the

Office of Management and Budget

welcome to the Evelyn Y Davis studios at

the National Press Foundation funding

for today's webinar on OMB and the

federal budget was provided by the David

Swit endowment Evelyn Y Davis and the

Evelyn Y Davis Foundation and the npf

training fund it's produced in

collaboration with the Center on

Congress at Indiana University and the

regional reporters Association and it's

coming up right now the National Press

foundation is a nonprofit dedicated to

helping journalists cover complex topics

with depth and accuracy our mission

includes journalists around the US and

around the world welcome back

I'm Linda topping stripe fell director

of programs at the National Press

Foundation joining me in the Evelyn Y

Davis studios is Kathleen pare off a

public and private sector consultant on

federal funding issues she's a 29 year

veteran of the Office of Management and

Budget having worked on defense nuclear

security energy space science housing

and other issues Kathleen welcome thank

you very much I'm delighted to be here

as we look ahead to the release of the

President's budget on Monday journalists

in Washington and elsewhere are trying

to get their arms around what's

happening here

OMB has done a lot of work to prepare

the White House proposal you've got some

slides can you take us through it I'd be

happy to and I'll begin by talking a

little bit about the history and overall

mission of OMB to provide some context

OMB goes back to 1921 when it was

actually called the Bureau of the budget

and it was located in the Department of

the Treasury it was in 1939 that it was

moved to the Executive Office of the

President and then in 1970 it was as a

result of the Ashe Commission provided

additional responsibilities to help the

president not only prepare the budget

but also to coordinate executive branch

management and so as a result it was

renamed the Office of Management and

Budget today it is the largest component

of the executive office of the president

and it is a powerful arm of the

presidency regardless of party whose

work is is not very visible but it has

certainly felt in many places this

mission statement provides an overview

of the the key components of what OMB

does policy budget management and

various regulatory regulatory review

over the last few years Congress has

also given OMB additional statutory

responsibilities I can just mention some

of them that relate to the government

performance and results Act additional

responsibilities related to overseeing

procurement particularly for technology

systems intellectual property

cybersecurity etc a question OMB is in

the executive branch is it considered

nonpartisan that's a very good question

let me just say that the the institution

is small it has less than 500 people

right now I think between 450 and 470

there is a layer of you know there are

people there who are political

appointees obviously in the number of

those varies but it's a it's a thin

layer for the most part and so the staff

are nonpartisan the culture emphasis

there is neutral competence and that

means that when there's a new

administration that comes in there's a

there's a transition period obviously

because if there's been a change in

administration sometimes there's at

least in the beginning a little

of distrust because these are the same

people who've just been working with the

previous the previous administration but

normally within six months or so the new

appointees learn of what the staff are

really about and that is to help the

president whoever that president is

whichever party and to support the

presidency it's a it's a staff bring a

longitudinal memory they bring a lot of

knowledge about how things work about

the programs and soon political

appointees realize that's a value to

them

great I've started to talk about some of

the points that I want to make here

about the strengths and challenges of

staff at OMB and as I noted earlier

there's a very strong culture of

professionalism emphasis on neutral

competence that focused on supporting

the president regardless of party and

who are the staff were they

most of them have advanced degrees like

the CBO staff with whom we work closely

both hard and soft sciences are

represented there interestingly in my

former division the last division I

headed there which was national security

I had a chemist I had a physicist I've

had engineers working for me I had a

astrophysicist so depending on the

programs that examiner's have

responsibility for we bring in and try

to hire the kind of appropriate staff

but I'd say most of the staff have

probably policy degrees or business

backgrounds as I said earlier the staff

is small and actually it's come down

over time while at the same time OMB has

been given more statutory

responsibilities it's because it's small

and because of the nature of the work

which is fairly fast-paced it's a rather

horizontal organization there's not a

lot there not very many layers three

four layers at the most

and and things move through that

organization fairly quickly if there are

issues that have to be taken up the line

for decisions and that's I think one of

the great appealing factors at least for

me too for working in an organization

like that rather junior people can have

access to the director and in a major

organization like DoD that one obviously

happen over time there's been an effort

to bring more transparency to the public

about OMB and I'll talk about that a

little bit later in terms of the kinds

of online data sources we have which I

think would be of interest to

journalists and other stakeholders I'm

glad you said that and I'm gonna

