Office of Management and Budget (OMB): A Brief Overview

CRS Report for Congress
Office of Management and Budget (OMB):
A Brief Overview
Clinton T. Brass
Analyst in American National Government
Government and Finance Division
Summary
The Office of Management and Budget (OMB) is located within the Executive
Office of the President (EOP). As a staff agency to the President, OMB acts on the
President’s behalf in preparing the President’s annual budget proposal, overseeing the
executive branch, and helping steer the President’s policy actions and agenda. In doing
so, OMB interacts extensively with Congress in ways that are both visible and hidden
from view. This report provides a concise overview of OMB and its major functions,
and highlights a number of issues influenced by OMB in matters of policy, budget,
management, and OMB’s internal operations. This report will be updated annually.
Capsule History of OMB. The Office of Management and Budget traces its
origin to 1921. Established as the Bureau of the Budget (BOB) within the Treasury
Department by the Budget and Accounting Act, 1921 (42 Stat. 20), it functioned under
the supervision of the President.¹ Reorganization Plan No. 1 of 1939 (53 Stat. 1423)
transferred the bureau to the newly created Executive Office of the President (EOP).
Subsequently, BOB was designated as the Office of Management and Budget (OMB) by
Reorganization Plan No. 2 of 1970 (84 Stat. 2085). Concern about OMB’s accountability
prompted Congress to make the director and deputy director subject to Senate
confirmation in 1974 (88 Stat. 11). Congress also established four statutory offices within
OMB to oversee several cross-cutting processes and management matters.
^!The Office of Federal Procurement Policy Act (88 Stat. 796) established
the Office of Federal Procurement Policy (OFPP) in 1974.

¹ This law and others cited in this report are summarized in CRS Report RL30795, General
Management Laws: A Compendium, coordinated by Clinton T. Brass. The BOB director and
assistant director were appointed by the President without Senate confirmation. The title of
assistant director was changed to “deputy director” by the First Independent Offices
Appropriation Act, Fiscal Year 1954 (67 Stat. 299).
Congressional Research Service ˜ The Library of Congress

^!The Paperwork Reduction Act of 1980 (94 Stat. 2812; later recodified as
the Paperwork Reduction Act of 1995, 109 Stat. 163) established the
Office of Information and Regulatory Affairs (OIRA).²
^!The Chief Financial Officers (CFO) Act of 1990 (104 Stat. 2838)
established the Office of Federal Financial Management (OFFM).³
^! The E-Government Act of 2002 (116 Stat. 2899) established the Office
of Electronic Government (E-Gov Office).⁴
Organization and Staffing in OMB. The current profile of OMB’s leadership
and organizational structure is available on the agency’s website.⁵ In addition to OMB’s
leadership and their support staff, OMB has three major types of offices: (1) resource
management offices; (2) statutory offices; and (3) OMB-wide support offices.⁶
Each of OMB’s four resource management offices (RMOs) focuses on a cluster of
related agencies and issues (e.g., natural resource programs) to examine budget requests
and make funding recommendations. In addition, RMOs are tasked with integrating
management, budget, and policy perspectives in their work as a result of OMB’s latest
major reorganization in 1994.⁷ Politically appointed program associate directors (PADs)
lead the RMOs. Below the PAD level, RMO staff are almost always career civil servants,
and are organized into divisions and branches. Each RMO branch covers a cabinet
department or collection of smaller agencies and is led by a career member of the Senior
Executive Service (SES). OMB’s program examiners staff each RMO branch.
Three of the statutory offices focus on management areas: financial management
(OFFM), procurement policy (OFPP), and information technology (E-Gov Office, shared
with OIRA). The fourth office, OIRA, has a broad portfolio of responsibilities, including
regulation, information policy and technology, paperwork reduction, statistical policy, and
privacy. Analysts in the statutory offices develop policy, coordinate implementation, and
work with the RMOs on agency-specific issues.
OMB’s seven support offices also play key roles. For example, the Budget Review
Division (BRD) coordinates the process for preparing the President’s annual budget
proposal to Congress. The Legislative Reference Division (LRD) coordinates review of

