Zero-Base Budgeting

Original Text

Effective Dates
2/14/1977 - 8/7/1981

Reform Goals
Institute a system of budgeting that required agencies to re-justify their total spending each year from the ground up, rather than merely reporting marginal/incremental changes to the previous year’s spending.

Requirements (What of Whom?)
Agency heads were to rank spending level options, or “decision packages,” eventually dropping out lower ranked proposals from consideration. 

Oversight for rule compliance
The Office of Management and Budget (OMB), and indirectly Congress and the President.

Reform “Teeth”
No formal penalties; the President could hypothetically remove an executive branch agency head for non-compliance, but this was not an explicitly stated consequence.

Outcomes
Did not materially change decision-making for setting federal agency budgets. The program was officially discontinued in 1981. [1]

Commentary
ZBB was adopted quickly across agencies, resulting in 25,000 internal decision packages created and an overall 229% increase in paperwork required of agencies. [1] It is a paradigm case of a regulatory reform which increases transparency for decision making at face value, but ultimately just creates more federal paper pushing.

References

  1. United States General Accounting Office. Report to Congressional Committees. "Performance Budgeting, Past Initiatives Offer Insights for GPRA Implementation." March 1997. Link , PDF