments should not be surprising given
the mission complexity and variety of operating environments across
federal agencies, and OMB's enhanced efforts to incorporate
performance information into its budget reviews should further
stimulate all agencies' interests. As we have previously reported,
[Footnote 24] the concept of performance budgeting has and will likely
continue to evolve, and no single definition or approach can be
expected to encompass the range of needs and changing interests of
federal decisionmakers. Governmentwide guidance is clearly necessary
to prompt continued progress, and such guidance should continue to
encourage agencies to develop their own unique approaches to linking
resources and results consistent with their different environments and
performance management challenges. Ultimately, the need to translate
the planned and actual use of resources into concrete and measurable
results remains an essential step in achieving a more results-oriented
government, and the heterogeneity of the federal government suggests
that sustained efforts and attention will be the hallmark of long-term
success.
Agency Comments:
We provided a draft of this report to the Director of OMB on November
8, 2001. On December 7, 2001, a senior OMB official told us that OMB
would not be providing written comments on the draft. However, this
official noted that OMB found the report to be useful, well done, and
constructive. The official said that the agency progress described in
this report was consistent with and supportive of initiatives which
the Administration intends to announce in the forthcoming budget
submission to further promote budgeting and managing for results
within the federal government.
As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter. At that time, we will send copies of
this report to the Chairman, Senate Committee on Governmental Affairs;
the Chairman and Ranking Minority Member of the House Committee on
Governmental Reform; other appropriate congressional committees; and
the Director, Office of Management and Budget. We will also make
copies available to others on request.
Please contact me on (202) 512-9573 or Michael J. Curro, Assistant
Director, on (202) 512-2991 if you or your staff have any questions.
Major contributors to this report included Jacqueline M. Nowicki and
Trevor J. Thomson.
Sincerely yours,
Signed by:
Paul L. Posner:
Managing Director, Strategic Issues (Federal Budget Analysis):
[End of section]
Appendix I: Scope and Methodology:
Scope:
To meet our objectives regarding the linkage between performance plans
and budgets, we limited our review to the performance plans from the
same 35 departments and agencies that we studied in our initial
assessments of agency experience in linking performance plans and
budget requests.[Footnote 25] However, as of August 15, 2001, 3 of
these 35 agencies—the Department of Agriculture's Food and Nutrition
Service and the Departments of Defense and Education—had not released
fiscal year 2002 performance plans and were therefore not considered
in our assessment of fiscal year 2002 plans. Also, we generally
focused on bureau-level plans for each department when the department
specifically identified such plans as components of the departmentwide
plan. In those cases, we limited our review to the three largest
bureaus with discretionary spending over $1 billion, or, if none of
the bureaus in the department had discretionary spending over $1
billion, to the two largest bureaus.[Footnote 26]
To meet our objectives regarding the linkages between performance
plans and statements of net cost, we reviewed the fiscal year 1999 and
2000 statements of net cost—a required component of the annual
financial statements—to identify the reporting structure selected by
the agency to report the net cost of its operations. We limited this
review to the 24 departments and independent agencies represented in
table 2—those required to prepare annual financial statements under
the CFO Act. Table 3 lists all of the agencies covered in our review.
Table 3: Performance Plans Reviewed:
Departmentwide Plans:
* Department of Commerce;
* Department of Defense;
* Department of Education;
* Department of Energy;
* Department of Housing and Urban Development;
* Department of State;
* Department of Veterans Affairs.
Bureau-Level Plans:
Department of Agriculture:
* Food and Nutrition Service;
* Forest Service;
* Rural Housing Service.
Department of Health and Human Services:
* Administration for Children and Families;
* Health Resources and Services Administration;
* National Institutes of Health.
Department of the Interior:
* Bureau of Indian Affairs;
* Bureau of Land Management;
* National Park Service.
Department of Justice:
* Federal Prison System;
* Federal Bureau of Investigation;
* Immigration and Naturalization Service.
Department of Labor:
* Employment and Training Administration;
* Occupational Safety and Health Administration.
Department of the Treasury:
* Customs Service;
* Internal Revenue Service.
Department of Transportation:
* Federal Aviation Administration;
* Federal Highway Administration.
Independent Agency Plans:
* Environmental Protection Agency;
* Federal Emergency Management Agency;
* General Services Administration;
* National Aeronautics and Space Administration;
* National Science Foundation;
* Nuclear Regulatory Commission;
* Office of Personnel Management;
* Small Business Administration;
* Social Security Administration;
* U.S. Agency for International Development.
Source: GAO.
[End of table]
Methodology:
In our initial review of agencies' experiences in linking performance
goals and budget requests, we developed a methodology for assessing
the plans on a variety of different dimensions and characteristics.
[Footnote 27] In this review, we used three of those characteristics.
* Program activities were linked to goals - We identified agencies
that either (1) linked program activities—directly, or by aggregation,
disaggregation, or consolidation—to some level of their performance
planning structure or (2) did not specify this linkage.
