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WebMemo #690 on Federal Budget

March 17, 2005

Performance-Based Decisions in the President's 2006 Budget

By and

The President's FY 2006 budget proposal focuses on demonstrable results and reflects a willingness to hold programs and agencies accountable if they fail to perform. The President's budget was released with the third round of Performance Assessment Ratings Tool (PART) scores, which are a way to gauge the effectiveness of government programs. The budget relies on PART scores to support terminating 99 programs and significantly reducing 55 others. In using PART so sensibly, the President demonstrates his resolve to hold the line on wasteful spending.

 

PART: A Government Report Card

Commissioned in 2002 and produced annually by the White House's Office of Management and Budget (OMB), PART assesses the purpose, planning, management, and accountability of individual government agencies.[1] Each agency or program receives an overall grade from "effective" to "ineffective" by combining the scores in these four areas. "Results not demonstrated," which is a temporary ranking, indicates that a program or agency cannot even measure its effectiveness. More than 600 government programs and agencies have now completed their initial PART reviews, while the remainder will undergo this process in the next two budgets.

 

Many programs and agencies do not stand up well to this scrutiny. Only 15 percent of the programs evaluated were rated "effective," although another26 percent came in at "moderately effective." A quarter by at "adequate," 30 percent were rated "results not determined," and 22 programs were found to be "ineffective."

 

2005 PART Results

 

Budgeting Based on Performance

The President's FY 2006 budget proposal cuts spending on programs that fail to make the grade. In fact, there is an encouraging correlation between performance and spending.

 

Percent Change for FY 2005 to FY 2006 [2]

Program Rating All Spending Percentage change Discretionary Spending only
Percentage Change
  
Effective  + 3.1 %  + 1.2 %
Moderately Effective  + 2.5 % [3]  + 1.3 %
Adequate  + 1.2 %  - 3.2 %
Results Not Determined  - 1.5 %  - 4.0 %
Ineffective  - 19.7 %  - 21.2 %

These numbers are encouraging, but there is room for even more fiscal tightening. The nearly 20 percent reduction in spending on "ineffective" programs could have been more than 40 percent if the budget had not reprogrammed nearly $4 billion of the reductions into additional spending on similar budget items.

 

Substantiating the Cuts and Reductions

Released shortly after the President's budget, Major Savings and Reforms in the President's 2006 Budget details all of the budget's major cuts and reductions.[4] Each page summarizes a funding proposal, gives background on the program or agency affected, and documents the reasons for the reduction in spending.

 

All told, the President's discretionary budget outlines $8.8 billion in savings from the 99 terminations and $11.2 billion in savings from 55 program reductions and other reforms. Because of the reprogrammed spending mentioned above, this number does not translate directly into deficit reduction, but nevertheless, it is a logical step to trim the growth of the federal budget by targeting the marginal and ineffective spending.

 

The Next Step

The President's list of 155 savings options, largely grounded in PART evaluations, provides a $20 billion opportunity for members of Congress. Congress should make the most of this chance by adopting the savings while foregoing any reprogramming of these funds elsewhere.

 

Keith Miller is Research Assistant in, and Alison Acosta Fraser is Director of, the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.



[1] Program Assessment Ratings Tool, Budget of the United States Government, Fiscal Year 2006, http://www.whitehouse.gov/omb/budget/fy2006/part.html.
[2] Data from Program Assessment Ratings Tool, Budget of the United States Government, Fiscal Year 2006, with calculations by the Heritage Foundation.
[3] Figure excludes Medicare (11.3 % increase with Medicare included).
[4] Major Savings and Reforms in the President's 2006 Budget, /static/reportimages/CD5447552D9501C52CE384B122FEA6AB.pdf

 

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