OMB BULLETINS 1968

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP06M00944R000200060001-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 189
• Document Creation Date: January 4, 2017
• Document Release Date: July 18, 2013
• Sequence Number: 1
• Publication Date: July 9, 1968
• Content Type: REPORT

50X1
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cm
PM\
9 July 1968
MEMORANDUM FOR: Executive Director-Comptroller
SUBJECT
Executive EcigliZY
_rf-aa2-491-
Bulletin 6 8-16 -- Limitations on Budget
Authority and Outlays for Fiscal Year 1969
1. Bulletin 68-16 contains guidance on preparation and
submission of Agency plans for reducing budget authority and
outlays for FY 1969 in accordance with PL 90-364, the Expenditure
Control Act of 1968.
2. The Bulletin states that the Bureau of the Budget will
provide each agency with a planning figure which will be each
agency's target for FY 1969. The planning figure will include
all anticipated requirements for the year except the amount
required for the pay increase effective 1 July 1968. This will
be added later.
3. Within ten days after receiving his planning figure,
the head of each agency will:
a. Prepare a plan for reducing his current 1969 budget
to the new planning figure. This plan must identify costs
of the 1 July pay increase. The plan must also indicate
the effect of the reductions on new obligational authority,
obligations, and expenditures.
b. Submit a prescribed format and a narrative
statement of the program implications of the plan to the
Bureau of the Budget.
c. Anticipate the need to restrict obligations and
outlays in accordance with anticipated reductions.
nr NWT
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4. The Bureau of the Budget will review the Agency plan.
The President's decision on the plan will be transmitted to the
Agency head by the Bureau of the Budget. The Agency head will
be responsible for insuring that limitations established by the
President are not exceeded.
5. Apportionment and reapportionment requests will conform
to the approved plan.
6. Each agency must absorb as much of the 1 July 1968
pay increase as possible. The absorption may take place by
applying savings from the reduction plan so long as that part of
the savings which comes from the limitation on number of employees
in PL 90-364 are held in reserve and not used for pay act absorption.
7. The Bulletin states that if it is necessary to prepare the
reduction plan before final Congressional appropriation action, the
Agency will use its best estimate of final appropriation and will
submit revised information after final Congressional action.
8. We foresee the following difficulties in this instruction:
a. In order to make the quick response demanded (ten
days) the personnel plan for FY 1969 will have to be agreed
on prior to receipt of the 1969 appropriation planning
figure.
b. The present plan to achieve a program
reduction will have to be revised to reflect savings from
personnel reductions as soon as the personnel plan for
FY 1969 is agreed to.
EC
Acting Director o
Programming, and Budgeting
50X1
STAT
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-16 June 28, 1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Limitations on budget authority and outlays for
fiscal year 1969
1. Purpose. This Bulletin provides for the preparation and
submission al; agency plans for reducing budget authority and
outlays for fiscal year 1969 to comply with the limitations
imposed by Public Law 90-364 of June 28, 1968.
The provisions of Public Law 90-364 which deal specifically
with the limitation on the number of civilian officers and
employees and the rescission of $8,000,000,000 of unobligated
balances are not covered in this Bulletin. Separate instruc-
tions will be provided on those provisions of the law.
2. Limitations. Public Law 90-364 requires that the
President --
a. Limit budget authority for fiscal year 1969 to
$191,723,000,000, which is $10,000,000,000 less than the
amount proposed in the 1969 budget.
b. Limit outlays for fiscal year 1969 to $180,062,000,000,
which is $6,000,000,000 less than the amount proposed in the
1969 budget.
3. Exceptions. The dollar limitations cited in paragraph
2 may be exceeded only insofar as budget authority and
outlays for the fiscal year 1969 exceed the amounts estimated
in the 1969 budget for any of the following:
a. Special sut?ort of Vietnam operations. (Activities
covered by the budget authority estimate of $25,405 million
that can be derived from the tables on pages 81 and 92
of the 1969 Budget and the outlays estimate of $26,264
million as shown in the table on page 83 of the 1969 Budget.)
b. Interest. (Payments under this heading as shown in
table 3 on page 53 and table 13 on page 183 of the 1969
_sudget.)
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c. Veterans benefits and services. (Activities covered by
the table on page 161 and table 13 on pages 182-183 and 188
of the 1969 Budget.)
d. Payments from trust funds established by the Social
Security Act, as amended. (Activities covered by the first
four line entries in table C-4 on page 488 of the 1969
Budget.)
4. Planning figures. Planning figures, which will establish
targets for agency plans, will be provided to all agencies
by the Bureau of the Budget. These planning figures will
cover amendments and supplemental appropriations as well
as regular appropriations. For consistency with the 1969
budget estimates, amounts for the civilian and military_pay
increases effective in July 1968 will not be included in
the planning figures for each agency, but will be added later.
5. Action by agency. The head of each agency will:
a. Prepare a plan for budget .reductions, by appropriation
and fund account, for 1962 budget authority, outlays and
obligations to conform to the 1969 planning figures provided
by the .Bureau of the Budget. This plan will also identify
the increased costs for civilian and military pay increases
under Executive Orders 11413 and 11414,, effective in July
1968, for which a special?allowance for the Government as a
whole was included in the budget. The plan will be designed
in such a way that, insofar as possible, reductions in budget
authority and outlays will flow from re,duction's-in obligations,
which will be controlled through the apportionment process.
_ .
b. Submit to the Bureau of the Budget:
(1) The "Plan for 1969 Budget Reductions" (see Exhibit
A) prepared in accordance with instuctions in Attachment A.
(2) A narrative statement summarizing the implica-
tions for specific programs of the action proposed to be
taken under the agency plan.
Four copies of the required information will be submitted
to the Bureau of the Budget not later than_10_days after
the planning figures are furnished by the BureaU-Of the
Budget. If it becomes necessary to prepare the plan before
final Congressional action on the agency's appropriation
act, the agency's best estimate of the final appropriation
will be used. After final Passage of the appropriation act,
the agency will submit revised information to the Bureau of
the Budget.
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c. Anticipate the need to absorb a share of the overall
reductions required by thelimitations in paragraph-2-above,
and restrict obligations and outlays appropriately, until the
agency plan is approved:
d. Request apportionments or reapportionments as
necessary to conform to the agency plan as approved in
accordance with paragraph 6 belovi;
e. Supplement the present administrative control
regulations (which govern the apportionment process) with
additional control instructions, as necessary, to prevent
the agency from exceeding the 1969 .limitations on outlays.
6. Limitations on budget authority and outlays. The Bureau
of the Budget will review the agency's plan for conformity
with the goals and priorities of the President and provide
him with recommendations for action. The President's decisions
with respect to 1969 limitations on budget authority and
outlays will be transmitted to the agency head by the Bureau
of the Budget. The agency head will be responsible for
insuring that the limitations established by the President
are not exceeded. Where necessary, a revised agency plan
reflecting the final 1969 limitations will be submitted to
the Bureau of the Budget.
7. Apportionment and reapportionments. Apportionment and
reapportionment requests will be submitted in accordance
with the instructions in Circular No. A-34. Apportionment
and reapportionment forms will also be required, when specif-
ically requested by the Bureau of the Budget, for selected
trust funds and other funds which are now exempt from appor-
tionment under Circular No. A-34.
The sum of the reserves for all accounts having 1969 budget
authority will equal or exceed the amount shown on line E,
minus line F, in the column for budget authority on the
approved agency plan (Exhibit A). Reserves established to
accomplish the reductions required by Public Law 90-364 will
be identified, either in the body of the form or in a
footnote.
In preparing apportionment and reapportionment requests,
the costs of civilian and military pay increases effective
in July 1968 must be absorbed insofar as possible, thus
reducing-the amount of the supplementals required. However,
reserves for each account must be at least equal to tha
CDC savings resulting from the provisions of Public Law 90-364
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relating to the limitation on the number o'f employees.
In a single account, therefore, the apportionment form
may reflect both a reserve for savings resulting from
the personnel limitation and an anticipated supplemental
to meet increased pay costs.
8. Budget presentation. In the schedules in the Appendix
to the 1970 budget, the budget authority entry will be net
of reserves which, under the terms of the law, are to be
automatically rescinded as of June 30, 1969. These amounts
will be identified in the review of the 1970 budget.
Instructions for preparing 1970 budget schedules to reflect
this reserve action will be issued at a later date.
10. Special guidelines. Agencies should be aware of the
following when planning for the execution of the imposed
limitations:
a. .Subsequent increases in 1969 budget authority over
the amounts in the budget for indefinite authorizations
will require the agency head to make an equivalent offsetting
reduction elsewhere to remain within the limitation.
b. Legislation not reflected in the budget which provides
"backdoor" financing will require the agency to make equivalent
offsetting reductions to meet the budget authority limitation.
Also, any additional outlays generated thereby in 1969 will
force an equivalent offsetting reduction in outlays.
C. Program additions or expansion (including those which,
under existing law, are not subject to direct administrative
control) and new legislation leading to greater 1969 budget
authority or outlays than reflected in the 1969 budget will
require the agency to make equivalent offsetting reductions
elsewhere.
d. Any increases over the budget estimates due to lack
of Congressional approval of proposed legislation which
would have reduced budget authority or outlays will also
require the agency to make equivalent offsetting reductions.
e. Reductions in outlays of special foreign currency
program appropriations will not decrease total Government
outlays, and will not count in reductions to meet agency
limitations.
CHARLES J. ZWICK
Director
Attachments
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ATTACHMENT A
Bulletin No. 68-16
I. S":-.UCTIONS 10R PREPARING
PLAN FOR 1969 BUDGET REDUCTIONS
PURSUANT TO P.L. 90-364
Summary section --
Line Al Enter the total amounts shown for the agency in
the 1969 budget for budget authority and outlays
in table 14, which starts on page 196 of the Budget.
In the column for obligations, show total amounts
on the same basis as in the budget schedules (Line
71, Total obligations (affecting expenditures)).
Include in all three columns those items which were
proposed in the budget for transmittal at a later
date.
Line A2 Paragraph 3 of the Bulletin specifies activities
which may cause the limitations to be exceeded.
Enter as negative items, in all three columns,
gross amounts included in the budget for these
activities (i.e.; excluding the effect of any
receipts deducted which might be related to these
activities).
Line A3 Show, as plus items, the amounts of receipts off-
setting budget authority, outlays and obligations
as estimated in the 1969 budget document (adjustments
for interfund and intragovernmental transactions and
applicable receipts from the public, and loan repay-
ments deposited in general fund).
Line A4 Sum of the three above lines.
Line B Enter 1969 planning figures for budget authority and
outlays as provided by the Bureau of the Budget.
In the obligations column enter the agency's planned
reduced level of obligations to meet the 1969
limitations.
Line C Line AS minus line B.
Line D Enter the net increases over the budget passed by
Congress, as a plus, and net decreases as a minus.
Line E Line C minus line D.
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Line F
Enter t.e estimated 1969 effect of the civilian
and military pay increases (including related
costs for Government retirement contributions,
el-an:Layer FICA taxes, and other payments based on
employees' salaries) which start in July 1968.
In the column for budget authority show only the
portion of the cost requiring additional 1969 budget
authority. (Exclude direct costs to be financed by
reimbursements or balances but include any payments
to other agencies for which appropriations would
be required.) The column for outlays and obligations
will include increases financed from balances (as
well as those financed from budget authority), but
will be net of those financed by increased
reimbursements. Exclude any anticipated wage board
increases. Wage board increases will be absorbed
by the agencies within the 1969 limitations.
Analysis by account
1. List all accounts for which amounts are reported on lines
C, D, or F. For each account, show separate lines for
budget authority (BA), outlays, and obligations (Obl.)
2. For each account listed, amounts will be entered as
follows:
Column 1 - Enter amounts shown in the 1969 budget,
including amounts proposed for separate
transmittal.
Column 2 - Enter the amount of budget authority enacted
by Congress, and comparable amounts for outlays
and obligations. Indefinite authorizations
(whether current or permanent) will be reported
in the same amounts as estimated in the budget.
Column 3 - Enter the current estimate of budget authority
after deducting reserves proposed under P.L.
90-364 , but excluding any changes which are
offset by changes in estimates of receipts to
be.deducted from agency totals. (Where an
appropriation is equal to receipts which are
deducted from the totals, the same amount will
appear in columns 1, 2 and 3 for budget authority.)
For outlays and obligations, enter the latest
estimates, taking account of any other
reserves in addition to those proposed under
P.L. 90-364.
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Column 4 - Enter the result of subtracting column 3
from column 2. In cases where column 3 is
a higher figure, the amount in column 4
will be negative, and must be offset by
positive savings in other accounts.
Column 5 - Enter the amount included on line F of the
Summary for the account involved.
3
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CIP Bulletin No.
PLAN FOR 1969 BUDGET REDUCTIONS
Pursuant to P.L. 90-364
DEPARTMENT OF GOVERNMENT
(In thousands of dollars)
68-16
A.
SUMMARY
1969
Budget authority, outlays and obligations:
1. Totals recommended in 1969 budget (including
Budget
Authority
Outlays
Obligations.
items proposed for separate transmittal)
8,798,600
8,555,016
6,868,750
2. Exception activities under P.L. 90-364
(-)
3. Offsetting receipts reflected in the
1969 budget
(+)
1,442,085
1,442,085
4. Sub-total
10,240,685
9,997,101
8,868,750
B.
Planning figures provided by the Bureau of
the Budget and agency action
(-)
-9,250,685
-9,037,101
C.
Gross reductions required
990,000
960,000
998,000
D.
Impact on reductions required due to
(+)
Congressional action
(-)
-15,000
-12,600
-13,000
E.
Net reductions required
(+)
975,000
947,400
985,000
F.
Adjustments for 1969 civilian and military
pay increases
(-)
-199,800
-200,000
-206,000
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eLAB EVE II-JUJ Bliri? REDUCTIONS
Pursuant to P. 90-364
DEPARTMENT OF GOVERNMENT
(In thousands of dollars)
ANALYSIS BY ACCOUNT
- 1969
budget
(1)
Enacted
(2)
Current
revision
(3)
Possible
reductions
Pay'
costs
(4)
(5)-
(2 - 3)
Office of the Secretary:
, -?
Salaries and expenses
BA
3,105
2,950
2,900
50
-15
Outlays
3,206
3,075
3,040
35
-14
Obl.
3,105
2,950
2,900
50
-15
Bureau of Public Works:
Construction
BA
54,455
45,000
45,000
Outlays
52,971
51,750
50,500
1,250
Obl.
54,986
49,900
48,700
1,200
Salaries and expenses
BA
10,300.
10,000
9,500
500
-75
Outlays
9,300
9,100
8,900
200
-72
Obl.
10,300
10,000
9,500
500
-75
?0
Bureau of Business Management:
Commercial Revolving Fund
BA
6,300
5,000
5,000
--
Outlays
-2,723
-3,700
-4,500
800
-50
Obl.
-11,845
-13,145
-13,145
Bureau of Public Benefits:
Public benefits trust fund
BA
1,216,838
1,216,838
1,216,838
Outlays
1,219,050
1,219,050
1,221,000
-1,950
-105
Obl.
1,220,100
1,220,100
1,222,600
-1,500
-105
0
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASH I NGTON D.C. 20503
BULLETIN NO. 68-15, Supplement No. 4 July 26, 1969
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Limitations on the number of civilian employees
1. Purpose. Bureau of the Budget Bulletin No. 68-15
prescribed regulations to implement section 201 of Public
Law 90-364, which established limitations on the number of
civilian officers and employees in the executive branch and
required that the savings resulting from the operation of
these employment limitations be identified and reserved
from use. The Second Supplemental Appropriations Act, 1969
(Public Law 91-47), approved July 22, 1969, repeals the
employment limitations of section 201.
This supplement terminates, as of July 1, 1969, the require-
ments of Bulletin No. 68-15 and its subsequent supplements,
subject to the qualifications below.
2. Report for June 1969. All agencies should recognize
that the "Special Report on Employment" and the "Report on
Reserves and Savings" for June 1969 -- as called for by
Bulletin No. 68-15 and its supplements -- are still required.
Thereafter, the requirement for these reports is discontinued.
3. Employment controls in fiscal year 1970. In signing
Public Law 91-47, the President directed "a further lowering
of the personnel ceilings established last April" (in con-
nection with the April budget revisions). Each agency will
be notified in the near future of a revision in those April
personnel allowances, covering both full-time permanent and
total civilian employment. In the meantime, you should
manage your agency's authorized positions effectively and
control strictly the numbers of personnel employed.
ROBERT P. MAYO
Director
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
Washington, D. C. 20503
BULLETIN NO. 68-15, SUPPLEMENT NO. 3 May 23, 1969
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Limitations on the number of civilian employees
1. Purpose. Bureau of the Budget Bulletin No. 68-15, dated
June 28, 1968, and Supplements 1 and 2 thereto, prescribed
regulations to implement section 201 of Public Law 90-364,
which (a) established limitations on the number of civilian
officers and employees in the executive branch and (b)
instructed the Director of the Bureau of the Budget to
reassign vacancies in agencies of the executive branch "for
the more efficient operation of the Government."
This Supplement No. 3 to Bulletin No. 68-15 further reduces
the rate at which full-time permanent employees may be
appointed to fill vacancies occurring due to resignation,
removal, retirement or death. This action, in part, is
prompted by the magnitude of agency requests for the reassign-
ment of vacancies during the first quarter of the fiscal year
1970. Agency requests for reassignments of vacancies far
exceed the number available for such action by the Director
of the Bureau of the Budget. The reduction in appointment
authority is required for the more efficient operation of
the Government.
2. Responsibility of agency heads. The head of each agency
will insure that appointments of full-time employees to
permanent positions in his agency are limited to 65% of posi-
tions becoming vacant on and after July 1, 1969, because of
resignation, removal, retirement, or death. Hiring commit-
ments must properly recognize this new limitation on appoint-
ments.
3. Coverage. These provisions are applicable to appointments
of full-time employees to permanent positions coming under
the provisions of section 201 of Public Law 90-364.
Agencies with 50 or fewer full-time employees in permanent
positions may continue to fill vacancies in such positions
as they occur, on a one-for-one basis.
ROBERT P. MAYO
Director
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(S4
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-15, Supplement No. 2 April 10, 1969
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Limitations on the number of civilian employees
1. Purpose. Bureau of the Budget Bulletin No. 68-15,
dated June 22, 1968, prescribed regulations to implement
section 201 of Public Law 90-364, which established lim-
itations on the number of civilian officers and employees
in the executive branch.
This Supplement No. 2 to Bulletin No. 68-15 is provided
to emphasize that unless the Congress amends or repeals
section 201 of Public Law 90-364,-the current hiring re-
strictions and reporting under the law will remain in
effect during fiscal year 1970. Therefore, Bureau of the
Budget Bulletin No. 68-15 and Supplement No. 1, as well
as this instruction, are in effect until amended or with-
drawn.
2. Responsibility of agency heads. The original 1970
budget and subsequent reviews of the budget assumed that
Public Law 90-364 would be changed for ?the fiscal year
1970. This assumption was made for budget planning pur-
poses only and does not automatically remove the hiring
restrictions as proviUd under the law.
The head of each agency, therefore, will insure that any
new hiring commitments made this summer and fall properly
recognize the employment limitations of Public Law 90-364.
The agencies' need to actively recruit during .the coming
summer and fall cannot be used to excuse any violations
of the provisions of this law.
Agency requests for the reassignment of vacancies for the
first quarter of the fiscal year 1970, as provided for
under Bulletin No. 68-15, should be submitted no later
than April 30, 1969. However, the Bureau of the Budget
will not grant blanket relief to any agency by reassign-
ing vacancies to meet excessive commitments.
? 3. Disadvantaged summer youth employment. The Civil
Service Commission will again advise agencies on the
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employment of disadvantaged summer youths. The Commis-
sion will monitor the program to assure that the legal
limitation will not be exceeded. The exemption under
, the law Is limited to 70,000 for" the executive- bramch',
of the Government.
ROBERT P. MAYO
Director
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-15, SUPPLEMENT NO. 1 August 20, 1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Limitations on the number of civilian employees
1. Purpose. Bureau of the Budget Bulletin No. 68-15, dated June 28,
1968, prescribed regulations to implement section 201 of Public Law
90-364, approved June 28, 1968, which established limitations on the
number of civilian officers and employees in the executive branch.
Those limitations became effective July 1, 1968.
This Supplement to Bulletin No. 68-15
and a revised report form (Exhibit A)
tory exemptions from those employment
1968. This new reporting requirement
cable to all agencies.
provides revised instructions
to take into account any statu-
limitations enacted Since July 1,
and the revised form are appli-
2. Special monthly reports on employment. The revised format, as
illustrated in Exhibit A of this Supplement, will be used for the
monthly "Special Report on Employment." Sections A, B. and C of the
report will apply only to employment subject to the limitations of
Public Law 90-364, as modified by any statutory exemptions. The
caption for these sections of the report will show parenthetically
"(Excluding Statutory Exemptions)," as indicated in Exhibit A. Agency
reports for sections A, B, and C of Exhibit A will be adjusted in both
columns "(a)" and "(b)" to exclude employment covered by newly enacted
statutory exemptions in the month the exemptions become effective. The
first agency report containing such adjustments will include an attach-
ment containing an explanatory note which cites the legislation authoriz-
ing the exemptions and presents information reconciling the data to the
figures on the report for the preceding month.
The caption to section D of the report is retitled to read "Employment
Under Statutory Exemptions." Monthly data on employment exempted in
Public Law 90-364 will be reported on lines 14, 15, and 16. Monthly
data on employment under any statutory exemption enacted since July 1,
1968, will be reported on new lines 17a, for "Full-time employment in
permanent positions", and on 17b for "Temporary and part-time employ-
ment."
New line 18 (previously line 17) will be used to report total employ-
ment at "End of month (same as on SF 113A)."
CHARLES J. ZWICK
Director
Attachment
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Dussecin IMO. Co-,ID
Supplement No. 1
o-e
SPECIAL REPORT ON EMPLOYMENT
DEPARTMENT OF GOVERNMENT
Cumulative
August Since
1968 June 30 1968
(a) (b)
A. Full-time Employment in Permanent Positions
(Excluding Statutory Exemptions)
1. Employment, July 1, 1968 XXX . 10,000
2. Employment, end of previous month 9,975 xxx
3. Separations due to retirement, resignation,
removal, or death:
a. Period with 75% vacancy-filling rate.(-) -85 -163
b. Period with % vacancy-filling rate.(-) NA NA
c. Period with % vacancy-filling rate.(-) NA NA
4. Employees transferring to other agencies.(-) -25 -55
5. Accessions during period ...(+) 90 173
6. Employment, end of month 9,955 9.955
B. Maximum Allowable Full-time Employment in Permanent
Positions (Excluding Statutory Exemptions)
7. Based upon % replacement limitations:
a. Employment, July 1, 1968 - (25% x line 3a) xxx
b. % not replaceable x line 3b (-) xxx
c. % not replaceable x line 3c (-) 200C
8. Reassignments by Bureau of the Budget(+ or -) xxx
9. Maximum allowable employment mac
C. Temporary and Part-time Employment (Excluding
Statutory Exemptions)
10. Employment, end of month 440
11. Employment same month, calendar 1967 xxx
12. Reassignments by Bureau of the Budget (+ or -) xxx
13. Maximum allowable employment xxx
9,960
NA
NA
9.960
MCC
(455)
(455)
D. Employment Under Statutory Exemptions
14. Presidential appointees (full-tine permanent) . 12 xxx
15. Disadvantaged summer youth 189 xxx
16. Intermittent 98 2CXX
17. Statutory exemptions since July 1, 1968:
a. Full-time employment in permanent positions xxx
b. Temporary and part-time employment xxx
E. Total Employment
18. End of month (same as on SF 113A) 10.694 xxx
NA - Not applicable at this time..
*Show employment covered by statutory
exemptions enacted since July 1, 1968
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OrniIrr Ccs? Pt.
