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Note of Transmittal

This report on Federal budgeting was made by the Institute of Public Administration of 684 Park Avenue, New York City, under contract with the Commission on Organization of the Executive Branch of the Government. It was completed in June 1948, and submitted to John W. Hanes, director of the Task Force on Fiscal, Accounting, and Budgeting Functions. Some minor changes have since been made in the organization and functions of the Buraeu of the Budget, which are indicated in footnotes to the appropriate sections of the report.

The survey upon which the report is based was directed by A. E. Buck, senior staff member of the Institute. In making the survey, he was assisted by Henry Burke, former State budget director of Tennessee and of North Carolina; Rowland Egger, director of the Bureau of Public Administration, University of Virginia, and former State budget director of Virginia; Peter Langhoff, director of research, Young & Rubicam, Inc., New York City; and John D. Millett, professor of public administration, Columbia University.

Copies of supporting documents to the report, notably those prepared by Messrs. Egger on the Estimates Division, Langhoff on the budget work of the Statistical Standards Division, and Millett on the Division of Administrative Management, have been filed with the Secretary of the Commission.

An expression of hearty appreciation is due to the officers and staff members of the Bureau of the Budget and to the budget officers of several of the operating departments for their ready cooperation in furnishing information and otherwise facilitating the study.

November 6, 1948.

FEDERAL BUDGETING

Summary of Findings and Recommendations I. Appraisal of the Organization and Workings of the Bureau of

the Budget

A. FINDINGS:

1. The Budget Bureau occupies a key position among the President's staff agencies which are designed to assist him in matters of policy formulation and administrative management. Currently it has a staff of about 600 persons.

2. During the 27 years of its existence, the Bureau has experienced extensive changes in the status of its Director, in the size and organization of its staff, and in its relation to the other fiscal units of the Government.

3. The Bureau has occasionally overplayed its position and has not always retained the full confidence of Congress.

4. While the Bureau has accomplished a great deal in the budget and management fields, it has thus far failed in the basic task for which it was created, namely, modernizing the budgetary process and producing an understandable and informative budget document.

5. The internal organization of the Bureau follows the usual bureaucratic pattern, with consequently useless hierarchies of officers, immobility of staff, and inflexibility in meeting work requirements.

6. As of the time of this survey, the Administrative Office, or housekeeping staff, of the Bureau consisted of more than 100 persons, receiving almost 13 percent of the total salary costs of the Bureau, an unusually high percentage for an organization of this general character.

7. The Division of Administrative Management has done some good work during the 9 years since it was established, but not on a consistent and long-range basis. It has largely taken the work that has come to it from day to day, in the belief that this was the important work to be done. Its operations have not been properly integrated with the budget work.

8. The Division of Estimates is the key unit of the Bureau, and as such has a staff of over 200 persons, receiving about 39 prcent of the Bureau's pay roll. It is not well organized for the task which it has to do; indeed, some elements of it seem constantly to get in each others way.

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9. The Fiscal Division, organized in 1940, is more or less incongruous within itself and generally disjointed in its approach to the work of the Bureau. Its useful budget accomplishments so far hardly warrant its cost, except perhaps in the field of previews and target figures.

10. The Division of Legislative Reference is a useful unit, fairly well set up and economically operated. It draws the bulk of its material from other Bureau divisions, principally estimates, and from the administrative departments and agencies. To this extent it utilizes the labor of other units. Its work, while essential to the President, is on the fringe of actual budget work.

11. The Division of Statistical Standards was placed in the Bureau in 1940, mainly for the lack of a better place to put it. It contributes very little to essential budget work. It can probably be shifted to advantage in any realignment of the President's staff agencies.

12. The Field Service of the Bureau was started in 1943 and two years later Congress limited it to the four field offices then in existence, namely, those at Chicago, Dallas, Denver, and San Francisco. At the present time this Service is the least productive of the Bureau's several units : it has yet to justify itself, even on the basis of four field offices.

B. RECOMMENDATIONS

1. Internally, the Budget Bureau should be completely overhauled so as to produce an integrated staff working on the essential job of the Bureau—the formulation and execution of the budget. This would mean completely breaking down the bureaucratic lines and official insulation that now exists between and within the estimates, administrative management, and fiscal divisions.

2. The staffs of these three divisions should be largely merged and redistributed on a functional basis so that they may handle the estimates and budget review work. Ten or a dozen functional groups should suffice.

3. Each functional group, such as national defense, natural resources, social services, etc., should consist of budget examiners, administrative and fiscal analysts, management specialists, and economists. The purpose of this staff integration would be to focus all viewpoints at the level of estimates examination and review rather than at higher levels.

4. There should be a small general staff on fiscal policy at the level of the Budget Director, or one level above the functional group staffs. This general staff, including the Budget Director, would make the over-all policy decisions not determined by the group staffs.

5. Grouped around the Budget Director's office would be a few small, flexible staff units, working on the form and preparation of the

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