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[The suspense for the Fall ASMC Washington Chapter Newsletter input is   3 November 1999.  Provide all your input--committee updates, articles, Newsnotes, symposium registration, PDI2000 update, etc--to Carolyn J Herbst, Newsletter Editor.]

Summer 1999 Newsletter

FROM THE PRESIDENT

    Help!   Hold that thought for a moment.

First, kudos to Vic Ackley and his fellow members of the past executive board of our Chapter.  As it became evident that I would be stepping into Vic’s shoes, I began to pay more attention to the behind-the-scenes labor that takes place to make this Chapter go (incidentally, the largest ASMC Chapter by far with some 1,700 members).   Needless to say, the efforts of these folks and their accomplishments are impressive.  For those board members and key volunteers moving on to other responsibilities – thank you for your good works.  For those staying with the current board – thank you for providing the strong continuity to maintain the high quality of our chapter activities.  Good on all of you.

And now, back to the beginning…HELP!

Our Chapter has two huge tasks in the coming year.  Our spring symposium and PDI 2000 (in Philadelphia).  For our symposium, Cindy Bogner and Jeannie Karstens have agreed to co-chair this event.   Cindy and Jeannie bring tremendous headquarters/ field and budget/CFO expertise together that will result in a dynamic symposium.  But they can’t do it alone.   Please contact Cindy (703-697-8580) or Jeannie (703-695-5589) to lend a hand in preparing for, or serving at, the symposium. And watch our website for more information.

The other task is support for PDI 2000. This is the first PDI that does not have a sponsoring chapter in the host city.  Although not chairing this PDI, we play a significant role and have lead responsibilities in three areas: Program (chaired by Liz Banta – retired, but not unworked!), Hospitality (chaired by CDR Marci Pinkerton), and Corporate (chaired by Sam Korson).  These functions will require varying levels of volunteer support at different stages of the PDI.   It’s a unique situation being considered a "local" supporting chapter and we’re 145 miles away!  Please see Liz Banta’s accompanying article on PDI 2000 for more details about PDI 2000.

An exciting year is sizing up and I look forward to seeing you at our many events.

HELP!!

 Charlie Cook

AMERICAN SOCIETY MILITARY COMPTROLLER (ASMC) MEMBERSHIP
By Mr. Joe Riggio

Are you getting the full benefit of your ASMC Membership?  The ASMC Washington Chapter with ~ 1800 members representing the Department of Defense, the US Coast Guard, DFAS, Corporate, and retirees is probably the best ASMC chapter in which to take advantage of these benefits.  You might be asking just what are these benefits? Let me share some with you:

• The "ASMC Network".  You have the opportunity to contact a member that works in another service or DFAS and ask about a process that impacts your organization.  You have the advantage of being an ASMC member with that contact that maybe you even shared a PDI moment or two together.  This commonality helps build a rapport, trust, and confidence with the other ASMC member.  Think of the time and frustration you can avoid by "connecting the dots" to the other ASMC members in your financial process.  Who knows you may even look forward to your suspense deadlines because you are confident that your ASMC network is there if you need them.   Who knows you may even have fun. And, yes, I have used this process for POM, budget, and execution deadlines.  It works!
  
• Luncheons, Spring Symposium, Holiday Social, and Community Service. When was the last time you were at an ASMC luncheon or event?  Believe it or not, the speaker is not the main event--you are!  Yes you.  You are the why ASMC exists.  ASMC promotes the education and training of its members, and the society encourages the exchange of techniques and approaches.  Through community service, members volunteer their services to help the community and individuals.  These events are also an opportunity for you to relax and have some fun.  If there is someone at work that you have been meaning to get together with, call him or her and go to an ASMC luncheon or event.  There are at least 15 ASMC Washington Chapter events a year.  Check out the Washington Chapter web site and this newsletter for upcoming luncheons, community service projects, or the spring symposium.  Make it a point to participate in at least one or two. With ~ 1800 members and 15 events there should be about _______ members per event.  If everyone goes to two events that is ______members per event.   Yes, the magic of compounding. Fill in the blanks and you are on your way to certification.
  
