BudgetFormulationand ExecutionLoBP GeigerS McCabe

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Slide1: 

The Budget Formulation & Execution Line of Business USDA Representative: Paula Geiger PMO Lead: Sandi McCabe Managing Partner, U. S. Department of Education June 6, 2007

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Vision Modern, interoperable, flexible, cost effective, and optimized solutions supporting all phases of the formulation and execution of the Federal Budget and linking budget formulation, execution, planning, performance, and financial information.

Slide3: 

Relationship With Financial Management and the FM LoB Budget Formulation & Execution LoB

Budget Formulation, Budget Execution, & Financial Management – per the Constitution (1787): 

Budget Formulation, Budget Execution, & Financial Management – per the Constitution (1787) “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law;” (Budget Formulation and Execution) “and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” (Financial Management) (Article I, Section 9)

Slide5: 

Policy Making: Resource Allocation ________________________________________ Post-decisional: Accounting, Control, Reporting Budget Formulation, Execution, and Financial Management - A Complete Cycle Policy Making Post-decisional Policy Making Post-decisional

Budget Formulation, Execution, and Financial Management - Components : 

Budget Formulation, Execution, and Financial Management - Components Policy Making  Decisional _________________________________________________________________________________________________________________________________________ _______________________________________________________________________________ Post-decisional  After-action _________________________________________________________________________________________________________________________________________ Financial Management Budget Execution Apportionments* Allotments, Suballot., & Allowances* Commitments* Obligations* Reprogramming* Budget Formulation Agency Budget Requests President’s Budget Request Legislative Action (Appropriations) Funds Control* Collections & Receivables Reporting Accounting* Payments Asset and Liability Mgmt Cost Accounting Performance Measurement * Key BFE LoB and FM LoB touch points

BFE LoB and FM LoB Coordination Activities: 

BFE LoB and FM LoB Coordination Activities BFE LoB representatives are participating in regular meetings with the FM LoB including the CFO Council’s FSIO Transformation Team meetings. BFE LoB PMO disseminates information on FMLoB/FSIO exposure draft documents to the budgeting community and consolidates and submits comments (e.g. CGAC and Funds Control Exposure Draft comments). Conducting a study and developing a Touch-Points document to highlight key intersections between Budgeting and Financial Management. BFE LoB is partnering with Treasury Financial Management Service (FMS) on a Budget Execution solution swim lane.

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Budget Formulation and Execution – The Nature of Federal Budgeting

Nature of Federal Budgeting: 

Nature of Federal Budgeting Budgeting is the process by which limited Federal resources are allocated among competing demands. It is a policy-driven process - inherently dynamic and fast-paced in response to political, economic, global, and (as witnessed last year) environmental events. Key participants are the President, Congressional leaders, over two dozen House and Senate Budget & Appropriations committees, OMB, CBO, and senior agency officials. Each of these key participants has the power to demand information in their own formats in their own time frames. “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law” (US Constitution: Article I, Section 9)

Federal Budgeting is Dynamic: 

Federal Budgeting is Dynamic Illustrative examples (nostalgia for US Budgeteers): August 1985 Gramm-Rudman-Hollings Act established deficit targets and sequestration requirements. Fall 1987 Bipartisan Budget Agreement following the “Black Monday” Stock Market crash. Oct. 1990 Budget Enforcement Act - new rules for constructing baselines; PAYGO for receipts & entitlements. Winter 1994 Republican Revolution and the government-wide shutdown. The current 2006 Democratic Revolution. Oct. 2001 decision to show Federal retirement costs on an accrual basis. Major disasters such as 9/11 and Hurricane Katrina. Presidential Transitions (every one is unique).

Budget Formulation and Execution LoB As Is State - Impetus for Change: 

Budget Formulation and Execution LoB As Is State - Impetus for Change Agency Analysis - Findings Primary agency tools for budgeting are Excel and Word A few agencies have integrated Excel & Word with databases A few agencies have successfully implemented elements of budget systems that contribute significantly to their productivity There have also been quite a few unsuccessful attempts at implementing systems – some fairly expensive BF&E modules from FM vendors have not worked

Business Analysis Findings: 

Business Analysis Findings Nine major business processes were identified as common to all agencies. Within these nine major processes, 59 business activities were identified with a high degree of commonality. However, at the next level of business specificity, there were significant process and workflow variances - reflecting inherent agency diversity characteristics. Also, the dynamic nature of budgeting necessitates that systems be flexible enough to readily accommodate changes to business processes. Agency Diversity Characteristics Budget size Political sensitivity Mission complexity Funding type (mandatory vs. discretionary, credit, revolving) Activity type (operational, services, regulatory, capital investment, grant-making, commercial-like, military) Organizational complexity (centralized, federated, field, international) Budgeting sequence (top-down vs. bottom-up) Different (and multiple) Congressional constituencies Nine Business Processes Pre-budget formulation Strategic business assessments Dept / agency budgeting Dept / agency submission to OMB OMB internal decision making Preparation and publication of the President’s Budget and Mid-Session Review Congressional submission and negotiation Tracking congressional action Budget execution