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tiyZJtn
,07.4/,e6ezae)/2A-t?s
10 July 1968
MEMORANDUM FOR THE RECORD
SUBJECT: BOB Bulletin 68-15 -- Limitations on Numbers of
Civilian Employees
1. A meeting was held with John Hurley, BOB representative,
regarding the application of Bulletin 68-15. In addition to Mr. Hurley,
the following people were present:
Mr. John Clarke
STAT
2. Mr. Hurley confirmed what he had indicated earlier to
Mr. Clarke that the three for four principle regarding replacement
hiring would not be applied to CIA. He stated that since the Agency
had successfully reached its FY 1968 end of year employment level
50X1 of which level was below the 30 June 1966 end of year
50X1"' employment of the objective of Bulletin 68-15 had been met.
This means that the Bulletin stipulation that the FY 1968 employment
ceiling will remain in effect is binding.
3. In the course of the discussion it was clearly pointed out to
Mr. Hurley that the year-end levels for FY 1966 and FY 1968 are
not strictly comparable, but that the lack of comparability had pre-
viously been agreed to by BOB. We showed him the 2 February letter
from the Budget Director which specifically excluded certain OSA and
all LAS personnel from the FY 1968 ceiling, and he had-no quarrel with
this position. Finally, we indicated to him that with the Bureau
interpretation as p by him we will go forward and prepare our
50X1 1970 Budget with a position level in the 1969 column. With all
of the above he was in agreement.
4. Next we took up the problem of monthly reporting on temporary
positions and part-time employees as required by Bulletin 68-15. We
pointed out that our current records do not permit this kind of detailed
GRMI? 1
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Chief, Budget Division
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reporting, but that we are in the process of developing a system
which will do so. He appeared understanding of this difficulty and
indicated that whereas the Bureau would not expect full compliance
where conditions do not permit, at the same time we should report
.
monthly levels on LAS or other categories where it is available.
This we agreed to do.
5. Finally, it should be noted that although Hurley not
reiterate again the Bureau's intention to retrieve some positions
as a result of the BALPA exercise, he had stated this intent in an
earlier conversation with Mr. Clarke,. Accordingly, we should
50X1 anticipate that some reductions from the level will in all
likelihood occur before FY 1969 comes to an end.
Distribution:
0 Orig - ExDir (return D/PPB)
1 - C/BD -
I - D/PPB
1 - Manpower Control Officer
1 - C/PPD
SECRET
STAT
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STAT
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9 July 1968
90/2,,1144Lit
e- t tdytni) 0-1
MEMORANDUM FOR: Executive Director-Comptroller
SUBJECT : Bulletin 68-15 -- Limitations on the Number
of Civilian Employees
1. The following is an analysis of the significant points in Bulletin
68-15 together with issues raised by these points and some recommen-
dations for resolving these issues. In general the Bulletin is complicated
and not entirely clear on a number of matters and is obviously directed
at the normal general government agencies rather than the CIA.
Z. Full Time Employees in Permanent Positions. The Bulletin
states that "until the number of employees for the executive branch as
a whole is less than the number employed on June 30, 1966 ... the head
of the agency will insure that the appointment of full time employees to
permanent positions does not exceed 75% of the number of separations
due to resignations, retirement, removal, or death." An exception to
this restriction can be provided by the Bureau of the Budget, but the
ground rules promise to be rather stringent unless an Agency is at or
below its 1966 year-end employment. The full time employment in
permanent positions as of June 30, 1966 will be furnishedito-each agency
by the Bureau of the Budget.
3. Regarding
First, it is necessary
level with the Bureau
asked our assistance
permanent positions, there are two major issues.
for us to arrive at an understanding on a June 30, 1966
of the Budget. Mr. Hurley has already informally
in determining this level. On the basis of actual
50X1
figures,
our 30
June 1966 reported level is our 30 June 1968
50X1.
level is
or 17 under the 1966 figure. Unfortunately, the two
50X1
figures
are not strictly comparable. The 1966 figure includes IAS
50X1
pool and
OXCART positions; the 1968 figures, by agreement with the
50X1
Bureau
of the Budget,
do not include IAS positions andr?DXCART
positions. The
Bureau may want to adjust one of the year-end totals to
achieve comparability.
I ?
O
4. The second issue, which flows from the above, is the question
of whether or not the Bureau will grant relief from the 75% replacement
r0 l
7 from oformlic"lar
gc171
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CIPPIT
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50X1
50X1
0
restriction, once we reach an agreed upon strength level. For if
the Bureau is unwilling to grant us relief even if we attain such a level,
we shall then be forced to restrict appointments to three-quarters of
losses until the "executive branch as a whole" reaches the June 1966
employment level.
5. It is recommended that for purposes of discussion with the
Bureau of the Budget, we attempt to determine first that the restriction
will be lifted if we achieve an agreed upon 1966 employment level. If
so, we would argue for the present status, i. e., OXCART and IAS
positions be included in June 1966 strength levels but omitted from
current level. Such an arrangement would find us 17 below strength
on 30 June 1968. Should the Bureau find this unacceptable, we would
urge either Alternative B or Alternative C as shown on the attachment.
6. Temporary Positions and Part Time Employees. The Bulletin
requires the head of each agency to insure that the appointment of full
time employees in temporary positions and part time employees
(excluding summer disadvantaged youth, intermittent employees, and
employees serving without compensation) is limited so that the number
of such employees on board during the corresponding months of calendar
year 1967. Here also the Bureau of the Budget is to provide us with
our 1967 monthly allotments. In each month, the total number of employees
on board shall not exceed the number on board during the same month
of 1967. This raises a very significant issue for CIA because at the
moment we do not have any central control over the numbers of tem-
porary and part time employees. Certain categories of these employees,
such as the LAS pool, are known and are readily controllable but the vast
majority of these employees including
are not subject to any position control at present.
The alternative here seems to be either to seek to establish immediate
controls over these positions or to ask the Bureau for a complete
exemption from this restriction and perhaps substitute some other method
of control such as the allotment of dollars for these positions. Neither
of these alternatives is very satisfactory and both point up a lack of
established control over this large category of employment in the past.
It is recommended that we discuss this situation with the Bureau of the
Budget and ask for temporary relief from this requirement with the pro-
mise that we will take steps to institute world-wide control and reporting
of temporary and part time employment.
7. Bulletin 68-15 implies that controls and reporting requirements
are to be managed by the Bureau of the Budget on a monthly basis. In
SECRET
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. nrODCT
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view of our practice of bringing in certain types of employees by classes
and in view of our heavy emphasis on summer and fall recruitment,
thwould be helpful to negotiate some method of control which sets
semi-annual requirements for CIA even if we must continue to make
monthly progress reports. The Bulletin requires special reports on
employment, as well as continuation of the standard form 113A Civilq
Service Report. The latter is required of other agencies, but not of
CIA, although the Bureau of the Budget has recently exhibited some
interest in abolishing this waiver. It is recommended that the matter
and form of reporting requirements be discussed with the Bureau of
the Budget, with the intention of negotiating a procedure which will
permit compliance with Bureau. requirements which are compatible
with Agency reporting capabilities.
8. Two other points worthy of note are: (a) savings resulting
from these employment limitations are tote placed in the Reserve; and
(b) the law is not to be circumvented by "contracting with firms and
institutions for personal services. "
Attachment
Acting Director of Planning,
Programming, and Budgeting
Deputy Director, 0/P
Distribution:
Original - ExDir (return AD/PPB)
1 - ER
70 \31,1 stg
r5 It
SECRET
STAT
STAT
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? 7.----S64D-112-1;1/-11:CoHielk CLC?FICATION TOP AND BOTTOM
?1 UNCLASSIFIED I--SONFIDENTIAL
SECRET
3 CENTRAL INTELLIGENCE AGENCY
OFFICIAL ROUTING SLIP
TO
NAME AND ADDRESS
DATE
INITIALS
1
Acting Director PPB
2
Executive Director-Comptroller
3
4
5
6
ACTION
DIRECT REPLY
PREPARE REPLY
APP*INAL
DISPATCH
RECOMMENDATION
COMMENT
FILE
RETURN
CONCURRENCE
INFORMATION
SIGNATURE
Remarks:
z.
FOLD HERE TO RETURN TO SENDER
FROM: NAME. ADDRESS AND PHONE NO.
DATE
AT OPPB 6 E 08
9 Jul
UNCLASSIFIED
I CONYILItNTIAL I
SECRET
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON, D.C. 20503
BULLETIN NO. 68-15 June 28, 1.968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Limitations on the number of civilian employees
1. Purpose. ?Section 201 of Public Law 90-364, approved
June 28,1968, prescribes limitations on the number of
civilian officers and employees in the executive branch.
These limitations become effective July 1, 1968. The Director
of the Bureau of the Budget is required to perform certain
functions in the execution of that section, and is authorized
to prescribe regulations to carry out its provisions. This
Bulletin prescribes such regulations.
The provisions of P.L. 90-364 dealing with the limitations on
budget authority and outlays for fiscal year 1969 are covered
in Bulletin No. 68-16 which will be issued shortly.
2. Definitions. Unless otherwise indicated herein, the
terms of this Bulletin relating to employment and types of
positions have the meaning set forth in Bureau of the Budget
Circular No. A-64. (Those meanings are the same as in the
Federal Personnel Manual, section 292.) The term "agency"
has the meaning set forth in Bureau of the Budget Circular
No. A-11; it includes both departments and those establishments
which are independent of the departments.
3. Responsibility of agency heads. The head of each agency
will:
a. Insure that the number of appointments of full-time
employees to permanent positions within his agency does not
exceed 75 percent of the number of separations due to
resignation, retirement, removal, or death, or such other
limitations as may be established by the Director of the
Bureau of the Budget in accordance with Public Law 90-364.
This limitation does not apply to positions filled by appoint-
ment by the President with the advice and consent of the
Senate, nor to the filling of vacancies resulting from
employees transferring to full-time permanent positions
elsewhere in the Federal service. (References in this
Bulletin to the 75 percent replacement rule also apply to
such modified replacement rules as may be prescribed by the
Director of the Bureau of the Budget - see paragraph 6 below.)
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b. Insure that the number of appointments of full-time
employees in temporary positions (exclusive of summer
employment of disadvantaged youth, casual employees, and
employees serving without compensation) and of part-time
employees is limited so that the number of such employees
during any month does not exceed the number of such employees
in his agency during the corresponding month of calendar
year 1967. (The numbers of temporary and part-time employees
for each month of 1967, adjusted for summer employment of
disadvantaged youth and for reorganizations and transfers
of functions, will be furnished to each agency by the Bureau
of the Budget.)
c. Provide for the reassignment of vacancies resulting
from separations for the specified causes between components
of his agency and among various types of positions so as
to achieve the most effective and efficient use of those
vacancies which he is authorized to fill.
d. Make sure that apportionment requests, submitted
pursuant to Bureau of the Budget Circular No. A-34, and the
provisions of Bulletin No. 68-16, "Limitations on budget
authority and outlays for fiscal year 1969," provide for
reserving the savings resulting from the operations of section
201 of Public Law 90-364.
4. Termination of limitations on full-time permanent
apvointments. The limitations established in accordance with
this Bulletin and Public Law 90-364 on the appointment of
full-time employees to permanent positions will be in effect
until the number of employees for the executive branch as
a whole is less than the number employed on June 30, 1966.
At such time, the Director of the Bureau of the Budget will
notify the agencies and issue such modifications of these
regulations as may be required.
5. Determination of vacancies to be filled. Within the
limits permitted by the law and this Bulletin, the head of
each agency may determine (or provide methods of determining)
the vacancies to be filled. In applying the 75 percent
rule forfilling-vacancierirrnill-tillirifernialieict positions,
the computation will be carried to the whole number, with
fractions dropped. The agency head should provide for the
reassignment, as he determines to be necessary and desirable,
of vacancies resulting from the specified causes. He may
fill the number of vacancies allowable under the 75 percent
rule (including new positions established to carry on new
and increased workloads) without regard to the specific
positions vacated. For example, four vacancies resulting
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from the resignations of statisticians and typists in Chicago
and Los Angeles could be used to hire three nurses for a
hospital in New York under the jurisdiction of the same agency.
6. Reassignments of vacancies by the, Bureau of the Budget.
The Director of the Bureau- of the Budgetmay reassign
vacancies between agencies if, in his opinion, such action
is necessary or appropriate because of the creation of a new
agency, because of a change In functions, or for the more
efficient operation of the Goveinment.
rfSVb
a. The Director may authorize a higher re lacement rate
for vacancies _in abIL - post ions for some
agencies (for example, those for which the maximum allowable
employment would otherWise'be below their June 30, 1966,
employment) iand prescribe a lower replacement rate fnr nfhPr
agencies (for examPl-d7-fh-751-6-5-5517-&-their June 30, 1966,
employment) in such manner as to adhere to the overall
limitation or t e The full-time employ-
men in permanent positions as of June 30, 1966, adjusted
for Presidential appointees and for reorganizations and
transfers of functions, will be furnished to each agency by
the Bureau of the Budget.)
b. Periodically, the Director of the Bureau of the
Budget will notify agencies of reassignments of vacancies
(1) in full-time permanent potitions (whether resulting
from the operation of paragraph 6a; or otherwise), and (2)
in part-time and temporary employment. Agencies receiving
such reassigned vacancies are authorized to make appointments
thereto for the full number of vacancies so reassigned, in
addition to appointments otherwise allowable.
7. Requirements for reassignment of vacancies. Requests for
reassignments under paragraph 6, above, will be made not more
often than quarterly by letter from the agency head. Such
letters will demonstrate the need for reassignments and set
forth the additional number of reassignments estitSted to be
required for each of the ensuing three months (full-time
permanent positions separately).
-
Except for those agencies which are.below_their June 30, 1966,
employment levels, the following guidelines will be used:
a. Agencies with more than 50 full-time employees in
permanent positions. There must be a clear demonstration
that the additional employees are required to meet needs such
as those involving the safety of human life, the immediate
health of individuals, or the protection of property. There
must also be a clear showing that the agency head has taken
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all steps within his power to meet the needs, including the
reassignment of vacancies within his agency to the organiza-
tion unit and types of positions in which the requirements
OCCUr.
b. Agencies with SO or less full-time employees in
permanent positions. There must be a clear demonstration
that the additional vacancies are required either for the
reasons stated in paragraph 7a above, or that they are
essential to executing the basic mission of the agency.
There must also be a clear showing that the agency head has
taken all the steps within his power to meet the needs,
including- the reassignment_of vacancies within his agency
to the-types of-positions in-which the -requirements occur.
8. Exceptions. Public Law 90-364 excepts the following
grodps-from-the-employment ceilings:
aw-Employees--(not exceeding 70)000 during any month)
appointed under the Pre?Ideari Pie:gram-to-provide summer
employment for economically or educationally disadvantaged
persons between the ages of 16 and 22 (i.e., 16 through 21).
The executive agencies will be advised by the Civil Service
Commission of the procedures for controlling employment
under this program.
b. Casual employees. (As referred to in Public Law
90-364, these are considered as "intermittent employees"
as defined in Bureau of the Budget Circular No. A-64.)
c. Employees serving without compensation.
9. Special monthly reports on employment. Special monthly
reports on civilian employment of executive agencies are
required for administration of this law, and for preparing
the prescribed quarterly reports to the Congress. These
monthly reports will be prepared in accordance with the
instructions in Attachment A.
10. Reports on savings and reserves. The law requires that
the savin s resulting from the operation of these 11 ? ? i ent
limitations be i en i i.e an rom use. Such
savings will, comprise the direct personnel compensation
that would otherwise be paid employees (including overtime,
premium pay, etc.) and the related expenses (including such
personnel benefits as the employer's share of retirement
premiums, Government contributions for employee life insurance
premiums, and other payments which are based on the number
of employees or the amounts of their salaries) less any over-
time costs made necessary by the employment limitations
required by P.L. 90-364.
3
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Apportionment and ea ??o t *tr. -. .? ? ?- 'Ltiated
by the agency, as appropriate, to place in resprvP cavings
resulting from employment limitations. These savings will
be part of the reserves for savings established under Public
Law 90-364 in accordance with the provisions of Bulletin
No. 66-16. Total reserves established for any account pursuant
to P.L. 90-364 must be at least as large as the savings under
section 201. If.at the end of any quarter, such savings
exceed the reserves previously established, a reapportionment
form must be submitted to. increase the amount reserved.
Cumulative net savings, resulting from sec ion 201 should-be
identified in a fbeitriote7-61i7Staiiddincirms_133.and_143?
.___
In addition, and in order that the reports prescribed by
section 201 of Public Law.90-364.c4p_be.made.taGongress,
each executive agency will prepare and submit to the Bureau
of the Budget special_repprt.pp_samings_resulting-from.
employment _limitations. These reports will be prepared in
accOkdance with the instructions in Attachment B.
11. Previous employment ceilings. In view of the provithions
0 of section 201 of Public Law 90-364 and this Bulletin, the
employment ceilings established by the Bureau of the Budget for
the end of the fiscal year 1969 are hereby rescinded.
The emplo ent ceilings established for the end of the fiscal
yea remain in e ect.
12. Special precautions. Contracting with firms and insti-
tutions for personal services will not be used to circumvent
the employment restrictions imposed-E7 section 201 of
Public Law 90-364 and this Bulletin.
In carrying out the provisions of section 201 of Public
Law 90-364, the reemployment-rights of any person under
section 9 of the Military Selective Service Act of 1967 or
any other provision of law conferring reemployment rights
upon persons who have performed active duty in the''-Armed
Forces will not be superseded or modified.
CHARLES J. ZWICK
Director
Attachments
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ATTACHMENT A
Bulletin No. 68-15
INSTRUCTIONS FOR PREPARING'
SPECIAL REPORT ON EMPLOYMENT
Each executive agency will prepare a report monthly in the
form illustrated in Exhibit A. It will be prepared con-
currently and in conjunction with the Standard Form 113A
report furnished to theCivil Service'Commiasion. Employment
data in theae-two reports muat agree. Two copies of the
Special Report on EMployment Will be sent to the Bureau of
the Budget and one copy to the Civil Service Commission at
the same time as the regular Standard Form 113A report is
due to be sent to the Commission (i.e., the 15th of the
following month).. ? '
Section A employment in permanent positions
(excluding Presidential appointees)'
This section (lines 1-6) covers full-time employment in
permanent positiOna as defined in Bureau of the Budget Circu-
lar No. A-64 and for line 9 of the Civil Service Commission
Standard Form 113A report, excluding Presidential appointees
requiring confirmation by the Senate.
Fot the initial report for July 1968, entries are required
-only in column (b) Of this section. Thereafter, entries
will be made, as indicated, in both columns (a) and (b).
Line 1_- 'Enter in column (b) the actual employment at the
start of the control period. The June 30, 1968,
employment reported to the Civil Service Commission
on line 9 of Standard Form 113A, excluding Presi-
dential appointments requiring confirmation by the
Senate, will be used for this entry. This base
? figure will remain the same on all subsequent reports.
Line 2 - Enter in column (a) the actual employment as of the
end of the month immediately preceding the month
for which the report is prepared.
Line, 3 - Make entries for lines 3a, 3b, and 3c, (explained
below) in columns (a) and (b); these will cover
separations due to retirement, resignation, removal
or death. These will be minus entries and will ex-
clude transfers to full-time permanent positions
in other Federal agencies.
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Line 3a ?
2
Enter the separations occurring during the period
when the agency is subject to the 75% replacement
limitation.
Line 3b - Enter the separations occurring ?during the period
in which a replacement rate lower or higher than
the 75% rate is prescribed by the Bureau of the
Budget under the provisions of paragraph 6a of
this Bulletin.. Enter the prescribed rate in the
stub.
Line 3c - Enter the separations for the period subsequent
to.that applicable for-line 3b during which a further
modification of the replacement rate has been
prescribed by the Bureau of the Budget. Enter
the revised prescribed rate in the-stub.
Line 4 - Enter in columns (a) and (b) separations due to
employees transferring to full-time permanent
' positions in other Federal agencies. These will.
be mintis entries.. Such separated employees may -
be replaced on a "1 for 1" basis.
Lind 5 --Enter.in columns (a) and, (b) accessions to the
? agency.
. .
Line..6....-Enter-in each dolumn the sum of the entries for
lines 1 through 5. The.sum_for.each column should
rbe the same. This end-of-month empioymeht-ahOuld .
not exceed the maximum allowable employment reported
on line 9. . . .?
Section B - Maximum allowable employment in full-time permanent
positions (excluding Presidential appointees)
Entries are required only in column (b).
Line 7a - Make entry pertaining to the replacement of
separations occurring, during the period the 75%
replacement rule is in effect. The entry will
be determined by deducting from the July 1
employment reported on line 1, 25% of the separa-
tions during the, period, reported on line 3a,
column b.
- ,
Line 7b'- Enter in the stub the percentage of the separations
reported online 3b which are not replaceable
(100% minus the replacement rate reported in the
stub of line 3b). Tor-example, if the- replace-
ment rate is changed to 70% for some agencies under
O
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LI

O
3
the provisions_qf,pAragraph 6a of this Bulletin, the
'entry on this line would be 30%_(109%79%). For
agencies below their June 30, 1966, employment levels,
and which are authorized to make .full replacements 1
(i.e., on a "1 for 1" basis), the entry would be
M% (100%-100%). Enter in column b the product of
.the 'percent in the stub of line 7b times the number
of separations reported on line ,3b, column b. This
amount will be a minus (-) eiftry7-- -
Line 7c - Enter in the stub the percentage'ot-the separations
reported on rife 3C'whith'are-nbt replaceable (100%
-
minus the replacement rate reported in the stub of
line 3c). Enter in column b the product of the
percent in the stub of line 7c times the. number of
? . separations reported on line 3c, column b. This
? amount will be,a minus (-) entry,
Line 8 Enter the net number (+ or -) of Vacancies in full-
time permanent positions reassigned to or from the
reporting agency by the Bureau of the Budget..
Line 9 - Enter the maximum allowable fulf-time employment
in permanent positions for the agency, the sum of
lines 7a, 7b, 7c and 8.
Section-d-rt6mgoiarg gfid Pait-tithe?eMpiOyMent-lexcluding-
disadvantaged summer youth)
This section identifies the numbers of temporary and part-
time employees subject to the.limitations of Public Law
90- . Entries are required only in column (a) for line 10
and in column ' (b) for lines 11, 12, and 13.
Line 10 - Enter the temporary and part-time employment as
of the end of the month, excluding the dis-
? advantaged summer.youth reported on line 15,
? below.
Line 11
Enter the temporary and part-time employment as
of the end of the corresponding month of calendar
year 1967, excluding disadvantaged summer youth
and as adjusted for reorganizations and transfers
of functions. The numbers reported should be
the same as those furnished to each agency by
the Bureau of the Budget.
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Line 12 - Enter the net number (+ or -).of vacancies in
temporary or part-time positions reassigned to
or from the reporting agency by the Bureau of
the Budget.
Line 13 Enter the maximum allowable temporary and part-
time employment for the agency, the sum of lines
11 and 12.
Section D - Other employment
This section will present other employment reported in line
1 of the Standard Form 113A. Entries are required only in
column (a).
Line 14 - Enter the number of full-time employees in permanent
positions serving at the end of the month who were
appointed by the President with the confirmation
of the Senate.
Line 15 - Enter the number of youths serving as of the end of
the month who were appointed under the President's
program to provide summer employment for economically
or educationally, disadvantaged persons aged 16
through 21. This number will be the same as the
"Total" entry in column (d) of Part IV of CSC
Form 113D.
Line 16 - Enter the number of intermittent employees for
the month as reported on line 11 of Standard Form
113A. ("Casual employment," referred to in Public
Law 90-364, is considered as "intermittent employ-
ment" as defined in Circular No. A-64).
Section E - Total employment
Line 17 - Enter the sum of lines 6+10+14+15+16. This should
be the same as the total employment at the end of
the month reported to the Civil Service Commission
on line 1 of Standard Form 113A.
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MA01011 11
N 0 Bulletin No. 68-15
SPECIAL REPORT ON EMPLOYMENT
.,DEPARTMENT OF -GOVERNMENT -? ? - ?? ?
? ? ? ? 1?????
Cumulative
August Since
1968 June 30,1968
(b)
A. FuLl-time Employment in Permanent Positions
(Excluding Presidential Appointees)
1. Employment, July 1, 1968 xxx 10,090.
2. Employment, end of. previ ous month ? 9,975 xxx
3. Separations due to retirement, resignation,
removal, or death:
a. Period with 75% vacancy-filling rate.(-) -85- -163
b. Period with %.vacancy-filling rate.(-) NA NA
. c.. Period with % vacancy-filling rate.(-) NA NA
4. Employees trans ferring ? t o other agencies . (- ) .. -25 ?55
5. Accessions during period ...(+) _2_3 173
6. Employment, end of month 9,955. .242Z.
.