* Plans associated dollars with goals - We identified agencies that
either (1) associated an amount of funding with some level of their
performance planning structure or (2) did not identify funding with
any aspect of their planning structure.
* Funding was allocated to a discrete set of goals and/or measures -
We identified agencies that either (1) displayed how requested funding
for program activities—directly, or by aggregation, disaggregation, or
consolidation—was allocated among specific or a unique set of
performance goals or measures or (2) did not indicate an allocation of
requested program activity funding.
To assess the nature of linkages between performance plans and agency
budgets, we reviewed each plan to determine the level of the
performance planning structure that was used to establish a linkage
with the budget's program activities. Generally, consistent with
expectations in GPRA, agency performance plans are organized in a
hierarchy of goals. Figure 1 in the body of this report presents a
generalized portrayal of this hierarchy.
To assess the extent and nature of linkages between agency performance
plans and annual financial statements, we compared the statement of
net cost reporting structure to the entities' performance plan to
determine if there was correspondence between the two and, if so, the
specific level of the performance planning structure that was used to
establish a linkage.
To ensure consistency and accuracy in the analysis of both performance
plans and statements of net cost, two staff members independently
reviewed the performance plans and financial statements and developed
an assessment on each characteristic. Differences in assessments were
resolved by having a third staff member jointly reevaluate the
separate assessments to identify and resolve differences.
The following qualifications apply to this analysis.
* The agencies in our review were not randomly selected. The results
of this study cannot be extrapolated to agencies and departments not
included in our population.
* Our analysis focused on the linkages described between performance
plans, budget submissions, and financial reports. We did not assess
the appropriateness of the goal structure or of individual performance
goals and measures.[Footnote 28] We also did not independently verify
requested funding amounts allocated to performance goals.
* Although we did not verify the information contained in the
agencies' statements of net cost, independent auditors, as part of the
annual financial audit, reviewed the information reported in these
statements. We requested comments on a draft of this report from the
Director of OMB and incorporated comments as appropriate. We conducted
this review from April through August 2001 in accordance with
generally accepted government auditing standards.
[End of section]
Footnotes:
[1] Performance Budgeting: Initial Experiences Under the Results Act
in Linking Plans With Budgets (GAO/AIMD/GGD-99-67, Apr. 12, 1999), and
Performance Budgeting: Fiscal Year 2000 Progress in Linking Plans With
Budgets (GAO/AIMD-99-239R, July 30, 1999).
[2] See appendix I for a list of these agencies and the methodology
used to select them. As of August 15, 2001, 3 of these 35 agencies—the
Department of Agriculture's Food and Nutrition Service and the
departments of Defense and Education—had not released fiscal year 2002
performance plans and were therefore not considered in our assessment
of fiscal year 2002 plans. In this report, we refer to a performance
plan, whether of a department, agency, or bureau, as an "agency plan."
[3] The term "program activity" refers to the list of projects and
activities shown for each account in the appendix to the Budget of the
United States Government. Subject to OMB clearance and generally
resulting from negotiations between agencies and appropriations
subcommittees, program activity structures are intended to provide a
meaningful representation of the operations financed by a specific
budget account.
[4] Managing for Results: The Statutory Framework for Performance-
Based Management and Accountability (GAO/GGD/AIMD-98-52, Jan. 28,
1998).
[5] In this report, the term "performance budgeting" refers generally
to the process of linking expected results to budgets, but not to any
particular approach. For a discussion of past federal initiatives and
the evolution of the concept and techniques of performance budgeting
in the federal government, see Performance Budgeting: Past Initiatives
Offer Insights for GPRA Implementation (GAO/AIMD-97-46, Mar. 27, 1997).
[6] GAO/AIMD/GGD-99-67, Apr. 12, 1999.
[7] Statement of Federal Financial Accounting Standards No. 4,
Managerial Cost Accounting Concepts and Standards for the Federal
Government, July 31, 1995. Agencies were expected to comply with this
standard beginning with fiscal year 1998.
[8] Preparation and Submission of Budget Estimates, OMB Circular A-11,
Sec. 232.1 and 232.3, July 1999.
[9] Form and Content of Agency Financial Statements, OMB Bulletin No.
97-01, Oct. 16, 1996.
[10] For additional discussion of this issue, see Budget Account
Structure: A Descriptive Overview (GAO/AEMD-95-179, Sept. 18, 1995).
[11] With respect to their fiscal year 2001 plans, these agencies were
assessed as follows: Defense, group A; Education and Food and
Nutrition Service, group D.
[12] Two agencies moved out of this group in fiscal year 2000 (Social
Security Administration and National Institutes of Health) and three
moved in (the Department of Commerce, the Federal Bureau of
Investigation, and the Federal Highway Administration). In fiscal year
2001, the Federal Highway Administration and the Rural Housing
Administration moved out, but the Department of State moved in.
