Incentivize cost reduction in execution of federal programs. Today inertia, risk averse budgeting, and the Anti-Deficiency Act lead to static, over-stated baselines as agencies and programmed budget line item managers pad (fudge) their estimates. If the extra budget is not required for intended program the funds are obligated to other administrative areas or or applied to next years programs, rolling forward a fudgable fund that is billions across the govt. Remove or relocate these fudge or slush funds, by establishing a risk and deficiency reserve in OMB. Agency budgets and all program line items would be adjusted by a few percent to set aside reserves. Secretaries and Agency Heads under personal cognizance would be required to submit documentation of programs that are at risk and need to tap the reserves to meet objectives. OMB would still manage a supplemental process as is done today for truely unplaned needs, unexpected deficiencies in critical programs, etc. The reserves for each agency and budget line item in the next year would be determined by a performance formula to discourage padding the budgets to offset risk reserves. Agencies that meet goals of executing below their risk revised budget targets would be allowed to retain a portion of the realized savings to be used as employee rewards and incentives. This approach reverses the general tendancy to reward successful spending of every dime and instead reward saving as many dimes as possible.
Idea No. 97