• Newsletter and Newsgram. Have you received a promotion, an award, earned a degree or certification, new to an organization, or ready to retire?  Share the event with other ASMC members in the quarterly Newsletter and or the monthly Newsgram.   There are four newsletters and twelve newsgrams a year.  If three percent of the 1800 members receive an award per year that would be a minimum of three announcements for each one of the sixteen publication opportunities to announce and share member activities for awards alone.  Submit your professionally related activities for recognition as well as to inspire other ASMC members.

Have a better way to do business?  Write an article and test it out in one of these sixteen publication opportunities.  Who knows it might even make it into the Armed Forces Comptroller magazine for distribution to the ~ 18,000 ASMC members worldwide, and someone may agree with you.

• Corporate members. Wow, what an opportunity to ask corporate members how they do business.  Many corporate members have worked in the government before moving on to the corporate world.  This provides a better chance for understanding how things are supposed to work and to compare how things work.

How many business cards have you as the corporate member handed out at a luncheon?   Have you written an article on what your company is doing to improve the financial process or training for certification?  Sixteen publication opportunities exist within the Washington Chapter, which is a lead to the other 140 worldwide chapters.   Have you taken advantage of the free opportunity to display your products at a luncheon?

• ASMC Retired members.  Invite some of the ASMC retired members to attend a luncheon.  Give them the opportunity to reflect on what they feel really counts in life.  The benefit to you is that you may get a better perspective (attitude) on just how well you might have it.  If you had no opportunities—challenges and problems—and possibly no job, then how are you going to become an ASMC retired member?  Find out from the retirees how you can become an ASMC retired member.
  
• Other Committees. Check out the Washington Chapter web site.  Our dedicated webmaster CAPT Vic Ackley is doing an outstanding job by the way! Join a committee and become an active committee member.  This is an excellent means to meet other members, as well as build your financial network while having fun.  An added benefit is that a fellow committee member can be the answer to meeting your financial deadline now or later during the fiscal cycle!
  
• PDI 2000 in Philadelphia.  Three to four thousand ASMC members from all over the world learning, networking, and bonding with each other during those PDI moments.   Are you planning now to go and benefit from this ASMC opportunity? The Washington Chapter, with four other chapters, will sponsor PDI 2000.

There are many more benefits for your becoming a member than I have just mentioned. If you can think of any more and want to share them with me, send me an e-mail at Joeriggio@msm.com.

About the Author:  Joe Riggio is the current Corporate and retiree Vice President, and a former Washington Chapter President (92).  Joe is a retired USMC Colonel and the President of Networking By Images.

Welcome to Orion Microsystems as the newest corporate member. Check out their web site at orion-glows.com or contact Norman Kanefsky, President/CEO at norm@orion-glows.com.

Welcome to Frank Murphy as new member to OSD Comptroller in Accounting Policy. Frank is highly energetic and looks forward to working on the PDI!  He is a native of Philadelphia and knows exactly were to get the best Philly cheese steak.  A good person to get to know soon!

Mrs. Erin Olmes was selected to fill the vacancy created by Mr. Neil Ginnetti.   Effective July 4, 1999, Erin is the Principal Deputy Assistant Secretary of the Army for Financial, Management, and Comptroller.

Congratulations to Mr. Barry Haas for moving to the ASMC Headquarters as the National Corporate Representative.  Barry was the Washington Chapter Corporate Vice President.

Congratulations to Mr. Sam Korson on his program analyst promotion.  Sam works in the Contingency Preparedness Division of the Office of Command, Control and Preparedness.  Sam is the Coast Guard Vice President for the Washington Chapter.

Congratulations to Ms. Barbara Bonessa on her assignment as the Chief, Budget Integration and Evaluation Division, Management and Control Directorate, Army Budget Office.  Her new assignment was effective August 3.  Barbara is actively involved with the Armed Forces Comptroller magazine.

