The news in any issue of the daily newspaper likely will reveal the importance of financial administration in government today. One story may deal with teh serious financial problem of a major city, another with schools that have closed because funds are no longer available to keep them open. Another report may tell of the defeat of a bond referendum to finance construction of a community facility, such as a new courthouse. These may be articles on efforts of local officials to obtain authority from the state legislature to levy new taxes because the yield from the property tax is insulfficient to meet expenditure needs. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal 337)
The state governor may have announced that no new taxes will be recommended. Legislative leaders may be questioning the governors revenue forecast as too optimistic. The general accounting office may have released a new report on waste in federal agency procurement. A minority group leader may have called a press conference and criticized the president for not recommending spending increase for social programs. Many more examples could be given, but suffice it to say that much of the news about government concerns its financial needs and problems and the community’s view points on the matter. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal 337).
The components of financial administration are budgeting, accounting, auditing, purchase and supply management, tax administration and treasury management. The last two specialized fields of administration, not appropriate for detailed treatment in an introductoty textbook. Broadly speaking, financial administration also includes fiscal policy and the governments role with respect to economic stabilization. Courses in public finance take up these problems from a substantive standpoint, so we will be concerned with them here only in terms of the adequacy of budget and accounting systems as tools for carrying out whatever economic policies the government adopts. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal 337-338).
CONCEPTS OF BUDGETING
The role of the chief executive in budgeting is now a strong one, but before the twentieth century it was not. The executive budget, meaning one controlled by the chief executive, was not adopted in the federal government until passage of the budget and accounting act in 1921. Before then, the agencies sent their spending estimates directly to congress. The executive budget was introduced in some state and local governments before 1921; it is now found in almost all states and large cities. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 338).
The Control Emphasis
The first executive budgets primarily emphasized controlling expenditures to prevent overspending, waste and misuse of the taxpayers money. Despite the advocacy of the executive budget as the vehicle for making budgets meaningful statements of work programs, this objective usulally was relegated meaningful statements of work programs this objective usulally was relegated to the background because of pressures to eliminate excesses and waste. Keeping expenditures down, rather than reshaping the budget to make it an instrument of forward work planning, was the pragmatic approach for political leaders during the post-World Wat I period of emphasis upon “normalcy” and economies in government. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 338).
The description applies to all levels of government as strikingly evidenced by Charkes G. Dawes’s statement that “the Bureau OF THE Budget is concerned only with the number and routine business of Government” and “with no question of policy, save that of economy and efficiency.” Dawes was the first director of the bureau. Clearly, the national government did not conceive of the budget as an instrument of fiscal planning to stabilize economic conditions, although in 1887 president Cleveland had warned Congress that large surpluses brought in by the pro tective tariff were making the Treasury “a hoarding place for money needlessly withdrawn from trade and the people’s use, thus crippling our national energies... and inviting schemes of public plunder.” (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 338).
Line item budgeting and objects of expenditure. The control emphasis is associated with line item budgeting and objects of expenditure. In its most rigid form, line item budgeting means listing every single position and piece of equipment on a separate line in the expenditure estimates. The individual items are sticken out or approved by the legislature; if one is allowed, the money may be spent only for that item and not for any other purpose, even if it be to hire a clerk instead of a janitor or to buy a typewriter rather than an adding machine. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 339).
In another form, a listing of every job or purchase is not required, but the appropriated funds may not be transferred from one category of expense to another, such as from the salary to the equipment account. Category, or object, of expenditure is the same the object is what that money is used for such as personal services, supplies and materials, equipment, travel, printing and binding and rental of buildings. In the eyes of many legislators and others the line item approach in a budget prepared on an object-of-expenditure basis provides maximum control. Line item budgeting is still found in many state and local governments. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 339).
Lump-Sum Budgeting. Others believe that lump-sum budgeting can be used judiciously, provided that the object method of presentation is retained. With lump sum budgeting, transfers of funds may be made not only between objects but also between organization units and work activities. As expenditure abuses were corrected in the first years of executive budgets, some use was made of the lump sum principle. In the federal government, limited lump-sum budgeting has been employed for many years; it is not unusual, however, for congress to restrict the amounts that can be spent for certain purposes, such as administrative expenses or those for printing and binding or the purchase of automobiles. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 339).
Advent of the Management Approach. It was not until the 1930s that the original promise of the executive budget as a vehicle for work planning began to produce results. With the advent of the New Deal, new concepts were in the air, such as “administrative management,” a term used in the report of Franklin D. Roosevelt’s Committee on Administrative Management. The focus now was a positive one : achieving work results under strong executive leadership. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 339).
This came to be know as the “management approach” to budgeting. Expenditure control was not disregarded; indeed, in some ways it was more effectively applied, as, for example, by instituiting a system of apportionment of the funds appropriated by congress whereby by the president and the bureau of the budget could control the rate of agency spending. The two purposes could be combined, with the guiding orientation a positive one of achieving concrete work results, as measurable as possible. Far from being restricted to “humbler and routine business,” the staff of the Bureau of the budget was greatly increased, and its director became a key policy adviser to the president. Agency estimates were critically reviewed in terms of efficiency and a beginning was made in developing work units to measure program results. In the agencies, efforts were made to improve the preoaration of estimates; gradually the finance responsibilities passed into the hands of management-minded persons, who replaced the narrow-gauge accountants, with their “unbending attitude, indiscriminate concern with minutiac and exaggerated impersonality.” (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 340).
At the same time, economic theory became much more significant in the presidents budget rcommendations. Although tax and spending policies were not conceived together and presented through the budget, the fiscal-planning implications of the budget were evident throughout the New Deal period as the Roosevelt administration adopted pump-priming measures. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 340).
