A Conversation With…

The Government Finance Research Center works with researchers from a variety of backgrounds to analyze the role that public finance plays in our lives. In the interviews below, we talk with experts to dig deeper into pertinent topics and get their perspective on the past, present, and future of government finance.

Daniel Chenok, Executive Director of the IBM Center for The Business of Government

Dan Chenok

From your perspective, what flaw in the budgeting process is particularly available for improvement?

The budget process at the federal, state and local levels often has the executive agency proposing a budget and then the legislature reviewing it, and then changes are made and then the legislature authorizes, and the executive branch implements.  Typically, this can take two or even three years for an agency’s budget to be passed after the agency originally proposed it.

So, there’s lots of lag time?

Yes, lag time is a good way to put it. Another issue is not just the time, but the number of players involved. You need to have a certain level of review but depending on how many proposals and reviews are involved, there can be many steps between the agency’s proposal and a final budget document, and all the players involved do not necessarily add value to the budget.

Can you give a good example of how this could be remediated?

At the executive level there’s usually a budget office, a chief financial officer, a legal office, and more. They each have a perspective from which they review the agencies’ proposals. On the legislative side, there’s reviews at subcommittee, legislative and staff level.

They could create a budget with team-based approaches with offices reviewing in a collaborative way, rather than setting up a daisy chain where each office reviews everything individually.

How could this work?

A good process that has been demonstrated as effective gets everyone in a room – a real room or virually – at one time.

Would everyone involved be present?

You need to ferret out who needs to be in the room to make the decision, and who needs to be informed but is not critical to the decision process. In the federal government, for example, an inspector general’s office may need to look at ten percent of the items in a budget. But the office doesn’t need to be involved in the decision-making process for the other 90 percent. There’s a difference between people making a decision and giving people the information they need to know. Determining the key people who need to be in on the decision making, relative to and the people who ought to know about it but don’t need to be in the decision process.

And then?

You could envision a lead committee or office model, where one organization takes the lead for the process and then coordinates with other groups, so you don’t need to have several levels of reviews.

But isn’t it difficult telling people that they’re not going to be in the room where the decisions are made?

People who have a heads up on something may not need formal sign off. Of course, you send a proposal out to everyone and invite comment. Many groups will appreciate the chance to comment. They may give you an OK or they may ask you to add X or Y as you make progress.

It’s basically understanding the difference between decision makers and stakeholders. Government processes often lead to risk averse actions, setting up the process to make sure everyone who has a stake in one part are involved in advance in all parts.  That creates lots of processes and lots of time and resources.

Other reforms?

You can use technology to make the process more transparent and faster. Right now, budgets tend to be produced in PDF files that get passed along from person to person. But distributed technology platforms can have people come together and do the kinds of reviews that used to take weeks and months as you passed paper from one person to another.

Is the technology enough to make major changes?

No, you need an agile team, not just technology.

Can you help to describe what you mean?

An agile team for budgeting brings together key representatives from each organization involved in a particular decision and produces a vision of where they want to go, for example, in developing spending priorities for a particular program. And then they use an iterative feedback process with other stakeholders, in order to develop a spending plan.

You also don’t necessarily have to seek authorization for the full amount for a program. You can budget in increments, in pieces. And you can take the lessons learned from the first increment as you develop a plan for allocating the subsequent sets of funds.

Do biennial budgets help or hurt in creating a more flexible budget?

Biennial budgets are often open to flexibility in the second year. Biennial budgeting can be a good way to focus on the spending level in one year and then the management level in the other year.

Read More Conversations