0 Bt Maximum Allowable Fun-time Employment in Permanent
Positions (Excluding Presidential Appointees)
7. Based upon % replacement limitations:
a. Employment, July 1, 1968 --.(-25% x line 3a). xxx 9,960
b. % not replaceable x line 3b (-) xxx NA
c. % not replaceable x line 3c (-) xxx NA
8. Reassignments by Bureau of the Budget (+ or -I) I in --
t9. Maldmtani allowable employment MCC S
C. Temporary and Part-time Employment (Excluding Dis-
advantaged Summer Youth)
10. Employment, end of month 440 xxx
11. Employment seine month, calendar 1967 XXX (455)
12. Reassignments by Bureau of the Budget (+ or -) xxx --
13. Maximum allowable employment XXX (455)
D. Other Employment
14. Presidential appointees (full-time permanent) ? 12 xxx
15. Disadvantaged summer youth 189 xxx
16. Intermittent 98 xxx
E. Total Employment
17. End of month (same as on SF 113A) 12.424,
NA - Not applicable at this time.
Xxx
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St..)
ATTACHMENT B
Bulletin No. 68-15
'INSTRUCTIONS FOR PREPARING
REPORT ON' SAVINGS RESULTING FROM -
LIMITATIONS ON EMPLOYMENT
HEach executive agency will prepare a report quarterly in the
form illustrated in Exhibit B. Four copies will be submitted
to the Bureau of the Budget .at the same time as the correspond-
ing Special Report on Employment (Exhibit A) for the 'last
month of each quarter. The entries for this report will be
. -
?
',cumulative for the fiscal year covered. .
Lines 1 through 8 deal only with data for employment of the
reporting agency (i.e., these lines exclude data for gMTIZTment
in other agencies which may be funded by allocations from the
reporting agency).?
Specific instructions for the line entries follow.,
Line I Enter the estimated man-years funded by regular
appropriation acts enacted for 1969 ?or by pending
appropriations which have not been ehacted at the
time the report is prepared (using ,the agency's
best estimate of the final appropriation). Also
include estimated man-years funded by allocations
from other agencies, and revenues and reimbursements
to be received and available during the ydar.
Exclude the man-year value of overtime. ?
Show the man-years likely to occur on the basis
of experience with employment to date. Do not
project further reductions in. man-years likTri to
occur as a result of additional vacancies arising
in the rest of the year. Exclude the man-year
value of overtime.
--Line 2
Line 3 - Enter line 1 minus line 2.
Line 4 - Enter the average savings per man-year for the man-
years reported on line 3. This will be calculated
on the basis of pay scales (and the related
expenses) on which the appropriation acts were
based. The calculations should conform to the
instructions in paragraph 10 of the Bulletin.
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cw, ?.0
Line
5
Line
6
Wine
7
Line
8
Line
9
2
- Enter line 3 times line 4.
- Enter estimates of the extra overtime costs made
necessary because the number of employees is less
than would have been the case without the employ-
ment limitations. The figure used should be
subject to substantiation. Do not project extra
overtime likely to occur as a result of additional
vacancies arising in the rest of the year.
- Enter line 5 minus line 6,
(2)
- Enter the estimated net savings (included in line 7)
which is in employment financed through allocations
from other agencies. This will be a minus (-)
entry. This net dollar savings will be reported
to the allocating agency in order that such savings
may be included in line 9 of the corresponding
report of that agency.
- Enter the net savings in allocations to other
agencies expected to result from employment
reductions in other agencies as a consequence of
the employment limitations of P.L. 90-364. The
entry will be the total of the net savings reported
to the "parent" (funding) agency by agencies
receiving allocations (see line 8 instructions).
Line 10- Enter the total of lines 7, 8, and 9.
Line 11 - Enter only the reserves officially established in
the apportionment process pursuant to Bureau of the
Budget Circular No. A-34 or under the provisions of
Bulletin No. 68-16, dealing with the limitations
on budget authority and outlays for fiscal year
1969.
Line 12 - Enter savings for which reapportionments to estab-
lish additional reserves are in process.
0
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. ? ' '4:190
t ' ? 4
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14..)
EXHIBIT B
Bulletin No. 68-15
REPORT ON SAVINGS
RESULTING FROM LIMITATIONS ON EMPLOYMENT
DEPARTMENT OF GOVERNMENT
As of September. 1968
(Dollars in Thousands)
1. Man-years funded by available funds 10,900
2., Man-years as now estimated 10,395
3. Savings in man-years (line 1 minus line 2) 595
4. Average savings per man7year. (not in thousands) $ 8,075
5. Estimated savings in annual costs for
employment of the agency (line 3 times
line 4)
6. Offsetting overtime added costs
$ 4,078
715
7. Estimated net savings in annual costs for
employment of the agency (line 5 minus -
line 6) $ 3,363
$ -250
$ 185
8. Estimated net savings (included in line 7)
on employment financed by allocations
received (-)
Additional savings from employment reduc-
tions by other agencies on allocations
to them
10. Total estimated net savings in costs to
agency funds for fiscal year (total of
lines 7, 8, and 9) $ 3,298
11. Savings which are in reserve $ 2,950
12. Additional reserves to be established $ 348
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Distfibution:
1-0/Finance
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20509
BULLETIN NO. 68-13
?
. ?
'i.lay7.22; -1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
' SUBJECT Information On agency financial management- imprekiement efforts
t
1. Purpose, This' Bulletinrequires each egencY to''sublit di.Wcin its
financial:management:improvement activities cturing'fiscal- year 468:
reqdetted infdririation will be used in a jipiht Financial -Management
dImprovement Program 'review of the status of agencysystems end-C:urrent
improvement efforts . ?
. *
2. Recent developments. Of particular pertinence this year is the
impact of the recommendations of the President's Commission on Budget
Concepts, as presented in the Commission's report of October 10, 1967.
Among other things, that report proposed that (a) the receipts and expend-
itures 'of' the Federal Government be reflected in the President's budget
on the accrual basis; (b) the monthly reports of the Treasury Department
be placed on the same basis as the budget; (c) such use of data be, tested
beginning with fiscal year 1969, and the 1971 budget be on the new basis;
(d) the development and refinement of agency cost accounts be continued;
and (e) program costs continue to be used for formulation and execution
of the budget and for internal management of agency operations. In
December 1967, the President accepted the Commission recommendations on
concepts of the annual budget, and directed that they be implemented as
soon as practicable.
Pursuant to these developments, the three central financial agencies have
been cooperating in a joint effort toward effective implementation of the
Commission proposals. The Bureau of the Budget, for example, modified
the overall presentation of the 1969 budget, and is undertaking further
changes in preparation for the 1970 budget. Transmittal Memorandum No.
31 amended Circular No. A-11 on December 18, 1967, and Bulletin No. 68-10
was issued April 26, 1968, to provide guidance for application of the new
concepts; Circular Nos. A-11 and A-34 currently are being revised for the
same purpose. In addition, Bulletin No. 68-9, dated April 12, 1968, con-
tained revised requirements for agency PPB systems. The General Accounting
Office, on May 4, 1968, released a recommendation on this subject to all
agency heads. This release clarified existing accounting principles and
standards in relation to the Budget Concepts Commission recommendations,
as a forerunner to amendment of the GAO Manual on this subject. The
Treasury Department is revamping its monthly reporting requirements,
and shortly will issue revised instructions for this purpose.
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The recommendations of the President's Commission on Budget Concepts,
and the followon efforts toward implementation of those proposals are
consistent with the objectives, principles, and concepts long sought
under the Joint Financial Management Improvement Program. Agency reports
under this Bulletin should appropriately reflect actions being taken or
planned in accordance with the directives identified above.
3. Reporting requirements. The information required under this Bulletin
is identified in Attachment A. The instructions call for data on signifi-
cant accomplishments during fiscal year 1968, the status of agency budget
and accounting systems improvement work as of June 30, 1968, and plans
for future improvements. An original and five copies of the report are
to be furnished the Bureau of the Budget not later than June 30, 1968.
This reporting date, which is earlier than last year's, is for the purpose
of enabling the annual report of the Joint Program to be published more
promptly. The General Accounting Office and the Treasury Department will
participate in the review of the agency reports.
CHARLES J. ZWICK
Director
Attachment
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ATTACHMENT A
Bulletin No. 68-13
C
'REPORTING INSTRUCTIONS AND GUIDELINES
1. Coverage. All executive agencies are to submit reports in response
to this Bulletin.
2. Content of required reports. Agencies are to present the material
in two sections--Part A, Accomplishments and Future Plans, and Part B,
Status Information--as shown in Exhibit 1. The content of each part is
to be developed according to the guidelines set forth below.
Part A, Accomplishments and Future Plans
z. This section of the report is to provide clear and concise narrative
statements on significant accomplishments and future plans. Such statements
should be reported for the agency or department as a whole or, if it is
more meaningful, in terms of major components or the tabular line items
used in Part B.
b. Statements should be provided on financial management improvements
completed during fiscal year 1968, emphasizing the management benefits
derived. Improvements installed during prior fiscal years, properly identi-
fied as such, should also be included if the operating and managerial gains
resulting from the change began to be realized substantially during fiscal
year 1968. In reporting on specific achievements, emphasis should be placed
on those accomplishments that resulted in major savings or other benefits.
C. To provide for effective presentation of accomplishments in the
annual report of the Joint Program for fiscal year 1968, the narrative
statement of improvements in agency submissions should be accompanied by
illustrations wherever practicable--employing graphs, charts, photographs,
etc., that will demonstrate pictorially the nature and significance of the
improvements.
d. The requested information should be set forth in a brief narrative
description of significant improvements and the results obtained, together
with a preliminary outline of any proposed illustrations. Agencies may wish
to consult with General Accounting Office or Bureau of the Budget staff on
questions concerning improvements to be reported and proposed illustrations.
To facilitate development of the Joint Program report, agency submissions
should be classified under broad functional headings such as financial
-organization, budgeting, accounting, reporting, and internal audit. Changes
Involving mechanization or automation should be included in the functional
area most directly involved, or may be set forth in a separate section on
automation.
e. To provide for clear understanding of the agency's modernization
program, reports of accomplishments should be accompanied by future plans
for neededimprovements. Each planned improvement should be appropriately
related to other information furnished in the report, and should include
a realistic target date for completion.
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f. Several areas of improvement action should be covered in the
reports of all agencies in which identified objectives of the Joint
Financial Management Improvement Program have not been fully attained.
These include:
Adoption of cost-based budgeting practices for presentation
of budget requests.
Actions taken or planned toward effective.use.ofresponti- .
bility centered cost-based operating budgets and related
reports that will measure performance .and.permit comparison
with approved plans for purposes of promoting efficiency and
cost reduction.
Synchronization of classifications for programming, budgeting,
accounting, reporting, and control in order to permit use of
an integrated management system for conduct of agency .
operations. For agencies in which planning-programming-
budgeting systems are required, the reports should identify:.
the progress being made in coordinating that effort with the
financial management improvement program. The objectives of
such coordination should be to assure that the financial
systems provide an accurate and reliable basis for associating
costs with program elements and budget classifications, and.
that the data demands of the PPB system are satisfied within '
the framework of a unified management system.in the agency.
Specifically, the reports should identify actions taken or
planned in response to the Comptroller General's letter of
April 4, 1967 (B-114365), which notified agency heads of an
amendment of the prescribed accounting principles and standards
to provide accounting support for the PPB program structure.
Actions taken or planned toward effective installation of
accrual accounting practices, and obtaining Comptroller General
approval of agency accounting systems. It should be recognized
that attainment of these objectives should not be deferred
pending the full development of PPB systems.
Actions taken or planned toward improvement of financial
management for grant-in-aid programs, with particular. reference
to simplifying financial requirements imposed on grantees
(while still retaining effective control and accountability)-;
and arrangements for improved coordination and efficient
accomplishment of Federal audit objectives in such programs,
as called for in Bureau of the Budget Circular No. A-73.
-- Application of statistical sampling techniques to financial
operations, with specific identification of actions taken or
planned toward use of such techniques in the administrative
examination of vouchers.
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Improvements in cash management, covering particularly the
use of letters of credit or other methods-of reducing cash
.balances held*by'contractors, States, international institu-
tions, foreign governments, or other recipients of grants or
contributions.
Actions taken or planned in the recruitment and training of
financial personnel in order to permit development and effec-
tive operation of a financial management system that conforms
to requirements and satisfies the needs of management.
Part BI Status Information
? g. This section of the report is to identify the, status of agency
efforts toward modernization of budget and accounting systems in re-
lation to the provisions of the Budget and Accounting Procedures. Act
of 1950, as amended by Public Law 84-863. The central agencies under
the Joint Financial Management Improvement Program have urged operating
agencies to attain these goals as quickly as possible so as to provide
better service to management and to promote more effective conduct of
program operations. The House Government Operations Committee, in a
series of hearings, has reemphasized the congressional interest in more
rapid implementation of legal requirements in agency financial management
systems.
h. For each agency in which those requirements have not been met,
the status tabulation will provide firm target dates that reflect
positive plansfor full compliance, and represent a realistic commit-
ment by the agency to attain the desired objectives within the specified
time period. In this connection, any postponement of target dates from
those reported in last year's report of status will be explained in Part B?
linder "Remarks"--including the reasons for the slippage in schedule, and
the action being taken to avoid similar problems with respect to the new
target date. Footnotes without target dates, and entries such as.
"Indefinite" or "Not Planned" will not be sufficient.
?.i. The -status tabulation in Exhibit 1 is to be completed by each
agency- as of June 30, 1968. However, if an agency as a whole has .attained
the required objectives-and its accounting system-has been approved by
the Comptroller- General, the tabular form of 'report need not be employed.
Instead, reporting under Part B can be complied with by use of the nar-
rative statement: "Installation of accrual accounting and cost-based
budgeting practices completed; accounting system approved by Comptroller
General (insert date of approval)."
j. For those agencies using the tabular form of report, column (a)
? is to identify the organization and/or accounting entity for which in-
formation is submitted. For this year's report, the tabulation in
.each-agency's submission is to reflect the stub entries used.for the
?agency in the Appendix of the published Annual Report of the Joint
Financial Management Improvement Program for Fiscal-Year 1967. The.
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entries are to cover both complete systems and segments of systems. If 0
any adjustments in the stub entries of the published tabulation are
warranted by reorganizations or other changes, the agency should contact
General Accounting Office representatives to stork out a mutually agreeable
stub column for its tabulation.
K. Columns (b) and (c) will identify the status of approval of agency
accounting systems by the Comptroller General.
(1) Column (b) will identify by appropriate language and by date
(month and year) whether the underlying principles and standards have been
officially approved, or formally submitted for approval, or scheduled for
future submission.
(2) Column (c) will identify by appropriate language and by date
(month and year) the status of the detailed accounting system in operation
similar to that prescribed for entry in column (b).
(3) Some agencies obtained approval of accounting systems or made
formal submission of systems in one step prior to July 1, 1967, when the
two-step approval procedure was prescribed by the Comptroller General.
In these instances, the status of systems will be entered in column (c).
(4) Where previously submitted systems have been withdrawn by
an agency or returned as unapproved by the Comptroller General, the entries
in columns (b) and (c) will reflect, as appropriate, the new target dates 0
for submission of the systems.
(5) For accounting systems not legally subject to approval by the
Comptroller General, the entry "Not applicable" will be shown.
1. The last two columns are to reflect the status of cost-based
budgeting. Column (d) is to show "Complete" if the agency has adopted
internal cost-based budget procedures and uses operating budgets and
related reports for planning and control of the costs of operations on
a current basis throughout the year. Otherwise, the column should show
the target date (month and year) for completing such action. "Complete"
is to be used in column (e) where all appropriations of the agency were
printed on a cost basis in the 1969 Budget Appendix. Otherwise, that
column should show as a target date the fiscal year budget in which the
agency plans to convert to a cost-based presentation for all appropria-
tions. The entry "Partial" is to be shown, along with a target date, if
cost-based presentations were printed for some appropriations in the 1969
Budget Appendix, but not for all.
m. The "Remarks" section of Part B is to provide any necessary
explanations of the tabular entries. Such explanations should be identi-
fied, as appropriate, with the line items in the tabulation. The tabular
entries and the supporting remarks should indicate clearly the degree to
which each organization has progressed in developing its financial manage-
ment system to meet the requirements of the Budget and Accounting Procedure
Act of 1950, as amended.
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Financial Management Improvement Program Agency
Agency Report as of June 30, 1968 Date
Bulletin No. 68-13
Part A - Accomplishments and Future Plans
Part B - Status Information
Organization and/or
Accounting
Entity .
Accounting S stem Approval
Cost-Based Budgeting
Principles
and
Standards
Accounting
System
Documentation
Used
Internally .
Budget
Presentation
(a)
(b)
(c)
(d)
(e)
Remarks:
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-12 May 17, 1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Use of excess and near-excess foreign '
currencies for travel
1. Purpose. This Bulletin (a) transmits a revised Bureau
of the Budget leaflet, "Instructions to Travelers on the
Use of Foreign Currencies" which replaces the issuance dated
August 1966, and (b) gives further guidance on maximizing
the use for travel purposes of excess and near-excess foreign
currencies owned by the United States.
2. Background and use of leaflet. A survey by the General
Accounting Office, completed in March 1967, indicates that
many Government travelers were not utilizing excess or near-
excess foreign currencies. On several previous occasions
material has been issued stressing the importance of
maximizing use of these currencies.
As specified in Bureau of the Budget Circular No. A-58, excess
and near-excess foreign currencies are to be used in preference
to dollars wherever possible. Authorized uses generally
cover the payment of travel, transportation, per diem and
related expenses of employees, uniformed personnel, grantees,
employees of contractors, and others whose travel is on
official Government business or is financed by the Government.
This includes authorized travel of dependents.
The attached leaflet is to be provided to individuals on
official Government business traveling to, from, or through
excess or near-excess foreign currency countries. It should
be distributed to travelers prior to the time foreign travel
arrangements are made. A previous leaflet, issued in September
1966, was not widely distributed. Heads of all departments
and establishments should take positive action to assure
distribution of the publication to all travelers destined for
the designated countries.
The attachment provides only general guidance on this subject.
It does not include specific information on the details of
approved uses of excess and near-excess foreign currencies
for transportation and related services, which vary from country
to country. Accordingly, each agency should also arrange for
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each traveler to have ready access to the pertinent informa-
tion on this subject--such as that included in the Foreign
Currency Bulletins issued by the Department of State.
3. Distribution. Agencies may obtain a supply of the
attached leaflet from the Bureau of the Budget Publications
Office (Code 103, ext. 4660).
? PHILLIP S. HUCHES
Acting Director
Attachment'
20
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1
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4C4A, have just been handed your
TRAVEL AUTHORIZATION
NOW, ascertain whether you are going to
an excess or near excess currency country.
The people who issued your travel orders
will have available current information from
the Bureau of the Budget listing these countries.
The list changes from time to time.
An excess or near-excess currency country.
is dne in which the United States,
for various reasons, has available a supply of
local money larger than its anticipated needs.
This money, by mutual agreement, cannot
be converted into hard currencies. Therefore,
if travelers on U.S. Government business
would utilize this local money, it would go a
measurable way toward relieving the pressure
on our balance of payments.
There are a few simple steps you must take
to ensure that your travels are financed
whenever possible by these excess foreign currencies.
This applies to your transportation,
and to your expenses after your arrival.
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A8,789,822
4/24 ./.5068
BILL TO DEPARTMENT OF GOVERNMENT
1 1
rosefrarspr apenalCROWS sr/DrisIOCT AINOuirt
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Mi122CMINIIIIrrirFITARrla
TIT'S
FISCAL DATA I. APPROPRIATKIN. AlETI0RIZAT1001, ETC.,
Travel order 68-14, April 10, 1968
Appropriation: 2581168
Office of the Secretary
TOTALS
TO BE PAID IN INDIAN RUPEES
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1 take a hard look at the facsimile Government
Transportation Request (GTR) on the opposite
page. There are two items here of primary interest. At
top left, where there appear the printed words: "BILL
TO," you must write in not only the name of the agency
paying your expenses, but give as its address the Amer-
ican Embassy in your destination excess currency
country. The facsimile shows how you would fill in the
GTR if you were going to India, which is high on the
list of excess currency countries. In the lower right
hand portion, you must state clearly, "TO BE PAID
IN INDIAN RUPEES." This will take care of utilizing
excess foreign currencies for your primary transporta-
tion. If you fail to specify the foreign currency, the
airline will later demand payment from the Govern-
ment in dollars.
4, and this pertains only to travelers who start their
.4.1k journey from a city in the United States not
served by the airline that is to fly them to their destina-
tion abroad. Use a separate GTR for the portion of the
trip that takes you to the connecting terminal in the
United States. When you arrive at that terminal, use a
second GTR for the trip to your foreign destination,
and fill out this GTR as explained earlier, indicating
the appropriate foreign currency and the American
Embassy to which the bill should be sent.
3 here's what you should do once you arrive at
your destination. Head for the American Em-
bassy at the earliest opportunity. It is there that you
should obtain the local currency you will need during
your stay. That way, your dollars remain with the
United States Government and do not increase the bal-
ance of payments deficit. Furthermore, you will be
helping your country by using currencies which the
United States owns but by agreement can expend for
limited purposes only.
Remember. all this is necessary only if you have
ascertained that the country to which you are going
is on the Bureau of the 13udges list for excess or
near excess currencies.
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"I want everyone who travels at Government
expense to use excess and near-excess for-
eign currencies wherever possible."
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OFTHE BUDGET / MAY 1968
nPn ??nnn 0 ? 297-992
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STAT
2 August 1968
MEMORANDUM FOR THE RECORD
SUBJECT: Bulletin 68-11
1. Talked to John Hurley today and reminded him that we
needed to discuss whether CIA response to BOB Bulletin 68-11
was required.
2. After brief discussion of purpose of the Bulletin (to
gather compensation data on Federal pay systems to assist
comparison of Federal versus non-Federal sector), Hurley
said no response from us was necessary.
Orig - D/PPB - CCS for file
1 - BD Chrono
1 - CSAB
1 - PPB Reading
Chief, CS Activities Branch
0/PPB
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-o
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-11 May 14,1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Man-year and cost reports for Federal pay systems
1. Purpose. The purpose of this Bulletin is to obtain
data on all compensation costs involved in each of the "
Federal pay systems. Compensation data so provided will
be comparable with the data available from the non-Federal
sector and will aid in developing improved estimates of
pay costs including related fringe benefits.
2. Background. The adoption by the Executive Branch of
the policy of comparability with the non-Federal sector
involves the consideration of total compensation as the
yardstick for comparison. Direct salary costs ?for the
components of each pay system are not sufficient to permit
adequate comparison since compensation involves not only
pay but costs of related fringe benefits. This Bulletin
provides for the reporting of personnel compensation and
related man-year data for each major pay system on an
interim basis pending the modification of other reporting
systems to incorporate these requirements.
3. Material to be submitted. Reports in the form of
Exhibits A and B will be prepared in accordance with the
instructions attached.. The information will cover actual
data for fiscal year 1968 and may be submitted for the agency
as a whole or for individual bureaus or comparable organiza-
tional units, at the option of the agency.
An original and one copy of each report will be required
not later than September 1, 1968.
The reports must be reasonably accurate and compiled
from the records of the agency. When precise data on
the distribution between pay systems are not available,
however, reasonable approximations may be used.
Agencies having computer capabilities are encouraged
to provide the data for these reports in the form of
input to the Bureau's computer operation. Mr. George
Brown (Code 103, ext. 3361) should be contacted concerning
the details of the Bureau's computer requirements.
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2
4. Interpretations. Questions concerning the general'.
interpretation of this Bulletin should be addressed to
Mr. David McAfee (Code 103, ext. 3848).
Attachments
PHILLIP S. HUGHES
Acting Director
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ATTACHMENT A
Bulletin No. 68-11
,
INSTRUCTIONS FOR PREPARATION OF MAN-YEAR AND,COST:REpORT
BY PAY SYSTEM, FISCAL YEAR 1968
A separate report in the form of Exhibit A will be prepared
for each applicable pay system category listed in Attachment
C to this Bulletin.