Congratulations to Mr. Jim Anderholm on his well-deserved promotion in the Budget Integration and Evaluation Division, Management and Control Directorate, Army Budget Office.

Congratulations to Mrs. Judith A. Guenther on the occasion of her promotion to the Senior Executive Service as Director of Investment, Army Budget Office.  Judy was the Chief, Budget Integration and Evaluation Division.

Farewell and best wishes to Ms. Georgia Turner as she departed the Pentagon for Texas.  Georgia will be working at Ft Hood.

Congratulations and good luck to Ms. Carolyn J. Herbst in her new position with the US Army Space Defense and Missile Command, Crystal City.  Carolyn worked in the Army Budget Office, and is our newsletter editor.

The following promotions recently occurred within the Air Force:

Mr. John Lucas was promoted to a GS-15.
Lt Col Robert Palmer. Bob is the Air Force Assistant Secretary for the Washington Chapter.
Lt Col Brian Shimmel.
Maj Bob Blue.
Ms. Sue E. Fullen was promoted to a GS-14.
Mr. John Uperti was promoted to a GS-14.

Congratulations to each of you!

Farewell and best of luck to Col Andy Sherbo on his reassignment to Hickman AFB Hawaii as the MAJCOM Comptroller.

Farewell and best of luck to Col Neva J. Lynde on her reassignment to Ramstein AFB Europe as the MAJCOM Comptroller.

Welcome Ms. Tamara Bowman, Systems Accountant, to HQ USAF/RECA.

Welcome Mr. Alan Blomgren, HQ USAF/RECB. Alan is the new Chief, Budget Division, Office of Air Force Reserve.

Welcome Col Don Henney, MAJCOM Comptroller, Air Force Reserve, HQ USAF/RECB.

Congratulations to Mr. Michael A. Bollinger on his certifications.  Mike has received certifications in Certified Management Accountant (CMA) and Certified in Financial Management (CFM).

Congratulations to Ms. Lupe Maguire on her budget analyst promotion to the Facilities Division, Investment Directorate, Army Budget Office. Lupe’s most recent position was within the Operations and Support Directorate, Army Budget Office.

Congratulations and best wishes to Ms. Anne Twist on her selection for a new position within the Army Budget Office. Anne will be working in the Investment Directorate; she formerly worked in the Operations and Support Directorate.

RETIREMENTS

Congratulations and best wishes to Major General Clair F. Gill.  MG Gill retired July 30, 1999, after thirty-four plus years of Army active duty.  MG Gill’s most recent position was OASA (FM&C), Deputy Assistant Secretary of the Army for Budget.

Congratulations to Colonel Roland A. Arteaga on his retirement from the Army.   Artie worked for the Deputy Assistant Secretary of the Army for Financial Operations.

NEW DEFENSE FINANCE ACCOUNTING SERVICE (DFAS) DIRECTOR ANNOUNCED

On May 25, 1999, William J. Lynn III, USD (C), announced Thomas R. Bloom selection as the DFAS director.  Mr. Bloom is the former chief financial officer (CFO) for the General Services Administration.

As the DFAS director, he will oversee the day-to-day accounting and finance activities of the DoD.  DFAS employs about 19,000 civilians and 2,000 military personnel at five major centers and 20 operating locations throughout the US and in the Pacific.  The agency processes 9.8 million payments to DoD personnel; 12 million commercial invoices; 450,000 travel vouchers/settlements; 500,000 savings bond issuances; and 120,000 transportation bills of lading, paying out $22B a month.  DFAS handles accounts for worldwide operations and multi-disciplined appropriations of the Department.  These financial resources are well in excess of $1 trillion.

Bloom has extensive experience in finance and accounting and is a certified public accountant.  Former assignments include serving as inspector general at the US Department of Education from 1995-1998, and as CFO and assistant secretary for administration at the Department of Commerce from 1993-1995.  From 1988-1993, he was a senior audit partner and director of governmental services and co-chair of its Financial Institution Practice with the national certified public accounting firm Kenneth Levanthal & Co.  As an accounting fellow and later the chief accountant for the Federal Home Loan System from 1985 to 1988, Bloom was the senior accounting and auditing authority for regulation of the troubled thrift industry.  Prior to that, he also spent nine years with two international accounting firms.  He is a member of the Advisory Council on Government Auditing Standards.  Bloom earned a bachelor's degree in Business Administration and Accounting from the University of Michigan.

