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The president's 2004 budget proposal cuts funding for some federal programs with poor performance records, continuing a practice begun during the fiscal 2003 budget cycle.

With budget deficits growing and the United States engaged in an expensive war on terrorism, President Bush recognizes that "we need to be smarter about how we spend our money," said Office of Management and Budget Director Mitch Daniels at a press conference Monday.

OMB reviewed a sample of 234 federal programs and rated them as "effective," "moderately effective," "adequate," "results not demonstrated" or "ineffective," based on whether they met performance goals established last year. By OMB's analysis, 5 percent of the 234 programs rated were "ineffective." For another 50 percent, agencies couldn't demonstrate results. Thirty percent of programs were rated as either "effective" or "moderately effective" and 14 percent were deemed "adequate."

The Bush administration used similar performance analyses to make funding decisions for more than 100 federal programs in its fiscal 2003 budget proposal. That budget proposal marked the first time an administration has formally linked federal spending to program performance.

But according to Carl DeMaio, president of the Performance Institute, an Arlington, Va.-based think tank, the fiscal 2004 budget proposal puts teeth behind the initiative to link agencies' budgets with performance data.

"Taxpayers deserve to know what results they are receiving for their tax dollars," DeMaio said in a statement. "This is the first budget that responds to that fundamental need with an objective, standardized and evidence-based assessment tool applied to a significant portion of federal programs."

DeMaio praised the budget proposal as a "truly historic" step that holds federal agencies more accountable for their performance than ever before. On average, the president's 2004 budget proposal rewards programs deemed "effective" with a 6 percent funding increase, and holds those programs "not showing results" to less than a 1 percent increase, according to DeMaio.

For instance, the Education and Health and Human Services departments both received "ineffective" ratings for programs they administer, prompting the administration to slash funds for those particular programs in the proposed budget, according to the budget document.

Bush's proposed funding for Education's Safe and Drug Free Schools State Grants was $422 million, an 11 percent reduction from fiscal 2003. OMB faulted the program for stretching its resources too thin to support quality drug prevention projects and using inappropriate measures to track progress on meeting its performance goals.

Health and Human Services' Health Professions competitive grants program would receive $82 million under the 2004 budget proposal, a 14 percent decrease from fiscal 2003 funding levels and a nearly 80 percent decrease since fiscal 2002. The program, which provides grants to educate health professionals, has failed at its attempts to encourage health professionals to serve in poor or rural areas, leading to an "ineffective" rating, Daniels said.

In contrast, the National Health Services Corps, another HHS program, has been more successful at moving health care providers into underserved areas, leading President Bush to channel more money its way, Daniels explained. The service corps received a "moderately effective" rating and a 12 percent budget boost.

The performance reviews grow out of a Bush administration initiative to link performance with budgets that was first announced in the fiscal 2002 budget. Making results a condition for funding - known as "performance budgeting" - is one of the administration's five governmentwide management priorities and was a chief goal of the 1993 Government Performance and Results Act.

The process generally seeks to reward high-performing programs with bigger budgets, while shifting resources away from low-performing or duplicative programs.

COMMENTS

• I’ve appreciated the coverage GovExec has given to the discussion on performance. As I progressed through this story, a few points came up that I would like to address—with a view to provoke a look at the issue from a different angle. As government executives have moved toward accomplishing the current administration’s management agenda, your journal and a few others are in a unique position to provide more pointed stories on the challenges they face. One aspect of performance management needing much more attention in the literature (not least, in practice) is the culture of any given agency and the mindset of its employees. Our society cultivates good managers. However, it cultivates far better specialists and technicians. There is much room for improvement on the management side when it comes to managing and changing cultures. In the Defense Department, the military leadership is successful in creating a “volunteer mindset” in its ranks, which contrasts sharply with what some have called an “entitlement mindset” seen so often in the civilian ranks. This is the challenge civilian Marines face. Perhaps as much or more than any other agency, the Marine Corps is gaining on the analytics. The financial management community has what it calls a real time data capability at its disposal. If used effectively, this capability will be a determining factor in the USMC’s effort to transform the way installation managers do business. The problem is the veracity of the data, which in large part is determined by the quality of the employees in charge of collecting, culling and analyzing that data. Some managers will say it’s a matter of training. In the trenches—where I happen to be—I have observed that we spend a great amount of time and money on developing our military members and civilian employees. What is missing in the civilian ranks is the energy, motivation and work ethic to make the management reform initiatives meaningful. My civilian colleagues and I share anecdotes every day that confirm this. This wouldn’t be a good message without a bottom line or three: Government executives and especially managers at the field activity level need to take back their right to manage. Corporate America, for the most part, is doing a better job at being efficient and keeping their arms around their operations because they employ innovative practices that foster productive cultures. Our leaders must aggressively develop their own practices and must guard against a tendency to fall back on “sound-bite” understandings, fashionable business panaceas, and false claims of efficiency. They must roll up their sleeves and confront the ineffective elements of their own cultures openly and honestly. The next step will be to challenge the veracity of data in an environment where there is strong incentive to pad budget requests by inflating expenditures. Only then can an agency get an accurate “as-is” picture on which it can assess its performance and make good management decisions. Until this happens, any decision by the Bush administration— or any administration— to increase or decrease funding to an agency will amount to arbitrary and capricious management and could have ungovernable and confusing consequences. At best, it will just shock agencies that happen to be on the short end of the stick and make a false example of them. Bad leadership, by any example. Having said all that, this administration has added to the effort which began before GPRA that I hope and trust will be positive in the long run. Ironic given what is written above, but no paradox by any performing measure. Anonymous Posted June 16, 2003 1:28 PM
• Why aren't the "poor performers" held accountable? Why the entire agency? The poor performance comes from poor management. But the managers are never held accountable for their incompetence. The agencies have a job to do and the taxpayers need the services provided by the agencies. Cutting the budgets only hurt the taxpayers. There are problems at all the agencies and have been for years. The problem is poor management. If the president wants better performance from the agencies all he needs to do is replace the managers. Anonymous Posted February 25, 2003 11:15 PM
• Enjoyed the article. Can't help but wonder if anything will come of the initiative with the world situation being what it is these days. We do lots of work for the feds, and agencies have ways of manipulating data to get almost any result they want, i.e, see the A-76 debacle. It is mired in so much rhetoric that agencies will fight for years to retain staffs instead of outsourcing work to those organizations who can do it more efficiently and cost effectively. Anonymous Posted February 25, 2003 11:22 PM