Transparency, Metrics & Outcomes ARRA Performance Requirements and Beyond

Transparency, Metrics & OutcomesARRA Performance Requirements and Beyond Rod Massey Vice President, Public Administration SAP Industry Solutions

Agenda • How is ARRA Different? • Recovery.Gov • ARRA Requirements for Transparency & Accountability • Performance Measurement for the Recovery Act • Evolving ARRA Performance and Beyond • Ongoing Concerns

How is ARRA Different? Accountability and Transparency Now • American Recovery and Reinvestment Act (ARRA) • Funds unprecedented effort to jumpstart economy, create or save millions of jobs, and address long-neglected challenges – extraordinary response to worst economic crisis since the Great Depression • Requires high levels of transparency and accountability so tax payers will know how, when, and where tax dollars are spent • New Levels of Efficiency and Accountability • “Rigorous internal controls, oversight mechanisms, and other approaches to meet the accountability objectives of the bill.” • “Enhancements to standard processes for awarding and overseeing funds to meet accelerated timeframes and other unique challenges posed by the recovery bill’s transparency and accountability framework.” • New Reporting and Heightened Transparency Requirements to Demonstrate Value to the Public • On May 8th, 2009, Agencies began submitting financial data to www.recovery.gov” • On October 10th, 2009, prime recipients must submit their first report to Agencies, followed by quarterly reports thereafter

ARRA Allocates Stimulus Funds to State and Local Governments to Support Many Programs Total Allocation US $ (Billions) Source: Input

ARRA in the State of Georgia • Use of Funds • Health, transportation, and education program funding provided to states and localities account for an estimated 90% of fiscal year 2009 funds. • Georgia’s participation in the three largest health, transportation and education funds is significant through early April. • Awarded grants of $521 million in increased Medicaid Federal Medical Assistance Percentage (FMAP) funds from Centers for Medicare and Medicaid (CMS), about $312 million drawn down • Apportioned about $932 million in Transportation – Highway Infrastructure Investment by US Department of Transportation – of which no funds obligated. As of April 30, Governor Perdue certified that that the Georgia Department of Transportation plans to spend $374 million on over 100 projects throughout the state. • Allocated about $1 billion of State Fiscal Stabilization Fund monies by the US Department of Education. State fiscal year 2010 budget included $521 million in state fiscal stabilization funds. • Governor Perdue appointed a Recovery Act Accountability Officer, who formed a Recovery Act implementation team which comprises: • Senior management team • Officials from 31 state agencies • A group to support accountability and transparency, and Cross-agency teams Georgia’s Estimated Recovery Act Funding by Major Programs Other programs Education Transportation 23% Medicaid Health Note: Other programs include those for housing, energy, and employment and training. The Office of Planning and Budget estimates are based on federal announcements and estimates from Federal Funds Information for States. Source: Georgia Office of Planning and Budget. Sources: Based on Report to Congressional Committees, “Recovery Act: As Initial Implementation Unfolds in States and Localities, Continued Attention to Accountability Issues Is Essential”, Government Accountability Office, April 2009 and http://stimulusaccountability.ga.gov/02/gov/stimulus/home/0,2804,134245182,00.html

Recovery Funds will Flow from the Federal Government to Prime Recipients Where is the Stimulus Money Going? Federal Agency Develops Agency-wide and Program –wide Recovery Plans Prime Organization Receives Funding (Sends Infrastructure Cert.) States Federal Agency Begins Support of Recovery Act Federal Agency Develops Solicitations Federal Agency Makes Awards and Obligates Funds Federal Agency Disburses Funds Prime Organization Makes Sub-Awards Counties/Local Private Sector Tribes Sources: Based on Section 1511, Certifications; Section 1512, Reports on Use of Funds, American Recovery and Investment Act of 2009 and Initial Implementing Guidance issued on Feb 18, 2009 by Office of Management and Budget (OMB) Data required in legislation

