THE ROLES AND RELATIONSHIPS
0F PLANNERS AND BUDGETERS
EN STATE GOVERNMENT

Thesis {‘0' HM gage-co cf M. U. D.
MiGBiGAN SMTE. UNE‘VERSITY
Kirk Lars Lindquist
I974

 

ABSTRACT
THE ROLES AND RELATIONSHIPS OF PLANNERS
AND BUDGETERS IN STATE GOVERNMENT
BY

Kirk Lars Lindquist

State planners have had difficulty in effecting
policy decisions. The budget process has been ignored or
passed off as being too single purpose and short range to
be useful in planning. The emphasis has been on program
coordination, the provision of planning services, and on
the vertical aspects of planning and intergovernmental
relations. In practice, there has been little actual
coordination, relatively little impact on agency planning,
and efforts at state regionalism have been rebuffed by
local governments. While the objectives have been well—
meant, the results have generally fallen short of expecta-
tions. Questions relating to strategies used need to be
asked and additional tools need to be sought out.

The approach utilized in this thesis is develop—

mental. The evolution of practices of budgeting and

Kirk Lars Lindquist

planning is traced and focused on how the roles and
relationships of the participants in these processes have
changed. Budgeting is presented as an alternative field
where planners can both make an input and directly affect
the manner that programs are guided and implemented. The
implementation concentration characteristic of program
budgeting it is argued can be merged with the longer range
concerns shared with planners. The thesis concludes with
a general discussion of how planners and budgeters have
combined their talents in Michigan State Government.

While planning and budgeting can be radically
different in practice, they share many of the same con—
cepts and approaches to problem solving. As a result,
they often share positive and negative qualities. This
thesis is not a critique of the practice of state planners.
It is meant to acquaint planners with how budgetary tech—
niques and the policy gaps found in budgeting processes
can enhance the effectiveness of planning programs while
offering an opportunity to existing tools to implement

their plans and recommendations.

THE ROLES AND RELATIONSHIPS
OF PLANNERS AND BUDGETERS
IN STATE GOVERNMENT
BY

Kirk Lars Lindquist

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

MASTER IN URBAN PLANNING

School of Urban Planning
and Landscape Architecture

1974

FOREWORD

In June, 1973, another urban planning graduate
and the author got summer jobs working in the Bureau of
the Budget in Michigan State Government. Unlike similar
situations, they were given assignments and responsibil-
ities of full-time analysts. They were given the uncom-
mon opportunity not only to observe, but to participate
in the budget process as planning analysts.

While employed as a student assistant in the
Planning and Policy Analysis Division, divergent tasks
were performed. The author was free to select a Program
Budget Evaluation System program area in which to spe-
cialize, and worked directly with the section and division
director in shaping the work program and projects to be
undertaken in the 1973-74 fiscal year. His responsi-
bilities centered on the environmental quality and
recreation programs undertaken by the Department of
Natural Resources and the Department of State. He worked

directly with budget analysts from the Budget and Program

ii

Analysis Division and with agency division and bureau
chiefs while refining the subcategory objectives and per-
formance measures as listed in the Michigan Program Plan.

The Planning and Policy Analysis Division
Director, A. Thomas Clay, encouraged him to investigate
existing and alternative methods of dealing with program
policies and information development. These experiences
presented unique opportunities to look at how planning
techniques have been utilized in budgeting in Michigan
and to see how budgeting has affected how planning was
undertaken by the earlier State Planning Division.

Even though these experiences were gained
while employed on a part—time basis, they have added a
valuable dimension to the smaller—scale city planning
orientation offered in the urban planning graduate
curriculum.

It was as a result of these experiences that
this topic was chosen. If it were not for this oppor-
tunity, he would not have been prepared or qualified to

undertake the research resulting in this thesis.

iii

ACKNOWLEDGMENTS

I am indebted to many people for their assistance
and guidance. However, there are several individuals who
played a particularly critical role in the development of
this thesis.

First of all, I would like to thank my advisor,
Dr. Carl Goldschmidt, whose suggestions on organization
and content, and penetrating questions have proved invalu-
able in developing this thesis from concept to this final
product.

Special thanks belong to the Planning and Policy
Analysis Division staff for giving me the opportunity to
experience the inner workings of planning and budgeting
activities. Especially important have been the assistance
and criticisms given by David N. Milstein and A. Thomas
Clay without whose involvement the topic never would have
gotten off the ground.

Also the thoughtful review and critiques offered
by the urban planning faculty have been central to making
this project a valuable learning experience.

iv

I am indebted to Carolee Ward for her excep-
tional clerical assistance and dedication in this thesis
preparation. And finally, I would like to give a special
thanks to my wife Barbara whose patience and support have

made this thesis possible.

TABLE OF CONTENTS
Chapter Page
I M RODUCT I ON C O O O O O O O O O O O O O O O O O O l

I. THE TRADITIONS AND CHARACTERISTICS

OF THE BUDGET PROCESS . . . . . . . . . . . 6
Definitions . . . . . . . . . . . . . . . . 6
The Budget Process . . . . . . . . . . . . . 9
Historical Background of Program Budgeting . 18
The Political Aspects of Budgeting . . . . . 34
State Budgeting and PPBS . . . . . . . . . . 42
The Program Budget Process in the States . . 45
Summary . . . . . . . . . . . . . . . . . . 55
II. PLANNING AS IT HAS OCCUREDJN THE STATES . . 59
Definitions . . . . . . . . . . . . . . . . 60
Strategies Employed by State Planning
Agencies . . . . . . . . . . . . . . . . . . 69
History of State Planning . . . . . . . . . 73
Prognosis for State Planning . . . . . . . . 108

III. PLANNING AND BUDGETING RELATIONSHIPS IN

MICHIGAN STATE GOVERNMENT 1968-1974 . . . . 114
Planning and Budgeting to January, 1973 . . 115

The State Planning Process Since March, 1973 129

IV. CONCLUSIONS . . . . . . . . . . . . . . . . 145
FOOTNOTES . . . . . . . . . . . . . . . . . . . . 153
BIBLIOGRAPHY . . . . . . . . . . . . . . . . . . . 162

vi

LIST OF TABLES
Page .

Legislative Status of State Planning
Boards, 1933—1938 . . . . . . . . . . . . . . . 82

Location of State Planning Responsibility
at Three Successive Dates . . . . . . . . . . 95

Principal Source of Support for State
Planning . . . . . . . . . . . . . . . . . . . 99

States Grouped According to State Planning
Agency Strategy . . . . . . . . . . . . . . . 101

Historical Trends in General Fund General
Purpose Expenditures . . . . . . . . . . . . . 119

Trends in Appropriations for Health,
Education and Social Services . . . . . . . . 121

Promise and Performance - . . . . . . . . . . 141

vii

LIST OF FIGURES

State Budgeting and the Political System
Sample Program Structure — Commonwealth
Program II - Protection of Persons and

Property . . . . . . . . . . . . . . .

Sample Program Structure Statements and
Program Plan Logic . . . . . . . . . .

Decision Cycle—PPB . . . . . . . . . .

Decision Cycle—Program Budget Evaluation
System . . . . . . . . . . . . . . . .

viii

Page

16

47

48

53

126

INT RODUCT ION

Since the rise of program budgeting in the
mid '60's, planners and budget officials have become
increasingly concerned with the processes involved in
decision-making and the implementation of administrative
policy. Budgeters have long recognized the political
importance and some have gone to great lengths to describe
the political aspects of the budgetary process.1 However,
planners generally have sought to insulate themselves from
the political side of making decisions and so have not
sought to involve themselves in the budget process. The
operating budget is an over-all plan for governmental
activities usually expressed in financial terms. The
scope of these budgets is comprehensive and covers those
aspects of everyday life which are affected by the appro-
priated programs. The perspective of planners, however,
does not respect the budget as an operating plan. They
have held closely to their role as administrative staff

assistants who supply the technical knowhow needed for

bureaucratic decision-making. By retaining this attitude,

1

planners are unnecessarily limiting their optimal effec—

tiveness. Robert walker said this of planners:

Among those who call themselves "planners" - ie.
those who belong to the professional planning
organizations, attend planning conferences, etc. -
concern with budgeting has been restricted almost
entirely to the capital improvements or public

works programs. This situation probably arises

from the fact that professional planners have

been interested primarily in planning physical
features, and the public works program is usually

a budgeting of major public construction for the
ensuing several years...one finds in the literature
of planning and proceedings of the national planning
conferences that discussions of the relation between
budgeting and planning are cast almost entirely in
terms of long range capital improvement programs.
Planners have largely ignored the annual budget
process. In so doing, they have neglected the
growing importance of the budget as a plan of

future action and have overlogked an opportunity

to make their work effective.

Budgets are financial plans but they are usually
not all that useful as planning documents. This is espe—
cially true of those which are designed as control docu-
ments. Budgeters often do not appreciate the value of
planning and are more interested in forms and accounts
than in the programs being financed. Developments since
the late 1960's at the state level have brought about
changes in the relationships among administrators, bud-

geters and planners which may hold strong implications

for the manner and types of ”plans" generated by
practicing planners.

This thesis will be concentrating on the differ-
ing characteristics and roles of planners and budgeters in
governmental decision-making as they relate to the pro—
cesses of budgeting and planning. There is always a need
to refine planning techniques to increase the probability
of the implementation of plans or programs and it is in
pursuit of this purpose that this thesis is written. This
will be accomplished through a review of pertinent liter-
ature and through a review of the planning - budgeting
process in action in state government. The setting for
this final phase is the Bureau of the Budget in Michigan
State Government.

The State of Michigan, since William G. Milliken
became Governor in 1968, has been looking into alternative
ways of administering the Executive Budget. The resulting
budget process (called the Program - Budget - Evaluation -
System, or PBES) now incorporates both planning and bud-
getary processes and houses both functions in the Bureau
of the Budget of the Department of Management and Budget.
Under the direction of Dr. John T. Dempsey, the department

was reorganized several times resulting in the disbanding

of the Planning Division and the creation of the Planning
and Policy Analysis Division within the Bureau of the
Budget. While, at the time of this writing, the perma-
nence of the relationship cannot be determined, the roles
and responsibilities of planners and budgeters have been
purposely intertwined and share the responsibility for the
production of the Executive Budget and supporting docu-
ments. This relationship deserves attention from all
concerned with program planning and implementation.

Many explorations into the topic of policy plan-
ning focus on the value, or public, aspects of defining
administrative goals and objectives. The application of
those objectives to implementation tools available through
the budget process will be treated here. In state govern-
ment, public goals are defined by the legislature and
through gubernatorial leadership. Program objectives are
specified by program administrators with review and comment
supplied by the Bureau of the Budget, and it is here that
planners, in Michigan, have made an impact. This pattern
of administrative decision-making may well have real possi-
bilities for other levels of government and planners and
budgeters alike should be aware of its possible implica-

tions.

The approach which will be used will first intro-
duce the reader to the traditions and characteristics of
the budget process. The budget process will be discussed
in the context of how program budgeting came into existence
and how it has changed the way that state budgets have been
prepared. The same approach will be used to present the
state planning process. ‘With this information as back-
ground, the second portion of this thesis will deal with
how budgeting and planning techniques have been developed
into what is current practice in the State of Michigan.

It is not the intent of this thesis to compre-
hensively present and analyze these two very complex pro-
cesses. It should also be noted that this cannot be con-
sidered, nor is it intended, to be the last word on state
program planning systems. Both of these fields have been
undergoing rapid changes and their evolution is probably
far from complete. However, it is hoped that this thesis
will show that sound working relationships between planners
and budgeters are not only possible but desirable in im-
proving program planning and evaluative techniques in the

interest of improved program management.

CHAPTER I
THE TRADITIONS AND CHARACTERISTICS

OF THE BUDGET PROCESS

This chapter will deal with the basic concepts
and characteristics of the budgetary process and include
a description of how the planning — programming - budgeting
process has evolved. It will attempt to define terms and
to describe the budgetary process within the context of
the decision-making environment. After the historical
aspect is presented, the political side of budgeting will
be briefly portrayed. Finally, the budgetary processes in
program budgeting (PPBS) will be outlined followed by a
critique of program budgeting systems as they were imple-

mented in the states.

Definitions

Before moving much farther, several terms used
regularly in budgeting circles should be clarified. First
of all, when the term budget is used it refers to a docu-
ment which illustrates the financial needs and activities

6

of agencies of government for the course of the upcoming
fiscal year. The budget serves as an over—all work plan
guiding governmental activities and as such determines
what public policy will be until the next budget comes
around. The budget does not strictly prescribe what
actions will be taken but can only illustrate intended
behavior, as a prediction. 'Wildavsky, in The Politics
of the Budgetary Process, describes budgeting as being
several things and has different forms depending on the
uses it will be designed for. It can serve as a plan,
a contract or as a channel for information among partic-
ipants in the budget process. As a plan, the budget
should include a detailed description of how its objec-
tives are to be achieved. Choices are coordinated to
make it possible for those responsible to implement the
intent of those who prepared the document. If the budget
is organized in such a way as to maximize the most policy
returns for a given sum of money, it becomes an instru-
ment for insuring efficiency.

The budget may also be regarded as a contract
between legislators and department heads. To the extent

that the budget is carried out, "it imposes a set of

mutual obligations and controls upon the contracting

8

4
parties." These contracts often extend into the thick
of the bureaucracy in the form of agreements between the
department heads and their subordinates for support of
the agencies' programs in return for some degree of con-
trol over how those programs are carried out. The budget
then becomes "a web of social as well as legal relation-
ships in which commitments are made by all parties and
where sanctions may be involved by all."

Throughout the budgetary process the partici-
pants relate their preferences and react to the desires
of others through the choices they make. As such, then,
the budget serves as a sort of communications network
through which information is passed and generated by the
participants. The importance of the governmental budget
cannot be over-emphasized. It serves as a focus for all
governmental activity and as a product of a process
through which programs are mobilized to meet pressing
problems represents one of the most political activities
to be fOund in administrative government.6

There are many definitions of pglicy floating
around but all have a basic concept in common - policy is

what the decision-makers say it is. Goodman, in his

Principles and Practice of Urban Planning, says that

policy is "a course of action adopted and pursued in
attaining goals or achieving objectives."

The policies set the broad framework for action

and form the basis upon which more detailed

development decisions are made. They are the

connective link between ggneral goals and

specific recommendations.
Within this context, a budget can easily fit as an admin-
istrative policies plan. Chapin defines a policy plan as
a "statement of the directions in which (a jurisdiction)
should move in order to achieve (its programmatic) objec-

9

tives.” This definition coincides quite closely to a
description of the program budget which has evolved in
recent years at the federal and state levels. This hasn't
always been the case. State budgeting has been most con-
cerned with how ongoing activities of established agencies

are to be financed while concern for public objectives has

often been shifted by their historical concern for control.
The Budget Process

While the names, forms, and activities of various
budgeting systems have changed several times since 1915,

the basic functions have remained the same with the

10

emphasis changing from one aspect to another shifting
the orientation of the process according to the attitudes
of those involved in the conduct of budgeting. James
Martin describes the budget process this way:

The process of budgeting is "a unified series of

steps undertaken to implement a government's

policy objectives. It provides the development

of a documented work program....the careful

linkage of that program with a formal, compre-

hensive financial plan, and the carrying out of

the entire scheme through an administrative

arrangement which includes,at least in the case0

of capital outlay, a definitive work schedule.
The budget process includes the determination of what will
be done and then the determination of what expenditures
will be necessary to reach those objectives. Programs
normally are not designed to fit constraints established
by the availability of the fiscal resources. Instead, the
processes of budgeting center on the optimal level of
resources necessary to satisfy program objectives or expec-
tations. The success and how this is done is directly
related to the use to which the budget is geared and the
perceptions of the participants in the process. Although

every budget process includes aspects of control, manage—

ment, and planning, one function tends to predominate to

11

the detriment of the other two. The character of a given
budget process is by and large determined by relative
balance of these three functions.11 The data requirements
of the process are determined by the relative orientation
of the process. "The time frame and degree of aggregation
suitable fOr one function may be inappropriate for another.
Similarly, for each function, data have a particular
source, distribution and use."12 The data which are gen-
erated by a budget process tend to have an inertial effect
on the process. The uses of the data are determined by
the data's characteristics.

As mentioned earlier, the three primary functions
of budgeting are control, management, and planning. Schick
defines the function of control this way:

Control is the process of enforcing the limitations
and conditions set in the budget and in appropria-

tions, and of securing compliance with the spgnding
restrictions imposed by central authorities.

If control is emphasized in the budget through detailed
itemized expenses, the budgeters will have to closely
watch agency expenditures to ensure that the limits, as
stated in the budget, are complied with. They will often

also be concerned with how agencies can be held to their

12

expenditure restrictions, the kind of reporting procedures
to be used to monitor the appropriations of expenditures
and account accuracy, and they would like to determine
which limitations should be placed on agency authority to
spend for personnel, equipment, travel, and other items.
The control function tends to emphasize the execution
aspect of the budget. Its basic analytic units relate to
items of expenditure as they are presented in the budget
document.

The management function is operation oriented
and involves the use of budgetary authority to ensure the
efficient use of staff and other resources in the conduct
of governmental activities. The focus is on agency out-
puts, or more specifically on what is being done or pur-
chased, and at what cost and how that performance compares
with budgeted goals. The budget operations found with this
emphasis will usually limit their range of concerns to the
efficiency aspects of program activities. Such things as
bureaucratic organization, cost prediction and maximization
of productivity from each unit of output are considered very

important where program management predominates.

