By ROBERT W. KUSTRA
Assistant professor of administration at Sangamon State University, he has an M.A. in political science from Southern Illinois University and is a Ph.D. candidate in political science at the University of Illinois. Before teaching, Kustra worked on the speaker's staff of the Illinois House.
BOB, state agencies struggle over program vs. line item budgets
Created in 1969, the Bureau of the Budget has put the direct responsibility of budgeting into the governors office
TWO YEARS before the Bureau of the Budget was created in Illinois in 1969, an observer of Illinois state government asked the question, "What does a governor have to do with the process by which his state's expenditures are determined?" Based on his observation of the Illinois' budgetary process and that of other states, he answered, "very little." In spite of the adoption early in this century of the executive budget which gives the governor the responsibility to review agency spending proposals and prepare a comprehensive spending program, governors in Illinois have been handicapped in their role as "chief budgeter." They have been confronted with a complicated maze of funds, independently elected officials who share authority over state government with the governor, legislators committed to existing programs, and state agency bureaucrats not prone to taking directions from governors. Instead of focusing on the expenditure of funds, the development of programs, and the overall management of state government, the governor was forced to play the limited role of revenue raiser, plotting from one year to the next how to keep the state out of the red.
Kerner realized limitations
Former Gov. Otto Kerner (1961-1969) recognized the limitations of his gubernatorial role in Illinois and twice proposed to no avail a bureau of the budget to assist in the preparation and execution of the budget. At that time, the responsibility for preparing the budget fell to the assistant director of finance and budget superintendent, T. R. Leth. Leth and his six-man staff had been putting Illinois' budgets together for more than 20 years. Four governors
— two Republicans and two Democrats
— depended on Leth for the budget
function and the governor's role in the process was limited.
After Gov. Richard B. Ogilvie (1969-1973) assumed office, he, like his predecessor, proposed a bureau of the budget to give the governor better budgetary information and control. As proposed by Ogilvie, the Bureau of the Budget (BOB) would coordinate overall preparation of the budget, make revenue projections, develop economic forecasts relating to revenues and expenditures, and install a management program to cut costs and increase efficiency and economy. The BOB would assume the budgetary functions of the Department of Finance and other management control functions permitted by state law but never attempted by Finance. This time Republican Gov. Ogilvie found a receptive audience in a Republican-controlled General Assembly and the Bureau of the Budget was established by law in 1969.
Staffing the Bureau
Although the Bureau of the Budget was to be held directly responsible to the governor, it was also intended to be an agency of professionals who could apply the tools of economics, public administration, accounting, law, and social sciences to the management of state government. For this reason BOB personnel have been hired on the basis of merit rather than political party affiliation. During the Republican Ogilvie administration, budget analysts were recruited from graduate schools across the country and there was no requirement of Republican party affiliation. BOB professionals would remain loyal to the governor but not necessarily to the governor's party. During the 1972 election a few BOB staffers sported McGovern/Ogilvie bumper stickers on their cars to reflect their "bipartisan approach" to the election. After the elec-
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Constitution of 1970
Article VIII. Finance Section 2. State finance
(a) The Governor shall prepare and submit to the General Assembly, at a time prescribed by law, a State budget/or the ensuing fiscal year. The budget shall set forth the estimated balance of funds available for appropriations at the beginning of the fiscal year, the estimated receipts, and a plan for expenditures and obligations during the fiscal year of every department, authority, public corporation and quasi-public corporation of the State, every State college and university, and every other public agency created by the State, but not of units of local government or school districts. The budget shall also set forth the indebtedness and contingent liabilities of the State and such other information as may be required by law. Proposed expenditures shall not exceed funds estimated to be available for the fiscal year as shown in the budget.
tion, staffers waited anxiously to see if Democratic Gov. Dan Walker would replace analysts with political appointments. This did not happen and the only turnovers were among agency personnel who pursued opportunities to improve themselves professionally. The most recent example of this nonpartisan (or perhaps bipartisan) approach to hiring was the appointment of the chief of the Republican staff of the House Appropriations Committee, Donald Glickman, to a position with Gov. Walker's Bureau of the Budget.