In most state and local government the budget had simply been a collection of figures, a subsidiary of the accounting system. Some governments now adopted the management approach, at least in principle and employed trainde budget examiners for the first time. Most state and local jurisdictions, however continued on the same old basis. Furthermore, prior to world ward II, at all levels of government, with very few exceptions, the estimates continued to be prepared on an object-of-expenditure basis, which meant that the really important question was left unanswered : exactly what work was proposed and what accomplishment were anticipated, compared with those realized in the past? A typical budget consisted of a detailed listing of the positions to be filled, followed by the recommended amounts to be spent on nonpersonal services. Three columns of figures were frequently shown: first, the actual expenditures for each object in the last complete fiscal year: and third, the sums desired for each object for the future fiscal year. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 340).
Such a budget could quickly be put together without carefully planning future work programs. All that was necessary was to obtain a list of existing positions, make the usual request for some additional ones and for certain salary increases, and then make some quick and usually quite liberal guesses about what would be needed for such objects as travel, supplies and equipment. In relationship with the central budget staff for the jurisdiction, this became more a bargaining than a planning process. Estimates were freqently padded in anticipation of cuts by the “hatchet boys” in the budget office. Object-of-expenditure budgeting becomes in practice rule-of-thumb budgeting. Division heads who are asked to present their estimates in terms of what they need to spend for positions, telephone service and the like do not have to develop detailed plans. Previous years expenditures as recorded in the accounts provide them with the basis for their estimates. Object-of-expenditure budgeting may actually legislators little control over what should be of most concern : overall effectiveness of the agency program. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 340-341).
Performance Budgeting. After World War II, attempts to make the management approach effective were intensified and performance budgeting was urged. Much of the stimulus came from the first Hoover Commission, which noted that the budget for 1949-1950 contained 1625 closely printed pages with about 1,5 million word. Exactly what all this detail meant in terms of work proposed and accomplished was far from clear. Accordingly, the commission recommended that “the whole budgetary concept of the federal government should be refashioned by the adoption of a budget based upon functions, activities and projects” and designated this the “performance budget” the term program budget came to be used by many people to mean the same thing. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 341).
In 1949 congress approved an amendment to the national security act providing for performance budgeting in the defense department and in january 1950 President Truman sent to Congress the first budget entirely prepared on such a basis. Although within a few years the “green sheets’ of detailed personnel requirements,” long used in traditional federal budgeting on an objects basis, came to be “included merely as an appndix to the President’s budget.” In many agencies the budget estimates were not significantly more meaningful. Proposes expenditures were grouped by categories and substantial progress was made in defining work measurements, but just why expenditures were requested for certain purposes and not for others was often not clear. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 341).
Some state and local government adopted performance budgeting, but in most cases the changes made were superficial. Allen Schick’s research shows that in the states budget decisions were still made in the same way, the principal change being consolidation of object-of-expenditure item under functional and work-activity groupings. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 341).
Performance budgeting emphasized work plans, but nit in the context of comprehensive, long range olanning of all government policies and activities. It did not concentrate on reconsideration of goals and determination of plocies rather on defining the work to be accomplished to carry out existing agency objectives. Planning-programming-budgeting (PBB) an innovation of the 1960s is an attempt to ontegrate budgeting with overall planning for the government as a whole, and to make the planning, execution and evaluation of government policies as rational as possible. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 341-342)
There is nothing new about each of the components of PBB-Planing, programming and budgeting – taken separately; what is claimed to be new is teh total patern of ideas into which they are fitted. Planning is the determination of the basic goals of the organization and the selection of the programs best calculated to achieve these goals. Programming entails the scheduling and execution, as efficiently as possible of the specific projects required to implement these programs. Budgeting is the process of converting the goals, programs and projects into money estimates for review within the adminisrative branch and final action by the legislature. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 342).
To illustrate these terms, an example of a goal is to raise per-capita uncome; of a program toward that end, industrialization; and of a project a steel mill. Since this goal-like so many others in government-covers so much, it embraces many other programs, such as fisheries, natural resource development and vocational training. Furthermore, within each program, there will be numerous projects reflecying the different choices in executing the program. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 342).
The PBB advocates say that planning, programming and budgeting that has taken place in governments has often been disjointed, with little attention given to the weighing of the relative merits of alternative goals, programs, projects and the different ways of carrying them out. The expenditure estimates have not been presented in such from that the reviewing officials could determine exactly what programs and project would be undertaken and why they had been chosen over other possibilities. Accordingly, arbitrary spending totals have been chosen over other possibilities. Accordingly, arbitrary spending totals have been imposed ond teh agencies, without any real knowledge of what would be desirable in terms of the merits of the work activities being conducted. While total expenditures may be controlled in this way, there is no check on the effectiveness with which the funds granted are used, nor any certainly that they might not better be spent on other activities. Under such procedures there is no set of coordinated plans to guide all activities of the government, and annual budgets are not develop as an integral part of such central plans. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 342).
Where the estimates are reviewed, the program base is seldom changed: it is assumed that the agency should get at least as much as in previous years. As governments have grown in size, limitations of time make it impossible to reexamine every activity annually. So more attention is given to analyzing requests for increases in existing programs and for financing of completely new activities. Sometimes desirable new programs are rejected while deficient old ones are routinely reapproved. In its widest application, PBB would – within time and other practical limitations – expose program bases to as much scrutiny as requests for increases and for new programs because its essence is to raise questions about what public policies should be pursued and which programs and projects offer the best promise of achieving newly determined or reconfirmed goals. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 342-343).
PBB has its roots industry, where it was practiced by General Motors as early as 1924: it was also used in the War Production boards controlled material plan, in effert during world war II. Later in government it was developed in weapons systems research performed for the departement of defense (DOD) by the Rand Corporation during teh 1950s. Rand applied systems analysis which means presenting “decision-makers with a systematic and comprehensive comparison of the costs and benefits of alternative approaches to a policy goal, taking advantage of techniques variously described as operation research or cost effectivenedd studies.” Weapon systems were compared in terms of their social, political and economic implications such as their impact on the United States economy, as well as traditional permormance factors such as speed and payload. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 343).