13

Within this context, the function of planning
refers to the process of determining public objectives and
the evaluation of alternative program means. For this to
function well, the central budget agency must be informed
as to the purposes and effectiveness of the various pro—
grams. In some forms of program budgeting the central
agency has sought to quantify program objectives to make
measurement of program effectiveness possible. The units
of measurement budget planners would be most concerned
with would be those which measure client demand for ser—
vices and the impact agencies are making on that demand.
These measurements would make it possible to answer ques-
tions such as what criteria should be used for evaluating
programs and for computing their costs and benefits? and
what is the effectiveness of program A compared to pro—
gram B? The aid and cooperation of the program adminis-
trators are critical.

As illustrated above, each of the three functions
emphasizes a different phase of the budget cycle. The
control situation relates to the execution of the budget
while a management process will be most concerned with the

preparation of the budget document. The planning function

14

relates to the pre-budget preparation period and involves
analytical work on the policy aspects before appropriation
targets are submitted for consideration for inclusion in
the budget. Schick observes that "each function has its
distinctive budget classification: items of expense in
the case of control, activity accounts for management
budgeting, and program categories for planning."14

When viewed within the context of the state
political system, the budgetary process can be seen as
dependent on many disciplines to support the various
activities involved. Regardless of the relative emphasis
upon the control, management and planning functions, these
activities contribute to the form and character of the
budgeted products or services. Inputs to the process take
the form of requests either for the continuation of exist—
ing services, the addition of new services, or changes in
the orientation of existing programs. The processing of
the budget document involves the process through which
the inputs are converted into budgeted programs and agency
outputs. These outputs take the form of capital improve-
ments, operation of programs, and the supply of public

services or may be concerned with policy decisions,

15

appropriation limitations, and expenditure controls.
Auditing provides the internal feedback loop within the
boundaries of the budgetary processes while the feedback
in the political system relates program impacts to the
needs of the state citizenry. These relationships are
illustrated in Figure l.15 The budgetary process is a
sort of sub-system of the greater political process where
demands and needs for state services are translated into
program impacts and in an improvement of the general
quality of life for those affected. Howard points out
that the scope of inputs into the budget system is nearly
boundless. "There are demands made by various affected
groups, there is apathy by a large part of the electorate,
there are attitudes toward specific actions, and there are
general dispositions towards the democratic way of conduct-
ing government."16

Each of the three budget functions, when viewed
from this context, cover different sectors of the system.
The control function is emphasized through the allocations
processes and auditing feedback, management deals with how
inputs are processed into outputs, and the planning func-

tion deals with the over-all balance of the system where

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citizen needs are compared against governmental services
and program impacts and program changes and/or policy
recommendations enter the budget process as inputs. This
system is highly political (as it should be), and requires
well trained and diverse personnel to operate smoothly and
efficiently.

Planning, as used in this discussion, deals with
strategies to be employed to define and refine program
objectives and with the resources to be used to attain
these objectives. Robert N. Anthony describes the stra-

tegic planning process this way:

Strategic planning (others call it policy analysis)
is essentially irregular. Problems, opportunities,
and "bright ideas" do not arise according to some
set timetable; they have to be dealt with whenever
they happen to be perceived...Failure to appre-
ciate the distinction between regular and irregular
processes can result in trouble of the following
type — A(state) with a well developed budgeting
process decides to formalize its strategic planning.
It prepares a set of forms and accompanying pro-
cedures and has the operating units submit their
long range plans on these forms on one certain date
each year. The plans are then supposed to be
reviewed and approved in a meeting similar to a
budget review meeting. Such a procedure does not
work.... There simply is not time enough in an
annual review meeting for a careful consideration
of a whole batch of strategic proposals.... It is
important that next year's operating budget be
examined and approved as an entity so as to ensure

 

18

that the several pieces are consonant with one
another... Except for very general checklists
of essential considerations, the strategic
planning process follows no proscribed format
or timetable. Each problem is sufficiently
different from other problems so that each must
be approached differently.

This strategic planning feedback and the nature
of the inputs into the budget process are critical in the
final context and function of the final budgetary product.
The role of planning in the budget process did not come
into its own until the rise of the program budgeting in
the middle and late 1960's. Before then, the control and
management functions clearly were emphasized. The signifi—
cance and future of planning in the budget process can be
better understood after being viewed against how histori-

cal developments have transformed budgeting into what

seems in current practice.
Historical Background of Program Budgeting

State budgeting has been evolving ever since
the late 19th century away from the pluralistic agency-
budget approach to the highly centralized Planning Pro-

gramming Budgeting systems of today. The development of

19

performance and program budgeting runs counter in several
ways from the established traditions of executive budget-
ing. Each reform which affected the budget process changed
the uses to which the budget document was put. The histor-
ical development of the budget process is a story of a
shifting emphasis from the control, to management, and to
planning aspects of budgeting.

Well publicized cases of political corruption,
graft and favor-selling brought a long period of reform to
American politics. It was the consensus that a way had to
be found to place decisions affecting governmental expendi-
tures into public control - strict control. This process
was keyed to the production of the budget documents under
the watchful eye of the chief executive and the legislature
and has been termed the Executive Budget process. Before
this time, budgeting was handled by the legislature alone
and was characterized by the following conditions.18
First, no central office was empowered to review or revise
departmental estimates, or to make fiscal recommendations
to the legislature. In most cases, the agency estimates

were submitted separately, often at different times during

the legislative session. Each agency had its own accounting

20

system. Estimates supplied by the agencies generally
lacked supporting data and usually were submitted in

lump sums. Agency requests were not related to revenue
projections or to total state expenditures. The agencies
dealt with the legislature separately and bargained for
each appropriation in a piecemeal fashion. Finally,
there was little or no central review or supervision of
agency expenditures.

To overcome difficulties which arose in the pre-
executive budget days, the reformers sought to make the
budget the principal instrument for administrative con—
trol over spending. Since the control function appealed
to the attitudes and perceptions of legislators and to
the growing professional ranks of public administration,
it was given prominence over the management and planning
functions. This was to remain the case until the era of
the "New Deal“ of the 1930's.

Even though the reformers desired to place
budgetary responsibility with the governor and legisla—
ture equally, in practice, the chief executive became the
control agent for the legislature. Accounts often were

presented in such a manner that the legislature could

21

look closely at agency requests and to enable the legis-

lature to intervene when it wanted to.19

This process,
however, routed agency requests through a central con—
troller where accuracy and the spending rule conformance
were checked for. Great care was also taken to keep
spending in line with available revenue.

The number of states utilizing the executive
budget process increased during the 1920's and 1930's and
controls over departmental spending were tightened and
centralized in the hands of the executive offices.

One of the products of this era of executive
budgeting was the line-item budget. This conformed to
prevailing ideas of separation of politics from adminis-
tration. From the aspect of control, item of expense
classifications have had much going for them. It was
believed that such a budget would deter administration
from excessive or improper expenditures and enable review-
ing officials to closely watch agency spending. A spin-
off of this orientation was a general lack of concern for
innovations in the management or planning sides of budget-

ing. Instead, attention was focused on forms and formats

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22

offices were being staffed by increasing numbers of accoun-
tants trained in the methods of control and committed to
line-item operations. The orientation of most budget offi-
cers of this period is fairly well illustrated by this
quote of Charles G. Dawes, the first director of the bud—
get (Federal).

The Bureau of the Budget is concerned only with

the humbler and routine business of government.

Unlike the cabinet officers, it is concerned

with no questioaoof policy save that of economy
and efficiency.

It was only natural for executive offices having
centralized budgetary control powers to form central bud-
get control agencies or budget bureaus. Anthony Downs
observes that these bureaus had vested interests in the
expansion of their control powers. Control agencies "be—
come advocates of greater control over the operating
bureaus they monitor" and "the quantity and detail of
reporting required by monitoring bureaus tends to rise
steadily over time, regardless of the amount or nature of
the activity being monitored."21

With the onslaught of the Depression came an

increase in executive power over the budget. Since income

23

frequently fell below projections, governors were empow-
ered by the legislatures to withhold funds if expenditures
threatened to exceed income. Thus the agencies' freedom
to spend appropriated funds at will was restrained by the
governor's power to impound funds to control the pace of
spending. Allen Schick notes that this change signaled
the passage of spending controls from the legislature to
the executive. "Initially conceived as a means of en-
forcing legislative intent, (control) now became the
vehicle for imposing executive intent on the agencies in
executing the budget. Although the governor once had been
the control agent of the legislature, he now was a con-
troller in his own right having his own incentives for
control."22

At the end of the 1930's, every state required
itemization of expenses in one or more of the basic budget
schedules. The effect was to focus budgetary activities
and analysis on inputs and on control operations. No
state gave any sustained attention to agency management

23

and program planning.

While its emergence wasn't formally recognized

24
until 1949, the management function began to be felt at

24

the federal level during the presidency of Roosevelt in
the 30's. It was under him that the budget enlarged
upon its basic control orientation to include the policy
aspects of program implementation. Budgeters realized
that it no longer made sense to develop the budget by
only looking at inputs. The results of spending (or out-
puts and services) were given their share of attention.
This kind of budgeting, later to be termed performance
budgeting, signaled a shift from accounting to an admin—
istrative orientation and brought public administrators
into the budget bureaus. In 1939, at the recommendation
of the President's Committee on Administrative Management
(1937), the Bureau of the Budget was moved from the
Treasury Department to the newly formed Executive Office
and added to its control orientation and became the lead-
ing management arm of the federal government.25 The
bureau was directed

to keep the President informed of the progress of

the activities by agencies of the Government with

respect for the work proposed, work initiated,

and work completed, together with the related

timing of work between the several agencies of

Government; all to the end that the work pro-

grams of the various agencies of the executive
agencies of the executive branch of the Government

25

may be coordinated and that the monies appro-
priated by the Congress may be expended in

the most economical manner possible to prevent
overlapping and duplication of effort (Execu-
tive Order 8248).

The emerging discipline of public administration
embraced budgeting as one of the functions of management
and included it along with other administrative functions
in the acronym POSDCORB (the major management activities of
chief executives: planning, organizing, staffing, direct-

26). This func-

ing, coordinating, reporting, and budgeting
tion was fairly established and strengthened during World
War II under the directorship of Harold D. Smith when pro-
gram management became the primary function of the bureau.
The concepts of this function of budgeting were carried to
the states as various federal programs became to be felt.
Individual federal agencies restructured their budget
accounts to conform with management principles and several
carried them through to their program operations. However,
with the interruption of WOrld War II, the fire of these
innovative ideas of objectifying administration through
scientific techniques gave way to a more rational percep—

tion of the budget as a product of the decision-making

process. The emphasis shifted from science to behavior and

26

{from reform to research. This administrative environment
was less than excited when in 1949, the Hoover Commission
recommended the adoption of "performance budgeting."

The commission, in a sense, invented the use of
performance to describe the management orientation. By
performance budgeting it was meant that decisions should be
based upon "functions, activities and projects."27 It
would focus attention "upon the general character and
relative importance of the work to be done, or upon the
service to be rendered, rather than upon things to be
acquired, such as personal services, supplies, equipment
and so on. These latter objects are, after all, only the
means to an end. The all important thing in budgeting is
the work or service to be accomplished, and what work or
service will cost."28 The frustrations of performance bud-
geting advocates were observed by Allen Schick. "Following
(the Hoover Report), many states tried to apply perfOr-
mance budgeting to their own budget operations. Yet per-
formance budgeting did not achieve its key objectives; it
won only limited acceptance in a limited number of juris-
dictions. While the detailed line itemizations were

purged from most budget documents, they remained prominent

27

in budget preparation and execution. Activity accounts
and work statistics were added, but few states reported or
measured accomplishments."29 Performance budgeting was a
product of the reform era which preceded the Second World
war, but it was advocated in a non-reformist climate.

Through the 1950's and into the 1960's, several
states experimented with various forms of performance
budgeting but without any major or significant success.

It could not overcome the influence of tradition on bud-
getary processes. As with any process, it is much easier
to add on to an existing administrative framework (or prac-
tice) than it is to radically change or replace it.

Before budget officials could get used to think—
ing in performance terms, life was complicated further
with the usherance of "PPBS." On August 25, 1965, Presi-
dent Johnson announced the beginning of a federal experi—
ment with Planning - Programming - Budgeting. This new
system, Johnson said, would enable public officials to
"(1) identify our national goals with precision and on a
continuing basis, (2) choose among those goals the ones

that are most urgent, (3) search for alternative means of

reaching those goals most effectively at the least cost,

28

(4) inform ourselves not merely on next year's costs,

but on the second, and the third and subsequent year's
costs of our programs and (5) measure the performance

of our programs to ensure a dollar's worth of service

fOr each dollar spent."30 The determination of public
objectives and programs was to be made the key budgetary
function. The entrance of PPBS signaled the establish—
ment of the last of the three budget functions identi—
fied by Schick — planning. Budgetary planning came into
practice more because the computer technologies had
enabled budgeters to monitor the effectiveness of federal
programs than because somebody realized that the planning
aspects of budgeting could not be ignored. The computer
made it possible to store large amounts of budgetary data.
The systemic qualities of budgeting were capitalized on
through the development of indices of program effective-
ness which measured the magnitude of problems facing
government and the relative impact programs had on the
magnitude of those problems. Under PPBS the planning

function was to be centralized to bring alternative means

analysis into the budget process.

29

The Planning - Programming — Budgeting system
sought to radically change the ways that budgets are pre-
pared and to shift the emphasis from means to ends. This
was good news for policy analysts and planners but was
confusing and counter-productive in the eyes of the stal-
warts. The basic reasons for this confrontation of wills
were with PPBS itself. Its aims were admirable but its
advocates sought to do too much too fast. This clearly
was the case with the federal experiment with program
budgeting.

In 1961, after Robert McNamara became Secretary
of Defense, a scheme to systematically evaluate the effec-
tiveness of various programs was initiated in the Depart-
ment of Defense (D.O.D.). It was utilized in six defense
budgets running from 1963 to 1968 and its successes were
mixed. It has come to be known as an interesting but un-
successful experiment, but it did give management authority
over the policies and objectives for agency programs.

When McNamara came to D.O.D. in 1961, he was
faced with major management difficulties. In 1968, he
observed that he didn't have the necessary management

support.

30

From the beginning in January, 1961, it seemed

to me that the principal problem in efficient

management of the department's resources was

not the lack of management authority.... The

problem was rather the absence of the essential

management tools needed to make sound decisions

on thglreally crucial issues of national secu-

rity.
Compounding his problems were the increasing costs of
making mistakes (like the "Cement Cargo Ship Project"
and the development of the "TFX Fighter Bomber Project" —
the F-lllA). To aid in centralizing policy—making in the
Secretary's Office, the activities of the Department of
Defense were grouped into units which shared common "mis-
sions" (objectives). In theory the D.O.D. PPB system was
built upon the Joint Strategic Activities Plan (JSAP)
which was prepared annually. This plan projected military
forces on a multi—year basis normally for five to ten years.
However, this plan was prepared outside of the Secretary's
Office and was, in form, little more than statements of
objectives or requirements made by the various armed
forces. The plan was often filed once received by the

Secretary's Office. After the introduction of PPB, there

is much doubt whether JSAP played any major role in

31

32
Defense decision-making. In practice the Five Year

Defense Program was the central component of the depart-
ment's system.

The Five Year Defense Program (FYDP) had an
eight-year projection of forces and a five-year projection
of costs and manpower arranged in mission oriented pro-
grams.33 This came to be known as the Program Structure.
These programs were not organized by organization but by
function, making analysis across organizational lines
possible. The FYDP could be amended through a process
initiated in the System Analysis Bureau of the Secretary's
Office. There were three request forms covering the three
phases of program changes - Draft Presidential Memorandums
(DPM's), Program Change Requests (PCR's) and Program
Change Decisions (PCD'sL If a program change were agreed
on, then the FYDP would be amended to show the revision.

Four indices were utilized in the program evalua-
tion process: need/demand, input, output, and program
impact. This process required that each program objective
be quantifiable. This was relatively easy, for D.O.D.

systems have been highly technical and R&D testing pro-

grams have been very scientific. It was fairly easy to

32

measure the impact of a 500-pound bomb on a grass hut or
the need for an improved pilot ejection seat in supersonic
aircraft. It was this element of PPB that caused the most
difficulty when President Johnson decided to implement PPB
in all federal agencies after the four—year experience in
D.O.D.

The champions of PPB were full of idealism when
the initial steps were taken in late 1965. The structural
models and processes were translated with little modifica—
tions directly from the Pentagon. The FYDP was changed to
PEP (Program and Financial Plan). The program structure
was built around four levels of aggregation (from greatest
to smallest) — programs, program categories, subcategories
and elements, just as it had been in Defense. DPM's were
retitled Major Program Issues (MP1) and PCRfs became Pro-
gram Memoranda (PM). PCD's (or program change decisions)
were not carried over to the civilian version. The
agencies were not equipped or able to do the kind of
special analytic studies (SAS's) required of them in many
cases.

When doing analyses in support of its PM's, the

agencies were to identify alternative program means to

33

fulfilling program objectives. This was to be accom-
plished through comparisons of the impacts the various
programs would have (quantitatively) on the identified
group or client need and at what fiscal cost. What was
fairly easy for the Department of Defense was nearly
impossible for agencies dealing with qualitative aspects
of human life (e.g., HEW and HUD). They also have experi-
enced difficulty in identifying the range of impacts of
their programs. All seems to have been contingent on the
objectives selected and the appropriate definition of a
program's or agency's client group. Stanley Botner had
this to say about quantification:

(It is next to impossible to quantify) the

benefits to the individual, his family, and

society generally of a program to rehabilitate

alcoholics, particularly if one consider§4the

impact of intervening causative factors.

Neither the military or civilian sectors mastered

the problems of quantification. Even after all is measured

the questions relating to the relative improvements to so-

ciety cannot be fully answered in quantitative terms.