Since the director is appointed directly by the governor, he is tied personally to the governor, his party, his program, and, most important, his tenure. Gov. Ogilvie's director of the BOB, John McCarter, resigned after Ogilvie lost the 1972 election. Gov. Walker appointed a new director, the former slate finance director for Ohio, Harold Hovey. Every governor can be expected to come to the office with his own priorities and his own men in crucial, policy making positions, such as director of the BOB.
BOB, the pacesetter
The Illinois budgetary process is tied to the tradition of line-item budgeting. The emphasis has been on controlling inputs by itemizing expenditures such as personal services, equipment, and travel. However, during the 1960's there was much criticism of governmental programs for being hastily conceived and implemented. Consequently, states began to shift emphasis from analysis of input items to analysis of output or programs by describing expected results, measuring whether they were achieved, and examining the impact of services. The creation of the BOB represents Illinois' entry into the era of program budgeting. Director McCarter described the mission of the BOB under Gov. Ogilvie as focusing on the state's efforts in terms of what was being accomplished for each dollar spent, rather than describing what was bought for each dollar in terms of salaries, supplies, and capital projects.
The Bureau under Gov. Ogilvie attempted to implement program budgeting by introducing the Planning-Programming-Budgeting System (PPBS) in Illinois. PPBS required identification of each agency's goals and objectives, classifying expenditures in ^rms of programs, multiyear programs and financial plans, and program analysis involving the systematic analysis of alternatives. However, PPBS was a highly mechanistic process with many deadlines and much paper-work. John Cotton, deputy director of BOB under Gov. Ogilvie, came to his job with the intention of implemen" ting PPBS in Illinois state government. Later, Cotton said that it only created a paper mill for information that was misused and inadequate. According to Cotton, the detailed interageocy structure supported by financial and output data, multiyear plan projections, and program memoranda did not pay off in terms of the time involved.
If the key to program budgeting under Ogilvie's BOB was PPBS, the Bureau of the Budget under Walker is emphasizing accountability, Management by Objectives (MBO), "Zero-base budgeting," and program evaluation. The budget for fiscal year 1975 was divided between two books. One was labeled the Accountability Budget and explained state services on a program basis. The other book was the Budget Appendix and detailed agency spending in the traditional line-item fashion. Director Hovey's memo on draft procedures for preparing the fiscal year 1976 budget describes the program budget and MBO formulation as the heart of the budgetary process. The MBO process requires each agency to define its objectives in terms of measurable accomplishments and links these objectives to the budget request. Then the Governor reviews the MBO's and holds the agency responsible for achieving those objectives.
Zero-base budgeting
The Bureau under Walker has also introduced a variant of "zero-base budgeting" for state agencies. A zero-base budget requires the review of total expenditures of a program rather than just the changes from its previous appropriation. BOB adopted the rationale behind zero-base by requiring each agency to prepare a base budget at a funding level of 90 per cent of the previous year's appropriation. This forced each agency to identify which 10 per cent of its activity it would eliminate if tight budgetary conditions prevailed.
The agency/BOB relationship is one of deadlines. Agency heads have cornplained that the deadline for the submission of the program budget for BOB
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'Agencies are tied to the line-item tradition, and many do not recognize the value of budgeting on a program basis, especially since the legislature still reviews the agency's budget in a line-item fashion'
review was unrealistic. BOB responded by creating a committee of four staff members of the Bureau and four agency officials. The committee issued a new set of guidelines which allowed agencies to stagger the submission of their budgets. Since BOB cannot review all budgets at the same time anyway, this flexible approach improved the budget review process from the perspective of both the BOB and the agencies.
