Poor performance leads to budget cuts at some agencies

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.

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