² See CRS Report RL30590, Paperwork Reduction Act Reauthorization and Government
Information Management Issues, by Harold C. Relyea.
³ For more on the CFO Act, see CRS Report RL31965, Financial Management in the Federal
Government: Efforts to Improve Performance, by Virginia A. McMurtry. The CFO Act also
created a new leadership position at OMB: deputy director for management.
⁴ OMB calls this organization the Office of E-Government and Information Technology. For
more about the E-Government Act, see CRS Report RL31057, A Primer on E-Government:
Sectors, Stages, Opportunities, and Challenges of Online Government, by Jeffrey W. Seifert.
⁵ See [http://www.whitehouse.gov/omb/omb_org_chart.pdf] for OMB’s organization chart and
the names of its senior political appointees.
⁶ Description of OMB’s organization draws on Shelley Lynne Tomkin, Inside OMB: Politics and
Process in the President’s Budget Office (Armonk, NY: M.E. Sharpe, 1998), pp. 11-29.
⁷ For discussion, see U.S. General Accounting Office, Office of Management and Budget:
Changes Resulting from the OMB 2000 Reorganization, GGD/AIMD-96-50, Dec. 1995, p. 4.

agencies’ draft bills, congressional testimony, and correspondence to ensure compliance
with the President’s policy agenda. OMB’s Economic Policy Office works with the
President’s Council of Economic Advisers (CEA) and the Treasury Department to
develop economic assumptions. The other support offices are general counsel, legislative
affairs, communications, and administration.
OMB had 484 full-time equivalent (FTE) positions in FY2005 and estimated 500 for
FY2006.⁸ OMB typically has a total of 20-25 political appointees and staff, while the rest
are career civil servants.⁹ OMB’s director, deputy director, and deputy director for
management are presidentially appointed with Senate confirmation (PAS). The heads of
OFPP, OFFM, and OIRA are also PAS officials. In contrast, the administrator of the E-
Gov Office is presidentially appointed (PA). Figure 1 shows OMB’s historical staffing.
Figure 1. OMB Staffing, FY1958-FY2007

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OMB’s Budget. OMB’s budget is driven mainly by personnel costs.
Compensation and benefits were 88% of OMB’s $67.8 million in total obligations for
FY2005.¹⁰ The remainder chiefly covered contractual services (8%). Among OMB’s
offices, 51% of FY2005 funding went to the RMOs, 31% to the OMB-wide support
⁸ U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year
2007, Appendix, p. 1043. During both FY2003 and FY2004, OMB also used 60 detailees from
other agencies in parts of each of those fiscal years, with total usage of 14 FTEs in FY2003 and
16 FTEs for FY2004. CRS has requested FY2005 figures. Detailees at OMB are typically
assigned to help prepare the President’s budget, for training, and for other specific projects.
⁹ Tomkin, Inside OMB, pp. 22-23.
¹⁰ U.S. Executive Office of the President, Fiscal Year 2007 Congressional Budget Submission
(Washington: EOP, 2006), p. OMB-10. OMB defines obligations as binding agreements that will
result in immediate or future outlays.

offices (including the E-Gov Office), and 18% to the statutory offices. Figure 2 shows
OMB’s budget history.
Figure 2. OMB Budget, FY1958-FY2007

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OMB’s budget has fluctuated in recent years due to reallocations of funding, related
to the “enterprise services program,” among budget accounts in the EOP. For FY2003,
Congress reallocated $8.3 million from OMB to the EOP’s Office of Administration (OA)
for central procurement of goods and services,¹¹ reducing OMB’s appropriation compared
to the prior fiscal year. The President subsequently requested for both FY2004 and
FY2005 that similar, though slightly reduced, funding be shifted back to OMB, but¹²
Congress continued a similar reallocation in both years. For FY2006, the President
requested that the reallocation to OA continue, but Congress shifted $7 million, for rent
and health unit costs, from OA back to OMB, and appropriated $76.2 million (after
rescission) to OMB. For FY2007, the President proposed $68.8 million for OMB (9.7%
lower than the FY2006 level) and $7.9 million (related to OMB’s rent, health unit, transit
subsidy, and flexible spending account costs) for OA. Including the $7.9 million proposed
for OA that otherwise might be in OMB’s budget, the FY2007 OMB proposal is a 0.6%
increase in nominal dollars compared to FY2006, and a 1.7% decrease in constant dollars.
¹¹ U.S. Congress, House, Making Further Continuing Appropriations for the Fiscal Year 2003,
and for Other Purposes, conference report to accompany H.J.Res. 2, H.Rept. 108-10, 108^th Cong.,^st