34

The Political Aspects of Budgeting

PPBS follows in much the same tradition as that
of scientific administrators of the middle and late 1930's
in that it seeks to rationalize decision-making. However
irrational, the decision-makers sought to keep budgeting
just as it had been (i.e., political). The irrational
ones, though, appear to be the system's advocates.
Frederick Mosher has noted the frequency of their author-
itarian language.

In all the literature I have read about PPBS...
only a very few authors have even mentioned the
executive and legislature processes of review
and decision. The President and Congress seem
to be regarded as enemies of rationality....
Much of the literature of PPBS resembles that
of the technocrats of the thirties; its aim
seems tgsbe to eliminate politics from decision
making.

Aaron Wildavsky, a strong critic of the PPB ex-
periment in the federal government, says that the budgetary
process is very political which is as things should be.

The victories and defeats, the compromises and
the bargains, the realms of agreement and the
spheres of conflict in regard to the role of...
government in our society all appear in the

budget. In the most integral sense the budg t
lies at the heart of the political process.

35

There are three primary groups involved in the
production of the executive type budget — the budget
bureau, the legislature, and agency representatives and/or
heads of departments. The primary function of any budget
bureau has been to help the chief executive by preparing
a budget which conforms to his targets and priorities. At
the same time it serves as a controller of agency spend-
ing. The legislators see themselves as guardians of the
purse-strings. They often are overwhelmed by the bureau-
cratic paperwork asked for by the budget bureau of the
agencies (especially with PPB systems) but this isn't con—
sidered critical by the appropriations committees. Their
principal budget dealings are with the agencies in the
months immediately preceding the end of the fiscal year
and their primary concerns are with agency requests for
increased appropriations. The agencies are expected to
guard their own interests. If they fail to, they do so
at their own peril. The appropriations committee members
view themselves as guardians of the public coffers and
see agencies attempting to aggrandize themselves by asking
for more dollars than they really need. One congressman,

interviewed by Richard Fenno, was pleased with his role.

36

No subcommittee of which I have been a member
has ever reported out a bill without a3$ut in
the budget. I'm proud of that record.

This position by apprOpriations people forces
the agencies to ask for more than they can get by with.
This brings the process down to questions of agency
strategy. If they continually estimate Egg high they
stand to lose the confidence of both the budget bureau
and the appropriations committees, which would result in
automatic cuts in their requests even before the detail
has been looked at. Such an agency would find it diffi-
cult to justify even high priority items. There usually
is a range within which the appropriation can fall and it
is up to the agencies to approximate the most practical
estimate for requests. The departments must do a certain
amount of padding (i.e., requesting funding for programs
the agency wants badly yet could do without) to keep
critical programs off the chopping block. As one agency
official said in an interview, "If you do not do this, you

8
get cut and you'll soon find your ass in alligators."3

While the role of the Bureau of the Budget is

very important in translating the governor's program into

37

budget requests, and in keeping the lid on agency appro-
priations and ensuring that spending stays within the
letter of the law, the other participants view central
budgeters as intruders in their affairs. Congressmen see
bureau officials as little more than "a bunch of bureau—
crats who think they are making the budget"; however, the
budgeters' role in establishing starting points for appro-
priations process and in cutting down on the amount of
work is appreciated.

The agencies feel that central budgeters often
get promotions on the basis of how successful they are in
coming up with a figure that is not changed much by the
legislature. However, it is also felt by central budgeters
that the agency's budget officers are likewise rewarded if
they are successful in getting the budget bureau and/or
the legislature to raise appropriations.

The bureau of the budget must be concerned that
agencies do not regularly "end—run" the bureau to get ap-
propriation increases. As Wildavsky notes,

If they do so often, the bureau of the budget

finds that its currency has depreciated. Hence
the Bureau accepts consistent (legislative) action

38

as a guide. A close eye is kept on (legislative)
action for the preceding year before an agency's
total is set for the next one. Failure to do so
might leave the Bureau with a record of defeat

that jeopardizes its effectiveness in other areas.40

As a matter of practice, the budget process is
carried through following the path offering the least
resistance. Budgeting thus becomes experimental,simpli-
fied, and incremental. Budget officials don't try for the
best of all worlds but instead seek to "come out alright"
by "avoiding trouble" and "just get by."41 The budget
process shows experimental properties as appropriation
estimates are derived. Budgeters generally make rough
guesses and let experience accumulate. Then, when conse-
quences become apparent, it is possible to make modifica-
tions to avoid difficulties.42 Appropriations committee-
men will attempt to simplify the review process by
analyzing simple items of expense as indicators of the
soundness of the general proposal. If the lesser appro—
priations are nailed down, it is reasoned that the general
appropriation is acceptable.

Budgets are incremented. The largest determin-

ing factor of the size and content of this year's budgetis

39

last year's budget.43 The bulk of the budget lies outside
of the control of anyone, even the governor. Actually the
governor has little to do with the budget process even

when the document is produced in his name. In a study of
budgeting in the State of Illinois, Tom Anton compares the

budget
...to a huge mountain, which is constantly being
pushed upward higher and higher by underground
geologic convulsions. On top of the mountain is
a single man, blindfOlded, seeking to reduce the
height of the mountain by dislodging pebble
with a teaspoon. That man is the governor.

This is in fact the plight of any person, or
group, seeking to reduce the extent and magnitude of
spending at the state or federal level. At any one time,
after past policies are paid for, a rather small per-
centage of bureau appropriations - seldom larger than
thirty percent, often smaller than five - is within the

45
realm of anybody's discretion. This is illustrated in
the testimony of Representative Norrel befbre the House
Rules Committee.
If you read the hearings of the subcommittees

you will find that most of our time is spent
in talking about changes in the bill which we

40

will have next year from the one we had this
year, the reductions made, and the increases
made. That which is not changed has very little,
if anything, said about it.

The budget process is not an ideal one, but
only rarely does one come across any type of operating
system that cannot be improved in some way or another.
Reformers point to the existing budget process saying
that is practices (described briefly above) are arbi-
trary and irrational; that procedures are incremental,
fragmented and sequential and lead to a lack of coordina-
tion and a general neglect of consequences. The partici-
pants are concerned with special interests rather than
general interests. They further maintain that not only
are roles excessively narrow but that the strategies
utilized are opportunistic (it not immoral).47 The recom-
mendations of some program budget advocates to correct
these "wrongs" would have the effect of de-politicizing
the budgetary process and to systematize decision-making
with a similar effect. Few can argue that effects such
as these are desirable, but there have always been those

who have maintained that politics is a dirty business and

certainly no way to run a government. We should remember

41

that when a governmental process is changed, the opera-
tors, techniques and outcomes cannot help but be
affected.48 The manner that analysis and research is
undertaken in support of the decision—making process can
be manipulated and contorted and all that is affected is
the efficiency and quality of the product. However, if
the substance of decision-making is toyed with by changing
the climate of and inputs to those decisions (or it's a
new ball game), the effects on society as a whole cannot
be predicted.

This is not to say that radical change is not
possible in a political process, such as budgeting. The
federal government, under President Nixon, has withdrawn
from the PPBS of the Johnson years, but only by bringing
a stronger emphasis to analysis and evaluation at the
expense of the forms and the structural orientation of
PPBS. The planning function, it seems, cannot stand on
its own, but that is no reason why it can't be co—equal
with control and management in a program budgeting format.
Several states are experimenting with this approach to
budgetary decisions, but the road to state PPB has not

been a smooth one.

42
State Budgeting and PPBS

Innovations have not often evolved from the
states and the case of program budgeting has been no
exception. When in 1965, PPBS was proclaimed in all
federal agencies, there were no states which had reli—
able cost data for major segments of their budget or
which had abandoned input controls in favor of perfor-
mance controls.49 For any state to move from the older
object — of expenditure control budgeting to an end
product-planning oriented budget process - requires a
forceful agency leadership and commitment from all those
involved in the budget process. These elements were
found lacking in the late 1960's and early 1970's.

Effofis to popularize program budgeting were
set in motion in 1967 when the George Washington Uni-
versity (Washington, D. C.) State and Local Finances pro-
ject was established under the direction of Selma J.
Mushkin, assisted by Harry P. Hatry. The project had
widespread backing and was well funded. It became known
as the "5—5-5 Project" because it selected five states,

five counties and five cities. It had two Primary

43

functions, to provide advisory assistance to the fifteen
participating governments, and secondly, to serve as a
clearinghouse for information pertaining to PPBS. As
pointed out by Lee and Johnson, the most important func-
tion of the project was to serve as a rallying point for
state and local officials desiring to attempt PPB in
their jurisdictions. They could show skeptics that the
5-5-5 Project was "proof that the planning - programming
- budgeting system.was a national movement."50 In 1968,
questionnaires were sent by these people out to state and
local governments to determine the extent and progress of
PPB in local levels. Of the 1,134 questionnaires sent to
municipalities, only 356 responded and of those, only 50
indicated that they were taking steps toward the imple-
mentation of PPB. Of the 40 states responding, 34 indi-
cated that they were considering introducing a PPB system
and 28 had taken at least preliminary actions in this

. 51
direction.

With some notable exceptions, of the seven
states previously mentioned, many of the PPBS experiments
of the late 1960's were dismal failures, and for several

reasons. First, some tried PPB on a pilot basis in one

44

department with the expectation that the system would be
enlarged to include additional agencies. Others lacked
the support of the budget office, moved too cautiously
and failed to make any impact on budgetary operations.

It is concluded that the primary reasons for the lack of
success could be traced to several factors.52 Some
failed to deal with political problems of implementation
(both partisan and non-partisan). Where vested or per-
sonal interests are involved, there will be political
conflict. Others clearly lacked any strong commitment on
the part of the executive. In others, the commitment was
misunderstood. And finally, it was found that even where
there has been a state PPB system, budgetary decisions
were not made by utilizing PPB procedures.

It should be noted that program budgeting efforts
have succeeded in several states including Alaska, Wiscon-
sin, Hawaii, Pennsylvania and Michigan. The reasons for
these successes may relate to the manner and type of PPB
established. In all, twenty-three states have imple-
mented program budgeting systems (November, 1972). Of
these only six didsn in progressive steps, by agency.

The balance used an across-the-board technique for all

 

 

fiv E~ . - h A“-

45

(or most) agencies. In all but two states (Alaska and
California) the program structure was developed by the
central budget-planning agency, with a moderate amount
of consultation with agencies. It should be noted that
many of the states responding to the Georgia survey on
program budgeting evaluation used their program budget
"systems" primarily to evaluate program effectiveness,
thus minimizing the relative importance of such system-
atic aspects of PPB as the program structure and auto—
mated information systems. In those situations, the
emphasis seems to be on management and less on the
planning and control aspects of the budgetary process.
And finally, only two states associate quantifiable

objectives with all their programs.

The Program Budget Process in the States

The way that appropriations decisions are made
in states having a p1anning-programming-budgeting system
really isn't much different from that found in more tra-
ditional budget settings. Regardless of all the quanti—
tative and non-political promises of advocates of the

federal-style PPBS, the budget process just does not work

46

that way. PPB is not a decision process... it is a means
to making budgetary decisions. The more successful states
have recognized this by utilizing the budget "program
structure" as a framework for evaluating and modifying
their programs instead of as a comprehensive statement of
the scope and characteristics of state programs. This
structure usually takes a form similar to that portrayed
in Figure 2. Under such a structure, those programs which
have similar ends are grouped within the same program.
Each program has a goal statement which is translated
more explicitly at the category level which is in turn
further refined into quantifiable objectives at the sub-
categories. The activities and resources committed to
accomplishing the subcategories' objectives are identi-
fied in the elements. It should be noted that goals and
objectives are not the same things. In the situation of
Pennsylvania, the program structure instructions make
this distinction:

A goal is a desired state of affairs based

upon current knowledge and values. It is time-

less in the sense that as achievement approaches,

goals tend to be restated at a higher level of
aspiration or new goals are projected. Goals

47

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50

reflect the basic values of society and are,
therefore, always culture bound and subjective.

...it is at the sub-category level of program
structure that agencies were required to convert
value-oriented goal statements of the program
categories into specific sets of objectives,
quantifiable as impacts, by identifying sub—
categories within each program category. It
is important to underscore that the logic
employed requires that objectives be expressed
in terms of effects upon individuals, institu-
tions and the environment, not in terms of how
much work is being performed. The measure of
objective achievement, therefore, is in tenms
of what the organization accomplishes in the
world of external to it rather than5§n terms
of the level of its own activities.

Most states employing the PPB system have seven
or eight programs. In Pennsylvania there are seven -
Protection of Persons and Property, Health, Physical and
Mental Well Being, Intellectual Development and Education,
Social Development and Income Maintenance, Transportation
and Communication, and Recreation and Cultural Enrich-
ment.

The subcategories and elements are levels where
goals and objectives are portrayed quantitatively. In the
case of Pennsylvania and Michigan, impact measures are
found at the subcategory level. These measurements are

meant to illustrate the magnitude of success an agency

51

has in approaching the end—state described in the objec-
tive. The elements contain two measures - outputs and
need/demand estimators. Output measures deal with the
services supplied by an agency while need/demand deals
with the extent that need for those services exists.
While there may not seem to be much in the way of numbers,
this scheme of quantification has become one of the con-
troversies surrounding the program budgeting concept. Not
all programs are amenable to objective measurements. For
instance, in the estimation of need/demand for programs
serving the mentally ill, how and to what limits should
the proposed client group be defined, and in measuring
impact, how do you determine - for program evaluation
purposes — standards for successful treatment? Similar
questions arise in dealing with all human service programs
and with programs aimed at improving and protecting the
quality of the environment. Criminal justice and safety
programs usually are easier in this regard, but still
experience problems in dealing with qualitative aspects
of program impacts.

PPB systems have enjoyed more success and stay—

ing power (i.e., surviving changes in the chief executive)

52

where they have been instituted as the budget process, and
as a substitution for that which preceded it.57 This was
the case in Pennsylvania. The older allocation process
was oriented towards agencies and their objects of
expenditure. Program revisions were requested of the
budget bureau and a final case for increases in appropria—
tions was often made with the legislative appropriations
committees. This wasn't changed much with the institution
of PPBS, but terms were changed and the basis for alloca-
tion decision—making was shifted from maximizing of pro—
gram efficiency to the maximization of impacts on program
client groups as specified in the program structure and
the program plan (called the Commonwealth Program Plan -
CPP. Agencies were responsible for developing their own
portions of the CPP and these were called Agency Program
Plans — APP). The PPBS decision cycle used in Pennsylvania
is illustrated in Figure 4. This pattern of decision-
making was adopted from that used in the Department of
Defense under McNamara and Hitch in the early and middle
1960's. The CPP can be amended at two places in the
cycle: after decisions made by the bureau of the budget,

and consequent to legislative action. When PPBS was

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54

instituted in Pennsylvania, the forms and correspondences
used in budget preparation were changed to fit the new

terminology and budgetary orientation toward planning and

58
program management, The only totally new documentation

added were the Commonwealth Program Plan and the Governor's
Program Policy Guidelines (PPG). One serves as the back-
ground and the other acts as the front end policy state-
ment initiating the decision—making cycle each March.

(The Budget is usually submitted to the legislature in
early to middle January after the PPG is prepared.) This
decision process, as designed by Dr. Robert J. Mowitz of
Pennsylvania State University, included the planning
aspects of budgeting and carried these elements through

the process. As Mowitz concludes in his discussion of

this decision-making schedule, information is critical

for its smooth and effective operation. "...Although a
zero budgeting approach is probably impractical, assembling
a total Commonwealth plan and examining the annual changes
introduced through the program revision process does pro-
vide a broader system-oriented perspective for decision-
making than existed in the past."59 The program and

financial information systems often are and have been the

55

most difficult to keep current and relevant for decision-
making. (Efforts are currently under way to merge the

informational aspects with the format of the state's pro-
gram plan in the State of Michigan and will be treated in

a subsequent chapter.)

Summary

The budget prOCesses found in the states today
are the product of two, and in some cases three, stages
of reform. The first stage brought the executive budget
based on the control function of budgeting. The prolifer-
ation of governmental programs of the 1930's and 1940's
made increases in the management aspects of budgeting
desirable to improve controls over how programs are
carried out and the outputs they produced. The third
aspect to effect state budgeting was an increased em—
phasis on program planning. Federal experiments with
Planning - Programming - Budgeting systems (as developed
by the Department of Defense) were inconclusive and dis-
couraging for those working for enhancement of the
planning function in the budget process. Several states,

however, have had success in implementing their own

56

systems and experience has fOund that those places where
the principal actors in the budget process are involved
and committed to making PPBS work, have enjoyed the
greatest amount of success. Experiences in Pennsylvania
and.Michigan have shown that it helps a lot to initiate

a radical change in the budget decision—making process to
have it coincide with the information and analytical
requirements of program planning.

It has seemed that only those processes which
are compatible with the political processes of fiscal
accommodation among the central budget bureau, the
agencies and the legislature on appropriations have any
chance for survival. It is for this reason (among
others) that it is necessary to ensure that the political
aspects of budgeting remain intact in any review or reform
of the budget process.

The survival of program planning techniques in
the states seems to be contingent on their ability to
meet four potential difficulties.60 (1) Great care should
be used in defining program objectives. If it is at all
practicable, the agencies should define their own objec—

tives under the guidance of the central budget bureau.

57

Care should be taken to ensure that objectives are judged
against more than just economic criteria. (2) PPBS

should be amended to make room for qualitative as well as
quantitative judgments in program evaluation. The doctrine
”If you can't count it, it doesn't count“ should be aban—
doned. (3) Care should be taken that too much power is
not centralized at higher levels as a consequence of PPBS.
(4) Thought also should be given on the long range impact
PPBS may have on legislative - executive relations. The
decision—making processes must remain intact and operable
‘within their own spheres of activity.

