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ED 024 144 EA coi 792 

ByTerrey, John N- 

Program Budgeting and Other Newer Management Tools in Higher Education: A Description and Annotated 

Washington Univ., Seattle. Center for Development of Community Coll. Education. 

Report No‘ Occasional "Paper "6 
Pub Date Jun 68 
Note" 62p. 

EDRS Price MF"S0.50 HC"S3.20 

Descriptors" Administrative PersonneK ♦ Annotated Bibliographies. Colleges. Critical Path Method. Decision 
Making. ♦Higher Education. *Management, MeiSods. ♦Program Budgeting. *Systems Analysis 
Identifiers"Delphi Technique. PERT. Planning Programming Budgeting System, PPBS. Program Evaluation and 
Review Techrtique 

The first part of this document describes the following four new managerial 
tools av“ - Sle to the educational ado>inistrator: Planning-programming-budgeting, 
systems a sis. PERT or the critical path method, and the Delphi technique which 
employs thr systematic solicitation and collation of expert opinion to achieve 
consensus n he formulation of goals. The second part is an annotated bibliography 
which lis'^s 73 books, reports, journal articles, bibliographies, and government 
publications related to the decision making process, publisned between 1963 and 
1968. (dK) 

zsi Ido va 









NUMBER «i • JUNE 19S8 




John N. Terrey, Associate Professor 


Higher Education 


I ; Central Washington State College 

*■ ^ 


Center for the Development of Community College Education 
University of Washington Frederic T. Giles, Director 

! Occasional Paper Number 6 June, I968 Seattle, Washington 

) ! 









Higher education is already a complicated business. It will become more 
complicated. Decision-makers will be called upon to make major decisions 
involving staff, students, programs and resources. These decisions should be 
good decisions; they should be based on careful analysis and sound judgment. 

This publication discusses some of the newer techniques: program budgeting, 
systems analysis, PERT and the Delphi method. It also includes an annotated 
bibliography for those interested in learning more about the managerial tools 

Robert S. McNamara, shortly after becoming Secretary of Defense in 1961, 
defined his managerial philosophy .^s follows: 

I think that the role of a public manager is very similar to the role 
of a private manager; in each case he has the option of following one 
of the two major alternative courses of action. He can either act as 
a judge or a leader. In the former case, he sits and waits until sub- 
ordinates bring him problems for solution, or alternatives for choice. 

T.n the latter case, he immerses himself in the operations of the 
business or the governmental activity, examines the problems, the ob- 
jectives, the alternative courses of action, chooses among them, and 
heads the organization to their accomplishment. In the one case, it's 
a passive role; in the other case, an active role. 

To be a leader with an active role requires an understanding of many 
managerial techniques, including the four tools which are the subject of this 

Planning-Programming-Budgeting is a system aimed at helping management, by 
studying alternative ways to attain educational objectives, make decisions on the 
allocation of resources. 


Systems analysis is nothing more than quantitative common sense aided hy 
modern analytical methods. It is simply a method to provide the decision-maker 
with relevant data organized in a way most useful to him. It is no substitute 
for sound and experienced judgment, and it is but one of the many kinds of infor 
mation needed by the college administrator. It will help college administrators 
to see more clearly the true cost and benefit of programs; it will not be able 
to measure accurately the cost and benefit of all possible programs in the campu 
setting. The realistic goal of systems analysis is the improvement of the 
decision-making process, not the creation of a mechanism that automatically 
produces ideal decisions. 

Although the CPM/PERT concepts have been used by some colleges , principally 
with constmction, the uses are much broader. The meaning of the acronym "CPM" 
means "Critical Path Method;" "PERT" means "Program Evaluation and Review Techn- 
nique." Evidence which relates the success of CPM/PERT is too impressive to be 
ignored. One college programmed its opening by means of PERT. Many processes, 
including registration, can be worked out by using PERT. 

Delphi, named in honor of the oracle Apollo, is a relatively new method 
employed to achieve a consensus without committee involvement. One concern 
shared by many is that systems analysis will place a premium on analytical and 
statistical studies. Such need not be the case. The Delphi method is one tech- 
nique which has been developed to obtain, in a systematic manner, judgments of 
experts. It does not require face-to-face confrontation, and it substitutes a 
computed consensus for an agreed-on majority opinion. One application of the 
method might be in developing long-range goals. Olaf Helmer has been the 
principal architect of the method. 

The Center has attempted to provide a timely service by compiling the 
annotated guide to materials relating to newer managerial techniques. These 
techniques are primarily tools for high level decision-making; they will not be 
worthwhile unless top administrators understand them, want them and use them. 

Frederic T. Giles, Director 
Center for the Development of 
Community College Education 





Among the newer managerial tools available to the educational administrator 
is the planning-programming-budgeting system (PPBS). It has particular relevance 
for higher education, especially publicly supported higher education. Jesse Unruh, 
Speaker of the California Assembly, stated what amounts to a warning: 

In my judgment, well-informed legislators, governors, and administrators 
will no longer be content to know, in mere dollar terms, what consti- 
tutes the abstract needs of the schools... . The politician of today 
is unimpressed with continuing requests for more input without some 
concurrent idea of the schools output.^ 

A college is a service-oriented, non-profit agency. As with most other 
service-oriented agencies, the outputs or benefits are difficult to meeisure, 
especially difficult in qualitative terms. Yet some measures can be developed. 

In a college setting, the needs, which the college is designed to meet, are 
seldom clearly perceived in terms of the region and the populations to be served 
by a college. Goals stated to meet the needs, if stated at all, are seldom 
quantified, are seldom specific. Objectives stated to meet the goals tend to be 
fuzzy. Overall planning is usually poor. At least, it is not as good as it 
should be. One of the reasons is that there is seldom any communication between 
planners and budgeters . 

Quoted by Elaine Exton in the American School Board Journal (February 1967), 15 . 


All colleges make use of budgets. Many colleges are extensively engaged in 
planning activities over extended time line horizons. What seems lacking, in a 
conceptual way, is a merger — an integration — of all these activities into a 
system conducive to decision-making. A system based on PPB requires constant 
reiteration of the word sequence: planning-programming-budgeting. The budget is 
a derived factor. It is not a primary document. It is derivative of larger 
aims and larger objectives. The iteration of the terms in PPB produces a system 
by which a program budget is based on the idea that analytic questions gain 
visibility and that economic variable' are addressed within an over-all planning 
conter^'. . The over-all planning context, in turn, generates alternative means for 
achieving on-going goals and objectives. The system should, therefore, explicate 
for the policy-makers the consequences of considered alternatives. As a result, 
the budget becomes a derivative of the process. Richard S. Eckaus assessed the 
present situation in this manner: 

The patterns that now exist represent the influence of tradition and of 
occasional crises more than they indicate rational planning... . Though 
we have muddled through in the past, the internal and external pressures 
on our system will not validate such behavior much longer. 2 

He sees a brighter future with the utilization of economic analysis. 

Economic analysis of education potentially can contribute a great deal 
to the understanding required for the formulation of an educational 
policy that will make the best use of human resources and contribute 

Richard S. Eckaus, "Education and Economic Growth," Economics of Higher 
Education edited by Selma J. Mushkin, p. 128. 


most to economic growth. Not all education, of course, has an economic 
motivation, but this does not preclude concentration on the economics 
of education.^ 

Harry Williams, in his study for the American Council on Education, provided 
this blunt warning: "One important argument for program budgeting is that if 

colleges and universities do not engage in this type of self-examination, then 
trustees, regents, and state legislatures may be expected to undertake their own 

The warning becomes quite real when public supported institutions realize 
that a "fifth of the nation's output is allocated, not by individual choices in 
markets, but by public decision-nmking."^ 

Recently the Governors' Conference Committee on State Planning drew the 
following conclusion: 

Every Governor understands that we must develop more sophisticated 
ways of sorting facts, of facing issues, of opening options, to make 
better decisions if we, as States, are to continue as effective part- 
ners in our federal system. We must have means to survey where we are, 
what the gaps in our efforts are, what our goals should be, what the 
alternative means and ways to these goals are, what the costs and 
benefits are, what the relative priority between various goals is. 

^ Ibid., p. 102. 

Harry Williams. Plccnning for Effective Resource Allocation in Universities, 
p. 59. 

^ Otto Eckstein. Public Finance (Second Edition), p. 21. 


The list is well known, but for some reason, tk.jse questions have 
never excited the imagination. 6 

Budgeting is both a scienca and an art. As a science it has its roots in 
economics. As an art budgeting must be viewed in its political context. Even a 
casual observer must conclude that the science of budgeting is being applied to 
large areas formerly considered solely the realm of the art of budgeting. The 
art has a base in science today. However, the converse is equally true, or 
should be true. The science permits the art full partnership. Katzenbach makes 
the point in his introduction to Williams' book. 

First, program budgeting is an approach, not a formula. Budgeting, 
therefore, must be conceived as an art as well as a science, a 
product of imaginative thinking as well as sound research. 

Second, program budgeting must deal with the future, because only 
by projecting figures can their true magnitude be appreciated. A 
decision on $10,000 a year becomes over a period of five years a 
decision of $50,000. 

Third, the satisfied budgeter is simply a man whose well of ideas has 
run dry or whose unwillingness to search for alternatives marks him a 
timid decision-maker. 7 

U. S. Senate. Criteria for Evaluation in Planning State and Local Programs, 
A Study by the Subcommittee on Intergovernmental Relations, p.v. 

Edward L. Katzenbach, Jr. "Foreward" to Planning for Effective Resource 
Allocation in Universities by Harry Williams, pp. v-vi. 


Before turning to other aspects of PPBS, it is necessary to repeat the point 
which Melvin Anshen makes so well: 

... it [program budgeting] will not in Itself provide answers to 
problems or nuke decisions for managers. It will not displace manage- 
ment judgment, wisdom, or experience. It will not detersdne object- 
ives. It will not judge performance. In short it will enlighten 
major decision issues and help managers to manage. ^ 

Defining PPBS 

On the morning of August 25, 1965, President Lyndon B. Johnson held a 
breakfast meeting with Cabinet members and agency heads. The president announced 
that a Plannlng-Programmlng-Budgetlng System would be installed throughout the 
Executive Branch. In a press statement following the meeting, he said: 

I am asking each of them [Cabinet mes^ers and agency heads] to 
immediately begin to Introduce a very new and a very revolutionary 
system of planning and programming and budgeting throughout the vast 
Federal Government, so that through the tools of modem management 
the full promise of a finer life can be brought to every American at 
the lowest possible cost.^ 

"In short," he said, "we W£int to trade in our surreys for automobiles, our cannon 
for new missiles. 