SCOREKEEPING: A "BRIEF" DISCUSSION
By Mr. John Cewe

What is scorekeeping?  Is it more than just an abstract concept of the federal budget process?  The Office of Management and Budget (OMB) defines scorekeeping as follows:

"Scorekeeping refers to measuring the budget effects of legislation, generally in terms of budget authority (BA), receipts and outlays for the purposes of compliance with the Budget Enforcement Act." (OMB Circular A-11)

What does that really mean?  Scorekeeping, or scoring as it also referred to, is a process for estimating the cost (outlay) impact of legislation, specifically the impact on federal balance sheet at the Treasury.    Will legislation add revenue to the Treasury or will it require expenditure of federal funds, which may require the government to "borrow" from the private sector?  When the President submits a budget request, the request is for permission to spend a specified level of (budget) authority (BA).  The rate at which that BA will actually be spent out at, or "outlayed," is scoring.  The role scoring plays in the federal budget process is beyond the scope of this article.  Instead the effort here will be confined to a brief overview of the concept of scoring and its impact on the budget process.

A Brief History: For the most part of the past 30 years the government has run annual deficits.  Beginning in the mid 1980s, concern with rising deficits led to the passage of the Balanced Budget and Emergency Deficit Control Act of 1985, or what is more commonly referred to as the Gramm-Rudmann-Hollings (GRH) Act after the Act’s chief sponsors in the Senate.  The GRH act required the "sequester" of funds if federal spending did not achieve yearly targets designed to bring annual federal spending into balance by 1991.  A sequester is merely the "returning of authority" to spend funds by Agencies back to the Treasury, something akin to a person tearing up their credit card.  The Act established a series of procedures to determine the level of sequestration and the process for executing a sequestration.

The GRH law was designed to introduce discipline into the federal budget process.   The law, however, was challenged in the court.  It did survive, however, a key element, that being who determined the level of sequestration, migrated from the Comptroller General (legislative branch) to the OMB (executive branch).  OMB became the government’s official scorekeeper.  GRH meant that scoring now mattered, at least it mattered if the sequester provisions were actually enforced.  Congress, however, found budget discipline difficult and revised the law and extended the timetable for bringing the annual budget into balance.  Several revisions to the 1985 law were enacted during the late 1980s.  In 1990 Congress passed the Omnibus Budget Reconciliation Act.  This Act revised the sequestration process and substituted "Budget Enforcement Act (BEA)" procedures, and made related changes to the Congressional Budget Act of 1974 and other laws dealing with the submission and review of the President’s budget.

Commonly referred to as the BEA, this Act has also evolved and been amended during the 1990s.  The last major update occurred in 1997.  The Act separates spending into two major categories, discretionary and mandatory.  Discretionary spending is spending controlled through annual appropriation acts, while mandatory spending is spending controlled through authorizing legislation.  Separate controls and sequestration procedures were established for each category.  Unlike the GRH law, the 1997 law was designed to enforce the "balancing of the budget," but not actually balance the budget.  In other words, the law was designed to foster a "workable" process to support balancing the budget and instill discipline through out all phases of the budget process, whereas GRH only provided discipline at the end of the process.

The current process: The BEA effectively replaced the GRH system of deficit limits with two independent enforcement regimens: caps on discretionary spending and a pay-as-you-go (PAYGO) requirement for mandatory (also referred to as direct) spending and revenue legislation.  The BEA also provided for enforcement by both the congressional and executive branches of the discretionary and paygo requirements. The BEA initially defined categories of discretionary spending, referred to as "firewalls."   These categories: domestic, defense, international and violent crime provides specified annual limits or caps on budget authority and outlays.  For FY 00 there is no firewall between defense and domestic spending.  These BEA "caps" run through FY 02.