All transactions reported in object classes 11 and 12 as
defined by Bureau of.the Budget Circular No. A-12, and
all employment reported to the Civil Service Commission,
regardless of the source of funding, will be included in
these reports, with the following exceptions:
1.
Data for pay systems for the uniformed services
as defined in 37 U.S.C. 101(3) (Army, Navy, Air
Force, Marine Corps, Coast Guard, Environmental
Science Services Administration and Public Health
Service) will not be required.
2. "Special personal service payments," which do not
represent salaries or wages paid directly to
Federal employees, will be excluded from, all reports.
3. Data for District of Columbia employees will not
be included in these reports.
Severance pay, a part of object class 13, will be
reported as shown on Exhibit A.
The heading on each report will identify the name of the
report, the organizational unit covered, the organizational
code for that unit as found in Bureau of the Budget Circular
No. A-11, and the pay system category description and related
category code as found in section A of Attachment C to this
Bulletin.
In addition, if there is more than one administrative pay
system covered in the report (Exhibit A) for either pay
system category 8 or 9 (as coded in Attachment C), each pay
system will be identified at the bottom of the report, along
with the number of the Public Law which authorizes the use
of such a pay system and the total man-years and costs
attributable to that pay system.
The following code numbers and entries will be shown on each
report (Exhibit A), except that the detailed entries for
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20
code numbers 201 through 208 and 401 through 409 will be
required only for the Classification,Act, Postal:Field-.
Service, Foreign Service, and Veterans Administration pay
systems:
Code 100. Basic,pay (total) - Man-years and costs for
basic pay. Entries will be the aggregate of:
Code 101. Full-time permanent employment - Man-years
will equal the difference between "Average number of
all employees" and "Full-time equivalent of other
positiohs," as required for the personnel summary
budget schedules. Costs should be based on object class
11.1 entries for the object classification schedules.
The data will include the full-time equivalent and
cost of terminal leave.
Code 102. Temporary employment - Entries will represent
the full-time equivalent and related costs for temporary
employment, notwithstanding the fact that the budget
submission does not require these data by pay systems.
Code 103. Part-time and intermittent orTloyment -
Entries will represent the full-time equivalent and
related costs for part-time and intermittent employment.
The sum of the man-years for codes 102 and 103 will
equal the "Full-time equivalent of other positions,"
as defined for the personnel summary budget schedules.
The sum of the costs for codes 102 and 103 will be
based on object class 11.3 entries for the object
- classification schedules.
Code 200. Premium pay - The aggregate total costs and
applicable man-years of the following:
Code 201. Overtime - Overtime man-years and costs for
services in excess of the 40-hour week or 8-hour day.
Code 202. Holiday pay
services of 8 hours or
Code 203. Sunday pay -
for 8 hours or less of
Sundays for which this
- Man-years and costs for
less on holidays.
Costs above the basic,rate
regularly scheduled work on
premium pay is given.
Code 204. Nightwork differential - Costs above the
basic rate for nightwork which is not subject to
overtime pay or Sunday pay.
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Code 205. Hazardous duty pay - Costs above the basic
rate because of assignments Involving hazardous duty.
Code 206.
basic rate
which have
Code 207.
basic rate
Overseas differential - Costs above the
of pay because of overseas differentials
been included in object class 11.
Cost-of-living allowance - Costs above the
of pay because of cost-of-living allowances.
Code 208. All other - Any other premium pay included
in object class 11 and which is above the basic rate
or in addition to regular pay.
Code 300. Gross pay - The aggregate totals of code 100 for
basic pay, and code 200 for premium pay, covering both man-
years and costs.
Code 400. Benefits - The aggregate total costs of the
following:
Code
Code
Code
Code
401. Health insurance
402. Life insurance
403. Retirement
404. Federal Insurance Contributions Act
Code 405.
Code 406.
Code 407.
Code 408.
Code 409.
Taxes (OASDHI)
Uniform allowances
Suggestion and superior performance awards
Federal Employees Compensation Act
(payments to the Department of Labor)
Overseas allowances not included in object
class 11
Other benefits included in object class 12
Amounts for codes 401-404 will represent only the employer's
contribution.
Code 500. Severance pay - Costs for payments to invol-
untarily separated employees. (See Bureau of the Budget
Circular No. A-11).
Code 600. Total - Aggregate of code 300 for gross pay, code
400 for benefits, and code 500 for severance pay, covering
both man-years and costs.
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EXHIBIT A
Bulletin No. 68-11
DEPARTMENT OF GOVERNMENT
MAN-YEAR AND COST REPORT, FISCAL YEAR 1968
Code
Organizational code: 16-00
Pay system category: Classification Act
Pay system category code: 1
Costs
Item Man-years (thousands)
100
Basic 1:)),
4,906
$ 43,053
101
Full-time permanent employment
4,6781
41,953
102
Temporary employment
135
690
103
Part-time and intermittent
employment
93
410
200
Premium pay
326
2,701
201
Overtime
317
2,623
202
Holiday pay
9
35
203
Sunday pay
xx
15
204
Nightwork differential
xx
9
205
Hazardous duty pay
xx
14
206
Overseas differential
xx
2
207
Cost-of-living allowance
xx
2
208
All other
xx
1
300
Gross pay (Total of codes 100
and 200)
5,232
45,754
400
Benefits
xx
3,174
401
Health insurance
xx
265
402
Life insurance
xx
201
403
Retirement
xx
2,604
404
Federal Insurance Contri-
butions Act taxes (OASDHI)
xx
65
405
Uniform allowances
xx
4
406
Suggestion and superior
performance awards
xx
2
407
Federal Employees Compensa-
tion Act
xx
8
408
Overseas allowances not
included in object class 11
xx
6
409
Other benefits included in
object class 12
xx
19
500
Severance pay
xx
2
600
Total (Total of codes 300, 400
and 500)
5,232
48,930
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ATTACHMENT B
Bulletin No. 68-11
INSTRUCTIONS FOR PREPARATION OF DETAILED FULL-TIME PERMANENT
MAN-YEAR AND COST STATEMENT BY PAY SYSTEM
Reports in the form of Exhibit B will be prepared to support
entries on line 101 of the man-year and cost reports sub-
mitted for Classification Act, Postal Field Service, Foreign
Service, and Veterans Administration pay systems. The reports
will reflect actual full-time permanent man-years and related
basic pay by level or by grade. Reports will not be required
for wage boards, executive positions, foreign local pay
systems administratively established, and other administrative
pay systems (pay system category codes 5 through 9).
The heading on each report will identify the name of the
report, the organizational unit covered, the organizational
code for that unit as found in Bureau of the Budget Circu-
lar No. A-ll, and the pay system category description and
related category code as found in Attachment C to this
Bulletin. Appropriate codes will be listed in the left-hand
(7) column corresponding to the grade number or level listed
in section B of Attachment C.
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EXHIBIT B
Bulletin No. 68-11
DEPARTMENT OF GOVERNMENT
FULL-TIME PERMANENT MAN-YEAR
AND COST STATEMENT BY PAY SYSTEM
Code
Grade
Fiscal Year 1968
Organizational code: 16-00
Pay system category: Classification Act
Pay system category code: 1
Man-years Cost (thousands)
1001
GS-1
4
$ 17
1002
GS-2
236
1,066
1003
GS-3
698
3,429
1004
GS-4
552
3,032
1005
GS-5
434
2,657
1006
GS-6
83
560
1097
GS-7
305
2,266
1008
GS-8
38
309
1009
GS-9
455
4,032
1010
GS-10
58
563
1011
GS-11
821
8,721
1012
GS-12
359
4,526
1013
GS-13
324
4,814
1014
GS-14
168
2,927
1015
GS-15
103 ?
2,085
1016.
GS-16
29
669
1017
GS-17
7
?? 178
1018
GS-18
4
108
1999
(Total)
4,678
$41,953
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ATTACHMENT C
Bulletin No. 68-11
CODES FOR PERSONNEL REPORTING SYSTEM
A - Pay System Category Codes:
Code Identification
1 Classification Act General Schedule
2 Postal Field Service Schedule (includes
Rural Carrier and Fourth-Class Office
Schedules)
3
Foreign Service Officers (including Foreign
Service Reserve) and Foreign Service
Staff Schedules*
VA Department of Medicine and Surgery Salary
Schedules
5 Executive Pay Act*
6 Wage Boards
7 Foreign Local Pay Systems
8 Administrative systems (or individual
positions) which correspond to the
General Schedule pay system or react
to changes in the General Schedule pay
system
9 Other administrative systems (or individual
positions)
B - Full-Time Permanent Man-Year and Cost Report (Exhibit B)
Codes
1 - Classification Act General Schedule
Code identification
1001
GS
- 1
1002
GS
- 2
1003
GS
- 3
1004:.
GS
- 4
1005 -
GS
5
1006
GS
- 6
1007
GS
- 7
*Career ministers, Career ambassadors, and Chiefs of mission
should be reported in pay system category 5, Executive Pay Act.
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Code
Identification
1008
GS - 8
1009
GS - 9
1010
GS - 10
1011
GS - 11
1012
GS - 12
..???
1013
1014
GS - 13
GS - 14
1015
GS - 15
1016
GS - 16
1017
GS - 17
I?
1018
GS - 18 "
1999
Total (Codes
1001
through
1018)
- Postal Field Service Schedules (includes
? and Fourth-Class Office Schedules)
Code Identification
Rural Carrier
2001
PFS - 1
2002
PFS - 2
2003
PFS - 3
2004
PFS - 4
2005
PFS - 5
.?:1()06
PFS -6
eif2007
PFS - 7
'!!Anr2op8
PFS - 8
ti -22009
PFS - 9
2010
PFS - 10
2011
PFS - 11
,2012
PFS - 12
2013
PFS - 13
2014
PFS - 14
2015
PFS - 15'
2016
PFS - 16
2017
2018
PFS - 17
'PE'S - 18
?
2019
PFS - 19
2020
PFS - 20
2021
Rural Carrier
2022
Fourth-Class Office .
2999
Total (Codes 2001 through
2022)
,
3 - Foreign Service Officers (includes Foreign Service
Reserve) and Foreign Service Staff Schedules
Code Identification
3001
3002
FSO - 1
FS0 ;- 2
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Code
Identification
3003
3004-
3005
3006
3007
F50 7 3
FSO - 4
FSO - 5
FS0 - 6
F50 - 7
3008k
,yso - 8
3501
FSS - 1
3502
FSS - 2
3503
FSS - 3
3504
FSS - 4
3505
FSS - 5
3506
FSS - 6
3507
FSS - 7
3508
FSS - 8
3509
FSS - 9
3510
FSS - 10
3999
Total (Codes
3001
through
3510)
4 - VA Department of Medicine and Surgery Salary Schedule
Code Identification
Section 4103 Schedule
4001 Assistant chief medical director
4002 Medical director
4003 Director of nursing service
4004 Director of chaplain service
4005 Chief pharmacist
4006 Chief dietician
Physician and Dentist Schedule
4101 Director grade
4102 Executive grade
4103 Chief grade
4104 Senior grade
4105 Intermediate grade
4106 Full grade
4107 Associate grade
Nurse Schedule
4201 Assistant director grade
4202 Chief grade
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4
4203
4204
4205
4206
4207
Senior grade
Intermediate grade
Associate grade
Full grade
Junior grade
4999 Total (Codes 4001 through 4207)
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?
'Mit/ ? Mtn PTTNI AO n
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Distribution:
1-0/Finance
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i_ 1 ?A 91-
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- ?
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-10, Supplement No. f July 1, 1969
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: The accrual of revenues and expenditures
1. Background and purpose. Bulletin No. 68-10 of
April 26, 1968, provided information and instructions to
enable agencies to install or improve systems of accrual
accounting, and to achieve operational readiness for
bringing accrued expenditures and revenues into the
central reporting system of the Treasury. The Bulletin
was followed by the issuance of instructions consistent
therewith by the General Accounting Office (Announcement
of May 4, 1968, of amendments subsequently made by
Transmittal Sheet No. 2-21 on July 22, 1968, to its
"Policy and Procedures Manual") and the Treasury Depart-
ment (Transmittal Letter No. 18 of June 20, 1968, to the
"Treasury Fiscal Requirements Manual").
Paragraph 7 of Bulletin No. 68-10 indicated that tempo-
rary working groups were being established to consider
ways of applying the accrual concepts in certain areas
of common interest, and that the results of these explo-
rations would be made known later.
On March 10, 1969, the Secretary of the Treasury, the
Chairman of the Council of Economic Advisers, the Comp-
troller General of the United States, and the Director
of the Bureau of the Budget joined in issuing a memo-
randum which provided further instructions and information
(see attachment).
This Supplement to Bulletin No. 68-10 takes account of the
studies mentioned above and provides a more formal supple-
mentation to, and amendment of Bulletin No. 68-10. It
also reaffirms the related policy of using cost-based
budgets, made possible by accrual accounting systems.
2. Reaffirmation of objectives, concepts, and rules of
application. The President has concluded that the accrual
basis of stating revenues and expenditures in the budget
and in the financial reports of the Government, as recom-
mended in October 1967 by the President's Commission on
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Budget Concepts, will be adopted and placed in effect in
the Budget to be submitted in January 1971. Accordingly,
the accrual concepts set forth in Bulletin No. 68-10, and
the guidelines for their application therein provided, are
specifically reaffirmed, subject to the additional in-
structions herein.
3. Action program and timing of conversion. While several
agencies have carried out satisfactorily the provisions of
Bulletin No. 68-10, the lack of readiness on the part of
other agencies has made it impossible to hold to the origi-
nal timetable for conversion. The original schedule had
been premised on the establishment of reliable accrual data
for the fiscal year 1969 for publication in the 1971 budget,
and the action program set forth in Bulletin No. 68-10 was
planned to fit with that timetable. For those agencies
which have been participating in Treasury's "pilot" pro-
gram of reporting on an accrual basis, this year's trial
period gives extra experience on which to draw; such agen-
cies should continue and further improve their accrual
accounting and reporting in accordance with the announced
instructions. The head of each other agency must arrange
at once to carry out an action program on the following
updated schedule:
a. Provide for a comprehensive and reliable "inventory"
of accrued assets and liabilities (billed and unbilled) as
of June 30, 1969, in accordance with the definitions and
interpretations in Bulletin No. 68-10 and this Supplement.
The results will be established in the accounts of the
agency and will serve as a basis for reports to the Treasury.
b. Make accounting system adjustments, in accordance
with General Accounting Office principles and standards,
as needed to implement these instructions. The adoption
of such changes in the accounting system should not be
delayed for GAO approval,alt?ough they must be submitted
to the General Accounting Office for final approval as
required by law and regulations.
c. Take the necessary steps promptly to achieve timely
compliance with Treasury's instructions on reporting ac-
cruals and related data, beginning with the date at which
the balances are established under 3a. above.
d. Seek continuing improvements and efficiencies in
the procedures for obtaining the accrual data, taking
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advantage of accumulating experience, but without sacrifice
of reliability of the data.
e. Assure that accrual data for both June 30, 1969, and
June 30, 1970, are on a consistent basis, so that their use
in concert with cash data will enable the establishment or
the "proof" of reliable accrual data for the entire fiscal
year 1970, for subsequent publication in the 1972 budget.
f. Make advance preparations for the use of accrual
data in lieu of cash information (checks issued and col-
lections) in the budget submissions which are due in
September 1970. Advance guidance on the form of budget
schedules for the future will be distributed shortly.
4. Modification and amplification of instructions. The
instructions in Bulletin No. 68-10 on the methods -of -ob-
taining and using accrual data are modified and amplified
as follows:
a. Paragraph 4 of Bulletin No. 68-10 established the
rule that "monthly reports on an accrual basis should
normally be obtained from major payees, where the amount
accruing is dependent upon sums earned and the measure-
ment thereof is basically in the hands of contractors,
.grantees, subcontractors, or subgrantees." It stated that
"Estimating and statistical devices may be appropriate for
determining accruals in those cases where such procedures
will eliminate the need for getting special reports from
a large number of payees with smaller contracts, grants,
or other obligations from the Federal Government," subject
to the further statement that a strong effort should be
made to obtain direct reporting as of each year-end.
Explanations and experience to date indicate a lack-of
readiness on the part of some payees to supply.the,neces-
sary accrual information, particularly within required
limits for recording and reporting by the agencies month-
ly. Therefore, the instructions of that paragraph are
modified as follows:
(1) To the maximum extent feasible, agencies
should rely on direct, periodic reporting on contracts
and grants. Such direct reporting is preferably done by
the payee, but it can be done instead by an agency repre-
sentative having continual knowledge of the performance
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under the contract or grant--for example, by an on-site
Government representative at a contractor's plant.
(2) Where such direct reporting is found to be
infeasible, estimating and statistical methods may be used
by the agency, provided that the results obtained through
the: use of such methods are properly validated as frequent-
ly as necessary, but at least annually, by reference to
data reported by contractors and grantees, and provided
that the method employed is approved by the General Ac-
counting Office (in consultation with the Treasury Depart-
ment and the Bureau of the Budget). For these purposes,
the point of reference for verification need not be
limited to reports from contractors or grantees of current
month's accruals; for example, it could also be based upon
a retrospective review of amounts earned for performance,
classified by month of performance as shown on claims'
for payments.
(3) In establishing systems for obtaining accrual
data, agencies may appropriately distinguish between:
(a) Larger_and smaller contracts (and grants).
Direct reporting for the larger transactions and esti-
mating and statistical methods for the smaller ones may
often provide a workable combination of reliability of
data and economy in procedures.
(b) Regular monthly recording and reporting,
and year-end closing entries and final reports. Treasury
reporting requirements provide for submission of final
year-end reports to it some weeks after June 30, in con-
trast to the necessarily tight time schedule for reporting
to Treasury shortly after the close of each month (in-
cluding preliminary June 30 reports). The difference in
time constraints may make direct reporting more feasible
for fiscal year-end purposes, even though estimating and
statistical methods may be necessary during the rest of
the year.
b. Some clarification with respect to the responsi-
bility of contractors and grantees may also be helpful in
the establishment of an agency's accrual procedures. It
is not intended that a contractor's or grantee's report
of unbilled (accrued) performance will be as detailed or
as precise as a claim for reimbursement or payment might
be. The goal for these accrual reports is to achieve
reasonable reliability, not exact precision. Therefore,
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5
a. contractor or.grantee.may use estimating and statistical
methods, pioperip'validated'And supported, to determine
accruals to bei-reported for-:.subcontracts and subgrants.
c. While accrued expenditures and revenue information
should be recorded at the level of the appropriation, fund,
or receipt account, the need for promptness in monthly
reports to the Treasury may make it necessary in some
cases for data for the latest month to be distributed on
an estimated basis, or to be reported on an undistributed
basis. An estimated distribution is preferable to an un-
distributed figure, but the latter is permissible if the
ground rules are worked out in cooperation with Treasury
staff. However, all accrual data should be fully dis-
tributed by appropriation, fund, and receipt account by
the time for preparation of the final reports for the year
and the subsequent budget.
d. An appropriate accrual accounting system should
not only provide for information on accrued revenues and
expenditures, but also for data on applied costs, suitably
integrated with total obligations for each appropriation
or fund. Agencies which are not presently submitting cost-
() based budgets should plan to do so for the 1972 budget, and
to use cost-based operating budgets (as required by Public
Law No. 863, 84th Congress) in their internal financial
management practices as soon as practicable.
5. Forms for common use. A basic form for periodic re-
porting of accruals on contracts, prepared cooperatively
with several agencies, has been approved for use by eight
civilian departments and agencies (BOB approval #80-R0178).
This approval can be extended to other interested civilian
agencies on application as prescribed for such approvals
under Bureau of the Budget Circular No. A-40. Another form,
intended for reporting the June 30, 1968, accrual balances,
was also approved for use by this group of agencies; its
approval has now expired, but agencies which were not ready
then, but are interested now, may obtain copies of that
form and consider applying for approval to revive it and
update it for their needs, if desired (BOB approval #80-568001).
A form for reporting of accruals on grants-in-aid has been
devised by an interagency study team. This form has not
yet been approved for use, but agencies interested in
joining in an application for approval may make their
interest known to the Bureau of the Budget, which will
assist them in coordinating their activities along this
line.
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6. Further information. Inquiries relating to?the subject
of this Supplement may be addressed to Carl W. Tiller,
Special Adviser on Budgetary Development, Bureau of the
Budget (telephone [phone] or Government dial code 103 -
3744).
? ROBERT P. MAYO
Director
Attachment: Joint memorandum to the
heads of departments and agencies,
from the Secretary of the Treasury,
Director of the Bureau of the Budget,
Comptroller General of the United
States, and Chairman of the Council
of Economic Advisers, dated March 10,
1969.
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COPY
SECRETARY OF THE TREASURY
DIRECTOR OF THE BUREAU OF THE BUDGET
CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISERS
COMPTROLLER GENERAL OF THE UNITED STATES
March 101 1969
TO HEADS OF DEPARTMENTS-AND AGENCIES
The President2haSTreaffirmed--the.importance of gding.ifOrward4proraPtly
with converting the-budget-and the-companion-financial reports of-the
Treasury to the'eatrual basis'retommended byrthe,Presidentas COMmitsitn'
on Budget Concepts in Octtbar-1967:. A-coprorthe-President'SYdirettive
on this subject it attathed:
Some agencies have made significant progreds-in deveropinvaneadi-
ness for this important change. However, it is now evident that.much:
more remains to be done. Therefore, we cannot-achieve the
recommeaded by the Budget Commission to move to-the accrual basis for
estimates and'ptior-year'actual data in-the'President's budget to be
submitted next January.
Accordingly, the President has decided that-the changeover-vill
be made effective-with the budget for 1972 to be submitted in January 1971.
While slippage of one year from the original.goal.is a practical
necessity, it highlights the need formore vigorous: action now, in all
agencies, to complete the changes necessary to meet the new timetable'.
Staff of the three central financial agencies- areworking together
and with the prograngenciaa-orc-this vital matter; Moreover, the-
Council of Econdffit-Advisers also hasp an important stake in.this change
because of its role in analyzing'the impact of the Federal sector in the
national economy. Interagency study teams have been working on certain
problem areas, and there will be further communidations from the Budget
Director on these matters as necessary; In.the near future, the Treasury
will be communicating with each agency On its-compliance with the required
monthly accrual reporting under-the current fiscal year "test operation."
The special monthly reports presently required on the accrual basis
must be of such stature, in substance and timeliness, as to enable the
Treasury to conduct its central operations for the rest of the current
fiscal year and extending through fiscal year 1970 as a comprehensive
"pilot" system, producing everything needed for reporting Government-
wide results on the accrual basis short of actually publishing the
financial statements on that basis during that period. The basic objective
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- 2 -
is to produce from that "pilot" system (a) actual data on accrued
revenues and expenditures for fiscal years 1969 and 1970 which will
be needed when the financial reports begin to be published on the
accrual basis in fiscal 1971; and (b) firm year-end balances of the
various asset and liability accounts on.the books of the agencies that
represent the bridge between the "cash" and "accrual" bases and that
are prerequisite to the changeover.
All of this adds up to a major and challenging undertaking. We
urge the head of each agency to see that his organization is ready for
the changeover soon. The specific requirements have already been
promulgated in Bureau of the Budget Bulletin No. 68-10 dated April 26,
1968, Treasury Fiscal Requirements Manual Transmittal Letter No. 18
dated June 20, 1968, and General Accounting Office letter to heads of
departments and agencies dated May 4, 1968.
Attachment
a
Sea " ? Sit et "arse?
Secretary of the Treasury
l(S7 Director
?
Director of the Bureau of the Budget
Chairman? of the Council of Economic Advisers
%at
Comptroller General of the United States
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(Ain ,
1
THE WHITE HOUSE
WAS
MEMORANDUM FOR:
February 22, 1969
The Director of the Bureau of the Budget
The Secretary of the Treasury
The. Chairman of the Council of Economic Advisers
The accrual basis of accounting has long been recognized as the most
appropriate basis for providing a fair riisclosure of financial con-
dition and operating results in the private sector of our.Nation's
business. Since 1956, accrual accounting has been a statutory stand-
ard for the Government itself, but one which has been but iMperfectly.
achieved.
