Mr. SCHULTZE. In many cases, the two are combined.

Senator CASE. I agree with you to a degree. This is a helpful thing—but it really seems to me that it does not meet the whole problem by any means. I do not believe that you suggest that it does. Mr. SCHULTZE. No.

Senator CASE. For one thing, on the matter of monetary costs, it means costs within the rather artificial context of our treatment of the Federal budget; that is to say, the income and the outgo, the paperwork of the budget as opposed to the total cost or the total cost, in fact, on the basis that we are paying for it.

Cochairman MADDEN. I think that Mr. Schultze would like to present the charts.

Senator CASE. We want to see the charts.

Mr. SCHULTZE. Whenever you are ready.

Cochairman MONRONEY. I think that it would be helpful to us to have them, and it would eliminate the necessity of some additional questioning.

Senator CASE. That, I can understand. That goes to Cochairman Madden's point of duplication.

Mr. SCHULTZE. Let me, before I go into this, stress one thing in advance. In giving such a presentation, I do not want to leave anybody with the idea that what we are doing is some revolutionary change. It really is an improvement in what we are doing now, a systemization and routinization, if you will; that is what it is, a substantial improvement, but not a revolution. It is not as if we are not doing anything right now, and we will be getting everything right. I want to stress this, that it is evolutionary and not revolutionary. Essentially, there are four major problems, four major improvements that we want to make in the budgetary process and they are all interrelated.

I will start with this introduction (chart No. 1).

CHART NO. 1

PLANNING-PROGRAMMING-BUDGETING SYSTEM

THE SYSTEM RELATES:

• NATIONAL NEEDS TO SPECIFIC GOALS

• GOALS TO ALTERNATIVE GOVERNMENT PROGRAMS

• PROGRAMS TO SPECIFIC RESOURCES

• SPECIFIC RESOURCES TO BUDGET DOLLARS

ALL ARE PROJECTED SEVERAL YEARS AHEAD

Those four improvements are as follows: First, to provide much greater emphasis in our decisionmaking process on making budgetary decisions on the basis of the output of programs, not on how much input goes into them, but on the output that you are getting from the program. What is the program there for? What is its purpose? Secondly, to provide more explicit and concrete information on the objectives to be met, measuring the performance or the output of the program in meeting those objectives, wherever possible quantitatively and explicitly. And where you cannot get quantitative measures, to get the best description of objectives.

Third, to provide explicit consideration of alternative methods of achieving objectives.

And, finally, to provide information on the total system cost.

First, on more emphasis on output; second, more concrete information in measuring performance; third, to generate much more explicit analysis of alternative ways of achieving those objectives; and fourth, to get system costs.

Finally, we hope to do this in a systematic manner which spreads the decisions over a longer period of time and, particularly, provides time for evaluation of objectives, performance costs, and alternatives. Given those objectives, our present system has a number of defects that we want to improve. (Chart No. 2.)

CHART No. 2

DEFECTS IN THE PRESENT SYSTEM:
INABILITY TO SPECIFY CONCRETELY

ACCOMPLISHMENTS OF EXISTING PROGRAMS
PLANNED ACCOMPLISHMENTS OF NEW ONES
DOESN'T THROW UP LEAST COST ALTERNATIVES

DOESN'T SHOW FUTURE YEAR COSTS OF PRESENT
DECISIONS

DECISION PERIOD TOO SHORT FOR GOOD EVALUATION
AND REVIEW

It seems to me that the major defects that we want to improve relate to the following: Our present system does not yet sufficiently give us the kind of information and the kind of flow of analysis which allows us to specify concretely the accomplishments of existing programs and the planned accomplishments of new ones. In other words, it does not specify concretely the objectives we are trying to reach, the measure of how we are reaching those objectives, or how we plan to reach them.

Secondly, it does not show up least-cost alternatives, at least not in too many cases. There is not sufficient examination of least-cost

alternatives to get to the specific and concrete objectives that we want to set up.

Next, the present system does not show sufficiently the future-year costs of present decisions. This information is not always absent, but, as a general proposition, we need more and more to give attention to the future-year cost of our present decisions, so that we will know that, when we make the decisions, the costs will not sneak up on us later.

Finally, the decision period is too short for evaluation and review. The way that we would like to improve the system is to establish a planning, programing, and budgeting system, rather than improving the present one, and to do the following

Senator CASE. I presume that this is going into the record in such a way that we can have the chart and then the discussion right under it?

Cochairman MONRONEY. Yes; that will be done.

Mr. SCHULTZE. I have provided the charts for the record.
Senator CASE. I think that they should be in the record.
Cochairman MONRONEY. They will be in the record.

Mr. SCHULTZE. The first point is really a logical sequence, an analysis of national needs-to analyze the specific goals which are proper and appropriate for the Federal Government to be seeking.

Secondly, to relate those goals specifically and concretely to alternative Government programs to achieve the goals or objectives.

The next step is to relate the programs to specific resources; for example, facilities, manpower, specific formula grants, whatever the particular program requires in terms of resource input.