It has not been until rather recently that
planning has been accepted as a function of the budgetary
process, and that acceptance has been tempered by quali-
fications. It still remains to be seen whether or not
planners will accustom themselves to a process which is
highly political and disciplined. As it will be shown in
the following chapter, state planning has been a rather
dismal experience, but the profession must first recognize

that it cannot monopolize all that is called planning. In

58

government, all who work in bureaucracy are public ser-
vants first, public administrators second and partici—

pants in the political process — not a planning process.

CHAPTER II
PLANNING AS IT HAS OCCURRED

IN THE STATES

Just as state budgeting has evolved into a
central policy-oriented process, state planning has
developed from a single purpose activity into a process
oriented toward improved decision-making. This second
chapter is devoted to how planning has been undertaken
by established specialized planning boards and agencies
in state government. It is recognized that planning has
always existed in some form or another independent of
any formal group assigned to act as the planning body for
the state. Just as there are many different types of
planners, there also are many types of plans, and the
evaluation of contemporary planning has been one defying
generalization or the development of any genuine con-
sensus. Centralized planning varies from state to state
according to the perceptions and planning strategies of

the planners and their decision-making clients.

59

60

This chapter follows the following format. First,
some basic terms will be defined. Following this will be a
general discussion of the various types of strategies used
by state planners and how they relate to a general state
planning process. A history of state level planning will
be next which, in turn, will be followed by a description
of the roles and general responsibilities of state plan-
ning officials and their relationships with agencies of
state government. Future roles of state planners, trends
of the evolution of state planning processes, and alter-
natives to the state planning process will wind up the

discussion of state planning.
Definitions

Unfortunately, there are few unambiguous defini—
tions of the word planning. Basically, planning is a
”methodology of rational thought and action, rather than
a specific blueprint for one or another definite course
of action."61 Several individuals have attempted to
define planning but instead of specifying what it is,

62
they often end up describing what it should be. They

all seem to agree that planning is a process. Charles E.

61

Marriam, in 1941, said that "planning is an organized
effort to utilize social intelligence in the determina—
tion of governmental policies....Considering our resources
and trends as carefully as possible, and considering the
emerging problems, planners look forward to the determina-
tion of the long-time policies." In 1934, the National
Resources Planning Board stated that planning is "a con-
tinuous process, and necessitates the constant re-
examination of trends, tendencies, policies, in order to
adopt and adjust governmental policies with the least
possible friction and loss." Robert A. Dahl says that
"....Planning is more and more regarded as equivalent to
rational social action, that is, as a social process for
reaching a rational decision." John Friedmann states that
"planning is nothing more than a certain manner of arriv-
ing at decisions and action, the intention of which is to
promote the social good of a society undergoing rapid
changes." Dr. Dror feels that "for the purposes of ad-
ministrative sciences,...planning is the process of pre-
paring a set of decisions for action in the future,

63
directed at achieving goals by optimal means." Broad

definitions of planning may lead to organizational

62

conflicts between those responsible for different aspects
of governmental planning. This can be illustrated by way
of the following exchange between two directors of state

planning and finance:

Planner: I view state planning as a process in
which the whole social, economic and physical
system of the state is analyzed and the options
are developed as to the optimum development of
the state as people (with development occurring)
through the state's and executive's intervention
into those social, physical and economic systems.
This occurs and is implemented by virtue of the
budget in resource allocations, through legisla—
tive programs, through changing rules of the
game - the basic law and structure of charters -
through executive leadership in leading the
private sector through local government - both
mandating local governments to do certain things
and through other instruments of getting incen-
tives - through channeling of federal money.
What I am trying to say is that there are many
ways state plans are implemented and budgets is
only one of them.

Finance Director: I cannot distinguish between
your description of planning and what I would
regard as a description of administrative govern-
ment. As far as I'm concerned, you have described
what government is.

How those involved in planning work at the state
level define planning is not as critical as how they plan.

Planning is not the exclusive territory of those educated

63

in "planning schools" but can be found in varied settings
and undertaken in as many ways. Francis H. Parker makes
this observation:

...state planning agencies constitute only a part

of the planning activities in each state, not the

entirety. Rather than speaking as if they were

the proprietors of all planning, the agencies

must define for themselves an individual strategy

relating their planning activities to planning6

and policy-making throughout state government.
The way, then that an agency may define the term "planning"
is not as important as how it interprets its roles and
relationships with other agencies of government. Parker
notes that the principal aim of many planning agencies has
been to provide coordination and to give guidance to state

65

agency programs. In these cases the planning office is
usually located in the executive office so that its prod-
ucts may be used by the governor and his staff. The
planning process for these planning offices seems to fol-
low the general description in a 1966 HUD document on
state planning.

The state comprehensive planning program should

be conceived as a continuing process to provide
central policy formulation for the inter-related

64

social, economic and physical aspects of state
development, to give direction to the various
governmental programs involved, and to effect
coordination of departmental or functional
agency activities and programs.

The primary tasks are

(l) to articulate goals and objectives for the
development of the state; (2) to identify and
analyze significant development problems and
opportunities facing the state; and (3) to
propose alternative courses of action to be
taken by the state to solve the problems or
realize the opportunities. The consequences

of each alternative course of action should be
presented in terms of its relation to the goals
and objectives for state development, to the
efficient allocation of resources for state
development, an% to specific program activities
and proposals.6

It is interesting to note that nowhere in any
of these descriptions of planning is an end document, or
plan, referred to as a product of a process. The emphasis
rests clearly on hgg an agency plans (i.e., the planning
process). For the purposes of this thesis, the plan is a
"set of decisions for actions in the future" which can be
arrived at through any rational or irrational method of

67
decision-making.

65

Since the type and operations of state planning
by and large depend on the strategy used by the planning
agency, the planning process is defined in a strategy
context. In a pr0posal to the State of Michigan, Booz,
Allen Public Administration, Inc., in September, 1972,
stated that the primary focus of planning systems is on
product oriented alternatives (on outputs and impacts).68
Therefore, a planning process should deal with the opera-
tional programs of state agencies. Attention should be
given to the needs for legislative action and to pro-
cedures of policy changes within the executive branch.

In the course of any planning study and recommendation,
the roles played by federal agencies and by individuals
and organizations in the private sector should be
addressed. "This process should provide the framework
for the state agencies' own annual operating plans. The
process should provide quantified output targets; the
agency operating plans develop the detailed resource
requirements for reaching those targets."69 The agency
operating plans generally have a horizon of from one to

five years and are utilized as a means for evaluating

agency performance. Operating plans usually are formal

66

documents whereas strategic plans rarely are published
and typically exist as "a continuous stream of analyses,
recommendations, and strategic decisions on salient

. "70

issues.

The ”strategic plan" concept is similar in many
respects to the Commonwealth Program Plan currently used
in Pennsylvania as a part of its PPB system. A strategic
plan often has a five-year perspective, specifies program
targets for the state, and gives guidance as to the best
means to be used to meet operational objectives. In those
states where a coordinative strategy is used, there are
five primary actors whose interests need to be rational-
ized in the planning process. Their roles need to be
specified and their spheres of activity need to be limited
to head off possible interagency conflicts. A strategic
plan cannot resolve all intergovernmental or intra—agency
conflicts. However, it can aid in clarifying the nature
of the conflicts and help in refining policy and enhancing
executive and legislative leadership. The principal par-
ticipants in such a process usually are the executive
office and state agencies, the state legislature, local

governments, the private sector, and federal agencies. A

67

strategic planning process must, necessarily, include the
participation of each. The focus of the process is pol—
icy development and program evaluation.

F. Stuart Chapin sees the planning process as
flowingin four stages. "...In general the basic elements
of the study will include the following: A statement of
local objectives; a discussion of existing trends...; a
presentation of future...requirements including a state-
ment of the principles to be followed and the assumptions
made; a description of each sketch land use plan among
the alternatives presented; and the identification of pro-
posals involvedjn each. In a later stage in the progres-
sion of planning studies in which a general land use plan
and transportation plan emerges, the content of this type
of report includes recommendations for the implementation
of the plan."71 The formal aspects of this planning pro—
cess end with the publication of the "plan.“ Implementa-
tion, in practice, has been left to administrators of the
programs and the executive. The process described by
Chapin is designed around the needs of physical planning,

but the methodology is a sound one for many types of pro-

gram planning as well. Planners, increasingly, are

68

talking in terms of policy planning as a means of moving
away from the heavily physical orientation of the past.
Planners have felt that the policy plan should

remain unbiased and apolitical and address only those
problems where they can make an impact - those which are
physical and development oriented — and where the polit-
ical climate is the calmest. Herbert Gans states that
the process of policy formulation is a highly political
one, however, and if planners are to be effective they
must immerse themselves in that process.

(Policy fOrmulation) involves determination

through research and political methods -

including citizen participation — of the goals

sought by various sectors of the population,

philosophical - political evaluation of

alternatives, choice among alternatives, and

their translation into operationally feasible

objectives which can then be fed back into

the pobtical process. Conversely, planners

who work for non-governmental, private, or

special interest groups will formulate and

operationalize the goals of their clients and,

of course, criticize the goals 95 the particu-

lar establishments they oppose.

With a few excepfions, as of 1968 those involved

in state planning were resource and physical development

oriented. This may be explained by the backgrounds and

69

education of those doing the planning, but best can be
explained by the lack of involvement by those from out-
side the planning professbn. Instead of forming working
relationships with public administrators and agency direc-
tors, state planners have maintained only the strictest
working relationships with these individuals, by rational—
izing that their principal client was the chief executive.
State planners have also isolated themselves from those
most directly affected by not addressing the potentials
and importance of the legislatures. The setting in which
state planning officials find themselves generally deter-
mines the strategy which will be used and the stages of

the process stressed.

Strategies Employed by State Planning Agencies

State planning agencies may be located in many
bureaucratic settings. They may have departmental status,
be housed in a line agency, or be fOund in the executive
office of the governor. Each setting has its own percep—
tion of planning, and these perceptions will influence
the strategy employed by the planning agency and the stage

at which its input is made into the decision-making

7O

process. The planning process used can be parochial or
comprehensive; it can project future conditions and
determine program priorities; or it can merely dream of
futures to come.

There are three general strategies which state
planners may use to develop the necessary political sup-
port for their policy recommendations: service,
coordinative—allocative, and innovative. The service
strategy tends to be a supportive one, where agencies
request the planning agency's aid in their operations.
This strategy enables the planning agency to be helpful
and serve a sueful purpose while not jeopardizing its
scope of authority. This service function usually is

73 . .
temporary or a stopgap. AgenCies generally Will not

maintain a service strategy permanently.

The majority of planning agencies use a coor-
dinative strategy when they are located in, or near, the
governor's office. An office concerned with coordination
usually is more involved in how agency programs operate
and fit together with similar programs administered by
other departments which are aimed at the same client

groups. Coordinative planning agencies usually do not

71

question the policies or program objectives of the line
agencies. This strategy rarely works unless the planning
staff works closely with and within the authority of the
decision-makers.

For those agencies utilizing an innovative
planning strategy, the principal client usually is the
governor. The agency can work toward the decisions from
alternative courses of action for the governor and can
develop new program proposals suitable for presentation
to the legislature or eventhe federal government.74 The
success of this strategy is dependent on the governor's
willingness to innovate, however. If an agency elects to
use this strategy, it may make it easier for a cautious
governor to innovate when the conditions are right. Until
then, these agencies will lean more on program coordina-
tion as a strategy.

Planning of one sort or another exists in all
agencies of state government. Agency planning tends to
be more parochial or single purpose, guided by the over-
riding concerns and perceptions of the department. It is

then often necessary to have a coordinative function in

the central areas of state admiistration, and it is

72

natural for a planning agency to fill that function. The
planning staff typically is manned by generalists and sup-
plemented with some analytical specialists. Often the
analytical work generated by planning agencies is of rel-
atively little use to all but those sharing similar
(general) views of state government. Consequently, a
coordinative planning agency may be ineffective if the
governor withholds his support. Other agencies usually
ignore all but their own analytical work except where
external power is exerted. Regardless of the strategy
employed, gubernatorial support often is critical to the
survival of the planning agency. As with any other
activity, planning must have a client for its work and
support for its existence. An innovative strategy
usually is only used in those cases where the governor
himself chooses to innovate, or where the department in
which the planning agency is located is free to innovate.
Innovative strategies demand a strong executive leader—

ship and are dependent on external sources of support.

73

History of State Planning

Like budgeting, state planning has stressed
different functions at different stages of its develop-
ment. Structured state planning has evolved from events
at the local levels of government and was extended to
include the state as an entity more because it was intel-
lectually defensible than because it had a place in state
administrative government.

State planning grew out of the regionalism
movement of the early 1920's in response to problems not
confined by city boundaries. From this beginning, the
emphasis has been on natural resources and how continued
state development has made demands on those resources.

The manner that state planning has progressed has been
influenced by three national mass movements: the con-
servation movement, the budgeting and management movement,
and the growth of the profession of planning from its city
planning roots. Each of these gained popularity during
the early decades of the twentieth century and made unique

contributions to functional state planning.

74

The conservation movement was established to
promote the efficient use of natural resources and to
popularize the need for public management to assure
that efficiency. One concept from the movement was the
idea that natural resources were interrelated rather than
separate. This interrelatedness extended as well to
human resources, but the primary emphasis centered on the
concept of scientific and rational planning of the uses
of natural resources.

The management movement was instrumental in
establishing planning bodies as a staff function in the
executive offices. As previously mentioned, the reform
movement was instrumental in the establishment of the
executive budget, and with the enhancement of the powers
of the governor. From 1909 to 1933, forty states had
established some form of staff for the governor, and by
1913 all but one had established some form of budget
subject to the governor's control or influence.

The city planning movement provided a growing
experience with planning techniques and methods. A spin-
off effect was the development of an identifiable plan-

ning profession. In 1916, a city planning conference

75

heard the plea for the establishment of an advisory mu—
nicipal affairs department at the state level. A need
was identified for state involvement in the preparation
of plans for parks and transportation (especially high-
way and public works projects).76

Planning, as adapted to state government,
evolved out of the experiments in planning at local
levels of the first decades of this century. The city
planning movement grew out of the general disgust with
corruption and bad politics of the days of'bossism and
political scandals in city government. Like most reform
movements in this country, the city planning movement was
championed by the upper-middle class. It rose out of a
general concern with the character of politics and the
squalid living conditions of the middle and lower immi-
grant classes flooding the nation's cities. Herbert Gans
describes the planners of this period as physical deter-
minists unconcerned with goals of the community. These
reformers "were a movement with missionary ferver to
develop programs calling for a change in the physical
environment, for they believed that physical change

would bring about social change....(the profession's)

76

physical emphasis naturally attracted architects, land-
scape architects, and engineers....Thus, they made master
plans which assumed that once land use arrangements had
been ordered 'comprehensively', the social and economic
structure would also change."77

The move of centralized governmental planning
from the cities to the states was rather rapid. The
intermediate steps were at county and multi-county levels.
In 1922, the Board of Supervisors of Los Angeles County,
California, passed an ordinance establishing the first
official planning commission in the United States. This
was fOllowed by similar actions in the rest of California,
upper New York state, New Jersey, Illinois, Missouri, and
along the west coast in Washington and Oregon. The em—
phasis in these early efforts was primarily rural develop-
ment oriented, possibly because of the existing attitudes
regarding local determination and home rule.78

Efforts at regional planning were made in the
Chicago, New York, St. Louis, Washington, D. C., and Boston
areas, but these regional bodies were largely ineffective

due to the lack of any implementation powers granted by

the states. As a result, the activities of these regional

77

organizations were primarily advisory and persuasive.
While these regional planning efforts illustrated the
need for cross-jurisdictional planning, the determining
force behind state level planning came from the conserva-
tion movement. To that time, economic development had
been the primary focus. It was useful in showing a need
for state economic planning, but came to run counter to
the ideals of the conservationists. Popular support of
resource conservafion proved too much for the development
oriented planners and by the late 1920's thecrientation
was clearly with resource utilization and conservation.

Beginning with the 1921 National Conference on
State Parks, state conservationists advanced the impor-
tance of integrating the scientific, sociaL.historic and
biologic elementsinto a serviceable and harmonious whole
”through the development of state parks across the
country." The proponents of the state park concept
(Richard Lieber, Steve Mather, John Barton Payne, William
Welch and others) felt that "the Federal Government alone
could never save the glory of American scenery and make
it accessible to the people. It was clearly seen that

untold hundreds of areas lesser in acreage and perhaps

78

some even of Federal standards within the several States
must be preserved for their inherent scenic, historic
and social value." The 1921 conference was to act as
a clearing house in park thinking and its objects were
to “urge upon our governments, local, county, state,
and national, the acquisition of land and water areas
suitable for recreation, and preservation of wildlife,
as a form of the conservafion of our national resources,
until eventually there shall be public parks, forests,
and preserves within easy access of all the people of
our Nation, and also to encourage the interest of non-
governmental agencies and individualsin acquiring,
maintaining and dedicating for public use similar
areas."80

The conservation ethic was instrumental in
encouraging the development of state policies aimed at
resource management through conservation and park pro-
grams under state and local sponsorship. Forest "pre-
serves" were established in New York state and elsewhere
to save forested areas from commercial exploitation.
Concern for the preservafion of forest areas was most

pronounced in Wisconsin, New York, and.Michigan. The

79

early 1920's saw both Wisconsin and Michigan pass legis-

lation establishing general land use policy and pointing

out the need for the study of existing timber problems

(and of "cut over” areas) and prdblems associated with
81

tax delinquent lands.

The impact of the economic collapse in 1929 was
felt in all sectors of government, especially at the
state and local areas. The conservation orientation was
not abandoned, but it was supplemented by a concern for
the basic elements of economic activity - land, labor
and capital. In 1930, the Illinois Chamber of Commerce
urged the appointment of a state planning commission to
study population movements (rural-urban shifts), changes
in land use, and major industrial trends. A year later,
Iowa's Department of Conservation was charged with creat—
ing a state conservation plan to "preserve outdoor rec—
reation resources and to guide state's land and water

82
policy."

