The Missing Link

It's the Holy Grail of federal management: creating a more perfect alignment between budget decisions and the real-world results achieved by programs. Many of the great acronyms of the past-MBO (management by objectives), ZBB (zero-based budgeting), PPBS (the Planning-Programming-Budgeting System), and GPRA (the 1993 Government Performance and Results Act), to name a few-were created in the service of this grand ideal.

So why does the search for the missing budget-performance link continue to generate ever more acronyms? (The Bush administration has weighed in with its PART-the Program Assessment Rating Tool.) Maybe it's because we're all looking for something we're just not going to find.

The President's Management Agenda, issued shortly after George W. Bush took office, listed "budget and performance integration" as one of his top five management priorities. "Everyone agrees that scarce federal dollars should be allocated to programs and managers that deliver results," the document said. Sounds good. But in the real world, there's little practical agreement on this proposition.

Just look at the administration's fiscal 2005 budget. It notes that Office of Management and Budget evaluators have used the PART to rate 400 programs since the beginning of the Bush administration. Those programs represent more than $1 trillion in spending. The budget proposes eliminating a grand total of 13 programs-barely 3 percent-on the grounds that PART analyses showed they don't deserve any more money. And only five of the programs were deemed "ineffective." The others couldn't demonstrate whether they were achieving results.

The total suggested cuts based on program evaluations: $1 billion in a $2.4 trillion budget.

What's more, OMB Deputy Director for Management Clay Johnson took pains to point out in discussing the 2005 budget with reporters that the administration actually proposed increasing funding for several programs that were rated ineffective. Why would you want to do that with your "scarce dollars"? Because lofty rhetoric aside, there's simply no direct line that can be drawn between a program's performance and its budget. Some poor-performing programs deserve to be killed. Others aren't doing well because they need more money. Still others just need a different approach to management, with more or less the same amount of cash.

The story is the same with peak-performing programs. "There is little reward, in budgets or in compensation, for running programs efficiently," the President's Management Agenda notes. That was true before President Bush took office, and it's still true. Just ask the managers of the 40 percent of programs rated under the fiscal 2005 PART exercise whose efforts were deemed fully or moderately effective. Many won't see major spending increases no matter how well they run their programs.

"The administration has insisted on fiscal discipline by restraining spending outside the critical areas of defense and homeland security," Bush's budget states. Note that it doesn't say, "except for programs that are doing a bang-up job." Defense and Homeland Security aren't getting the lion's share of the dollars because they have generated such impressive results. (Not that they haven't, especially in the case of Defense, generated impressive results.) They're getting more money because national exigencies require it.

And remember, this is only the administration's proposals we're talking about. Congress adds a whole other layer of factors into the budgetary decision-making process. And program performance typically is far down on the list of appropriators' priorities.

None of this is meant to suggest that gathering data on performance is a bad idea. And clearly, the government is getting better and better at it, largely because of legislative efforts like GPRA and administration initiatives like the PART.

But most of this data will end up being best used to forge a stronger link not between performance and budgets, but performance and management. In a recent report on the fiscal 2004 PART process (GAO-04-174), the General Accounting Office concluded that its major impact lay not in the budget area, but in management. More than 80 percent of OMB's recommendations about the 234 programs analyzed in the 2004 PART review concerned program design, assessment and management issues. Less than 20 percent were related to funding.

That's good news. As a result of the PART, GPRA and the residual effects of the previous acronyms, federal managers are paying more attention to the results of their programs. But the idea of "performance budgeting," in which program effectiveness is directly linked to spending decisions, is one grail that will likely remain far out of reach.