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Change Federal Budgeting Process to Eliminate End of Year Money

I have been working for the DoD in one capacity or another for 6 years now. In every organization I've been in, there has always been "End of Year" fallout money with a directive from higher up to "spend it!". End of year money is a use or lose situation for organizations.

 

As I understand it, many (most?) organizations have budgetary needs that change from year to year. In order to meet those needs, organizations have to budget for the worst years, then figure out how to spend all the money for the years where they have extra cash. If they don't, their budget is cut and they do not have the money when they need it. (The year to year theory being that if you didn't use it this year, why would you need it next?) This creates a large incentive to waste a lot of money.

 

I propose that someone figure out how to avoid this cycle. My (very high level) theory is this. We give organizations throughout the government a "budget bank". They still receive a yearly operating budget, but at the end of the year any excess funds can be deposited into the "budget bank" as insurance against a rainy day in the future. Once the "budget bank account" reaches a certain percentage of the yearly budget (personally, I'm thinking 100%, but the specfics should be up to the accountants), THEN the budget for that organization is reduced. There is plenty of room to tweak this system, too. For instance, organizations that have over X% of their yearly budget available at the end of the year don't get to bank the entire excess, but only Y% of the excess.

 

This would create a much smoother grounding for organizations to work from. It would enable more truth in budget requests, which are currently inflated for worst case scenarios that don't have to exist. It would offer much more incentive to organizations and their leaders to find ways to save money rather than to spend money. But it would do so without threatening the mission of those organizations.

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Idea No. 102