After President Franklin Roosevelt took office
in winter, 1933, a flurry of programs and executive

orders emanated from.Washington. One of these was the

establishment of the Federal Public Works Administration

80

(P. W. A.) - the agency designated to maintain a series
of projects designed to create new jobs for thosethrown
out of work. The PWA administered projects; it did not
select projects. Political units in each state were
given an opportunity to express their need for useful
public works. On July 20, 1933, a National Planning

Board was appointed. Its functions were:

To advise and assist the administrator in the
preparation of the "Comprehensive Program of
Public‘Works” required by the Recovery Act
through-

1. The preparation, development and mainte-
nance of comprehensive and coordinated plans
for regional areas in cooperation with na—
tional, regional and state and local agencies
based upon-

2. Surveys and research concerning:

(a) The distribution and trends of popula-
tion, land uses, industry, housing and
natural resources; and

(b) The social and economic habits, trends
and values involved in development
projects and plans; and through

3. The analysis of projects for coordination in
location and sequence in order to prevent
duplication of wasteful overlaps and to obtain
the maximum amount of cooperation and correla-
tion of effort among the departments, bureaus
and agenciesagf the Federal, state and local
governments.

81

Unlike the functions of the Civilian Conserva-
tion Corps in work done to improve the conditions in
national and state parks (where the federal administra-
tors dealt directly with local officials and adminis-
trators of the various state park systems), the WPA pro-
jects were to be processed through a network of State
Planning Boards. The creation of these boards was the
result of initiatives from‘Washhgton.

The immediate stimulus leading to the establish-
ment of the State Planning Board was a suggestion
by the Secretary of the Interior, Harold L. Ickes,
as administrator of Public Works, late in 1933,

to the Governors of the several states of the
desirability of following the examples of New

York, Wisconsin, and a few states which had 84
earlier experimented with planning agencies.

The response from the Governors was nearly
unanimous. By 1935 all but two states had established
planning agencies. Initially, these boards usually
were created by executive order but by 1938, nearly all

had been legally established by the legislatures as

statutory agencies. (See Table l)

82

TABLE 1.

LEGISLATIVE STATUS
OF STATE PLANNING BOARDS, 1933-1938

 

 

 

 

Boards
YEAR TOTAL Established by Statutory
Executive Order Boards
1933 14 9 5
1934 42 33 9
1935 46 13 33
1936 47 ll 36
1937 48 6 42
1938 47 5 42

 

Source: National Resources Committee, Theggtates and
Planning, (Washington, D. C.: U. S. Govern-
ment Printing Office, 1938).
On June 30, 1934, the functions of the National
Planning Board were merged with the National Resource
Board. Soon after its creation, the National Resource
Board became an advisory committee to the National Re-
sources Committee made up of the Secretaries of Commerce,
War, Agriculture, Labor, and the Interior, the Works
Progress Administrator, and.Messrs. Delano and Merriman
of the original National Planning Board.
While the state planning boards were serving a

real purpose in the administration of public works pro-

grams, they acted at the direction and in the service of

83

the National Resource Board. In a sense, these state
boards became extensions of the federal government to
the local level. In 1937, Robert H. Randall - consultant
to the National Resources Committee - described the role

of the state planning boards this way:

The state boards have opened a course between
the localities and the Federal Government.
They have gone into the field and solicited
citizen opinion....They have encouraged the
establishment of local - town metropolitan

and county—planning commissions, and have
called upon those commissions for contribu-
tions of thought and effort. They have become
sensitive to the emerging problems in their
states....They have been in communication with
each other, and have assisted interstate
endeavors on the part of the legislatures and
administrative departments. Finally they have
pooled their resources for purposes of assist-
ing the several regional planning commissions
in existence....And, above all, they have not
lost touch with the public.8

These state boards were instrumental in the
preparation of three national plans: one relating to the
provision of public recreation facilities, one to the six-
year programming of public works, and one to use and con-
servation of'water resources. To the federal government,
these planning boards were indispensable to the WPA

87
efforts and to the National Resources Committee.

84

However, had these boards not been financed by Washington,
it is questionable whether the states would have had
state planning agencies at all. Several states realized
this situation as potentially serious. The Maryland State
Planning Commission in its letter of transmittal of its
1938 report to the National Resources Committee pre—
sented the following observations:

The Commission has been severely handicapped in

its work by the lack of important State finan-

cial support in the performance of its duties.

The total State contribution to the entire five

years of its activity has been approximately

$9,000....If the Federal and private support

were curtailed, and this is likely to occur in

the immediate future, the activities of the

Commission would be seriously hampered. The

State must decide in the immediate future

whether the kind of functions which the State

Planning Commission performs should be per-

petuated and extended or whether it should be

abandoned.88

The role federal dollars played in the mainte-
nance of state planning programs can be illustrated by
looking at the operating budget of the Wisconsin State
Planning Board in 1939. Of the total expenditure of
9

$685,000, $620,000 was provided from federal funds.8

At the end of 1937, of the 1,358 staff positions

85

nationally in the various planning boards, 1,118 (or
82 percent) were provided for by the Works Progress
Administration.90

As national attention shifted from the domestic
economic crisis to events in Europe and the Pacific, the
priorities of the federal government shifted from public
works to concerns of national security. The state plan—
ning boards became vulnerable and many ran into diffi-

culties with their legislatures and by 1942, fourteen

91 ,
planning boards had been terminated. Through this

period, state planning remained oriented towards public
works projects and resource management concerns.

Several states replaced these emphases with
concentrations on economic development and commercial
promotion. A good example of how such a transition was
attempted is the Columbia Basin Joint Investigation ini-
tiated in 1940 by the Federal Bureau of Reclamation and
the Washington State Planning Council. They concentrated
on the adequacy of the standard of living, the feasibility
of village industries, the location of public institu—
tions, and the pattern of local government and land use.

Nearly one-third of the state planning boards were involved

86

in some sort of an industrial study during the pre—war
92
years from 1939 on. Many boards were merged into
economic development agencies both because of the per-
ceived need for economic development planning and the
general distrust and lack of acceptance of planning
"agencies" by departments in state government. The
National Resources Committee observed in 1938 that:
one of the chief obstacles to the inauguration
of planning has been the difficulty of bringing
to the State departments an understanding of
the nature of planning and an assurance that

planning would not encroach improperly upon
their function.

The State Planning Boards were given an exten-
sion to their tenure when on May 24, 1941, President
Roosevelt authorized the Public Works Reserve Project.
Again, the project was financed through the Public Works
Administration. It was designed to "...assemble ideas
and plans, to stimulate sppropriate independent action
by other public and private agencies, to harmonize views
of interested individuals, and to furnish information to
the President and Congress."94 The program never really

got off the ground due to the lack of enthusiasm at the

87

local levels to plan for problems before they arose. One
year after the termination of the Public Wbrks Reserve
project, the National Resources Planning Board was it-
self disbanded after disagreements with Congress over the
type and extent of post—war planning really necessary.
The early 1940's saw the lapsing of many state planning
laws for lack of their reenactment.

During this roughly ten-year period from the
early 30's to the outbreak of WOrld War II, state plan—
ning agencies and boards utilized a service strategy.
Their principal client was the federal government or,
more specifically, the Public Works Administration and
the National Resources Planning Board. Neither of these
organizations gave any real policy guidance to the states.
The concerns and activities of the state boards have been
summarized by Alan Steiss as f01lows:

l. The need for state planning is evidenced by
the lack of orderly development in the past.

2. In recognition of this growing need for
coordination state governments are beginning
to assume additional responsibilities.

3. The general public is also becoming aware of
the need for planning.

10.

88

To assist in this undertaking, both lay
and professional leadership must be
developed.

State planning is a vital aspect of all
phases of governmental activities.

Planning must be advisory in nature and
should not duplicate the activities of
other agencies.

State planning is primarily a fact finding
activity, involving thorough analyses of
statistics and data.

State planning is not "economic planning"
or "social planning," but rather deals
with the physical environment.

To be successful, state planning must have
its own set of clearly recognized responsi—
bilities.

Public participation is a necessary ingre§6
dient of any successful planning program.

As a result of this lack of guidance and perhaps of a

general distrust and otherwise apathetic view of planning

on the part of state government, structured state planning

was fragmented and its pieces spread out to the various

departments. The public works concerns were considered

local problems and not an area for state involvement.

Industrial promotion and tourism activities were trans-

ferred to commerce related agencies. The resource

89

activities usually were referred to departments involved
in conservation and parks. There did not seem to be any
importance attached to centralized state planning by
state government.

Probably one of the more significant explana-
tions for the demise of state planning was its general
lack of any real identity in the scheme of state govern-
ment. A service strategy will not survive when nobody
wants to be served. Local governments usually are
reluctant to invite state involvement in their affairs.
Other state agencies were skeptical when planners offered
to help them plan (...to help plan, or to help do?).

When the federal government moved away from the scene,
the state planning agencies lacking clients similarly
faded away. Realizing that a pure service strategy was
not a good way to operate, thoughts began to shift toward
strategies which were more coordinative. The opportunity
to experiment had passed for the moment, and state
planners had to wait until 1959 for another chance.

Planning agencies which had survived the war-
years devoted attention to encouraging local governments

to establish planning agencies themselves. Several of

90

these state agencies were criticized for giving too much
attention to local problems and for failing to fulfill
their proper role in terms of "state? planning. What was
perhaps worse, state planning agencies were generally
excluded from their earlier concerns with capital im-
provements. Capital budgeting processes were merged into
the timetables of operating budgets and were administered
by budgeters without the earlier regard to the need for

longer range financial planning measures.

Federal assistance for planning was reestablished
in 1954 under provisions of Title VII (section 701) of the
Federal Housing Act. These grants were to be administered
by the states to facilitate planning programs in small
communities, metropolitan planning bodies, and regional
planning agencies. The scope of state planning concerns
remained with the lower levels of government until the
Housing Act of 1954 was amended in 1959 making state
planning agencies eligible for federal planning assis-
tance under section 701. During this intervening period,
the emphasis was on industrial promotion efforts in com-
munities under 25,000 population. The "701 funds" were

administered by a designated state agency under the

91

banner, "good industries demand good towns." Since these
industrial development efforts were oriented towards
small towns, planning assistance programs also were
directed towards the smaller communities. It was ration—
alized that the larger cities could afford to take care
of their own planning needs. As a-result, the large
metropolitan areas were obliged to take their case to
Washington.

In 1959, the year of the amendments, the Com-
mittee on State Planning of the American Institute of
Planners observed the relative lack of planning activity

at the state level.

Today, overall state planning as an organized

and recognized function of state government

is virtually non—existent.98

The states were slow in applying for federal

assistance. Initially, only the more populous states in
the east showed interest and support for state planning
efforts. Planning agencies, such as they were, were
handicapped by a general lack of trained personnel

capable of identifying the broader implications of area—

wide planning, the inertia of twenty years of local

92

assistance planning, the relatively low status of state
planning agencies in the governmental hierarchy, and the

9
resulting blurred lines of responsibilities.9 The

impetus for renewal of state level planning came from
outside of the planning profession. It should be remem-
bered that the field of public administration and the
practice of state budgeting was moving in the direction
of centralized management with the primary focus on the
performance and efficiency of governmental programs in
satisfying the needs of the constituency. Advocates
called for strong unified controls in the hands of a
single strong executive. Planners responded as assis-
tance to the governor in managing and coordinating over-
all state programs was requested.

Considerable attention was given to the rela-
tionships and differences between planning and budgetary
functions. Budgeting in this period was more concerned
with appropriations and courses of action than with state
priorities. To supplement this shortcoming of budgeting,
central planning agencies were established. Francis

Parker describes the relationship this way:

93

By statute and practice, the dominant con-
sideration of the budget office is to
analyse proposed increases or decreases

of costs, in money, taxes, and as related
to revenues....It does not, as a rule,
evaluate the long range objectives of the
administrator and rank the various depart-
mental plans in terms of desirability or as
a part of a coordinated policy for the state.
This function, in the executive branch,
remains with the Governor. For his assis-

tance in performing it arises the need for
an office of planning services.

The Council of State Governments stated that it
is the purpose of the state planning staff to assist the
leaders in state government in specifying the long and
shorter range objectives of state government; in gather-
ing all relevant information and securing an adequate
understanding of problems facing the state; in deciding
on priorities and the balance of state programs within
a flexible schedule; and in the coordination of effort
for the most effective and economical accomplishment of

, 101
aims.

The course of events in state planning during
the 1960's was quite similar to the mercurial rise exper-
ienced in the F. D. R. years. More than for any other

reason this was in direct response to the availability

94

of federal dollars. Between 1960 and 1968, the number
of states reporting active planning programs grew from
thirteen to thirty-nine. Gross expenditures for state
planning grew from $614,000 to $24,001,800 and the num-
ber of professional planning positions rose from sixty-
four, in 1960, to 804 in 1968. In fiscal year 1966-1967,
42.6% of total state planning expenditures originated
with the federal government.102 It should be noted that
the federal share in 1967 was significantly lower than
the 82% portion supplied in 1937.

During the decade of the 1960's, the bureau-
cratic location of state planning agencies shifted
from relative obscurity towards the centers of decision-
making. The emphasis on community development and
industrial promotion seems to have remained relatively
stable, as evidenced by the small variation in the number
of planning agencies located in Commerce, Development or
Planning and Development Agencies. The increase in the
total number of state planning agencies was largely
responsible for the increase in the number of agencies

located in the Governors' Offices. (See Table 2)

95

TABLE 2.

LOCATION OF STATE PLANNING RESPONSIBILITY
AT THREE SUCCESSIVE DATES

 

Location of Agency Date of Survey
1960 1965 1967

 

Governor's Office 3 11 18

Administration or Finance
Department 3 3 7

Commerce, Development, or
Planning and Development
Agency 22 27 16

Independent State Planning

Agency 4 6 4
Community Affairs Department - - 2
Other _4_ ___l_ _2_

TOTAL 36 48 49

 

Source: Relevance, Reliance and Realism, 1968 Report
of the Committee on State Planning, National
Governor's Conference, prepared by the Insti-
tute on State Planning for the '70's, p. 5,
Table l.

96

State planning has frequently been stimulated by
federal requirements calling for the preparation of a plan
as a prerequisite for receiving federal aid. Like other
recipients of federal dollars, state planners were ini—
tiated to the concepts of program budgeting (PPBS) during
the middle 1960's. Noting that PPBS had the word plan-
ning in it, some planners sought to carve out a role in
the administrative processes. However, due to conflicts
within the field of budgeting, budgeters viewed the
initiatives of planners as intrusions into their spheres
of operation. Consequently, difficulties were experi-
enced in attempts to supplement management oriented
budgeting with coordinative planning. These conflicts,
however, did not reach a peak until the early 1970's.
Until the rise of state program budgeting, state planning
agencies utilized a coordinative planning strategy and
fOcused their attention on state program coordination.
They also fostered regional structures as middlemen in
intergovernmental relations and in the review of localized
federal planning assistance programs. When viewed in the
context of efforts to include planning as an element of

systematic decision-making, however, these two activities

97

may be seen as diversions from the general call for rele-
vancy from the balance of state government.

Local assistance has always been a concern and
area for state planning activity. However, agencies
which have been solely involved in this type of activity
have discovered that they run the risk of losing the sup-
port both of the governments they were seeking to serve
and of their fellow agencies of state government. Inno-
vative planning agencies have recently turned to sophis-
tication supplied by the systems approach to program
budgeting (that is, the processes of the establishment
of long range goals and objectives, the definition of
state programs to accomplish those objectives regardless
of agency lines, and the determination and evaluation of
alternative methods for carrying out the programs). For
these agencies, the transition from the physical resource
- local assistance orientation to services and programs
supplied by state government was not a natural or easy
one.

The regional movement of the late 1960's was
encouraged by a concern that activities which encouraged

jurisdictional boundary crossings, or that decisions on

98

issues relating to more than one government were being
made in a jurisdictional vacuum (e.g., highway planning,
mass transit, open space planning, air pollution, waste
disposal, water supply, etc.). The emphasis of and
rationale for regional planning bodies has been on
cooperation among regional governments. Daniel Grant
observes that "the role of the State in meeting metro-
politan area pressures for local government reorganiza—
tion has been predominantly negative, grudging, road-

. . . . 103
blocking or simply indifferent in its general stance."
The Advisory Commission on Intergovernmental Relations
in 1973 stated,

There is nothing resembling a primary course

of action by which States propose to deal

with their metropolitan governing problems.

Perhaps the dominant pattern remains an amalgam

of establishing special districts, handling

some metropolitan functions through existing

State departments, and doing nothing.104

In those states where regional planning repre-

sents a major concern of state planning agencies, plan-
ning agencies have adopted a coordinative or coordinative-

service strategy. Their reputation for relevancy and

their roles in the operations of state government policy

99

TABLE 3.

PRINCIPAL SOURCE OF SUPPORT FOR STATE PLANNING

 

Source of Support

 

Governor's
Office

Administration of
Budget Agencies

Legislature

Line Agencies

No Predominant

Source of
Support

Arizona
Delaware
Iowa
Minnesota
Mississippi
New Jersey

Colorado
Georgia
Hawaii
Missouri
Pennsylvania
South Dakota

California
Florida
Montana

Alabama
Alaska
Connecticut
Kentucky
Maine
Maryland

Arkansas
Idaho
Illinois
Indiana
Kansas
Louisiana

New York
Oklahoma
Oregon
Rhode Island
Utah
Vermont

(12 states)

Tennessee
Texas
Virginia
Wisconsin
Wyoming

(11 states)

Nebraska
West Virginia
(5 states)

Massachusetts
Michigan
New Mexico
North Dakota
Ohio

(11 states)

Nevada
New Hampshire
North Carolina
South Carolina
Washington

(11 states)

 

Source: Parker, op. cit., p. 194.

