Performance Budgeting: Initial Experiences Under the Results Act in
Linking Plans With Budgets (Letter Report, 04/12/99, GAO/AIMD/GGD-99-67).

Pursuant to a congressional request, GAO reviewed selected fiscal year
(FY) 1999 federal agency performance plans, focusing on: (1) agencies'
approaches to linking performance goals and budgetary resources; (2)
characteristics that might be associated with different approaches to
linking performance goals and budgetary resources; and (3) implications
for future efforts to clarify the relationship between budgetary
resources and results.

GAO noted that: (1) in their first Government Performance and Results
Act of 1993 performance plans, agencies experimented with a variety of
approaches to connect budget requests with anticipated results; (2)
although most agencies reviewed (30 of 35) defined some type of
relationship between the program activities of their proposed budgets
and the performance goals of their plans, far fewer (14 or 40 percent of
the plans reviewed) translated these relationships into budgetary
terms--that is, most plans did not explain how funding would be
allocated to achieve performance goals; (3) such allocations are a
critical first step in defining the performance consequences of
budgetary decisions; (4) GAO found that agencies with budget and
planning structures of widely varying complexity made these allocations,
but some common approaches were used; (5) agencies were significantly
more likely to have allocated funding to program activities if they: (a)
showed simple, clear relationships between program activities and
performance goals (as illustrated by eight agencies in GAO's review);
(b) fully integrated performance plans into congressional budget
justifications (as illustrated by five agencies); or (c) had changed
their program activity structures to reflect their goal structures (as
illustrated by three agencies); (6) agencies' first-year experiences
show progress in bringing planning and budgeting structures and
presentations closer together, but much remains to be done if
performance information is to be more useful for budget decisionmaking;
(7) continued efforts are needed to: (a) clarify and strengthen links
between planning and budgeting structures and presentations; and (b)
address persistent challenges in performance planning and measurement
and cost accounting; and (8) the progress that has been made, the
challenges that persist--including the indefinite delay in the
performance budgeting pilots called for by the act--and Congress'
interest in having credible, results-oriented information underscore the
importance of developing an agenda to ensure continued improvement in
showing the performance consequences of budgetary decisions.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD/GGD-99-67
     TITLE:  Performance Budgeting: Initial Experiences Under the
	     Results Act in Linking Plans With Budgets
      DATE:  04/12/99
   SUBJECT:  Performance measures
	     Reporting requirements
	     Agency missions
	     Strategic planning
	     Cost accounting
	     Congressional/executive relations
	     Budget administration
	     Accountability
	     Mission budgeting
IDENTIFIER:  GPRA
	     Government Performance and Results Act

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cover1+2.book GAO United States General Accounting Office

Report to the Chairman, Committee on Governmental Affairs, U. S.
Senate

April 1999 PERFORMANCE BUDGETING

Initial Experiences Under the Results Act in Linking Plans With
Budgets

GAO/ AIMD/ GGD- 99- 67

United States General Accounting Office Washington, D. C. 20548
Lett er

Page 1 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

GAO

Accounting and Information Management Division Lett er

B-282035 Letter April 12, 1999 The Honorable Fred Thompson
Chairman Committee on Governmental Affairs United States Senate

Dear Mr. Chairman: The Government Performance and Results Act of
1993 (the Results Act) seeks to strengthen federal decision-
making and accountability by focusing on the results of federal
activities and spending. A key expectation is that the Congress
will gain a clearer understanding of what is being achieved in

relation to what is being spent. To accomplish this, the act
requires that, beginning for fiscal year 1999, agencies prepare
annual performance plans containing annual performance goals
covering the program activities in agencies' budget requests. In
addition, Office of Management and Budget (OMB) guidance states
that agency performance plans should display, by

program activity, the funding level being applied to achieve
performance goals. 1 Plans that meet these expectations can
provide the Congress with useful information on the performance
consequences of budget decisions.

Our assessment of fiscal year 1999 performance plans found that
agencies generally covered the program activities in their
budgets, but most plans did not identify how the funding for those
program activities would be allocated to performance goals. 2 To
enhance the Congress' understanding of issues that may affect
agencies' abilities to relate budgetary resources and results, you
requested that we review selected fiscal year 1999 performance
plans to (1) describe agencies' approaches to linking performance
goals and budgetary resources, (2) examine characteristics that
might be associated with different approaches to linking
performance

goals and budgetary resources, and (3) identify implications for
future efforts to clarify the relationship between budgetary
resources and results. More clearly describing and analyzing the
approaches agencies developed to link funding requests with
performance expectations can be an 1 OMB Circular A- 11,
Preparation and Submission of Budget Estimates, Sec. 220.9( e),
June 23, 1997. 2 Managing for Results: An Agenda to Improve the
Usefulness of Agencies' Annual Performance Plans (GAO/ GGD/ AIMD-
98- 228, September 8, 1998). For a discussion of key practices for
improving the usefulness

of annual performance plans, see Agency Performance Plans:
Examples of Practices That Can Improve Usefulness to
Decisionmakers (GAO/ GGD/ AIMD- 99- 69, February 26, 1999).

B-282035 Page 2 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

important foundation as the Congress reviews agencies' fiscal year
2000 performance plans. To respond to your request, we selected 35
fiscal year 1999 performance plans for review that covered entire
agencies or large subordinate bureaus, services, or
administrations. 3 We developed a methodology to characterize each
plan's structure and method of linking program activities and
performance goals, and we gathered information on each agency's
budget structure. We also identified agency plans in which program
activity funding was allocated to performance goals a key
criterion for useful plans. 4 We analyzed how characteristics
differed among agencies that

made such allocations and those that did not to determine which,
if any, of the characteristics were statistically significant in
making these allocations. We provided a draft of this report to
OMB for comment and

also discussed selected aspects of this report with staff from the
Senate and House appropriations committees. See appendix I for a
detailed discussion of our objectives, scope, and methodology.
Results in Brief In their first Results Act performance plans,
agencies experimented with a

variety of approaches to connect budget requests with anticipated
results. Although most agencies reviewed (30 of 35) defined some
type of relationship between the program activities of their
proposed budgets and the performance goals of their plans, far
fewer (14 or 40 percent of the plans reviewed) translated these
relationships into budgetary terms that is, most plans did not
explain how funding would be allocated to achieve performance
goals. Such allocations are a critical first step in defining the
performance consequences of budgetary decisions. We found that
agencies with budget and planning structures of widely varying
complexity

made these allocations, but some common approaches were used.
Agencies were significantly more likely to have allocated funding
to program activities if they (1) showed simple, clear
relationships between program activities and performance goals (as
illustrated by eight agencies

3 We generally focused on bureau- level plans for each department
but limited our review to the three largest bureaus with
discretionary spending over $1 billion and/ or the two largest
bureaus. For a list of plans reviewed, see table I. 1 in appendix
I.

4 While an allocation of funding requests to performance
expectations is important, plans must also have other attributes
to be fully useful. In addition to showing the performance
consequences of budget decisions, useful plans need to contain
results- oriented goals, clear strategies, and credible
performance information. See GAO/ GGD/ AIMD- 98- 228, September 8,
1998 and GAO/ GGD/ AIMD- 99- 69, February 26, 1999.

B-282035 Page 3 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

in our review); (2) fully integrated performance plans into
congressional budget justifications (as illustrated by five
agencies); or (3) had changed their program activity structures to
reflect their goal structures (as illustrated by three agencies).
Agencies' first- year experiences show progress in bringing
planning and

budgeting structures and presentations closer together, but much
remains to be done if performance information is to be more useful
for budget decision- making. Continued efforts are needed to (1)
clarify and strengthen links between planning and budgeting
structures and presentations and (2) address persistent challenges
in performance planning and measurement and cost accounting. The
progress that has

been made, the challenges that persist including the indefinite
delay in the performance budgeting pilots called for by the act
and the Congress' interest in having credible, results- oriented
information underscore the importance of developing an agenda to
ensure continued improvement in showing the performance
consequences of budgetary decisions.

Therefore, we recommend that the Director of OMB assess the
linkages between performance goals and program activities
presented in the fiscal year 2000 plans and develop a constructive
and practical agenda to further clarify the relationship between
budgetary resources and results.

The Results Act and Performance Budgeting

The Government Performance and Results Act of 1993 is a key
component of a statutory framework that the Congress put in place
during the 1990s to promote a new focus on results. 5 Finding that
waste and inefficiency in federal programs were undermining
confidence in government, the Congress sought to hold federal
agencies accountable for the results of federal spending through
regular and systematic performance planning, measurement, and
reporting. Among its several purposes, the act is designed to
improve congressional decision- making by providing more objective
information on the relative effectiveness and efficiency of
federal programs and spending. That is, with regard to spending
decisions, the act

aims for a closer and clearer link between the process of
allocating resources and the expected results to be achieved with
those resources. 5 For a fuller discussion of this framework, see
Managing for Results: The Statutory Framework for Performance-
Based Management and Accountability (GAO/ GGD/ AIMD- 98- 52,
January 28, 1998).

