Web site designed
by Jean-Marie Slove
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Budget and Performance Integration
The Reform
The Most Important Reform
The most important of the reforms on the President's
Management Agenda is the Budget and Performance Integration initiative.
OMB made this point explicitly when first announcing the management agenda
by stating, "Improvements in the management of human capital, competitive
sourcing, improved financial performance, and expanding electronic government
will matter little if they are not linked to better results."
Another term for this type of integration is "performance budgeting".
Because this reform is of such fundamental importance, and because there
is so much confusion about exactly what a real Performance Budget is and
how it differs from a "regular" (i.e., object class) budget,
this web site contains additional information elsewhere relating specifically
to performance budgeting, including a step-by-step
how-to guide 
for federal agencies. Also included are several performance
budget examples from a system praised by OMB for its effectiveness
in integrating budget and performance information in a manner useful to
program managers, and which was used as the basis for developing GPRA.
The Problem
Among the several reasons the OMB gave in announcing the President’s
Management Agenda for why budget and performance integration is so important
are the following:
- "Everyone agrees that scarce federal resources should be allocated
to programs and managers that deliver results. Yet in practice, this
is seldom done because agencies rarely offer convincing accounts of
the results their allocations will purchase…"
- "In 1993, congress enacted the Government Performance and Results
Act (GPRA) to get the federal government to focus programs on performance.
After eight years of experience, progress toward the use of performance
information for program management has been discouraging…"
- "Agency performance measures tend to be ill defined and not
properly integrated into agency budget submissions and the management
and operations of agencies…"
The Initiative
OMB's description of the actions the Administration is taking to implement
this reform includes the following items:
- "To provide a greater focus on performance, the Administration
plans to formally integrate performance review with budget decisions.
This integration is designed to produce performance-based budgets starting
with the 2003 Budget submission."
- "Over time, agencies will be expected to identify high quality
outcome measures, accurately monitor the performance of programs, and
begin integrating this presentation with associated cost. Using this
information, high performing programs will be reinforced and non-performing
activities reformed or terminated."
- "Ultimately, the Administration will attempt to integrate more
completely information about costs and program performance in a single
oversight process. This would include budgeting for the full cost of
resources where they are used, making budget programs and activity lines
more parallel with outputs, and where useful, improving alignment of
budget accounts."
- "This would facilitate the goals of the President's initiative
to improve financial performance."
In announcing the Budget and Performance Integration initiative, OMB
also described the expected results it intends
to achieve, as well the core criteria used
to determine agency compliance with the reform.
The Next Phase
By early 2004, it had become clear that the Administration had moved
into the next phase of budget and performance integration, by much more
explicitly requiring departments and agencies to develop integrated performance
budgets in conjunction with OMB’s use of an evaluation tool for
examining both program costs and program performance in a simultaneous,
integrated manner – the PART.
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