Winter Leader Conference February 4, 2009 “ Building Strong “1 Creating the CW Budget Mr. Pete Luisa 2 March 2009 PNWA

Winter Leader Conference February 4, 2009 “ Building Strong “2 US Ports & Waterways convey > 2B Tons Commerce Foreign Trade alone creates > $160 B Tax Revenues Recreation areas 376 M Visitors/yr Generate $15 B in economic activity, 500,000 jobs 11,000 miles of Commercial Inland Waterways: ½ the cost of rail 1/10 the cost of trucks 400 miles of Shore protection 8500 Miles of Levees 299 Deep Draft Harbors Emergency Operations Stewardship of 11.7 Million Acres Public Lands Environmental Restoration 627 Shallow Draft Harbors Regulatory ¼ of Nation’s Hydropower: $500 M + in power sales Civil Works Value to the Nation

Winter Leader Conference February 4, 2009 “ Building Strong “3 CIVIL WORKS BUDGET FORMULATION TRADITIONAL APPROACH: By account (Surveys and Design/Construction/O&M, etc.) Geographic balance considered Funding shortages spread across nearly all activities BUDGETING BY PERFORMANCE: By business program (navigation, flood, etc.) Funding distributed based on outcomes Highest priority work funded at an efficient rate Lower priority work may be deferred, even if already started

Winter Leader Conference February 4, 2009 “ Building Strong “4 PROGRAM STRUCTURE Business Line Navigation Coastal harbors; Inland Waterways Flood Damage Reduction Riverine Floods; Coastal Storms Environment Aquatic Ecosystem Restoration Stewardship Formerly Utilized Site Remedial Action Hydropower Recreation Water Supply Emergency Regulatory Account Investigations Construction Operations & Maintenance Mississippi River & Tribs Regulatory Program Formerly Utilized Sites Remedial Action Program Expenses Flood Control & Coastal Emerg

Winter Leader Conference February 4, 2009 “ Building Strong “5 Budget Reviewed & Presented to SecArmy (Jun - Aug ) OMB Passback ( Nov ) Budget Submitted to OMB ( Sep ) President’s Budget to Congress ( Feb ) All Offices Develop Program Requirements ( Feb - May ) Appropriations Bills ( Jul - Sep ) Cong. Hearings ( Mar - Apr ) President Signs Approp. Bill ( Sep - Oct ) OMB-ASA GUIDANCE ( FEB-MAR ) Funding Alloc. To Field Offices ( Oct - Dec )

Winter Leader Conference February 4, 2009 “ Building Strong “6 FY 09 PROGRAM PROCESS Use Performance Measures and Policy Direction Guidance memo to: · Rank competing investments in each business program · Demonstrate improved outcomes from added increments Develop amounts based on their own internal performance metrics for: · GE; REG; FCCE; REC; ENV Stewardship; FUSRAP Develop Performance Based program for project competing business lines: · Initial level (No new work, phases or contracts, previously budgeted projects only) · O&M at 75% of last 5 years budget; Investigations same as PY-1. · Categorize and Prioritize CG projects into Priority levels · Add Performance Base High Return items and increments for GI and O&M items Add to the Highest Priority, ongoing projects & contracts to “Final Budget”

Winter Leader Conference February 4, 2009 “ Building Strong “7 Budgeting Measures Construction FRM & NAV & HYDRO - Benefit to Cost Ratio FRM & NAV - Dam Safety & Seepage Stability FRM – Construction Flood “Risk” Index ENR - Loss prevention for significant natural resources O&M NAV – Tonnage movements FRM & NAV & HYDRO – “Risk” Assessments ALL New/Continuing/Completing/Years to Complete Watershed Elements ESA & compliance needs Safety, Caretaker, Compliance, Subsistence

Winter Leader Conference February 4, 2009 “ Building Strong “8 PROGRAM COMPARISON ($ millions) FY08 Bud FY08 Appr FY09 Bud FY09 Appr Investigations Operation & Maintenance 2471 (2185) Construction 1523 (1809) Miss. River & Tribs Regulatory Program Flood Control & Coastal Em F.U.S.R.A.P Expenses OASA(CW) (6) Total FY 2010 BUDGET DELIVERED TO CONGRESS AT $5.1 BILLION