interrupt for just a minute to make the

point that at the end of this slide

presentation there are links to some

fantastic resources for journalists

datasets and websites that can be very

very helpful so whether or not you're

able to stay with us for the whole

presentation I encourage you to skip

forward to the end in this recorded

version and make use of those resources

and thank you for including them I think

that that development is really rather

recent and I think it's a very welcome

one excuse me let me get one of the

other points I want to make about

improving federal management and this is

a point that I will return to several

times is the challenge therein

we're a small organization improving the

overall federal management of the vast

federal government is obviously not just

Owen B's responsibility but all of the

federal agencies nevertheless we play a

significant role in terms of providing

circulars and guidance on a whole

variety of issues which I'll talk about

in a little

more detail but one of the things just

as a staff member I could comment on is

that each administration has a different

sort of set of issues that they wish to

focus on in terms of management a

different approach often so

unfortunately you don't get the kind of

consistency sometimes at least at the

staff level that we would like in terms

of focus this is the organizational

structure of OMB I want to make just a

few key points obviously the office of

the director is at the top of the

organization and within it you have your

general counsel your office of

legislative affairs which is a very key

office that manages OMB relationship

with the hill and that means certainly

managing relationships with the

appropriators it means making sure that

the administration gets its views up to

the hill there's something called

statements of administration position

colloquially an OMB referred to as saps

and these are documents prepared by OMB

staff about where administration signals

its position on bills that are going

through Congress either appropriations

bills or authorizations authorization

bills and will also signal not only sort

of have comments about some of the

substance but will have a bottom line

signal about whether the administration

is considering opposing that how

strongly they oppose the bill or support

the bill or even if they're intending to

veto it and does the public have Aten by

the public I mean journalists have

access to the SAPS the PSAPs generally

are placed on the White House OMB lab

and

I have the reference to that later great

so yes you can get that or you can call

the Office of Communications within the

director's office and and they will

certainly provide that information if

it's not on web on the web quickly

enough I'm not going to talk about each

of these officers in great detail but

the budget review office is a critical

office that sort of that has

responsibility for pulling together the

entire budget and that is just a really

really really complex and intense

endeavor especially between September

and February when this office has to

manage the the process by which we

develop the budget how we interact with

the agencies and once we get all the

decisions and it's that office that

pulls together all of the numbers into

an enormous database is responsible for

printing the budget so it's a very very

key office there's also the performance

and Personnel Management office that is

responsible for some of the management

and an emphasis on performance and again

I'll talk about that in a little bit

more detail later as I indicated earlier

there are also statutory

responsibilities that have emerged over

time more than just putting together the

budget one is the office of federal

financial management the office of

federal procurement policy the office of

government and information technology

and the office of information and

regulatory affairs these and lastly the

intellectual property enforcement

coordinator so these are offices where

Congress has specifically said we care

about these functions and we want Owen B

to have some staff dedicated to these

particular functions so it's they're

obviously related tangentially to the

budget but they're they're separate

offices and they have very separate

functions the for instance the office of

procurement policy puts out a lot of

guidance to all of the agencies on

procurement policy and issues related to

contracting versus not contracting

issues related to competition on

contracts and and a host of other detail

issues then you notice in the chart

below the sort of lime green line it's

called resource management offices there

are five different divisions there and

our offices and each essentially every

federal agency and every federal program

has someone in those resource management

offices who has budgetary policy

management responsibilities for that

both for the agency and and and for the

or for a program there in the this this

really illustrates what you said earlier

about the horizontal structure of OMB

you're covering such a wide range every

issue every program that the government

funds is stretched out along that that

bottom line yes so for a journalist if

you're interested in a particular

program you can be sure that there's

someone in oh em B who's got a little

bit of a handle on it that's correct I

might add and is this something I forgot

to note earlier OMB generally in fact

the entire time I was there has a rather

strong policy of not giving ax the the

budget examiner's are making them

available easily to journalists right as

you

may have heard so if you have questions

generally the OMB policy is that you

call the office of communications and