B-282035 Page 4 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

The Concept of Performance Budgeting

The concept of linking performance information with the budget is
commonly known as performance budgeting. 6 Within the past 50
years, initiatives at the local, state, and federal levels of
government as well as in other nations have sought to link
performance expectations with specific budget amounts. In essence,
the concept of performance budgeting assumes that a systematic
presentation of performance information alongside budget amounts
will improve budget decision- making by focusing funding choices
on program results. Specifically, performance budgeting seeks to
shift the focus of attention from detailed items of expense such
as salaries and travel to the allocation of resources based

on program goals and measured results. In this sense, the Results
Act is the most recent of a series of federal initiatives
embodying concepts of performance budgeting. At the federal level
and elsewhere, performance budgeting initiatives have

encountered many challenges. 7 Key challenges include a lack of
credible and useful performance information, difficulties in
achieving consensus on goals and measures, dissimilarities in
program and fund reporting structures, and limitations of
information and accounting systems. For example, some prior
initiatives used new and unfamiliar formats that were layered onto
existing budget and appropriations processes, compromising the
goal of integrating performance information into the budget
process. Specifically in the federal government, past performance
budgeting initiatives resulted in unique and often voluminous
presentations unconnected to the structures and processes used in
congressional budget decision- making. 8

When viewed collectively, these past initiatives suggest three
common themes. First, any effort to link plans and budgets must
explicitly involve the executive and legislative branches of our
government. Past initiatives often faltered because the executive
branch developed plans and performance measures in isolation from
congressional oversight and 6 In this report, we use the term
performance budgeting to refer generally to the process of linking

expected results to budget levels, but not to any particular approach. 7 See Performance Budgeting: State Experiences and Implications for the Federal Government (

GAO/AFMD-93-41
, February 17, 1993). For a discussion of past federal initiatives including the
expected results to budget levels, but not to any particular
approach. 7 See Performance Budgeting: State Experiences and
Implications for the Federal Government (  GAO/AFMD-93-41 ,
February 17, 1993). For a discussion of past federal initiatives
including the

Planning- Programming- Budgeting- System (PPBS) and Zero- Based
Budgeting (ZBB) and the evolution of the concept and techniques of
performance budgeting, see Performance Budgeting: Past Initiatives
Offer Insights for GPRA Implementation (GAO/AIMD-97-46, March 27,
1997). 8 See GAO/AIMD-97-46, March 27, 1997.

B-282035 Page 5 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

resource allocation processes. Second, the concept of performance
budgeting will likely continue to evolve. Past initiatives
demonstrated that there is no single definition of performance
budgeting that encompasses the range of needs and interests of
federal decisionmakers. Third and perhaps most importantly, past
initiatives showed that performance budgeting cannot be viewed in
simplistic terms that is, resource allocation cannot be
mechanically linked to results. The process of

budgeting is inherently an exercise in political choice allocating
scarce resources among competing needs in which performance
information can be one, but not the only, factor underlying
decisions. Ultimately, the promise of any performance budgeting
initiative, including the Results Act, lies in its potential to
more explicitly infuse performance information into budgetary
deliberations, thereby changing the terms of debate from simple
inputs to expected and actual results.

Performance Budgeting Under the Results Act

The Results Act differs from earlier performance budgeting
initiatives in several key respects but can be viewed as a
continued evolution of the concept. 9 At its most basic level, the
act requires agencies' annual performance plans to directly link
performance goals and the program activities of their budget
requests. Testifying on the Results Act before its

passage, the Director of OMB characterized this linkage as a
limited but very useful form of performance budgeting . . . . 10
The act also requires that another form of performance budgeting
be tested during performance budgeting pilots. The Results Act
requires an agency's annual performance plan to cover each program
activity in the President's budget request for that agency.
Subject to clearance by OMB and generally resulting from
negotiations between agencies and appropriations subcommittees,
program activity structures are intended to provide a meaningful
representation of the

operations financed by a specific budget account. Typically, the
President's annual budget submission encompasses over 1,000
accounts and over 3,000 program activities. As the committee
report accompanying the act noted, however, the program activity
structure is not consistent across the federal 9 See GAO/AIMD-97-
46, March 27, 1997.

10 Government Performance and Results Act of 1993, Committee on
Governmental Affairs, United States Senate, S. Rpt. No. 58, 103d
Cong. 1st Sess., p. 19 (1993).

B-282035 Page 6 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

government but rather is tailored to individual accounts. 11 The
committee report further cautioned that agencies' annual plans
should not be voluminous presentations that overwhelm rather than
inform the reader. Accordingly, the act gives agencies the
flexibility to consolidate, aggregate, or disaggregate program
activities, as illustrated in figure 1, so long as no

major function or operation of the agency is omitted or minimized.
In addition to this flexibility, agencies also have the option to
propose changing their budget structures, subject to concurrence
from OMB and the Congress. 12 Figure 1: Using the Results Act's
Flexibility to Align the Annual Performance Plan

With the Budget Account and Program Activity Structure

a These activities are created through disaggregation and would
not necessarily appear in the list of program activities presented
in the President's budget.

11 S. Rpt. No. 103- 58, p. 31. 12 OMB Circular A- 11, Sec. 11. 6(
c), June 23, 1997.

Program activity 3 Activity 3. 1 a Activity 3. 2 a

Performance goal 1 Performance goal 2

Performance goal 4 Performance goal 3

Consolidation

$QQXDO SHUIRUPDQFH SODQ %XGJHW DFFRXQWV DQG

SURJUDP DFWLYLWLHV

Budget account 1

Program activity 1 Program activity 2

Program activity 4

Budget account 2

Program activity 1 Aggregation

Disaggregation

B-282035 Page 7 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

OMB's guidance regarding this provision of the act set forth an
additional criterion: plans should display, generally by program
activity, the funding level being applied to achieve performance
goals. 13 That is, OMB expected performance plans to show how
amounts from the agency's budget request would be allocated to the
performance goals displayed in the plan. 14 In addition to
mandating a linkage between budget requests and

performance plans, the act required that pilot projects be used to
test another approach to performance budgeting. OMB, in
consultation with the head of each agency, was required to
designate for fiscal years 1998 and 1999 at least five agencies to
prepare budgets that present, for one or more of the major
functions and operations of the agency, the varying levels of
performance, including outcome- related performance, that would
result from different budgeted amounts. 15 While the act required
agencies to define goals consistent with the level of funding
requested in the

President's budget, the act's pilots would also show how
performance would change if the agency received more or less than
requested. OMB was to include these pilot performance budgets as
an alternative presentation in the President's budget for fiscal
year 1999 and to transmit a

report to the President and to the Congress no later than March
31, 2001, on the feasibility and advisability of including a
performance budget as part of the President's budget. This report
is also to recommend whether legislation requiring performance
budgets should be proposed. The performance budgeting pilots were
scheduled to start in fiscal year 1998 so that they would begin
only after agencies had sufficient experience in preparing
strategic and performance plans, and several years of collecting
performance data. 16 In this context, and recognizing the
importance of concentrating on governmentwide implementation in
1998, OMB announced on May 20, 1997, that the pilots would be
delayed for at least a year. OMB stated that the performance
budgeting pilots would

require the ability to calculate the effects on performance of
marginal changes in cost and funding. According to OMB, very few
agencies had this capability, and the delay would give time for
its development. In 13 OMB Circular A- 11, Sec. 220.9( e), June
23, 1997. 14 Subsequently, in its guidance on fiscal year 2000
plans, OMB noted that it expected to see significant progress in
associating funding with specific performance goals or sets of
goals in agencies' plans. 15 31 U. S. C. 1119( b). 16 S. Rpt No.
103- 58, p. 38.

B-282035 Page 8 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

September 1998, OMB solicited agencies' comments on these pilots,
but no agencies have been designated as pilots. At present, OMB
has no definite plans for proceeding with the performance
budgeting pilots. Agencies Linked Complex Planning and Budgeting
Structures Using Many Approaches

The complexities that are the hallmark of today's federal budget
account structure and the diverse planning structures associated
with broad federal missions were reflected in the approaches used
to link budget and planning structures. The fiscal year 1999
performance plans we reviewed frequently depicted complex and
imprecise relationships between these structures. Using the
Results Act's flexibility to aggregate, consolidate, and

disaggregate existing program activities, most agencies generally
linked their program activities to some level of a frequently
complex planning hierarchy. These linkages were often presented in
a performance plan that was separable from the agency's budget
justification. As a result, plans

frequently depicted a relationship between program activities and
performance goals that, while consistent with the act's charge to
cover program activities, proved difficult to translate into
budgetary terms. However, 14, or 40 percent of the agencies we
reviewed, built on these relationships to show how the funding
from program activities would be allocated to achieve discrete
sets of performance goals. These agencies, in effect, took the
first step toward defining the performance consequences of budget
decisions.

The Complexity of Budget and Planning Structures

As we have previously reported, the federal government's budget
account structure was not created as a single, integrated
framework but rather generally developed over time to respond to
specific needs. 17 As a result, budget accounts and program
activities within the accounts vary from agency to agency. This
complexity was evident for agencies included in this review. For
example, the number of budget accounts associated with a

given agency's performance plan ranged from a low of 1 to a high
of 118 for the agencies we reviewed, while the number of program
activities to be covered by the plan ranged from 6 to 465. The
median number of accounts for agencies that we reviewed was 9, and
the median number of program

activities was 32. Typically, program activity structures were
unique not only to each of the agencies in our review, but also to
each of the budget accounts within an agency. In only 2 agencies
EPA and the Department 17 Budget Account Structure: A Descriptive
Overview (GAO/AIMD-95-179, September 18, 1995).

B-282035 Page 9 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

of Defense were the same program activity titles repeated across
all or groups of an agency's budget accounts.

Agencies' planning structures were similarly complex, comprised of
widely varying numbers and layers of goals. The Results Act and
OMB guidance give agencies flexibility in structuring strategic
and annual performance goals. Annual performance goals are
expected to measure progress in achieving longer term strategic
goals. There is no required format or structure and no limitation
on the number of goals that can be included in a performance plan.
Our sample of performance plans presented a variety of planning
structures and many different terms to describe those structures.
Twenty- one of the 35 agencies we reviewed used a cascading
hierarchy of

goals to put their fiscal year 1999 performance in context that
is, these plans placed one or more layers of goals between their
strategic and annual performance goals. For example, the Bureau of
Land Management (BLM)

plan contained a complex hierarchy of goals: 5 General Goals,
supported by 17 Strategic Goals, that were supported by 43
Performance Goals, 47 Long- Term Goals, and, finally, 64 fiscal
year 1999 Annual Goals. Figure 2 shows the numbers and layers of
goals associated with one of BLM's five general goals. The
remaining 14 agencies, however, had fewer

layers of goals. For example, the U. S. Agency for International
Development's (USAID) six strategic goals were supported directly
by performance goals with fiscal year 1999 targets. Figure 3
presents the performance goals associated with one of USAID's
strategic goals.