Melvin Anshen. "The Federal Budget as an Instrument for Management and Analysis," 
Program Budgeting: Program Analyaie and the Federal Budget edited by 
David Novlck, p. 23. 


Presidential quotes are from the Public Papers of the Preeident of the United 
States t Lyndon B, Johnson, 1936, Book II. 

10 _ .. 

Loo, ott. 





Actually there is nothing new in the PPBS ingredients except the order and 
emphasis of the parts within a total system. As early as 1924 a form of PPBS 
was in use at DuPont and General Motors. Gerhard Cohn^ Chief Economist of the 
National Planning Association^ says, "There is little new in the individual con- 
cepts of the planning, programming and budgeting system. The newness arises 
primarily from the combination of these concepts into a package, and the systematic 
application of the package to governmental decision-making. "12 

As an integrated whole the system was installed in the Department of Defense 
by Robert McNamara. When he took over the Department of Defense in January of 
1961, McNamara discovered several problems in the sphere of decision-making; 

1 . 

2 . 

There was no way for the Secretary to plan or identify objectives, 

There was a separation between the planners and the budgeters which 
created confusion for the decision-makers. 

There was an inability to specify the accomplishments of existing 
programs or to predict the expected accomplishments of a new 

There was no system for identifying the least cost alternative; in 
fact, there were no altsmatives. 

There was no method to show future year costs of the present 

There was too short a period of time for good evaluation prior to 

11 * . . 

See David Novick. Origin and History of Program Budgeting, The RAND 
Corporation, October 1966. 


From the Preface of Program Planning for State, City and County Obgeatives 

by Harry Hatry and John Cotton, a monograph from the State-Local Finances 
Project, The George Washington University, 1967. 

This is the sane 

The Secretary appointed Charles Hitch as Comptroller. 

Charles Hitch who was recently appointed president of the University of California 
to succeed Clark Kerr — an obvious indication that PPBS will have a full-scale 
trial in higher education. Hitch placed the entire defense establishment under 
nine "programs" instead of the multiple object groupings which pitted one service 
against another. Each of the nine "programs" was subdivided into "program 
elementa" — about 800 of them.^^ 

McNamara's innovation — from a manac^erial point of view — ^met with amazing 
success. No previous Secretary of Defense had been able to solve the fantastic 
management problems which beset the nation's defense establishment. The President 
observed the Pentagon experiment with interest. Based on his observation, he 
decided to employ PPBS throughout the entire Federal Government. 

In making his announcement to the members of the Cabinet and the heads of 
the numerous agencies. President Johnson instructed each division to institute 
PPBS. He declared that once in operation the system will enable policy-makers 

1. Identify our national goals with precision and on a continuing 

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. 

For fuller discussions of this phase of PPBS, see Charles Hitch and Roland 
McKean, The Eoononrioe of Defense in the Nuclear Age, Charles Hitch, 
Deoieion-Making for Defense, and Daniel Seligman, "McNamara's Management 
Revolution," Fortune (July 1965), 117-121 ff. 

4 . 


Inform ourselves not merely on next year's costs, but on the 
second, and third, and subsequent year's costs of our programs. 

Measure the performance of our programs to insure a dollar's worth 
of service for each dollar spent. 15 

This system will improve our ability to control our programs and our 

having them control us. It will operate year round, 
dies, goals, program proposals, and reviews will be scheduled 
throughout the year instead of being crowded into 'budget time.' 

system and carry out the necessary studies, each of 
^able> + central staff for program and policy planning account- 

^le dtrectly to you. To make this work will ^ake good peoSe, th^ 
best you now have and the best you can find. (Italics supplied) 

budget and later year programs presented 
in this new form by next spring. 1^ 



M to Cabinet Members and Agency Heads on the New Government 

Wide Planning and Budgeting System, op. ait. 

Ibid. The sentence above has been underlined in order to stress the fact that 

of PPBS is expensive. It requires internal reorganiza- 
flnLcL“nr*^?^ studies, data, analysis of alternatives, 

th?r r® ^"‘^““^st of all-the technical staff. Recognizing 

this. President Johnson, in his Budget Message on January 24, 1967, said, 
in part; I urge the Congress to approve the funds requested in the 

agencies to make possible this improvement 
IPPBS] in the manapment of Federal resources " Later in his Congres- 
sional Message on The Quality of American Government, “ March 17, 1967 
he urged support: To continue this vital work I urge that Congress 

approve the funds for PPBS requested in the budgets of various Federal 
agencies . 


Subsequently, the Bureau of the Budget issued Bulletin No. 66-3, which 
outlined the procedures by which the system was to be installed in the vast 
Federal Government. On July l8, 1967, the Bureau of the Budget issued Bixlletin 
No. 63-2 providing revised guidelines. It stated, in part: 

The principal objective of PPB is to improve the basis for major 
program decisions , both in the operating agencies and in the Executive 
Office of the President. To do this, it is necessary to have clear 
statements of what the decisions are and why they were made. Program 
objectives are to be identified and alternative methods of meeting 
those objectives are to be subjected to systematic con^jarison. Data 
are to be organized on the basis of major programs, and are to reflect 
future as well as current implications of decisions. As in the case 
of budgeting generally, PPB applies not only to current programs, but 
to proposals for new legislation. The budget is the financial expres- 
sion of the underlying program plan. The budget review will therefore 
be conducted primarily in program te3rms for each agency to which this 
Biaietin applies. It is essential that the Program Memoranda, Program 
and Financial Plan, and Special Studies provide adequate bases for 
these decisions. The budget, however, is submitted and must be justi- 
fied to the Congress in terms of individual appropriations. The 
program decisions must, therefore, be translated into appropriation 
requests, and the relationship for these requests to the program 
decision must be clearly set forth. 16 

The most recent guidelines from the Bureau of the Budget are to be found in 
Biaietin No. 68-9 (April 15, 1968). Few changes of significance are noted; how- 
ever, much greater attention is focused on the supporting docvanents , the Program 
Memorandum, the Program and Financial Plan and the Special Studies. 


Bureau of the Budget. 

Bulletin No. 68-2 (July 18, 1967). 



The documents referred to have very specific functions. For example, the 
Program Memoranda (PM) is a succinct presentation of the agency's program recom- 
mendations within the agency's objectives. The PM identifies the alternatives. 
It also provides support for the recommendation in terms of their contribution 
to the achievement of the objectives. 

The Program and Financial Plan (PFP) is a comprehensive multi-year plan of 
the objectives, including input and output. All costs are included. Periodical 
review and revision are essential elements. Usually a plan is rather specific 

for a period of about five years, but projected in less specific terms for 20 or 
30 years . 

The Special Studies (SS) are the analytical basis for the decisions on the 
program issues in the PM. Special Studies are in depth views of the objectives 
and the effectiveness of the efforts being made. Major emphasis is on specific 
recommendations for future action. For example, HEW rehabilitation, adult basic 
education, work-experience and training, vocational education and Title I of the 
Elementary and Secondary Education Act.^"i^ 

The primary distinctive characteristics of PPB arer^Q 

1. It focuses on identifying the fundamental objectives of the 

goverment and then relates all activities to these (regardless of 
organizational placement). 


Elizabeth B. Drew, 
pp. 22-24. 

"HEW Grapples with PPB," The Fuhtio Interest (Simimer 1967), 


Hatry and Cotton, op. 



2. Future year implications are explicitly identified. 

3. All pertinent costs are considered. 

4. Systematic analysis of alternatives is performed. This is the crux 
of PPBS. It Involves (a) Identification of the governmental object- 
ives, (b) explicit, systematic Identification of alternative ways 

of carrying out the objectives, (c) estimation of the total cost 
implications of each alternative, and (d) estimation of the expected 
results of each alternative. 

The analysis process, however, should provide an academic decision-maker with a 
considerably Improved understanding of the Issues and the alternatives open to 
him; the resulting program plan and its liiq>lementlng budget should thereby also 
be considerably Improved. 

Arthur Smithies provider the following concise definition for PPBS: 

Planning, programming, and budgeting constitute the process by which 
objectives and resources, and the interrelations among them, are taken 
into account to achieve a coherent and cos^rehenslve program of action 
for the government (campus or statewide system) as a whole. Program 
budgeting Involves the use of budgeting techniques that facilitate 
explicit consideration of the pursuit of policy objectives in terms of 
their economic costs, both at the present time and in the future. 

For fuller discussion, see David Novick, Editor. Frogrom Budgeting: Progrm 
Andlyeie and the Federal Budget^ especially the chapter by Werner Z. 
Ulrsch, "Education in the Program Budget," pp. 178-207. 

See also. Budgeting for National Objeotivee prepared by the Committee for 
Economic Development, January, 1966. 


Arthur Smithies. "Conceptual Framework for the Program Budget," Program 
Budgeting a edited by David Novick, p. 24. 


Implementing PPBS 

The primary considerations involved in program budgeting can be summarized 
under three headings: (1) structural or format, (2) analytical process and (3) 
data or information systems. 

The structural aspects of program budgeting are concerned with the establish- 
ment of a set of categories, usually from five to ten, which are oriented primarily 
toward the "end product" activities~the objectives and goals for the institution. 

In other words, the process requires an identification of needs for the 
region or population served. The needs are long-range and are, so far as possible, 
put in quantified terms. For example, the need for middle management personnel 
in King County will increase ten per cent each year for the next five years and 
continue thereafter to increase at about 2.5 per cent for another fifteen years. 
This need is stated as a goal for a college year's effort will become an 
objective. The total effort is found in the program structure. 

More systematically the development is as follows: 

I. Needs. Assessment of the needs for a protracted period of time in relation 
to an institution's ability to service. 

II. Planning Goals. The specific end results expressed in planning that^a college 
is expected to achieve usually over a multi-year period. 

III. Program Objective. A statement of specific work to be undertaken for the 

first planning year of a college's multi-year plan to achieve a desired goal 
developed during the planning process. 