A year and a half ago, a bipartisan Presidential Commission on
Budget Concepts recommended the adoption of the accrual basis for
stating revenues and expenditures of the Government in preparing
the budget and reporting on budget results. All three of you,
though then private citizens, were associated with the Commission
and are thoroughly familiar with its work. Some of the senior
members of Congress, most clearly associated with the budget pro-
cess, were also members of the Commissibn. Shortly after the Com-
mission reported, the Executive Committee of the American Institute
of Certified Public Accountants adopted a resolution commending
the conceptual changes recommended by the Commission, and urging
their prompt adoption.
Since that time the Bureau of the Budget and the Treasury Department
have been working with the General Accounting Office to get all de-.
partments and agencies of the Government into a position of readiness
to convert to the accrual basis, and to execute a trial or "pilot"
accrual reporting operation.
I hereby reaffirm the objective of placing our budgets and financial
reports on the accrual basis recommended by the President's Commission.
Please continue vigorous joint effort with the Comptroller General of,
the United.States to that end. - lam expecting the heads of the various
departments and agencies to give their personal attention toward
achieving this objective at the earliest practicable date, but not
later than the end of this fiscal year, so that the conversion can be
made effective with the budget to be transmitted to Congress in
January 1971.
Please report to me, from time to time, on the progress that is being
made.
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env) rat
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30 August 1968
MITIORANDUM FOR THE RECORD
SUBJECT: Accrual Accounting Briefing for Colonel White
1. At 1100 this date Colonel White was briefed in his office on
the Agency's accrual accounting requirement. Present were:
Colonel White
2. Colonel White seemed to understand the briefing perfectly and
agreed with the conclusions and recommendation of the briefing, i.e.,
that there be no change to the Agency's present accounting procedure.
However, he made it clear that we should look at the accrual accounting
requirement again in a couple of years. He appeared to be concerned
with two aspects of the accrual accounting requirement. First, he
did not want the Agency to fall back into the "horse and buggy" age
in comparison with other Governmental agencies which will be forced
to adopt accrual accounting techniques. Secondly, he wanted to be
certain that our young finance and progressive C.T.'s would find an
attractive and challenging environment in terms of using modern
financial management techniques. He stressed this atmosphere shall
exist not only before they entered the Agency, but also after they
were on duty so we would not lose them to the competition of other
Governmental agencies or industry after they came aboard.
3. I believe that there was good communication with Colonel
White on a rather technical subject and he complemented 0/PPB upon
the completion of the briefing.
Originaly-AD/PPB
PPB Subject(CCS)
1 - Reading
STAT
STAT
Coontz STAT
1 PPD Chrono
SECRET
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. .
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-10 April 26, 1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Reporting accrued revenues and expenditures to
Treasury and the Bureau of the Budget
I. Purpose. Transmittal Memorandum No. 31 to Circular
No. A-11, on December 18, 1967, announced that the adoption
of accrual accounting must be brought to early completion,
and that agencies should take appropriate steps to install
or improve systems of accrual accounting. It was also
indicated that data on accrued expenditures and revenues
will be brought into the central reporting system of the
Treasury on an experimental basis for the fiscal year 1969
as recommended by the President's Commission on Budget
Concepts, looking toward the later use of such data in
budgets and public reports. The establishment of the status
of each appropriation or fund at the close of business
June 30, 1968, on an accrual basis, is essential to the plan.
This Bulletin gives further information and instructions,
so that each agency may proceed promptly to accomplish
these objectives.
2. Background. Section 113 of the Budget and Accounting
Procedures Act of 1950, as amended (31 U.S.C. 66a), requires
that "... the head of each executive agency shall, in
accordance with principles and. standards prescribed by the
Comptroller General, cause the accounts of each agency to be
maintained on an accrual basis ..."
The principles and standards prescribed by the Comptroller
General have provided further details with regard to accrual
requirements. Bureau.of the: Budget Circular No. A-11 has
for some years required the. submission of cost-type budgets
wherever an agency has an accrual accounting system which
provides such information integrated with data on obligations
and disbursements. The Treasury Department has for some
years required year-end reports from agencies to reflect, by
appropriation and fund, the accounts payable and other
accrued liabilities, less the accounts receivable and other
accrued assets. -However', the principal budget tables and
Treasury reports on Government outlays have been stated on
the basis of checks issued and cash collected, rather than
the accrual basis.
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The President's Commission on Budget Concepts, in its report
of October 10, 1967, recommended that:
- Accrued expenditures be used in lieu of checks
issued as the measure for summary budget statements
and financial reports.
- Receipts of the various agencies be similarly
budgeted and reported on an accrual basis.
- Accrued expenditures be defined to. include the
"constructive delivery" basis.
Use of such data be tested, beginning with the
opening of the fiscal year 1969, with the expecta-
tion that the budget submitted in January 1970
be on the new basis.
- After the new concept is in use, the term
"expenditures" be automatically applied to the
concept which during the transition is called
"accrued' expenditures".
Monthly financial reports fiom the Treasury be
placed on the same basis as the budget, with the
belief that by July 1970 such monthly accrual
reports should be on the same time schedule as
monthly cash reports have heretofore been.
The cost accounts of the Government agencies
be continued and refined.
- Program costs be continued as significant
instruments of management, budget formulation
and execution, along with assuming increasing
importance in connection with appropriation
requests.
The President last December accepted the recommendations of
the Commission with regard to the basic concepts for the
budget, directing that they be placed in effect as promptly
as feasible.
The Commission also recommended that there be pursued the
objective of putting the Federal sector of the national-
income accounts on the same basis of accruals as is
recommended for the budget. This is under study.
3. The concept of accrued expenditures and accrued revenues.
The attached statement on the concept of accrued expenditures
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and accrued revenues (Attachment A) is hereby promulgated
for use by all agencies. The staffs of the Bureau of the
Budget, General Accounting Office, and Treasury Department
have prepared the attached answers (Attachment B) to a
number of questions about the concept and its applications
during the coming year, which have been raised in preliminary
discussions with staff of various agencies. The definitions
and the interpretations of the most widespread applicability
will soon be incorporated in permanent instructions.
Your attention is invited to the major changes in the concept
as compared with the current or earlier concepts and
interpretations of accrued expenditures under Bureau of the
Budget Circular No. A-34. Under the refined concept of
accrued expenditures herein promulgated:
Performance by the payee, through which he earns a
payment from the Government, is the test to be
applied. Therefore, the reporting of accrued
expenditures is not to wait until physical delivery
by the contractor and receipt by the Government,
or until title passes to the Government in those
cases where a contractor manufactures and fabricates
materiel in accordance with Government instructions.
Instead, the accrual in such cases is to be reported
at the time of constructive delivery and receipt.
The crucial point is the time when the money is
first owed by the Government, as distinguished from
the time when the money is legally "due and payable."
Thus accrued expenditures include amounts equal to
the liabilities for unbilled performance by the
payee, and the amounts of the liabilities that have
been billed to the Government.
-- The concept is made explicitly applicable to the
identification of amounts earned by contractors
or grantees on the basis of performance by sub-
contractors and subgrantees, as well as the per-
formance by the prime contractors and grantees.
Advance payments are never to be considered
accrued expenditures. They are assets, which
are liquidated (and become expenditures) as
they are earned by the payee. Advance payments
should be distinguished, however, from deferred
charges (for example, leasehold improvements) and
the acquisition of inventories; the two latter
terms should generally be reserved for situations
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where performance has already occurred, and the
accrued expenditure has been recorded, even though
the expense is to be recognized in the accounts
in part or in whole at a later time.
With respect to revenues, the refined concept requires
recognition of receivables, whether billed or unbilled,
and the exclusion of unearned revenue.
The refined concept should result in similar changes in
the practices of agencies in preparing reports on accounts
payable, other liabilities, and receivables under Treasury
Department Circular No. 965.
4. Application of the new concepts. Expenditure and
revenue information will be recorded at the level of the
appropriation, fund, or receipt account. It will not
usually be required by the Bureau of the Budget (or the
Treasury Department) at the level of individual activities,
where applied costs (and in some cases obligations) are
required. It is not a replacement for data now obtained
at the object classification level. It does not change the
obligation basis of appropriations or apportionments.
A principal objective in the application of the new concepts
is to obtain reliable results for use by agency management
and in Government-wide financial management. The ultimate
test will not be the method by which the figures are derived,
or the level of the agency accounting system at which they
are recorded, but the reliability of the data on accrued
expenditures and revenues, and on related assets and lia-
bilities, as indicated by appropriate techniques of verifi-
cation. While the concepts set forth in paragraph 3 above
and in the attachments are firmly established, the criterion
of materiality is applicable in the implementation of those
concepts. It must be recognized that absolute precision may
not be attained, and that figures originally reported as
accrued expenditures, though grounded in the best informa-
tion then available, may be subject to some subsequent
adjustments upwards and downwards as invoices are received
and examined, and as bills are paid or settled.
As in the case of earlier statements on the application of
the accrual concept in Bureau of the Budget Circular No.
A-34, "the best estimate" will be used where the exact
amount of accrued expenditures is not known and cannot
feasibly be ascertained at the time that the accrual should
be recorded. However, "the best estimates" should avoid
arbitary proration of quarterly estimates into thirds for
each month, and similar formula approaches; it is important
that the reported accruals be a sensitive reflection of the
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transactions and performance which actually occur, and
a mere prorating of estimates over consecutive months
will not achieve this purpose.
Monthly reports on an accrual basis should normally
be obtained from major payees, where the amount accruing
is dependent upon sums earned (costs incurred or other
performance rendered) and the measurement thereof is
basically in the hands of the contractors, grantees, sub-
contractors or subgrantees. This will include as a minimum
the State governments, and other large governmental
instrumentalities, institutions, and contractors doing
business with Federal agencies.
Estimating and statistical devices may be appropriate for
determining accruals in those cases where such procedures
will eliminate the need for getting special reports from
a large number of payees with smaller contracts, grants,
or other obligations from the Federal Government. Such
methods will be susceptible to verification as to their
validity.
However, as of the end of each fiscal year, beginning with
June 30, 1968, a strong effort should be made to obtain
and record full and accurate accrual information, both from
within the Government structure (including interagency
transactions as well as matters under accounting control of
the agency itself), and from contractors and grantees.
Final year-end reports must attain a high degree of accuracy,
even if interim reports are not able to reach the same
standards during the early months of the test period. There-
after, regular monthly reports should be as close to the
accuracy of final year-end reports as possible, considering
that reporting deadlines will be tighter than at year-end.
5. Accrual accounting generally. While the major emphasis
of this Bulletin relates specifically to obtaining reasonably
accurate and timely figures on accrued expenditures and
revenues, the efforts to implement it should be carried out
as part of the financial management program in accordance
with the overall principles and standards for accrual
accounting prescribed by the Comptroller General. That is,
data on accrued expenditures and revenues should be properly
integrated with information on cash transactions, on applied
costs, on obligations, and on other facets of agency finances.
Improvements in agency information on accrued expenditures
and revenues should be accompanied by attaining more accurate
data on applied costs, and by exerting better accounting
control over assets and liabilities.
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The accrual accounting system should serve managerial needs
of the agency, as well as assist in serving overall
Government purposes. Program and operating personnel should
be encouraged to understand and utilize the accounting system
results. In the case of grants and contracts, the same
reports on financial performance and status should serve
the program personnel and the financial management system.
In some cases, financial data on the use of grants and on
progress under contracts now reach an agency, but do not
reach the accounts. Corrective action can make financial
management better serve the needs of program review.
6. Action program for each agency. The head of each agency
will see that steps are taken promptly and competently
as follows:
a. To provide for a comprehensive and reliable "inven-
tory" of accrued assets and liabilities as of June 30, 1968,
in accordance with the definitions and interpretations in
this Bulletin. The phrase "accrued assets and liabilities"
in this case refers to accounts receivable, advances out-
standing, accounts payable, unearned income, and accrued
funded liabilities not otherwise classified. The results
will be established in the accounts of the agency, and be
reported to the Treasury in accordance with its instructions.
b. To make accounting system adjustments, to the extent
needed under this Bulletin, and in accordance with General
Accounting Office principles and standards. Where systems
have not yet been approved by the Comptroller General, the
requirements of this Bulletin will be worked into those systems
prior to submission for approval. Where an accounting
system has alreadY been approved, proposed changes will be
submitted to the General Accounting Office.
c. To take necessary steps immediately, both internally
and with regard to contractors and grantees, so that there
can be timely compliance with Treasury's reporting instruc-
tions on accruals and related data, beginning with transac-
tions for the month of July 1968.
d. To require a review of procedures by financial
management staff during the fiscal year 1969, and the
adoption of such additional action as needed to facilitate
the obtaining of better accrual data in a more timely
manner and with lesser effort than may be possible in the
first months of the year.
e. To provide for a verification of accrued assets
and liabilities as of June 30, 1969. Where the accounting
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system clearly contains imperfections, a comprehensive
Accurate inventory may be appropriate. Where the system
is in operation and appears to be functioning smoothly,
normal verification techniques should be utilized to the
extent deemed necessary.
7. Actions of central agencies. The Treasury Department
and the General Accounting Office will shortly issue
additional appropriate instructions relating to this subject.
The definition and interpretation of accrued expenditures
in Bureau of the Budget Circular No. A-34 are superseded
by those contained herein; the Circular will be revised
subsequently.
The three central financial management agencies have invited
several of the operating agencies to join in creating some
temporary working groups to propose ways of applying the con-
cepts of this Bulletin in certain areas of common interest --
particularly, major contracts which involve constructive
delivery, grants-in-aid to other levels of government, and
financial relationships with educational and other institu-
tions. The results of these explorations will be made known
as soon as possible, and supplementary or amendatory in-
structions will be issued as necessary.
The working groups will be in contact with, and seek advice
from, representatives of private industry, of other levels
of Government, and of institutions. It is also expected
that the proposed further regulations, so far as they affect
other levels of government, will be offered for comment
through the customary channels of the Advisory Commission
on Intergovernmental Relations.
During the forthcoming year the Bureau of the Budget and
the Treasury will review various reports now required. While
there will temporarily be some necessary overlapping between
the new reporting requirements and the older reports, the
objective will be to integrate the reports and eliminate
such overlapping as soon as practicable. In the meanwhile
this Bulletin should not be construed to revoke existing
reporting requirements.
CHARLES J. ZWICK
Director
Attachments
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ATTACHMENT A
0 Bulletin No. 68-10
THE MEANING OF ACCRUED EXPENDITURES AND ACCRUED REVENUES
(Under the new budget concept transactions are divided
between the expenditure account and the loan account.
The concept of accrued expenditures and accrued revenues
relates only to the expenditure account; the loan account
is measured by checks issued in disbursement of loans
(less write-offs, all of which are chargeable to accrued
expenditures) and loan repayments collected. A few loan
programs have by definition been placed within the expendi-
ture account; until further notice they will also be ac-
counted for and reported on the basis of checks issued and
repayments collected. The respective totals in the ex-
penditure account will be referred to as "accrued expendi-
tures" and "accrued revenues" even though they will include
some loan programs stated on the checks-issued and cash-
collected basis.)
Accrued Expenditures
Abcrued expenditures are the charges incurred during a given
-period requiring the provision of funds for: (1) Goods
and other tangible property received, (2) Services performed
by employees, contractors, grantees, lessors, and other
payees, and (3) Amountsibecoming owed under programs for
which no current services or performance is required (such
as annuities, insurance claims, other benefit payments, and
a few cash grants).
Expenditures accrue regardless of when cash payments are
made, of whether invoices have been rendered, or, in some
cases, of whether goods or other tangible property have
been physically received. The portion of any such expendi-
tures which is unpaid at a given point in time is a liability.
The portion of payments made for which the expenditure has
not accrued (such as advances) is an asset.
Accrued expenditures, obligations, and disbursements become
identical in amount over time. The differences in measures
are differences in the timing of the events.
The concepts of performance and earnings are critical to the
definition of accrued expenditures. When a contractor,
vendor, or other party performs for the Government, earnings
have accrued to him and the expenditure should be recognized
at that time.
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Accrued expenditures include both expired and unexpired
costs. Basically accrued expenditures measure receipt of
goods and services by the Government, whereas applied
(expired) costs reflect the use and consumption of goods
and services by the Government. ?
The charges for accrued expenditures are normally matched
by one of the following credits:
a. Reduction of cash with Treasury -- when disbursement
is simultaneous with expenditure.
b. Reduction of advances -- when disbursements were made
prior to the expenditure.
c. Increase in accounts payable or other accrued
liabilities -- when disbursements will be made subsequent
to the accruing of the expenditures.
Constructive receipt of goods or other tangible property,
rather than physical receipt or the passing of legal title,
is the measure of the accrual in certain cases. When a
,contractor provides goods to the Government which he holds
himself available to sell to others, the accrual occurs when
-physical delivery by the contractor and receipt by the
Government takes place and title passes (that is, when goods
are either delivered to the Government or to a carrier.
acting on behalf of the Government). However, when a
Lcontractor manufactures or fabricates goods or equipment to
the Government's specifications, constructive receipt occurs
in each accounting period when the contractor earns a portion
of the contract price, and the accrual takes place as the
work is performed. Formal acceptance of the work by the
Government is not a test.
The accrual basis, among other things, measures what is
owed between the parties, whether or not it is "due and
payable" as soon as it becomes owed. In general, ,the
Government does not owe on its obligations until performance
takes place on the part of the other party; it does not owe
on goods and equipment of a type sold generally until physical
delivery has been made. However, once performance occurs,
the Government owes for it, even though it has not yet been
billed,by the other party.
Advance payments including prepaid-expenses are assets;
they are not accrued expenditures. They develop into
accruals only as the money is earned by the payee, at which
time the advance outstanding becomes reduced and the
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accrued. expenditure is recognized. If an advance- is
'neither earned by the payee 'nor returned, it becomes
an accrued expenditure when its uncollectibility is
determined,.at which time it should be recognizecfin the
accounts. However, 'deferred charges" which extend over
a substantial period of time are counted as accrued expendi-
tures at the same time and in the same manner as the?
acquisition of inventories and long-term assets (for
example, leasehold improvements).
In.some-cases the performance required by the Government is
directed toward a third party rather than to the Government
itself (for example, a contract for medical services to be
rendered to patients, or a grant for welfare payments).
Even in such cases, the timing -of the performance determines
the time when the money is earned and thus the time when
it becomes an accrued expenditure.
Where a contractor, a grantee, or even another Government
agency (to which there is an obligation or an advance payment)
performs through a subcontractor, subgrantee, or other
party, it is necessary to determine the timing of such per-
formance -- generally following the same rules as if the
principal had performed directly. Therefore, in a cost-
type contract requiring- specific performance according to
Government specifications, the contractor's earnings, and
therefore the Government's accrued expenditures, will be
measurable, at least in part, by the amounts of the sub-
contractors' costs and a pro rata share of fees in a given
period. In the case of a fixed price contract, requiring
'specific work according to the Government's order, the
accrual is measured by the earnings of the contractor,
determined not by his costs and thoe of subcontractors,
but by the proportion of the price which has been earned
under the contract during the accounting -period.
In those cases where Congress has permitted liabilities to
accrue without being charged to the balance of an appropria-
tion, a fund, or a contract authorization, the liability is
considered "unfunded" and'Ildi accrued expenditure is recorded
or reported until the time that the liability becomes funded.
Accrued annual leave of employees is a principal example.
On the other hand, liabilities and accrued expenditures which
are normally funded are to be recorded and reported promptly,
even if they 'cause the recorded accrued expenditures to
exceed available funds. The concept of accrued expenditures
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MINUS increase in unfunded liabilities (e.g.,
accrued annual leave)
EQUAL accrued expenditures
Accrued Revenues (Other Than Taxes)
Accrued revenues are the credits earned during a given
period which are a source of funds, resulting from (1)
Services performed by the Government, (2) Goods and other
tangible property delivered to purchasers or their agents,
(3) Amounts becoming owed for which no current performance
by the Government is required (such as fines and forfeitures
levied, interest accruing on loans and premiums earned
on Government-operated insurance programs), And (4) Amounts
collected in cash in the case of gifts to the United States.
The concepts of performance and earnings are vital to the
definition. The revenues are earned by the Government and
are owed to the Government as performance occurs, regardless
of the timing of collection or even of whether 'billing has
occurred. Receipts collected in advance of performance are
unearned revenue (deferred income) until-performance occurs,
and develop into accrued revenues as the money-is earned
by the agency concerned.
The concept is applicable to revenues of all types of
funds included in the budget,. including appropriation
reimbursements. Where revenues will be credited upon collec-
tion to an appropriation account' for a year that has not
yet started, the accrual will be accounted for and reported
under the symbol of the future account in the period in which
the earnings actually take place.
Some revenues earned by the Government prove to be un-
collectible. Such amounts should be excluded from the
accrued revenues. The normal method of doing this is to
reduce the accrued revenues :on an estimated basis as the
money is earned,- and concurrently establish an allowance for
possible losses on collections. Write-offs which are not
_charged to such an allowance, or special adjustments to
such an allowance, should be treated as adjustments to
accrued revenues in the period when they are recognized
in the accounts.
- .
Accounting for accrued revenues should be accompanied by
full and accurate accounting for assets and liabilities
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on an accrual basis. Wherever orders received are used as
a basis for obligating, as is permitted for interagency
transactions where the orders are a valid obligation of the
ordering agency, accrued revenues should be appropriately
related to such orders through an account for unfilled
customer orders.
The relationship for any given accounting period betweeh -
accrued revenues and certain other concepts may be expressed
by formulas such as the following: ,
1. Relationship to cash receipts:
Cash receipts
PLUS increase in accounts receivable
MINUS increase in unearned revenue
EQUALS accrued revenues
Relationship to customer orders received ?(in the case
of interagency transactions):
Customer orders received
MINUS increase in unfilled customer orders
(whether collected or uncollected)
EQUALS accrued revenues
General
The convention of materiality should be applied to exclude
the need for refinement on small items. For example, it
is not anticipated that an agency will ordinarily-record
as an advance the prepayment of subscriptions to periodicals.
,Similarly it may not be necessary to segregate as unearned
revenue the occasional small collections received toward
the close of a month in payment for reproductions of records,
etc.,.which will be accomplished during the following month.
Nor is it necessary to seek absolute precision on'larger
amounts being due, provided that the probable deviation
from exactness is immaterial, and that the overall results
are reasonably reliable.
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On the other hand, where the aggregate of expenditures or
revenues accrued is significant, even though composed
of a number of small items, the total will require explicit
recognition. For example, if the aggregate of a thousand
small transactions represents $100 million of accrued
expenditures, it is clearly a material amount and the
estimate of the aggregate should be included, even though
no one transaction is very large. Similarly, for an
account that has a significant sale of subscriptions
to Government periodicals, the unearned revenue at any
given time may be significant enough to require recognition
by an aggregate entry in the accounts, thus resulting
in placing the total accrued revenues on the correct basis
of sums earned.
There should be adequate documentation received or
established as a basis for all accounting entries and
reports. The documentation may be at whatever organiza-
tional level is deemed most suitable by management, but
it should be subject to verification.
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ATTACHMENT B
CD Bulletin No. 68-10
ci
? QUESTIONS AND ANSWERS ON THE CONCEPT OF .
? ACCRUED EXPENDITURES AND ACCRUED REVENUES
[In preliminary discussions of the accrdal toncept.with
staff of various agencies, a number of questions have been
raised. Many of these questions are shown below, .together
with the answers suggested by staffs of the Bureau of the
Budget; General Accounting Office, and Treasury Department.]
1. Question:
Will accrued expenditures be necessary at the level of
budget activities?
Answer:
It is not expected that accrued expenditure_data will
:normally be required by the Bureau of the Budget, or the
:Treasury. Department below the appropriation level,
although occasionally the functional or other Government-
wide classifications used by the Bureau of the Budget
?may'require a few splits of data below the appropriation
level; such needs will be made known as they_arise.
Applied, cost information is needed at .the budget activi-
ties level, in accordance with Bureau of the Budget
'Circular No. A-11. For many.kinds of transactions,
applied costs and accrued expenditures are identical;
however, they are not the same for items passing through
inventory. The operation of a joint-use inventory for
more than one budget activity within an appropriation
would not normally permit the splitting of accrued ex-
penditures by activity, and such splitting is therefore
not anticipated.
2. ? Question:
Is the accrual basis to be applied to the foreign cur-
rency (FT) accounts?