B-282035 Page 10 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 2: BLM's Fiscal Year 1999 Performance Plan Presents Many
Goal Layers

Source: GAO analysis based on BLM's fiscal year 1999 performance
plan. Strategic goals

Long- Term goals BLM mission: To sustain the health, diversity,
and productivity of the

public lands for the use and enjoyment of present and future
generations General goals

Annual goals Performance goals

1.01. Provide opportunities for environmentally responsible

recreation 1.02 1.03 1.04 1.05

1.01. 01. Manage outdoor recreation activities to achieve and
maintain public

land health standards 1.01. 02 1. 01. 03 1.01. 04

1.01. 01. 01. Encourage outdoor recreational users to be better
stewards for protecting BLM public lands

and waters by using multimedia environmental education and
interpretative information

1.01. 01.02 1. By Sept. 30, 1999, increase number of recreation
sites in good condition by 20 percent over 1997

2 3 4 1. Serve current

and future publics 2 3 4 5 6

B-282035 Page 11 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 3: USAID's Fiscal Year 1999 Performance Plan Links
Strategic Goals Directly to Performance Goals

Source: GAO analysis based on USAID's fiscal year 1999 performance
plan.

To analyze these disparate planning structures, we developed and
used a common framework that defined two layers of goals above the
annual performance goals stated in the performance plans: (1)
strategic goals, to reflect the first goal layer under an agency's
mission statement and (2) strategic objectives, to reflect the
next subordinate level of goals under

strategic goals. 18 We found that, quantifying just these two
layers, most agency plans involved relatively complex
presentations. The number of strategic goals in plans we reviewed
ranged from 1 to 47, with a median of 5. Just over half of the
agencies in our review placed an intervening layer of strategic
objectives between strategic and performance goals. In plans

Strategic goals Performance goals

1. Broad- based economic growth and agricultural development
encouraged

2 3 4 5 6

USAID mission: To contribute to the U. S. national interests by
supporting the people of developing and transitional countries in
their efforts to achieve enduring economic and

social progress and to participate more fully in resolving the
problems of their countries and the world.

1. Average annual growth rates in real per capita income above 1
percent

2 3 4 5

18 For our definitions of strategic goal and strategic objective,
see characteristics six and seven in table I. 2 of appendix I.

B-282035 Page 12 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

where strategic objectives were used, the number of strategic
objectives ranged from 5 to 122. Across our sample of agency
plans, the median number of strategic objectives used was nine.

Variety of Approaches to Linking Budget and Planning Structures

The variety and complexity of agencies' planning and budget
structures necessarily resulted in a range of approaches to
present and link this information. However, across this range, two
approaches predominated: 29 performance plans were presented
separately from congressional budget requests, and 22 plans
established complex linkages of multiple program activities
related to multiple performance goals.

Although performance plans and budget requests commonly referred
to as justifications of estimates are both transmitted to the
Congress following the President's budget submission in February,
most agencies kept their plans physically separated from their
budget submissions, either as entirely separate documents or as
separate components appended to the

justifications. 19 Only 6 of the 35 plans we reviewed had been
fully integrated into the agency's budget justification (see
appendix II). In addition to separating plans and budgets, almost
all agencies retained

the budget structure they had used in previous budget submissions.
Only three agencies in our review EPA, the Customs Service, and
the Nuclear Regulatory Commission (NRC) substantially changed
their program activity structures, and all cited the Results Act
as a factor in this change. Some others such as the Bureau of
Indian Affairs (BIA) and the Department of Veterans Affairs (VA)
noted that such changes were under consideration but proposed no
changes in fiscal year 1999. For example,

BIA stated that it would work with OMB and congressional
committees to simplify the budget format to mirror the strategic
plan. 20 However, agencies very frequently took advantage of the
act's flexibility to modify that is, to aggregate, consolidate, or
disaggregate program

activities in order to show linkages with performance goals. The
extent to which this flexibility was used varied greatly. For
example, figure 4 illustrates how the Administration for Children
and Families (ACF) consolidated program activities before relating
them to performance goals. 19 See appendix I for a discussion of
how we categorized the degree of integration between agencies'
budget justifications and performance plans.

20 BIA fiscal year 1999 performance plan, p. 2.

B-282035 Page 13 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 5 illustrates how the Health Resources and Services
Administration (HRSA) linked some performance goals to
disaggregated program activities.

Figure 4: The Administration for Children and Families Uses
Consolidation to Link Program Activities to Strategic Objectives

Note: Dollars in millions. Numbers may not total due to rounding.
Source: GAO analysis based on Administration for Children and
Families fiscal year 1999 performance plan and Budget of the
United States Government Fiscal Year 1999 Appendix.

$&) EXGJHW DFFRXQWV DQG SURJUDP DFWLYLWLHV

Family support payments to states account

1. State child support administrative costs ($ 2, 749)

2. Federal incentive/ hold harmless payments to states ($ 469)

3. Access and visitation grants ($ 10) 4. Payments to territories
5. Repatriation 6. Aid to families with dependent children benefit
payments

7. Emergency assistance

Children's research and technical assistance account

1. Federal parent locator service ($ 30) 2. Training and technical
assistance 3. Child welfare study 4. Welfare research 5.
Evaluation of welfare to work 6. Evaluation of abstinence
education

$&) VWUDWHJLF JRDOV  VWUDWHJLF REMHFWLYHV  DQG SHUIRUPDQFH JRDOV

Strategic goal: Increase economic independence and productivity
for families

Strategic objective: Increase parental responsibility ($ 3,257)

Performance goals:

 Increase the paternity establishment percentage among children
born out- of- wedlock to 96 percent

 Increase the percentage of cases having child support orders to
74 percent

 Increase the collection rate for current support to 70 percent

 Increase the percentage of paying cases among arrearage cases to
46 percent

 Increase the cost- effectiveness ratio (total dollars collected
per dollar of expenditures) to $5. 00

B-282035 Page 14 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 5: The Health Resources and Services Administration Uses
Disaggregation to Link Program Activities to Sets of Performance
Goals

Note: Dollars in millions. Source: GAO analysis based on Health
Resources and Services Administration's fiscal year 1999
performance plan and Budget of the United States Government Fiscal
Year 1999 Appendix. +56$ VWUDWHJLF JRDOV DQG

SHUIRUPDQFH JRDOV

Strategic goals: 1. Eliminate health care disparities 2. Eliminate
barriers to care 3. Assure quality

Performance goals:

+56$ EXGJHW DFFRXQWV DQG SURJUDP DFWLYLWLHV

Health resources and services account

20 program activities including: HIV/ AIDS

Activity 1: AIDS emergency relief grants ($ 490)

Activity 2: HIV care grants to states ($ 670)

Activity 3: HIV early intervention services ($ 86)

 Increase the number of clients served by Title I grant programs
by 7.5 percent

 3 other performance goals

 Increase the number of clients receiving anti- retro viral
therapy to 57,500

 5 other performance goals

 Increase by 5 percent the number of clients receiving primary
care services

 4 other performance goals 4 other activities

B-282035 Page 15 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

In addition to modifying or proposing changes to program
activities, agencies in our review used three principal strategies
to meet the Results Act's expectation that annual plans would
establish performance goals to define the level of performance to
be achieved by a program activity. 21  About half (13) of the
agencies that made linkages 22 between

performance goals and program activities in their performance
plans established this connection at the relatively high level of
strategic goals or objectives. For example, as shown in figure 4,
ACF linked consolidated program activities to strategic
objectives, which, in turn, were subsequently associated with
performance goals.  About the same number of agencies (14) defined
direct linkages to performance goals. Figure 5 illustrates how
HRSA linked disaggregated

program activities directly to its performance goals.  Three
agencies the National Aeronautics and Space Administration,

the National Science Foundation, and VA linked program activities
to something other than a statement of strategic goals, strategic
objectives, or performance goals. For example, the VA plan
contained 17 strategic goals and 25 strategic objectives. However,
instead of linking program activities directly to these goals and
objectives, VA linked both its program activities and performance
goals to its 10 business lines. The

business lines generally represented different agency functions
such as medical care and education. As the above discussion
indicates, regardless of the strategy used, most agencies ended
with the same basic relationship many program activities were
related to many performance goals (see appendix II). These
imprecise, many- to- many relationships frequently resulted from
agencies' linking aggregated or consolidated program activities
with strategic goals

or other groupings of performance goals. For example, in figure 4,
ACF consolidated program activities and linked them to the group
of performance goals associated with a strategic objective,
creating a manyto-

many relationship between program activities and performance
goals. In contrast, eight plans used a more direct and simple
approach typically linking a single program activity with multiple
performance goals. Figure 5 21 31 U. S. C. 1115( a)( 1). 22 In
addition, we could not determine linkages between program
activities and performance goals from information provided in the
performance plans of the following 5 agencies: the Department of
Defense, the Immigration and Naturalization Service, the National
Institutes of Health, the Rural Housing Service,

and the Social Security Administration.

B-282035 Page 16 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

shows that HRSA linked a single disaggregated program activity to
multiple performance goals. While 30 of 35 plans defined some
relationship between program activities and performance goals, 16
of these did not build on that relationship by showing how the
funding from program activities would be allocated to discrete
sets of performance goals.

 Ten of these 16 plans did not present funding levels for any set
of performance goals in their performance plans.  Six of these 16
plans presented funding levels for some set of performance goals
without explaining how those funding levels had

been derived from program activities in their budget requests.
However, 14 agency plans, or 40 percent of those included in our
review, both identified the funding for program activities and
explained how that funding would be allocated to a discrete set of
performance goals. 23 In effect, these 14 plans, which will be
discussed more fully in the next section, took the first step in
defining the performance consequences of budget decisions.