IV. Program Structure. A series of out-put oriented categories which, when taken 
as a whole, encompass the total work of a college. The program structure is 
the means by which a college is able to classify all of its programs and 


activities in a manner that will permit a ready determination of the total 
program commitment for which a college is responsible. The program structure 
serves as a basic framework for a college's management processes and for 
relating these processes to others. 

Within a program structure are additional subdivisions: 

A. Program Category. The primary or initial divisions of the program 
structure. It is a grouping of activities or operations that serve the 
same broad objective or mission, e.g., occupational education, adult 
education, transfer program, library, general administration, student 
personnel, auxiliary services. 

B. Program Suboategory. A subdivision established within each program 
category, combining programs on the basis of narrower objectives con- 
tributing directly to the broad goal for the program category as a whole. 
A subcategory of the transfer program could be social sciences or 

Program Element. Usually is a subdivision of a program subcategory and 
comprises the specific services that contribute to a college's go;«ls. 
History and political science could be program elements under social 
sciences . 

D. Program Factor. A measure of program output normally in terms of numbers 
of units produced or per cent of completion. The number of student credit 
hours taken in history or the number of certificates granted to students 
in the mid-management could be program factors. 


The second primary consideration involved in program budgeting is the 
analytical process. This process pertains to various study activities conducted 
as an integral part of the system and within the framework mentioned above. The 
primary objective of this type of analytical effort is to systematically examine 
alternative courses of action in terms of utility and costs with a view to 
helping clarify the relevant choices open to the decision-makers. 

The principal tools include the f ollowing : 

I. Progpcm Memorandum. An analytical planning document for a specific Program 
Category that presents, in summary fashion, an analysis of the most pressing 
educational problems facing an institution. The Program Memorandum addresses 
itself to a future time period of at least five years and gauges the Impact 
of a proposed action over that time period. It is supported by a Program 
and Financial Plan. 

II. Program Strategy and Rationale. A plan, method, or series of actions for 

obtaining a specific goal or result, with a fundamental reason for adopting 
such a plan. 

III. Reeouroee Planning Sohedulee. Schedules used to accumulate cost and 

production information on a combined appropriation structure and program 
structure basis. They provide information for the Program Memorandum, Program 
and Financial Plan and the appropriation process. 

IV. Planning Goale. The specific end results expressed in planning that the 

organizations of a college are expected to achieve, usually over a period of 


V. Systems Analysis. (Systems analysis will be more fully described in the next 
section.) One of the special features of program budgeting is that it forces 
the analysis of alternatives. Systems analysis is the means by which proposed 
alternatives can be examined. Specifically, it is the use of quantitative 
reasoning aided by modern analytical methods to help choose a policy or course 
of action from among competing alternatives . 

The third primary consideration involved in program budgeting is the data or 
information systems. Hie information system must be able to generate the data 
which are needed to support the structural format and the analytical process. In 
addition, the information system should provide data for progress reporting and 
control so as to indicate how good or how poorly major program decisions are being 
carried out in the process of implementation. Likewise, the information system 
must provide data to serve as a basis for analytical process in making estimates 
of benefits and costs for future alternative courses of action. 

Techniques for reporting progress are built into the Review and Analysis. 
Review and Analysis can be quarterly or in any other segment of time agreed upon. 
The process is used within the scheduled period of operation. For a longer look, 
which would carry policy implications. Special Studies are used. Each program 
category usually is subjected to a special study on a periodical basis. The study 
involves an intensive examination of the program category or any of its parts. 

Williams predicted three major areas of concern in implementing PPBS in a 
College setting: (l) conceptual, (2) operational and (3) institutional. 


Conceptual problems are those encountered in the design of a 
programming system and in relating that system to existing administra- 
tive requirements which are likely to be inherent in the income- 
expenditure analysis at colleges and universities. 

Operational problems are those encountered in implementing a program 
system in the environment of some specific university. These problems 
are likely to be much more comprehensive in the initial phases of 
implementation, but they will endure to some extent because a program- 
ming system by definition is not a static and final set of techniques. 

Institutional problems are those defenses thrown up by bureaucratic 
organizations when any change threatens the citadel of established 
decision-making procedure. 21 

In summary, Melvin Anshen states the philosophy of PFBS as follows: 

It is the essence of decision-making, therefore, to choose among 
alternative ends and to ration scarce means to their accomplishment. 

At this level of description, no significant distinction exists 
between profit and non-profit organizations, or between private and 
public organizations. All require the ordering of goals, the analysis 
of their relative contributions to the great aims of the total under- 
taking, the development of plans, the measurement of alternative 
resource inputs and their relation to progress toward objectives, 
rational choice of feasible ends, allocation of means, monitorin g of 
progress and appraisal of results. The budget process is the activity 
through which this work is done. The budget is the instrument through 
which the process is made operational.^^ 

Williams, op. ait., pp. 52-53. 

Melvin Anshen. The Federal Budget ae an Instrument for Analysis, Planning, 
and Management, p. 1. 



Om feature of prograai budgeting which Ita advocates praise highly la that 
It forces an examination of alternative means to reach goals. Systasui analysis 
Is the Mans by which the alternatives can be objectively analysed. Alain C. 
Enthoven* Assistant Secretary of Defense for Systesui Analysis, declared that 
systems analysis "Is nothing more than quantitative or enlightened common sense 
aided by modem analytical methods." 

Charles J. Hitch defined the term as follows: 

Systems analysis Is simply a method to get before the declslon<‘maker 
the relevant data, organized In a way most useful to him. It Is no 
substitute for sound and experienced Judgment, and It Is but one of 
the many klnda of Information needed by the declslon’-maker.^ 

There are many misconceptions about systesui analysis (also called cost/ 
benefit analysis, cost/utlllty analysis, cost/effectiveness analysis). To some 
the system Is equated with magic and surrounded with mystery. It Is not magical; 

It la not Infallible. There need be no mystery about It. Another group fears 
that cost analysis will always recommend the cheapest alternative rather than the 
best. Whereas the former group displayed too much faith, the latter displayed 
too little. One of the basic features of the system Is the development of criteria. 
The purpose of analysis Is to meet the criteria at the least cost, which Is not 

^ Charles J. Hitch. 

DeoiBMn-Mdking for Defense, p. 53. 


th« BKmm as the cheapast method. However, the concept has limitations. It is 
subject to bias. It can be Improperly designed. Faulty data can be fed into the 
system. Yet, one must ask: What are the alternatives to analysis? (Parenthet- 
ically, one could note that a systems analysis could be done on the alternatives 
to analysis.) One alternative Is pure Intuition. Another Is expert opinion. 

Still another Is the committee system. 

THb Prooeae of Analyaia 

One of the most lucid explanations of systems analysis Is provided by Hitch 
and McKean (1960) In their book. The Eaonomioa of Defenee in the Nuolear Age. ^ 

They describe the five elements of systesis analysis: (1) Objectlve(s) , (2) 

Alternatives, (3) Costs, (4) Model(s) and (5) A Criterion. 

Since systems analysis Is primarily a tool for decision-makers to be used 
In selecting a policy or course of action, the first task of the analyst Is to 
ascertain what the objectives are. What goal Is to be met? This Is crucial; If 
wrongly made, the whole analysis can be addressed to the wrong problem. 

The alternatives are the means by which It Is hoped the objectives can be 
attained. Since each alternative Is thought of as a system and each alternative 
Is analyzed, one can see how the term "systems analysis" came Into existence. 

One example can be used to Illustrate the process. The objective could be to 
combat juvenile delinquency. The alternatives could Include education, antipoverty 
measures, police protection, moral rearmament and slum clearance. 

Charles J. Hitch and Roland N. McKean. The Eoanomios of Defenee in the Nuotear 
Age, pp. 118-120. 



Having established the objective and having identified the alternatives, the 
next step is to ascertain the costs. Costs are the negative values in the 
analysis. Costs are usually stated in dollars, but they are resources which, if 
used in one manner, cannot be also used in another. Their true measure must be 
thought of as opportunities which are precluded. This structure can be seen as 
cost/benefit analysis. 

Next comes the model. Models are abstract representations of reality. They 
help the analyst and the decision-maker to perceive significant relations in the 
real world, to change them a' ^ to base predictions on them. In systems analysis, 
the role of the model is to estimate for each alternative the costs that would 
be incurred and the extent to which the objectives would be attained. Put 
another way, the model permits the tracing of inputs and outputs so that the con- 
sequences of all the alternatives can be visualized. 

Finally comes the application of the criterion, which is the standard by 
which the alternatives are ranked. It provides a means of weighing cost against 

The positive values — the objectives— are weighed against the negative values— 
the resources used up. 

Hitch and McKean conclude: 

Judgment is always of critical importance in designing the analysis, 
choosing the alternatives to be compared, and selecting the criter- 
ion. Except where there is a completely satisfactory one-dimensional 
measurable objective, judgment must supplerent the quantitative analy- 
sis before a choice can be recommended.^ 

Ibid.j p. 120. 





J. D. McCullough provides a list of six features which are characteristic 
of systems ejialysis: 

1 . End-product orientation 

2 . Extended time horizon 
3 • Incremental costing 

4. Life cycle costs 

5. Dollars as the measure of resources 

6. Analytical approach and statistical techniques^ 

The Politioat Realm 

There is an inherent conflict between the systems analysis of PPBS and the 
world of politics. J. R. Schlesinger observes that: 

The pride of systems analysis is its ability to take a long run view 
and to disregard prior commitments, if they are too costly or non- 
productive . 

Ey contrast , in politics , one is concerned with more than the substant- 
ive costs and benefits involved in a specific decision area. One is 
engaged in mobilizing support by words and by action over a wide range 
of ill-defined issues. The ultimate criterion will remain the psycho- 
logical and voting responses of the general electorate and of important 
pressure groups. Positive responses in this realm are only irregularly 
correlated with those actions preferred on the basis of cost-benefit 

action tends to be short run. 5 

Ptanning-Progrcmrdng -Budgeting Coet- 

and the Political Process (Santa Monica, 


criteria. The focus of political 

J. D. McCullough. Cost Analysis for 
Benefit Studies ^ p. 10. 


J. R. Schlesinger. Systems Analysis 
The RAND Corporation, 1967), p. 


More pointedly Schlesinger says that the process of PPBS "cannot transmute 
the dross of politics into the fine gold of Platonic decision-making. . . . Poli- 
tical decisions in a democratic society can hardly be more 'rational' than the 
public, the ultimate sovereign, is willing to tolerate."^ 

Despite these "political" reservations, three states — California, New York, 
and Wisconsin— and two cities — Detroit and New York — have begun installing PPBS 
into their governmental processes. Surely more will follow. The work of the 
State-Local Finances Project at the George Washington University is working with 
five states, five counties and five cities in a pilot program. The project has 
already drawn one clear conclusion: "As PPBS is primarily a tool for high level 

decision making, it will not be worthwhile unless the high level management 
understands it, wants it, and uses it."^ 

^ Ibid., p. 29. 

