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Business intelligence and the federal budget process

Budgets are a primary management tool, and the business intelligence to be gained by analyzing budgets is very significant. The same is true of the U.S. federal budget.

This article originally appeared on the BeyeNETWORK.

The news item in a year-end (December 18, 2006) Washington Technology Datastream read: “The Senate’s busy final week wrapped up with members extending through February 15 the federal government’s fiscal 2006 budget. The House and Senate approved a third continuing resolution that will keep agencies’ spending at the 2006 level for two more months. When Congress returns January 4 for the 110th Congress and the Democrats take over control of the House and Senate, many of the bills will get another look.”

And so the saga continues. It is not just this year, when control of Congress has changed as a result of the mid-term elections. No. Delays in passing a federal budget, which must be approved by Congress into law, have been chronic and one more sign of the tensions between our Legislative and Executive Branches, and not just a reflection of partisan politics. As a result, anyone involved with the federal government has become familiar with the abbreviation CR, which stands, of course, for continuing resolution.

With $2.78 trillion proposed for the FY2007 budget, there is much debate and positioning over its approval. Until this happens and it is passed into law, there is no authority to spend any money. Congress gets around this small inconvenience by passing “continuing resolutions” that limit spending usually to the prior year’s levels and only for absolutely critical operational programs.

The founding fathers were wise enough to realize that the way to control the country was through the ability to be in command of the purse strings. No matter what the Executive Branch wants to do, if they don’t have the money to do it, they cannot, and the Constitution has reserved those tasks of authorization and appropriation of spending to the Congress, the “direct representatives of the people.”

The budget process is complex and fraught with peculiarities. It is also the main battlefield over national priorities. Are we going to fight terrorism or educate our children? Are we going to fix the potholes or eradicate disease? Are we going to pursue drug dealers or explore the solar system? Ultimately, these questions are resolved by looking at their funding in the budget as approved by Congress.

And what a battlefield it is! Appropriations are dollars, and they can mean life or death for companies, industries or technologies. They can signal the rise or decline of a politician around the championing of an issue. They can have a decisive impact on the whether or when a disease will be overcome or whether a bridge will be built. Because the stakes are so high, the game is very rough. It is often played for keeps, and “earmarks” are some of the most visible ballistic missiles. Earmarks, as the word implies, are very specific mandates in the legislation directing a project or program to be done by the Executive Branch. It is mandated by law, and hence it is not a question of debate. These may be the building of a road, a library or a research center in a Representative’s home district, often pointing to a site, location or company in a way that will raise objections by other colleagues, who often acquiesce in exchange for reciprocity in approving a colleague’s favorite pet project, or “pork.”

The federal budget is probably the mother lode for anyone truly wanting to understand the government and how it works, and it is potentially a very rich source of business intelligence (BI).

Everett Dirksen, the legendary senator from Illinois, is reputed to have said, "A billion here, a billion there, and pretty soon you're talking real money.” So there are huge opportunities to study current and past budgets to obtain insights and understanding of national issues and priorities.

For starters, the action on government spending follows a specific sequence: authorization, appropriation, budget authority, obligation, outlay. In other words:

  1. First, Congress must establish or change a program through an authorization.

  2. Then Congress must appropriate the necessary funds for the agency to operate the authorized program.

  3. This is followed by providing the executive agency the “budget authority,” which is the legal power to incur financial obligations, or commitments to make payments now or in the future.

  4. The last step is the outlay or payment, usually a check drawn on the Treasury to comply with an obligation.

The best overall measure of the federal budget is the so-called “unified budget.”  It consists of four types of funds: general funds, trust funds, special funds, and revolving funds. The general funds account for approximately two-thirds of the budget and have no direct link between how they are raised and spent. Trust funds are specifically designated by legislation, are raised through earmarked collections and are charged with specific outlays. Special funds are similar to trust funds; and revolving funds finance their operations through income derived from their activities.
The unified budget is further divided, usually, into two parts: off-budget items (i.e., Social Security and the Postal Service) and on-budget items.

Lastly, there is the distinction between discretionary and mandatory spending. Mandatory (or direct) spending refers to having budget authority and outlays provided for in authorizing legislation. Discretionary spending, on the other hand, is provided for in appropriations acts. They refer more to legislative processes and not to the importance or lack thereof of the programs being funded.
We’ve long known that budgets are a primary management tool, and the business intelligence to be gained by analyzing budgets is very significant. The same is true of the U.S. federal budget. There are many ways to look at all this data, compiled over a number of years, to obtain insights on what’s happening (and what is not happening) at the national level. It is solid territory for the BI practitioner. Furthermore, the copious amount of text and imagery accompanying the budget submission – several thousand pages of text, graphs and charts – make for another source for the application of BI and knowledge management tools. Plus, the Congressional Budget Office (CBO) and many academic institutions and think tanks put out competing versions of fiscal desiderata around the federal budget process.

Well, as February 15 rolled around (the expiration date of the Continuing Resolution passed extending the spending levels of the 2006 budget until the 2007 budget is approved), the President revealed his plan for the 2008 budget at $2.9 trillion – the largest budget request ever. There will continue to be ample debate and lots of room for business intelligence in analyzing the federal budget in the coming years.

Dr. Barquin is the President of Barquin International, a consulting firm, since 1994. He specializes in developing information systems strategies, particularly data warehousing, customer relationship management, business intelligence and knowledge management, for public and private sector enterprises. He has consulted for the U.S. Military, many government agencies and international governments and corporations.

Dr. Barquin is a member of the E-Gov (Electronic Government) Advisory Board, and chair of its knowledge management conference series; member of the Digital Government Institute Advisory Board; and has been the Program Chair for E-Government and Knowledge Management programs at the Brookings Institution. He was also the co-founder and first president of The Data Warehousing Institute, and president of the Computer Ethics Institute. His PhD is from MIT. Dr. Barquin can be reached at

Editor's note: More government articles, resources, news and events are available in the BeyeNETWORK's Government Channel. Be sure to visit today!

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