Paul Posner is director of the public administration program at George Mason University and former director for the Government Accountability Office's work on federal budget and intergovernmental programs. ()
The administration finally released the federal budget in a prolonged rollout that started with the budget and finished with the analytical perspectives and historical tables. Much attention is devoted to the top line – how much is the deficit and debt projected to be and what are the overall priorities that this administration has decided to support?
This is the 40,000-foot level but it doesn't have much to do with how budget authority is carved up among agencies, programs and activities. It turns out that the most critical parameter shaping those decisions lies in the deep recesses of the budget that is rarely discussed – the appropriations account structure. These basic accounting categories are the fundamental building blocks not only for appropriations but for agency budget formulation.
There are about 1,400 appropriations accounts across the federal budget. But that’s not all. Beneath this level, there are over 8000 program, project or activities or PPAs. Accounts and PPAs have widely different orientations across the federal budget which are determined by appropriations committees in conjunction with agencies. Some accounts are framed as objects of expense, e.g. personnel, construction, contracts. Other accounts are organizational, e.g. office of the secretary, inspector general. Still others are based on programs or even strategic goals, e.g. EPA’s strategic goals which are reflected in PPAs across its appropriations structure.
So far, this sounds technical and far removed from the business of determining priorities and results. Nothing could be more wrong. The accounts and PPAs have two major consequences:
They shape the tradeoffs that will inform decisions by the executive and appropriations on an agency’s budget request. If an agency’s accounts are focused on objects of expenses, that will mean that the budget discussion will gravitate around tradeoffs across the means of federal operations, e.g. more for salaries, less for contractors. On the other hand, a programmatic account structure will focus budget deliberations around deciding how to allocate funds across competing programs or even strategic goals.
They shape budget execution because agencies are generally held accountable for spending the amounts appropriated by account. And even within accounts, appropriators require them to notify them of changes across PPAs. Some agencies like DOD have flexibility to transfer funds across accounts, but this is relatively unavailable elsewhere
The perennial unheralded budget building block, the account structures and PPAs have been seized by Congress and the administration to frame recent governmentwide initiatives on performance budgeting and sequestration. As the only comprehensive framework defining programs and activities across the budget. – however inconsistent – the budget accounts were used by the Bush administration to define the units of analysis for assessing performance under the Program Assessment Rating Tool (PART). As many will recall, OMB and agencies teamed together to give ratings to each of these “programs”, with the intent of influencing budget and appropriations decisions. The inconsistencies of the account structure in fact inhibited the ability of OMB to make tradeoffs among PART programs and required the agency to institute workarounds to rationalize coverage.
Most recently, the sequester imposed by the 2011 Budget Control Act used PPAs as the fundamental unit of analysis for implementing so-called across the board cuts.
Occasionally, there is a document that lays bare the actual contours of budget decisions. The GAO provides such a portrait in its excellent report on the implementation of the 2013 budget sequesters. The report shows the lengths that agencies went to in mitigating its worst effects, yet nonetheless furloughs, project delays and other real cuts could not be avoided.
The congressional designers of the sequester attempted to ensure that cuts would be allocated across the board evenly and applied to every PPA across the federal budget. Yet, one comes away from this report with the conclusion that the cuts were anything but even and across the board. Some programs like social security and Medicaid were exempt.
The effects of the sequester varied in no small part due to differences in the PPAs themselves. First agencies had variable degrees of freedom to shift money across PPAs and even across appropriations accounts. Second, the PPAs themselves gave agencies widely different ranges of flexibility to manage cuts.
The Agriculture Department, for instance, had 923 PPAs that are very narrowly defined which limits agency’s flexibility – many of the PPAs are defined as specific research locations, county offices or projects. As a result, USDA had to sequester funding for each of these locations and offices without regard to relative priorities or demand across these services. Some agency PPAs were composed entirely of salaries and related expenses, requiring cuts to be visited almost exclusively on direct federal employees in those agencies through furloughs and other actions.
Some agencies were able to use transfers across accounts and reprogramming within accounts to blunt the effects of furloughs and other sequestration actions. NASA was able to support long term space exploration priorities by transferring funds across accounts and the Customs and Border Protection shifted funds from its border fence technology account to salaries accounts to reduce furloughs.
The picture drawn by the GAO report shows a government budget process that is highly entrepreneurial and improvisational. Proactive leadership, strong support from interest groups and publics and active Congressional intervention had much to do with who won and who lost in the sequestration struggles of the past two years.
This is absolutely consistent with what we teach about our system of government. After all, in a democracy, the relative strength of interests and priorities should be determined by political officials who have an election certificate on their wall. But only some interests and values are protected through this process. Others bear a disproportionate impact. For instance, agencies used carry over balances to avoid or limit furloughs. This protects federal employees, but at the expense of the future beneficiaries that those balances were designed to protect.
One wonders if we can do better. One place to start is to think more systematically about how to structure those accounts and PPAs which are so fundamental to determining winners and losers in budgeting. Other nations have restructured their accounts to align better with performance goals; France and Italy are two that come to mind. We might undertake such a project one day ourselves, with Congressional appropriators and executive officials sitting down together to fashion a budget structure that facilitates easier tradeoffs across competing claims for limited resources. The process we have today satisfies many important interests in our democracy. But it is no way to run a railroad.