1 sess. (Washington: GPO, Feb. 13, 2003), p. 1342.

¹² See U.S. Congress, House, Making Appropriations for Foreign Operations, Export Financing,
and Related Programs for the Fiscal Year Ending September 30, 2005, and for Other Purposes,^th^nd
conference report to accompany H.R. 4818, H.Rept. 108-792, 108 Cong., 2 sess. (Washington:
GPO, Nov. 20, 2004), p. 1449.

Major Functions. As a primary support agency for the President, OMB has
important and varied responsibilities. A 1986 study identified 95 statutes, 58 executive
orders, five regulations, and 51 circulars that reflected OMB’s operational authorities at
the time.¹³ Most observers include as “major functions” of OMB those listed below.
Budget Formulation and Execution. The Budget and Accounting Act, 1921,
as amended and recodified, requires the President to submit each year a consolidated
budget proposal for Congress’s consideration.¹⁴ In this “formulation phase,” OMB sends
budget guidance to agencies via its Circular No. A-11, which is updated each year to
reflect the President’s budget and management priorities.¹⁵ Agency heads then forward
their formal budget requests to OMB, where the RMOs and E-Gov Office (for
information technology initiatives) assemble options and analysis for decisions by OMB
and the White House.¹⁶ After an opportunity for agency appeals, OMB’s BRD
coordinates production of the President’s budget. When Congress completes action on
appropriations bills and they are signed into law, the “execution phase” begins. The
Antideficiency Act (which includes 31 U.S.C. §§ 1511-1514) requires OMB to
“apportion” appropriated funds (usually quarterly) to prevent agencies from spending at
a rate that would exhaust their appropriations before the end of the fiscal year.
Legislative Coordination and Clearance. OMB plays a key role in
coordinating the President’s legislative activities. Under Circular No. A-19, OMB’s LRD
coordinates executive branch review and clearance of congressional testimony and
correspondence and agencies’ draft bills to ensure compliance with the President’s policy
agenda, make known the Administration’s views on legislation, and allow affected
agencies to provide input during intra-executive branch policy development.¹⁷ For non-
appropriations legislation, LRD plays a coordination role in preparing “Statements of
Administration Policy” (SAPs) for Congress, and memoranda to advise the President on
enrolled bills (e.g., recommending signature or veto, or contents for signing statements).
BRD performs similar duties for appropriations legislation.
Regulatory and Information Policy. OMB exercises considerable influence
over agency regulations. Under Executive Order 12866, OIRA works with OMB’s RMOs
to review agency rules and cost-benefit analyses.¹⁸ In addition, other OIRA policy and

¹³ See Morton Rosenberg and Mark Gurevitz, “Preliminary Catalogue of Office of Management
and Budget Authorities and Directives,” in U.S. Congress, Senate Committee on Governmental
Affairs, Office of Management and Budget: Evolving Roles and Future Issues, committee print,^th^nd

99 Cong., 2 sess. (Washington: GPO, 1986), pp. 395-696.

¹⁴ For more on OMB’s budget responsibilities, see CRS Report RS20167, The Role of the Office
of Management and Budget in Budget Development, by Bill Heniff Jr.
¹⁵ U.S. Office of Management and Budget, Circular No. A-11, Nov. 2005, available at
[ h t t p : / / www.whi t e house.go v/ omb/ ci r c ul ar s/ i ndex.ht ml ] .
¹⁶ See Tomkin, Inside OMB, pp. 127-137, for a description of the process.
¹⁷ U.S. Office of Management and Budget, Circular No. A-19, rev. Sept. 20, 1979.
¹⁸ U.S. President (Clinton), “Regulatory Planning and Review,” Executive Order 12866, Federal
Register, vol. 58, Oct. 4, 1993, pp. 51735-51744, as amended. For an overview of OIRA’s roles,
see CRS Report RL32397, Federal Rulemaking: The Role of the Office of Information and
(continued...)