Answer:
Yes. It is applicable to all Government accounts.
However, its installation with respect to foreign cur-
rency accounts is of lower priority than with regard
to dollar accounts, since the transactions in the foreign
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currency accounts do not enter into the budget totals
and therefore monthly reporting to Treasury on an
accrual basis is not required for these-accounts.
The introduction and refinement.of the accrual basis
in the foreign currency accounts may therefore be de-
ferred until later in the fiscal year 1969..
3. Question:
-We have a-cutoff of the 25thof the month for, ac-
counting and reporting from contractors and stations
in order that we may make timely reports shortly :after
the end of the month. Transactions after that date
are included"in the next month's report. Ts this'.
acceptable?
Answer:
rFinSncial reports for the month,forwarded.to Treasury
'or others outside the agency, should cover the total
transactions of-the month. Two'alternatives may be
used:
a. The preferable method.is to keep the accounts open
?
through the end of the month, and make strong
efforts to speed up the processing of reports in
, the early days. of the following.sMonth so:as-to
-.meet reporting deadlines. This is .especially.
desirable with regard to the monthly closing of
_station accounts. ?: .
b.. A, less preferable method ds:to ,continue..en..early
closing date for some contractors,. but require
that there be included', as an estimate.the-sd-
ditional accruals occurring between the closing
date and the end of the month. Such treatment
might mean that the estimate should be recorded
ih the accounts at the time of the early :closing,
and reversed at the beginning of the folloWing
. 'month. ? .
4. Question:
What procedure shall we follow if reports frOM some
.accounting stations are delayed?.
Answer:
It is hoped that firm instructions will be given to
accounting stations to initiate their reports in time
to allow for slight delays in the mails. It is not
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reasonable to assume next-day or second-day delivery
of all domestic mail, and agency processing tdheclules
'should allow appropriate leeway. Even go; there will
be some occasions when station reports ate misting,
particularly in cases of stations in foteign countries.
In tuch Situations the central office of,the agency
should include in its reports, on behalf of the missing
station or stations, its best estimates forthsac-
counting period. The actual report should be obtained
and processed as soon as feasible, and correctiOns
effected with the Treasury, in accordance with procedures
announced by the Treasury, before the' next report'is
due.
?
5. 'Question:
Will additional time be given for closing the accounts
at the end of a fiscal year, in order that the accrual
data may be refined?
: .Answer:
It.is.anticipated that regular reporting deadline's will
4betbserved every month including at the endHcif..the
year/tut that-in addition thete.will'be-some refiae-
meitt snd-revision in the aacounts for a-few weeks after
the regular June report is made. For other -reasons,
not connected with the change to the accrual -basis, it
is quite likely that the present September 10 cutoff
for finalizing status of appropriation and fund accounts
for reporting to Treasury will be changed to sm earlier
date. In preparing their procedures, agencies should
contemplate accomplishing the final closing of .their
accounts with a consolidation of summary data within
.60 days after the end of the fiscal year. 'The adjust-
ments that occur between the regular-June report and
the final closing should be minimal; the system will
not be functioning correctly if there are substantial
additions to or deductions from expenditures to-be
accomplished as a part of the final adjustments:
6. Question:
Is accrued annual leave to be included as an accrued
expenditure?
Answer:
In most cases, no. For nearly all appropriations,
accrued leave is an unfunded liability until the time
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thatdit is taken or becomes payableas terminal leave.
For most revolving funds, leave currently accruing is
? treated as a funded liability, and as such is re-
portable as an accrued expenditure. The basic answer
is: accrued leave is to be.reported as an accrued
expenditure only to the extent that it is "funded".
Question:.
How can.we get precision for such items astravel?
While:we )(now the amount obligated for travel orders
by-the end of the month, we will not.know the amount
to be reimbursed for travel claims until they are
presented in the following month, and the amount of
carriers' claims even at that time may be.subject,to
change later as their invoices are examined. -
Anpwer: .
Absolute precision is not expected. Ona cumulative
basis, accrued expenditures should include the.amounts
audited and paid for travel performed, and the-mOSt
? reasonable estimate for travel performed which has
not yet been paid for and for travel. performed that
will be funded out of advances for which vouchers
-,.-have not yet been presented. In many cases, therefore,
,on.an.itensuch as travel, cumulative accrued ex- ?
? .penditures within a fiscal year will represent a.
??reasonable .estimate for the most recent 'period and
,fairly-firm 'actual" figures for the preceding portion
Of the year.
Question:
This,same.principle is applicable to other types of
- transactions such as communication services and utility
,services. What procedure should be followed where the
,billing cycle of-the payee does not correspond to
calendar months?: Many telephone and utility bills
are rendered 12 times a year, but the billing period
does not correspond to calendar months.
Answer:
It is permissible to equate monthly billing periods that
do not correspond with the calendar month with the ac-
crued expenditures for the calendar month in which the
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' billing period ends, in those cases where.a similar
. obligation transaction is recorded, and where neither
the differences in the month's transactions nor in the
amounts of the liabilities are likely to be material.
(Note, however, that this practice is not permitted
for personal services; the accrual practice must cover
the earnings through the end of the month.) However,
if the accrued liability for communication-and utility
services performed for the portion of the month be-
tween the end of the billing period and month-end is
material, provision should be made for recording it
as an obligation, an accrued expenditure, and an applied
cost. ?
9. Question:
-With 'regard to transportation which is incomplete at the
? end of a month, when should the accrual be reported?
This. question is applicable to both passenger and freight
transportation.
- -Answer:
It is preferable to record the transportation as an ac-
crued expenditure in the accounting period in which it
begins. If the amount of unperformed transportation
is not likely to be material, the accrual might even
be recorded when the bill of lading is issued or the
transportation request is exchanged for tickets.
10. Question:
How should we treat advances to revolving funds, such as
those of the General Services Administration?
Answer:
These should be accounted for as advances until per-
formance occurs, when they become accrued expenditures.
When the performing agency performs or makes delivery
to the ordering agency, its revolving fund would re-
flect accrued revenues and the ordering agency would
reflect an accrued expenditure of the same amount. In
those cases where the other agency (say, GSA) contracts
with an outsider (for example, a building contractor),
its revolving fund would reflect accrued expenditures
based on the contractor's performance, and accrued re-
ceipts of an equal amount at the same time based on
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. .? ?
. .
the "sale" Of the 'Services or material to thfriordering
Agency; the ordering aqency would reflect air4Cered
expenditure at the same time, reciprocal to-dbA'S.-
aOcrued revenues.'
QUeStion:
'How should advance-s to cOnsoli4ate6mbtkingifunds.be
treated?
Answer:
These should also be treated as advances, not as ac-
crued expenditures, until performance occurs. The,
agency administering the consolidated working fund
Should treat the amounts as deferred income and report
promptly each month to the ordering agencies the'athounts
to be treated as an accrual between the two agencies
c-for the month. Exceptions may be made for small amounts
which are considered immaterial, by agreement between
the two agencies; however, neither agency should act
unilaterally in concluding that an interagency-payment
is to be treated as an accrual instead of an advance
' because' of its small size.
12. -QueStiOn:-.
? '-
,Would payments for the cost of interagencY boards .and
committees follow...a different rule? ' ,
Answer:
No. In general, .they should f011ow the same. rUleS indi-
cated above for consolidated working fund. ' '
13. Question:
What arrangements should be Made in the case' pf allo-
cation '('appropriatien transfer) accounts? ? '
Answer:
Allocation accounts in effect.represent-a subdivision
of an appropriation or-fund.. Allocation accounts are
combined withthe parent account in the budget and in
the Monthly Treasury Statement. . It cs preferable to
establish the same type of relationship .as might be
established' between a headquarters -and- a field -office,
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with one or more linking accounts on a reciprocal basis.
The transactions of the allocation accounts should be
summarized along with the transactions of the parent
account, in accordance with Budget Bureau regulations,
when needed for reports and budgets. Under Treasury
regulations, the allocation accounts may be reported
separately by the performing agency in certain cases,
and the Treasury accomplishes the combination of these
with the parent accounts.
14. Question:
To what extent should accrued expenditures be adjusted
retroactively? For example, an accrual in January is
overlooked and becomes known only in March. Or, an
accrued expenditure reported in January on the basis of
the estimated value of performance may be paid in March
at a different amount, on the basis of the invoice re-
ceiyed and/or adjustments made during the examination
of that invoice. Should the January figures be re-
stated?
Answer:
No. Information becoming known in March will usually
be treated as a March entry. The difference between the
amount originally accrued as an expenditure and the. net
amount ultimately paid will enter into accrued expendi-
tures of the month in which the adjustment becomes
known. Accounts for prior months will not be reopened
to make such adjustments, except at the end of the year
when June accounts should be held open to record ac-
cruals, cancellations and adjustments reaching the
accounting center after the preliminary reports have
been made but before final reports are made. Even for
June, it is not necessary to adjust year-end accruals
for minor differences between recorded accruals and
payments of those transactions; such adjustments, un-
less significant, can be treated as transactions of the
new fiscal year. Where the accounting system contemplates
the identification of accrued expenditures by the primary
use of cash figures together with a change in certain
assets and liabilities, the adjustments described here
will be automatic. Where the accounting system derives
accrued expenditures directly, provision must be made
for recording the adjustments when actual liabilities
are determined, and cash payments made or advances
liquidated.
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15. Question:
We had set up our plans on the basis of making certain
accruals only on a quarterly basis. Would this be
acceptable for a substantial number of items which are
individually relatively small?
Answer:
No. It is necessary to record an accrual each month.
However, estimating methods might appropriately be
used in some situations, taking account of all factors
known to be relevant, and subject to correction as more
accurate information becomes available. Such short-
cuts are applicable primarily when individual items
are relatively small. Where amounts are significant,
it is important that the reported accruals be a sensi-
tive reflection of the transactions actually happening,
and a predetermined prorating of estimates over con-
secutive months will usually not be satisfactory.
16. Question:
In those cases where goods are bought out of a ware-
house or off the shelf, does the accrual occur at the
time that delivery is made to a carrier, or at the time
the carrier makes delivery, to the Government?
Answer:
Technically, the accrual to the seller occurs when he
makes delivery to the carrier, if the circumstances
make the carrier an agent of the United States. If,
instead, the carrier is an agent of the vendor, the
accrual occurs when delivery is effected to the agency.
In general, the controlling circumstance is not the
choice of a Government bill of lading versus a com-
mercial bill of lading, but the terms of the purchase
order or contract (that is, did it call for the vendor
to make delivery to us or to a carrier?). However, as
a practical matter, it will usually be sufficient to
record accruals during the year (for this type of
purchase) on the basis of deliveries received by the
agency.
17. Question:
Suppose that on a cost-type contract the contractor
subcontracts several portions of it, and the sub-
contractors in turn arrange for part of the work to
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be done by other firms, involving a chain of contracting
arrangements that may run to several levels. What is
really expected in terms of getting timely reports on
earnings through:a.whole chain of contractors?
Answer:
In many cases it will not be feasible to establish a
monthly reporting chain to the last possible level of
subcontractors. However, the accrued expenditures re-
ported should represent the best estimate of the amounts
earned, whether or not they are known specifically and
supportable in detail in the prime contractor's books
at the end of the month. A possible test is this: If
the contract were terminated at the end of the month,
how much would the Government owe for work already'
performed by the contractor and all subcontractors,
aside from penalties and cleanup costs relating to
termination?
18. Question:
Can the Government require a contractor to report his
costs Under a firm fixed price contract?
Answer:
It is not necessary to ask the contractor to report his
costs under these circumstances. The information needed
for our accrual accounting is the contractor's earnings,
not his costs;. the Government can appropriately ask him
to report his, earnings,. based upon the percentage of
completion of the cOntract, on those contracts where
his performance is specifically to meet requirements of
the Government and at the Government's direction.
19 Question:
Our experience indicates that on certain types of con-
tracts (for. example, those with renegotiation provisions),
contractors generally claim more earnings than the
amounts for which settlement is ultimately reached.
Should we recognize the total amounts claimed each
month as an accrued expenditure?
Answer:
The agency may appropriately utilize its experience to
establish an allowancee(a reduction in the accrued ex-
penditures) for excessive claims that will likely not be
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paid. It will probably be more satisfactory to operate
this allowance (like valuation allowances on assets)
in relation to a group of contracts rather than to seek
to identify an amount to be discounted on each indi-
vidual contract.
20. Question:
Are we to rely basically on how a cost-type contractor
records a transaction -- that is, treat his current
earnings as an accrued expenditure if he records revenue,
but do not do so if he doesn't?
Answer:
No, not with outside contractors. The Government's
treatment of a transaction is not dependent on whether
the contractor picks up the transaction as revenue
each month or leaves it as work in progress in his
accounts until the job is completed. The agency must
accrue the expenditure on the basis of contractor per-
formance in the case of contracts which require his
performance to the Government's order, as distinguished
from cases where the contractor holds himself out as
selling the product generally. Agency procedures should
provide methods of determining the performance that has
occurred and the portion of the purchase price repre-
sented by that performance month by month.
21. Question:
In the case of construction jobs does the Government
have an accrued expenditure for material brought to the
site but not yet put in place?
Answer:
The timing of the accrued expenditure depends upon the
terms of the contract. Where the contractor is deemed
to earn a portion of the contract price- only as work
is put in place, the accrued expenditure must be re-
corded accordingly. ,Where the contractor's performance
and earnings include the delivery to the site of certain
materials which the contractor then "appropriate" to
the job, the accrued expenditure should properly include
the price of such materials.
S
0
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22. Question:
We use the letter-of-credit procedure for many grants.
Can we count the disbursements on letters of credits
as accruals?
Answer:
Neither the issuance of the letter of credit nor the
disbursement on a letter of credit can be counted as
an accrual. The letter-of-credit device is a means of
handling payments, not a means of handling accruals.
23. Question:
If advances for grants are handled on a "pooled" basis
by the grantee, how should the accrued expenditures
be distributed to the funding accounts?
Answer:
This question relates more to the theoiy of pooling
than it does to accrued expenditures. -However, with
a pooled arrangement it is necessary to determine the
costs ultimately chargeable to the various funding
appropriations. Since costs and accrued expenditures
are likely to be concurrent in the case of grants in
cash, the principles adopted for cost application can
probably be applied equally well to the distribution
of accrued expenditures.
24. Question:
We make some grants and loans in kind--through current
purchases. When should the accrual be reported?
Answer:
If the purchase is made on the Government's purchase
order or contract, the relationship between the Govern-
ment and that party must be recognized, even though
another party is a grantee or borrower in the trans-
action. In such cases, the accrual should be reported
as an expenditure when the vendor or contractor performs,
in the same manner as if he were making delivery, to the.
agency directly. These cases therefore differ from
grants or loans which are made in cash, in which the
timing of the accrual depends primarily upon the status
of the transaction between ourselves and the other
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party. However, if the grantee or borrower is the
purchaser of a commodity from a third party, and
assigns his payment from the United States to the
third party, the accrual is based upon the relation-
ship between the agency and the grantee or borrower,
and the performance by the third party is not
relevant.
25. Question:
How should we handle grants which do not require per-
formance?
Answer:
It should be noted that the number of domestic grants
of this type to.the states, counties, and cities is
especially small. Nearly, every "categorical grant"
requires some type of performance as the basis for the
grant. However, a possible example to conform to the
question is the annual grant of $50,000 to each state
and to the Commonwealth of Puerto Rico for "Colleges
for agriculture and the mechanic arts"--a program
appropriation in which the specified amount is paid
without any specific showing of need, any submission
of a plan for the use of the money, any separate ac-
countability, or any reporting on how the money was
used. In the rare cases of this type where the pay-
ment is clearly gratuitous for general financial sup-
port, and unconditional in nature, the accrual may
properly be recorded on the basis of cash disbursements.
26. Question:
How should we handle the sharing of revenues with
States or local governments (for example, the return
to the States of 12-1/2% of grazing fee receipts on
certain Federal lands within their boundaries)?
Answer:
The method of handling these depends upon the law,
although the rules are generally the same as for grants.
In most cases of shared revenues there is no require-
ment as to performance and no showing is required from
the recipient, either before or afterwards, as to its
use of the money. In these cases the accrual may
properly be recorded on the basis of cash disburse-
ments. If some performance is required then, of course,
the accrual will be based upon such performance.
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27. Question:
We. give monthly stipends to individuals to assist them
in going to school. What evidence of "performance" is
necessary for-carrying out the accrual concept?..
Answer:
None. It is assumed that the agency has some method of
ascertaining, that the individual is attending school,
but it would not seem practicable to carry the accrual
concept to any special degree of precision in cases
such as this. If the stipend is. given in the month
for which it is applicable, there mould be no .objec-
tion to treating the disbursement and accrued expendi-
ture as concurrent. . If the stipend is given in advance
of the month for which it is applicable, it would be
desirable to set up an advance account, but there would
be no objection to liquidating the advance account
en bloc for the month without demanding individual
performance reports'as a condition for doing so..
28. Question:
Our. grants go to.20,000 school districts (or, our con-
tracts.go to 20;000 contractors). Our workload'would
be too great to get monthly reports from each of these,
and many would probably not comply. What do you pro-
pose that We do?
Answer:
Noncompliance with reporting requirements should not be
condoned. As a party to the contract or as a.grantor,
the Government may require and obtain necessary and
reasonable monthly reports as a condition of continuing
the contract or the 'grant.
However, the question has identified a practical problem
which needs to be dealt with in a practical manner. Two
alternatives are suggested. On either of them an agency
should get appropriate professional advice, and its
procedures will be subject to review and approval of
the General Accounting Office in connection with its
review and approval of accounting systems:
(a) If a relatively small number of the payees account
for a large proportion of the payments--for example,
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if the 100 largest contractors cover 80% of the
payments--the agency should get monthly per-
formance reports from each of these large payees,
and it may properly draw upon experience and
judgment to make an estimate of the accruals,
otherwise unrecorded, ?with regard to the remaining
smaller proportion of the total lot.
(b) If no reasonable number of payees account for a
predominant part of the total payments, statistical
sampling techniques might be considered; that is,
monthly performance reports might be obtained from
a limited number of the payees, provided that the
size and nature of the sample is appropriately
drawn. In such cases it will be necessary to
carry on the sampling periodically, since no one
period of the year is necessarily indicative of
? the levels or volumes of activity in the remainder
of the year, and since too infrequent sample re-
porting might cause estimated results to fail to
reflect new developing trends.
An agency might choose to use one alternative for some
programs, the other alternative for others. An agency
might also select still other methods of dealing with
the problem subject to obtaining the approvals mentioned
above.
29. Question:
We must pay interest semiannually on certain borrowings
(or on moneys deposited with us). Is it permissible to
accrue this only on the due dates?
. Answer:
Interest should be accrued as It is earned, month by
month, and not merely at semiannual or other periodic
intervals when it becomes due to lenders or is credited
to depositors' accounts.
30. Question:
The Post Office sells stamps and obtains revenue from
setting postage meters somewhat in advance of per-
formance. Is it necessary to recognize a distinction
between accrued revenues and cash receipts in such
cases?
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Answer:
To the extent that an agency obtains receipts in ad-
vance of performance, and the unearned balance of such
advance collections is material, it should be recog-
nized as deferred income until it is earned. In
cases of this type it is common to expect that a
portion of the receipts collected will never require
performance--stamps will be kept by philatelists,
lost, etc., just as a local transportation company
may assume that some bus tokens it sells will never
be used. It is appropriate to include in the accrued
revenues, rather than as unearned revenues, the por-
tion of the current collections which it is expected
will never require performance by the Government.
31. Question:
Are some Federal agencies small enough to avoid appli-
cation of these rules under the principle of materiality?
Answer:
No. The rules are to be applied for each agency and
for each appropriation or fund symbol. The concept of
materiality is applied separately for each accounting
entity and therefore differs according to relative size.
32. Question:
Some of our reports from contractors and grantees
presently combine program status and financial infor-
mation, and go to program offices rather than the
accounting staff of the agency. By your references
to getting the financial data to the accounting staff,
are you suggesting that program statistics and financial
data be separated into different reports?
Answer:
No. A combination of program statistics and financial
reports on performance is often desirable. While the
immediate emphasis of this effort is to obtain timely
and accurate information on financial performance for
use in the accounts and reports, nothing herein should
be construed as minimizing the usefulness of program
statistics or as seeking to separate them from financial
data.
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EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20603
BULLETIN NO. 68-9 April 12, 1968
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Planning-Programming-Budgeting (PPB) System
1. Purpose and scope. This Bulletin contains guidelines for continued
development of integrated Planning-Programming-Budgeting (PPB) systems
and outlines requirements for PPB submissions to the Bureau. This
Bulletin supersedes Bulletin No. 68-2, dated July 18, 1967. Bureau of
the Budget Circular No. A-11 is being revised to be consistent with
these instructions.
This Bulletin applies to the agencies listed in section 1 of Attachment A.
Other agencies (listed in section 2) will be contacted by the Bureau with
respect to the extent of required compliance to the guidance provided
in this Bulletin.
Attachment B provides guidance on the preparation of Program and Finan-
cial Plans (PFP's). This guidance has been developed as a step toward
making the PFP a more useful tool for planning. The use of this guid-
ance is not required of all agencies this year. It will be used this
year with a few selected agencies which agree to make a pilot applica-
tion to test and refine the concepts involved. While only a few agen-
cies are involved in the pilot effort, other agencies are encouraged to
use Attachment B guidance this year. (See paragraph 7a.) Bureau staff
will be available to advise on application of this guidance.
The principal objective of PPB is to improve the basis for major program
decisions in the operating agencies and in the Executive Office of the
President. This requires clear statements of alternatives and of the
reasons for decisions. Program objectives are to be identified and
alternative methods of meeting them are to be subjected to systematic
comparison. Data are to be organized on the basis of programs, and
are to reflect the future as well as current implications of decisions.
As in the case of budgeting, planning and programming apply not only
to current programs but to proposals involving new legislation.
The budget is the financial expression of the underlying program plan.
Review by the Bureau is conducted primarily in program terms. It is
essential that the products of the PPB system -- the Program Memoranda,
Special Analytic Studies, and Program and Financial Plans (each defined
in paragraph 2) -- provide adequate bases for program decisions. Since
the budget is transmitted to the Congress in terms of individual appro-
priations, there must be a clear relationship of program decisions to
appropriation requests.
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2. ' Elements of the system. The PPB system provides for identification
of program issues and consideration of such issues in the framework of
a program structure. The system has three basic elements: Program
Memoranda, Special Analytic Studies, and Program and Financial Plans.
a. Program Memoranda (PM's). A PM presents a statement of the
program issues, a comparison of the cost and effectiveness of alterna-
tives for resolving those issues in relation to objectives, the agency
head's recommendations on programs to be carried out, and the reasons
for tfiose decisions. PM's, therefore, provide the documentation for the
strategic decisions recommended for the budget year.
b. Special Analytic Studies (SAS's). The Special Analytic Studies
provide the analytic groundwork for the decisions reflected in the PM's.
Studies are of two -types, both of which are essential. to effective
operation of an agency PPB system and to annual budget review.
Some SAS's will be performed in order to better resolve an
.issue in the budget year. These studies will be initiated and com-
pleted during the year and their results will be shown in the PM sub-
mitted in support of the budget request.
The second type involves studies which continue beyond the
.budget year.. .A continuing study will develop on a longer-run basis the
conceptual understanding necessary to improve the data available, to
evaluate the implications of agency objectives, and to provide an
analytic basis for deciding future Major Program Issues (see paragraph 3).
c. Program and Financial Plans (PFP's). The PFP is a comprehensive
multi-year summary of agency programs in terms of their outputs, costs,
and financing needs over a planning period covering the budget year and
four future years, or a longer period if this is appropriate to agency
programs. While PM's deal primarily with the resolution of specified
program issues, PFP's provide a continuing record from year to year of
the outputs, costs, and financing of all agency programs. Thus the
PFris the basic planning document of the agency PPB system.
To meet Bureau needs, agency PFP submissions are to present
specified data on outputs, costs, and financing over a seven-year
period: the past, current and budget years, and four future years.
Since PM's submitted to the Bureau of the Budget present agency recom-
mendations only on Major Program Issues, the PFP serves as the vehicle
for summarizing all piogram recommendations for budget review.