100

making seems to be directly proportional to the relative
amount of support supplied by the chief executive. The
public statements of state planning agencies have shown
that the number using a coordinative strategy far exceeds

those using more innovative approaches. (See Table 4)

101

TABLE 4.

STATES GROUPED ACCORDING TO STATE
PLANNING AGENCY STRATEGY

 

 

 

 

 

Strategy
Service Coordinative
+ +
Service Coordinative Coordinative Innovative Innovative
Alabama California Alaska Connecticut New York
Georgia Colorado Arkansas New Mexico
Idaho Illinois Delaware Texas (1)
Indiana Kansas Florida
Iowa New Jersey Hawaii (3)
Louisiana Vermont Kentucky
Maine Maryland
Mississippi (6) Massachusetts
Missouri Michigan
Nebraska Minnesota
Nevada Montana
Oklahoma New Hampshire
Rhode Island North Carolina
Tennessee Ohio
Virginia Oregon
Washington Pennsylvania
South Carolina
(16) South Dakota
Utah
West Virginia
Wisconsin
Wyoming
(22)
Source: Parker, op. cit., p. 160.

102

By way of example, service—coordinative agencies
in California and New Jersey each describe their roles as
planning advocates. In 1968, the California State Office
Planning (a service-coordinative agency) described its

functions as follows:

* To provide general intelligence to the exec-
utive and legislative branches, to various
agencies and departments of state government,
to all units of local government, and to the
private sector.

* To develop planning and programming, including
the formulation of long-range physical develop-
ment perspectives and capital improvement
programming.

* To coordinate plans and programs for physical
development of departments and agencies of
state government.

. . . 105
* To improve intergovernmental relations.

In this same year, New Jersey, in one of its

newsletters, described its function in a similar fashion.

The goal of the Bureau of Statewide Planning is
to recommend to the Director of the Division
future patterns of development in New Jersey and
its areas and regions.

Among the functions of the Bureau are: the prep-
aration of comprehensive statewide plans, the
fOstering of and provision of assistance to the
functional planning being increasingly under-
taken by the various departments of State

103

Government, the recommendation of state
development policies, and the review of
major projects for their conformity with
state plans.

The Bureau provides planninglggta and plan-
ning information services...

An example of a coordinative agency has been found in
Delaware. In its 1967 Annual Report, the Division of
State and Regional Planning described its strategy as

follows:

The primary function of the Delaware State
Planning Office is to assist in guiding the
long-range physical development of the state.
In its advisory capacity to the Governor and
General Assembly the State Planning Office
conducts comprehensive planning activities for
the State and its towns, cities, and counties...-
As stated in the Delaware Planning Act of 1961,
a major responsibility of the State Planning
Office is the preparation of Annual Capital
Budgei and six-year Capital improvement pro—
gram. 0

Just to complete the picture, Connecticut has
employed an innovative approach to planning. As Horace
Brown, administrator of the program, comments:

...we have attempted to obtain a comprehensive
picture of past trends and present conditions
in Connecticut and then to propose goals and

alternative plans for key elements of the
future development of the state, including the

104

economy, land use (urban and open space), and
transportation. ‘We feel this is essential as
an aid to planning work by other levels of
government, as well as to state government
itself and can give us the proper frame work
within which we can subsequently carry out
state institutional planning and budgeting in
a more classic fashion if this is deemed
appropriate.10

It is too soon to know for sure, but more states
may be moving toward the strategy espoused by Mr. Brown.
Generally, though, such activities are possible only when
the planning agency has strong gubernatorial support and
few strong bureaucratic enemies. State level policy
planning is becoming more common (see especially products
of the planning agencies in Hawaii, California, Michigan,
New Mexico, Vermont, Colorado and Kansas).

Parker in 1973 found that those agencies located
in the governor's office were twice as likely to be highly
effective as were those agencies in other locations. How-
ever, he also found that there seems to be little correla—
tion between effectiveness and any one strategy, nor does
there seem to be any correlation between the perceived
effectiveness and the principal sources of support of a

109
planning agency's activities. The effectiveness may

well depend more on how planners interact and relate

105

with bureaucrats of other state agencies than with the
source and characteristics of its support.

As state planners have been seeking to make
their activities more relevant for decision-makers, they
have found that their dealings have been becoming more
political and increasingly budget related. As their
concerns shift from the older physical-development,
capital improvement orientation to the totality of state
governmental programs, the potential for conflict is
greatly increased. In several states, the emphasis is
clearly shifting from comprehensive - physical planning
to policy development and analysis. Howard observes that
”although physical considerations remain important, the
planning profession now lays increasing stress upon social
and program planning. Thus old-fashioned budgeters and
old-fashioned planners have changed, and their modern
counterparts are increasingly indistinguishable from each
other."110 The conflicts between state budgeters and
planners have been caused by a reluctance on the part of
budgeters to accept the assistance and participation of
planners in the budgetary matters. This is only natural

since budget staff have always enjoyed a closeness to

106

policy decision—making. They have been close to the
governor's office since the beginning of executive
budgeting and are quite action conscious and aware of

the political aspects of budget decisions. The interest
shown by state planners was encouraged by the development
of PPB systems and planners' lack of an operation's gos-
pel has made it possible fOr them to adapt to the program
budget developments in the late 1960's - early 1970's
without sacrificing their earlier functions.

In many cases, a simple education process may
encourage planning-budgeting relationships. In a planning
- programming - budgeting system there is enough to
involve everybody. The governor and his budget staff
tend to be more concerned with the present than with con-
sequences. A PPB system requires a staff capability to
forecast the consequences of budgetary and policy com-
mitments to enable budgeters to make enlightened decisions
and to assess the impact of the previous budget decisions.
Once the budgeters, the agencies, and the legislature
realize that the inclusion of planning processes will not
adversely affect the quality of decisions made, a sort of
silent acceptance may take place. The budget process can

be extremely important in encouraging the planning process,

107

but the budget system still must fulfill operational
processing requirements that do not similarly constrain
strategic planning.111
As state planners seek to make their activities

more relevant to decision—making, they are discovering
the increasing importance of politics to the success of
planning. Frederich Aschman observed that, like the
allocative functions of government, planning is also
closely tied to political decisions on policy.

...our planning programs may be ineffective

if we do not understand that the essence of

planning is policy and thelfisence of demo-

cratic planning is chOice.
As planners involve themselves in policy concerns, they
have realized the necessity of skills in action politics.
Policy planning processes are moving away from.more con—
templative, inventory-taking, and long range goal setting
activities associated with city planning.

Professional planners have been confronted with

a real dilemma. To the extent that the planner becomes
involved in decision—making his objectivity becomes

questionable. The profession has discouraged political

activities as an element of the planning process but has

108

not gone so far as to recommend that planners be apoli-
ical. As Francine Rabinovitz pessimistically states,
"...the more generalized the techniques of an operation,
the more difficult the achievement of professional recog-
nition....Although the myth of apolitical action remains,
the successcf planning is tied to the operation of the

. . 113
political system."

The message is clear. State planning must focus
on the issues and problems confronting the state
leadership, and must work to aid that leadership
more directly.

Prognosis for State Planning

The viability and versatility of planning in
state government seem to be dependent on the type of
strategy employed and affected by characteristics and
sources of support.115 It should also be recognized
that planning activities are pursued by all agencies of
government. State planning agencies constitute only a
part of planning activities in the states. Consequently,
where planning agencies are relied upon for policy guid—

ance and for information related to decision-making, some

degree of plan coordination of agency planning activities

will be necessary regardless of the type of strategy used.

109

Both the coordinative and innovative strategies
require gubernatorial support and often such agencies are
located either in or near (bureaucratically speaking) the
executive office. The staff of such agencies should have
expertise that includes planning, law, economics, finance,
administration and politics.

The strategic planning task that needs to be
done is not the sole province of ”planners" in
the traditional professional sense. These
advisors about strategy will need to see that
a state develops, probably apart from the
crisis orientation of operating programs, a
capacity to see the entire range of problems
confronting the state, to explicate goals, to
explore interrelationships amopg6goals, and to
develop projection techniques.

State planning must move away from the dreamy,
pie—in—the-sky goals. Decision—makers are not so much
concerned with goals or final objectives as they are with
the processes and mechanisms to be used to attain those
goals and objectives. It is for allocative decisions
that priorities are set and these decisions are made as a
part of the budgetary process. It therefore is important
that the means be available to include the planning staff

in this aspect of budgeting as the "front end" for the

budget decisions.

110

Planning activities,including budgeting, require
a constant framework within which to operate. Partici—
pants in this process should not seek to dictate or other-
wise dominate the manner in which those activities are
pursued. This is especially true of the relationships
between planners and budgeters.

Strategic planning and budgeting must be brought
into a workable relationship if a state govern-
ment is to be directed and managed most effectively
to accomplish public purposes. To have policy
created and implemented effectively, financial

and planning as well as other specialists will

have to pafficipate in budgeting and other policy
processes.

In developing such close relationships, it is
notalways necessary or even advisable purposely to struc—
ture planning and budgeting agencies in the same bureau
or department. All that is required is an opportunity and
the motivation 5m the products of one staff to be used and
administered by the other.

Planning needs budgeting more, it seems, than
budgeting needs planning. While these functions have been
separated in the past, planning agencies have always

needed tools to implement their findings and recommenda-

tions for state administration. The budgeting processes,

111

especially in those states where the program budgeting
approach to appropriations is used, offer several oppor—
tunities for the involvement of planners. The planning
perspectives can be refreshing for budgeters, if not
carried to extremes. Correspondingly, the discipline of
an annual budget can be very sobering and helpful for
planners in keeping deadlines and for focusing planning
studies on the activities of state government and away
from the irrelevant and the ideal. Budgetary choices
can be made within the policy framework maintained by
the planning agency.

...the compilation of budgetary matters should

not be allowed to determine effectively what

the goals and strategies are. It is probably

easier but not wiser to decide to cross a

bridge when it is reached than to decide in

advance what bridge to reach and what new
bridges to build and how.118

If the activities of state planning agencies
were to be fOcused on the short range concerns dictated
by the needs of budgeters, of course some long range
activities would have to be deemphasized. It would be
ideal if the role of the agency were expanded to include

the budget orientation. However, if the long range

112

aspects of planning were abandoned, a valuable planning
activity would be lost. Proposals should be subjected

to analysis for long as well as short-run impacts.

Budget officials often have not felt that long range
planning has been that helpful. Unfortunately, responsi-
bility lies with planners themselves who must prove their
relevance and the value of long range analysis and plan-
ning to budgeters and other public officials.

The ideas and conclusions in this thesis are
not new. The importance of the involvement of planners
in the politics of policy formulation processes has been
stated by many writers — planners and non—planners

, 119 . . .
alike. However, it should be recognized that planning
and budgeting are both portions of the greater context of
administrative government. They differ only in their
f0cus and areas of primary concern within the processes
of state program management.

A planner wants to have an impact. He cannot
assume that he is doing so just because he

does all the things that planners have been
taught to do: He must recognize that different
participants in the policy process have differ—
ent needs for planning. To be effective, he too
must develop alliances among these different

individuals and groups, recognizing that the
success of these alliances will be affected by

113

how well the strategy he pursues fulfills

the needs of other key participants. He
appreciates the importance of communicating
effectively with those who make final allo-
cative decisions....He will know the importance
that budgeting has assumed among such decision-
makers as consistently the single most important
and inclusive policy-making activity in state
government.

CHAPTER III
PLANNING AND BUDGETING RELATIONSHIPS
IN MICHIGAN STATE GOVERNMENT

1968-1974

The budgeting-planning relationship has been
recognized in several state governments. The experience
in Michigan has shown that budgeters and planners can
work together when necessary. Problems have been caused
more by PBES than by professional animosities between
budgeters and planners. The experience in Michigan
serves to illustrate this point.

At this point in time (summer, 1974) the plan-
ning and budget functions are located in the Department
of Management and Budget within the same bureau (with
division status) as participants in the state decision—
making processes. This relationship was established by
executive order in July, 1973, with the appearance of being
a rational and purposeful decision by Governor William
Milliken. The relationship has worked out well. However,
the steps leading to this reorganization have lacked any

real pattern or purpose.

114

115

Planning and Budgeting_to Januarm 1973

The origins of the developments culminating in
the 1973 reorganization may be found in the late 1960's.
In May, 1966, the task force assembled by Governor George
Romney to design a financial management information sys-
tem made its final report. In that report, the task
fOrce recommended that the State of Michigan move toward
a "program—performance budgeting" approach to agency
appropriations and budget decisions. In 1965, this
approach had been piloted with the Departments of Con-
servation and State. The experience was positive enough
to convince Governor Romney to extend this approach to
include all agency allotments of the 1966-67 appropria-
tions and the budget requests for fiscal 1967—1968. This
concept of budgeting placed emphasis on the provision of
better criteria to decision-makers for assessing alter-
native allocations of available resources and giving a
more meaningful basis to managers for evaluating expendi-
ture effectiveness. To administer this new budgeting
process, a new division (Management Services) was to
monitor and implement the budgetary procedures of the

new process. This change improved the analytical basis

116

for the evaluation of budget requests, but did not affect
the manner or procedures used by the Governor and Legis-
lature in acting on and approving the Executive Budget.
The objective of this development was to move from the
older, control—oriented budget towards a management
budget, thus making it easier to monitor and affect state
government programs.

Like the moves toward budget reform.which fol-
lowed in spring, 1971, these developments were in response
to rising public demands for state services. This experi-
ence with budget reform.was successful in bringing added
rationality to the budget request procedures but was
largely unsuccessful in stemming the trend toward spi-
raling costs of government.

The year 1968 found the planning activities of
Michigan State Government focused in the Office of Plan-
ning Coordination (O.P.C.) in the Executive Office of the
Governor. In late 1966, the Office of Economic Expansion
had been shifted to the Executive Office where it became
the Office of Planning Coordination. Before and during
this reorganization, O.P.C. was involved in a technical
assistance program to encourage the establishment of the

multi-county Economic Development District agencies.

117

In 1967, legislation was passed to enable local
governments to form regional agencies. This was done to
make the planning statutes conform to the requirements
for organization and membership under federal guidelines
(Public Act 46 of 1966). The primary responsibility of
O.P.C. was to develop criteria for the substate district-
ing scheduled for 1968. The districting took place with
the issuance of Executive Directive 1968-l in February.
The year 1968 found the Community Planning Division
still in the Department of Commerce and the Office of
Planning Coordination in the Executive Office. Each of
these agencies was involved either in administering
federal programs or in developing a structure which
would conform to the guideline established under Bureau
of the Budget Circular A-80 from.Washington.

George Huffman, an intern with the Office of
Planning Coordination, reported that the functions of
O.P.C. were guided by a service and coordinative strategy.
"...the intended function of state planning in Michigan
is essentially coordination. At present (1968), the
Office of Planning Coordination is more of an information

and research oriented unit.... ...state planning is done,

118

for the most part by the Bureau of the Budget....The
fiscal control held by the Bureau of the Budget does,
in effect, dictate state planning efforts in Michigan."121
It would seem that state planning did not really exist in
1968 in Michigan, which could have been the actual case.
OPC's program objective in the 1968-69 Executive Budget
was "to provide a framework for regional, metropolitan,
local, and other planning...." No mention was made
regarding the coordination of state programs. The Com-
munity Planning Division continued to serve as the state
clearinghouse for all local and state assistance under
section 701 of the 1954 Housing Act (as amended in 1959).
Governor Romney showed a great deal of interest
in the way that his budget bureau operated. He would sit
in on staff meetings periodically and would ask questions
regarding any special projects under way; he would be
briefed regularly on the progress and problems the bureau
had experienced since his last briefing. (Budget Bureau
analysts still speak fondly of how he would show interest
even in projects undertaken by students under the summer

internship program by interrogating the students them-

selves in the staff meetings.) In December, 1969,

119

Governor Romney resigned to become U. S. Secretary of
Housing and Urban Development. William.Milliken suc-
ceeded Romney as Governor and was elected to a four-year
term in fall, 1970.

All was not well in Michigan in January, 1971.
Expenditures had been rising at a rate in 1970 of 19.2
percent while revenues were increasing only 7.2 percent,
forcing Governor Milliken to ask for new taxes to close
the gap. The situation was the result of several years
of unregulated appropriations. Table 5 reflects these

appropriations patterns from 1965 to 1970. It is

TABLE 5.

HISTORICAL TRENDS IN GENERAL FUND
GENERAL PURPOSE EXPENDITURES
(in millions of dollars)

Revenue
Fiscal Year Expenditures Expenditures Growth Growth

1965 650

1966 794 22.1% 12.8%

1967 1,049 32.1 6.1

1968 1,142 8.9 5.7

1969 1,337 17.1 8.8

1970 1,550 15.9 2.6
5—year avg. 19.2% 7.2%

 

Source: William G. Milliken, Budget Message of the
Governor for the Fiscal Year 1971-1972, (Lansing,
Michigan), p. 4.

120

interesting to note that the experiments with performance
budgeting seem to have made an impact in fiscal 1968, but
the budget of fiscal 1969 reverted to the earlier rate of
growth. These expenditure increases did not occur equally
across state government, but happened in three areas -
education, public and mental health, and social services.
Between 1965 and 1971 inclusive, general fund appropria—
tions in Michigan rose $1,100 million. Of this, education,
health (mostly mental health) and welfare accounted for
$1,006,000, over 90 percent of the increase, while the
balance of the state agencies increased only $94 million.

(See Table 6)

‘

Educat
Depe
Sch:

Fu1
Hig
ca

Su
Healt

Put
Met

Soci.

