Federal Budget Outlay Estimates:
A Growing Problem
PAD-79-20: Published: Feb 9, 1979. Publicly Released: Feb 9, 1979.
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Federal budget outlay estimates generally swing between longfalls, or underestimates in the budget year, and shortfalls, or overestimates in the current year. The budget year estimates reflect the administration's concern about the growing deficit and the need to hold down spending. The shift to a shortfall, or overestimate in the current year's estimates (12 months later), reflects the administration's assessment of actual financial needs to carry out legislation enacted by Congress. The estimating process is flexible and changing and can be influenced by a number of variables. Many of these variables are uncontrollable, such as historic upward bias (the past tendency to overestimate). Budget data must be accurate to be useful and controllable factors should be of concern to improve outlay estimates.
As a result of increased interest in outlay estimates, both the Office of Management and Budget (OMB) and the Congressional Budget Office are striving to achieve more accurate estimates. GAO found that $76.4 billion in outlays was not included in fiscal year 1977 government-wide net outlays of $402.8 billion. These outlays included both offsets from collections and receipts from business transactions with the public and outlays of off-budget federal entities. Estimates of offsetting collections and offsetting receipts have not been reliable. The current method of presenting these transactions as offsets against budget authority and outlays distorts budget numbers and makes the budget unnecessarily complex.
Recommendations for Executive Action
Status: Closed - Not Implemented
Comments: OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should make further efforts to improve outlay estimates by establishing criteria for acceptable levels of accuracy for estimates to be used as a guide in defining significant variances to be pursued.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should further efforts to improve outlay estimates by identifying corrective action to improve estimates in future years when such action is feasible.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should further efforts to improve outlay estimates by requiring each agency to document the procedures used to develop outlay estimates, including documenting assumptions and subjective modifications made by reviewing officials.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should apply these recommendations to improve outlay estimates to estimates of offsetting collections and offsetting receipts.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should change the presentations of offsetting collections from nonfederal sources and offsetting receipts from the public by including them in revenue totals and not by subtracting them from budget authority and outlays. This involves only a change in presentation of data for clarity. Availability of revenues from business-type transactions is not affected.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should include offsetting collections and offsetting receipts from off-budget agencies under revenues and not subtract them from budget authority and outlays. As long as off-budget agencies are excluded from budget totals, this change will not result in double counting. Off-budget agencies should be returned to the budget. If they are returned to the budget, this recommendation would no longer be appropriate.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should further efforts to improve outlay estimates by comparing actual outlays to estimates and providing a detailed explanation annually concerning those accounts in which there were significant variances.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: This recommendation is still valid. However, OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should further efforts to improve outlay estimates by making information on variances and related corrective action available to congressional users and including it in budget justifications where appropriate.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: Closed - Not Implemented
Comments: OMB does not agree with GAO and there is no indication that there will be any change.
Recommendation: The Director, OMB, should further efforts to improve outlay estimates by applying early efforts in goal setting and variance analysis toward accounts with the largest outlays.
Agency Affected: Executive Office of the President: Office of Management and Budget
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