Web site designed
by Jean-Marie Slove
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Budget and Performance Integration
Expected Results
The Budget and Performance Integration initiative is intended to provide
a very useful tool to OMB in its budget development processes. More importantly,
OMB intends that it will also be an important tool for federal managers,
with the results being better program performance and better cost control
and accountability. These benefits were described in the August 2001 announcement
of the President's Management Agenda.
The Expected Near-Term Results
In describing what it expected to achieve over the near term through
performance budgeting, OMB signaled a serious intention to base agency
and program funding on tangible results, and to use comparisons between
various programs to make such budget decisions. Two of these uses of performance
budgeting were described as follows:
- "Starting in 2003, the President's Budget will shift budgetary
resources among programs devoted to similar goals to emphasize those
that are more effective."
- "In the 2003 Budget, the Administration will set performance
targets for selected programs along with funding levels."
By early 2004, OMB’s use of the Program Assessment Rating Tool
(PART) had greatly facilitated its ability to understand exactly how agency
programs were (or were not) implementing performance budgeting. Use of
the PART had also begun having a significant impact on OMB’s decisions
on program funding levels.
The Expected Long-Term Results
OMB understands the important point that effective Budget and Performance
Integration is dependent upon the agency having the necessary financial
management and accounting systems. The principles of managerial cost accounting,
and especially Activity Based Costing and Cost
Management (ABC/M), are key enablers for the agency to realize the
full benefits of performance-based budgeting through improved day-to-day
program management. OMB mentions the following as being among the expected
long-term benefits of this reform:
- "Better performance…"
- "Better control over resources used and accountability for results
by program managers…"
- "Better service…"
- "Standard, integrated budgeting, performance, and accounting
information systems at the program level that would provide timely feedback
for management and could be uploaded and consolidated at the agency
and government levels. This would facilitate the goals of the President's
initiative to improve financial performance."
The last item cited above is fully consistent with the experience of
John Mercer in the model
performance budgeting system that inspired GPRA. Based on that experience,
it is Mr. Mercer's conviction that the most effective Performance Budgeting
system is one that integrates all three elements of program performance,
budget, and financial management.
OMB's core criteria for determining compliance
with this reform reinforce the importance of an integrated approach. The
33-page guide 
to Cascade™ Performance Budgeting on this web site also underscores
this point by illustrating the effective integration of budgeting, performance
and accounting information systems at the program level, as desired by
OMB.
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