GENE
TC

Sour

121

TABLE 6.

TRENDS IN APPROPRIATIONS
FOR HEALTH, EDUCATION AND SOCIAL SERVICES

 

Amount and Amount and
% of 1965 % of 1971 Amount and
Budget Budget % Increases
Education
Department 10 32
School Aid
Fund Grant 142 511
Higher Edu—
cation 164 348
Sub—total 316 (49%) 891 (51%) 575 (182%)
Health
Public Health 18 24
Mental Health 88 200
Sub-total 106 (16%) 224 (13%) 118 (111%)
Social Services 91 (14%) 404 (23%) 313 (344%)
Total, Three
Functions 513 (79%) 1,519 (87%) 1,006 (196%)
GENERAL FUND
TOTAL 650 1,750 1,100

 

Source: William G. Milliken, Budget Message of the Gov-

ernor for the Fiscal Year 1971-1972,
Michigan, 1971), p. 5.

(Lansing,

122

To effect spending reform, Governor Milliken
called for an intensification of efforts to change atti-
tudes toward the processes of program and budgetary
decision—making. In Executive Directive 1971-1 the
Governor established the Bureau of Programs and Budget
in the Executive Office and directed the Bureau to
develop a program budget evaluation system (PBES). To
develop this system, a Project Management Office was
created in the Bureau of Programs and Budget (BPB). The
PBE system was to help "focus decisions on goals, objec—
tives, and achievement of state programs in terms of
their costs and impacts upon major problems of state
government."122

To help direct the implementation of PBES, the
Bureau of Programs and Budget contracted with Robert J.
Mowitz, the Project Director in Pennsylvania's PPBS
design and implementation from 1968 to 1970. The term
of the PBES Project was to be two years with full imple-
mentation scheduled for the 1973-1974 Executive Budget
season. Under the direction of Joseph L. Farrell, and
the consent of the Governor, the implementation efforts

were addressed, through the Bureau of Programs and

123

Budget, to the agencies and departments. The Legislature
was not involved in the decision to move toward PBES and
neither was it consulted on the possible impacts the
system was to have had on the manner and character of
the budget-allocation process.

While these budget innovations were being dis-
cussed, little was happening in the Office of Planning
Coordination. In January, 1971, the Office of Planning
Coordination was redesignated as the State Planning
Division in the Bureau of Programs and Budget. The
effects of the State Planning Division still centered on
local and regional assistance with much of its efforts
concentrated on the maintenance of and assistance to
the newly designated State Planning and Development
Regions.

The reorganization of the Executive Office in
January, 1971, was designed to place program development,
planning and budgeting functions in the same bureau.
Governor Milliken was seeking to improve the efficiency
and communications among the elements of the Executive
Office which were involvedin program planning and evalua-

tion. This does not seem to have been a conscious effort

124

on the part of the Governor to merge the planning and
budgetary functions together. However, it was in the
minds of those involved in the PBES Project that it would
be desirable to augment the control and management ori—
entations with a planning orientation. This would aid
them in generating a more balanced budgetary process.
Their concerns seem to have been dictated by the require-
ments of PBES and the recommendations of Robert Mowitz
rather than by a general concept of what the planning
processes were at the time. While they saw the poten-
tials of including planners as policy analysts, they paid
little attention to the feasibility of including the
State Planning and Development Regions in the budget

123
process.

There was no significant activity in 1971 save
that of the PBES Project office. The lines were being
drawn for a confrontation between budget advocates and
those who had been active in the activities of OPC. The
planning position was strengthened when, in January,
1972, the Office of Planning Coordination joined the

State Planning Division in the Bureau of Programs and

Budget.

125

On April 14, 1972, the 1973-74 Program Policy
Guidelines were published and the first sign was shown
that the commitment to PBES the year before was more
than just talk. These guidelines identified problem
areas requiring departmental and agency action in explor—
ing program alternatives, along with projections of
economic, demographic, and social trends. It was intended
that the PPG would provide parameters to help guide agen-
cies in defining the PBES programs to emphasize in pre-
paring requests to revise the Michigan Program Plan (see
Figure 5). This PPG was not directive but suggestive,
and no agencies were identified as responsible for PPG
issue follow-up. The departments generally ignored the
document just as many wished to ignore PBES. However,
they were forced to adjust to the new processes if they
wanted to change any of the programs which they admin—
istered. The Program Revision Requests and the Executive
Budget were structured within PBES and submitted to the
Legislature in January, 1973.

By summer, 1972, the State Planning Division
was developing the process to be used and the planning

components to be stressed. The Operations Plan was

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127

approved in September. The tasks of the Division were
three-fold. First, it was responsible for "comprehensive
or multifunctional planning; for providing broad policy
rather than specific programmatic advice; for considering
non-budgetary instruments affecting the development of
the state; and for supplying other inputs on policy alter-
natives which otherwise may not reach key decision—
makers."124 Second, the Division was to develop and
maintain the regional planning and development system

and to provide financial and administrative support for
these agencies. And finally, it was to maximize the
impact of federal programs affecting the state through
local assistance, new legislation, and continued service
as the state clearinghouse for project review.

The product of the State Planning Division was
to have been a policy-oriented state plan. The process
would involve the annual recycling of policy analyses
related to PBES through the PPG's and participation in
the review of Program Revision Requests. The scope of
planning concerns was not strictly defined, but the
Division was excluded from considerations of specific
actions or program activities on the part of the depart-

ments. In short, the Operations Plan stated that the

128

State Planning Division was going to do everything plan-
ning agencies did in the past plus add a concern of
agency program impacts and better than ever before.

Unfortunately, the Division was not given a
chance to prove itself. Just four months after the Opera-
tions Plan was finalized, the Governor decided to disband
it. No set of reasons was given beyond the desire on the
part of the Governor to streamline the functions of the
executive branch. The reorganization announcement was
made in the Governor's ”State of the State" message in
January, 1973, and was implemented by the following
.March. The majority of the agency's personnel went to
the Department of Natural Resources, while some remained
in the Executive Office in the Research and Budget
Divisions of the Bureau of Programs and Budget. The
Director was reassigned to the Capital City Airport, in
Lansing, and his deputy joined the Peace Corps and moved
to Western Samoa. After the dust had settled, nobody

really knew what had hit him.

129

The_§tate Planning Process Since Marcthl973

In spring, 1973, the planning process was made
to conform to the concept and calendar of the budget
cycle. The 1973-1974 PPG was published in March and was
produced through the joint efforts of the State Planning
Division and the Program Analysis Division of the Bureau.
They were an improvement over those produced the year
before but had yet to be fully accepted by the agencies.

The reorganization plan of the Executive Office
addressed in January was completed in August, 1973, and
utilized many of the concepts advocated by RObert Mowitz.
The new Department of Management and Budget was formed
through the merger of the Bureau of Programs and Budget
of the Executive Office and the Department of Administra—
tion. The Bureau of Programs and Budget was redesignated
the Bureau of the Budget and the Research Division was
renamed the Office of Intergovernmental Relations and
Special Units (IGR). The planning function was divided
between the Bureau and IGR.with the policy analysis func-
tion going to BOB and the local planning assistance

activities to IGR.

130

In the organization plan implemented in Septem-
ber, 1973, the Bureau of the Budget was divided into two
divisions and an operations unit — the Budget and Program
Analysis Division, the Planning and Policy Analysis Divi-
sion, and the Operations Unit. The bureau was organized
according to the three basic functions of the budgetary fl-i

process (i.e., planning, management, and control). In

 

the memorandum (9/12/73), the Budget Bureau Director,

Charles Sturtz, specified the goals, objectives and tasks

'E

of each of the organizational units as follows:

...I wish to state unequivocably that I believe
the analysts and managers in the budget business
are professional people....I believe we can de-
sign an environment where professionalism can
thrive without becoming elitism, where standards
of performance can be established which allow us
to recognize acceptable conduct, and where the
incentives are such as to encourage commitment
and response....

Through the perspective of these observations,
the following organization plan is promulgated
to execute the budget fundion.

Goals and Objectives

The following goals (I), objectives (A), outputs
(l), and taska (a) are established.

I. To assure the development of public policy
goals and objectives through which the
allocation of resources can be made to
assure their effective attainment.

131

(This goal constitutes the budget strategy.)

A.

To develop and maintain a program plan
reflecting established public policy
goals and the means of their attainment
(objectives and impact indicators).

(1) The Michigan Program Plan

(a)

(b)

(C)

(d)

(e)

Conduct systematic and contin-
uous analysis of the state's
economic, social, and environ-
mental conditions, trends, and
identify problems and their
causes.

Prepare Program Policy Guide-
lines (PPG) indicating desired
or possible responses to prob-
lems so as to propose appro-
priate state policy (objective)
response.

Evaluate proposed policy alter-
natives by agencies to validate
the cause-effect hypothesis of
the response.

Conduct cost-benefit analysis of
alternative policy (objective)
proposals.

Evaluate legislative proposals
which have the effect of chang-
ing state policies from those
established in the MPP.

(The foregoing constitutes the state policy
planning process.)

B.

To prepare an annual resource allocation
plan designed to support programs (means
and outputs) for the effective achieve-
ment of state policy goals and objectives.

II.

132

(l) The State Budget

(2:!)

(b)

(C)

(d)

(e)

(f)

(g)

(h)

Evaluate program performance in
achieving state objectives as
established in the Michigan
Program Plan (MPP)

Evaluate alternative program
proposals (means) designed to
achieve defined policy objec-
tives (ends) and prepare recom-
mended Program Revision Actions
(PRA) for gubernatorial deci-
sion.

Evaluate the current means of
program delivery so as to assess
the cost-effectiveness (impact/
cost) of the program.

Evaluate the current methods of
program delivery so as to assess
the cost-efficiency (output/
cost) of the program.

Propose comprehensive resource
allocations.

Prepare the detail budget recom-
mendations and present them to
the Legislature and the public.

Review legislative program pro-
posals.

Authorize federal fund program
requests and recommend expendi—
ture authorization of funded
requests.

To assure public policy makers that operation-
al plans to achieve public policy goals are
appropriate as to intent and are efficiently

executed.

133

(This goal constitutes the management
strategy.)

A. To assure the establishment of operation—
al plans to achieve public policy intent.

(l) The allotment of appropriations.

(a) Establish the allotment pro-
cess to assure compliance
with appropriation intent.

(b) Review and approve the program
plan of agencies for the expen-
diture of appropriations and
establish the output perfor-
mance expected to be achieved
during the year.

(c) Monitor agency program fiscal
and output performance on an
on-going basis to ascertain
conformance with the approved
allotment plan.

The management strategy encompasses much more than
the identified objective; however, the other ob-
jectives are ones we need to relate to but are not
responsible for their achievement.
The responsibilities of the two divisionsare both defini-
tive and non-specific depending on the portion of the bud-
get process looked at. The relationships are relatively
stable until the fall, or when budget hearings with the
agencies begin.

In the early spring, the Planning and Policy

.Analysis Division publishes the Program Policy Guidelines

134

(PPG) and later the following fall produces an updated
version of the Michigan Program Plan. The PPG is a
compilation of evaluations on issues confronting state
government which generally direct the state agencies to
modify existing programs, or to prepare studies evalua-
ting alternative methods of addressing state problems.

The Michigan Program Plan (MPP) is a working
document used in budget decision-making. The MPP pro-
vides fiscal summaries for each of the major program
areas, descriptions of departmental activities, and
relates what state government does to meet the needs of
its citizens emphasizing the relative impact those pro-
grams have had on those needs. Each of these two docu-
ments represents the formal input of PPAD into the
Michigan budget process. When contrasted withthe more
manipulative activities of the Budget-Program Analysis
Division, the role and character of PPAD is distinctively
analytical.

In the earlier days of PBES and under the older
budget system, budgeters were wholly responsible for what
went into the Executive Budget and for recommendations on
agency requests for increased appropriations. Since the

1973 reorganization, some of this has changed. While the

135

responsibilities have remained much the same, the roles
filled by BPAD and PPAD analysts have become indistin-
guishable. This has been especially true for the
development of the Executive Budget itself.

In the development of the 1975—76 Executive
Budget, several events took place to further solidify
the budgeter-planner relationship. First of all, BPAD

participated in the issue selection process for the

 

1976—77 PPG. Care was taken to ensure that policy
issues were not duplicative of analysis topics to be
addressed by BPAD. Since agency assignments are shared
by the two divisions, both PPAD and BPAD analysts worked
together with agency program specialists in the produc-
tion of their Program Revision Requests. This made it
possible to raise both program and policy questions as
the proposals were developed. The pace of activity did
not pick up, however, until after the second week of
September when the PRR's were fOrmally submitted.
Program Revision Request review was undertaken
in the following manner. Any submissions which reflected
a policy change or a major change in the level or source

of funding for a program.were referred to the PPAD analyst

136

for his review. The BPAD analyst reviewed all PRR's and
was responsible for the disposition of all requests.
Incidentally, where any conflict over any recommenda-
tions occurred, the bureau position was determined after
a review of the issue with the agency. PRA's or Program
Revision Actions were drafted and placed into the budget
document in early December.

Agency budget hearings were scheduled through
the months of October and November. Any policy questions
or long range budget questions raised during these hear-
ings were written up in the form of proposals to be
placed befOre the Governor for final disposition.

Budgeters and planners worked closely together
in the preparation of the materials for the Governor's
briefing on the 1975-76 Executive Budget. The detail
'was done by BPAD. This included changes in line item
recommendations and a summary of programmatic conse-
quences of their proposals. A major component of the
briefing materials was prepared by PPAD. This section,
entitled “Policy Issues," included statements on emerging

issues and recommended actions to meet those problems.

137

In the case of the Department of Natural
Resources, the PRR recommendations were finalized in
late November. As a result of some discussions which
occurred at the agency hearing, the PPAD analyst initiated
a series of meetings with the department's director and
principal bureau chiefs. The purpose of these meetings
was to formulate a series of issue statements for the
Governor's budget briefing. Both current problems and
emerging issues were discussed and the department posi—
tion was stated on each one.

In the meantime, the BPAD analyst completed the
Program Revision Action forms and finalized the issues
pertaining to the current budget. Both analysts then got
together and worked out the bureau position on each issue
and completed the final draft of the Executive Budget.
The PPAD analyst then reviewed the draft for consistency
with existing and contemplated policy and then submitted
it for the final run. The Executive Budget was then pre-
sented to the Legislature in January, 1975.

It may still be too soon to determine the
effects of merging the planning and budgeting functions

together but at this point in time (one year after the

138

reorganization), solid working relationships among bud-
geters and planners are developing and there is every
indication that budgeting and planning will be able to
coexist in the type of relationship indefinitely.

The relationships of budgeting and planning in
Michigan need not be dependent on the Program Budget
Evaluation System. Regardless of the relative balance
among planning, management and control, all three aspects
will probably exist in any future budget organization
guided by any budget system. The policy aspects of
planning have been divorced from the older intergovern-
mental relations — physical resource focus and haveshown
that it can stand on its own merits, with or without PBES.

In March,l974, an assessment was made of the
success and shortcomings of the Program Budget Evaluation
System. It was concluded that PBES has fallen short of
its 1971 promises as shown in Table 7. many of the prob-
lems can be overcome through changes in the quality and
frequency of departmental contacts. However, several are
potentially serious. The case against PBES continues to

be a strong one, but disciplined attention will have to be

focused on those instances of blatant disregard of direc-

tives and of budget procedural deadlines.

139

Many of these problems are procedural and gener-
ally are not critical to the survival of the PBES with an
important exception. If it is remembered, the PBE system
was implemented independently of the Legislature, and
more or less imposed on the agencies. As a result, there
are three different frameworks being used in the Michigan
budget—appropriations process.

The Bureau of the Budget still uses the PBES
program structure for the program evaluation and selec-
tion of alternative program means to prdblem resolution.
The agencies generally use the bureaucratic organization
charts for their appropriation requests and program re-
vision requests (PRR's). The Legislature uses the same
model as it has since 1963 (the year of the Michigan
Constiutional Convention), geared towards line item appro-
priation entries. As a result, the Legislature and the
agencies are most concerned with line item entries (since
these are subject to the Governor's veto power) and with
how much money was appropriated earlier and the magnitude
of changes each agency requests. The Legislature gener-
ally has not been involved in program evaluation, budget

efficiency or with the management and planning of programs

140

even though it is the principal policy—making body in
state government. As a result, PBES - the guiding
system of the Bureau of the Budget, has been tolerated

by the agencies and largely ignored by the Legislature.

141

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143

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144

In this writer's opinion, this situation will
need to be cleaned up, or the PBES structure of the
existing budgetary process may become irrelevant. How-
ever, regardless of any ultimate outcome, the relation-
ships between planning and budgeting have solidified, and
this development alone has made the Michigan budget inno- F‘R

vation experience worth its while, and is an indication

 

that centralized state planning has passed through

adolescence.

CHAPTER IV

CONCLUSIONS

The preceding chapters have been devoted to the
development of the processes involved in state planning
and budgeting with the emphasis placed on the tasks and
strategies employed by each in pursuit of its bureau-
cratic responsibilities. The tradition and character-
istics of each have been discussed and the roles each
has played in the state policy-decision-making processes
have been briefly treated. The reader may ask, what is
their relevance for practicing planners? These are
legitimate questions and will be addressed here in
these concluding remarks.

State planning and budgeting each grew out of
the same reformist period in the history of administra-
tive government. As it was pointed out in Chapters I and
II, the policy aspects of both planning and budgeting are
highly political. The maturity of budgeting seems further

advanced than planning, but this is because budgeting has

145

146

been used and taken far more seriously than planning.
Procedurally speaking, government has stressed the con—
trol and management aspects of administration for some
time. It would not be totally out of line to hypothesize
that this presented both the opportunity and motivation
for the separate and independent evolution of planning.
Now, 60 years later, an opportunity is again offered to
bring planning back into the mainstream of government
policy development. To take advantage of this develop—
ing situation, planners must be prepared to adapt.

