Academic journal article The Public Manager

Modernize the Budget Process to Reflect Technology Realities: Reforming the Budget Process for Technology to Capture Savings and Provide Financial Transparency Can Allow Government to Benefit from Significant Advances Already Being Realized in the Private Sector

Academic journal article The Public Manager

Modernize the Budget Process to Reflect Technology Realities: Reforming the Budget Process for Technology to Capture Savings and Provide Financial Transparency Can Allow Government to Benefit from Significant Advances Already Being Realized in the Private Sector

Article excerpt

Fiscal constraints will challenge government for the foreseeable future. While this might appear daunting, budget pressures can create an entrepreneurial environment and powerful incentives to rethink traditional approaches to mission support and service delivery. In this context, identifying innovative ways to reduce costs, while maintaining and improving performance, will be a critical catalyst.

Rethinking how to finance IT and other investments can help agencies leverage rapidly evolving offerings in areas ranging from cloud and "as a service" computing models, to real-time review and response to cybersecurity threats. Finally, government can reap the benefits of innovation and efficiency through a more refined approach to measuring and capturing cost savings.

Innovation in Cost Reduction: Lessons From the States

Federal leaders can learn much from state experiences. Earlier this year, the IBM Center for the Business of Government released Managing Budgets During Fiscal Stress: Lessons for Local Government Officials by Jeremy M. Goldberg, University of San Francisco, and Max Neiman, University of California at Berkeley. This report describes how California's budgetary experiences over the past several years can provide lessons learned and roadmaps for other federal, state, and local governments facing fiscal constraints.

Like many local governments across the nation, cities and counties in California have been affected by the economy in recent years. The report makes recommendations that are applicable to governments across the nation. These include:

* Identify and address structural deficits in a finely grained manner, leaving no major budget category unexamined. For federal budgets, this includes programmatic areas as well as functional categories--appropriated dollars, working capital and franchise funds, and even user fees.

* Foster citizen engagement to encourage widespread dissemination of fiscal information to enhance the legitimacy of public policy choices. Encourage employees and citizens to identify new ways of doing business that do not require continuing to spend on outdated processes that have built up for years without much question as to whether they are still needed. Interestingly, this recommendation complements findings that innovation can be a key lever to thrive in a cost-constrained environment.

Budgeting For the Fast Pace of Technological Change

The traditional federal budget process takes up to 30 months from planning to spending, and even longer when that spending takes the form of a multi-year contract. The traditional budget calendar runs roughly as follows, taking fiscal year (FY) 2016 as an example:

1. Spring 2014 (typically March): Agencies start to plan their request to the Office of Management and Budget (OMB) for FY2016 funds.

2. Fall 2014: Agencies submit a budget request to OMB, who reviews it for several months.

3. Winter 2015: The president submits a formal budget request to Congress for its review, which takes another several months.

4. October 2015: Congress enacts the FY2016 budget, for the fiscal year that runs through September 30, 2016. This often comes after October, because Congress has not agreed on all or part of a budget by September 30 for many years, making continuing resolutions the norm in congressional budgeting.

5. Summer 2016: Agencies often spend much of their budget in the last few months of the next fiscal year--some 30 months after initial planning. For IT, agencies often sign multi-year contracts using these funds, in effect locking in requirements over multiple years that were originally planned two years prior.

In an Internet age when technological advances are made in months rather than years, the traditional budget process does not foster flexibility that agencies need to move quickly to capture the benefits of innovation. …

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