Testimony Franklin D. Raines
FRANKLIN D. RAINES
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE SENATE APPROPRIATIONS
AND GOVERNMENTAL AFFAIRS COMMITTEES
JUNE 24, 1997
Chairman Stevens, Chairman Thompson, I am pleased to appear at this joint hearing of the Senate Appropriations and Governmental Affairs Committees this morning, and to discuss the importance to the Government and the American public of the Government Performance and Results Act of 1993 (GPRA). I am joined by John Koskinen, OMB's Deputy Director for Management, who has had a central role during the past three years in OMB's GPRA implementation effort.
My statement will be brief. To my statement, I have appended a summary of the major provisions of this Act, and recent actions to carry these out.
We are about one month away from the fourth anniversary of GPRA enactment, and three months away from when the Act takes effect government-wide. So this is a timely opportunity to review where we are and what further work needs to be done.
Let me start with an important principle. This Act was drafted and enacted in a spirit of bipartisanship. It is essential that this spirit continue, as it has over these four years, to be a featured aspect of implementation if we are to bring about the better government that we all seek.
The potential impact on the public if this law is implemented effectively should not be underestimated. One reason for the deep disaffection with government in this country at all levels -- state, local, and national -- is that we poorly explain to the American public why the government does what it does.
Under this Act, we will be discussing with each other, and showing the public, what the goals should be for our major programs and activities. Once these goals are defined, accountability will be established for the progress made in achieving those goals. Being able to answer the public's questions about what they get for the money we spend should go a long way toward restoring their faith in the ability and interest of the government to do the right thing.
This is an era of fiscal limits. Resources are scarce. Not every priority can be met, nor all needs satisfied. Every program must count. So we must ask: Which programs are effective, and which are not? Which programs are efficient, and which are not? GPRA is intended to help all of us obtain better answers to those questions.
Let me now briefly summarize those aspects of GPRA implementation that are our most immediate focus.
GPRA requires Federal agencies to submit a strategic plan to Congress and OMB not later than September 30, 1997. Further, when preparing their strategic plans, agencies must consult with Congress.
Strategic plans set the general course and direction for what agencies will be doing over the next five years, and longer. Strategic plans are built from a statutory base of enacted legislation. These laws state the purpose and intent of Congress and the President when programs are established and funded. The process of preparing these plans allows both the Executive and Congress to examine, in a fresh and comprehensive way, the whole structure of programs, projects, and initiatives put in place over decades.
The specifications for a strategic plan and the process for developing those plans are defined in 42 lines of text in the United States Code. The specifications are straightforward and uncomplicated. But no one should be misled into thinking that preparing a strategic plan is easy or simple. Only a short period and a quick effort is needed to produce a superficial plan, one reflecting little participation by agency leadership. What we are now seeing, belatedly in some instances to be sure, are earnest endeavors across the agencies to produce substantive plans and engaging, in a serious way, agency leaders in the process.
For a plan to have meaning and consequence, it must be the product of a deliberative consideration of what can be realistically accomplished. Priorities must be assigned, choices made, and commitments given. As an OMB staffer recently reported after attending a strategic planning session at an agency, the underlying maxim for the session was "If there is no pain, then we aren't doing it right."
Agency Implementation to Date
As we near the September date when completed strategic plans are to be sent to Congress, I share the concern that much work is still to be done, and the time for doing it is growing short. Let me outline the scope of the task remaining. About half of the departments and largest agencies are in good shape or making real progress. The other half must make a substantial effort if they are to produce credible plans by September. Nine of these departments and agencies have yet to submit a sufficiently complete draft strategic plan to Congress to provide a basis for substantive consultation.
Many plans remain in a formative state. Required elements are often still being developed. In some plans, agencies are finding it easier to describe internal management activities than to define program goals. In other instances, we are reviewing whether the goals in the plan realistically match what can be achieved with the resources likely to be available. For the past two years, OMB has done intensive assessments of the agency strategic planning effort, and looked at early iterations of the plans. While most agencies have made substantial progress, the assessments revealed several areas where further work is needed. Many agencies are having difficulty describing the relationship between the long-term goals in the strategic plan and their annual performance goals. Also, agencies understandably have first focused on their own programs, and are only beginning to look at enhancing interagency coordination for programs or activities that are cross-cutting in nature.
When the plans are done, we should expect that not everyone will agree with the completed product. We also should not view these first plans as being perfect expressions of what each agency will do for the next five years. We are at the start, not the end of a dialogue and an effort to set our course for what we will do, how we will do it, and what we will accomplish. These plans -- and how they are prepared -- will evolve, be refined, and improve. Over 75 years ago, Congress first commissioned the annual submission of the President's budget. The current budget has changed significantly -- and not just in dollar amount -- from that first submission. Similarly, we should look to and work toward increasing the usefulness and value of future strategic plans.
