Budget Issues

The public, Congress, and the Administration are all concerned about the costs of the federal government--both in terms of persistently high deficits and the costs of delivering programs and services. Executive Order 12837 attempts to address these concerns by prescribing across-the-board reductions of administrative expenses. These required reductions, however, will probably not significantly reduce the budget deficit or improve the efficiency and the effectiveness of government programs. Although it supports giving agency managers the flexibility to apply reductions within their agencies, GAO believes that a governmentwide rethinking and reengineering of agency operations would be a better approach to deficit control and productivity improvement. This report specifically examines (1) efforts by the Office of Management and Budget and executive agencies to define administrative expenses, (2) reviews the presentation of fiscal year 1994 administrative expense budgets, and (3) analyzes potential budgetary and management implications of the required administrative cost reductions.

GAO found that: (1) OMB estimated administrative expense reductions based upon each agency's anticipated FY 1993 obligations; (2) although the agencies were required to provide a separate category for administrative expenses in their FY 1994 through 1997 budget requests, they did not report their detailed administrative expense budgets for FY 1994; (3) the effects of administrative expense reductions cannot yet be measured because Congress has not taken final action on agency appropriations; (4) administrative expense reductions will not likely improve federal government productivity; and (5) across-the-board expense reductions will affect all programs equally regardless of how well the programs are managed.