^ Harry P. Hatry and John F. Cotton. Program Planning for State, City, and 
County Objeotivea, p. 35. 




Many activities on a canpua today are exceedingly complex. They reflect 
elaborate networks and require a careful ordering of the multitude of activities 
if a schedule is to be met. Planning and constructing a campus is one illustra- 
tion of a complex activity which represents a very elaborate network of events. 

A schedule must be developed which will tie all the events together into a net- 
work so chat the sequence, time and place are known. Program Evaluation and 
Review Technique (PERT) has been developed as a means of ordering potential chaos. 

The use of PERT in construction is now commonplace, but it has many other 
uses. Evergreen State College has set up the process for selecting its first 
president by using a simplified PERT chart to reflect the number, sequence and 
time for all the activities involved in the selection. There are many other 
campus programs to which PERT could be applied— catalog preparation, registration, 
eaq>loyment, budget preparation, etc. 

For supemetworks a computer is essential; however, in many routine 
applications of PERT no hardware is required. Often in supemetworks 30,000 or 
more activities will be scheduled. In fact, PERT was developed to coordinate the 
severrl thousand activities required in the Navy's Polaris missile project and is 
credited with helping to complete the project about two years ahead of schedule. 
This is all the more significant when one realizes that the history of such 

i***iicates that completion dates are often extended considerably. The 
two primary features of the technique are; (1) they provide a schedule so that 


the administrator can know at all times whether the project is on schedule and 
what steps can be taken if the project falls behind schedule and (2) there is a 
potential saving of large sums of money when the contractor or other producers 
are forced to plan and schedule the activities. 

Defining CPM/PERT 

The Critical Path Method and Program Evaluation and Review Technique are 
terms which refer to techniques of ayatemltiaing the planning, scheduling, con- 
trolling and evaluating phases of project management. As program budgeting 
brought the planners and the budgeters together so CPM/PERT brings together the 
project engineer and the manager. PERT was developed by the Navy, as noted 
above. The Critical Path Method is a modification developed by Unlvac. It is a 
network planning system employing a single activity-time duration estimate; the 
Irreducible path length is termed the "critical path", and it represents the 
shortest possible completion time according to the planned approach. 

As with most concepts, this one did not develop in isolation. The history 
is Interesting and Includes contributions from Frederick W. Taylor, Henry Gantt 
(the Gantt Chart), George Fouch (the Line of Balance), the Navy's Milestone 
Method, Polaris, Unlvac. There are certain to be other refinements, for the 
process seems to be evolutionary. 

Using PERT 

PERT, unlike CPM, may use multiple time estimates. CPM uses a single time 
estimate, the "most likely" time estimate between events. The most likely time 
estimate is defined as that time in which an activity can be completed, all 
factors taken into consideration. PERT, if multiple time estimates are used. 



e«ploys three estimates: optimistic, most likely and pessimistic. The "expected" 
ti»e is then mathematically computed by a simple formula. 

As with systems analysis, the first glance at a complicated network forces 
one to conclude that the technique must be extremely complicated. Actually, the 
technique is not complicated, especially for the manager, who needs to read the 
progress results. The descriptions are difficult; however, a few hours with one 
of several good books would provide valuable dividends. Most important for the 
college administrator is the need to remeid)er that CPM/PERT is only an information- 
generating process performed in a systematic and relatively uncomplicated manner. 

It incorporates the engineering and management experience and knowledge. 

The advantages are listed below: 

1. Planning and scheduling tend to become more disciplined than in earlier 


2. The magnitude of the project receives better definition. 

3. The separation of planning, scheduling, controlling and monitorine is 

possible. ^ 

4. The critical areas can be identified. 

graphical presentation of the arrow diagram allows visual 
constructive criticism. ' 

6. Management "by exception" reduces managerial effort for a project to 
between 15 per cent and 20 per cent of the total project. 

7. Coordination and communication i^>rove all levels of the project. 

8. Planners and schedulers become more coflq>etent in their skills. 

9. Time forecasts can be made more accurately. 

10. Planning can allow for outside effects (contingencies such as adverse 
weather and labor disputes). 


11. Management acquires a useful device for measuring the ability of the 
planner. ^ 

Desmond Cook provides a helpful checklist for the Implementation of PERT. 2 


1. Organizing for PERT Implementation 

A. Prepare policy statement on management support and participation. 

B. Assignment of organizational responsibilities for PERT 
Implementation and operation. 

C. Secure PERT guidance documents. 

D. Develop PERT Implementation plan. 

E. Prepare procedures handbook for PERT lar'lementatlon to Include such 
topics as: 

1. Methods of preparing and transmitting Input data during the 
original PERT application. 

2. Methods for providing updating Information as a result of 
computer processing or hand calculations. 

3. Distribution system for output data and reports to persons 
having declslon'-maklng authority. 

4. Types of management reports to be employed. 

5. Establish frequency of reporting. 

See Norton E. Marks » et al. CPM/PERTi A lyiagvccntna'tio Scheduling Prooedurc. 
pp. 71-72. 

See also Desmond L. Cook. Program Evaluation and Review Technique: Avplications 
zn Education and Robert W. Miller. Schedule j Cost, and Profit Central 
with PERT. 

Cook. op. dt.y pp. 84-86. 


6. System for network preparation including event numbering, 
standard activity descriptions, and designation of milestones. 

7. Data input and output formats (depending on computer used) 
to be employed. 

F. Conduct PERT training. 

Operational Considerations 

A. Work Breakdown Structure 

1. Develop work breakdown structure consistent with project 

2. Check to insure compatibility of work breakdown structure 
with proposal and contract items. 

3. Check end item subdivisions to insure coverage of all work 
contained in the summary item from which developed. 

4. Establish compatibility between work breakdown structure 
and the project organization. 

5. Assign organizational responsibility for work packages. 

6. Check to be sure work packages have well defined start and 
end points. 

B. Establish Network 

1. Develop master network to show general project plan. 

2. Develop detailed network and subnetworks based upon the 
master network and project work breakdown structure. 

3. Check events for uniqueness (i.e. , occurring only once). 

4. Check network for possible "loops". 

5. Select project sillestone events. 

6. Identify interface events. 

7. Check logic of final project network plan. 


8. Adopt event numbering system (sequential or random 
depending on con 5 >uter program to be used) . 

9. Secure time estimates for network activities. 

C. Process Network Data 

1. Enter directed date on network. 

2. Transpose network event and activity date to keypunch input forms. 

3. Audit input forms against network for con 5 >leteness and accuracy. 

U. Keypunch and verify PERT data. 

5. Process data. 

D. Analysis and Replan 

1. Analyze conq>uter output reports to note probability and slack 
conditions (i.e., problem areas). 

2. Verify reasonableness of problem by use of cross checks to locate 
errors in input and processing. 

3. Analyze critical and limit path to determine nature of constraints. 

k. Discuss possible problem areas with responsible organization or 
personnel for proposed solutions . 

5. Document proposed solutions and prepare for reprocessing. 

6. Correct networks and reprocess data. 

7. Establish Internal Schedule Dates, Consistent Directed Schedule 
Dates and Latest Allowable Dates . 

8. Prepare reports and displays for management. 

E. Update System 

l. Note completion dates for work elements accomplished. 

2. Secure time estimates for work elements in process. 

3- Review and secure, as needed, time estimates for work elements yet 
to be initiated. 


U. Incorporate management decisions into work breakdown structure and 

ns uiv orjK • 

5. Process data. 

Even a quick glance at the checklist above will show that the college 
administration would have an active and decision-making role in any project in 
which PERT is employed. However, the success of PERT depends more on decisions 
external to the network than to those internal to the network. The first-and 
most in5)ortant~decision in the successfia utilization of PERT is a firm decision 
to use PERT for planning and control of the entire project. To put the issue 
differently , it is worse to use PERT as a supplementary tool of planning and 
control than it is not to use it at all. 



I Planning horizons are being extended. As noted, the planning phase of PPBS 

, extends 20 years or more. Many statistics are available. Colleges, for 

} exaii 5 )le, can predict with some accuracy enrollments to 1980, staff needs, physical 

I facilities. More difficxilt are mattera of Judgment. What shotad be the limit 

of the enrollment? When should a second campus be started? What programs 
should be intiroduced? Something better than haphazard intuitive gambles are 

needed as a basis for planning. Educators cannot be fatalistic about the future, 
and they need not be. 

The futxire need not be viewed as \inique, imforseeable and inevitable. It 
\ fact, rather exciting to think that there may be several futures-alterna- 

tive futures. Speculation on the future is no longer in the tradition of 
H. G. Wells or even George Orwell. Daniel Bell is completing a book on the post- 
industrial society. Herman Kahn and Anthony Wiener published a book last year 
entitled Ygui* 2000 • Futuristic study is quite popular. For educatoirs, 

speculation about the future is not a parlor game; it is a hard, practical problem 
which needs clarification and decision now. One recent technique which could be 
of help to policy-makei*s is the Delphi technique. 

"The Delphi technique is a method for the systematic solicitation and 
collation of es^eirt opinions," says Olaf Helmer. "it is applicable whenever 
policies and plans have to be based on informed Judgment, and thus to some extent 
to vlrtu8illy any decision-making process"^ 

Olaf Helmer. The Use of the Delphi Technique in Problems of Educational 
1 Innovations, p. 1. 