LoB Common Solutions Framework: 

LoB Common Solutions Framework Focus on Functional Capabilities The diversity and dynamic nature of budgeting business processes precludes traditional business process engineering approaches. However, these difficulties can be effectively bridged by focusing on solutions that enhance core functional capabilities of budgeting. These same core functional capabilities often apply to multiple business activities. Therefore, an architecture based on core functional capabilities will have broad applicability in transforming budgeting activities. Core Functional Capabilities Numbers manipulation (spreadsheets, reporting) Word processing and document publishing Database/data warehouse Tracking Collaboration (meetings, documents) Data collection (numbers & text) Information sharing Analysis and modeling

LoB Target Architecture: 

LoB Target Architecture Solutions consist of Functional Capabilities that support multiple business processes. Applications are flexible integrations of modules that connect via open data exchange technologies and can be reused. Functional Capabilities Modules in turn consist of service components consistent with a Services Oriented Architecture. Federated – application solutions are a combination of central, shared, agency-unique, Open, GOTS, and COTS components. Capabilities Solutions that enhance the effectiveness of performing budgeting functions: Technology Agency Budgeting Tools Analytical Tools Budget Performance Integration Collaboration Data Collection & Tracking Document Production Knowledge Management Human Capital Governance Program Mgmt Office Architecture Standards

The LoB Approach: 

The LoB Approach Improve Federal budgeting without compromising the ability of agencies and OMB to perform essential budgeting functions. Based on a value proposition - agencies voluntarily participate in the LoB and pay a flat funding (or in-kind) contribution to gain the benefits and government-wide services the LoB provides. Agencies optionally implement LoB sponsored tools and services that they either procure and deploy themselves or obtain via fee-for-service. Governed by the contributing agencies under the auspices of the Budget Officers Advisory Council (BOAC) and the Small Agency Council.

LoB Transformation Strategies: 

LoB Transformation Strategies Governance processes that: Maintain a year-round PMO staff to advance budgeting interests Set standards for data, data exchange, and modularization Extend the architecture to further understand business processes Provide centralized services (and service components) where functions are mandated or conducive to standardization. Help agencies be Smart Consumers: Share information on what has and hasn’t worked (best and worst practices) Consolidate acquisitions (e.g. Smart Buys) Arrange for shared service providers (for functions multiple agencies are acquiring) Leverage new custom development in a reusable way as GOTS and Open Source. Encourage Collaboration - establish a community of practice for the budgeting profession.

LoB Benefits: 

LoB Benefits Cost avoidance: more efficient acquisition of agency budgeting systems; reuse of custom development as GOTS; consolidated purchases. Improved effectiveness: faster turnaround; more collaboration; reduction of labor intensive activities; freeing up and leveraging valuable analyst resources; better workforce professional development. Reduced risk: avoiding solutions that haven’t worked; fewer errors in agency publications. Enhanced budget decision making, execution, planning, performance, and financial integration. Supports the President’s Management Agenda

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Capabilities as Common Solutions

Capabilities as Common Solutions: 

Capabilities as Common Solutions Program Management (Coordination, Standards, Architecture) Agency Budgeting Tools Analytical Tools Budget Performance Integration Collaboration Data Collection & Tracking Document Production Knowledge Management Human Capital (the Federal Budgeting Profession) Budget Formulation & Execution Line of Business (BFE LoB) Budget Formulation & Execution Line of Business (BFE LoB) (New) Budget Execution (including Touch-Points with the FM LoB)

Agency Budgeting Tools: 

Agency Budgeting Tools

Budget Execution (New): 

Budget Execution (New)

Collaboration: 

Collaboration

Data Collection & Tracking: 

Data Collection & Tracking

Human Capital (the Federal Budgeting Profession) : 

Human Capital (the Federal Budgeting Profession)

Governance (Coordination, Standards, Architecture) : 

Governance (Coordination, Standards, Architecture)

Current Progress - Highlights: 

Current Progress - Highlights Established the PMO within the LoB’s managing partner, the Dept. of Education (e-mail: BudgetLoB@ed.gov). Established a government-only collaboration website for the budget community. Used to coordinate agency comments on FM LoB exposure drafts, and for collaboration by the Earmarks Workgroup. Piloted a quick-turnaround data collection approach that collected the earmarks database in just six weeks. “Productized” our first agency system for use by other agencies – Treasury’s Budget Formulation & Execution Manager (BFEM) – available via shared service provider or as GOTS software. Well along with the development of a budget systems decision matrix that compiles requirements from multiple agencies and assesses available budget system solutions against them. Started a new Budget Execution Solutions workgroup in partnership with Treasury FMS, and including the new MAX Apportionment application and a study of key intersections (touch-points) with Financial Management.