When rand, using this approach, attempted to compare, for example, different kinds of bombers, its discover that the budgeting and accounting system then in effect could not provide it with the necessary cost and other information. It proposed a true program budge, based on “program packages,” namely, the combinations of personnel, installations, equipment, and other resources required for accomplishing missions, within programs. The air force did not accept Rand’s recommendations, but when Robert McNamara became secretary of defense, he adopted PBB for the entire department. By fiscal 1964 (July 1, 1963), it was fully operative in Defense. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 343).
In August 1965, on the recommendation of the Budget Bureau, President Johnson issued a directive calling for the extension of the system on a government wide basis. In a bulletin issued on October 12, 1965, the bureau required 22 agencies, including all the executive departments, to adopt PBB and encouraged 17 other, mostly smaller ones to do so. Subsequently, OMB instructions requested the agencies to include in their budget estimates several documents explaining the recommended programs and making explicit the assumptions upon which they were based, including full cost and other information about the advantages and disadvantages of alternative programs. Special, in-depth analytic justifications were usually required for program questions that had major implications in terms of costs and policy choices. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 343).
The Experience with PBB in the Federal Government PBB was launched with much enthusiasm, but soon it encountered major difficulties. Basically, PBB is an application of the rational-comprehensive approach, discussed in chapter 3. As described by Aaron Wildavsky in his The Politics of the Budgetary Process, for practical reason budgetary decisions in government have been made on the basis of incrementaslism. Both administrators and congress simplify the calculating process by generally accepting program bases as gives and concentrating on request for increases. Legislators except agencies to request increases-a realistic expectation – and cut the estimates accordingly. The whole process is neither rational nor comprehensive, but it avoids numerous complexities. Furthermore, it is realistic because decisions made by legislators on spending proposals do not conform to pure logic. As one example, dam and other construction projects, no matter how negative the results of cost-benefit analysis, may be so strongly support in legislators’ home districts that the legislators feel compelled to support them. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 343-344).
Incrementalism is defended, indeed praised, as the better method of making theses decision. It is contrasted with the centralized or hierarchical model, exemplified by PBB, where master plans are developed at the level of the chief executive, and the agencies are then required to stay within those plans. Charles E. Lindblom has written. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 344).
Independent, partisan decision makers can be coordinated in several ways in the absence of a central coordinator; that such partisan mutual adjustment is characteristic of the real world; that complex decision making is necessarily fragmented, disjointed, and incremental; that having a multiplicity of interacting quasi-independent decision makers promotes rationality; that central decision making doesn’t work very well; that partisan mutual adjustment facilitates agreement on values and actions; and that the process promotes consent to democratic government.
PBB defenders say they know that ultimately budget decisions must be the result of the pull-and-haul of various groups, inside and outside the government. They would not change this; rather, they would improve the process by giving political policy makers more adequate information on available choices. For example some public, some public work project usually approved might be thrown out because their utter unsuitability would be revealed by the comparison required under PBB procedures. Furthermore they do not believe that good “technical and economic decision will be made, of even taken into account, by a system operating primarily in a partisan mutual adjustment mode. “for one thing, the “remarkable inertia” of large bureaucracies….. keeps them moving in the same directions, the result being the suppression of options and a concealing of “possibilities that don’t conform.” In addition, not only does the bargaining power of competing organizations vary greatly, but power “is not necessarily very highly correlated with the information or the power to the take relevant action to accomplish objectives with a high degree of efficiency. “For example. “our maritime policies…… have traditionally been worked out via the bargaining mode” and “include an operating subsidy….. structured so as to create a positive incentive to over manning of ships.” (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 344-345).
Writing in early 1971, sick observed, “overall….. the view in Washington in that PPB has not had much impact that program decision continue to be made in the pre-PPB fashion, and that there are few traces of planning and systems analysis in the annual budget process.” When PPB was decreed by president Johnson in 1965, the expectation was that increased revenues would be available for new activities to be selected trough PPB analysis. However, the numerous social programs initiated by the Johnson administration had been “engineered with low start-up costs but with built-in increased in subsequent years,” and by the 1970s, fiscal scarcity was the reality. As a result, the agencies generally found PPB of little value to theme selves and merely “when trough the motion of filing the required forms.” Schick believes PPB was never a success except in the defense department and that, when it was discarded by an OMB circular of june 21, 1971, it already was moribund. This circular eliminated the requirement for the PPB document to be included in agency budget submissions to OMB. While agencies could continue to prepare these document for their own use, it was obvious that OMB, like the old budget bureau, was not really committed to PPB. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 345).
According to schick, at the national level the complete PPB system filed for several reasons, a process that is basically antianalytic, proceeds by suppressing conflict, and has ”many devices and strategies for regulating and containing discord,” whereas. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 345).
PPB would escalate conflict by pushing for greater consistency in program objectives…… it would seek more explicit understandings on program purposes (all that the budget now requires is agreement on dollars and activities): it would advocate the termination of some low-yield programs (nowadays it is hard to excise anything from the budget ); it would expand the range of alternatives………(generally, the only alternative now considered is the one advocated by the agency). (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 345).
There is considerable agreement nonetheless that PPB has made in important contribution because its emphasis or analysis remains, as witnessed, foe example, by development in the agencies of the program evaluation function discussed in chapter 12. OMB Instructions Continue to request the agencies to define their goals and provide objective measure of outputs in their estimated, and agencies participating in the president’s management-by-objectives (MBO) program were asked to describe in details short-term objectives during the budget year for activities that contribute to long-term goals. OMB also encouraged the other agencies to describe these short-term objectives in their annual budget submissions. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 345-346).
