Sound Financial Management: A Federal Manager's Perspective

Abstract

The 1980s have been years of unprecedented growth in the nation's budget deficit. Current projections indicate that deficits will continue to increase if present policies are continued, and consensus is growing that this would create ever increasing risks for economic stability and growth. The response to this consensus will involve an enormous challenge to federal managers. Revenue increases, spending cuts, or both, are the only available ways of correcting current and future imbalances in the nation's budget. Most reform proposals focus on the need to restructure our current program priorities and tax policy. They are often described as longer term measures. But I suspect that effects of the budget problem on federal managers will be much more immediate. In civilian agencies, managers will face increasing pressures to cut programs and to reduce costs. In the Department of Defense, they will face equally great demands to assure that the rapid growth is managed effectively and that increased defense resources are translated into increased defense capability. Timely and reliable program and financial information are critical to successful management under these circumstances. However, our current financial management structure and supporting systems are not capable of coping with the demands which must be placed on them if managers are to meet their responsibilities. We must begin now to modernize the federal government's financial management structure and put the systems into place that will serve the needs of the public and the government.