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Budget Overview

Presented by Cynthia LodgeNASA Performance Improvement OfficerDirector Strategic Investments Division

Contributions from:Justin OliveiraKevin GilliganAlesyn Lowry

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Federal Budgeting…It’s Not Rocket Science

• Rocket science, after all, conforms to the laws of physics and it is predictable

• Our political system is perfectly and purposely designed to neither be efficient nor predictable

• Consider that by 2025 we will have had:– Up to 3 more Presidents with their own vision– 6 election cycles for the House of Representatives– 2 Senate election cycles– 10 more budgets, 10 continuing resolutions, perhaps a few shutdowns, and

possibly 30 reprogramming's to those appropriations• Add in debates on taxes, entitlements, sequestration, deficit reduction to

the normal engineering and science challenges we face every day…budget stability is challenging

• Our federal system is designed not with efficiency in mind but rather with the purpose of protecting liberty and freedom, ensuring no one player holds the key to power.

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How A Budget Is Born (1 of 2)

• One person’s requirement is seen by the next level as only a request. It is all a negotiation.

• OCFO distributes top level budget guidance reflecting the Administrator’s priorities and budget levels.– The Administrator can set aside funds in order to provide flexibility for resolving

issues at the end of the process. 1% has been set aside in recent years. • Control Account Managers (CAMs), formulate their individual budget

requests and submit their budget proposals called the “Program Analysis and Alignment (PAA)” report along with the submission of issue papers on gaps, risks, misalignments and initiatives.– CAMs are the HQ Mission Directorates, Education Office and Inspector General

• The Administrator makes his final decisions on NASA’s budget content and allocations to CAMs based on these inputs, including leveraging any set aside to solve “budget” problems.

• Based on this final direction, NASA submits its budget proposal (OMB Submit) to the Office of Management and Budget (OMB) in the Executive Office of the President.

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Budget Guidance

(SPG)

MD Budget Proposals

(PAA)

OMB

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• OMB receives the budget proposals from all Federal departments and agencies, and forms the President’s Budget Request (PBR) based on Presidential priorities. This is submitted to Congress.

• The House of Representatives and the Senate each write and pass their own version of the NASA budget along with all others, and eventually come to agreement on funding levels, voting the bills into law.

• The President signs off on the Appropriation Act from Congress• NASA submits an Operating Plan (op plan) on how to spend the

appropriations, given likely differences between the final appropriations and NASA’s request, as well as changes in programmatic needs since NASA developed its budget request. – There are limits on how much money may be moved through operating plans.

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How A Budget Is Born (1 of 2)

President’s Budget Request

Appropriation

NASA Operating

Plan

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NASA Operational

Requirements

Budget Guidance

(SPG)

MD Budget Proposals

(PAA)

NASA Budget Proposal

(OMB Submit)

OMB

President’s Budget Request

Appropriation

NASA Operating

Plan

Continuous Budget Cycle

Why Change is Needed

• New Commercial Space Market– When NASA was founded (1958)

space operations were government funded; the current space market is only 25% government funded

• Severely Constrained Budget– US debt levels ~$17 trillion– NASA budget is lowest in history; ~2/3

lower funding than Apollo era

• Aging & Costly Infrastructure– Institution is unbalanced with program/

mission requirements– Deferred maintenance levels in

Agency are huge ($2.3B)

• Increasing Civil Service Costs– Comparing 2007 to 2014, labor costs

rose 23.5%,and total budget only increased 8.5%.

• Limited New Opportunities– With SLS/MPCV/GSDO

moving to development, only 1-2% of the budget is invested in missions in formulation through the budget horizon

NASA’s institution was largely developed during a past era with different missions; we must change and provide an institution for current & future mission priorities

NASA Budget Trend ($B)

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Institutional CoF

FY2011 FY2012 FY2013 FY2014 $-

$50 $100 $150 $200 $250 $300 $350 $400 $450 $500

Institutional CoF

PAA OMB SubmitPBR Op-Plan

Nom

inal

$M

FY2011 FY2012 FY2013 FY2014

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

Institutional CoF

% Δ OMB Submit | PBR% Δ PBR | Op-Plan% Δ OMB Submit | Op-Plan

% Δ

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• Funding request for CoF typically increases between NASA initial budget guidance and the NASA budget request to OMB due to the Administrator applying a portion of his 1% Fund.