I 29 





As with CPM/PERT, systems analysis and program budgetings the origin and 
Impetus came largely from research conducted for the military, Olaf Helmer of 
the RAND Corporation developed the technique in the early 1950 's. It was 
"declassified" about five years ago, 

The Delphi technique eliminates committee activity among experts. In its 
piece is a carefully designed program of sequential individual interrogations , 
usually by questionnaires, Interspersed with information and opinion feedback, 
Pfeiffer outlines the technique as follows: 

1) The first questionnaire may call for a list of opinions 
involving experienced judgment, say a list of predictions or 
recommended activities, 

2) On the second round each expert receives a copy of the list and is 
asked to rate or evaluate each item by some such criterion as 
Importance, probability of success, and so on, 

3) The third questionnaire Includes the list and the ratings, indicates 
the consensus, if any, and in effect asks the experts either to 
revise their opinion or else to specify their reasons for remaining 
outside the consensus, 

4) The fourth questionnaire Includes lists, ratings, the consensus, 
and minority opinions. It provides a final chance for the 
revision of opinions, ^ 

Generally, a consensus develops as the result of the convergence of opinions, 
Tet no meetings are held. No personalities are Involved, 

In some cases, there is no consensus. Opinion then tends to polarize at 
the extremes beyond the range within the 25 per cent and 75 per cent quartlles 

John Pfeiffer, New Look at Eduaation, pp, 152-153, 



around two distinct but opposing values. Even this consequence is of value to 
the decision-maker. 

The report of one pilot project might illustrate the potential of the Delphi 
technique. Three groups of educators participated in the experiment, which was 
related to educational innovations. All 50 participants were specialists. 

First, suggestions were obtained for specific educational innovations. 

These were edited and classified before being listed on the second questionnaire. 

Second, the respondents were asked to evaluate the innovations listed in 
terms of inqportance, desirability ai'd feasibility. Additions were accepted. 

Finally a list of 93 distinct proposals was compiled. These were grouped under 
several headings: 

A. Increase in student participation 7 proposals 

B. Educational R + D XO 

C. Model facilities 4 

D. Administration of school system 12 

E. Internal administration of schools 5 

F. Professional staff X8 

G. Costly new equipment 3 

H. Reorganization of instruction 22 

I. Adult retraining 4 

J. Education in the home 5 

K. Education of the deprived 3 

A subgroup assigned the items to gross cost categories: F (essentially free); 
L (low cost); M (medium cost); and H (high cost). All projected cost estimates 
were for five years. 

Third, a questionnaire asked the group to allocate a fictitious five-year 
budget of ten billion dollars among the proposed innovations. Subgroups were 
asked to allocate nine billion dollars among high-cost items, 990 million 


dollars among medium-cost items, 90 million dollars among low-cost items and ten 
million dollars among essentially free items. Thirteen items were selected for 
funds by the high-cost subgroup. Highest allocations went to raising teachers' 
salaries and starting public school below age five. Eighty-five items were sup- 
ported financially to some degree. The full ten billion dollars was allocated 
on a priority basis determined by experts without face-to-face contact. ^ 

Helmer summarized the features of the final consensus: 

1) The largest single item was $3 billion to raise teachers' salaries. 

2) The two next largest items totalled $1.65 billion and were aimed at 
increasing student participation— —encouraging life-long education by 
awarding grants to promising adults for educational leaves, and pro- 
viding public school education for children under five years old. 

3) In general, experiments with teaching machines, developing measures 

teaching ability and the effectiveness of innovations, and other 
exploratory studies, received large-scale support. 

4) Costly new equipment, including audiovisual material available for 
individual use and computerized libraries, were allotted some $700 
million — "not nearly as large a share as it might have absorbed, 
possibly reflecting the opinion that more experimental work should 
precede large-scale adoption of new devices." 

5) The category "reorganization of instruction and programs" Included 
twenty-two separate proposals, and practically all of them received 
budgetary support. 

6) All three groups (the experiment Included three groups of experts) 
rejected five high cost proposals: subsidizing private schools, 
subsidizing on-the-job industrial training, reversing the trend toward 

A full report of the experiment can be found in Inoenting Education for the 
Future edited by Werner Z. Hlrsch (1967). 

larger schools 
increasing the 

providing full pay sabbaticals to teachers, and 
salaries of high school teachers to college level. ^ 



The bibliography provided below is not intended to be complete or exhaustive. 
Changes relative to such new techniques as program budgeting, CPM/PERT, systems 
analysis and the Delphi method are rapid. However, it is hoped that the best 
available introductory material is listed. 

Following each entry is a letter in parenthesis. The letter is intended to 
designate the level of difficulty and the general focus of the entry. Below is 
an explanation: 

(A) Introductory/PPBS 

(B) General Treatment 

(C) Application to Education 

(D) Technical Treatment 

For example, under BOOKS, the first entry is Cook. This book provides a 

technical treatment with application to education as indicated by the designations 
(C) (D). 

Under the section on REPORTS, can be found several entries from the RAND 
Corporation. The RAND Corporation is a "think tank" in Santa Monica, California, 
with a large staff of researchers from almost every academic discipline. It is 
an independent, non-profit organization engaged in scientific research and 
analysis, primarily for governmental agencies. 

A list of reports is included in Selected RAND Abstracts ^ which is issued 
quarterly (March, June, Septeiri)er and December). Annual subscriptions are 













available without charge to academic and public libraries. Over one hundred 
libraries are depositories for all unclassified publications. The University 
of Washington and since 1967, Washington State University, are depositories. 
Publications are available on Interlibrary loan and all libraries are authorized 
to reproduce materials. Materials may be purchased directly. The address is: 
The RAND Corporation, 1700 Main Street, Santa Monica, California 90406. 













Don Vito, P. A. Annotated Bibliography on Systems Cost Analysis. The RAND 
Corporation, RM- 4848 - 1 -PR , March 1967. 

ais IS a rather complete hihliography prepared for the United States 
Air Force. 

Section III is concerned with program budgeting. Most of the listings are 
ec nic and/or difficixlt to locate as they relate to military operations. 

of the Budget Library. Program Analysis Techniques: A Selected 
Bxblxography (Revised). Washington, D. C., 1966. 

A bibliography for the advanced student covering eleven major areas from 
Health, Education and Welfare to Transportation. 

u. S. Libraiy of Congress. Legislative References Service. The Planninq- 
Programmng-Budgeting System: An Annotated Bibliography, by Robert L. 
Chartrand and Dennis W. Brezma. April 11, 1967, Washington, D. C. 

^extension of an earlier bibliography. Contains relatively few entries 
but provides, in most cases, rather complete notations. Selections would 
be good for general use. Most technical works are omitted. 


Cook, ^smond L. Program Evaluation and Review Technique: Applications in 
Educatton. (Cooperative Research Monograph No. 17, Office of Education 
U. S. Department of Health, Education and Welfare.) Washington: 1966. * 

(C) (D) 

Cook, of Ohio State University, has prepared a primer for educators on PERT. 
Chapter II provides, in elementary terms, the characteristics of a PERT 
network. Later he provides applications to educational problems. 
Bibliography included. 


Culbertson, Jack. "State Planning for Education" in PZccnn'i'ng and Effecting Needed 
Changes in Education. Designing Education for the Future, No. 3, edited by- 
Edgar L. Morphet and Charles 0. Ryan. New York: Citation Press, 1967, 

pp. 266-285. (C) 

An article written by an educator for educators . It provides a general view 
of the importance of planning under state leadership while introducing PPBS 
and Operations Research. 

This is an excellent introductory article to the whole subject of planning. 
References in the footnotes provide good suggestions for additional reading. 

Dorfman, Robert (ed.). Measuring Benefits of Government Investments. (Papers 
presented at a conference of experts held November 7-9, 1963). Washington: 
the Brookings Institute, 1965. (p) 

The in-troduction contains remarks by the editor which set the stage for 
measuring cost/benefit. One section is devoted to the topic "Preventing 
High School Dropouts" by Burton Weisbrod. Much of the book, as might be 
expected, is quite technical as one expert talks to another. 

Eckstein, Otto. PuhZic Finance. 2nd Edition. Englewood Cliffs, New Jersey: 

Prentice-Hall, Inc., 1967* (B) 

An excellent, general treatment of the issues related to public finance by 
a recognized authority. "A fifth of the nation's output is allocated, not 
by individual choices in markets, but by public decision-making." Chapter 
two discusses the budget process and cost/analysis. 

Helmer, Olaf. Social Technology. New York: Basic Books, Inc., 1966. (d) 

Helmer has,^^in Soc%al Technology ^ expanded on his work to date relating to 
the "Delphi" me-fchod of reaching expert consensus. Emphasis is on the social 
technology of "inventing the future". Much of the pioneer work reported in 
this short book was done at the RAND Corporation where Helmer has been 
working since 19 k 6 . 


Hitch, Charles J. Deoision-MaktTig fox* Defense, Berkeley: University 
California Press, 1966. 

Charles J. Hitch, now President of the University of California, 

Comptroller for the Department of Defense under Robert S. McNamara when 

Installed in 1961. With Roland N. McKean, he authored The Economics 
of Defuse in the Nuclear Age, published in 1960, ten months before McNamara 
asked him to join DOD. The basic work was the result of several years of 
stiray conducted by the RAND Corporation, including David Novlck's Efficiency 
and Economy in Goveznvnent (1954). ^ 

Incision-Making for Defense is the book version of the H. Rowan Gaither 
lectures in Systems Science delivered by Hitch in 1965. Chapter II is 
entitled "Plannlng-Programming-Budgetlng" — a first-hand account of the 
introduction of PPBS to the DOD. 

Chapter HI, "Cost-Effectiveness" describes the use of systems analysis to 
alternative ways of reaching national security objectives. 

The first and fourth lectures (chapters) represent a preview or overview 
snd retrospection or prospect. 

and Roland N. McKean. The Economics of Defense in the Nuclear Age. 

Cambridge; Harvard University Press, 1960. (Reprinted by Athereum, 1965.) 


This is the book which Hanson W. Baldwin called "The Bible of the Pentagon." 
McNamara selected Hitch as Comptroller of the DOD based on this work and 
the earlier efforts by the RAND Corporation. Subsequently, President Johnson 
made his August 25, 1965 pronouncement about "a very new and very revolu- 
tionary system" (PPBS) which was to be employed throughout the Federal 
government. In addition to what this basic book contributes to an under- 
standing of program budgeting, it also Introduces the reader to systems 
aMlysls. The process is sliiq>ly outlined in Chapter 7 under the subheading 
The Elements of an Economic Analysis," pp. 118-120. 