PPB in the states and local governments schick had found in mid – 1970 that, although there was discontent in states with traditional budgeting, many agency officials still liked object-of-expenditure estimating. Budget officers wanted to deemphasize control but found they could not because of the “overriding task of bringing estimates into line with available resources. Governors rarely reexamined existing programs, and legislators were unwilling to limit themselves to reviewing policies and not trying to control administrative detail. S. Kenneth Howard believes, however, that the underlying ideas of PPB-“adoption of a longer – range view emphasis upon alternative, evaluating choices in terms of effectiveness, developing a capacity for more thoroughgoing analysis, and stressing programs and problems rather than agency lines”-are very much a live in many states. His judgment is that these new ideas are changing the “shape of state budgeting” and will continue to do so for many years. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 346).
In some local governments, progress has been made in developing program structures, analyzing public services in term of outputs for the public, considering long- range consequences of budget decisions, and evaluating alternative ways of achieving public objectives. Jack rabin observes, “few government have rejected PPBS, but few have implemented it in any meaningful way.” (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 346).
Zero-Base Budgeting (ZBB)
When the was governor of Georgia, jimmy carter ordered the adoption of zero-base budgeting and, when he become president, did so for the federal government. Carted had read and article by peter. A. Pyhrr in the Harvard business review describing the use of ZBB in the texas instruments company, and, at carter invitation, Phyrr helped install ZBB in the Georgia state government. Several other state government have since adopted ZBB, as have some local government. In a February 14, 1977 letter to department and agency heads. Carted announced that he was fulfilling his campaign pledge to introduce ZBB throughout the federal government, and the estimates for fiscal year 1979 (f.Y.1979)incorporated ZBB in to the budget preparation process. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 346).
Phyrr explains that texas instruments “wanted some type of budgeting procedure that would force use the identify and analyze what we were going to do in total, set goal and objectives, make the necessary operating decisions, and evaluate changing responsibilities and work loads-not after the budgeting process, but during it, as an integral part of the process.” He emphasizes that ZBB shift the emphasis from consideration of marginal increases in exiting programs to examination of the possibility of decreasing some programs and increasing others. Phyrr also believes that ZBB provides a systematic procedure for weighing the relative merits of funding different levels of effort for carrying out a given activity. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 346-347).
As Graehme M. Taylor explains, there are three basic elements in ZBB: (1) identification of decision unit; (2) analysis of the functions performed within each decision unit, and the formulation of decision package, each reflecting a different level of effort for carrying out the work in the decision unit; and (3)ranking of decision packages, in descending order of importance, by the manager in charge of a decision unit, and then, at each higher level of management, consolidated ranking of all packages under the executives jurisdiction, culminating in a ranking of all packages in the total organization by its head. (Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 347).
The decisions unit is the lowest – level program or organizational entity for which budgets are prepared. The guiding consideration in determining the unit is the organization “responsibility structure”. Taylor illustrates with a neighborhood heal center. If each center has a manager who allocates all its resources, logically the center is the unit. However, if within each center, there is a manager for each kind of health service who makes budget decision for that service, each center health service can be designated a decision unit. Finally, if resource allocation decision for each kind of health service are made on a citywide basis by specialist in the particular service at headquarters, then the individual health service, aggregated across all centers, would be logical decisions units. Felix A. Nigro, Lloyd G. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 347).
Hypothetical Examples From Georgia To provide further illustration and clarify what are meant by decision packages and the ranking process, we will use materials from the office of planning and budget in georgia for the estimates for fiscal year 1979. It should be remembered, however, that three are many versions of ZBB, an element of flexibility stressed by its proponents. The example is the hypothetical case of a zero – base budget request for a program, field audit, which is one of the many functions of the examination activity of the banking department. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 347).
The first from (figure 16.1) to be completed is for describing decision package 1 of 3, the minimum- objective –level decision package. This is the “ level of effort, expressed in measurable terms, assuming unlimited resources.” The manager insert here, “To examine every state chartered bank and thrift institution in Georgia on an annual basis and to investigate promptly all request for establishing new institutions.” then a description is required of the program in terms of its current objective in F.Y. 1978. The manager writes, “to examine 95 % of all bank and 100% of all Thrift institutions during F.Y. 1978 and to average two weeks investigation time for new or expanded banks or thrift institutions.”Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 347-349).
Similarly. For the minimum-level limited objective he state: “to examine 90% of all banks and 84 % of all thrift institutions during E.Y. 1979 and to average four weeks investigating time per request for new or expanded banks or thrift institutions. Eleven examiners and three secretaries we employed. “there also is a space a for explaining services now being provided that would be excluded under the minimum package : “5% of the state chartered banks and 16 % of the Thrift institutional examined in F.Y. 1978 will not be examined in F.Y. 1979. New banks and thrift institutions will be investigated over a four-week period rather than two weeks. Delete I bank examiner and I clerk – typist II and related operating expenses. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 349).
There is also a table comparing program effectiveness and work load efficiency measure for the F.Y.1978 current objective and the F.Y.1979proposed minimum objective. For example. The average cost per bank examination for the former is $ 2,745, and for the letter, $2,890. Another section of the from shows detailed information about personnel service and other categories of expense for F.Y. 1977 and 1978, for the F.Y.1979 minimum objective level. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 349).
The second from (figure 16.2) shows decision package 2 of 3, the current objective level. Under “explain any cost change in the current level over the minimum level,” the entry is : “add one financial examiner and 1 clerk typist II and related operating expenses to fund the current objective level, not including workload of additional banks, and Thrift institution described below”. The explanation of workload change in the current level over F.Y.1978 is : “eight new banks and two new thrift institution were created in the state during F.Y. 1978. In other to maintain examination of 95 % of the banks and 100% of the thrift institutions, two new financial examiner I’s related operating expenses are requested.” The average cost per bank examination is $2910 for F.Y. 1979. The final right-hand column of figure 16,2 “cumulative amount,” shows the deference between the F.Y. 1979 minimum objective level and the current objective level. In the word, $67.080 plus $327, 872 equals $394,952. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 349).