• OMB varies between matching the NASA request in the President’s Budget Request (FY12-13) versus making reductions (FY11 and FY14) to the NASA request.

• Congressional appropriations have cut CoF funding from the President’s Budget Request annually (FY11-FY14).

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Institutional CoF Demolition

FY2011 FY2012 FY2013 FY2014 $-

$5

$10

$15

$20

$25

$30

Institutional CoF Demo

PAA OMB SubmitPBR Op-Plan

Nom

inal

$M

FY2011 FY2012 FY2013 FY2014

-60%

-50%

-40%

-30%

-20%

-10%

0%

Institutional CoF Demo

% Δ OMB Submit | PBR% Δ PBR | Op-Plan% Δ OMB Submit | Op-Plan

% Δ

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• OMB has been supportive of our budget request for demolition and has not asked us to reduce that line item. Congress has not specifically reduced the demolition amount from our request but their overall reductions to CoF have forced us to reduce demolition in the initial operating plan to preserve some of the critical repairs within the CoF account.

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CMO – Facility Services

FY2011 FY2012 FY2013 FY2014 $-

$100

$200

$300

$400

$500

$600

CMO - Facility Services

PAA OMB SubmitPBR Op-Plan

Nom

inal

$M FY2011 FY2012 FY2013 FY2014

-20%

-15%

-10%

-5%

0%

5%

10%

CMO - Facility Services

% Δ OMB Submit | PBR% Δ PBR | Op-Plan% Δ OMB Submit | Op-Plan

% Δ

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• CMO Facility Services is vulnerable to reductions in the larger CAS account.• Name change proposed in FY15 budget for CAS to more accurately reflect mission

support investments and provide a more defensible description.– Congress proposed name change to “Safety, Security, and Mission Success”

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ECR

FY2011 FY2012 FY2013 FY2014 $-

$10 $20 $30 $40 $50 $60 $70 $80 $90

$100

ECR

PAA OMB SubmitPBR Op-Plan

Nom

inal

$M FY2011 FY2012 FY2013 FY2014

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

ECR

% Δ OMB Submit | PBR% Δ PBR | Op-Plan% Δ OMB Submit | Op-Plan

% Δ

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• ECR funding variation demonstrates competing values year to year given different ECR requirements

What Makes a Successful Budget Request?

• Clear, specific, and realistic results to be obtained from the requested funds.

• Well-developed analysis documenting that the most cost-effective options have been chosen.– Benefit/Cost Analysis is the gold standard.– Net Present Value or Return on Investment a silver

standard.– Simple Payback a distant bronze.

• A solid, documented track-record of delivering on past promises without unexpected cost or schedule growth.– Show specifically what has been accomplished to date.

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Communications• Communication is critical to NASA’s success! • Communication is critical for fully-functional distributed and

multidisciplinary teams. • People show complicated charts all the time… And we always say,

“I know you can’t really read this, but here’s what is really important about this chart…” Of course, communication goes way beyond charts. It includes all aspects of content, style and making connections with others. Don’t get into the Wah wah wah wah …

• Communicate your accomplishment and cost benefits.• Congress has rewarded good performance by increasing program

budgets, or by not cutting them. Communicating good performance is valuable!7/22/2014

National Aeronautics and Space Administration13

Questions? Comments? Musings?

National Aeronautics and Space Administration

BACK UP

National Aeronautics and Space Administration

2014 NASA Strategic Plan: Goals and Objectives

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HOUSE SENATE

Hearings/Markup before Science, State, Justice and Commerce Subcommittee

Hearings/Markup before Commerce Justice and Science Subcommittee

Markup by Appropriations Committee

Markup byAppropriations Committee

Report Report

FLOOR FLOORConference

President Signs or Vetoes Appropriations Bill

Rules

Legislative Process - Appropriations Bill

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Acronyms

• CAM Control Account Manager• CMO Center Management & Operations• CoF Construction of Facilities• ECR Environmental Compliance & Restoration• FY Fiscal Year• OCFO Office of the Chief Financial Officer• OMB Office of Management and Budget• PAA Program Analysis & Alignment• PBR President’s Budget Request• SID Strategic Investments Division• SPG Strategic Programming Guidance• SSMSSafety, Security, and Mission Success7/22/2014