Lastly, in fiscal year 2002, the Federal Bureau of Investigation and
the Immigration and Naturalization Service moved out, while the
Internal Revenue Service move in.
Specific agency circumstances can also affect the manner and extent of
linkage presented in the performance plan. For example, IRS is in the
midst of an agencywide modernization effort, as required by the
Revenue Restructuring Act of 1998. As part of this effort, IRS
reorganized and also implemented a new strategic planning and budget
process that included a new mission statement and goal structure.
While IRS did not show a clear link in its performance plan between
these new goals and its fiscal year 2002 budget submission, we noted
that the IRS Oversight Board did make this link in its independent
budget submission.
[13] For example, the Department of Commerce chose to present a
departmentwide plan, which included funding estimates for strategic
objectives but did not indicate how the performance goals or the
funding estimates were related to program activities. As described in
appendix I, we accepted the agency's definition of what constituted
its annual plan and thus did not consider Commerce's subordinate
bureau plans because these plans were not specifically included as
component parts of the department's plan. Some of these plans,
however, did provide useful linkages. See Observations on the Fiscal
Year 1999 Annual Program Performance Report and Fiscal Years 2000 and
2001 Annual Performance Plans for Selected Science Agencies Within the
Department of Commerce (GGD-00-197R, Sept. 25, 2000).
[14] For further information, see Department of Housing and Urban
Development: Status of Achieving Key Outcomes and Addressing Major
Management Challenges (GAO-01-833, July 6, 2001).
[15] Those agencies that did not use a structure based on their
performance plans generally used traditional accounting-based
presentations that captured costs for either the agency in total or
for separate organizational components ("responsibility segments").
Typically, this structure displayed the net cost of operations as
governmental and intragovernmental program costs less earned revenues
plus nonproduction costs.
[16] Because the statement of net cost is prepared on an accrual basis
while budget estimates for program activities are developed on an
obligations basis, the reported figures will likely not match, but
they will present a planned versus actual perspective linked to the
same goal structure.
[17] It should also be noted that the above discussion only addresses
the extent of linkage between the statement of net cost and
performance planning structures. It does not comment, directly or
indirectly, on the quality of financial management within an agency or
the adequacy of its financial reporting or managerial cost accounting
processes.
[18] See Financial Management: FFMIA Implementation Critical for
Federal Accountability (GAO-02-29, Oct.1, 2001); U.S. Government
Financial Statements: FY 2000 Reporting Underscores the Need to
Accelerate Federal Financial Management Reform (GAO-01-570T, Mar. 30,
2001); and Financial Management: Agencies Face Many Challenges in
Meeting the Goals of the Federal Financial Management Improvement Act
(GAO/T-AILVID-00-178, June 6, 2000).
[19] The pilots included (1) the Food and Drug Administration, (2)
military recruitment programs at the Department of Defense, (3)
diplomatic security programs at the Department of State, (4) severely
distressed housing programs at HUD, and (5) continuing disability
reviews in the Social Security Administration.
[20] Preparation and Submission of Budget Estimates, OMB Circular A-
11, Jul, 2001, Sec. 220.8(d).
[21] See also Human Capital: A Self-Assessment Checklist for Agency
Leaders (GAO/OCG-00-14G, Sept. 2000), Executive Guide: Creating Value
Through World-class Financial Management (GAO/AIMD-00-134, Apr. 2000),
Executive Guide: Leading Practices in Capital Decision-Making
(GAO/AIMD-99-32, Dec. 1998), Executive Guide: Improving Mission
Performance Through Strategic Information Management and Technology
(GAO/AIMD-94-115, May 1994), and Executive Guide: Measuring
Performance and Demonstrating Results of Information Technology
Investments (GAO/AIMD-98-89, Mar.1998).
[22] GAO/AIMD-97-46, Mar. 27, 1997.
[23] Managing for Results: Using GPRA to Assist Oversight and
Decisionmaking (GAO-01-872T, June 19, 2001), Major Management
Challenges and Program Risks: A Governmentwide Perspective (GAO-01-
241, Jan. 2001), Managing for Results: Continuing Challenges to
Effective GPRA Implementation (GAO/T-GGD-00-178, July 20, 2000), and
Managing for Results: Opportunities for Continued Improvements in
Agencies' Performance Plans (GAO/GGD/AIMD-99-215, July 20, 1999).
[24] GAO/AIMD-97-46, Mar. 27, 1997.
[25] GAO/AIMD/GGD-99-67, Apr. 12, 1999, and GAO/AIMD-99-239R, July 30,
1999.
[26] Discretionary spending was used as an indicator of a bureau's
relevancy to appropriators because discretionary funding is affected
by appropriations actions.
[27] See GAO/AEMD/GGD-99-67, Apr. 12, 1999, appendix I.
[28] Additional information on our assessments of agency performance
plans can be found at the GAO web site [hyperlink, http://www.gao.gov]
on the "GAO Reports" page under "Special Collections" and "Reports and
Plans About GAO."
[End of section]
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