The third from (figure 16,3) is for decision package 3 of 3, improvement objective level. The entry is : “ to examine 98 % of all banks and 100% of all thrift institutions during F.Y. 1979 and average one week investigation time for new or expanded banks or thrift institutions.” The explanations of this package’s cost is, “to examine an additional 3 % of the banks will require 2 new financial examiner I’s and related operating expenses. ”average cost per banks examination is $2900 for F.Y. 1979current objective level and the improvement objective level; $33,267 is added to $394, 952, equaling $428,219. These packages, 1-3, constitute a serial package for examination activity, banking department. There are serial package for other activities within that department. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 349-352).
The manager of the examination activity ranks, in descending order of importance, decision package for all decision units under his or her responsibility (figure 16.4). A higher decision package in a serial package must be ranked over a lower one in the same serial package, but a package from one series maybe ranked over a higher or lower package in another series. For example, in figure 16.4. it is hypothesized that the manager rank as first major bank regs. (1 of 4), and a fourth, filed audits (1 of 3). The additional cost of each package ranked is tabulated an the grand total for all the package listed. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 352).
For each package ranked, the percentage the cumulative amount represents to total F.Y budgeted state funds is shown. With the tenth ranking, it goes up to 111. In determining what should be founded for F.Y. 1979, the manager established a cutoff point, according to his or her expectation as to the increase over F.Y. 1978 funding that might be approved. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 352).
After reviewing the activity manager decision package ranking, the head of the banking department ranks all the departments decision packages (figure 16.5) the procedure for cumulating costs is the same. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 352).
The Experience With ZBB Research conducted in Georgia by Thomas P. lauth in 1977 revealed that ZBB has not changed actual budgetary behavior in that state. Lauth interviewed staff members of the office of planning and budget, executive agency budget officers, and budget analysts of the general assembly, and their responses made clear that the incremental approach was still followed. Lauth writes, “budgeters in Georgia tend to assume that agency programs will be continued at very close to, or slightly above, the current level. ….even in ZBB the ‘base’ is the historic base, not zero-base. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 352).
Agency budget officers did not take the “minimum objective level” seriously, as evidenced in this statement, “the minimum is a waste of time….. no one looks at that. We determinate where we want to be and work back to 85 percent.” (agency budget officers and OPB analyst generally were agreed that the minimum level should be approximately 85 percent of the current level). Nor did OPB analysts expect the agencies to fund programs at the minimum level; rather they were satisfied that having a minimum “makes them think about the possibility of a cut rather than always expecting more.” In practice, the package ranking process “facilitated rather than terminated marginal analysis,” because the “rankings depict incremental levels of effort.” According to one OPB official, greatest scrutiny was given those package “falling between 85 and 110 percent levels.” Analyzing departmental appropriations between F.Y. 1973 (when ZBB was introduced) and F.Y. 1978, lauth found that there were few non incremental changes in appropriation levels. (incremental was defined as change of less than 10 percent.) He concludes that ZBB in Georgia did not result in “substantial spending reductions through the elimination of programs,” but, since his analysis was limited to departmental spending totals, he notes the possibility that non incremental changes and reduction of funds did take place at the division and unit level within departments. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 352-355).
Lauth believes that incrementalism persists in Georgia because :
1. The state constitution and statues require funding some programs at prescribed levels, thus precluding zero-base analysis.
2. Public expectation make impractical reconsideration of the “historic base” of certain functions.
3. “interest groups play an important role in maintaining continued support for existing programs.”
4. “the process of negotiation through which OPB analysts and agency budget officers reconcile the competing demands of their individual role requirements, tends to be marginal adjustment. State quit simply by one agency budget officer. ‘the analyst gets paid to cut – so I try to protect against that by making sure that there is something to cut …… we trade around the edges.”
5. “the legislative budget office simply does ‘continuation budgeting’ and that strongly biases the total process in the direction of incrementalism in budget preparation.
6. “program and matching fund requirement witch are part of federal grants-in-aid limit the ability of budget makers to alter existing program significantly from year to year.”
Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 355).
Elsewhere, in states and local governments using ZBB, trade –offs between decreases in one program for increases in another do not appear to be taking place. Schick believes that the evidence does suggest that expenditure shifts within budgets do take place, but not “…. Basic reexamination of programs.” As to the federal government, schick believers its first ZBB budget-that for F.Y.1979 – came out a very incremental one. Nonetheless, he stresses that ZBB involves program managers at every level in the budgeting process. Some top federal official believe that ZBB has given them a “better handle on agency speeding habits”, and that it has proved valuable in making decision on daily operating cost. On the negative side, ZBB is said to have created a “ mountain of paperwork,” money has not been saved, and spending priorities have not been saved, and spending priorities have not been altered. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 355-356).
Basically, ZBB is very similar to PBB. There is the same emphasis on clarifying program goals, comparing alternatives for attaining those goals, developing program effectiveness measures, and analyzing cost. Obviously, ultimate budget decisions by chief executive and legislators will be as much influenced by political factors under ZBB as PPB. While ZBB, like PPB, is criticized for claiming too much, its not questioned that the emphasis on program is the proper one. As yet, experience with ZBB is too brief to make a definite evaluation. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 356).
FISCAL POLICY AND THE BUDGET
Although concepts of how to achieve economic stabilization have long influenced government spending policies and thus the budget, only and recent years has the budget come to be recognized as the “key instrument in national policy making”. After word war II, since governmental expenditures have represented a large proportion of total economic activity, those responsible for decisions on budgets have increasingly thought in terms of the impact of their decisions on economic conditions. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 356).