The bibliography is rather thorough, but most references are technical and 
references are to works prior to 1960. 



was t-ha 

Lyden, Fremont J. and Ernest G. Miller (eds.). VZ(mnvng-^Vvogv(mwir\g-^Bu 

A Systetns Approach, to Mcofi(xg&(noyit% Chicago: Marham Publishing Company, 

(A) (B) 

The editors are on the faculty of the Graduate School of Public Affairs, 
University of Washington. Included are nineteen articles covering a period 
fifteen years (1952-67). Many of the articles have appeared in The 
’Public Interest or Public Administration Review. 

Articles are grouped under six headings: PPB in Perspective, Budgeting 
and the Political Process, Approaches to Planning and Program Budgeting, 
the PPB Approach to Budgeting, The Systems Base of PPB and the Application 
and Critique of PPB. Also included in the Appendix are the familiar 
Bulletin No. 66-3, Supplement to Bulletin No. 66-3 and Bulletin 68-2 pub- 
lished by the United States Bureau of the Budget. 

Marks, Norton E. , H. Lyndon Taylor, Gary W. Schoen and Jeffrey C. Susbauer. 
CPM/PERTi A Diagrammatic Scheduling Procedure. (A publication of the 
Bureau of Business Research, Graduate School of Business, the Universitv of 
Texas.) Austin: 1966. (jjj 

With Cook and Miller, this booklet would provide a good introduction to the 
Critical Path Method and PERT. Of particular interest, is the application 
of the techniques to construction. 

Miller, Robert W. Schedule, Cost, and Profit Control with PERT. New York: 
McGraw-Hill Book Co. , 1968. 

This is one of the better written textbooks on PERT. It would be a good 
follow-up to Cook. (See Cook above) PERT has become standard practice 
in the construction industry, and the Federal government requires all con- 
tractors to PERT their schedules. State University of New York planners 
not only require critical-path schedules from contractors bidding for new 
jobs but also hold special meetings before hand to describe the new methods. 

PERT was developed to coordinate the several thousand activities required 
in the Navy's Polaris missile project and is credited with helping to 
complete the project two years ahead of time. 

Bt^etingx Progrcan Analysis and the Federal Budget. 
Cairi>ridge: Harvard University Press, 1965. (A) (B) 

nils book is a collection of essays—many of them reprints of papers prepared 

chapters divided into thrL pa?ts: 

Government Decision-making and the Program Budget. Actual and Potential 
Applications of the Program Budget Idea and Implementation and Operation. 

the «uthors are pioneers in the field: Novick, Arthur Smithies, 

Gene H. Fisher. Werner Z. Hlrsch. Melvin Anshen and Roland N. McKean. 

Fischer has contributed a chapter on the role of cost/utility analysis 

»y»tems analysis) in PPBS. Werner Z. Hirsch has a chapter 
entitled EduMtira in the Program Budget" (Chapter 7). Also of particular 

enting^PPBr chapter by George A. Steiner on the problems of Implem- 

Well documented but no bibliography. 

Pfeiffer. John. 

New Look at Education: Syeteme Analyeie in our Sohoole and 
New York: The Odyssey Press, 1968. 


ms brief and inexpensive book ($1 per copy) is something less than 
comprehensive and comprehensible" as Henry Chauncy describes it in the 
Foreword ; but it is short, recent and Introductory— the best present 
single source for an overall view of a systems approach to education. 

Little emphasis Is given to program budgeting. More emphasis Is given to 
systeu analysis. Much is covered but little in depth. Especially valuable 
are cupters 2. 5. 6 and 7. Chapter 6 deals with university research, 
including a discussion of the simulation model known as CAMPUS, now in 
operation at the University of Toronto. 

Also touched on briefly in the last chapter is a section on the Delphi 

John C. G. Boot and Teun Klock. Operations Researoh and 

(fiumtxtatvve Eooncmios: An Elementary Introduction. New York: McGraw-Hill 
Co^iany. 1965. f. 


While the subtitle announces that the book is an elementary introduction, it 
is somewhat puzzling to the educator. Introductions are made to moat of the 
management techniques now practiced; linear programming, optimum path (CPM 
and PERT), game theory, simulation and input-output analysis. 

Wildavsky, Aaron. The Politico of the Budgetary Process. Boston; Little, Brown 
and CoBq)any, 1964. (B) 

The budget of the United States must be approved by the Congress of the 
United States; it must be prepared and presented to the Congress by the 
P*^®*i*l®**t of the United States. Both the bud{;wt .aud the budgetary process 
are products of the political process. Professor Wildavsky analyzes the 
politics of the budgetary process. 

Brief mention is made of program budgeting (pp. 135ff.), but the concept was 
in its infancy at the time the book was written. 

Williams, Harry. Planning for Effective Resource Allocation in Universities. 

Washington, D. C. : American Council on Education, 1966. (C) 

The author is experienced in budgeting and systems analysis as a result of 
his work on economic studies for the Institute for Defense Analysis. This 
booklet (78 pp.) was prepared for the Commission on Administrative Affairs 
of the American Council on Education. 

Emphasis is placed on the fact that program budgeting is an approach, not 
a formula. This publication attempts to relate program budgeting to 
university setting. 


Burkhead, Jesse. ^ "The Theory and Application of Program Budgeting to Education," 
Trends in Financing Public Education. (Proceedings of the Eighth National 
Conference on School Finance, NEA Committee on Educational Finance.) 
Washington: The National Education Association of the United States. 

1965. (C) 


Burkhcad traces recent developments in program budgeting , provides a 
conceptual framework and suggests applications to public education. He 
argues^that program budgeting should not be Introduced as a control decree 
but rather as a system for evaluation. (In the same proceeolngs, are 
reports of progress with program budgeting in the Chicago and Memphis 
schools. Both experiences reflect greater visibility of program.) 

Committee for Economic Development. 
January, 1966, 65 pp. 

Budgeting for National Objeotives. 

A policy statement by the CED Committee for the Improvement of Management 
in Government. The budget is seen in two parts: as a focus for national 
policy decisions and as a tool for effective management. 

A need is seen for a continuous unified system of planning, prograimnlng 
and budgeting. The system as used in DOD is examined and a recommendation 
is made to extend the concepts of PPBS throughout the government. (President 
Johnson Issued such an order on August 25, 1965.) 

A recommendation is made for the intensive use of cost/benefit studies. 

Fisher, G. H. The World of Program Budgeting. The RAND Corporation, P-3361, 

May 1966, 30 pp. 

A general discussion of PPBS. The elements of the system are described, 
including its basic objectives, the development of alternatives, extended 
time horlson and costs. 

Cost utility analysis is described as an approach in aiding decision- 
making. Several examples are presented. 

Helmer, Olaf. Analyeie of the Future: The Delphi Method. 
P-3558, March 1967, 11 pp. 

The RAND Corporation, 


’’'-slmer expands upon his earlier writings on the Delphi Method. He contends 
' ,iat the "soft" ware sciences are about to make a dramatic breakthrough and 
that the Delphi method may be one means of getting to the breakthrough. Sub- 
jective opinion which is tested for consensus is needed in all decisions 
where objective measures are not absolute. Included in this category would 
be all social cost/benefit studies. 


Helmt^r) Olaf* 3/ze Usq of "tixo Dotphi 'xochniciuc in PvobZsns of EcmowtioTiciZ 

Innovations. Tlie RAND Corporation, P-3499, December 1966, 22 pp. (B) (C) 

The Delphi Technique is a method for the systematic solicitation and 
collation of expert opinions* It is intended to avoid personality pressures 
and related complications and to get at expert opinion without bringing the 
experts together face-to-face. 

Helmer illustrates the method in operation by applying it to the problem 
of educational innovations. 

The importance of the technique to PPBS is that it is a means by which 
human judgment can be utilized as well as quantitative measures. 

Hirsch, Werner Z. Integrating View of FederaZ Program Budgeting. The RAND 

Corporation, RM-4799-RC, December 1965, 27 pp. (b) 

Hirsch has tried to prepare a follow-up to the Novick book (see above) by 
suggesting an integrated view to Federal budgeting. He suggests five major 
decision areas: maintenance of national security, maintenance of law and 
order, social development, economic development and general government 
operations. He applies this structure to the budget for FY 1965. One 
decision area, for example, is social development, which includes health, 
welfare, education and urban housing and community development programs. 

Cost for FY 1965 was $32 billion. 

Hirsch addresses himself to the problems of planning, appropriations, 
administration and control. 

Klein, Burton H. PubZia Administrat-f-on and the Contemporary Economic Revolution. 
The RAND Corporation, P-3586, March 1967, 15 pp. (b) 

Klein traces the development of the ”new economics" as an example of the lag 
between economic theory and political practices based on economic theory. 

He then projects the same lag to systems analysis and political decisions. 
Conflicts must result. 


McChillough, J. 

D. Cost Analysis for Planning -Prograntning-Biidge ting Cost Benefit 
The RAND Corporation, P-34Y9, November 1966 , 63 pp. (b) 

Includes a general discussion of the role of cost analysis in cost/ 

effectiveness studies. Cost/effectiveness is seen as a tool for long-range 
planning . 

Education is used as an illustration. 
A list of references is included. 

McGown, Wayne F. How to Apply Programming-Planning-Budgeting to your State," 

A Report Prepared for the National Conference of State Legislators, 
Washington, D. C., 1966 . ( 3 ) 

Ihe author is director. Bureau of Management, Department of Administration, 
State of Wisconsin. His report on the installation of PPBS in the State 
of Wisconsin is optimistic. He found the system especially helpful to the 
legislature in considering educational programs. 

Novick, David. Program Budgeting in the Department of Defense. The RAND 

Corporation, RM-4210-1-RC , September 1964, 29 pp. (a) 

Discusses the introduction and development of the concept in DOD. 

Stresses the role of the decision-maker. 

Planning is considered in long-range terms. The annual budget is a part 
of the long-range plan. Outlines the application of program change propo- 
sals used to keep the budget (the Program and Financial Plan) addressed to 
current issues and needs. 