Who are Recipients of ARRA Funds? Act 1 • Prime “Recipient” • Any entity that receives recovery funds directly from the Federal Government • Includes a State that receives recovery funds • Is not an individual • Funds may be received through grant, loan, or contract • Required to report directly to recovery.gov on a quarterly basis starting October 10th, 2009 on funds received through discretionary appropriations • “Sub-grant” recipients and subcontractors • Entity that receives recovery funds from a prime recipient or as a subcontract • Not required to report directly to recovery.gov • Individuals • Not defined as “recipients” in the law • Do not report to recovery.gov 12 Affected Agencies 150 Appropriations in Act 200+ 1,000+ Agency Programs 10,000+ Recipients 100,000+ Recovery Act Reporting Estimates Projects/Activities Awards Sources: Based on Section 1512, Reports on Use of Funds, American Recovery and Investment Act of 2009 and Initial Implementing Guidance issued on Feb 18, 2009 by Office of Management and Budget (OMB)

Clearly Showing Value of Recovery Funds to the Public is Critical • Five objectives for federal agencies flow down to state and local governments • Recovery funds awarded and distributed promptly, fairly, reasonably • Recipients and uses of all recovery funds are transparent to the public; public benefits of these funds must be reported clearly, accurately, and in a timely manner • Recovery funds are for authorized purposes and every step is taken to prevent instances of fraud, waste, error, and abuse • Projects funded under the recovery legislation avoid unnecessary delays and cost overruns • Programs must meet specific goals and targets and contribute to improved performance on broad economic indicators “ We cannot overstate the importance of this effort. We are asking the American people to trust their government with an unprecedented level of funding to address the economic emergency. In return, we must prove to them that their dollars are being invested in initiatives and strategies that make a difference in their communities and across the country.” OMB Memorandum Feb. 9, 2009

Recovery.GovInformation Flow Recovery Website Recovery Website Recovery Website Recovery Website Public Companies National Recovery Website Good Government Organizations Recovery Website Recovery Website Recovery Website

Likely Conceptual ArchitectureMid to Long Term Federal Agency Reporting Feeds from Existing Federal Solutions Feeds from Prime Recipients USAspending.gov Web Service Grants.gov Web Service FBO.gov Web Service Web Service Major Communications XHTML XHTML Preferred Method XHTML Summary Data Formula Block Grant Allocations Staging DB AgencyDB AgencyDB DB XHTML Agency Web Server Validate content and post to recovery.gov Financial Activity Report Citizen supplies feedback Review content and select content to post to recovery.gov Sources: Based on Section 1512, Reports on Uses of Funds, American Recovery and Investment Act of 2009; Initial Implementing Guidance issued on Feb 18, 2009 and updated Implementing Guidance issued on Apr 3, 2009 by Office of Management and Budget (OMB)

ARRA Requires Prime Award Recipients to Report Information Quarterly to Recovery.gov Key Actors and the Information Flows to Recovery.gov State and local governments Sources: Based on Section 1511, Certifications and Section 1512, Reports on Uses of Funds, American Recovery and Investment Act of 2009; Initial Implementing Guidance issued on Feb 18, 2009 and updated Implementing Guidance issued on Apr 3, 2009 by Office of Management and Budget (OMB)

Governor, Mayor or Other Chief Executive Must Certify Infrastructure Investments to Get Funds • Governor, mayor or other chief executive must certify and report to recovery.gov that: • The infrastructure investment is an appropriate use of taxpayer dollars • Must includes description of investment, estimated total cost, and amount of total funds to be used in the certification Sources: Based on Section 1511, Certifications and Section 1512, Reports on Uses of Funds, American Recovery and Investment Act of 2009; Initial Implementing Guidance issued on Feb 18, 2009 and updated Implementing Guidance issued on Apr 3, 2009 by Office of Management and Budget (OMB)