Annual Performance Plans
Strategic plans provide the framework for the annual performance plans required by GPRA. The first of the agency annual performance plans for fiscal year 1999 will be sent to OMB this September with the agency's budget request. The plans are then sent to Congress early next year when the President's budget for fiscal year 1999 is transmitted. These annual plans are tied to the budget, and set out specifically what we will get from the money that we will spend. Strategic plans describe the long-term course; the annual plans define what will be accomplished in any one year as we proceed on that course.
Agency budget justifications to both OMB and the Congress have included information about what the agency does. In many instances, this information is in the form of descriptions and enumerations that count workload or transactions, such as applications received or grants awarded. In other instances, the number of employees or facilities operated, or the amount of acreage managed, is used to illustrate how or on what the money will be spent. Of course, in most instances, simple workload and transaction counts doesn't tell us enough.
That fact has led OMB, for years, to work with the agencies on increasing the amount and value of data on the effects and impact of programs, and whether programs fulfilling their purpose. We have sought to have this information incorporated into the submissions of agency budget proposals to the President, and subsequently in the budget justifications to Congress. GPRA echoes this effort, and by embedding the need for this information in statute will add immeasurably to the prospect of having much more and better information on results and effects.
I am certain we will find that as we increasingly understand how programs are doing, and their effects and impact, we will increasingly use and rely on this information as we make program and funding decisions. Much of this will not happen overnight. In some instances, the information will be obtained quite quickly. In other cases, such as the impact of educational innovation, it may be some years before the impact can be determined. We must be both patient and realistic about when information will be forthcoming.
What Will Be Different Under GPRA?
The fiscal year 1999 budget transmittal will mark the first appearance of the annual performance plans as a part of the Federal budget process. The performance measures that agencies expect to include in these plans will be described in their strategic plans. The consultations currently underway with Congress on these strategic plans are an important opportunity for you to help define those measures that will be informative and useful to the Appropriations Committees in reaching decisions on an agency's budget request.
With GPRA, we have the opportunity to change the nature of the conversation from one which now focuses on how much money we are providing, or inputs, to one oriented more toward what the money will buy, or outcomes. Examples of such an outcome is "lowering the number of highway traffic deaths." Results from the GPRA performance measurement pilot projects also show how this can work. The Coast Guard rethought its approach to safety, and began emphasizing the human factor rather than vessel inspection. The new approach resulted in a substantial reduction in the number of job-related deaths in certain maritime industries, -- and saved resources as well.
Budgeting under the regimen of a long-term balanced budget agreement can be seen as a zero-sum game. Within the discretionary spending cap, choices about which programs receive funding increases, remain level funded, or shrink, should increasingly be governed by performance. While performance will never be the only element in the process, analysis about should become a major factor in decision making.
We are mindful that our use of performance information when making budget decisions will never be the only relevant factor. Policy judgments will continue to be a factor; in some instances, the prevailing factor.
We must avoid using GPRA only as a budgetary cleaver. One response to poorly performing programs may be to cut or eliminate resources -- but perhaps with more money allocated differently, or new managers, or a different management approach, performance of these programs would improve. When faced with poor performance, we must first understand the reasons for it and then apply the appropriate remedy. If the automatic consequence of poor performance is to end the program, then soon the only performance reported will be good performance. Not that every program will indeed be effective and efficient, only that the reports will indicate such. So it will be important for us to be discerning and critical in our assessment of program performance, and prudent in the courses that we take.
I urge you to get involved. Increasing the extent and value of performance information in the Executive Branch should be as important to your decisions as it is to ours.
As we near the date when the major provisions of the Act take effect government-wide, our efforts, and those of the agencies, to meet successfully the requirements of the Act are intensifying. I have growing confidence that the initial products of the Act will be of significant value as we mutually work toward achieving a balanced budget and explaining to the American people what they are getting for their taxes.
This concludes my statement, Mr. Chairman. I'd be pleased to take any questions you may have.
SUMMARY OF MAJOR PROVISIONS
A. Strategic Plans
GPRA requires that Federal agencies to submit a strategic plan to Congress and OMB not later than September 30, 1997. The strategic plan covers the major functions and operations of the agency, and contains:
a comprehensive mission statement
general goals and objectives
a description of how the general goals and objectives will be achieved
a description of the relationship between the performance goals in the annual performance plan and the general goals and objectives in the strategic plan
an identification of those key factors, external to the agency and beyond its control, that could significantly affect achievement of the goals and objectives
a description of program evaluations used in the strategic plan, and a schedule for future program evaluations.
The strategic plan spans a minimum six year period: the fiscal year it is submitted, and at least five fiscal years forward from that fiscal year. A strategic plan is to be revised and updated at least once every three years. There is no more important element in performance-based management than strategic plans. These plans set the agency's strategic course, its overall programmatic and policy goals, indicate how these goals will be achieved, and are the foundation and framework for implementing all other parts of GPRA.