Role of the budget examiner
The Bureau's principal contact with the agency is the budget examiner. He works with the agency on the preparation of the budget and reviews the final product with the BOB director. The examiner also plays a role in approving the allotment of funds for agency expenditures during the fiscal year. Other support roles include keeping abreast of developments in an agency's area and assisting with the development of legislation when needed and providing expertise on a variety of management problems which might confront the agency.
The budget examiner plays the role of an adversary in his relations with the agency and, therefore, encounters resistance from the agency. The major issue in this struggle is the idea of the program budget. Agencies are tied to the line-item tradition, and many do not recognize the value of budgeting on a program basis, especially since the legislature still reviews the agency's budget in a line-item fashion.
Many agencies consider budget examiners who have a working knowledge of the agency's mission and its problems to be an extremely valuable resource. At least 15 major state agencies have capitalized on this pool of expertise by hiring BOB examiners for agency positions. From the agencies' point of view these people can deal successfully with the BOB in defending programs since they know most about BOB'S operation. On the other hand, BOB is not a loser either. In the Bureau's attempt to implement program budgeting and MBO, it has come to value working with agency people who sympathize with its mission and understand program budgeting.
The executive budget review system in Illinois places the Bureau of the Budget in the executive office of the governor. This allows the governor to directly link the activities of the BOB to those of his executive agencies and the policies of his administration generally. How the governor uses BOB will depend on his style of leadership.
Although the Bureau is only six years old, it is already possible to see contrasting styles between the Ogilvie and Walker administrations. Brad Leonard, deputy director of the BOB, who has served under both Ogilvie and Walker, points out that while both governors were obviously interested in management and budget processes, they have shaped the environment of the budgeting process differently and thus affected the final shape of the state budget. Ogilvie chose to retain certain key agency heads of the former administration whereas Walker replaced all of his directors. Consequently, Walker gets more responsiveness from the agencies, and the agency heads are involved more directly as members of the Walker cabinet. The accountability for agency management in the Walker administration lies with the agency heads and although BOB serves as a resource base for agencies, it doesn't involve itself as directly in agency administration as the Ogilvie BOB did. Ogilvie turned the BOB staff loose in the agencies to effect control over policy making.
Ogilvie and Walker have shaped the Bureau of the Budget into more than a staff agency to assemble budget figures. Under the leadership of Ogilvie and Walker the BOB has become the focal point of administrative direction in Illinois state government. If their styles differ, it is only a question of degree. If Ogilvie relied on the Bureau more as a control agent, Walker has allowed agency management more autonomy while casting the BOB in a catalyst role for program analysis and the MBO process in the agency.
No matter how successfully the BOB implements program budgeting in the agencies, these budgets must eventually come before the General Assembly for approval. Illinois lawmakers, however, do not view the governor's budget on a program basis, but instead approve agency expenditures on the basis of appropriations bills in line-item detail. Thus, the BOB must translate state programs in the governor's Accountability (program) Budget — programs such as transportation, human services, and education — into line items such as personal services, equipment and travel. The end result appears in the second budget book, the Illinois Budget Appendix.
'Could be more information'
Tied to the tradition of line-item budgeting, some staff members of the Appropriations Committees in the General Assembly take a dim view of the governor's Accountability Budget, contending that it is little more than a public relations gimmick. These critics along with some journalists have been analyzing line-item budgets for years and prefer to sink their teeth into the Budget Appendix which gives the breakdown of expenditures. But the appropriations staffs also find fault with the Budget Appendix. They assert that the 1975 budget document had less information than the 1974 document. Specifically, the 1975 budget excluded program narratives which, in the 1974 budget book, explained the reasons for increases or decreases in agency funding. BOB Deputy Director Brad Leonard agrees that there could be more information in the budget and he indicates that BOB plans to improve future budgets.
Since the Bureau of the Budget has been established, the budgetary process in state agencies has changed considerably. Added to the dictionary of
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