oversight responsibilities include statistical policy; paperwork reduction; government use
of personal information under the Privacy Act (5 U.S.C. § 552a); information technology
investment under the Clinger-Cohen Act (P.L. 104-106, 110 Stat. 679); and information
security. OIRA shares some responsibilities with the E-Gov Office.
Executive Branch Management. OMB has responsibility for overseeing
management in the executive branch. OMB is responsible for clearing and approving
proposed executive orders (EOs) and many proclamations.¹⁹ OMB’s deputy director for
management (DDM) is charged with overall responsibility for general management
policies in the executive branch, including the domains of the statutory offices, plus²⁰
human resources management. The statutory offices also develop policy and coordinate
implementation in the areas of financial management (OFFM), procurement policy
(OFPP), and information policy and technology (OIRA and E-Gov Office). OMB’s
RMOs are tasked with integrating budget, policy, and management issues for specific
agencies in cooperation with the statutory offices. Observers disagree as to how well
OMB has fulfilled these management responsibilities. Some have argued that the “M”
in OMB is more mirage than real, because budget responsibilities crowd out attention to
management issues, while others have argued that budget and management²¹
responsibilities cannot realistically be separated. OMB leads implementation of the
George W. Bush Administration’s Program Assessment Rating Tool (PART) and²²
President’s Management Agenda (PMA). The PART, which OMB uses to rate the
“overall effectiveness” of programs, has been used to help justify the President’s budget
proposals. The PMA includes, among other things, five government-wide initiatives and
quarterly evaluation of agencies on a “scorecard” with red, yellow, or green “stoplight
scores” for each of the initiatives, based on published “standards for success.” As an
agency, OMB’s scorecard ratings for December 31, 2005, were two yellow and three red
for “status” and, for “progress,” four green and one yellow.

¹⁸ (...continued)
Regulatory Affairs, by Curtis W. Copeland, and Tomkin, Inside OMB, pp. 203-216.
¹⁹ EO 11030, 3 C.F.R., 1959-1963 Comp., p. 610, as amended by EOs 11354, 12080, and 12608.
²⁰ The DDM acts as chairperson or vice chairperson of seven interagency councils: four statutory
councils of agency “chief officers” (chief financial officers [CFO Act, 104 Stat. 2848], chief
information officers [E-Government Act, 116 Stat. 2905], chief human capital officers [Chief
Human Capital Officers Act of 2002, 116 Stat. 2287], and chief acquisition officers [Services
Acquisition Reform Act of 2003, 117 Stat. 1666]); two councils of inspectors general (IGs)
established by executive order (the President’s Council on Integrity and Efficiency and the
Executive Council on Integrity and Efficiency; see U.S. President [George H. W. Bush],
“Integrity and Efficiency in Federal Programs,” Executive Order 12805, Federal Register, vol.
57, May 14, 1992, pp. 20627-20629); and a council of senior real property officers established
by executive order (see U.S. President [George W. Bush], Executive Order 13327, “Federal Real
Property Asset Management,” Federal Register, vol. 69, Feb. 6, 2004, pp. 5897-5900).
²¹ See U.S. Congress, House Committee on Government Reform, Subcommittee on Government
Management, Information, and Technology, The Office of Management and Budget: Is OMB^th^nd
Fulfilling its Mission?, hearings, 106 Cong., 2 sess. (Washington: GPO, 2000).
²² See CRS Report RL32663, The Bush Administration’s Program Assessment Rating Tool
(PART), by Clinton T. Brass; CRS Report RS21416, The President’s Management Agenda: A
Brief Introduction, by Virginia A. McMurtry; and the PMA website, available at
[ h t t p : / / www.whi t e house.go v/ r e sul t s / a ge nda/ ] .