they will then get the information from

the budget examiner's and they will

communicate it back to the journalists

sometimes when there is a lot of

discussion and follow-up questions they

will have the examiner on the phone and

with with the journalists but that

doesn't happen a lot so there's there's

openness but there's also I think an

attempt to first of all allow the

examiners to do their their day-to-day

work and secondly to you know preserve

the the president's discretion in terms

of what he or she is going to propose in

the budget without quote unquote leaking

it to journalists yes we we understand

there's always there's always a tension

yeah between journalists and the White

House and frankly in this administration

there may be more tension than there has

been previously the Obama administration

is known for trying to keep hold

information very closely and use their

own resources to reach out and that's

that's just part of the part of the

process yes so I think again I'm not

going to go through each one of these

offices but it's just the point that you

well made there's there's someone in

those are Mo's that has responsibility

for each and every program now having

said that the point that you also made

which was worse it's a small institution

and so if you're talking about the

national security apparatus the we can't

be as in-depth as we probably would like

to be I mean if I think AB OMB staff had

their way we would probably double our

size but you know that's we're not

supposed to say that and not politically

correct but I think given the staffing

that we have we it's a fairly impressive

home

information that the staff have and how

knowledgeable they are about some of the

history of programs I want to talk a

little bit now about the budget process

because the budget does take up an

enormous amount of time and staff work

and what I've done here is to highlight

something that's not very clear to many

people outside of OMB and that is that

the there really are somewhat two

different processes processes for

developing the budget with respect to

DoD and other agencies let me talk about

all of the other agencies first there is

a circular called a eleven and that is

on the website that I will show later

which describes and prescribes guidance

I should say for federal agencies in

terms of what they're supposed to do

with respect to their budget and that

might be a very good circular for

journalists to look at because it really

gives you an insight into what only B

expects in terms of the development of

the budget from the agencies and what

they're required to submit but in

September

almost every agency has to submit their

full budget requests to the Office of

Management and Budget and it's expected

to be an official budget request that is

approved by the head of the department

or the small agency then in September

and October OMB budget examiner's review

these requests and it's I might add it'd

probably be more accurate to say a lot

of OMB staff beyond even the budget

examiner's review those requests the

management side as well is looking at it

and that process involves than a series

of what we call budget hearings with

program and usually budget staff from

the agencies the hearings can go on for

several weeks and from that process

budget examiner's develop their list of

issues what I'll call policy issues

where they think there's going to be a

need for involvement our policy decision

by the LMB director on how much

resources how or whether even to fund a

particular program or whether the budget

that's come in has actually funded some

high priority initiatives of the

president up until they get the request

from the agency in September budget

examiner's are really not involved in

the internal discussions of the agencies

for the most part the agency's view that

is their time to develop their options

and their requests and they don't want

budget examiner's involved and

understandably sure the second thing I

want to note is that when that budget

comes in for the most part it's not a

it's a one-year budget it doesn't have

an out year program plan and I'm making

that point now because I'm going to use

that as a key difference with DoD in the

case of DoD we do not get a budget

request in September as approved by the

Secretary of Defense ideally of course

OMB staff would like that to enhance our

ability to really understand and review

it but really since the beginning of DoD

that hasn't happened and the reason that

and this is the argument that's

succeeded in convincing policy officials

they're too big they're too big they're

too complex they can't get their budget

done by September so what has developed

in lieu of that is what it's referred to

as a joint review and in this case we do

have budget staff participating within

do

during their process sitting in on the

meetings and they're allowed to serve no

signal as they do only be thoughts

positions concerns during that process

so that's a very that within Irwin B

there's been a lot of discussion about

that is it's which is the better way of

doing the budget and there are pros and

cons from both sides the second point

about the DoD budget that is different

from the non-defense side is that DoD

and it really goes back to secretary

McNamara puts a great emphasis on

program budget systems review and and it

does a five-year program budget plan

each year that becomes the starting

point for the successive year so when

they put together a budget they've got

of five years sometimes six year plan

and in the budget we have those figures

those are all whatever is agreed to by

OMB is is put into the official budget