Presidential Task Force on Career Advancement. Investment for Tomorrow, A 

Report to the President of the United States. Washington, I 96 Y. (b) 

President Johnson assigned a special task force to make recommendations on 
post-entiy training and education for the Y60,000 Federal professional, 
administrative and technical employees. Chapter 9 outlines PPBS and points 
out the need for new professional personnel. The system will reg.u.ire a 
large number of specialized personnel. 


Quads, E. S. Cos't—EffeQ't'ivGYiess: Seine Tvendo %yi Avfitvsis . The RAND Corporation, 
P-3529, March 1967 . " * (B) 

In this paper, Quade moves away from a concentration on the mathematical 
aspects of analysis to emphasize the "judgmental" aspect of analysis . 
Computers of today are frail tools when compared to the computers of the 
future. Judgment by experts must make similar strides. Quade discusses 
the Delphi method of using expert judgment in reaching a consensus . 

Exaiples are provided. 

• Systems AnciLysis Techniques fox> Ptanning-I^gvcmning-BudgetiYig . The 

RAND Corporation, P-3322, March 1966 . (B) 

Quade *s paper is an excellent introduction to systems analysis. It provides 
a detailed definition, an outline of the process, and a theoretical applica- 
tion. Tlie five steps of analysis are discussed: (l) decision-maker's 
objectives, (2) alternatives, (3) costs, (4) model and (5) criterion. 

Also discussed are the limitations of systems analysis. 

Schlesinger, James R. On Relating Non-Teohnioal Elements to Systems Studies. 

The RAND Corporation, P-354-5, February 1967 , 34 pp. (b) 

With low level decisions , orthodox methods of systems analysis work quite 
well. The higher the level of decision the greater the risk in applying 
systems analysis. Excellent studies involving the total society could 
result in misleading policy decision-making. The implications should not 
be made that technical information is not needed. There remains a need 
for judgment by decision-makers. 

• Systems Analysis and the Rolitioal Process. The RAND Corporation, 

P-3464, J\ine 1967 , 31 pp. (B) 

The author is concerned with systems analysis at the practical level— the 
political level — rather than at the abstract level. In the abstract 
systems, the analysis is good, but it, too, has built-in bias, inadequate 
information bases, possibly erratic methodology. Finally, systems analysis 
needs to reckon with the political world. 



The higher the order of decision to be made the lower are the chances that 
adequate information can be provided the decision-maker by the systens 

State- Local Finances Project of the George Wrshlngton University. FZocnnir g- 

Prograrmting-Budgeting fox' City, State, County Objectives. Selma J. Pushkin 
Director. (A) (B) 

This project, supported in part by the Ford Foundation, is a 5x5x5 design: 
five cities, five counties and five states. Can PPBS be adapted to sr.ate 
and local governmental fiscal problems? To date there have been some intro- 
ductory materials and eight publications under notes, e.g., "PPB Note 1." 

Harry P. Hatry and John F. Cotton did a general introduction in a booklet 
"Program Planning for State, County, City." Part One deals with the con- 
siderations in instituting a PPBS System. Part Two illustrates the apjpli- 
cation of systems analysis to PPBS. A brief bibliography is included.' 

The notes included the following: 

Note 1: "Is an Integrated Planning-Programming-Budgeting System Useful 

for Our Jurisdiction?" 

Note 2: "Administrative Framework for Establishing Planning-Programming- 

Budgeting Systems in States, Cities and Counties." 

Note 3: "Development of Initial Instructions to Inaugurate a Planning- 

Progranming-Budgeting System." 

Note 4: "Staffing and Training for a PPB System in State and Local 


Note 5: "Developing an Objective Oriented Governmental Program Structure." 

Note 6: "The Role and Nature of Cost Analysis in a PPBS System." 

Note 7: "Output Measures for a Multi-year Program and Financial Plan." 

Note 8: "The Multi-year Program and Financial Plan." 

Most of the notes conclude with a brief bibliography. 




Banks I Robert L. and Arnold Kotz. "The Programs Budget and the Interest Rate for 
Public Investment," Public Administration Review, XXVI: 4 (December 1966). 

283-292. (D) 

The authors have introduced a rather technical aspect of PPBS, the 
calculation of interest rates for prolonged periods of time. What standards 
should planners use in systems analysis applications to alternatives? 

Dilley, Frank B. "Program Budgeting in the University Setting," The Educational 
Record, 47: 4 (Fall, 1966), 474-489. (C) 

The author is not an economist. In fact, he is a professor of philosophy. 
The article grew out of Dilley 's experience as an academic intern at the 
University of Denver (1965-66). The emphasis is not on budgeting but rather 
on planning. College administrators would appreciate this calm, dispassion- 
ate presentation of the advantages, methods and difficulties encountered in 
program budgeting. 

Drew, Elizabeth B. "HEW Grapples with PPBS," The Public Interest, No. 8 
(Summer 1967), 9-29. 

Drew has taken one agency (HEW) which has taken PPBS seriously and has 
traced the first year of experience. Gardner and William Gorham took PPBS 
seriously. (Drew observes: "How well PPBS has worked, agency by agency, 
has depended more than anything on how seriously the man at the top has 
taken it... .") 

During the first year, Gorham and his staff selected five areas for study: 
disease control, human investment programs (vocational rehabilitation, 
adult basic education, etc.), maternal and child care, improving income 
maintenance, and comparing programs to aid higher education. Four were 
completed. The last— higher education— "foundered on an astonishing lack of 
basic information." Following a short introductory section, the article is 
devoted to an explanation of the four completed studies. 


Dror, Yehezkel. "The Planning Process; A Facet Design," International Review 

of Administrative Soienoesj XXIX; 1 (January 1963), 46-58. (D) 

Professor Dror provides a philosophical setting for the planning process ; 

A. The general environment of the planning process. 

B. The subject-matter of the planning process. 

C. The planning unit. 

D. The form of the plan to be arrived at. 

• "Policy Analysts; A New Professional Role in Government Service," 

Public Administration Review, XXVII; 3 (September 1967), 197-203. (B) 

The author argues that policy analysis should become a new professional 
role in government, operating within the political and organizational 
setting as a new component which contributes to aggregate policy-making 
without preempting in any way the functions of the politicians and line 

Under PPBS, where decision-making based on analysis is stressed, the need 
is more clearly perceived. Policy analysis is needed more than systems 
analysis . 

Fumo, Orlando F. "Program Budgeting and School Quality," AEDS Monitor, V; 9 

(April 1967), 13-16. (C) 

The author, director of research for the Baltimore City Public Schools, 
observes that program budgeting becomes significant when goals and 
objectives are clear. It offers no panacea to the financial woes of 
education. Its paramount value is that it stresses the importance of 
goals and provides visibility to the programs designed to achieve the goals. 

Gorman, William. "Notes of a Practitioner," The Public Interest, No. 8 (Summer 
1967) , 3-8. (B) 

The author. Assistant Secretary for the Program Coordination, HEW, 
introduced PPBS into his department. His main purpose is to ease concerns 
about the analytical emphasis which seems to many to be replacing judgments. 

and the hopes of PPBS in HEW. ^ ^ manner the problems 

Greenhouse, Samuel M. "The Planning-Programming-Budgetinc System- Ratinnai*^ 



One of the better articles from the point of view o-f a T>T.Qr.+-,- + - w 

Objectives, programs. alte^S 

measurement, input and systems analysis. He defines each tem operltlonaHy. 
"^^^’ipelrios-li™ Washington." The Publie Interest. No. 4 (Summer 

^ popular article reflecting the role of pp"rc; o-v. 

foUouing President Johnson?s August 85 dirertilf^”?^ departments 

a revleu of the theory hv relatinrcu^vi^i ^ “1=° provides 

his.. Novich. Hitch.'^cSa^^SS?L^"TLL“2;?^= earlier vrltiugs . 

She concludes that analyses »111 become powerful weapons in persuasion. 

SfdecL"l“"\'rthf?ed:^ goverS:ngT 

identifying pJowS SS. ^ ® alternatives, and by more quickly 
One of the specific cases he discusses is education. (See pp. 865-266.) 

(Ml’’S66)r46-497.’^°'"'°"''“"“® National Reeord. 


Is placed upon a full emamlnatlon of alternatives wUhin hu^t pre^aMon 

^i--aad With the advantages outweighing 






McCrea^^lEdward Federal Budgeting System," Think, 32: 2 (March- 


0* '■'■“S in the DOD in a general, journalistic manner. 
Then the author raises the question; Can PPBS be transferred to other 
agencies? His answer, based on interviews, is a strong yes. In fact, the 
agencies welcome the change. They welcome the change because the new system 
provi e top executives with more information and a greater oppor~ 
tunity to have w impact on the agency. One problem is the lack of trained 
personnel to make the system function effectively. 

Sldger*^^*^^^ Illustrates reasonably well the role of the Bureau of the 

The author quotes Henry Rowen, When you get to an inner core of values where 
people differ, analysis stops. But analysis lays bare these differences." 

A brief comparison is provided between the old and new budget formats for 
the Coast Guard. 

McGilvery, Francis E. "A Management Accounts Structure " 
Review, XXVI: 4 (December 1966), 277-283. * 

Public Administvation 


PPBS brings together planners, budgeters, accountants, executives — all with 
their own private language. The success of the program, the author contends, 
depends on a common language. He proposes a "management accounts structure" 
based on the practice in the Department of Labor. 

Mason, ^omas R. "A Basis for Program Planning Higher Education," Sooietu for 
College and Umverevty Planning Quarterly, I: 3 (December 1967), 1-4. 

The author declares that the qualitative values of a college's "products" 
cannot be measured, they must be judged. However, the organized instruc- 
tional program lends itself to quantitative description as the basis for 
estimating the resources required to support it. 

A model is provided based on the author's experience at the University of 



Robinson, Daniel D. and W. Lynn Fluckiger. "Computer-Assisted Planning for 
Colleges and Universities," 'Aanagement Controls, XV: 4 (April 1968), 


The authors stress the growth aspects of higher education and the burdens 
the growth places on careful placement of scarce resources. Recommendations 
include the application of PPBS and the utilization of a computer model for 

A case study is provided — Fairfax University. 

Rowen, Henry S. "PPBS: What and Why," Civil Service Journal (January-March 1966), 


The assistant director. Bureau of the Budget, provides a brief history, 

description and analysis of PPBS. The article is not written in technical 

Schelling, Tliomas C. "PPBS and Foreign Affairs," The Public Interest^ No. 11 
(Spring 1968), 26-36. 

