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.