request so that the out your numbers

have real policy content whereas for all

of the non-defense agencies they're

really just placeholders so it seems if

if DoD is planning five and six years

out it seems like each year's individual

budget would be easier to do it's it

seems it's almost set because last year

it was year two now it just becomes year

one with some tweaking doesn't work that

way well it's a good question

you would think that's the case but it

still involves a lot of work because

there's there's a lot of change and

usually what happens is that the out

your plan tends to be a little

optimistic and the execution in

particular programs or issue

that have come up during the year

meaning that we have to tweak things but

it certainly I think does make it a

little bit easier because you have a

good base from which to start and it's

also related to this idea that weapons

systems are developed over take more

than anywhere to build and ships and

examine all that no it's exactly right

there's a lot of procurement funding for

programs that are spending over multiple

years and it makes a lot of it's it's

just very prudent to have that kind of

planning and to show what your your

liabilities are when you enter into a

contract for a new carrier or the f-35

so from Oh DoD unknown B's perspective

this makes a lot of sense and some

people argue it makes a lot of sense for

some of these domestic agencies as well

where especially where there's a lot of

construction and permanent major items

right and all of this information is

available to journalists in the budget

is that yes correct yes great is either

on the OMB website that I'll talk about

or also if you go to agency websites

most agencies these days have their

budgets and they're what we call

congressional budget justifications

online and there you get even more

detail on particular programs so for an

example view the gets coated I think

it's DoD gov and put in budget or put in

CFO and and you'll get lots and lots of

information right terrific

I want to make a few observations about

the budget process beyond the just what

we've talked about so far first of all

the budget requests that come over from

the agencies are normally focused on

what we call the discretionary budget

and what does that mean that is the

budget that is subject to review by the

appropriators on a year-by-year basis

that is the those are all of those

programs where if there's no

appropriation bill there's no funding

for those programs unless there's some

unobligated balances from previous years

where they can continue to spend and

that's roughly a trillion dollars or so

in the budget but some of your biggest

spending programs particularly on the

domestic side are called mandatory

programs and that means that they're not

subject to that appropriator review each

year and we're talking about the ones

you might suspect Medicare Social

Security military retirement veterans

disability payments those are programs

where the spending just continues

regardless of appropriation action

because the programs have been

authorized so in such a way that

spending occurs if people apply for

benefits and meet their criteria for

those benefits money then it's dispersed

by the agencies running those programs

at the same time that there's not a an

annual review of these programs it

doesn't mean that the budget can't

include proposals to modify these

programs and sometimes that happens

sometimes I would say usually there are

some mandatory proposals in the budget

sometimes a really major sometimes

they're they're not so major but clearly

if there's going to be any grand bargain

at some point for the budget we would

need at least in the eyes of most people

we would need to have some proposals to

impact both the tax revenue side and

some of the mandatory programs but

obviously that's a major political

debate that we haven't resolved so the

point here is that the mandatory side of

that budget is really going to be

impacted by authorization action and

sometimes you hear the term

reconciliation bills that will change

the way those programs are structured

and thus either increase or decrease

mandatory spending and lastly I want to

talk about the economic projections

which are obviously and then that's an

uncertain endeavor but those are very

important because they will impact the

projections of tax revenues and spending

particularly again for the mandatory

programs and OMB working with CEA

the National Economic Council Treasury

economists come up with their economic

projections and that will have an impact

on programs like again retirement and

other social insurance benefit programs

that are tied by law to let's say

consumer price indices Medicare Medicaid

spending or tied to the price of medical

services interest on the debt it's

linked to market interest rates size of

the budget surplus or deficit so that's

a a major part of that federal budget

process that occurs I think usually

beginning you know in the later fall the

meetings are a coin between the

economists of the agencies are the

entities I just talked about and then

when our budget goes up to the hill CB

we'll look at our budget and it comes up

with its economic projections and

there's always been a lot of debate

about OMB versus CBO economic

projections I would say two things

they're not that far off usually from

each other on the other hand small

differences over time can make a

significant have a significant impact on

some of the deficit calculations you

mentioned the useful online information

and the desire to provide that kind of

information to journalists who may not

be aware of it again to make the point I