In assessing the potential effectiveness of
planning agencies at the state level, it must be remem-
bered that the experiences of state planning have been
frustrated whenever they have relied on experiences of
city planning to guide their selection of strategies and
areas for concentration (e.g., coordinative - service
strategy concentrating on urban development natural
resource allocation and land use). State planners,
further,must seek bureaucratic alliances and the support
of decision-makers. It was found at the conclusion of
the Second WOrld war and again in the early 1970's that

state agencies relying heavily on federal dollars as

147

their principal sources of support were in the most pre-
carious of positions when the federal subsidies dried
up.

State and local planning agencies alike can
take some lessons from the Michigan planning experience.
Where strong executive support is lacking, planners
would do well if they seek to ally themselves and their
agency to the bureau or staff responsible for developing
the annual operating budget. Planners and budgeters are
alike in their perspectives and motivations. They often
differ on the matter of the appropriate planning horizon
to be used in the contemplations of governmental actions
- budgeters usually think in terms of the fiscal year
while many planners rarely think in figures smaller
than seven to ten years. It should be remembered that
for public officials, a five—year plan is long range
while anything greater is pure dreaming. Planners
should not allow themselves to be placed in the dreaming
category and should shift their "comprehensive" focus on
physical concerns to the general scope of governmental
programs and on how these programs should be changed

to meet future demands.

148

Planners and budgeters must actively work togeth-
er in directing and forming state program objectives and
priorities, developing programs and in managing these pro-
grams. Together they can ensure that programs are oper—
ated effectively and efficiently. Administrative govern-
ment exists in an environment of conflict. The question
is not whether change will take place, but how that change
will occur. It is in the nature of bureaucracies that
change will not happen rapidly or suddenly, but changes
will occur just the same.

State planning agencies can enhance their effec—
tiveness by adopting innovative strategies keyed to
managing required shifts in executive and agency policy.
Policy changes often occur incrementally. This offers
the opportunity to "manage" those changes. Program re-
visions can be reviewed and commented on for their short
and long range implications. Planners can enlarge upon
their analytic expertise by establishing workable and
relevant information capabilities. Such a management
oriented information should illustrate the magnitude of
the needs of the people being served by government pro-

grams and of those not being addressed by program

 

149

managers. The significance of a program's impact should
be portrayed along with emerging prdblems and needs for
new or renewed governmental action.

Planning agencies should view program contro-
versies as opportunities to affect changes in the context
and orientation of these programs. In their analytical
efforts, political variables should be incorporated into
recommendations. It should be the goal of state planners
to offer broader policy choices and clarify the implica-
tions of actions under consideration. Planners, further,
should endeavor to set the stage, so that prOgram admin-
istrators may participate in solving their own problems.
They should include analyses of the program methods of
affecting change and not look exclusively at desirable
ends.

If the roles of planners can be changed in this
manner, a change in perceptions may be required. ‘What
planners do would not be changed so much as how they do
it. Decision—makers generally need reminding as to the
effects and impacts their decisions will have on the
future. There will continue to be a need for long range

planning, but efforts will need to be channeled more into

150

the area of program and policy analysis. The gadfly role
has its place, but agencies adopt it as a general strategy
at their peril. Planners should be careful to keep their
relevance while at the same time addressing the future.
Therefore, context and balance of strategies are most
important. Decision-making requires a look to the future
while dealing with problems of the present. The future
should not, however, become the exclusive domain of
planners if they are to shake their dreamer image.

The budget process should not be ignored. It
offers opportunities for planners to participate in the
decisions on governmental policy. Budgeting has several
shortcomings and planners can gain strength from those
deficiencies. Howard observes that planners must have
had something going for them or they would have been
wiped off the field of combat long ago. Budget coordina-
tion based solely on review and control of agency spending
have proved inadequate. Needs for state action and
priorities among different programs have rarely received

systematic consideration. Annual time perspectives have

proven too short and budgeters have frequently failed to

151

provide executives with relevant and timely informa-
125

tion. Each of these problems presents clear oppor—

tunities for innovative planners to effect policy and

allocative decisions.

Within the environment of political decision-
making, planning should be concerned with the inputs to
the political system - demands for services, needs of
powerless citizens and with the characteristics of
conditions contributing to emerging problems confront-
ing government.

we planners must learn to crisis - monger in
our search for improved government. The Chinese script
for the word crisis has two characters - one stands for
danger and the other for opportunity. Crises are becom-
ing common occurrences and the opportunities for planners'
input are increasing.

Planners need to be prepared to operate in po-
litical settings. The days of dreaming and 30—year
development plans are rapidly dropping by the wayside.

If professional planning is to have a future, its prac—

titioners should fOllow the lead of budgeters and enter

152

the politics of policy making armed with the knowledge
that if they do their jobs properly, their impact can
be felt in the field of public administration for years

to come .

FOOTNOTES

10

ll

FOOTNOTES

See Aaron.Wildavsky, The Politics of the Budgetary
Process, (Boston: Little Brown & Company, 1964).

Robert A. Walker, "The Relation of Budgeting to
Program Planning,“ Public Administration Review 4,
no. 2 (Spring 1944), p. 108. See also S. Kenneth
Howard, Changing_State Budgeting, (Lexington:
Council of State Governments, 1973), p. 218, note
#43.

 

 

Aaron Wildavsky, pp, gip., pp. 1-5.
Ipid,, p. 2.

gp;g,, p. 3.

1219-. pp- 4-5.

William I. Goodman, Ed., Principles and Practice
of Urban Planning, (Washington, D. C.: Interna-
tional City Managers'Association, 1968), p. 335.

Ibid., p. 331.

F. Stuart Chapin, Jr., Urban Land Use Planning,
(Urbana: University of Illinois Press, 1965),
p. 349.

James W. Martin, "Some Relationships Between State
and Agency Budget Management," a paper delivered to
the State Government and Administration Seminar,
Institute of Government, University of North Carolina
at Chapel Hill, February 6, 1964, p. 2.

This discussion draws heavily from Allen Schick,

Budget Innovation in the States,(Washington, D. C.:
The Brookings Institution, 1971), pp. 3-6.

153

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

154

Ibid., p. 4.

Ibid., p. 4.

Ibid., p. 6.

S. Kenneth Howard, gp. cit., pp. 17-20. See also
David Easton, The Politicalggystem: An Inquiry
Into the State of Political Science, (New York:
Alfred A. Knopf, Inc., 1953).

Ibid., p. 19

Robert N. Anthony, Planninggand Control Systems:
A Framework for Analysis, (Boston: Harvard Uni-
versity Press, 1965), pp. 38-39.

Allen Schick, pp, cit., pp. 14-15.

Ibid., p. 18.

Charles G. Dawes, The First Year of the Budget of
the United States, (New York: Harper and Brothers,
1923). P. ii.

Anthony Downes, Inside Bureaucracy, (New York:
Little Brown & Company, 1967), p. 150.

 

Allen Schick, pp. cit., p. 24.
Ibid., p. 25.
See U. S. Commission on the Organization of the Exec—

utive Branch of the Government, Budgeting and
Accounting, (U. S. Government Printing Office, 1948).

 

Norman Pearson, ”The Budget Bureau: From Routine
Bushess to General Staff," Public Administration
Review, Vol. 3 (1943), pp. 126-149.

 

See Luther Gulick, "Notes on the Theory of Organiza-
tion," in Luther Gulick and L. Urwick (eds), Papers

on thg:§cience of Administration, (Institute of Public
Administration, 1937), pp. 3—45.

27

28

29

30

31

32

33

34

35

36

37

38

39

‘40

4].

155

U. S. Commission on the Organization of the Exec-
utive Branch of the Government, pp, cit., p. 8.

Ibid., p. 8.

Allen Schick, pp, cit., p. 2.

As reprinted in the U. S. Senate, Committee on
Government Operations, Planning — Programing -

Budgeting, Official Documents, 90th Congress,
lst Session (1967), p. 12.

 

RObert S. McNamara, The Essence of Security;
Reflections in Office, (New YOrk: Harper and Row,
1968). p. 88.

RObert D. Lee and Ronald W. Johnson, Public Budget-
ing Systems, (Baltimore: University Park Press,
1973). P- 128.

Alain C. Enthoven and K. Wayne Smith, "The Planning,
Programing and Budgeting System in the Department of
Defense," in Lee, pp. cit., p. 128.

Stanley B. Bottner, "Four Years of PPBS: An Ap-

praisal," Public Administration Review, 30 (1970),
p. 424.

As reprinted in the U. S. Senate, Committee on
Government Operations. pp, cit., p. 16.

Aaron Wildavsky, pp, cit., p. 5.

Richard F. Fenno, Jr., "The House Appropriations
Committee as a Political System: The Problem of
Integration," The American Political Science Review,
LVI (June, 1962), pp. 311-312.

Aaron Wildavsky, pp, cit., p. 22.

Ibid., p. 38.

Ibid., p. 41.

Ibid., p. 13.

42

43

44

45

46

47

48

49

50

51

52

53

54

55

156

Ibid., p. 11.
Ibid., p. 13.

As quoted in Allen Schick in "Governors and Their
Budgets,” a paper prepared for the Conference on
Budget Innovation in Michigan, May 22-23, 1972, p. 3.

Ibid., p. 14.

The Committee on Rules, U. S. House of Represen—
tatives, To Create a Joint Committee on the Budget,
82nd Congress, 2nd Session, 1952, p. 61.

Aaron Wildavsky, pp. cit., pp. 145—174.
Ibid., p. 140.

Allen Schick, “The Status of PPB in the States: An
Interim Report,“ presented at the Joint National
Meeting of the American Astronautical Society and
Operations Research Society, June 17-20, 1969.

Robert D. Lee and Ronald W. Johnson, pp, cit.,
pp. 140-141.

Selma Mushkin, ImplementinngPB in State, Cipy and
County, (washington, D. C.: The George Washington
University, 1969), pp. 132 and 139.

 

RObert D. Lee and Ronald W. Johnson, pp. cit.,
pp. 143-144.

These statistics were derived from the Program
Budgeting and Evaluation Status Survey, Report of
Results, (Atlanta, State of Georgia, 1973).

RObert J. Mowitz, The Design and Implementation of
Pennsylvania's Planning, Programming, Budgeting
System,(Commonwealth of Pennsylvania, 1971), p. 16.

 

Ibid., p. 17.

56

57

58

59

60

61

62

63

64

65

66

67

68

157

Ibid., p. 16. Pennsylvania includes an eighth pro-
gram — Administrative and Support Services - which
includes elements pertaining to the management
aspects of agency operations.

Allen Schick, "PPB: The View from the States,"
Spate Government, Winter, 1972, pp. 13-15.

Rdbert J. Mowitz, pp. cit., pp. 58-72 (appendix)
Ibid., p. 30.
From Frederick C. Mosher, "Limitations and Problems

with PPBS in the States,” Public Administration
Review 29, no. 2, 1969, pp. 162-163.

 

Yebezkel Dror, "The Planning Process: A Facet
Design," International Review of Administrative
Sciences 29, no. 1, 1963, p. 46.

 

Each of the following definitions have been extracted
from Yebezkel Dror's article, pp. cit., pp. 48—50.

As quoted by S. Kenneth Howard, pp, cit., p. 203.

Francis H. Parker, "Strategy and Effectiveness of
Planning in State Government,“ (Ph.D. dissertation,
University of North Carolina at Chapel Hill, 1970),
p. 209.

Francis H. Parker, pp, cit., Appendix G.

"State Comprehensive Planning,” in Urban Planning
Program Guide, Policies and Procedures for Federal
Assistance Under the Urban Planning Program, Depart-
ment of Housing and Urban Development, (Washington,
D. C., September, 1966), pp. 5-11.

Yebezkel Dror, pp. cit., p. 51.

Booz, Allen Public Administration Services, Inc.,
"Technical and Management Proposal for an Inventory
and Analysis of Existing Policies and an Analysis
of Alternative Policy Opportunities for the State

69

70

71

72

73

74

75

76

77

78

79

80

81

82

158

of Michigan,“ (Booz, Allen Public Administration
Services, Inc., New YOrk, September 15, 1972,
unpublished), pp. 4-7.

113119.” p- 6.

119.13” p- 6-

F. Stuart Chapin, Jr., pp, pip,, p. 359.

Herbert J. Gans, "The Need for Planners Trained in
Policy Formulation,” in Urban Planning in Transi-

tion, by E. Erber, Ed. (New York: Grossman, 1970),
p. 224.

 

Francis H. Parker, pp. cit., p. 210

Ibid., p. 222.

Ibid., p. 55.

Ibid., p. 57.

Herbert J. Gans, People and Plans: Essays on Urban
Problems and Solutions, (New YOrk: Basic Books, Inc.,
1968)! po 20.

Alan W. Steiss, A Framework for Planning in State
Government, (Chicago: Council of State Govern-
ments, 1968), p. 15.

Richard Lieber, "The Purpose of the National Con-
ference on State Parks," American Planning and Civic
Annual, (Washington, D. C.: American Planning and
Civic Association, 1940), p. 134.

Ibid., p. 135.

Francis H. Parker, pp. cit., p. 57.

Ibid., p. 58.

83

84

85

86

87

88

89

90

91

92

93

94

95

96

159

As quoted by George C. Perry, ”State Planning,"
American Planning and Civic Annual, (washington,
D. C.: American Planning and Civic Association,
1936), pp. 159-160.

Harold L. Ickes, Back to WOrk - The Stopy of the PWA,
(New York: The MacMillan Company, 1935), p. 79.

Alan W. Steiss, pp, cit., p. 19.

Robert H. Randall, "State Planning - 1937," American
Planning and Civic Annual, (washington, D. C.:
American Planning and Civic Association, 1937),

p. 179.

Ibid., pp. 175-180.
Five Years of State Planning, (Baltimore: Maryland

State Planning Commission, December, 1938), letter
of transmittal.

“Minutes of Meetings of the Wisconsin State Planning
Board, 1935-1943," (August, 1939).

National Resources Committee, The Future ofpgtate
Planning, (Washington, D. C.: U. S. Government
Printing Office, 1938), p. 5.

RObert A. Walker, pp, cit., p. 80.

John Miller, "A Resume of State Planning Activities
in 1939-40," American P1anning_and Civic Annual, 1940,

(Washington, D. C.: American Planning and Civic
Association, 1940), p. 113.

National Resources Committee, pp. cit., p. 9.
George B. Galloway, Postwar Planning in the United
States, (New York: The Twentieth Century Fund),

p. 81, as quoted in Alan W. Steiss, pp, cit., p. 23.
Alan W. Steiss, pp, cit., p. 24.

Ibid., p. 20.

97

98

99

100

101

102

103

104

105

106

107

108

109

110

111

160

Ibid., p. 26.
As quoted in Francis H. Parker, pp, cit., p. 87.

Alan W. Steiss, pp, cit., p. 27.

Francis H. Parker, pp, cit., p. 86.
Ibid., pp. 88-89.
Francis H. Parker, pp, cit., p. 88.

Daniel Grant, "Urban Needs and State Response:
Local Government Reorganization,” The States and
Urban Crisis, ed. Allen Campbell (Englewood Cliffs:
Prentice Hall, 1970), p. 74.

Advisory Commission on Intergovernmental Relations,
Regional Governance - Promise and Performance,

Vol. II, (Washington, D. C.: U. S. Government
Printing Office, 1973), p. 157).

California State Office of Planning, "California
State Development Plan Program, Phase II Report,"
(Sacramento, 1968), p. 26.

New Jersey Division of State and Regional Planning
Newsletter, Vol. V, no. 4, September, 1968, p. 1.

Delaware State Planning Office, "Annual Report for
Fiscal Year 1967," (Dover, Delaware), pp. 2, 10.

Horace H. Brown, "State Planning Experiences in
Structuring Strategies," U. S. Department of Com-
merce, State Development Strategies, (Washington,
D. C.: U. S. Government Printing Office, 1968),
p. 95.

Francis H. Parker, pp. cit., p. 172.

S. Kenneth Howard, pp. cit.} p. 220.

Ibid., p. 227.

112

113

114

115
116
117
118

119
120

121

122

123

124

125

161

Frederick T. Aschman, ”The Policy Plan in the Plan—
ning Program," Planning 1963, (Chicago: American
Society of Planning Officials, 1963), p. 105.

 

Francine Rabinovitz, "Politics, Personality and
Planning," 1967, Public Administration Review 28,
no. 1, 1968, p. 21.

Relevance, Reliance and Realism, Report of the Com-
mittee on State Planning, The National Governors'
Conference, July 22, 1968, (Lexington, Kentucky),
p. 4.

Francis H. Parker, pp, p32,, pp. 206—222.
S. Kenneth Howard, pp, pip., p. 227.
Epigp, pp. 228-229.

‘Ipid. p. 211.

See especially Rdbert A. Walker, pp, cit., p. 107.
S. Kenneth Howard, pp. cit. p. 214.

George S. Huffman, ”Report on Internship with
Michigan Office of Planning Coordination," summer,
1968. Institute on State Planning for the '70's
(Chapel Hill, North Carolina, 1968), p. 17.

William G. Milliken, Executive Directive 1971—l,
February 16, 1971.

The reader is invited to consult the PBES memorandums

generated as a part of the 1971-72 PBES Project. They

have not been published, but can be seen at the Plan-

ning and Policy Analysis Division in the Bureau of the
Budget.

Operations Plan: State of Michigan Planning Process
and Components, Executive Office, Bureau of Programs
and Budget, State of Michigan (Lansing, Michigan,
September, 1972), p. 1.

S. Kenneth Howard, pp, cit., p. 224.

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