Funding Was Allocated to Performance Under a Variety of Conditions
But Using Some Common Approaches

Our review of selected fiscal year 1999 performance plans
indicated that agencies with budget and planning structures of
widely varying complexity were able to develop approaches toward
achieving a fundamental purpose of the Results Act clarifying the
relationship between resources and results. Figure 6 lists the 14
agencies in our review that allocated program activity funding to
performance goals in their performance plans. We found that some
of the approaches that these agencies used, alone or in
combination, were more frequently associated with plans that
linked

program activity funding to performance goals. For example,
agencies that (1) established simple relationships between program
activities and performance goals or (2) fully integrated budget
justifications and performance plans were significantly 24 more
likely to allocate program activity funding to performance goals.
In addition, each of the three

23 The set of goals ranged in size and scope. For example, some of
these plans presented allocations of funding to strategic goals or
objectives, which represented discrete sets of performance goals.
24 When significant is used in this report, we are referring to
statistical significance at or around the 95 percent confidence
level. This significance means that we can be 95 percent certain
that the association we find in our sample is not due to chance or
random variation.

B-282035 Page 17 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

agencies that changed their budget structures to align them with
their planning structures made these allocations. Conversely,
plans characterized by imprecise, many- to- many relationships
between performance goals and program activities and plans
presented separately from budget justifications generally did not
present such allocations.

Figure 6: Agencies Allocating Program Activity Funding to
Performance Goals in Fiscal Year 1999 Annual Performance Plans

Source: GAO analysis.

Allocations Were Made Within a Variety of Planning and Budgeting
Structures

But Alignment of These Structures Was Significant

Our review generally found few differences in the budget
structures of agencies that allocated program activity funding to
performance goals and those that did not. For example, the number
of an agency's accounts or program activities was not
significantly related to whether a plan presented funding
allocations for performance goals. As table 1 shows, for example,
the median number of accounts and program activities was nearly
the same for agencies that did allocate program activity funding
to performance goals and for those that did not.

 Department of Energy  Customs Service  Environmental Protection
Agency  Food and Nutrition Service  Internal Revenue Service
Nuclear Regulatory Commission  Small Business Administration

 Administration for Children and Families  Employment and Training
Administration  Federal Bureau of Investigation  Health Resources
and Services Administration  National Aeronautics and Space
Administration  Office of Personnel Management  U. S. Agency for
International Development

B-282035 Page 18 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Table 1: Complexity of Budget Structure Was Not Significant in
Allocating Funding to Performance Goals

Source: GAO analysis.

We also considered whether plans that allocated program activity
funding to performance goals were more frequently associated with
agencies having spending concentrated in one account. To determine
if concentration of spending was a significant factor, we
calculated the

number of agencies for which 75 percent or more of requested
spending was associated with a single account. Again, no
significant relationship was observed (see figure 7). Four, or 36
percent, of the agencies with spending concentrated in one account
allocated program activity funding to performance goals. Ten, or
42 percent, of the agencies with spending

concentrated in multiple accounts allocated program activity
funding to performance goals.

Low High Median Agencies that allocated funding

Number of accounts 2 33 7 Number of program activities 6 119 32

Agencies that did not allocate funding

Number of accounts 1 118 10 Number of program activities 9 465 32

B-282035 Page 19 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 7: Concentration of Requested Spending Was Not Significant
in Allocating Funding to Performance Goals

Source: GAO analysis.

Similarly, the complexity of an agency's program activity
structure was not a significant factor in allocating funding to
performance goals. We considered whether a simpler program
activity structure that is, one in which program activity titles
were repeated across budget accounts was more frequently
associated with allocating funding to performance goals. We found
no significant difference in the number of agencies allocating

7 4

14 10

0 2

4 6

8 10

12 14

Number of agencies Did not allocate funding Allocated funding
Spending concentrated

in one account Spending concentrated in

multiple accounts

B-282035 Page 20 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

program activity funding to performance goals. Thirteen, or 39
percent of the 33 agencies without common program activity
structures, allocated program activity funding to performance
goals (see figure 8). Although only two agencies EPA and the
Department of Defense exhibited common program activity
structures, EPA presented such an allocation and DOD did not.

Figure 8: Commonalities Within Agencies' Program Activity
Structures Were Not Significant in Allocating Funding to
Performance Goals

Source: GAO analysis.

Although a particular account and program activity structure was
generally not associated with allocating funding to performance
goals, there was one significant but perhaps unsurprising
exception. All three of the agencies 20

13 1 1 0 2

4 6

8 10

12 14

16 18

20 Number of agencies

Did not allocate funding Allocated funding Uncommon program

activity structure Common program

activity structure

B-282035 Page 21 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

that proposed changing their program activities to be consistent
with their planning structures EPA, NRC, and the Customs Service
allocated funding to performance goals (see figure 9). For
example, EPA proposed a uniform program activity structure across
all of its accounts in which each program activity represented one
of its strategic goals. Figure 10 illustrates how EPA used
consolidation to allocate program activity funding to strategic
objectives and their supporting performance goals.

Figure 9: Alignment of Budget and Planning Structures Was
Significant for Allocating Funding to Performance Goals

Source: GAO analysis. Number of agencies

0 5

10 15

20 25

Did not allocate funding Allocated funding Used fiscal year

1998 structure Changed

structure 21

0 11

3

B-282035 Page 22 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 10: EPA Proposed Aligning Budget and Planning Structures

Note: Dollars in millions. Source: GAO analysis based on EPA's
fiscal year 1999 performance plan and Budget of the United States
Government Fiscal Year 1999 Appendix.

Fourteen agencies in our review that showed how program activities
were allocated to performance goals did not appear to have any
common structural elements in their performance plans. Differences
in plan complexity defined in terms of number and layers of goals
were not significant between agencies that allocated program
activity funding to performance goals and those that did not. As
indicated in table 2, the

median number of strategic goals and objectives was the same or
similar between these two groups of plans.

$4 $13

$5

(3$ VWUDWHJLF JRDOV  VWUDWHJLF REMHFWLYHV  DQG

SHUIRUPDQFH JRDOV

Strategic goal: clean air Strategic objective: acid rain ($ 22)
Performance goals:

 Maintain 4 million tons of sulfur dioxide reductions from utility
sources

 Maintain 300,000 tons of nitrogen oxides reductions from coal-
fired utility sources

 Launch the nitrogen oxides Emissions and Allowance Tracking
System for the Ozone Transport Region

(3$ EXGJHW DFFRXQWV DQG SURJUDP DFWLYLWLHV

Science and technology account

1. Clean air ($ 137) 2. Clean water 3. Safe food 4. Preventing
pollution 5. Waste management 6. Global and cross border 7. Right
to know 8. Sound science 9. Credible deterrent

Environmental programs and management account

1. Clean air ($ 169)  Other program activities corresponding to
EPA's other strategic goals (similar to above)

State and tribal assistance grants account

1. Clean air ($ 201)  Other program activities corresponding to
EPA's other strategic goals (similar to above)

B-282035 Page 23 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Table 2: Planning Structure Was Not a Significant Factor for
Agencies That Allocated Program Activity Funding to Performance
Goals

Source: GAO analysis.

Two Approaches to Linking Budget and Planning Structures Were
Significant

Although the complexity of an agency's budget and planning
structures generally was not significantly related to whether it
linked program activity funding to performance goals, two
approaches to linking these structures were. These approaches were
(1) establishing simpler relationships between program activities
and performance goals and (2) fully integrating budget
justifications and performance plans. Whether used alone or in
combination, these approaches were more frequently associated with
agencies that were able to show the performance consequences of
budget decisions.

A significant difference in allocating program activity funding to
performance goals existed between agencies in which the
performance plan was integrated with the agency's budget
justification and agencies in which the performance plan was not
integrated. Agencies whose plans were fully integrated with the
budget justification nearly always (five of six

such plans) allocated program activity funding to performance
goals (see figure 11). Conversely, about two- thirds, or 20 of the
29 agencies whose plans could be physically separated from the
budget justification, did not allocate program activity funding to
performance goals. For example, figure 12 shows how information
traditionally contained in a budget justification, such as
descriptions of accounts and their funding, was combined with
performance information in the Internal Revenue Service's

(IRS) integrated budget justification and performance plan.

Low High Median Agencies that allocated funding

Number of strategic goals 3 10 5 Number of strategic objectives 0
55 7

Agencies that did not allocate funding

Number of strategic goals 1 47 5 Number of strategic objectives 0
122 10

B-282035 Page 24 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 11: Integrating Budget and Planning Documents Was
Significant for Allocating Funding to Performance Goals

Source: GAO analysis. Number of agencies

20 9

1 5

0 2

4 6

8 10

12 14

16 18

20 Did not allocate funding Allocated funding Plan separable

from the budget Plan fully integrated

with the budget

B-282035 Page 25 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 12: The Internal Revenue Service Integrates Its Budget
Justification and Performance Plan

a IRS noted that this is a projection for budget purposes and is
not used in the agency's business review.

Note: Dollars in millions. Source: GAO analysis based on the
Internal Revenue Service's fiscal year 1999 performance plan.

We also found that plans showing a simpler relationship between
program activities and performance goals were significantly more
likely to show how funding was allocated to performance goals (see
figure 13). That is, in all agencies in which the relationship
between program activities and

performance goals could be characterized as one- to- many or many-
to- one, program activity funding was allocated to performance
goals. For example, figure 14 shows that the allocation of funding
to performance

goals in the NRC plan was essentially automatic because each of
the agency's program activities generally align with a strategic
goal and its supporting performance goals. However, where
relationships were less precise that is, when multiple program
activities were related to multiple performance goals allocations
of program activity funding to

performance goals were less common.

