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Deidre A. Lee - July 1, 1999

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before the

July 1, 1999

Mr. Chairman, Congressman Turner, members of the Committee, I appreciate the opportunity to appear before you today. The Government Performance and Results Act (GPRA or the Results Act) established a number of new, major requirements for the Executive branch, with one overriding objective - to improve performance and get better program results for the taxpayers. This has been a high priority of this Administration.

The drafters of the Government Performance and Results Act of 1993, (commonly called GPRA or the Results Act) outlined several sequential steps for bringing about a better linkage between resources and results. So I believe it is useful to review both what these drafters envisioned, and the role that the Results Act would have in bringing about this linkage.

The Senate Committee Report outlines the objectives of performance budgeting. The first objective is to clearly present what we are getting for the money we are spending. The second objective is to show how those results change with an increase or decrease in funding. To reach these objectives, the Committee Report sketches a series of steps. The first step is for a government-wide performance plan. The government-wide plan is developed from the agency annual performance plans. The second step is a set of two-year pilot projects which would link anticipated results to alternative spending levels. The third step is for OMB to report on the results of these pilots along with a recommendation of whether the entire budget should be cast as a performance budget.

In reality and in the law, it is a great leap from step one to steps two and three. This was understood by the drafters of the Results Act, who recognized that the lessons learned from the pilot projects should not directly lead to further implementation of performance budgeting as envisioned by the pilots. Indeed, a major thrust of the OMB report would be whether the performance budgeting is feasible or advisable government-wide.

We began implementing GPRA in earnest across the government in 1997. We are now in our third year, and, overall, the Federal agencies have made very substantial progress. Over the past two years, about 100 departments, independent agencies, and government corporations have prepared their initial strategic plan and two sets of annual performance plans. Within the next 15 months, these agencies will prepare an updated strategic plan, two more sets of annual performance plans, and their first program performance report. By September 2000, these agencies will have provided OMB or Congress with approximately 700 GPRA-required plans and reports.

As part of the President's budget, OMB has produced two government-wide performance plans. The third plan will be sent to Congress next February with the President's FY 2001 budget transmittal.

Our progress in carrying out the Results Act is substantial and this progress will continue.

Let me turn to the second objective, which is showing how results change with increases and decreases in funding; and, to the second and third steps, the performance budgeting pilot projects and the OMB report on these pilot projects, which are related to this objective.

Agency budgets are showing how performance is affected by increases and decreases in funding levels. The annual performance plans sent to Congress generally show several years of performance information. For example, OMB is specifying that the FY 2001 performance plans include actual performance for fiscal year 1999, and performance goals for fiscal years 2000 and 2001, and encouraging agencies to include performance data for fiscal years 1996 through 1998, if it is relevant and available. The performance plans also provide information on the budgetary resources associated with the set of performance goals. The display of performance and related budget information in these plans is complemented, to a substantial degree, by the detail provided by the agencies in their Congressional justifications. Many justifications highlight the changes from year-to-year.

Let me now summarize the specification in GPRA regarding performance budgeting pilots. The Results Act calls for the Director of OMB, after consultation with the agencies, to designate at least five departments or agencies as performance budgeting pilots. These pilot projects would cover a particular agency component or program. At least three of the pilot projects have to be chosen from the set of performance measurement pilot projects that were conducted during fiscal years 1994 through 1996. As you may recall, Mr. Chairman, 28 departments and agencies were designated as performance measurement pilots. These performance measurement pilots successfully demonstrated that Federal agencies could prepare annual performance plans and annual program performance reports that met GPRA requirements. The performance budgeting pilots were to be conducted during fiscal years 1998 and 1999. The law anticipated that the President's Budget for FY 1999 would include, the performance budgets of the designated pilot projects. OMB is to send a report to Congress on the performance budgeting pilot projects by March 31, 2001. This report is to: assess the feasibility and advisability of including a performance budget as part of the President's budget; describe any difficulties encountered by the pilot projects; and recommend whether legislation requiring performance budgets should be proposed, and, if so, the general provisions of that legislation.

Let me add that GPRA requires that the March 2001 report examine government-wide implementation of GPRA from 1997 through 2000, and provide a picture of what is working well and identify any areas where change or further improvement is needed.

I have detailed the contents of the 2001 report because it addresses overall GPRA implementation, including the viability of performance budgeting. The contents of the report also underscore Congress' clear understanding that further legislation is required before the government could proceed to preparing these performance budgets.

Let me turn to the current status of the performance budgeting pilots. On May 20, 1997, the then Director of OMB, Frank Raines wrote to the chair and ranking member of both this Committee and the Senate Committee on Governmental Affairs, indicating that OMB planned to delay the start of the performance budgeting pilot projects by one year. Our priority then, as it remains today, is to bring about the successful implementation of GPRA throughout the Executive branch. Calendar year 1997 marked the beginning of GPRA implementation. We and the agencies were devoting nearly all time and effort to ensuring that strategic plans were sent to Congress on time, and that both the strategic plans and annual performance plans would be useful documents that met the requirements of the statute.

We have had a series of discussions with the departments and agencies on how we might initiate these pilots.

During the Fiscal Year 2001 budget formulation process, which is now beginning, we will select agencies that will prepare as a pilot a performance budget for specific programs or areas. We will work with the agencies to have them prepare performance budget alternatives for selected programs or areas. We will analyze these performance budgets to determine alternative levels of performance and the associated resources aligned with these performance levels. We will report on the results of the pilots by March 2001, as required.

We believe this approach is consistent with previous GAO recommendations on government performance and results. We look forward to working with them and the Congress in moving this effort forward.

Mr. Chairman, the Results Act can bring about a fundamental transformation in how we prepare our budgets, manage our programs, and become more accountable to the American public for how we spend their tax dollars. Any great change is not accomplished overnight, but we have made a good start. From this solid beginning, the path to a true and useful linkage of resources and performance can be realized in the months ahead, and we intend to work hard to bring about that linkage.

Mr. Chairman, that concludes my statement. I will be happy to answer any questions you may have.

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