In addition to the material outlined above, the Bureau will
continue to request, at staff level, such additional information as
is necessary' to better understand agency programs, PM's, Special Ana-
lytic Studies, PFP's, and budget submissions.
3. Major Program Issues (MPI's). A Major Program Issue is a question
requiring decision in the current budget cycle, with major implications
in terms of either present or future costs, the direction of a program
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or group of programs, or a policy choice. The most important feature of
the statement of a Major Program Issue is the identification of specific
alternative courses of action, and the costs and benefits of each. Per-
tinent legislative as well as budgetary considerations should be high-
lighted.
4. Program structure. The program structure should group agency activi-
ties in a way that facilitates comparisons of the cost and effectiveness
of alternative approaches to agency objectives. To serve this purpose,
program classifications should be objective-oriented, grouping activities
with common objectives or common outputs. Each agency is responsible for
its own program structure, subject to Bureau review. Continuing agency
review of the program structure is required, with modification as neces-
sary to meet changing conditions. The Bureau should be consulted on
structural problems and proposed changes.
Normally, an agency program structure will include three levels of classi-
fications: program categories, program subcategories and program elements.
These should be established in accordance with the following general cri-
teria.
a. Program categories. The categories in a program structure should
provide a suitable framework for considering and resolving major questions
of mission and scale of operations which are a proper subject for decision
at the higher levels of management -- within the agency and within the
Executive Office of the President. An agency generally should have be-
tween five and ten program categories.
b. Program subcategories. Subcategories should provide a meaning-
ful substantive breakdown of program categories, and should group pro-
gram elements producing outputs which have a high degree of similarity.
c. Program elements. A program element covers agency activities
related directly to the production of a discrete agency output, or group
of related outputs. Agency activities which contribute directly to the
output should be included in the program element, even though they may
be conducted within different organizations, or financed from different
appropriations. Thus, program elements are the basic units of the pro-
gram structure.
Program elements have these characteristics: (1) they should
produce clearly-definable outputs, which are quantified wherever possible;
(2) wherever feasible, the output of a program element should be an
agency end-product -- not an intermediate product that supports another
element; and (3) the inputs of a program element should vary with
changes in the level of output, but not necessarily proportionally.
d. Treatment of support and indirect activities. In dealing with
the costs of support and indirect activities, arbitrary allocations which
are made solely for the purpose of distributing all costs should be
avoided. Allocations should be made only where they contribute to better
decisions.
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When supervisory and support operations (such as comptroller,
personnel and administrative service operations) are completely in-
volved in a single program element, they should be reflected in that
element.
In many situations, however, such operations may support two ?
or more program elements. In such cases, the costs of the supervisory
or support activities should be distributed to each supported program
element -- if there is a reasonable basis for doing so, and if those
costs may be expected to vary reasonably in line with trends in each
of the program elements involved.
Where there is no reasonable basis for allocating such activi-
ties, or where allocation would not contribute to more effective
decision-making in budget review, these activities should be reflected
in appropriate separate classifications within the program structure.
e. Adaptation of program structure to decision-making needs. There
are many instances where the program structure, if it is to facilitate
decision-making, must cut across organization lines, appropriations,
and other classifications. Pursuit of absolute uniformity and consis-
tency in development of a program structure will, however, be counter-
productive in some instances in terms of the major objective of PPB:
the improvement of the basis for decision-making.
For example, there are cases where a specific target group is an
important focus of decision-making, while the services provided to the
group would normally fall within several different classifications of
the program structure. This would apply, for example, to a group of
refugees who are furnished, health, education, and other services, but
where decisions in the Executive Branch are in fact made in terms of
this group of refugees as a whole. In such a case, all activities con-
cerning the group should be reflected in one unique program element
within the subcategory and category predominantly involved, unless this
would produce significant distortions in the basis for decision-making
in the other parts of the program structure.
A second example involves certain overhead and support activi-
ties or administrative expense items, which may be technically allocable
among various program elements under guidelines furnished above. In
some instances, these costs are large collectively but, distributed
among many program elements, are not a significant factor in decisions
regarding those program elements. Where this is true, and where decision-
makers in the Executive Branch must focus at some point upon the costs
in total, it is better to segregate them within the program structure,
rather than allocating them.
As a third example, excessive fragmentation of appropriations
and organizations should be avoided. For example, if about 80 percent
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of an appropriation or the costs of an organization would fall within
one part of the program structure, the entire amount should be so
allocated unless this would cause significant distortions in the basis
for analysis and decision-making. Further, there is usually little to
be gained by spreading very small appropriations or small parts of an
appropriation within the program structure. Normally, they should be
allocated in total to that element into which the costs predominantly
fall.
Agencies should review their structure in light of these cri-
teria. In addition, Bureau representatives will advise individual
agencies of a number of specific instances where the program structure
? should be modified in accordance with the foregoing.
f. Relationship to other classifications. As part of its effort
? in the review of program structures in individual agencies, the Bureau
will continue to work toward development of a Government-wide program
structure. As this effort progresses, agencies will be asked to adjust
their structures to produce a comprehensive and compatible pattern
across agency lines.
To facilitate the translation of program decisions and related
data into the classifications used in the budget, it is desirable to
bring program and appropriation structures into as close a relationship
as possible. In refinement of the PPB system, the aim is to interrelate,
to the maximum extent, the functional classification employed in the
budget, the agency program structures, and the appropriation activity
classifications in the budget. Attention should be given to changes in
structures which will contribute to this objective.
S. The Program Memoranda (PM's). PM's are oriented to Major Program
Issues. They may cover all or only a part of a program category, or
cut across several program categories. Where a category is not involved
in a Major Program Issue, the category will not be covered by a PM.
Thus, PM's will not necessarily cover the agency's entire program.
For internal purposes, and to provide for the September 30 budget sub-
mission to the Bureau, agencies should develop and maintain narrative
and tabular material outlining the strategy and assumptions underlying
the projections in the PFP for each program category. These category
summaries will make reference to PM's as appropriate. Specific instruc-
tions regarding Bureau requirements are included in Circular No. A-11.
a. Content of the PM. The PM shows what choices the agency head
has made, includes the major program recommendations of the agency for
the upcoming budget, and defines authoritatively the strategy under-
lying those program recommendations. In addition to identifying the
strategy upon which agency plans are built, the PM should show how the
resolution of Major Program Issues fits into or modifies the program
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strategy. This integration of the objectives of the agency program
with specific decisions made on program issues for the budget year is
one of the principal functions of the PM.
The PM also shows why particular choices have been made, by
identifying agency objectives in a measurable way, and comparing
alternative programs in terms of their costs and who pays them, and
their benefits and the group benefitted. The PM should deal explicitly
with the legislative implications of the alternatives presented, and
should summarize the analytic basis for choice among those alternatives.
The supporting analyses may be contained in separate appendices to the
PM. Where Special Analytic Studies cover the detailed analysis, and
have been made available, a PM need only summarize the findings and make
reference to the studies.
The PM's provide internal guidance for preparation of the agency
budget submissions, and a basis for major program decisions in budget
review. Therefore it is essential that the choices among alternatives
be recorded in the PM's anti that the reasons for the choices be stated.
Where Special Analytic Studies have not been made, the PM will indicate
whatever basis exists for choice among the alternatives.
A PM should be no longer than 20 pages, and should be so pre-
pared that it can readily be used by the agency head and the Director
of the Bureau of the Budget.
b. Submission requirements. Each agency will receive from the
Bureau an issue letter requesting Special Analytic Studies and identi-
fying the Major Program Issues to be covered by PM's for the upcoming
budget cycle. Agencies may suggest additional issues and submit re-
lated PM's if they will contribute to more effective review of budget
requests.
In response to the issue letter, draft PM's will be submitted
in accordance with a schedule developed with the Bureau. The draft
PM's will permit review by the Bureau of the statements of the Major
Program Issues which the agency will address, and the analytical ma-
terial and methods being employed. Draft PM's are not commitments on
the part of the agency, to program decisions.
Final versions of each PM (and Special Analytic Studies ad-
dressed to budget year problems) are to be submitted on September 30
with the agency's budget submission. These final PM's should indicate
the recommendation of the agency head on all identified Major Program
Issues.
PM's are required to be submitted to the Bureau only in connec-
tion with Major Program Issues, as outlined above. Agencies are en-
couraged to develop PM's in connection with other issues; submission
of these additional PM's to the Bureau will be welcomed.
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(?ft) 6. Special Analytic Studies (SAS's). Special Analytic Studies provide
agency heads and the Bureau with information for making decisions among
alternative ways of achieving program objectives. There is no estab-
lished format nor length for these studies -- these will vary with the
subject matter involved. Normally, a Special Analytic Study should be
conducted for each Major Program issue. However, staff shortages, the
lack of data or of conceptual bases for analysis, and other circum-
stances may in some cases make it impossible to provide a Special
Analytic Study for each PM.
Usually a study is not coextensive with a program category. Dealing with
a specific Major Program Issue, a study may cover a specific aspect of
a program category, or may cut across program category lines. As soon
as practicable after receipt of the issue letter, agencies should notify
the Bureau of studies under way and planned. If these plans change
significantly, the Bureau should be advised.
7. Program and Financial Plans (PFP's). The PFP covers data relating to
the outputs, costs and financing of all agency programs. The PFP should
reflect the future implications of current and past program decisions of
the agency head and, subsequently, of the President. The outputs, costs
and financing of agency programs are to be shown in the PFP for each
program element, grouped in terms of the program structure by category
and subcategory, and for each of the seven years covered by the PFP.
The years beyond the budget year are included to show the future impli-
cations of past and current decisions. This projection, therefore, is
not intended to be a prediction of the future budget totals for the
agency or for major programs. It is intended to be a reflection of the
level to which existing decisions have committed the Federal Government.
The PFP shows, on the output side, the expected benefits of multi-year
projections and, on the cost side, the future financial requirements
that are the result of the accumulation of program decisions made for
the budget year or in past years.
Agency systems will include procedures for preparing and updating PFP's
in a way which is suited to the agency's programs and which satisfy re-
quirements of this Bulletin.
a. Scope and content of PFP. The PFP covers the total operations
of the agency. Data should not be excluded because certain operations
are not specifically covered by the existing program structure, or be-
cause the PPB system has not yet been extended to those operations.
Data for such operations should be shown on a separate line of the PFP.
As a general rule, agencies will prepare PFP's on the same basis
as for the 1969 budget. However, Attachment B provides new guidance
with respect to the preparation of PFP's. For the 1970 budget, this
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guidance will be used on a pilot or test basis by selected agencies, for
which separate arrangements will be made by the Bureau. It is planned
to make this guidance mandatory for all ?agencies next year, subject to
whatever modifications are suggested by experience with the pilot appli-
cations this year. Other agencies are encouraged to review the guidance
carefully; apply it for the 1970 budget to the extent they ?find it
practicable; advise the Bureau of any problems; and make plans for ap-
plication of the guidance next year.
b. Submission requirements. Specific tabulations to be used within
an agency should be developed as appropriate for the programs of the
agency. For submission to the Bureau, the following are required:
(1) Table I - Outputs and costs by program element (agency
formats are acceptable).
(2) Table II - Costs by program category and subcategory,
and, for the budget year, budget authority by program category and sub-
category.
(3) Table III - A translation of financial requirements from
the program structure to agency appropriations. (See Circular No. A-11
for format and instructions.)
A PFP will be submitted to the Bureau twice each year: on
September 30, with the agency's budget submission to the Bureau, and
not later than February 15, updated for all years to reflect the de-
cisions reached in the budget. The initial submission will reflect the
agency request for the budget year and, for the four future years, the
cost of carrying out the programs to which the Government would be
committed under those recommendations. The February 15 submission will
reflect for the budget and future years the costs of carrying out the
programs to which the Government is committed by decisions reflected in
the budget. The PFP required for submission to the Bureau is not in-
tended as a projection of requirements as foreseen by the agency over
the planning period.
c. Relationship to PM's and SAS's. This constraint upon the data
to be reflected in the future years of the PFP submission to the Bureau
does not apply to PM's and Special Analytic Studies. These are decision-
making documents which require full consideration of all relevant out-
puts, costs, and financing needs over the planning period used by the
agency, and comprehensive examination of the benefits and costs of
alternative approaches to resolving the issues. Such analysis requires
an evaluation of the total scope of a proposed program and its antici-
pated benefits, and consideration of such factors as systems costs, mar-
ginal costs, and economic opportunity costs.
8. Timing and submission of PPB documents. PPB is a continuous process.
Analytic work cannot produce once-and-for-all answers, nor can periodic
planning and programming efforts produce a systematic and effective
decision-making process. On the other hand, successive analyses within
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the framework of an integrated PPB system which operates as part of the
total management complex of the agency, can assist in producing suc-
cessively better Government decisions and in responding to new initia-
tives and changing circumstances. The decisions to which PPB con-
tributes are basically incorporated in two annual processes -- the
budget and the legislative program of the President. It is necessary
that the preparation and presentation of PPB documents fit the schedules
for these two processes. The timing of PPB submissions and the actions
involved in each time frame are outlined below.
a. Illustrative annual cycle for PPB submissions. The agency PPB
system and related internal procedures should be geared to the following
schedule:
In first quarter
of calendar year
Bureau sends letters to agencies identifying
Major Program Issues for which PM's are re-
quired and suggested Special Analytic Studies.
Agency provides Bureau with list of SAS's under-
way and planned.
February 15 through Agencies submit by February 15 PFP updated to
July 15 reflect programs in President's Budget.
March through
August
Agencies begin submission of draft PM's on a
staggered schedule agreed upon by the Bureau
and the agenty.
Bureau works closely with agency staff who are
preparing required PM's and SAS's, and reviews
those documents for adequacy as a final submis-
sion.
July-September Agency head makes final decision on his program
recommendations.
September 30
October-December
Agency completes final PM's and related SAS's
and revises PFP's -- adding one year and making
the PFP conform to agency head's decisions.
Bureau responds to agencies on draft PM's sub-
mitted in response to issue letter.
Agency submits final PM's, SAS's as required,
PFP, the annual budget, and the annual legis-
lative program to the Bureau.
Bureau reviews agency submissions and recommends
to the President; Presidential decisions made
and communicated to agency.
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January President's budget is transmitted to the
Congress.
Agency updates PIP to conform to that budget,
for February 15 submission to the Bureau.
b. Copies required. Six copies of PM's, SAS's and PFP's should be
submitted to the Bureau. Bureau staff may request additional copies.
9. Responsibility, staffing and training. Responsibility for the
development and use of PPB systems rests with the head of each agency.
Agency heads are requested to take such action as is necessary to insure
that line managers participate in operation of the PPB system, and that
they have available sufficient resources to insure participation in the
development of PM's, SAS's, and PFP's.
Agencies will be called on to provide pertinent data on the results of
resource allocation decisions made under PPB. The accounting system(s)
of the agency should provide adequate support for the information uti-
lized in operation of the PPB systems. Where the maintenance of specific
accounts for program classifications is not justified as an efficient
,and practical approach, information for the past year may be developed
through cost allocation or analysis techniques. In such cases there
should be a technical note appended to the PFP to indicate the techniques
used. Cost distribution practices should furnish a suitable basis for
program decisions and provide managers concerned with reliable informa-
tion.
Agency reporting systems should provide timely data on outputs and costs
in budget execution, so that programs may be effectively carried out ac-
cording to approved plans and related operating budgets. Such systems
should be designed to provide data suited to the needs of managers at
each leyel, and to furnish information useful for planning and program-
ming in the next cycle of operations.
To make PPB a fully effective system, a general understanding of the
methods and purposes of PPB must be generated throughout the agencies.
Agencies are encouraged, therefore, both to make use of the various
training and educational programs offered through the Civil Service
Commission, and to establish internal orientation and training courses
as appropriate.
CHARLES J. ZWICK
Director
Attachments
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. . ?.0, ATTACHMENT A
Bulletin No. 68-9
AGENCIES TO WHICH THIS BULLETIN APPLIES
Section 1
Department of Agriculture
Department of Commerce
Department of Defense - separate submission for:
Military functions (including civil defense and military
assistance)
Corps of Engineers, civil functions
Department of Health,.Education, and Welfare
Department of Housing and Urban Development
Department of the Interior
DepartMent of Justice
Department of Labor
Post Office Department
Department of State (excluding Agency for International
Development)
Department of Transportation
Department of the Treasury
Agency for International Development
Atomic Energy Commission
Central Intelligence Agency
General Services Administration
National Aeronautics and Space Administration
National Science Foundation
Office of Economic Opportunity
Peace Corps
United States Information Agency
Veterans Administration
Section 2
Civil Service Commission
Federal Communications Commission
Federal Home Loan Bank Board
Federal Power Commission
Federal Trade Commission
Railroad Retirement Board
Securities and Exchange Commission
Small Business Administration
Tennessee Valley Authority
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ATTACHMENT B
Bulletin No. 68-9
PFP GUIDANCE .
The tables that comprise the Program and Financial Plan (PFP) include
data on outputs, costs and their financing. This attachment presents
guidance on the concepts to be applied in preparing the PFP. For the
1970 budget, this guidance is not mandatory for all agencies, but will
apply in all respects to selected agencies which will be notified by
the Bureau (see paragraphs 1 and 7a of the Bulletin). It is planned to
apply this guidance to all agencies next year, subject to modifications
suggested by the pilot applications. All agencies are encouraged to
review this guidance carefully; apply it for the 1970 budget to the ex-
tent practicable; and make plans for mandatory application of the
guidance next year.
1. Concept of outputs. Table I of the PFP submission is to display
outputs, i.e., a quantitative measure of the end products or services
produced by a program element. The types of outputs to be reflected in
the PFP may differ from those to be considered in the PM's and Special
Analytic Studies. The PFP is intended to reflect, for decisions reached,
the outputs in relatively unambiguous terms. Outputs in these terms
might include the number of 8-52 squadrons, number of workers trained,
etc. Such measures are useful for internal agency programming, although
they do not measure the benefits of the program or progress against
agency objectives.
PM's and Special Analytic Studies should reflect, for a given program
element, a much broader concept of the benefits produced by the element.
For example, PM's and Studies might consider ordnance on target for B-52
squadrons, or the impact of a training program upon worker earnings --
thus facilitating the comparison of either with other elements that
produce similar benefits. Normally, however, there will be differences
in output mixes, and special qualifications or breakouts required, which
will make it difficult to express such measures in unambiguous terms in
the PFP. In short, the PFP will normally reflect the outputs associated
with decisions reached. An appreciation of the reasons for the decisions,
and the relevant cost-benefits comparisons, will normally require re-
course to PM's and studies.
However, if meaningful measures of achievement and effectiveness for a
program are available, they should be displayed in the PFP, either on a
separate line in Table I, properly identified, or by means of a supple-
mentary table. In certain cases, such as research programs, where
benefits are difficult to define, the best available quantitative non-
financial descriptions of the program should be used.
In some cases -- a recreation program, for example -- costs in the PFP
may best be related to the capacity of proposed recreation facilities,
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and this might serve as the best output measure. Attainment of the ob-
jective of the program, however, may best be shown by a measure of the
use of the facilities -- which is an important factor for decision-
making. Both of these measures, therefore, are relevant and appro-
priate for presentation.
Agencies should strengthen their efforts to produce more suitable pro-
gram measures --particularly measures of program benefits, and measures
that show the achievement of objectives. These are of prime importance
for analysis and for making informed program decisions.
2. Concept of costs - the "program level". The financial information
to be shown in Tables I and II of the PFP submission is to reflect the
program level for each year in the respective classifications. In most
cases, the best financial measure of program level will be budget auth-
ority. This includes, for example, lending authority for many loan
programs; and new obligating authority for most operating programs,
some construction projects, grant programs, and research activities -
wherever such data are the most suitable indicator of the level of
effort contemplated for the program.
There are a number of cases, however, ?where budget authority is not a
good measure of program level because of the type of program and the
nature of financing. In such cases, other measures should be used as
appropriate, and they should be identified in the stub column of the
PFP. Some examples include:
a. For construction and other projects financed on an incremental
basis, the program level for the budget year should reflect the full
amount to which the Government will in fact be committed for projects
for which approval is requested in that year. For example, if a project
will ultimately cost $200 million, and if the first year budget authority
would be $40 million, the PFP should show for the budget year:
(1) A program level of $40 million if, as a practical matter,
the project could be stopped at that point.
(2) A program level of $200 million if, as a practical matter,
the project would have to be completed once begun.
(3) A program level between $40 million and $200 million if
there is an interim stopping point.
b. In many trust funds, budget authority represents appropriated
receipts -- which are not a good measure of the level of activity be-
cause not all receipts will be used under the planned program. In these
cases budget outlays differ markedly from budget authority and should be
used to show the program level.
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c. In some loan and grant programs, available funds are reserved
upon approval of in application. These reflect the program level
better than budget authority and should be used in the PFP.
d. In some cases, the budget authority provided for a given year
does not provide a good measure of program level for that year because
of the application of unused balances from other fiscal years. For
example, an agency may propose a $50 million project to be financed
from an unused prior-year appropriation, without use of any authority
provided in the budget year. In such a case, the PFP should reflect a
program level of $50 million. If, in this situation, the project was
estimated at a $75 million total cost, with $25 million drawn from
authority requested in the budget year, the PFP should show a $75 million
program level in the budget year.
e. Another exception involves loan collections, sale of assets, and
similar transactions - the proceeds of which are used to finance programs
in lieu of budget authority. In the budget, these collections are some-
times applied at. the appropriation or agency level, and sometimes as
department-wide deductions. An example of the former is the sale of
equipment to another government or agency, where the proceeds are credited
to the appropriation which originally financed the acquisition of the
equipment. In some loan programs, loan collections are offset against
budget authority. Regardless of how they are treated in the budget, such
transactions should not be netted from the program level for program
elements in the PFP.
f. Some agencies, such as Post Office, parts of GSA, and certain
support organizations in the Department of Defense, exist almost entirely
to provide services for other agencies or the public, for which the per-
forming agencies are paid. In cases such as these, the program classi-
fications of the performing agency should reflect gross program levels,
receipts earned, and net program levels. Agencies which levy user
charges or realize proprietary receipts which are creditable against
budget authority may follow this practice if the program level is in
fact substantially determined by the volume of such charges or receipts.
Reimbursable work in general (e.g., provision of ADP services to
another agency) may be treated in the manner just outlined or, at the
agency's option, excluded from the PFP.
In cases where a program is financed by the Federal Government
and others, the total program level for the element involved may be
shown. If this is done, the non-Federal financing should be shown as
a deduction at this point, so that the PFP will show the program level
which the Federal Government is committed to finance.
The total program levels for the agency are to be reconciled, at the
bottom of Tables I and II of the PFP, to total budget authority for each
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year shown in the PEP. Total budget authority for the past year, cur-
rent year, and budget year must agree with the three columns shown in
the budget schedules. Bureau staff are available to assist in this
reconciliation effort, and in identifying the most suitable measure
of program level to be used for individual programs.
3. Concept of controllability - the "commitment classification". To
improve the usefulness of financial information in the PEP for budgetary
and planning purposes, a commitment classification is to be employed in
Table II of the agency PEP submission. This classification will group
financial data for programs according to the degree of control that can
be exercised by the Executive Branch in the allocation of resources in
the budget and future years (see illustrative table).
Program information should be based upon existing legislation, plus specific
legislative proposals put forward by the President. Where activities
are subject to annual legislative authorization, the data in the PEP
may assume that such authorization will continue to be secured, in the
form last approved by the President. Where programs have been author-
ized for a number of years, with the terminal date falling in the fore-
cast period, renewal may be anticipated but this fact should be appro-
priately noted in Tables I and II.
The commitment classifications to be reflected in Table II of the PEP
(:) (illustrated at the end of this attachment) are defined in the follow-
ing paragraphs.
a. Programs controlled by statutory formulae (Class 1). This
classification brings together all programs where the recipients and
the amount to be provided are specified in law. Examples include
veterans' compensation and the social security trust funds. Program
levels in future years will be based on projections of numbers of
beneficiaries and other relevant factors. Programs should be placed
in this classification only in clear cases where the budget provides
for a specific or formula-related payment to all qualified recipients.
Where the level of appropriation is in fact controlling:the program
should be shown in Class 6.
b. Programs controlled by workload level (Class 2). This classi-
fication includes all programs where the work must be performed to meet
specified needs, and the volume of the work in fact sets the require-
ments, as in the case of postal service. Program levels for future
years will be based upon projections of workload and productivity changes.