Slide27: 

Summary Budget Formulation & Execution LoB

Vision: The Budget of the Future: 

Vision: The Budget of the Future The MAX A-11 data collection application as we know it would disappear - it would be replaced by agencies using their own automated systems to formulate their budgets and pass the data to OMB electronically. Budget numbers and supporting text would move seamlessly from stage to stage of the budget process. Budget exercises – even fast-turnaround ad hoc exercises – would be performed using nation-wide web-based applications. Collaboration within agencies, between agencies and OMB, with the Hill – would be facilitated by easy-to-use secure capabilities.

Slide29: 

Opportunities BFE LoB presents for each agency Touch-Points Study Communicating the BFE LoB to Departmental Components Be a good consumer of budget formulation & execution tools: Use the new BFE decision matrix and participate in the workgroup. Look at the Treasury BFEM tool. Reconsider any procurements of BFE modules that are part of FM systems – they have generally not worked. If you have a system, form a consortium for development, modernization, and enhancement. Consider making it available for other agencies as an LoB “productized” system. Engaging agency CFOs on the BFE LoB

Slide30: 

Supporting Materials

Slide31: 

Budget Formulation and Execution LoB Vision, Goals, & Objectives

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Vision Modern, interoperable, flexible, cost effective, and optimized solutions supporting all phases of the formulation and execution of the Federal Budget and linking budget formulation, execution, planning, performance, and financial information.

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Goals Improve the efficiency and effectiveness of agency and central processes for formulating and executing the Federal Budget Improve the integration and standardized exchange of budget formulation, execution, planning, performance measurement, and financial management information and activities across government Improve capabilities for analyzing budget, execution, planning, performance, and financial information in support of decision making Enhance capabilities for aligning programs and their outputs and outcomes with budget levels and actual costs to institutionalize budget and performance Integration Enhance the effectiveness of the Federal budgeting workforce

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Objectives The tactical targets that lead to achieving the goals Develop a target architecture, concept of operations, and range of common solutions that are flexible enough to accommodate the diverse and dynamic requirements of agency and central budget processes Achieve operational efficiencies and cost savings via the consolidation and dissemination of standardized budgeting solutions and processes where possible Develop a maturity model that assesses the sophistication of each individual agency’s automated budgeting processes and defines transition paths to appropriate common solutions for agencies at different maturity levels Establish a government-wide capability for electronic collaboration on budgeting-related exercises and activities by organizations in the Federal budgeting community Goal 1 - Improve the efficiency and effectiveness of agency & central processes for formulating and executing the Federal Budget

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Objectives The tactical targets that lead to achieving the goals Ensure that the LoB target architecture, concept of operations, and range of common solutions facilitates automated exchange of data using standards and technologies for electronic information exchange Improve the collaboration between budgeting, planning, and financial management organizations Review and reconcile terms and usage between budgeting and financial management information Goal 2 - Improve the integration and standardized exchange of budget formulation, execution, planning, performance measurement, and financial management information and activities across government

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Objectives The tactical targets that lead to achieving the goals Ensure that the LoB target architecture, concept of operations, and range of common solutions includes diverse innovative tools and approaches for enhancing agency and central budget abilities to readily and flexibly extract, manipulate, and model budget, execution, performance, and financial data Ensure that the clearinghouse/repository for Federal budgeting and execution activities facilitates and promotes agencies adopting best practices and common solutions for analyzing data and supporting decision making Goal 3 - Improve capabilities for analyzing budget, execution, planning, performance, and financial information in support of decision making

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Objectives The tactical targets that lead to achieving the goals Establish guidance and best practices relating to the alignment of program budget requirements, strategic goals, actual costs, and performance outcomes Ensure that the LoB target architecture, concept of operations, and range of common solutions includes innovative approaches that facilitate integration of planning and performance in all phases of the budget formulation and execution process Establish the standardized processes and data definitions necessary to readily align budget, planning, and performance information Goal 4 - Enhance capabilities for aligning programs and their outputs and outcomes with budget levels and actual costs to Institutionalize budget and performance integration

Budget Formulation & Execution LoB: 

Budget Formulation & Execution LoB Objectives The tactical targets that lead to achieving the goals Create a Federal Budgeting Community of Practice: Establish a government-wide capability for knowledge sharing among agencies and central budget organizations, including a clearinghouse/repository for Federal budgeting activities of interest (e.g., guidance, best practices, lessons learned, etc) Develop and disseminate best practices for human capital management for Federal Budget offices Conduct a skills assessment and gap analysis for Federal budgeting – develop and disseminate best practices for training and education Conduct conferences, training, and other approaches that facilitate professional development of the Federal budgeting workforce. Goal 5 - Enhance the effectiveness of the Federal budgeting workforce

Capabilities as Common Solutions: 

Capabilities as Common Solutions

Capabilities as Common Solutions (cont.): 

Capabilities as Common Solutions (cont.)

Capabilities as Common Solutions (cont.): 

Capabilities as Common Solutions (cont.)

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