Budget Reform: The Planning-Programming Budgeting System
Key events in American history have played a crucial role in the history of budgetary reform. Much of our modern budgetary systems start from the basis of executive budgets. According to Milakovich and Gordon, “ As the national government budget became an instrument of economic policy, it became steadily more important to have a central budget mechanism that could respond to changing economic conditions and needs” (Milakovich and Gordon, 2007, pg. 374). There have been several attempts to reform the executive budget, each attempt emphasizing a different theme, “first, control of budget expenditures, then performance measures aimed at rational procedures to improve management and, more recently, deficit reduction to achieve a balanced federal budget” (Milakovich and Gordon, 2007, pg. 374).
By the end of the Progressive Era in the 1920s, advancement in science and technology led to increased productivity and a better quality of life for many citizens. The introduction of Frederick Taylor’s scientific management theory and start of mass production showed how scientific principles could be applied to administrative tasks to improve efficiency. During this time, President William Howard Taft introduced the need for an executive budget system; his Commission on Economy and Efficiency made a final report to the president in 1912 “recommending that a budgetary process be instituted under the direction of the president” (Milakovich and Gordon, 2007, pg. 375).
During this first stage of budgetary reform, the “dominant emphasis was on developing an adequate system of expenditure control” with “the first priority, a reliable system of expenditure accounts” (Schick, 1966, pgs. 201-202). This led to line-item budgeting, which is the “earliest approach to modern executive-budget making, emphasizing control of expenditures through careful accounting for all money spent in public programs; facilitated...