Quarterly Reporting by Prime Recipients is Likely to Require the Following Data Sources: Based on Section 1512, Reports on Uses of Funds, American Recovery and Investment Act of 2009; Initial Implementing Guidance issued on Feb 18, 2009 and updated Implementing Guidance issued on Apr 3, 2009 by Office of Management and Budget (OMB)

Primary Factors Acting on Performance Measurement for the Recovery Act • Where is funding associated with the Act applied? • When is the funding distributed? • How are the agency activities performing compared to initial targets? • What are the results of the distributed funding? EFFECTIVENESS EFFICIENCY Cross Government Goals/Objectives Cost Schedule Quality Agency Goals/Objectives Quality vs. Is a subset of Supports measurement of ProgrammaticOutcomes Scope Project/Activity Outputs

Quarterly Reporting by Prime Recipients is Likely to Require the Following Data Efficiency Effectiveness Sources: Based on Section 1512, Reports on Uses of Funds, American Recovery and Investment Act of 2009; Initial Implementing Guidance issued on Feb 18, 2009 and updated Implementing Guidance issued on Apr 3, 2009 by Office of Management and Budget (OMB)

Estimating Jobs Created or Retained is Required by Section 1512, “The Jobs Accountability Act” • March 31 changes to Federal Acquisition Regulations (FAR) provided guidance for estimating jobs funded by Federal Agency Contracts and similar guidance is in progress for grants recipients • Components of the guidance for estimating created or retained jobs are: • Only compensated jobs are to be estimated • Recipients should report full-time equivalent (FTE) estimates cumulatively created or retained using the definition of a full-time schedule defined by the recipient • FTE calculations are based on aggregate hours worked to ensure temporary or part time labor is not overstated • Grant recipients will also address the impact on the work forces of sub-recipients using a method they deem most accurate without creating undue cost or burden • First estimate of direct jobs due from recipients on October 10, 2009 “ The primary purpose of the Recovery Act is to create and retain jobs by promoting sound economic recovery. At its signing, President Obama said, “The Act provides a direct fiscal boost to help lift our Nation from the greatest economic crisis in our lifetimes and lay the foundation for further growth. This recovery plan will help to save or create as many as three to four million jobs by the end of 2010.” Quarterly Report to the President on Implementing the American Recovery and Reinvestment Act of 2009, May 2009

Agency Recovery Act plans includeKey Performance Indicators (KPIs) • Federal Agencies presented Plans for Recovery Act programs • Agencies will be held accountable for reporting these performance measures • For existing programs these performance measures are likely already in use • For new Recovery Act programs, prime recipients need to be prepared to gather and report these performance measures • Existing: Unemployment Insurance Administration State Grants Recovery Plan, Department of Labor • Payment timeliness: Percentage of intrastate UI first payments made within 14 days in states with a waiting week and 21 days if no waiting week • Establish overpayments: Dollar amount established for recovery as a percentage of estimated overpayments that states can detect and recover under state law. • New: Broadband Technology Opportunities Program (BTOP) Recovery Plan, Department of Commerce • Job creation • Expanded broadband access -- Number of areas where service will be made available or improved, and how many homes and businesses are passed by the network • Stimulate private-sector investments • High-speed access to "strategic institutions" • Encourage broadband demand Source: http://www.recovery.gov/?q=content/program-plan-tags&type=meas_text&keyword=states&pageno=1

Economic Impact Governments have the challenge to capture and disburse funds, run programs, measure performance and report to the public on timely basis Effectively Managing Economic Stimulus Funds and Programs Presents New Challenges Lack of financial performance insight • Planning and forecasting is inaccurate • Cannot track financial progress & performance against targets Poor policy execution • Unable to identify impact of government spending • Limited ability to cascade policy and objectives across and beyond the organization • Budget shortfall, “in the red” Finance Little visibility to public • Cannot show where tax dollars are spent, low public confidence • Struggle to meet reporting requirements due to long reporting cycles Elected Officials / Executives Public Program Management Procurement / Contracting Non-compliance • Potential for fraud, waste, abuse • Limited compliance management increases costs • Short timelines increase risk - little due diligence, vague contracts Program delays, wasted funds • Struggle to meet aggressive deadlines to disburse funds • Cannot determine best programs to fund • Unable to track progress and performance against targets Other Agencies Lack of coordination • Lack coordinated alignment, strategy and execution across multiple organizations • Disconnected processes across the community • Bad quality of data, little sharing of information

