Problem: The specificity of much government budgeting leaves little room for flexibility on the part of managers. This often leads to inefficient operation and an exceccive amount of time being devoted to the budgeting process. Proposed solution: The President should begin the budget process with an executive budget resolution, setting broad policy priorities and allocating funds by function for each agency. Federal managers should focus primarily on the content of the budget, not on the process. A new executive budget resolution will help them do that. The President should issue a directive in early 1994 to mandate the use of such a resolution in developing his fiscal year 1996 budget. It will turn the executive budget process upside down. To develop the resolution, officials from the White House policy councils will meet with OMB and agency officials. In those sessions, the administration's policy leadership will make decisions on overall spending and revenue levels, deficit reduction targets, and funding allocations for major inter-agency policy initiatives. The product of these meetings--a resolution completed by August--will provide agencies with funding ceilings and allocations for major policy missions. Then, bureaus will generate their own budget estimates, now knowing their agency's priorities and fiscal limits. Beginning with their fiscal year 1995 submissions to OMB, departments and agencies will begin consolidating accounts to minimize restrictions and manage more effectively. They will radically cut the number of allotments used to subdivide accounts. In addition, they will consider using the Defense Department's Unified Budget plan, which permits shifts in funds between allotments and cost categories to help accomplish missions. OMB will simplify the apportionment process, which hamstrings agencies by dividing their funding into amounts that are available, bit by bit, according to specified time periods, activities, or projects. Agencies often don't get their funding on time and, after they do, must fill out reams of paperwork to show that they adhered to apportionment guidelines. OMB will also expedite the "reprogramming" process, by which agencies can move funds within congressionally appropriated accounts. Currently, OMB and congressional subcommittees approve all such reprogrammings. OMB should automatically approve reprogramming unless it objects within a set period, such as five days. While understandable in some cases, such earmarks hamper agencies that seek to manage programs efficiently. Agencies should work with appropriations subcommittees on this problem. Evaluation: Earlier uses of approaches similar to this have had positive results. Our own Environmental Protection Agency (EPA) tried a similar approach in the 1970s as part of a zero-based budgeting trial run. Although zero-based budgeting fell short, participants said, two important advantages emerged: a new responsiveness to internal customer needs and a commitment to final decisions. When participants voted to cut research and development funds because they felt researchers ignored program needs, researchers began asking programs managers what kind of research would support their efforts. EPA also found that, after its leaders had agonized over funding, they remained committed to common decisions. Typically, federal organizations experimenting with such budgets have found that they can achieve better productivity, sometimes with less money. During an experiment at Oregon's Ochoco National Forest in the 1980s, when dozens of accounts were reduced to six, productivity jumped 25 percent the first year and 35 percent more the second. A 1991 Forest Service study indicated that the experiment had succeeded in bringing gains in efficiency, productivity, and morale, but had failed to provide the Forest Service region with a mechanism for complying with congressional intent. After 3 years of negotiations, Washington and Region 6, where the Ochoco Forest is located, couldn't agree. The region wanted to retain the initial emphasis on performance goals and targets so forest managers could shift money from one account to another if they met performance goals and targets. Washington argued that Congress would not regard such targets as a serious measure of congressional intent. The experiment ended in March 1993. When the Defense Department allowed several military bases to experiment with what was called the Unified Budget Test, base commanders estimated that they could accomplish their missions with up to 10 percent less money. If this experience could be applied to the entire government, it could mean huge savings. Citation: 1993 National Performance Review, Chapter 1 Keywords: budgeting efficiency