think OMB has really tried to become

more transparent and and and this

administration I have I do have to give

them credit in terms of putting more

online than perhaps we have in the past

it may not be the kind of information

you always want but some of these tools

are fairly helpful and they may take a

little bit of work on the part of

journalists to to understand them but I

I think you can be surprised how much

information is there

first of all white house.gov slash OMB

that would be the first place that I

would always go to pretty soon we will

have the fiscal year 16 budget on there

but you've got not only the budget you

have historical budget tables going back

a long time you have fact sheets that

are prepared by OMB staff but they're

coordinated with the agencies and White

House policy councils there there's

going to be so they it's the best place

to get information on the

administration's initiatives

particularly cross-cutting initiatives

and lastly the budget appendix the

budget appendix probably takes up a lot

of time of the much of the time of the

budget review division that I was

talking about earlier

this is the part of the budget that the

appropriators really pay attention to

because it has a lot of detail that they

want to see it has proposed

appropriations language it explains what

we are intending to do with some of the

funds we are asking it contains

legislative proposals either authorizing

proposals or sometimes we'll put in

program changes actually in the

appropriation language so there's a lot

of information there it's fairly

technical so sometimes it it's not it's

clear and it could be to people who are

not involved in the preparation law can

I ask you about the historical budget

tables those are indications of what

budgets have been in previous years but

they also have projections in the budget

going forward to how do we find out how

much was actually spent by an agency in

a year not what they planned to spend

but at the end of the year is there any

kind of accounting how do we see if if

they're in the red or in the black in

terms of their own budget the historical

tables will provide you with what we

call budget Authority the amount of

money that was made available for a

particular program or what we call

budget function the federal government

is budget is broken up into major

functions like Oh 105 Oh is the defense

function and it also those tables also

provide information on what we call

outlays well and an outlay is what

actually is liquidated spent so you can

look at both and get a sense of what was

actually liquidated in terms of the

budget Authority there are also if you

look at the congressional budget

justifications you can get more detail

on that

and the mid-session review I haven't

talked about that that is a report that

is required of OMB and it puts it out

usually in the late summer and that will

also provide a sense of how outlays are

matching up with some of the projections

and and then it looks usually there's an

attempt to explain why there's some

differences very useful another website

that has been developed really in the

last few years is called performance gov

that contains informational and selected

federal agency goals and objectives as

well as key administration initiatives

it also has a program inventory for each

federal agency so if you want to know

see every single program that an agency

is responsible for you can go to here

and see it and it's actually quite

amazing when you look at the programs

and it sometimes will identify some

issues about redundancy and because

you'll see that you know for example

you're doing breast cancer research in

DoD and you're doing breast cancer

research and NIH integrates well why are

you doing it in DoD and there's some

answers to that but it's this kind of

information out there that certainly can

raise those sorts of questions another

website that's very useful is

usaspending.gov and there you can see

spending this is actually spending as

you were talking about not just what was

appropriated but spending by year by

agency by prime awardee that is the

contractor and location they also have

it if information on money provided in

terms of grants for example the state

and local governments

and actually it's not really until I

left him be that I started focusing on

this website and I'm impressed by how

useful it is and the kinds of analytic

tools that are embedded therein I put

together this very quickly just to give

you an idea I wanted to know hum

now this isn't this is how much money

has been awarded to the top ten

contractors so far in 2015

mm-hmm it took me it took me bending yes

it this is it took me probably ten

minutes to do this and that table was

just generated by that web site and you

can see obviously defense is a major

player here Lockheed Boeing United

Technologies Corporation but you can

also see that health is you know this

sort of gives you a sense of where the

priorities are McKesson Merck fight sir

and then Los Alamos consolidated nuclear

security those are contractors that are

running some of our Department of Energy

laboratories so I mean and this is just

one small example of where you can get

by going on I'm glad you mentioned that

USA spending because certainly every

regional reporter here in Washington is

familiar with that it's a great way to

find out what contracts are operative in

your state or the region right you are

reporting for you're absolutely right

the website called the recovery gov is

more focused it provides information on

the distribution of money from the

stimulus bill eight hundred and forty

billion stimulus bill during the

recession and then from the hurricane