The New Economics
President kennedy’s budget for fiscal 1964 represented a significant change. For one thing, he stressed he revenue recommendation, presenting them in the opening paragraph of his budget message. Previously president had scarcely dealt with tax policy in the these messages. Furthermore, his budget was presented in two parts, the first consisting essentiality of data significant for economic analysis and the second of the detailed supporting schedules that in previous years had constituted the “budget document.” Kennedy stressed tax policy because the wanted congress to reduce taxes in other to stimulate the economic. In the following year, after his death, congress took such action, and the new economic,” whereby government uses its spending and tax powers to steer the economy, was launched. That fiscal-policy implications are paramount is seen in the fact that when the new house and senate budget committees hold their hearings on the budget in preparation for recommending the first concurrent resolution on the budget, they listen to testimony by numerous with nesses on how the proposed expenditures will effect the economy. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 356-357).
In his budget message to congress for fiscal 1968, president Johnson announced he would name a special commission to make a “thorough review of the budget and recommended an approach to budgetary presentation which will assist both public and congressional understanding of this vital document.” Sine no one form of presentation could satisfactorily serve the different purpose served by the budget, several method were being used, but not without some drawbacks. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 357).
The Administrative, Consolidated Cash, and National Income Accounts Budgets before fiscal 1968, the administrative budget had been employed as the “principal financial plan for conducting the affairs of government.” It cover receipts and expenditures of funds owned by the federal government unemployment insurance, federally aided highway construction, medicare, and civil service retirement. These trust funds are controlled by congress, wich makes frequent changes in them, such as in tax rates and contribution and benefit formulas. In theory, however, the government acts only as trustee for them. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 357).
Whereas at one time the administrative budget accounted for the bulk of federal financial activity, the trust funds have grown so large that they must be taken in to account in gauging the total effect of government activities on income levels and other aspects of the economy. An increase in social security benefits as surely adds to purchasing power as does a rise in government employment. Prior to the Johnson administration, to additional forms of presentation had been added, the consolidated cash budget and the national income budget. The consolidate cash budget combines “administrative budgets transaction with those of trust funds…… to show the flow of case between the federal government and the public.” Its shows all payments to and receipts from the public. The national income accounts budget (NIA) is :
A measure of receipts and expenditures of the federal government sector of the national income and product accounts (maintained by the department of commerce). It includes federal trust fund transactions, but excludes loans and similar transactions since they consist of the exchange of financial assets or physical assets which are not newly produced and therefore do not contribute to current “income”. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 357).
Loans are included in the administrative and consolidated cash budgets, but a loan is not like any other government expenditure because the borrower assumes the responsibility to repay. While economist are generally agreed on the way in which taxes and expenditures other than loans affect the economy, they differ about the effect of loans and, therefore, have generally felt that the NIA was the best measure of the federal government’s economic impact. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 358).
The Unified Budget Essentially, what the president’s commission on budget concept recommended is a unified budget, consisting of two complementary components: a receipts expenditure account and a loan account. The receipt –expenditure account includes as receipts all tax revenue, trust fund receipts, and expenditures, called the expenditure-account surplus (or deficit), measures the economic impact of the budget. The loan account shows net lending, which is derived by deducting load repayments and sales from gross loan disbursements during the year. Net lending added to the expenditure –account deficit, equals the total budget deficit. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 358).
President Johnson accepted this recommendation, and the budgets for fiscal 1969 and thereafter have been prepared on this basis. Breakdowns for the administrative and consolidated cash budgets have disappeared, except in historical calculations. Federal transactions in the national income accounts are shown in a special analysis. The new budget format neatly solves the problem of how to serve both the fiscal –policy and expenditure –control use of the budget. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 358).
In recent years, economic analysis has also played some part in state government budget. While no one state’s budget is big enough to have anywhere near the impact of federal activities on the economy, some are now in the billion-dollar category and have a great effect on economic condition within the state. No longer can budgeting be viewed solely as a management tool of executives. Particularly at the federal level, budgeting now serves “simultaneously as an aid in decisions about both the efficient allocation of recources among competing claims and economic stabilization and growth”. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 358).
STEP IN THE BUDGET PROCESS
The detailed procedure for the preparation an approval of a budget varies greatly the pending on the place. Two example with the used; new castle country (delaware) and the federal government. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 358).
New Castle County
Like many other local governments, new castle country has both a capital and an operating budget. The capital budget is part of the long-range planning of the physical facilities of the county, such as drainage systems, sewers, buildings, and parks. The county maintains a capital program, which is a schedule of capital improvement project for the next 6 years, showing their priority, estimate cost, and sources of financing. (capital improvement is defined as any permanent physical improvement with a normal life of 10 years or more.) each year the capital program is extended for another fiscal year; beginning with july 1, 1978, the period covered was 1979-1984. The capital budget is a detailed list of capital expenditures to be incurred during the next fiscal year (which is the new first year of the 6-year plan). The operating budget shows all anticipated noncapital expenditures during the next fiscal year. Such as salaries and the materials and the supplies (current expense). Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 359).
The Capital Budget in new castle county there is an elective county executive and a chief administrative officer (CAO) appointed by the county executive. There also is a budget and management office reporting to the CAO. Under the direction of the executive, the CAO is responsible for preparing the capital program and capital budget and for ensuring that they are in conformance with comprehensive development plans prepared by the department of planning. Figure 16.6 shows the detailed step in the capital budget procedure; the capital program review committee consists of the CAO, a representative of the planning board, the director of planning, and the director of finance. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 359).
