Once again, cooler heads have prevailed, and the United States will not default on its debt—at least not now. Federal agencies will once again be asked to do more with less, as they have so many times before--and Congress will continue to expect the highest possible level of performance from the Federal government despite these new spending cuts. They will also not hesitate to hold senior Federal officials accountable if things go wrong… especially if they occur in an individual Member’s district.
Throughout the government, federal managers are desperately figuring out how to cut costs while minimizing the effects those costs will have on key programs. It is clear, however, that even more fundamental changes will need to take place to help resolve our current debt crisis. Solving the crisis will take better financial data gathering from multiple sources, extensive analysis, and a systematic approach to optimize agency spending. Here are a few ideas senior managers can use:
First, Federal managers need to take a hard look at their budgeting information. Large cabinet agencies are multi-billion dollar operations and it can often be difficult to get a handle on how all that money is really spent… but it is not impossible.
Key leaders need complete and detailed information about how their money is being allocated and used on a regular basis. Employee input is also a very valuable tool in deciding what to cut and where. The workforce that is engaged day to day in these projects can help provide a true understanding of the impact of a proposed budget cuts and propose where true waste can be eliminated. Although leadership will make the ultimate decisions, it is the responsibility of every government employee to ensure that public funding is being spent appropriately.
Second, financial data and analysis needs to be useful to decision makers. Many managers shy away from budget management because the information and regulations can be intimidating. Those who work directly with an organization’s finances need to provide an easy to understand analysis, not in ‘accounting-ese’, so management can take the appropriate actions where necessary. Then, even managers who have been traditionally ‘budget-averse’ can insist on regular financial information and briefings to use as an integral part of their decision-making processes.
Finally, each agency needs to adopt a systematic approach to aligning their budget to their Strategic Plan. In the 1970s, the Federal Government used what was called a “zero-based” approach to budgeting. Missions agencies planned or hoped to accomplish were broken down, evaluated, and ranked against each other. As a result, agency managers were able to look at everything their organization did or might do, and make good decisions on which projects should continue and which should not.
This “Zero-based budgeting” process allowed decision makers to look at the consequences of not spending money on a project or activity. It was a great way to take a fresh look at programs that have been funded year in and year out, but may have outlived their usefulness. Managers in agencies dealing with budget cuts might consider this process as a way to review financial and performance data continuously.
Our recent debt crisis is not a “one-time” issue. The size of America’s debt, and the recent revision of our credit rating, means that we are going to be in an era of prolonged fiscal austerity in Government. The only way in which most agencies will meet the demands that will be placed upon them is with a comprehensive overhaul.
The government will not fix the long term issue by lopping off a program or two. Each agency will need to improve their financial data gathering and analysis and institute a systematic process to constantly review the quality of each program they are financing. In the event the benefits of a given program are not realized, issues need to be immediately recognized and actions should be changed.
It can be done—but it won’t be easy!
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