3URFHVVLQJ  $VVLVWDQFH  DQG 0DQDJHPHQW $FFRXQW

Program activity: submission processing

($ 888) Performance measure:

Number of individual refunds issued will equal 93.3 million a

Performance measure:

Refund timeliness-- paper 40 days

5 other performance measures

Performance goal #1: Improve customer service

Functions: This activity provides for the salaries, benefits, and
related costs to process tax returns and supplemental documents,
account for tax revenues, issue refunds and tax notices, develop
and print tax returns and publications . . . . Also included are
resources to: process information returns such as wage, dividend,
and interest statements; provide for payment of refunds . . .
identification of possible non- filers for investigation; and,
provide tax returns for audits . . . .

Performance goal #2: Increase compliance

Performance measure:

211.8 million primary returns processed a

Performance goal #3: Increase productivity

Performance measure:

19.5 percent of individual returns filed electronically

Performance measure:

78.2 percent of dollars received electronically

Performance measure:

70.9 percent dollars received via third party processors

B-282035 Page 26 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 13: Simple Relationships Between Program Activities and
Performance Goals Were Significant for Allocating Funding to
Performance Goals

Source: GAO analysis. Number of agencies

0 2

4 6

8 10

12 14

16 Did not allocate funding

Allocated funding 16

6 0

8 Complex

relationship Simple

relationship

B-282035 Page 27 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 14: The Nuclear Regulatory Commission Aligns Budget and
Planning Structures to Create a Simple Relationship Between
Program Activities and Performance Goals

Note: Dollars in millions. Source: GAO analysis based on Nuclear
Regulatory Commission's fiscal year 1999 performance plan and
Budget of the United States Government Fiscal Year 1999 Appendix.

As indicated by the agencies profiled in the figures above,
approaches that were individually significant in allocating
funding were often used in combination. In fact, 6 of the 14 plans
that allocated program activity funding to performance goals used
two or more of the approaches identified above. For example, of
the three agencies that changed their program activity structures,
two either presented simple relationships

between program activities and performance goals or fully
integrated their performance plans and budget justifications. The
21 plans in our review that did not allocate funding to discrete
sets of performance goals were also generally characterized by
common features. These plans (1) did not reflect any significant
change in the agency's account or program activity structures, (2)
generally were separable from the justification of estimates, and
(3) presented either no explicit 15& VWUDWHJLF JRDOV DQG

SHUIRUPDQFH JRDOV

Strategic goal: nuclear reactor safety ($ 211) Performance goals:

 Goal I. A - zero civilian nuclear reactor accidents

 Goal I. A. 1 - maintain low frequency of events which could lead
to a severe accident

 Goal I. B - zero deaths due to radiation or radioactivity
releases from civilian nuclear reactors

 Goal I. B. 1 - zero significant radiation exposures due to
civilian nuclear reactors

Strategic goal: nuclear materials safety ($ 49) Performance goals:

 Goal II. A - zero radiation- related deaths due to civilian use
of source, byproduct, and special nuclear materials

 Goal II. A. 1 - no increase in the number of significant
radiation exposures due to loss or use of source, byproduct, and
special nuclear materials

 Goal II. A. 1. a - no increase in the number of losses of
licensed material as reported to Congress annually

 Goal II. A. 1. b - no accidental criticality involving licensed
material

 Goal II. A. 2 - no increase in the number of misadministration
events which cause significant radiation exposures

15& EXGJHW DFFRXQWV DQG SURJUDP DFWLYLWLHV

Salaries and expenses account

1. Nuclear reactor safety ($ 211) 2. Nuclear materials safety ($
49) 3. Nuclear waste safety 4. Common defense and security and

international involvement 5. Protecting the environment 6.
Management and support

B-282035 Page 28 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

relationship or a many- to- many relationship between performance
goals and program activities. These features were a hallmark of
plans that did not inform users of the performance consequences of
budget decisions.

First- Year Experiences Demonstrate Progress and Continued
Challenges

Our review of selected fiscal year 1999 performance plans presents
a mixed picture. Certainly, some agencies were able to develop
informative approaches to connect budgetary resources to results.
These approaches are addressing some of the challenges that have
plagued performance

budgeting efforts prior to the Results Act. They can also be seen
as the first step toward achieving a key objective of the act a
clearer understanding of what is being achieved for what is being
spent. Paralleling these changes is growth in the Congress'
interest in performance information in its resource allocation and
other oversight processes. Nevertheless, our review, as well as
the delay of the performance budgeting pilots required by

the act, indicates continuing challenges for achieving a clearer
relationship between budgetary resources and results. A Year of
Progress in Connecting Resources to Results

The fiscal year 1999 budget process marked an important beginning
in more clearly showing the performance consequences of budget
decisions. As indicated in the previous section, executive branch
agencies developed a variety of approaches to link their
performance plans and budget requests. But equally important, the
Congress also showed an awareness of Results Act implementation
efforts and a clear interest in obtaining credible performance
information during its appropriations and oversight processes.
Executive agencies have demonstrated that linking complex budget
and

planning structures demands adaptive approaches. The scope of the
federal government's missions, the variety of its organizational
models, and the breadth of its processes all subject to a
multifaceted congressional oversight environment suggest that many
approaches will be developed to more clearly allocate requested
funding levels to performance goals. Our review found that
agencies reflecting the heterogeneity of the federal government
from direct service agencies (e. g., IRS) to agencies

principally involved in grant or loan making (e. g., USAID) to
regulatory agencies (e. g., NRC) began to link budgetary resources
and results. In the fiscal year 1999 performance plans, the
agencies we reviewed developed several approaches to overcome a
common problem of previous performance budgeting initiatives
planning structures and presentations

B-282035 Page 29 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

that were unconnected to budget structures and presentations.
These approaches include:

 changing budget structures to more closely align with performance
plans. Three agencies proposed new program activities within
existing budget accounts to generally reflect the strategic goals
of their performance plan. These proposals sometimes facilitated a
relatively simple relationship between program activities and
performance goals that helped make connections clear.  integrating
performance information with budget justifications. In some

cases, this took the form of fully integrating the performance
plan with the agency's budget justification, as in the IRS, the
Customs Service, and the Federal Bureau of Investigation. Where
plans were not fully integrated with budget justifications, some
agencies used the justification to provide more detailed
information on goals contained in their performance plan. For
example USAID's fiscal year 1999 budget justification contained
strategic support objectives and special

objectives. These objectives appear to further describe and
support the performance goals expressed in USAID's separate
performance plan.  crosswalking performance plans with budget
structures. For example, ACF devised a crosswalk to identify the
contribution of its over 60

program activities to its 10 strategic objectives (see figure 4
for an excerpt from this crosswalk). The crosswalk identifies
funding for accounts or program activities and using consolidation
and aggregation relates an account or program activity to a
strategic objective, and consequently, to the objective's set of
discrete performance goals. Account or program activity funding
levels are summed to provide a proposed funding level for each
strategic objective.

As executive agencies developed these approaches and presented
their fiscal year 1999 budget submissions, the Congress also
indicated an increasing interest in credible performance
information to inform the resource allocation process. 25 We
reviewed fiscal year 1999 appropriations hearings and reports for
the agencies in our review that allocated program

25 The Congressional Research Service recently documented the
growth of congressional interest in performance information in its
memorandum, Performance Measure Provisions in the 105 th Congress:
Analysis of a Selected Compilation, dated December 17, 1998. This
analysis concluded while the number of public laws with
performance measure provisions nearly doubled from the 104 th to
the 105 th Congresses, the number of committee reports containing
performance measure provisions. . .nearly tripled.

B-282035 Page 30 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

activity funding to performance goals and observed that members of
the Congress often made specific reference to the performance
information contained in the agency's justification and/ or
performance plan. Some notable examples include the following.

 ACF officials were questioned as to whether a 4 percent increase
in children exiting foster care through reunification justified
the appropriation being sought for these activities. 26  U. S.
Customs Service officials were asked how the appropriations

committee should evaluate performance and resource requirements
for Customs' marine mission, given an apparent lack of measures
for its marine enforcement program. 27  NRC officials were asked
what performance measures would be used to justify U. S.
participation and funding in international nuclear safety programs
and how requested budget increases were related to NRC's

mission. 28  Food and Nutrition Service officials presented data
on the number of meals being served in the school lunch and
breakfast programs and

were asked how much additional budgetary resources would be needed
to serve all eligible children. 29  The Conference Report on HUD's
Fiscal Year 1999 Appropriations directed the agency to revise its
performance plan to incorporate

measurable goals and outcomes for providing housing vouchers and
certificates to assist families in transitioning from welfare to
work. 30  A House Subcommittee on Appropriations was unwilling to
recommend

funding for a request for community- based technology centers in
part 26 Departments of Labor, Health and Human Services, Education
and Related Agencies for Fiscal Year 1999, Hearings before a
Subcommittee of the Committee on Appropriations, House of
Representatives, 105 th Congress, 2d Sess., Pt. 2, p. 776. 27
Treasury, Postal Service, and General Government Appropriations
for Fiscal Year 1999, Hearings before a Subcommittee of the
Committee on Appropriations, House of Representatives, 105 th
Congress, 2d Sess., Pt. 1, p. 490. 28 Energy and Water Development
Appropriations for Fiscal Year1999, Hearings before a Subcommittee
of the Committee on Appropriations, House of Representatives, 105
th Congress, 2d Sess., Pt. 5, p. 1842. 29 Agriculture, Rural
Development, Food and Drug Administration, and Related Agencies
Appropriations for Fiscal Year 1999, Hearings before a
Subcommittee of the Committee on

Appropriations, House of Representatives, 105 th Congress, 2d
Sess., Pt. 6, p. 399. 30 Making Appropriations for the Department
of Veterans Affairs and Housing and Urban Development. . .for the
Fiscal Year Ending September 30, 1999, Conference Report,
Committee on Appropriations, House of Representatives, H. Rpt. No.
769, 105 th Cong. 2d Sess. p. 237 (1998).