Both preliminary and final submissions are required. The preliminary submission provide the basic data needed to consider capital program policies and content; the final sub mission give the details on financing and timing of projects after final agreement on the content of the departmental programs. The purpose of the presubmission conferences with each agency, shown in the second step, is to assists them in the development of their capital programs and to discus the impact of agency proposals on the county’s comprehensive plan. In the third step, the agencies complete their preliminary submission, giving primary attention to policy questions. Project justification and priorities and the general magnitude of costs. The agencies record their current capital programs, plus all proposed new projects, regardless of year of authorization ; precise dollar figures and detailed time schedules omitted, but preliminary estimate of cost and timing for new project are shown. After fourth step, The CAO convers with other members of the capital program review committee and then submits to each agency a memorandum of content suggesting any desirable changes in the preliminary submission. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 359-361).
In the fifth step, the agencies incorporate these comment in to the final submissions, provide details on cost estimates and project timing, and submit their detailed capital budgets for the next fiscal year showing only those projects that require authorization of funds in that year. In the sixth step, the CAO and the county executive review all the agency final submissions and capital budgets. The county executive then submits recommendations on the capital program to the planning board which, although it has participated earlier and the review process, may now wish to deliberate further. The law requires the county executive to submit recommendations on the capital program to both the county council and the planning board by april 1. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 361).
The Operating Budget the budget data are requested both on a program and an object –of-expenditure basis. Assisted by the budget and management office, the CAO puts together the budget estimates and forwards them to the county executive, together with forecasts of receipts to be received from the various sources of revenue to be used to finance the budget, after the agency budget hearings, the county executive make recommendations to the county council in the form of the budget message “accompanied by proposed revenue and operating budget ordinances to gives effect to the budget as presented”. If estimated revenue is insufficient to archive a balance budget, the executive must “recommend revenues sufficient to achieve a balanced budget.” The operating budget ordinance provides appropriations by object-of-expenditure for each “office, department, or board to which appropriations are made”; both ordinances must be submitted to the council by the first of april (see figure 16.7). Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 361).
The Federal Government
The federal government does not have a separate capital budget, nor are the estimates for capital and current expenditures shown separately. The lumping together of capital and current expenditures has long been criticized because capital investment expenditures are treated as current expenses, with the entry cost for an expensive project sometimes charged to one years operations, thus making deficits much larger than they otherwise would be. This is contrasted with private business where capital outlays are not charged against current sales in estimating a firm’s profit or loss. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 361).
President Johnson’s commission on budget concepts recommended, however, against excluding “outlays for capital goods from the total of budget expenditures …. Used to compute the budget surplus or deficit.” Its reasoning was that the “current draft by the government on the economic resources of the private sector” would be seriously understated. It though the institution of a capital budget might lead to overemphasis on brick-and-mortar project by comparison with chose in such areas at health and education where the future benefits cannot be capitalized. Notwithstanding, the commission strongly supported better estimating of capital costs and cost-benefit analysis at the agency level. In recent year, capital outlays have been classified along with operating and other budget outlays in one of the budget special analysis. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 361-362).
Budget Preparation Within The Executive Branch in the federal government, the starting point is the department estimates of the expenditures. In the early spring, and in some departments even earlier, the budget officer, after conferring with the agency head, request the bureau heads and other directors to make their estimates of expenditures for the next fiscal year. This is known as the “call for estimates”; is consist of budget request forms, together with a statement of policy assumption upon which the estimate are to be based. After consultation with the president, the office of management and budget (OMB) sends its own call for estimates to the agencies in june, together with an explanation of the chief executive’s policy decisions as to permissible level of spending. The agencies then revise their internal budgets and prepare their final estimates in accordance with the president policy directives. Following a time schedule prepared by the OMB the agencies forward these estimates to OMB, the process starting around September 15 and terminating for all agencies by November 15. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 362-363).
From September through November, for almost every agency formal hearings are held before an OMB examiner. These hearings enable the agency to supplement and the fend the written material submitted with an oral statement of the issue involved. The OMB examiners in turn defend determinations before the OMB budget review committee, after which the OMB director makes recommendations to the president as to the agency estimates. The OMB advises the agency of the president decisions, and the agency then revises its estimates accordingly. This process is completed for all the agencies by the end of December. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 363).
Meanwhile, the OMB has received the latest estimates of revenues from the treasury department. With the expenditure and revenue information now ready, the OMB puts the budget document together and delivers it to the government printing office. Usually the president sends his budget message and the accompanying estimates to congress in the third week in January. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 363).
Review In Action In Congress The Congressional Budget and impoundment control act of 1974 made extensive changes in the congressional budget process. Prior to its passage, over all spending and revenue goals were not established by the congress as a whole to guide committee deliberations, and action on appropriation and revenue bills was not coordinated. The house and senate appropriations committees and subcommittees independently considered and acted on expenditure proposals, and there was no coordination between their decisions and those of the house ways and means committee and the senate finance committee on revenue meters. As a result, congress could not control total spending and it was vulnerable to charges that is was responsible for inflationary deficits. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 363).
The 1974 act establishes a committee on the budget in each house. The house budget committee consists of 25 members, each from the appropriations and ways and means committees, 13 from other standing committees, and 1 members each from the leadership of the majority and minority parties. The 15 members of the senate committee are appointed from the senate at large, like any other standing committee. The act also establishes a congressional budget office (CBO), the responsibilities of which are indicated in the step-by-step procedure set forth in the act. The CBO director is appointed by the speaker of the house and the senate president pro tem, after they have considerer the recommendations of the house and the senate budget committees, solely on the basis of fitness and without regard to political affiliation. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 363-364).
The step-by-step procedure 1. The current services budget referred to in the first step is a “projection of the cost of continuing all existing programs without major policy changes or legislative initiatives.” It provides congress (by November 10) with detailed information to use in beginning its preparation for next fiscal year’s budget. Budget authority is legal authorization “to enter into obligations which will result in immediate or future out lays involving government funds.” Must budget authority is in the form of appropriations. In congress, programs must be authorized by legislation before appropriation bills providing fund for the activities in question can be passed. All budget authority does not have to be enacted annually; much is automatically available under exiting legislation (e.g., trust funds interest on the debt, general revenue sharing). Outlays means the amounts of money actually disbursed to meet program commitments; these sums frequently are less than budget authority. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 364-365).