Finally, to relate these resource inputs into budget dollars.

So, essentially, we will have: (1) the analysis of needs in relation to goals and objectives; (2) review of goals and objectives in an examination of alternative Government programs to meet those goals and objectives; (3) analyses of those programs in terms of the specific resource costs, so that they can be compared to their efficiency in achieving the goals; and (4) a translation of those resources of manpower, facilities, and the like into budgetary dollars, all projected several years ahead as relevant, so that we get the multiyear costs of our program.

Cochairman MONRONEY. Is that to be published with the budget figures in advance?

Mr. SCHULTZE. I cannot give you a "Yes" or "No" answer to that. As a general proposition, this would be the internal analysis that we go through.

Cochairman MONRONEY. I see.

Mr. SCHULTZE. But it will provide, as Mr. Staats said earlier, in the agency justification, we hope, substantially more concrete and specific evaluation and statements of goal consequences and alternatives. It would not be as a formal budget presentation, but will provide a basis on which we could make better decisions. And a large part of this, in turn, would be very appropriate in the agency justifications before the committees.

Mr. HECHLER. It would be made available to the Congress?

Mr. SCHULTZE. As I said, it would seem to me that you cannot get a universal answer on this. It seems to me that a very large part of it will end up, and quite properly end up, in the agencies' justi

fication, agency by agency, of these various analyses, specific goals, and specific accomplishments. But in terms of our formal presentation in the budget document it would not, because this is for internal analysis; rather, it is not a sort of a format to go into the budget, per se, but it would be included in the agency justifications-in very large part it would be there.

In order to do this to go from need to goals, and from goals to programs, an examination of programs, and to go from programs to costs we would like, and we intend, to establish a system for each agency to do the analysis and evaluation, and this really consists of two parts (chart No. 3).

First is the continuing need for in-depth program evaluation studies of each agency's major program. This is to be done by the agency continuously-continuing in-depth studies by highly qualified and competent staff in each agency-feeding in information and analysis to the Secretary, to the Bureau Chief.

Now, in turn, the way that this second part essentially would be operated as we see it now-this is still tentative-is as follows: Starting out, we have an annual cycle that runs all through the year. Early in the year, perhaps in January, the individual bureaus in each agency would submit to the Secretary their statement of 5-year goals and objectives. I say 5-year illustratively. It need not necessarily be 5 years in every case, it depends on circumstances, but multiyear goals and objectives stated in as explicit a form as is possible. You can go through it program by program, and you can think yourselves of the specific kind of objectives that could be saved.

The Secretary by March would have reviewed these goals and objectives and would have issued his tentative decisions, his tentative

guidance back to his bureaus, and his approval or modification of this statement of goals and objectives.

On the basis of the Secretary's review, the bureaus would then develop their 5-year program plans to achieve those goals and objectives. For example, let us take the case of manpower training. Goals and objectives relate to the number of trainees, to the kind of training, to the kind of problems to be met by training. In turn, programs to achieve those goals would be in the form of alternatives; in fact, a package of institutional training, on-the-job training, specific training for specific skills, general training, and the like. So, we have goals and objectives approved tentatively by the Secretary, translated into tentative program plans by the bureaus, that come back to the Secretary who reviews now the whole set of program packages, and issues program memorandums in which he evaluates, analyzes, and makes tentative decisions on the agency's long-range programs.

At the same time this is being done, the Secretary and the bureaus are, presumably, receiving these in-depth evaluations of program objectives and goals, and of the program plans to achieve those goals, which evaulate the goals and objectives in terms of their priorities, in terms of their practicalities, and in terms of tentative programs to achieve the goals and objectives. The bureaus will continue this indepth study, reporting the results in this process, and getting assignments from the Secretary for further studies. These studies may take a year or two years, depending upon the complexities of the subject itself.

Having put together the program memorandums, the secretarial evaluation and approval of these goals and objectives and programs, the department will forward them to the Bureau of the Budget for the normal summer review, where the major concentration is on goals and objectives and program plans.

In turn, on the basis of the discussions with the Bureau of the Budget and where relevant-where major issues are involved-with the President, the Secretaries and the bureaus make such program changes as appear desirable in terms of goals and objectives, and programs to get to those goals and objectives. On the basis of that set of approved programs, goals, and objectives, the Secretary and the Bureau then prepare the specific budget requests, based now on these "quasi," if you want to call them that, approved goals and objectives. And upon that basis, they prepare the specific budget requests due here in September.

In turn, as in the normal case now, the budget requests come over to the Bureau. They are now based on specific goals, objectives, and programs. The Bureau reviews them in the normal process. The President, in turn, makes his decision on the basis of meetings with agency heads and the Budget Bureau Director, and out of this flows, presumably, the budget and legislative proposals, and where appropriate such public statements with respect to these goals and objectives as are found to be desirable and necessary.

So, what you will have is a sequence in which the agencies have a system which explicitly calls for the formulation and statement of goals and objectives down through the specific budgetary requirements, with an examination of alternative programs and alternative means to achieve objectives, and with a statement in terms of priorities

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