B-282035 Page 31 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

because specific performance measures for this new program were
not presented. 31  The Treasury and General Government
Appropriations Act of 1999

stated that the Office of National Drug Control Policy could not
obligate funds provided to continue its national media campaign
until it submitted the evaluation and results of the campaign. 32

Challenges Facing Future Performance Budgeting Efforts

Deliberations on agencies' appropriations also indicate that
making effective linkages between budget program activities and
performance goals is one of many challenges that need to be
addressed for performance information to be used in the budget
process. Members of the Congress also questioned agencies about
why goals were not more results- oriented and what steps were
being taken to coordinate activities with other agencies. For
example, Office of Personnel Management officials were asked if
the agency's performance plan could identify measures to help
determine the agency's progress toward a result of recruiting and
retaining the federal workforce required for the 21 st century.
Members of the Congress were also concerned about agencies' use of
program evaluation

and other techniques to ensure the validity and reliability of
performance data. ACF officials were asked about their approach
for evaluating the academic success of Head Start preschool
participants after those students

leave the program. These concerns demonstrate that agencies also
need to adopt a broader agenda for improving performance plans
that includes focusing on results, defining clear strategies, and
improving their capacity to gather and use performance data.
Translating the use of agency resources into concrete and
measurable results will be a continual challenge that will require
both

time and effort on the part of the agency. The uneven pace of
progress across government is not surprising; agencies are in the
early years of undertaking the changes that performance- based
management entails. Although some agencies, as indicated in our
review, began to show the performance consequences of budget
decisions, improvements can be made in the clarity and
completeness of linkages between program activities and
performance goals. Agencies must also balance the scope

31 Departments of Labor, Health and Human Services, and Education
and Related Agencies Appropriation Bill, 1999, Committee on
Appropriations, House of Representatives, H. Rpt. No. 635, 105 th
Cong. 2 nd Sess. p. 145 (1998). 32 H. R. Conf. Rpt. No. 105- 825
at 515 (1998).

B-282035 Page 32 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

and precision of funding estimates for performance goals with the
usefulness of such estimates for resource allocation decisions. In
addition, we believe weaknesses in the performance measurement
systems described in agencies' fiscal year 1999 performance plans
need to be addressed. 33

Linkages between plans and budgets must be supported by results-
oriented and credible performance data to be useful. Our
assessment 34 of agencies' fiscal year 1999 performance plans
found most goals were focused on outputs, not outcomes. This
presents a dilemma for future performance budgeting efforts. While
outcome information is clearly useful for measuring performance,
it may be more difficult to allocate funding to outcomes that are
far removed from the inputs that drive costs. Allocating funding
to outcomes presumes that inputs, outputs, and outcomes can be
clearly defined and definitively linked. For some agencies, these
linkages are unclear or unknown. 35 For example, agencies that
work with state or local governments to achieve performance may
have difficulty specifying

how each of multiple agencies' funding contributes to an outcome.
In addition to understanding how actions affect outcomes,
allocating funding to outcomes also requires an ability to
understand how costs are related to outcomes. Agencies are noting
the importance of cost

accounting and other management systems for success in allocating
funding to performance. 36 For example, the Department of Housing
and Urban Development's (HUD) fiscal year 1999 performance plan
acknowledged that the agency has no mechanism for tracking
resources as they are applied to performance measures. 37 The plan
noted that HUD

33 For additional discussion, see Major Management Challenges and
Program Risks: A Governmentwide Perspective (GAO/OCG-99-1, January
1999), GAO/ GGD/ AIMD- 98- 228, September 8, 1998, and GAO/ GGD/
AIMD- 99- 69, February 26, 1999. 34 See GGD/ AIMD- 98- 228,
September 8, 1998. 35 Program evaluation is critical to
understanding and isolating an agency's impact on outcomes. For a
discussion of performance measurement challenges, see Managing for
Results: Measuring Program Results That Are Under Limited Federal
Control (GAO/GGD-99-16, December 11, 1998), Program Evaluation:
Agencies Challenged by New Demand for Information on Program
Results (GAO/GGD-98-53, April 24, 1998), and Managing for Results:
Analytic Challenges in Measuring Performance (GAO/ HEHS/ GGD- 97-
138, May 30, 1997).

36 Our recent Performance and Accountability series cited
developing cost accounting systems as a key challenge in
supporting the Results Act. See GAO/OCG-99-1, January 1999. 37 HUD
fiscal year 1999 performance plan, p. 6.

B-282035 Page 33 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

intends to develop a system that will allow the Department to
identify, justify, and match resource requirements for effective
and efficient program administration and management. 38 Agencies
are expected to develop such systems as they implement managerial
cost accounting standards developed by the Federal Accounting
Standards Advisory Board (FASAB). 39 These standards require that
agencies develop and implement cost accounting systems that can be
used to relate the full costs of various programs and activities
to performance outputs. Although these standards were originally
to become effective for fiscal year 1997, the Chief Financial
Officers (CFO) Council an interagency council of the CFOs of major
agencies

requested the effective date be delayed for 2 years due to
shortfalls in cost accounting systems. As FASAB recommended, the
effective date was extended by 1 year, to fiscal year 1998, with a
clear expectation that there would be no further delays. However,
developing the necessary approach to gather and analyze needed
program and activity- level cost information will be a substantial
undertaking. While there is a broad recognition of the importance
of doing so, for the most part agencies have just begun this
effort. As discussed earlier in this report, agencies'
difficulties in developing performance planning and measurement
and cost accounting systems were

cited by OMB in its 1997 decision to delay the performance
budgeting pilots required by the Results Act. To further
discussion of those pilots, OMB recently suggested possible
formats and time frames for the pilots in a September 1998 paper
sent to federal agencies. In that discussion paper, OMB noted that
pilot projects would not be designated unless they could

fairly test the [Results Act's] concept of performance budgeting,
which it described as the application of multi- variate or
optimization analysis to budgeting. The paper described three
analytical alternatives that could be tested involving performance
tradeoffs (1) in the same program with changes in program funding,
(2) in the same program with no change in

38 HUD fiscal year 1999 performance plan, pp. 6- 7. 39 In October
1990, the nine member FASAB was established by the Secretary of
Treasury, the Director of the OMB, and the Comptroller General of
the United States to consider and recommend accounting standards
to address the financial and budgetary information needs of the
Congress, executive agencies,

and other users of federal financial information. Once FASAB
recommends accounting standards, the Secretary of the Treasury,
the Director of OMB and the Comptroller General decide whether to
adopt the recommended standards. If they are adopted, the
standards are published as Statements of Federal Financial
Accounting Standards by OMB and GAO.

B-282035 Page 34 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

total program funding, or (3) in several programs with shifts in
intra- agency funding between these programs. At present, OMB has
no definitive plans for proceeding with the performance budgeting
pilots. OMB solicited agencies' comments on the discussion paper
and on their capability to produce the alternative budgets
suggested in the committee report accompanying the Results Act.
According to OMB, no agency has as yet volunteered to participate
in the pilots. In its discussion paper, OMB stated that the
absence of designated

pilots or having fewer designations than required would be an
indication of agency readiness to do performance budgeting, and
would be discussed in the OMB report to Congress. These
developments reflect some of the broader tensions involved in
linking planning and budgeting structures. On one hand,
performance plans need to be broad and wide- ranging if they are
to articulate the missions and outcomes that agencies seek to
influence. Often these plans will include goals that the agency
can only influence indirectly because of responsibilities assigned
to other actors, such as state and local governments. On the other
hand, budget structures have evolved to help the Congress control
and monitor agency activities and spending and, as such, are
geared more to fostering accountability for inputs and outputs

within the control of agencies. Performance budgeting poses the
daunting task to agencies of discovering ways to address these
competing values that are mutually reinforcing, not mutually
exclusive. Strategies for bringing planning and budgeting
structures together must balance both sets of values. For example,
some

agencies might let their planning structures be the starting point
for making connections and seek to crosswalk broad overarching
goals to their many program activities. This approach is
consistent with a results orientation but can obscure the impact
of specific funding decisions. Other agencies might decide to use
the budget structure as their starting point and integrate
performance information into formats familiar and useful for
congressional oversight. Although this approach may be helpful in
focusing on the performance consequences of budget decisions, such
strategies risk confining performance information to structures
that may be too limited to fully address the broad mission and
outcomes of the agency.

Conclusions The fiscal year 1999 annual performance plans the
first called for under the Results Act showed potential for
providing valuable information that

B-282035 Page 35 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

can be used to better program performance. However, the linkage
between requested funding and performance goals is just one of
many elements that need improvement for these plans to be useful
for improving program performance. Top management within agencies
must provide the

consistent leadership necessary to direct the needed management
changes and to ensure momentum is maintained. Ultimately,
performance- based management should become an integral part of an
agency's culture. The transition process must include proven
change management approaches to be successful and sustained. In
addition, congressional use of resultsoriented program performance
and cost information in its decision- making about federal
policies and programs will also spur agencies' efforts to
implement the statutory framework by sending the unmistakable
message

to the agencies that the Congress remains serious about
performancebased management and accountability.

As we have noted in a previous report, one of the Results Act's
most conspicuous and useful features is its reliance on
experimentation. 40 This is certainly true regarding performance
budgeting. The act calls for one form of performance budgeting by
requiring that performance goals from an agency's annual
performance plan cover the program activities of the agency's
budget request while giving agencies flexibility in how this
linkage is made. This requirement, when coupled with OMB's
guidance that plans reflect the funding levels being applied to
achieve performance goals, constitutes the first governmentwide
expectation to directly associate budgetary resources with
expected results. In addition, the act also requires pilot
projects to test a specific form of performance budgeting that
presents varying levels of funding for varying levels of
performance. The

committee report accompanying the act noted that this pilot
approach is best because, while performance budgeting promises to
link program performance information with specific budget
requests, it is unclear how best to present that information and
what the results will be. 41

The fiscal year 1999 performance planning and budgeting cycle
produced a useful experimentation in connecting planning and
budgeting structures that accommodated unique federal missions and
structures. Some, but not all of the agencies we reviewed, began
to develop useful linkages. Moreover, challenges in performance
planning and measurement and 40 GAO/AIMD-97-46, March 27, 1997. 41
S. Rpt. No. 103- 58, p. 19.