The use of this classification should be restricted to clear cases
where the budget provides for a given quality of service to all quali-
fied recipients. Where the level of appropriation is in fact controlling,
the program should be shown in Class 6.
c. Market-oriented programs (Class 3). This classification includes
programs in which the Government is committed to respond to market con-
ditions. Generally, these are financed by permanent budget authority.
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The major examples include interest on the public debt and agricultural
price supports. The PFP will be accompanied by explanatory material
indicating the key assumptions involved in the future-year projections
and the probable range of estimates applicable to each year.
d. New programs requiiing legislation (Class 4). This classifica-
tion will group all new programs covered in the budget-year legislative
program. Budget-year program levels will, as in other cases, be consist-
ent with the budget. Future-year projections ;all be based upon the in-
structions for the commitment classification in which the program would
otherwise belong: statutory formula, etc. If the program is of the type
that will be controlled by the level of appropriations (see Class 6),
equal amounts will be projected for each of the four future years, based
upon the operating rate that will have been attained by the end of the
budget year.
e. Administration commitments (Class 5). This classification will
? include programs to which the President has publicly and specifically com-
mitted the administration to changes, either for the budget year or future
years. Future-year projections will be based upon this commitment.
This should not include budget-year legislative proposals (Class 4).
f. Programs controlled by the level of appropriations (Class 6).
? This classification is to group all programs where the program level is
in fact controlled by the level of appropriations. This involves cases,
for example, where the amount of grants that could be paid to recipients
under accepted standards exceed the amount available in the budget.
Most grants, foreign assistance, and construction programs, and many
research, service and lending programs are in this class. In all these
cases, the programs will be projected in the PFP on a flat or declining
trend, in accordance with the specific guidelines which follow, even
though increases are projected in population supported or in other in-
dices of program need. This classification will be subdivided into two
parts.
(1) Construction and acquisition of major capital items
'Class 6a). This will cover construction, the acquisition or improve-
ment of real property, public works activities, and a significant
change in capabilities or mode of operations which involves equipment
of a high cost. In general, equipment to be reflected here should in-
volve a 5-year cost of $5 million or more for a given item, or closely-
related family of items. Major proposals for modernization or mechani-
zation should be included here, even though they involve support of
programs otherwise included in the first three classes. Class 6a is
not intended to include all equipment which may be reflected as capital
items for accounting purposes -- for example, office equipment and
furniture, commercial vehicles, and similar items acquired to support
ongoing operations will normally be excluded.
The budget year program level for these capital items
should reflect the full costs to which the Government would be com-
mitted if the proposal was approved, including costs that might be
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financed from subsequent year budget authority (see paragraph 2a). The
program level for such items beyond the budget year should be zero.
(2) Ongoing costs (Class 6b). This will cover ongoing costs
and minor capital items for programs controlled by the level of appro-
priations. No increases will be shown beyond the budget year, but de-
creases will be shown where appropriate. Decreases would be appropriate,
for example, where the legal basis will change during the forecast period;
where apart of the basis for the program will disappear, as in the case
of declining food surpluses; or where pilot or demonstration projects or
improvement efforts will run their course.
The purpose of this commitment classification is to enhance the useful-
ness of the PFP as a tool in planning and decision-making, including
the provision of meaningful agency-wide and Government-wide aggregates.
It is not intended to be precise and accurate to the last detail. The
PFP submission will include a summary of each agency's program level by
commitment classes as illustrated in the accompanying table.
4. Guidelines for projections. Budget-year estimates in the PPB sub-
missions will in all cases be consistent with the budget submission,
for which guidance is provided in Bureau Circular No. A-11. The guide-
lines which follow relate to future-year projections.
a. General price levels and Federal pay rates. With respect to the
direct Federal purchase of goods and services and employment, general
price levels and pay rates should be projected for future years at the
same levels as are used in the budget year.
b. Price levels and economic assumptions applicable to specific
programs. A small number of Federal activities are heavily or totally
dependent upon price and other movements in certain economic sectors.
Examples include debt iRterest, agricultural price supports, and pay-
ments tied to the cost of medical services. In these cases, future-
year projections should be based upon trends that are the most realistic
in terms of the sector involved. The PFP estimate should be accompanied
by explanatory material indicating the key assumptions involved in
future-year projections, and the possible range of estimates applicable
to each year.
0.
c. Transfer payments that are related by statute to an economic
index. These types of payments should be projected on the basis of
the changes in the pertinent index. Examples include payments to re-
tired personnel that are automatically adjusted with movements in the
consumer price index. The projection should be based on the assumption
that the average annual change for the most recent five years will
continue.
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7
d. Receipts. To the extent that agency receipts are a significant
factor in developing the PFP data or in making projections, appropriate
explanatory material should be submitted with the PFP. For example, in
cases where the volume of trust fund outlays for an agency exceeds $100
million annually, a projection of trust fund receipts should be included
with the PFP submission. Such projection should also be prepared in any
?
case where proprietary receipts exceed $100 million annually.
- Receipts from employment taxes should reflect changes in
covered employment and average earnings. Tax rates should
be those provided in existing law, or in any amendments
proposed by the President.
The effect of price movements in specific sectors, as men-
tioned above, should also be reflected in receipt estimates.
- Estimates for premiums received and similar items should be
consistent with the program projections -- if the program
projection would imply an increase or decrease in premiums,
this should be reflected even if statutory authority is re-
quired.
Receipt estimates based on postal and other rates fixed in
law should be projected on the basis of existing law or
amendments proposed by the President, recognizing projected
workload changes. For those rates which can be altered ad-
ministratively, receipts should be projected on a basis
consistent with workload and cost projections.
User charges should be included where now authorized, or as
proposed by the President. Where the legal basis for such
charges, or other receipts, will expire during the forecast
period, renewal should be assumed unless this would clearly
be inconsistent with other assumptions in the PFP.
In all other cases where the PFP reflects changes in price in-
dices and other economic assumptions, concise explanatory material
should be included with the PFP. In addition, there should also be sub-
mitted with the PFP information bearing on any significant financial
matters related to the programs shown in the basic tables. Examples
include information on large unobligated balances and data on purchase
and sale of non-Federal securities.
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DEPARTMENT OF GOVERNMENT
PROGRAM LEVEL BY SUBCATEGORY
1970
est.
:.(In millions
1. Military applications:
of dollars)
1968
actual
1969
est.
Intelligence
248
260
255
Communications
160
190
205
Total, military applications
408
450
460
2. Space applications:
Propulsion
121
90
75
Navigation
91
111.
114
Total, space applications
212
201
189
Total program level, Department of
Government
620
651
649
Increase or decrease (-) in unobligated balance
174
-61
-26
Unobligated balance lapsing
5
3
Increase (-) or decrease in unobligated loan
commitments
-5
Budget year construction program to be financed from
subsequent budget authority
xxx
xxx
-120
Current and prior years construction programs for
which budget authority is necessary in future
years
xxx
xxx
30
Loan collections
-20
-25
-28
Purchase or sale (-) of non-Federal securities
100
-50
Intragovernmental transactions
-5
-6
-8
Total budget authority, Department of
Government
869
504
503
a
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1971 1972 1973 1974
est. est. est. est.
210
210
420
70
84
154 .
574
26
2
195
190
T
188
215
215
212
'410
. 405
400
65
60
63
96
105
108
161
165
171
571
570
571
so
40
30.
20
10-
-'
-31
-31
44
-35
-
.-
-
-8
-9
'-10
-10
633
581
571
526
l
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Program level by commitment class:
1968
actual
1969
est.
1970
est.
1971
est.
1972
est.
1973
est.
1974?
est.
i
1. Statutory formula
388
381
376
367
340
338
343
2.
Workload level
48
51
SS
59
62
63
64
3.
Market-oriented programs
25
28
15
8
10
15
5
4.
New programs requiring legislation
-
-
10
20
40
45
SO
5.
Administration commitments
-
-
5
10
10
_
6a.
Level of appropriations: capital acquisitions
48
72
76
-
-
-
6b.
Level of appropriations: ongoing
111
119
112
110
109
109
109
Total program level, Department of
Government
620
651
649
574
571
570
571
?
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Decl
ST
ST
ST
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? __ ? -..--- ..
UNCLASSIFIED
CONFIDENTIAL
SECRET
OFFICIAL ROUTING SLIP
,..70
NAME AND ADDRESS
DATE
ITIALS
AT
I i
2
I 5
egrZ-.
3
4
AT
6
ACTION
DIRECT REPLY
PREPARE REPLY
APPROVAL
DISPATCH
RECOMMENDATION
COMMENT
FILE
RETURN
CONCURRENCE
INFORMATION
SIGNATURE
llemar
AT
P , , 4Mit, ':1- '-
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FOLD HERE TO RETURN TO SENDER
FROM: NAME. ADDRESS AND PHONE NO.
DATE
C.????"'..
I UNCLASSIFIED'/ I CONFIDENTIAL I
SECRET
nom kin nr)*1 ii..
(40)
-9
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CIA-RDP06M00944R000200060001-9
MEMORANDUM FOR: Roy & Gehe
This seems to further the points made in
our discussion for more analysis of the
knock ingredients of specific programs during
period July thru November.
JMC
(DATE)
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1471
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0 COMMENTARY ON RECENT DEXpeqiiancling-g?i/Nsd
PLANNING, PROGRAMMING, AND BUDGETING SYSTEM
By Charles J. Zw'
Director, Bureau of the ./ar?s?d
1"----ja ?
I. PRINCIPAL CHANGES IN PLANNING PROGRAMMING AND BUDGETING 4-)4
(PPB) GUIDELINES
The purposes of the recently redrafted PPB Guidelines
(BOB Bulletin 68-9, April 12, 1968) were to:
1. Permit agencies and the Bureau an opportunity
to consolidate the progress made in developing
and introducing the PPB System in the past two
years.
2. Clarify aspects of earlier guidance (Bulletin
68-2, July 18, 1967) and to place ereater em-
phasis on the need for analysis to support
program decisions.
3. Encourage further integration of program and
appropriation structure.
4. Initiate a test of five-year projection pro-
cedures to improve future guidelines in this
area.
Considering each of the above separately:
1. Consolidate Progress
The principal object of PPB, has been and is
to subject decisions about resource nilocaticn to?
systematic anal sis
? ?
-in. alternative courses.
of action In a framework of national objectives c_carly
and specifically stated. Since the inception or the
-system in the civilian agencies, much of the PPB effort
has had to be invested in developing and adapting the
procedures and organizational arrangements needed. As
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!A
? ? . ."
in any significant change in a management process,
those most affected by the change need time to as-
similate.not only different ways of thinking about
issues but also the.new organizational units created
and proceduresused.
An important aim of Bulletin 68-9 (Attachment 1)
is, therefore, to provide agencies the opportunity,
during this year, to accommodate to these changes
and to increase emphasis on the aoplication_of mial-
ysis To do this we have made as
few cnanges in procedures as possible.
? ?
2. Clarify Earlier Guidance
The principal clarification concerns the re-
quirement to submit Program Memoranda to the Bureau
of the Budget. Under Bulletin 68-9, the requirement
is limited to program categories within which major
program issues have bean identified. This is to em-
phasize further the requirement stated in Bulletin 68-2
that the Program Memoranda are to ba decision documents;
,
focused on Important issues that are stated in terms of.
It he options among which choice is necessary, and explain-
ing the recommended choices in terms of comparisons among
the alternatives. The comparisons are to be based on 'an
exposition of the relevant national obiectives and to
draw upon the conclusions of relevant analytic studies.
Detailed reports of analytic studies are to accompany
the Program Memoranda.
We anticipate growth over time in the ability
of the agencies to formulate and analyze major program
issues. As this occurs, the PM's will become increasingly
comprehensive and authoritative statements of program
strateay for the program categories they cover. They are
therefore a critically important element of the PPB System.
3. Encourage Integration of Program and
Appropriations Structure
Bulletin 68-9 reflects recognition that a "two-
track system".-- one geared to program analysis and a
?
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.4
3
separate one to appropriations -- may result in con-
fusion and an undue burden of effort on both agency
and Bureau staff now involved in working with similar
data in both systems: In Bulletin 68-9 we have, there-
fore, asked that agencies consider changes in their
program structures to assist in integrating program
and appropriations structure, where such changes will
not impair the usefulness of the program structure for
analysis and program decisions.
A prime purpose of PPB is to bring to bear on
specific program issues analyses of the cost and effec-
Si221.-aaa_4f_alternal-ive ways of achieving national ob-
iectives. Our intention is that decisions on these
issues will be reflected in specific budget decisions.
TO-Ca.e. the process of incorporating decisions made in
program terms into budget requests made in appropriation
terms, agencies are asked to consider changes in appro-
priations and program structure and in internal organi-
zation and procedures through which greater integration
of the two classification systems might be effected.
4. Test of Projection Procedures
Last year, the Program and Financial Plans, the
multi-year planning element of the PPB process, in most
cases presented agency views of the future costs of their
programs based upon full funding of programs and assump-
tions about new Program starts. While these forecasts
have some uses for internal agency pimuning, future pro-
gram levels will be responsive to a cllanging and uncertain
environment and to future deezions. so that any single
estimate will be unreliable. current. decisions, however,
have relatively predictable future im2lications and,
Bulletin 68-2 had asked that PEP projections of program
costs reflect only those future costa to which we were
committed by decisions taken to date. It was recognized at
that time, however, that substantial additional work would
be necessary to define what we meant by commitment, in
sufficient detail to produce consistent, useful projections.
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?
Attachment B of Bulletin 68-9 is the result
of effort by the Budget Bureau to develop guidance
on PFP preparation which more specifically defines
criSneate.ol Two factors bearing on the appiTalinty.
of our instructions to agencies became apparent during'
the preparation of this guidance.
(1) A mandatory and universal change in the
method fOrpreparing PFPs -- particularly the
adoption of a new classification system --
would have imposed a heavy burden on the pro-
cess. This would have conflicted with our
.major objective of consolidating the progress
made in program analysis over the past two
years.
(2) A classification of commitments applicable
to all PPB agencies and sufficiently simple to
be useful, must be developed on a pragmatic
basis, and will probably require some modifi-
cation by trial and error.
Both factors argue against the promulgation of
a requirement that all agencies adopt the scheme this
year. We have, therefore, issued the new PFP guidance
(Attachment B of BOB Bulletin 68-9) to be used by a few
agencies which elect to follow the guidance. It is our
intention to work closely with these agencies (none of
whom are in the Foreign Affairs area) in order to pro-
duce good forecasts of commitment levels for those
agencies. More important, we hope to learn enough
about the variations in program activities, financing
methods, and other factors to develop better guidelines
for PFP projections next year. As BOB Bulletin 68-9
announces, those guidelines will then be mandatory for
all agencies.
II. THE STATUS or PPB IN THE FOREIGN AFFAIRS AR,ZA
I have Toviewed the testimony before your Subcommittee,
last fall, by my predecessor, Charles Schultze, and I am in
substantial agreement with the views he expressed on the
rola and prospects for PPS in the foreign affairs arca.
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It might be useful to the SubcOMmittee if I were to
indicate the progress we are making on the two limited
steps which he said the Budget Bureau and the State
Department would jointly take on foreign affairs pro- .
gramming. Because of our concern for the complexities
of the problems, we are moving forward pragmatically
and deliberately.
First, we have systematically consulted with the
State Department's Regional Assistant Secretaries on
interagency program issues arising out of agency PPB
submissions during our formal budget review last fall.
We found the consultations useful in dealing with the
issues, and we believe we have initiated a dialogue that
can be continued in future cycles.
? Second, we are developing on an experimental basis
soma interagency papers for-individual countries, dealing
with U.S. objectives and the resources of the major foreign
affairs agencies devoted to achieving the objectives. We
anticipate that we will want to continue this experimenta-
tion and learn from it.
In the case of the Latin American region, the State
Department and the agencies are continuing to develop
Country Analysis and Strategy Papers, drafted in the
EMbassies arid reviewed by the Interdepartmental Regional
Group in Washington. These Papers are providing guidance
to the agencies and the Embassies as they develop their
individual programs and budget requests.
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? ..../9-?7? I Executive Fteeivere
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leffrbit/eR
OFFICE OF
THE DIRECTOR
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON, D.C. 20503
JUN
Honorable Richard Helms
Director of Central Intelligence
McLean, Virginia 22101
Dear Dick:
Enclosed for your information is a comparison of
Bureau of the Budget Bulletin 68-9 with the previous
version, Bulletin 68-2. These bulletins provide
guidelines for the PPB system. The comparison was
made at the request of Senator Jackson.
0 I would, of course, be pleased to receive any com-
ments you wish to make.
Sincerely,
acuat:c.
Charles J. Zwick
Director
Enclosure
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Distribution:
1-DDS
1-0/Finance
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. ,
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a 0
EXECUTIVE OFFICE OF THE PRESIDENT
BUREAU OF THE BUDGET
WASHINGTON. D.C. 20503
BULLETIN NO. 68-8
February 14, 1968 ?
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Reduction of official travel.overseas
1*. Purpose and policy. .In a.memorandum of January 18, the President
directed the heads of departments and agencies to reduce U.S. official
travel overseas to the minimum consistent with the orderly conduct of
the Government's business abroad. This Bulletin provides further
instructions to assure that the Presidents objectives are fully met.'
The President intends that agency heads will apply the strictest fea-
sible interpretation to "the minimum consistent with the orderly conduct
of the Government's business abroad." Each agency head should take as
his objective a reduction of 257. in the overseas travel within the scope
of the directive. Particular attention will be given to international
conferences overseas and to attendance at other meetings abroad. Agency
heads will take additional appropriate steps to-restrict overseas travel
by persons under contracts with or grants from their agencies.
Overseas travel covers all travel outside the United States and its
territories, including travel to and from Canada and Mexico.
Agency heads will submit revised travel plans and quarterly reports to
the President, through the Bureau of the Budget, as provided for in
this Bulletin.
2. Plan for travel to international conferences overseas. No later
than March 1, each executive branch agency will submit its plan for
travel to international conferences overseas through fiscal year 1969
to:the Office of International Conferences, Department of State. The
plan will be prepared in accordance with the initructions in Attach-
ment A. Negative reports will be submitted by those agencies whose
personnel do not attend international conferences overseas..
The plan will reflect maximum implementation of the President's orders
to:
- Reduce the number ofconferences attended;
- Hold attendance to a minimum and use U. S. personnel located
at or near conference sites to the extent possible; .
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2
- Schedule conferences, where possible, in the U. S. or countries
in which excess currencies can be used.
3. Overall plan for overseas travel. No later than March 15, each
executive branch agency will submit to the President, through the
Bureau of the Budget, a plan encompassing all of its overseas travel
through fiscal year 1969. The plan will be prepared in accordance
with the instructions in Attachment B. It will include a narrative
statement describing the actions taken by the agency head to reduce
all types of overseas travel, the results expected from such actions,
and recommendations as to any additional measures that might be taken.
Negative reports will be submitted by those agencies which have no
overseas travel.
Without awaiting any response to the submission of the plan, each agency
head should take necessary measures, including the following:
a. Tighter controls over travel authorizations, including
screening of overseas trips by appropriately high echelons of
management;
b. Designation of a central point for information, planning,
and monitoring of overseas travel;
c. Reduced attendance at meetings abroad;
d. Greater use Of more tepid transportation ?and other steps to
avoid loss of time en route;
e. Greater use of less-than-firat-class accommodations;
f. Greater use of American carriers; and
g. Maximum use of-excess foreign currencies.
4. Quarterly reports. Within 45 days after the end of the reporting
period, each executive branch agency'will submit to the President,
through the Bureau of the Budget, a report summarizing actual overseas
travel costs as compared with the agency's travel plan. The reports
will be prepared in accordance with the instructions in Attachment C.
?
, CHARLES J. ZWICK
Director
Attachments'
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If
ATTACHMENT.A
(:) Bulletin No. 68-8
? INSTRUCTIONS FOR PREPARING PLAN FOR TRAVEL.
T0 '.INTERNATIONAL. CONFERENCES OVERSEAS
An original and four copies of a'report in the form of Exhibit'l and an
optional narrativeatatement, Or a negative report from agencies whose
personnel attend no international conferences overseas, will be prepared
by each executive branch agency and submitted to the Office-of Inter-
national Conferences, Department of State, by March 1, 1968. Mr. J. F.
?Donelan, Code 182, extension 4591, will be available to ansiTer questions
and provide advice with respect to-preparation of the report.
1:.:ScOpe: '
a. This review will cover all multilateral intergovernmental con-
ferences held outside of the U. S; and-its territories in which the
United States participates as a Government and in which one or more
officially accredited participants (not necessarily from the reporting
agency) attend on behalf of the U. S. Government.
b. All Government-financed attendants will be included (delegates,
advisers, observers, visitors) whether government employees.or not, and
whether they are based in the United States or overseas. 'This includes
official personnel stationed in the country, or city, in which the con-
ference is held.
?' ?6:,':Wherea participant in'an international conference visits other
locations .on the same .trip, he will be included in the number reported
attending-the conference, atid the entire cost of his trip will be
included.
,
d. This report ?wilUcciver all travel administered by the reporting
agency, including travel financed by reimbursements and allocations from
other agencies. It will not include travel to conferences financed from
the State Department appropriation "International conferences and con-
tingencies."
2. Exhibit I. The purposes of this Exhibit are (a) to identify the
degree and cost of participation in international conferences overseas
for fiscal years 1967-9 as estimated in the 1969 budget; and (b) to
reflect actions taken to reduce such travel in response to the President's
instructions.
Exhibit I will present the international conference travel plan for the
reporting agency in total. No itemization by internal organizations or
appropriations is required, but agencies may submit separate forms for
individual bureaus. In such cases, a departmental summary of Exhibit I
will also be submitted.
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2
Part I will present conference attendance. The stub column will list
each conference attended in 1967 and each conference expected to be
attended in 1968 and 1969. Individual conferences will be grouped by
the sponsoring international organization or general purpose. Where
a conference recurs annually in much the same form, one general
descriptive stub entry will be used for all years, instead of a
separate stub entry for each year's conference. Numbers of personnel
attending conferences will be divided between officially accredited
participants and all other persons attending.
Part II will show the total travel cost of participation in international
conferences overseas, first as reflected in the 1969 budget and then
pursuant to the agency head's revised plan. In most cases, the revised
plan should reflect a 257. reduction in conference travel financed from
dollars during the second half of 1968 and all of 1969.
Line 1 will represent obligations or costs financed from the following
countries' currencies, which have been designated.as excess for 1967,
1968, and 1969:
Burma Israel
Ceylon Pakistan
Congo (Kinshasa) (1967 Poland.
and 1968 only) . Tunisia
Guinea United Arab Republic (Egypt)
India Yugoslavia
Line 2 will represent obligations in dollars and in nonexcess currencies.
Part II must be consistent with line 1 of Parts B and C of Exhibit 2.
3. Narrative statement. A narrative will be submitted, if needed, to
explain proposed actions that may not be apparent in the Exhibit.
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!Cs, EXHIBIT 1 0
Bulletin No. 68-8
PLAN FOR TRAVEL TO
INTERNATIONAL CONFERENCES OVERSEAS
[NAME OF AGENCY]
I. Number attending conference
1969 Budget
Individual conferences 1967 Actual 1968 Estimate 1969 Estimate
(grouped by international Accred- Accred- Accred-
organization) ited Others ited Others ited Others
Total
Revised Plan
1968 Estimate 1969 Estimate
Accred- Accred-
ited Others ited Others
II. Obligations or costs (In thousands of dollars)
1967 Actual
1. Excess
Forenaa currencies
2. U. S.
Dollars
Total
1969 Budget
1968 Estimate
1969 Estimate
Revised Plan
1968 Estimate 1969 Estimate
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ATTACHMENT B
Bulletin No. 68-8
INSTRUCTIONS FOR PREPARING OVERALL'PLAN,FOR OVERSEAS TRAVEL
An original and four copies of a plan in the form of Exhibit 2
arid a narrative statement, or a negative report from agencies with
no overseas travel, will be prepared by each-executiVe branch
agency and submitted to the President; through the Bureau of the
Budget, by March 15. Mr. Gordon D. Osborn, Code 103, extension
4850, will be available to answer questions and provide advice with