Once the President submits his budget request, the congressional review phase of the budget process commences.  Under the guise of a budget resolution, Congress considers both revenue and spending proposals within the framework of its own budget plan.  The budget resolution is designed to guide Congress in its consideration of revenue and spending legislation throughout each annual legislative session.  The budget resolution is a concurrent resolution, which is agreed to by both houses of Congress.   While it is binding on both houses it is not a public law and does not require the agreement or signature of the President.

The President’s budget is passed as annual legislation.  The BEA requires OMB and the Congressional Budget Office (CBO) to score proposed legislation.  The scoring estimates provided by OMB and CBO are used by the Congressional Budget Committees to determine allocations to each of the 13 Appropriation committees.   These allocations are required by section 602 of the 1974 Budget Act and thus they are commonly referred to as the "602 allocations," or as "302 allocations."  The 602 or 302 designations refer to sections from the 1974 and 1997 budget acts, respectively.

Normally scoring estimates will be based on historical execution experience.  A review of the "actuals" over time will generally reveal a "spendout pattern" for accounts.  For example, Military Personnel (Milpers) funds, monies used to pay salaries, permanent change of station and other personnel related expenses will normally tend to spend out at a very high annual rate.  In the case of Milpers over 98% of BA will spendout within 2-3 years.  While procurement funds will tend to spend out at a much slower rate, on average only about 12% of procurement funds will spend in the first year they are made available.  It will normally take anywhere from 5-7 years before over 90% of procurement funds will be spent.  Discernable historical spending patterns greatly influence scoring estimates.  These spending patterns will change, but generally changes are gradual.  Occasionally, there will be a sharp deviation from the "normal" pattern.  For example the outlays from the Persian Gulf war caused DoD outlays to spike during FY 91.  Over a 10 year time horizon that spike would be smoothed out.   However, back in 1992 and 1993, that spike made it more difficult to forecast outlays in the short term.  When using spending patterns to develop scoring estimates, it may be appropriate to ignore an execution year like 1991.  The use of trend analysis will help to avoid skewing the historical execution data used to develop budget year forecasts of outlays.  The fact that scoring forecasts are dependent upon historical execution data makes it vitally important to have accurate accounting reporting.  Accounting is the basis for budgeting.  For DoD DFAS generated accounting reports (and the data input provided by the Services and the Agencies) can have a significant impact on the formulation of scoring estimates used to develop the budget, and support the negotiation of the department’s topline with OMB.

Scoring is also dependent upon the intended use of the funds requested in the budget.   A good example of this point involves the shipbuilding account.  SCN normally outlays at about 6% in the first year funds become available.  However, the funds used to acquire an aircraft carrier (CVN) have generally taken 12-15 years to spend out.   This reflects the 10-year plus time frame required to construct a carrier.   Thus, while the Navy may require $6B of BA in a given fiscal to contract (obligate funds) for a CVN, it will generally only outlay about two percent of this BA in the first year of construction, or about $120M.  The remaining $5.9B will spend out over the next 11-14 years, and these funds would be scored against subsequent years.  The inclusion of a CVN in the budget will cause OMB and CBO analysts to factor the impact of the carrier’s scoring pattern into their scoring estimates for the Navy’s shipbuilding account.  Both OMB and CBO analysts must apply "judgements" in arriving at their scoring estimates for the budget request.  Typically these judgements will be based on historical experience, the actual outlay patterns that may be evident from accounting data.  These judgements may also be influenced by programmatic considerations like the CVN example where the SCN rates are adjusted to account for the aircraft carrier that is only budgeted for once every five to six years.   Other examples would include the introduction of a major new program like the F-22, a policy change that affects the level of or timing of DoD progress payments to vendors, or the timing of the passage of a supplemental; when it is approved during the execution year "may" affect the spendout of funds.  These are typical examples of programmatic factors that serve to influence judgement in arriving at annual scoring estimates.