B-282035 Page 36 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

deficiencies in cost accounting systems continue to confront
federal agencies. OMB has already cited these problems as the
reasons why performance budgeting pilot projects were not being
initiated. The progress that has been made and the challenges that
persist underscore the importance of developing a specific agenda
to ensure continued progress in better showing the performance
consequences of budgetary decisions. 42

The original goal for the act's performance budgeting pilot
projects was twofold: to allow OMB and agencies to develop
experience and capabilities towards realizing the potential of
performance budgeting, and to provide OMB with a basis for
reporting to the Congress on next steps and needed changes.
Although OMB stated in 1997 that agencies' financial

management systems were not capable of the specific form of
performance budgeting called for in the act, our review
demonstrates that some agencies were able to develop approaches to
make perhaps a more basic, but still useful, connection between
proposed spending and performance. These

fiscal year 1999 efforts to link performance goals and program
activity funding essentially constitute a first step toward
achieving the intent of the performance budgeting pilots. They
also provide a baseline from which

OMB could assess future progress and determine what changes, if
any, may be needed to the act and federal budget processes.

In addition to its longstanding responsibilities regarding the
formulation, review, and presentation of the President's annual
budget requests, OMB is the lead agency for overseeing a framework
of recently enacted financial, information resources, and
performance planning and measurement reforms designed to improve
the effectiveness and responsiveness of federal agencies. 43 As
such, OMB is well- situated to assess (1) the practicality of
performance budgeting pilots as currently defined in the law, (2)
agency approaches and continuing challenges to linking budgetary

resources and performance goals, and (3) options to encourage
progress in subsequent planning and budgeting cycles. 42 In
Managing for Results: An Agenda to Improve the Usefulness of
Agencies' Annual Performance Plans (GAO/ GGD/ AIMD- 98- 228,
September 8, 1998), we recommended that OMB develop an agenda to
address five key opportunities for improving performance plans,
including showing the performance consequences of budgetary
decisions.

43 The Results Act: Observations on the Office of Management and
Budget's July 1997 Draft Strategic Plan (GAO/ AIMD/ GGD- 97- 169R,
August 21, 1997).

B-282035 Page 37 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Recommendation to OMB In light of the indefinite delay of the
performance budgeting pilots required by the Results Act and the
experiences of agencies during the fiscal year 1999 performance
planning and budgeting cycle, we recommend that the

Director of OMB assess the approaches agencies use to link
performance goals and program activities in the fiscal year 2000
performance plans. OMB's analysis, building on our review of
fiscal year 1999 performance

plans, should develop a better understanding of promising
approaches and remaining challenges with respect to the concept of
performance budgeting within the federal government. OMB's
analysis should address, for example:

 the extent of agencies' progress in associating funding with
specific or sets of performance goals,  how linkages between
budgetary resources and results can be made

more useful to the Congress and to OMB,  what types of pilot
projects might be practical and beneficial, and  when and how
those pilot projects would take place.

On the basis of this analysis, we recommend that OMB work with
agencies and the Congress to develop a constructive and practical
agenda to further clarify the relationship between budgetary
resources and results, beginning with specific guidance for the
preparation of agencies' fiscal year 2001 plans. We further
recommend that this analysis and the resulting agenda become the
foundation for OMB's report to the Congress in March 2001, as
currently required by the Results Act, on the feasibility and
advisability of including a performance budget as part of the
President's budget and on

any other needed changes to the requirements of the act. Agency
Comments On February 10, 1999, we met with the Deputy Director for
Management

and other OMB officials to discuss this report and our
recommendations; on February 19, 1999, we provided a draft of this
report to OMB for comment. At both our meeting and subsequently,
OMB provided technical comments orally, which we have incorporated
as appropriate. On March

26, 1999, OMB informed us they would have no written comments on
this draft. As agreed with your office, unless you publicly
announce its contents earlier, we plan no further distribution of
this report until 30 days from the date of this letter. At that
time, we will send copies to Senator Joseph

B-282035 Page 38 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Lieberman, the Ranking Minority Member of your committee; other
appropriate congressional committees; and The Honorable Jacob Lew,
Director, Office of Management and Budget. We will also make
copies

available to others on request. Major contributors to this report
are listed in appendix III. Please contact me on (202) 512- 9573
if you or your staff have any questions.

Sincerely yours, Paul L. Posner Director, Budget Issues

B-282035 Page 39 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Page 40 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Contents Letter 1 Appendix I Objectives, Scope, and Methodology

42 Appendix II Summary of Our Analysis

55 Appendix III Major Contributors to This Report

57 Tables Table 1: Complexity of Budget Structure Was Not
Significant in Allocating Funding to Performance Goals 18

Table 2: Planning Structure Was Not a Significant Factor for
Agencies That Allocated Program Activity Funding to Performance
Goals 23

Table I. 1: Plans Reviewed 43 Table I. 2: Characteristics and
Associated Classification Frameworks 45

Figures Figure 1: Using the Results Act's Flexibility to Align the
Annual Performance Plan With the Budget Account and Program
Activity Structure 6 Figure 2: BLM's Fiscal Year 1999 Performance
Plan Presents Many Goal Layers 10 Figure 3: USAID's Fiscal Year
1999 Performance Plan Links

Strategic Goals Directly to Performance Goals 11 Figure 4: The
Administration for Children and Families Uses

Consolidation to Link Program Activities to Strategic Objectives
13 Figure 5: The Health Resources and Services Administration Uses
Disaggregation to Link Program Activities to Sets of

Performance Goals 14 Figure 6: Agencies Allocating Program
Activity Funding to

Performance Goals in Fiscal Year 1999 Annual Performance Plans 17

Contents Page 41 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure 7: Concentration of Requested Spending Was Not Significant
in Allocating Funding to Performance Goals 19 Figure 8:
Commonalities Within Agencies' Program Activity

Structures Were Not Significant in Allocating Funding to
Performance Goals 20 Figure 9: Alignment of Budget and Planning
Structures Was

Significant for Allocating Funding to Performance Goals 21 Figure
10: EPA Proposed Aligning Budget and Planning Structures 22 Figure
11: Integrating Budget and Planning Documents Was

Significant for Allocating Funding to Performance Goals 24 Figure
12: The Internal Revenue Service Integrates Its Budget
Justification and Performance Plan 25

Figure 13: Simple Relationships Between Program Activities and
Performance Goals Were Significant for Allocating Funding to
Performance Goals 26

Figure 14: The Nuclear Regulatory Commission Aligns Budget and
Planning Structures to Create a Simple Relationship Between
Program Activities and Performance Goals 27 Figure I. 1:
Illustration of Characteristic 9 48 Figure I. 2: Illustration of
Characteristic 10 50

Abbreviations

ACF Administration for Children and Families BIA Bureau of Indian
Affairs BLM Bureau of Land Management CFO Chief Financial Officer
EPA Environmental Protection Agency HRSA Health Resources and
Services Administration HUD Department of Housing and Urban
Development IRS Internal Revenue Service NRC Nuclear Regulatory
Commission OMB Office of Management and Budget USAID U. S. Agency
for International Development VA Department of Veterans Affairs

Page 42 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Appendix I Objectives, Scope, and Methodology Appendi x I

Our September 1998 report on agencies' first performance plans
establishes an agenda for improving several elements of agency
plans, including showing the performance consequences of budget
decisions. Following the issuance of that report, the Chairman of
the Senate Committee on Governmental Affairs asked us to examine
in more detail how the plans linked expected performance with
budget requests. To do

this, our objectives were to  describe agencies' approaches to
linking performance goals and

budgetary resources,  examine characteristics that might be
associated with different approaches to linkage, and

 identify implications for future efforts to clarify the
relationship between budgetary resources and results.

Scope To address our objectives, we selected 35 fiscal year 1999
performance plans for review from departments and agencies 1
covered by the CFO Act. We generally focused on bureau- level
plans for each department but limited

our review to the three largest bureaus with discretionary
spending over $1 billion and/ or the two largest bureaus. 2 Table
I. 1 lists the agencies whose plans we reviewed.

1 In this report, we refer to a performance plan, whether of a
department, agency, or bureau, as an agency plan. 2 Discretionary
spending levels were used as an indication of the bureau's
relevancy to appropriators since discretionary funding is affected
by appropriations actions.

Appendix I Objectives, Scope, and Methodology

Page 43 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Table I. 1: Plans Reviewed

Data Collection To describe agencies' approaches to linking
performance goals and budgetary resources, we identified 12
characteristics that could be used to describe agencies' planning
and budgeting structures and the linkages

between them. For each characteristic, we developed a
classification framework for differentiating between plans based
on that characteristic. These classification frameworks involved
either straightforward counts of plan components (e. g., number of
strategic goals) or judgments based on the content and structure
of the plan. One staff member reviewed each plan

and classified the plan on each characteristic. To ensure
consistency in 1. Administration for Children and Families
(Department of Health and Human Services)

2. Bureau of Indian Affairs (Department of Interior) 3. Bureau of
Land Management (Department of Interior) 4. Department of Commerce
5. Customs Service (Department of the Treasury) 6. Department of
Defense 7. Department of Education 8. Employment and Training
Administration (Department of Labor)

9. Department of Energy 10. Environmental Protection Agency 11.
Federal Aviation Administration (Department of Transportation) 12.
Federal Bureau of Investigation (Department of Justice) 13.
Federal Emergency Management Agency 14. Federal Highway
Administration (Department of Transportation)

15. Federal Prison System (Department of Justice) 16. Food and
Nutrition Service (Department of Agriculture) 17. Forest Service
(Department of Agriculture) 18. General Services Administration
19. Health Resources and Services Administration (Department of
Health and Human

Services) 20. Department of Housing and Urban Development 21.
Immigration and Naturalization Service (Department of Justice) 22.
Internal Revenue Service (Department of the Treasury) 23. National
Aeronautics and Space Administration 24. National Institutes of
Health (Department of Health and Human Services) 25. National Park
Service (Department of Interior) 26. National Science Foundation
27. Nuclear Regulatory Commission 28. Occupational Safety and
Health Administration (Department of Labor)

29. Office of Personnel Management 30. Rural Housing Service
(Department of Agriculture) 31. Small Business Administration 32.
Social Security Administration 33. Department of State 34. U. S.
Agency for International Development

35. Department of Veterans Affairs

Appendix I Objectives, Scope, and Methodology

Page 44 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

judgments, another staff member also independently reviewed the
plans and the assessment on each characteristic. Differences in
judgments were addressed by having staff members jointly
reevaluate the coding of the

characteristic to resolve the difference. We then compiled our
assessments on plan characteristics into a database that was used
to profile agencies' first- year approaches to linking budgetary
resources with results. These characteristics generally fell into
two groups: characteristics describing agencies' budget and
planning structures (numbers 1 through 7 in table I. 2), and
characteristics describing agencies' approaches to linking these
structures (numbers 8 through 12 in table I. 2). Table I. 2
presents

additional detail on the characteristics used in this review.