Winter Leader Conference February 4, 2009 “ Building Strong “9 Budget Arithmetic FY09 Civil Works Budget Math$4,800mil Allocate GE, REG, FCCE, REC, FUSRAP…- 900 Allocate Base O&M (~75% of required)- 1,800 Essential Dam Safety- 500 High Performing Construction- 400 Continuing Construction Contracts- 700 Planning Studies- 100 Minimum Essential Allocation = - $4,400 Left for all other CW Projects & Programs ~ $ 400 mil* Use the $400 mil to restore project O&M to prior year levels

Winter Leader Conference February 4, 2009 “ Building Strong “10 CW Funding Through 09 Budget

Winter Leader Conference February 4, 2009 “ Building Strong “11 FY Budgets and Appropriations Oct 08 – FY09 Continuing Resolution (CRA) to 6 Mar 09 Feb 09 – ‘American Recovery and Reinvestment Act’ Feb 09 – FY09 Appropriations Act Mar 09 – ARRA & Appns Act funds issued to field offices 26 Feb 09 – President presents FY10 Budget Overview Mar 09 – HQUSACE releases FY11 Budget Guidance to field offices Spring 09 – FY10 Budget details released to public Apr 09 – House/Senate FY10 Budget hearings May/Jun – Defense Supplemental ? Early-mid 2010 – Another possible Stimulus Bill?

Winter Leader Conference February 4, 2009 “ Building Strong “12 ARRA Breakdown by Account SUMMARY OF APPROPRIATIONS ($Billions) Investigations$0.025 Construction$2.000 O&M$2.075 MR&T$0.375 Regulatory$0.025 FUSRAP$0.100 TOTAL$4.600

Winter Leader Conference February 4, 2009 “ Building Strong “13 Stimulus Funding Information CW Eligible Projects AccountNumber of Work Packages Amount (Millions) Construction3,600$ 7,700 Ops & Maint6,600$ 7,000 MR&T700$ 700 Total10,900$15,400

Winter Leader Conference February 4, 2009 “ Building Strong “14 Economic Stimulus American Recovery and Reinvestment Act $4.6 billion for Corp programs No cost sharing with Inland Waterways Trust Fund No cost-share exemption from the HMTF or cost- shared projects Significant “transparency” requirements for tracking, monitoring and reporting of specific metrics Final selection of projects scheduled for approval in mid Mar 09 with work allowances to Districts immediately following selection. All unobligated funds (except for E&D, S&A and claims) expire 30 Sep 2010.

Winter Leader Conference February 4, 2009 “ Building Strong “15 Stimulus-Project Selection Criteria Project selection criteria from Conference Report: (1) Obligated/executed quickly; (2) Results in high, immediate employment; (3) Will have little schedule risk; (4) Will be executed by contract or direct hire of temporary labor; and (5) Will complete either a project phase, a project, or will provide a useful service that does not require additional funding.

Winter Leader Conference February 4, 2009 “ Building Strong “16 Other ARRA Provisions Projects are eligible only if funded “heretofore or hereafter” Unlimited reprogramming authority Up to 0.5% to administer the bill NLT $200M for environmental infrastructure Section 902 relief Ceiling relief for Section 14, 205, 206 and 1135 Programs Funds may be retained after 30 Sep 2010 expiration for E&D, S&A, Claims WRDA Sec 9006 relief (levee survey limit)

Winter Leader Conference February 4, 2009 “ Building Strong “17 And for the Out Years … Expect a major debate on Federal funding priorities to commence with the FY 11 budget We will continue to place a high priority on accurate ‘capability’ estimates We will continue to place a high priority on execution of all that is appropriated We will seek to improve our budget ‘defense’ of the value to the nation of the water resources infrastructure for which we are responsible

Winter Leader Conference February 4, 2009 “ Building Strong “18 How We All Contribute USACE: –Develop the vision, goals, objectives in an open, collaborative way –Implement the Strategic Plan Administration: –“Walk the performance-based budget talk.” Stakeholders: –Contribute to vision, Goals, Objectives, Metrics ALL: Keep Communicating! - A Vision to be the desired future state of water resources and the desire to have a water resources infrastructure that will serve this Nation’s economic, quality of life needs, today and into the future.