The OMB is designated as the "official" scorekeeper for the government, and its scoring estimates are used to determine the need for a sequester.  CBO's role, however, is that of an advisor to congressional committees, particularly the budget committees.  Differences between their respective estimates do arise because of differences in methodologies used to formulate scoring estimates.  Government-wide the scoring process generally has worked smoothly.  In recent years, OMB and CBO scoring differences between domestic and defense spending have tended to offset each other.  However, there can and will be "differences in "judgements" over scoring rates for individual accounts.  Scoring differences between OMB and CBO can have a significant impact on the administration’s budget request.

These differences combined with the inherent timing differences between the administration’s budget preparation timetable, and Congress’ budget review schedule make it impossible to resolve 100% of budget scoring differences before Congress must pass the budget resolution.  The administration and CBO are required to consult on and negotiate scoring estimates for the defense portion of the federal budget.   The intent of requiring this consultation and or negotiation is to minimize scoring differences.  A joint report signed by the heads of OMB and CBO provides the committees with specific account by account scoring differences.  However, the report is only a scorecard and does not serve any more useful purpose than that.

When OMB and CBO scoring differences are significant and cannot be resolved, the budget committees are left with a problem.  In the days before the BEA and annual federal deficits, the differences were largely ignored.  With the BEA, however, it becomes more difficult to ignore these differences.  Since the estimating differences between OMB and CBO of spending (outlays) that will result from the President’s budget request must be adhere to the BEA caps, any required outlay reductions must translated back into Budget Authority (BA) adjustments that must be incorporated into an appropriations bill.  Thus, a $1B scoring difference, depending upon how Congress chose to allocate that difference could have a dramatic impact on the budget request.   If the difference were allocated entirely to military personnel funding then a similar amount of Milpers BA would have to be cut out of the budget.  Conversely if the decision were to protect people and cut modernization and the difference allocated to procurement accounts, then it could take a $3-$4B reduction of procurement BA (about double the proposed F-22 BA reduction) to result in a $1B outlay reduction.  In the grand scheme of things, a $1B or $4B reduction represents less than 2% of the department’s roughly $250B BA request.  However, making the required BA reduction among the various programs competing for resources is difficult.  Much of the operating portion of the budget is fixed from year to year.  This means that any scoring differences between OMB and CBO are more likely to impact the investment accounts and a larger BA reduction will be necessary to achieve the required outlay target.   If there are unresolved scoring differences between OMB and CBO, then the budget committees and the appropriation committees have to struggle with scoring appropriation bills that support executive and legislative branch policy agendas and adhere to BEA spending caps.  In dealing with this dilemma, it sometime becomes necessary to resort to "unusual measures."  Just recently congressional appropriation committees elected to push certain Veterans Administration (VA) costs from the last day of FY 00 to the first day of FY 01.  This solved the FY 00 problem, but only deferred the VA scoring problem a year.

In summary, scoring is a budget concept.  It refers to measuring the budget effects of legislation, generally in terms of budget authority, receipts and outlays for the purposes of compliance with the Budget Enforcement Act.  Scoring estimates tend to be based on trend analysis of historical execution data, tempered by programmatic considerations and other judgements.  Because of the subjectivity element, it is often said, "scoring is an art and not a science."

About the Author: Mr. John Cewe works in the OUSD(C), Program and Budget, Program and Finance Control organization.

ASMC Calendar of Events
See Calendar page

GOLF TOURNAMENT
By Ms Carolyn J Herbst

Thank you to these Corporate Sponsors of the successful ASMC golf tournament:

Arthur Anderson LLP, Association of Government Accountants, COGNOS, GELCO, Grant Thornton, LLP, JP Associates, Inc., KPMG Peat Marwick LLP, MEVATEC Corporation, Networking By Images, Pentagon Federal Credit Union, PriceWaterhouseCoopers, Robbins-Gioia, Inc, Sequent Computer Systems, Soza and Company, Ltd., Tecolote Research, Inc., TREEV, UNISYS

A great time was had by all who attended the June 21 tournament.  Following is a listing of the golf tournament winners.

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