2. shortly after submission of the president complete budget (in mid January ) the budget committees begins hearing on the federal budget and the economy, reviewing testimony from interest group representatives, fiscal experts, federal, state, and local government officials, and member of congress. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 365).
3. the reports of the standing committees and joint committees (march 15) contain their views on all budget matters under their purview; they also include estimates of new budget authority and outlays to be authorized by legislation under their jurisdictions, to be effective during the next fiscal year. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 365).
4. the CBO’s report (april 1) includes a presentation o alternative levels of revenues. New budget authority, and budget outlays, as well as a “discussion of national budget priorities, including alternative ways of allocating budget authority and budget out lays among major program or functional categories, taking into account how such alternative allocation will meet major national needs and effect balanced growth and development of the unites states. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 365).
5. The budget committees proposed first concurrent resolution (april 15) includes recommendation of appropriate levels of total budget outlays both from current –year and prior-year obligation-and- of total budget authority, with a breakdown for each major functional category (e.g. national defense, international affairs, agriculture, commerce and transportation). It also includes revenue estimate, showing the amount to be raised from each major revenue source. All of the above recommendation are compared with those the president, and the economic assumptions and objective reflected in the resolution are explained as well as the alternatives considered. Also included are five-year budget projections. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 365).
6. neither the house of representatives nor the senate may consider any spending or tax measure prior to may 15, the deadline date for adoption of the first concurrent resolution. May 15, is also the last day for reporting legislation authorizing new budget authority. While authorization need not be for one year only, in recent years congress has increased the number of programs for which annual authorization is required. The authorization bills are considered by the standing committees with jurisdiction in the particular filed of legislation. Without the may 15 deadline, it would be very difficult for the new budget timetable to be kept; furthermore, passage of appropriation bills can be greatly delayed if authorizing measures are acted on late in the session, as occurred so often in the past. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 365-366).
The house and senate conferees (on may 15), in a joint explanatory statement accompanying the conference report on the concurrent resolution, allocate the appropriate levels of total budget outlays and total new budget authority among the house and the senate committees having jurisdiction over bills and resolution providing such new budget authority. “for example, if the conference report allocates $7 billion in budget authority and $6 billion in outlays for the functional category ‘community and regional development” the statement of the managers would divide those amount among the various committees of the house or senate with jurisdiction over programs and authorities covered by that functional category, each committee to which an allocation is made must, in turn, further subdivide its allocation among its subcommittees. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 366).
7. The seventh day after labor day is chosen as the latest date for completing action an all authorization and spending bills because after that, there are only three weeks before the beginning of the next fiscal year. Appropriation bills whose consideration has been deferred because of delay in the passage of the authorizing legislation are excepted from this deadline. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 366).
Between may 15 and completion of action on the spending bills, the CBO carries out a “scorekeeping function” by issuing periodic report comparing the amounts approved with the estimates contained in the may 15 resolution. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 366).
8. the second concurrent resolution (September 15) affirm or revises the recommended levels of budget authority, outlays, and revenues in the firs resolution . this permits congress to make changes based on new information, altered economic condition, and the decision it has made on the spending bills. The second resolution may also “direct the committees with jurisdiction over any changes required … to determine and recommended such change to the house ….. for example, the resolution might call upon the appropriations, and the ways and means committees to report legislation adjusting tax rate or the public debt limit. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 366).
9. the term “reconciliation process” means making spending and revenue bills conform with the second concurrent resolution. Congress may not adjourn until it has completed action on the second resolution and the reconciliation process. After it has completed such action (September 25), “it is not in other in either house to consider any new spending legislation that would cause the aggregate levels of total budgets authority or outlays adopted in that resolution to be exceeded, nor to consider a measure that would reduce total revenues below the level and the resolution. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 366-367).
Although the legislation state that the procedure described above would not apply until the fiscal year beginning October 1, 1976 congress decided to try it for the fiscal year beginning july 1, 1975, (previously, the fiscal year was july through june 30) in this “tryout” year, the house and the senate voted and overall spending and revenue totals only, rather than on each of the functional categories of expense referred to in fifth step above. There was much pessimism that the new procedure would not succeed, largely because in the legislative reorganization act of 1946, congress had provided for a legislative budget setting spending and revenue targets very early in the sessions but on only one occasion had approved such a budget, event then failing to keep within the ceilings. However congress was able to adopt the two concurrent resolution, and a binding ceiling was established and adhered to for fiscal 1976. Further when the new procedure were fully implemented for fiscal 1977, congress also kept within the ceiling, and since then the new budget process has in the general worked well. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 367).
Total spending has not been decreased significantly, but this was not the purpose of the legislation; it was rather to increase congressional control over the budget process and to bring “some discipline to the congressional appropriation process which was seriously lacking in the past.” The budget committees have established them selves and won significant victories in getting authorizing and appropriation committees to stay within the concurrent resolution with which they disagreed or withdrawn spending bills that would break the ceilings, to ensure that the new procedures would work. Nigro. Modern Public Administration. New York : Harper & Row, Publisher . 1817. Hal. 367).
Backdoor spending in the past, as much as 75 percent of all spending has been outside the regular appropriation process-so-called backdoor spending (frequently referred to as uncontrollable expenditures). This result from the fact that much of what is expended during a given fiscal year is based on authority granted by congress in previous years; to control these outlays from previous authorizations, congress would have to changes existing laws. Examples are: (1) outlays resulting from permanent budget authority granted by congress, as in the case of trust funds, interest on the debt, and general revenue sharing; (2) outlays under budget authority enacted in prior years on an annual basis (e.g., those occurring because of the time lag between entering into contract commitments and the actual disbursement of funds to meet these contact obligations); and (3) expenditures resulting from formulas in existing