This article was originally prepared for the Subcommittee on National 
Security and International Operations, United States Senate (The Jackson 
Subcommittee). Its merit is that it places the discussion in a policy area 
not dominated by economic thinking and economic measures. Schelling does 
restate a familiar refrain: "... PPBS is a method or procedure whose worth 
depends on the skill and wisdom of the people who use it. " 

SchlcK, Allen. "The Road to PPB: The Stages of Budget Reform," Public 

Administration Review, XXVI: 4 (December 1966), 243-258. (b) 

The PAR for December 1966 is devoted to a symposium on PPBS with several 
contributors. It is a valuable basic document. 

Schick traces budget reforms from 1920 to date. The Budgeting and Accounting 
Act of 1961 is his base. Basically he views three stages of development: 
Control, Management and Planning. His conclusion is that the "ethos of 
budgeting will shift from justification to analysis." 














Seligman, David. "McNamara’s Management Revolution," Fortune ^ LXXII: 1 (July 

1965), 117-120, 246-250. (A) (B) 

The author traces in journalistic style the management revolution McNamara 
introduced in the DOD. Included is a sketch of Mr. Hitch's "Marvelous 
Budget-Making Machine." 

A related article by the staff of Fortune is "Systems Analysis by Land, Air, 
and Sea" which relates in laymen’s language Alain Enthoven’s analytical 
response to McNamara’s question: How many more transports should the Defense 
Department be ordering? 

Takasiki, Richard S. "Translate Programs into Dollars with Federally-Tested 

Budget," College and University Business, 42: 5 (May 1967), 78-80. (C) 

The author. Vice President for Business, University of Hawaii, looks at 
the new Federal budget process as a means for academic institutions to stress 
outputs rather than inputs, or program budgeting. 

Tough, Coulson and James Skarp. "A Systems Approach to Budgeting Can Open 

Communication Bottlenecks," College and University Business, 44: 5 (May 1968), 
68-72. (C) 

The authors relate their eiqperiences at the University of California, Irvine. 
They developed a systems approach to planning which united capital and 
operating budgets. Basic to the system was the management information 
system (MIS). 

A brief bibliography is provided. 

Ways, Max. "The Road to 1977," Fortune, LXXV: 1 (January 1967), 93-95, 194-197. 


Ways examines the means available to prepare for the future. He includes in 
his techniques both PPBS and systems analysis. Of systems analysis he says: 
"This involves ways of arraying ends and means so that decision-makers have 
clearer ideas of the choices open to them and better ways of measuring 
results against both expectations and objectives." 



t hiaifBiifftifiiTiTiaiJ 

Of the techniques associated with PPBS he says : "They are beginning to be 
recognized as the greatest advance in the art of government since the 
introduction nearly a hundred years ago of a civil service based upon 
competence. " 

Hildavsky, Aaron. "The Political Economy of Efficiency: Cost Benefit Analysis, 
Systems Analysis, and Program Budgeting," Fuhlio Adminiatration Roview, 

XXVI: 4 (December 1966), 292-310. (B) 

The author, a professor of political science, makes the argument that 
efficiency in the economic realm may not be the only consideration in the 
political realm. He recognizes the value of PPBS, of systems analysis, 
and of co£C/benefit studies, but he also recognizes that decisions must be 
made in the political realm. While economists and analysts should not 
dominate political discussion, neither should political scientists ignore 
economics reality. 


State of California. Department of Finance. Rrogrcaming at'A Budgeting Syatem. 
1967,, 66pp. ^ (D) 

The guide for utilization of the program budgeting method in the State of 
California. Introduced under former Governor Edmund G. Brown, it has been 
continued under Governor Ronald Reagan. 

The directions seem to follow closely those prepared by the U. S. Bureau of 
the Budget. 

Several appendices provide a chronology of the development of the system 
over two state administrations. 

State of New York. Guidelines for Integrated Planning-Prograrming-Budgeting. 
Prepared by the Office of Planning Coordination and the Division of the 
Budget, Albany, 1967. 64 pp. (D) 

The guide for the State of New York to be used in the installation of PPBS. 

U. S. Bureau of the Budget. Bureau of the Budget Bulletin No. 66-3, 
October 12, 1965. 13 pp. 

Washington , 

T^s b^letin is the first follow-up to heads of departments and agencies 
after President Johnson declared his intent to install PPBS throughout all 
Federal pennies. Outlined ai'e the main components of the system with dir- 
ections for applying them to the budget preparation. 

*5® Budget. Bureau of the Budget Bulletin No. 66-3 (Supplement). 
Washington, February 21, 1966. 31 pp. (D) 

^pplement provides added information in detail on two aspects of PPBS— 
Financial Plan (PFP) and the Program Memoranda (PM). Both 
the PFP and PM had to be submitted to the BOB by May 1, 1966. Both are 
essential to the budget preview which is conducted in the spring. 

PFP is the budget in program format. The PM provides the analytic 
backup for the program categories in the PFP. 

Attachments provide illustrative guidelines. 

U. S. Bweau of the Budget. Bureau of the Budgeu Bulletin No. 68-2. Washington, 
July lo, 1967. 11 pp. (D) 

Ibis bixlletin replaces Bulletin No. 66-3 and the supplement to it. The 
directions reflect many refinements following almost two years of experience. 
Definitions are much sharper. An illustrative annual, cycle fo” budvet 
preparation is included. ^ 

U. S. Bureau of the Budget. Bureau of the Budget Bulletin No. 68-9. Washington, 
April 12, 1968. l6 pp. (D) 

This bulletin supersedes BOB Bulletin No. 68-2. It is a set of guidelines 
to heads of executive departments and agencies and includes the latest 
directions for preparing budgets under PPBS. Greater en^hasis is placed on 
analysis to support program decisions. Establishes a test of five-year 
projection procedures to improve future guidelines in this area. 

u. S. Congress. Headings Before the Subaoimittee on Economy in Government of the 
Joint Economic Coimittee, Congress of the United States. 90th Cong. , Jst 
Sess., Sept. lA, 19, 20 and 21, 1967. W (^7 

A thorough analysis of PPBS is aade by experts at state and national levels, 
from agencies and universities and corporations. Testimony taken includes 
a statement from William Gorham (HEW). Several speakers comment on the 
introduction of PPBS in Wisconsin. The chairman. Senator William Proxmire, 
gave the following purpose for the investigation: 

At the present time, the cash flow through the Federal sector 
amounts to approximately $175 billion. In addition. State and 
local governments now account for more than $60 billion. Certainly 
at a time when approximately 30 per cent of our national income 
flows through the public sector, it is of the utmost importance 
that our policy-makers be armed with the best possible tools for 
evaluating the effectiveness of our public programs and 
expenditures . 

U. S. Congress. Joint Committee on the Organization of Congress. Hearings. 

(pages 1775-1873) 89th Congress, 1st Session. Washington, D. C. : U. S. 

Government Printing Office, 1965. 

Charles L. Schultze, then Director of the Budget, presents his views on PPBS. 

U. S. Senate. Committee on Government Operations, Subcommittee on Inter-govern- 
mental Relations. Criteria for Evaluation in Planning State and Local 
Programs, A Study. 90th Congress, 1st Session (July 21, 1967). Washington, 
D. C. ; U. S. Government Printing 0f';ice, 1967. (B) 

Senator Edmund S. Muskie expressed a concern, shared by many governors f 
about the ability of the states to be effective partners with the Federal 
government unless the states could improve their abilities to make decisions. 
He invited Harry P. Hatry to relate PPBS to the state dilemma. Hatty's 
study is entitled "Criteria for Evaluation in Planning State and Local 
Programs . " 

Bibliography included. Illustrative program structure presented. 

U. S, Senate, Subcommittee on National Security and International Operations, 
Committee on Government Operations. Planning-Programning-Budgeting. 90th 
Congress, 1st Session and 2nd Session, 1967 and 1968. 

To date the Jackson Subcommittee has produced eight publications in the 
examination of PPBS. 

1. "Initial memorandum" Briefly defines PPBS, traces its applica- 
tion in the DOD, relates it to the State Department, and 
suggests implications for the President and Congress. 

August 11, 1967. 

2. "Official Documents" Includes the basic documents relating 

to PPBS; President's statement to the Cabinet (August 25, 1965) 
President's news conference (August 25, 1965), President's 
Memorandum to Heads of Departments (November 17, 1966), excerpt 
from President's Budget Message (January 24, 1967), an excerpt 
from President's Message The Quality of American Government 
(March 17, 1967). 

Also included in full is the Bureau of the Budget Bulletin 
No. 68-2 (July 18, 1967). 

3. "Selected Comment" A collection of eight articles on PPBS and 
for systems analysis by experts: Alain C. Enthoven, Charles J. 
Hitch, Klaus Knorr, Frederick C. Mosher, David Novick, 

Admiral H. G. Kickover, Harry S. Rowen and Aaron Wildavsky. 
(Novick' s article is entitled "Origin and History of Program 
Budgeting. ") 

4. "Hearings, Part 1" Consists of the testimony of Charles L. 
Schultze, then Director of the Budget (August 23, 1967). 

Includes detailed question-answer sequence between several 
senators and the director. 

5. "Hearings, Part 2" Consists of the testimony of Alain C. 

Enthoven, Assistant Secretary of Defense (September 27 and 
October 18, 1967). A substantial segment of the testimony is 
taken up with the TFX (F-111). Systems analysis was not used 
in that decision because DOD did not have the systems analysis 
techniques fully developed and implemented. 



6. "Hearings, Part 3" Consists of the testimony of Elmer B. 
Staats, Comptroller General of the United States. 

' 7. "Uses and Abuses of Analysis" A paper by this title vas 

prepared for the Subcommittee by James R. Schlesinger of the 
i RAND Corporation. Dr. Schlesinger cautions his readers 

I about systems analysis. Analysis is no better than the 

people, design and facts put into it. 

8. "Budget Bureau Guidelines of 1968" Includes a copy of BOB 
Bulletin No. 68-9 which supersedes Bulletin No. 68-2. To 
[ date, these have been three general sets of directives to 

agencies on the implementation of PPBS. 

Also included are brief comnents by Charles J. Zvlck, 
Director, Bureau of the Budget, on the new guidelines.