Public ROI Evolution of PerformanceARRA Reporting and Beyond PUBLICVALUE Collaborative Performance Optimization (aka, Policy to Outcome) Performance Optimization and Analytics Platform Strategy Management Performance Management From Outputs to Outcomes Business Intelligence Performance Monitoring Analytics Reporting Improved Transparency

SHORT-TERM MEDIUM-TERM LONG-TERM Performance Monitoring Required by ARRA is a Step Towards Greater Transparency PERFORMANCE MONITORING PERFORMANCE MANAGEMENT STRATEGY MANAGEMENT “How did we do last month?” “How can we do better next month?” “How can we achieve our strategic goals?” Management and Reporting for ARRA Funds Program Fulfillment Performance Optimization Collaborative Outcomes Compliance, Transparency& Accountability Operational Efficiency Maximize Employee Resources Collaborative Performance Optimization Foundation Performance Optimization and Analytics Platform

A Performance Optimization and Analytics Platform Improves ARRA Transparency Governance, Risk, and Compliance Strategy RiskManagement Access Control Enterprise Performance Management Process Control Global Trade Services Strategy Management Business Planning Environment, Health and Safety Profitability andCost Management Consolidation Spend Analytics Decisions Insight Insight Unified Information Collaborative Decisions Business Network Optimization Business Intelligence Information Management Execution Query, Reporting, and Analysis Reporting Data Integration Data Quality Management Dashboards and Visualization Search and Navigation Master Data Management Metadata Management Advanced Analytics

Technology Environment Can Hinder ARRA Fulfillment Non-Integrated Applications Multiple UserInterfaces Fragmented DataSources Strategy ?! Structured Data ?! Contracting ?! Other Agencies ?! Public Planning X Finance ?! Program Manager Costing ?! Elected Officials / Executives ?! Unstructured Data

A Platform Approach Can Streamline Management and Reporting of ARRA Funds Contracting All Applications Other Agencies Public Finance Program Manager Structured Data All Data Elected Officials / Executives Unstructured Data

A Platform Approach can Enable Total Economic Stimulus Reporting and Visualization Link to Recovery.gov reporting Visibility into Funding Categories Financial and Job Results Status of Spend and Job Results Geo representation of spend Enablement of Public Sentiment Reporting

Economic Impact Increase transparency and accountability by effectively disbursing stimulus funds, fulfilling program goals, collaborating with stakeholders and reporting performance within mandated timelines New Performance Process and Technology Approaches Enable Economic Stimulus Goals and Beyond Align policy to outcomes • Clear line of sight from strategy to execution, spanning policy to programs to projects to outcomes • Cascade and align strategy across and beyond the organization • Position your agency (and constituents) for continued investments / revenue Monitor financial performance • Ensure compliance, accountability and “auditability” • Establish and analyze cost, schedule and performance metrics for accurate reconciliation • Track stimulus funds distinct from normal financial and budgetary applications Finance Elected Officials / Executives Communicate public transparency • Inform public of progress against program funding • Clearly communicate strategy, results and outcomes in timely manner Public Program Management Procurement / Contracting Track program fulfillment • Meet mandated timelines to disburse funds to warranted programs • Track progress and performance against targets • Effectively manage and adjust program scope, costs, schedules resources and risk Ensure compliance • Monitor and detect fraud via improved controls • Improve sourcing and procurement management to increase purchasing power and • Expend funds rapidly with improved oversight Other Agencies Promote collaborative outcomes • Align, coordinate and streamline planning, programs and resources within and beyond organizational boundaries • Open, flexible, architecture fosters interoperability