GPRA requires agencies, when preparing their strategic plan, to consult with Congress, and solicit and consider the views and suggestions of stakeholders, customers, and other potentially interested or affected parties.
The Administration is currently undertaking a strategic assessment of agency goals and commitments. This assessment is being conducted jointly by the agencies and OMB. A focus of the strategic assessment is the agencies' implementation of GPRA, and the preparation of the strategic plans and the annual performance plans that are due in September.
Generally, the agency plans reflect a serious effort and allow us to conclude that agencies should be able to produce useful and informative strategic plans by this Fall.
B. Annual Performance Plans
An annual performance plan consists of three main elements:
- the performance goals and indicators for the fiscal year;
- a description of the processes, skills, and technologies, and the human, capital, and other resources that will be needed to meet the performance goals; and
- a description of the means that will be used to verify and validate measured values.
The first of the agency annual performance plans will be sent to OMB this September. These plans will be for fiscal year 1999. The annual performance plans will contain the specific performance goals that the agency intends to achieve in the fiscal year. GPRA provides that a subsequent iteration of the annual performance plan be sent to Congress concurrently with release of the President's budget.
The agencies and OMB gained valuable experience in preparing annual performance plans through the pilot project phase of GPRA. GPRA required that at least ten departments or agencies be designated as pilot projects for performance plans and program performance reports. The pilot projects covered three fiscal years and tested the ability of agencies to establish performance goals, and subsequently measure and report actual performance against these goals. Pilot projects were designated in all 14 Cabinet departments and an equal number of independent agencies. The 28 designations included over 70 individual pilots in the departments and agencies.
The performance measurement pilot projects became a substantial initiative. Approximately a quarter of the entire Federal civilian workforce were covered by the pilots. The size of individual pilots ranged from complete agencies to small component organizations. The largest pilots included the entirety of the Internal Revenue Service, Social Security Administration, Defense Logistics Agency, and the Forest Service. Several agencies covered a large proportion of their programs through individual pilots.
The most important conclusion reached on completion of the performance measurement pilot projects is that -- without these pilots and the time given agencies across the government to gain experience in performance-based management -- there would be little prospect for a successful implementation of GPRA government-wide. The scope and dimension of these pilots confirmed that virtually every activity done by government can be measured in some manner, although not perfectly.
Over the course of the three years, improvement was generally seen in the pilot projects' ability to set goals, and measure and report performance against these goals. The improvement was uneven, and not always immediate. Goals often were changed or refined from year to year. While this is to be expected in any pilot project process, it also indicates that the first years of full-scale implementation of GPRA will be the start of a dialogue about performance and performance measures, not the end of it. Measures will be modified, better and more appropriate goals will be defined, performance data will increase in both volume and quality. Over time the overall quality of agency plans and reports should improve significantly.
OMB has initiated a review of the performance goals that agencies proposed to include in their annual performance plans for FY 1999. This review is still ongoing. The agencies are providing OMB with descriptions of their proposed performance goals, illustrating what will be measured and the nature and type of measurement. Gaining an early consensus on these goals will not only help assure that they are appropriate and relevant but will allow agencies to measure current performance, creating a baseline from which to set future performance levels or targets.
In another joint collaboration with the agencies, OMB has prepared guidance on the preparation and submission of annual performance plans for FY 1999. This guidance was issued May 23, 1997. We expect agencies to produce useful and informative annual performance plans for FY 1999.
C. Government-wide performance plan
GPRA requires that a government-wide performance plan be annually prepared and made part of the President's budget. The government-wide performance plan will be based on the agency annual performance plans. The first government-wide plan will be sent to Congress in February 1998, and cover FY 1999. In this regard, we would welcome your views on those features that you believe would make the plan informative and useful to the Congress.
D. Program Performance Reports
The agency's program performance report is the annual concluding element of GPRA. These reports are required within six months of the end of a fiscal year, and compare actual performance with the performance goal target levels in the annual performance plan. In cases of unmet goals, agencies will explain why the goal was not achieved, and describe the actions being taken to achieve the goal in the future. The first program performance reports, for FY 1999, are to be sent to the President and Congress by March 31, 2000.
Some agencies are experimenting with different formats for performance reporting in the Accountability Report pilot program authorized by the Government Management Reform Act. For FY 1996, eight agencies are issuing Accountability Reports, and are including various information on the agency's performance as well as other statutorily- required information, such as the agency's audited financial statement and the Federal Managers' Financial Integrity Act report.
For over a decade, a major effort has been underway to improve financial systems, standards, and reporting in the Executive branch. There has been much progress, but we are not yet done. Without good systems and reporting, we will be hard-pressed at precisely and completely describing where the money went. The meshing of program performance information with financial performance information is important if we are to give a full picture. We intend to bring about the integration of program and financial performance reporting, and to continue improving and enhancing the capability of agency financial and management systems to provide this information.