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OMB Issues Guidance to Agencies for FY 2015 Budget Preparations

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Greetings from D.C. In last month’s column I highlighted the FY 2014 federal budget release, which came a few months late this year (in a year chock-full of abnormal budgeting activities), signaling the starting point for discussions on the Hill and with the Administration that will lead to a final FY 2014 spending bill (or more accurately, a set of spending bills).

Following closely on the heels of the 2014 budget release comes the annual (this year, earlier than usual) guidance from the Office of Management and Budget (OMB) for agencies preparing their 2015 budget submissions. So, while Congress works to develop its federal appropriations bills for 2014, the agencies begin/continue the process of working their submissions for 2015, based on the following guidance from OMB.

As noted in the memorandum, OMB is instructing agency heads that their 2015 budgets should continue to build on the Administration’s prior budgeting plans, by focusing on investments in areas “critical to economic growth and job creation, including education, innovation, infrastructure, and research and development”—while reducing spending on lower priority programs.

For discretionary spending, submissions should reflect “a 5 percent reduction below the net discretionary total provided for [their] agency for 2015 in the 2014 budget.” Further, agency budget submissions should include reductions that would bring the “overall submission to a level that is 10 percent below the net discretionary total provided for [their] agency for 2015 in the 2014 budget.”

Per usual, agencies are to look for ways to “reduce fragmentation, overlap, and duplication” and asked to include in their submissions recommendations to accomplish those goals. Those recommendations should incorporate any Government Accountability Office (GAO) recommendations in these areas as well.

Agencies are also asked to submit with their budget proposals updated strategic plans, aligned with the 2015 budget, that provide clear and realistic implications of achievable impacts consistent with budget policy. These plans should also include any new “priority goals” reflecting the Administration’s budget objectives.

As noted in this column in past years, these kinds of guidance memos are typically done in broad strokes (i.e., provide objectives, reduce duplication, enhance performance, etc.); however, in recent years—due to the Budget Control Act and other budget-related considerations—the memos have called out explicit target reduction levels in the discretionary component of the budget (e.g., reduce by 5 percent). This year is no exception.

While we still don’t know where the 2014 budget will wind up, we know the starting point and are beginning to see progress. Clearly we are a long way from knowing even the starting point for 2015, but indications from OMB point to a budget proposal with continued focus on reducing the budget overall, while hopefully focusing on areas critical to our community (innovation, research and development, among others).

You can find the OMB guidance memorandum here.

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