Concerns About Guidance and Measuring the Impact of Recovery Act Funds Persist • How do states and local officials measure the impact of the Recovery Act? • Additional clarity needed on methodologies to estimate the number jobs created and retained • Further guidance is needed for measuring the economic and jobs impact where Recovery Act funds are combined with other federal, state, or local funds • How does government make best use of single audits to provide effective oversight? • Single audit process needs to be modified to be a more timely and effective audit and oversight tool for the Recovery Act • Internal controls review are important before significant funds are disbursed • How do states receive information about primary recipients in their state, when the state is not the primary recipient, but has a state-wide interest in this information? • How do states and local officials fund the additional accountability and oversight required by the Recovery Act? • Significant declines in the number of oversight staff due to fiscal constraints limit state and local governments’ ability to ensure proper implementation and management of Recovery Act funds Sources: Based on Report to Congressional Committees, “Recovery Act: As Initial Implementation Unfolds in States and Localities, Continued Attention to Accountability Issues Is Essential”, Government Accountability Office, April 2009.

States May Recover Administrative Costs for Recovery Act Programs • Rationale: • Majority of Recovery Act funds are disbursed by States • State governments need to build administrative capacity to meet reporting and other responsibilities under the Recovery Act • States generally receive reimbursements for administrative costs after the fact • How to: • Use the State-wide Cost Allocation Plan (SWCAP) submitted annually to the Department of Health and Human Services (HHS) for review and approval • May include Recovery Act administrative costs as an addendum plan to SWCAP • Recovery Act administrative costs should not be in excess of 0.5% of total Recovery Act funds received by the State • Alternatives for Administrative Cost Reimbursement: • Estimated Costs for Centralized Services – based on budgeted or estimated costs of service • Billed Services – methodology for identifying, recording, and charging administrative costs • Where to find guidance: • Office of Management and Budget (OMB) M-09-18 Memorandum for the Heads of Departments and Agencies regarding Payments to State Grantees for Administrative Costs of Recovery Act Activities, May 11, 2009 http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m09-18.pdf • OMB Circular A-87, Cost Principles for States, Local and Tribal Indian Governments, Attachment C, State/Local Wide Central Cost Allocation Plans http://www.whitehouse.gov/omb/circulars_a087_2004/ • Department of Health and Human Services (HHS), Program Support Center, Financial Management, Cost Allocation, contains information for State, Local and Tribal Indian Governments, hospitals, non-profit organizations, colleges and universities http://rates.psc.gov/fms/dca/asmb%20c-10.pdf

Recovery Act – Useful Websites • US Government websites • Recovery.gov – http://www.recovery.gov/ • Office of Management and Budget (OMB) – Reporting Guidance http://www.whitehouse.gov/omb/recovery_default/ • FedBizOpps – Federal Government contracting opportunities and awards, not limited to Recovery Act - https://www.fbo.gov/index?s=main&mode=list&tab=list • Grants.gov – Federal Government Grant applications and awards http://www.grants.gov/ • Government Accountability Office (GAO) – Recovery Act reports and mechanisms to report stimulus fraud http://www.gao.gov/ • Recovery Act General Information • Council of State Governments – http://www.staterecovery.org/ • Recovery.org – http://www.recovery.org/ • Government Technology – Economic Stimulus http://www.govtech.com/gt/289136 • SAP Solutions for Economic Recovery http://www.sap.com/usa/industries/economic_recovery/index.epx

“Our American story is not – and has never been – about things coming easy. It’s about rising to the moment when the moment is hard, converting crisis into opportunity, and seeing to it that we emerge from whatever trials we face stronger than we were before.” Barack Obama , President of the United States of America

Thank you!

Transparency, Metrics & Outcomes ARRA Performance Requirements and Beyond