sandy fund

Congress wanted that and so that was a

website was put up by the OMB let me

clarify is there still money

you spent or is this is some of this

money certainly with respect to

Hurricane sandy is still being out late

as we say yes okay still being spent yes

with respect to the stimulus bill I you

know I'm not totally up to speed on

whether there's still some money being

spent there my guess is there is because

some of that was construction funding

the contracts may have been led a long

time ago but there could still be some

money that's being spent under those

contracts and then you know and then

also underscores one of the points that

you learn when you're known would be

it's not always easy to spend money fast

right if it's salaries if it's benefits

the money goes out fast if it's money

that's going to construction procurement

it can go it can take seven eight nine

years to spend and then sometimes it's

not actually spent and then those

unobligated balances right we all

remember the controversy over the the

search for shovel-ready projects when we

were trying to spend to stimulate the

economy and that's exactly right there's

a tension between spending fast which is

what you want to do during a recession

and spending wisely effectively or

cost-effectively and that's a tension

you're always feeling I don't wanna be

but I guess that that's the nature of

the beast okay and then lastly sorry

another website a more general

government website called data.gov which

is not just focused on spending right

but also a great useful website

journalists will find you can talk about

it on data.gov databases that cover so

many areas of the government and things

that were reporting on it's really nice

'full exactly I I went in there just to

look at they didn't pulled up

information on the IRS

you want to look at individual tax

revenues by any sort of category it's

it's all there in a table and it the

table comes out for you you don't have

to do much work yourself so it's quite

impressed it's like a miracle

yes it's a great thing well that's sort

of the the summary of brings to an end

my my summary of OMB okay so so let me

ask this how many government programs

are evaluated on a regular basis and how

is that done and how are those

evaluations used to determine future

funding it's a very good question first

of all it takes money to evaluate a time

to evaluate programs well so it's an OMB

staffer I will give my bias as I wish

there were more funds and more staff

resources focused on evaluation having

said that there's a lot of work that

goes on actually during the previous

administration OMB developed something

called the program assessment rating

tool maybe you've heard about it it was

a tool that got a fair amount of

attention most of the agencies didn't

like it a lot of others particularly in

the academic world including Harvard

were thought it was a very good thing

but this tool was a set of questions

getting at the very issue you're talking

about how our programs achieving the

mission that they were designed to

achieve what kinds of outputs what kinds

of impacts and there was a lot of

discussion about what the differences

between an output and an impact and all

of those all of the federal programs

were evaluated using that tool and that

information was made public

obviously the next question then is well

how is that information used in the

budget development process it it is used

however at the same time it's it's one

factor sometimes when a program is not

performing very well the political

decision will be let's put more money

into it to improve it so it does achieve

the results because we want those you

know it's an important program from an

objective perspective there are times

when there will be decreases in funding

if the program isn't or even you know if

you look at OMB they have often put out

lists of programs that have been

decreased or actually terminated so it

does happen but at the same time I just

I guess would emphasize that it's one

factor that goes into the process it's

not always the determining factor I

think this administration has taken a

slightly different approach from part

and it gets to the point I think I made

earlier each administration has a

slightly different approach to the way

they do program management and

performance evaluation

you mentioned evidence-based analysis or

initiatives and that's a very that is a

high priority of this administration and

there are funds that have been made

available to look at certain programs

and to test certain programs and

approaches to see how they work I

personally think that there's an

extremely good way to to go and I hope

that we can expand this initiative more

in the future and it stays around and

won't disappear and then in the next

administration when the you know just

the bottom line is if you don't know how

your programs are working you're you

don't know what you're getting for your

money and I think in this day and age

that's just a big issue with a

constraint that we have on our own

resources

and especially with the sequester that's

even more the case absolutely and that's

probably a good note for us to close on

I hope that journalists out there are

thinking about how programs are

evaluated and when you're taking a look

at the budget look at the programs that

are important to your audience and find

out how they're working and how they'll

be funded in the future this has been

really really helpful thank you so much

Kathleen pair off and thanks again to

the David Swit endowment Evelyn Y Davis

and the Evelyn Y Davis foundation for

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