How to get your agency's 2012 budget in line

Friday - 8/27/2010, 11:08am EDT

Budget Discussion Part 1: Surprises

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Budget Discussion Part 2: Impactors

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Budget Discussion Part 3: Where it CAN Go

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Budget Discussion Part 4: Who Holds the Purse

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Budget Discussion Part 5: Making Payroll

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By Suzanne Kubota
Senior Internet Editor

The clock is ticking for Congress to approve your agency's budget for 2011. We have about a month before the current fiscal year ends and the new one begins. But agencies are thinking about their 2012 budgets. They're due to OMB in less than a month. But how do those budgets come together in the first place? A special Federal News Radio Discussion: Meeting Mission Goals Through Technology brought to you by General Dynamics IT looks at the federal budget process.

Joining us for the discussion were Mike McCord, Principal Deputy Under Secretary of Defense, and Karen Evans, National Director for the US Cyber Challenge and founder of KE&T Partners and former Administrator of E-government and IT at the Office of Management and Budget.

Here are some of the topics, questions and excerpts from the responses of the panel:

Part 1: Surprises

    Evans: Every year, it is such a challenge, and yet it's not like nobody knows this is coming. Is there not a template? A standard operating procedure? Why does this get to be so complicated? "I don't know why it's so complicated, because there is a template and in our view, the OMB view...the guidance is out there," but gets reviewed every year. "So people say 'well we can't do it until it's final when the Director signs off on it,' and that usually happens around the June timeframe" said Evans. So while agencies work on the process, they don't get "the top number" and guidance on the priorities "until later on in the cycle."

    McCord: "Certainly we all know that it's coming and we're not surprised by that at all. What's complicated, I think there's two things for DoD. One is our size and our scope make it complex," said McCord. Defense can react to a change up or down in the topline, but to distribute the information "and get it back from all the different entities can take a little while." The second challenge for Defense, according to McCord, is wartime operations. "President Obama doesn't like the idea of doing supplimentals and we've really been pushing to get those into the regular budget. Well, if you're trying to do your budget, you can't do the base budget and then come back and do the wartime budget later because you have decisions about what goes where, where should that funding go, and you can't really do one in isolation."

Part 2: Impactors

    Evans: On the OMB side, said Evans, the "pressure of the deficit levels are what really drive" the guidance given to agencies. After the President promises to cut the deficit, "it really is a policy discussion." Assumptions have to be made by OMB. "That has to be agreed upon by the economic team, and the economic team, then, is driven by the policies of the Administration." OMB and the economic team in the White House, said Evans, "have a tendency to be a little bit more optimistic because you want to make sure that your policies are getting enacted." Then reality sets in when the "Congressional Budget Office then releases what's happening and that's the yin and the yang in the pieces going forward." So, explained Evans, OMB is looking at the top level numbers "that then cascade down to the agencies and you kind of hope that they all meet so that you can meet what the President's numbers are."

    McCord: Add to that, said McCord, within the figures handed to agencies, are a big part and a small part. "The big part is the deficit which might lead them to say 'oh, we thought we could afford to give your agency X, but now the deficit number's looking pretty bad. We're going to have to give you a little less.'" The small part, said McCord is something like an inflation assumption or a pay raise assumption that can ripple through hundreds of DoD accounts in a small way, but across a wide spread.

Part 3: Where it CAN Go

    McCord: While many other departments and agencies are facing a five percent cut in spending, McCord said that doesn't mean DoD can spend its funds any way they'd like. "A good example would be when the earthquake hit Haiti (January 12, 2010.) It was fairly early in the fiscal year so we had, in terms of our appropriations, had not been all spent down, but we had actually very limited authority to respond to that initially, whereas the State Department has better authorities but didn't have, necessarily, the money. We have a fairly small pot, about $100 million at best, to respond to emergencies like that." McCord said Defense "can't just go into our regular budget and borrow money" because they don't have the legal authority to spend funds on anything that isn't strictly Defense missions. "So matching up money and authority is a common problem for us," said McCord.