Appendix I Objectives, Scope, and Methodology

Page 45 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Table I. 2: Characteristics and Associated Classification
Frameworks Characteristic Description A. Characteristics
describing budget and planning structures

(1) Number of accounts The number of budget accounts in the
Appendix of the Budget of the United States Government, Fiscal
Year 1999 from which agencies proposed to make obligations in
fiscal year 1999. (2) Concentration of spending a) Single account
Agencies were classified as having a single account if they
proposed to

make 75 percent or more of their proposed fiscal year 1999
obligations from one budget account. b) Multiple accounts Agencies
were classified as having multiple accounts if the amount of gross
obligations proposed for each account was less than 75 percent of
the agency's total proposed gross obligations. (3) Number of
program activities The number of program activities shown in the
Appendix of the Budget of the United States Government, Fiscal
Year 1999 from which the agency proposed to make gross obligations
in fiscal year 1999. When the Appendix does not list any program
activities under a particular

account, the account was deemed to have one program activity,
reflecting the entire budget account.

(4) Common program activity structure A common program activity
structure means that most of the agency's accounts contain program
activities with the same titles.

(5) Budget structure used in performance plan a) Changed structure
Agencies in this category proposed to substantially change their
account and/ or program activity structures in the Appendix of the
Budget of the United States Government, Fiscal Year 1999 from
those used in the previous year's Appendix.

b) Used fiscal year 1998 structure Agencies in this category
generally used the same account and program activity structures as
they did in the Appendix of the Budget of the United States
Government, Fiscal Year 1998.

(6) Number of strategic goals The number of goals that are related
directly to the agency's mission without any intervening plan
elements. According to the Results Act, agencies' strategic plans
are to contain general goals and objectives that elaborate on the
agency mission statement and provide a set of programmatic
objectives for the major functions and operations of the agencies.
We defined the first layer of goals under the agency's mission
statement as strategic goals regardless of how they were labeled
in the plan.

(7) Number of strategic objectives a The number of strategic
objectives, that is, goals that the plan related directly to the
agency's strategic goals as defined in (6) above. As in (6), we
defined this layer of goals as strategic objectives regardless of
how they were labeled in the plan.

B. Characteristics describing how agencies linked program
activities with performance goals

(8) Integration of performance plan with the agency's budget
request a) Full Integration An agency embedded its performance
plans in its justification of estimates such that the
justification could not logically or readily be detached from the
performance plan.

b) Separable The agency's plan was either (1) a separable
component of the agency's justification of estimates (e. g., an
appendix) such that justification readers could either turn to or
skip over the performance plan, but the plan would appear in the
justification's table of contents; or (2) an entirely separate
document that may or may not have been transmitted at the same
time as the justification. A user would need to read the plan, as
opposed to the justification, in order to understand how the
agency addressed Results Act requirements.

Appendix I Objectives, Scope, and Methodology

Page 46 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

(9) Program activities linked to b, c Agencies were placed in one
of five categories depending on the lowest performance planning
structure to which the plan linked program activities. (See figure
I. 1 for an illustration.) a) Strategic goal Plan related program
activities to strategic goals as defined in (6) above. b)
Strategic objective Plan related program activities to goals that
the plan related directly to the agency's strategic goals as
defined in (6) above. These goals may or may not have been labeled
strategic objectives by the agency. c) Performance goal Plan
related program activities to performance goals and/ or measures.
As defined in the Results Act, a performance goal means a target
level of performance expressed as a tangible, measurable objective
against which actual achievement can be compared, including a goal
expressed as a quantitative standard, value, or rate. For plans in

this category, a program activity was associated with each
individual performance goal/ measure.

d) Other Plan related program activities to a structure other than
its strategic goals, strategic objectives, or performance goals.
In many cases, this structure was a business line or some other
unit for which a single goal statement was not expressed.

e) None Agencies were placed in this category if the performance
plan did not relate program activities to any of the above
structures (strategic goal, strategic objective, performance goal,
or other) in their performance plans. (10) Plan associated dollars
with Agencies were placed in one of six categories depending on
the lowest performance planning structure for which the plan
presented dollar amounts. (See figure I. 2 for an illustration.)

a) Strategic goal Plan presented dollar amounts for each strategic
goal. b) Strategic objective Plan presented dollar amounts for
each strategic objective. c) Set of discrete performance goals
Plan presented dollar amounts for any set of performance goals
presented in some combination other than as described in (a), (b),
(d), or (e).

d) Performance goal and/ or measure Plan presented dollar amounts
for each performance goal and/ or measure.

e) Other Plan presented dollar amounts for a unit of analysis
other than strategic goals, strategic objectives, or performance
goals. f) None Plan did not present dollar amounts for any
performance planning or other type of structure.

Appendix I Objectives, Scope, and Methodology

Page 47 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

a While we quantified strategic objectives as defined, the plan
may have contained other goal layers between strategic objectives
and annual performance goals. b We reviewed linkages between the
program activities and performance goals presented in the plan.
This characteristic did not assess whether all program activities
were listed and covered in the performance plan. c If accounts
were linked to the planning structure, the underlying program
activities were also presumed to be linked to this structure. d
When a plan contained performance goals distinct from performance
measures, reviewers considered whether this assessment would
change if the word measure( s) was substituted for the word goal(
s). If so, measure( s) were used as the unit of analysis instead
of goal( s). If agencies linked program activities to a structure
other than performance goals (i. e., an intervening structure

such as a strategic goal or objective), the plan reviewer
determined this relationship by examining how program activities
were related to the intervening structure and how the intervening
structure was related to performance goals.

e The set of goals ranged in size and scope. For example, some of
these plans presented allocations of funding to strategic goals or
objectives, which represent discrete sets of performance goals.
(11) Relationship of program activities to performance goals and/
or measures d a) One program activity to one goal Agencies were
placed in this category if a program activity was linked to one
performance goal. b) One program activity to many goals Agencies
were placed in this category if a program

activity was linked to more than one performance goal. c) Many
program activities to one goal Agencies were placed in this
category if more than one program activity was linked to one
performance goal.

d) Many program activities to many goals Agencies were placed in
this category if more than one program activity was linked to more
than one performance goal. e) Could not be determined Agencies
were placed in this category if the plan did not convey how
program activities were related to performance goals. (12) Funding
allocated to a discrete set of goals and/ or measures e Plans that
allocated funding to a discrete set of goals (a) generally showed
how program activities and their requested funding were allocated
among

performance goals/ measures or sets of performance goals/ measures
(plans met this criteria even if only discretionary funding was
allocated) and

(b) used sets of goals/ measures that were unique (i. e., a single
performance goal/ measure is related to only one strategic
objective or strategic goal).

Appendix I Objectives, Scope, and Methodology

Page 48 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure I. 1: Illustration of Characteristic 9

Example 9( a)

Strategic goal 1

Strategic objective 1 Performance goal 1 Performance goal 2
Strategic objective 2

Performance goal 3 Performance goal 4

Strategic goal 2

Strategic objective 3 Performance goal 5 Performance goal 6
Account 1

Program activity 1

Program activity 2

Program activity 3

Program activity 4

Program activity 5

Example 9( b)

Strategic goal 1

Strategic objective 1 Performance goal 1 Performance goal 2
Strategic objective 2

Performance goal 3 Performance goal 4

Strategic goal 2

Strategic objective 3 Performance goal 5 Performance goal 6
Account 1

Program activity 1

Program activity 2

Program activity 3

Program activity 4

Program activity 5

Appendix I Objectives, Scope, and Methodology

Page 49 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Strategic goal 1

Strategic objective 1 Performance goal 1 Performance goal 2
Strategic objective 2

Performance goal 3 Performance goal 4

Strategic goal 2

Strategic objective 3 Performance goal 5 Performance goal 6
Account 1

Program activity 1

Program activity 2

Program activity 3

Program activity 4

Program activity 5 Example 9( c)

Appendix I Objectives, Scope, and Methodology

Page 50 GAO/ AIMD/ GGD- 99- 67 Performance Budgeting

Figure I. 2: Illustration of Characteristic 10 Strategic goal 1

Strategic objective 1 Performance goal 1 Performance goal 2
Strategic objective 2

Performance goal 3 Performance goal 4

Strategic goal 2

Strategic objective 3 Performance goal 5 Performance goal 6

Example 10( b) Strategic goal 1

Strategic objective 1 Performance goal 1 Performance goal 2
Strategic objective 2

Performance goal 3 Performance goal 4

Strategic goal 2

Strategic objective 3 Performance goal 5 Performance goal 6

Example 10( a)

*** End of document. ***