In Tune with Army Financial Management Managing Your Budget In a Declining Economy June 2010 Army Day COL C. A. Cruse, ChiefMr. Todd Nethery, Chief OMA Budget Formulation OMA Current Operations Army Budget Office, ASA (FM&C)

In Tune with Army Financial Management Pentagon Math 1 Imbed Video of Abbot and Costello 7 X 13 = 28

In Tune with Army Financial Management Agenda  Setting the Stage  DoD Budget Growth  Army Budget  Challenges Ahead  Managing Your Budget  Conclusion  Building the Next Army Budget 2

In Tune with Army Financial Management Setting the Stage  “Therefore, as the Defense Department begins the process of preparing next year’s Fiscal Year 2012 budget request, I am directing the military services, the Joint Staff, the major functional and regional commands, and the civilian side of the Pentagon to take a hard, unsparing look at how they operate – in substance and style alike.” Secretary of Defense Robert M. Gates Eisenhower Library, Abilene, Kansas 8 May

In Tune with Army Financial Management OSD Top Line 4

In Tune with Army Financial Management Army Funding Trends 5 $1.7 Trillion in 10 years * OCO appropriations include war and non-war funding Business practices changed. DepSecDef 9 Apr Memo: “POM “ OEFOIFGTASurgeResponsible Drawdown

In Tune with Army Financial Management 6 FY 2000 $18.9BFY 2011 $33.9B *Contract growth includes CLS Army Budget Growth OMA

In Tune with Army Financial Management Challenges Ahead  OCO Shrinking  OCO to base movement  Increased limitations/rules  U.S. Economy  Health care  Banking reform  Housing foreclosures  Oil spill  Unemployment  Peace Dividend  Following Korea, Vietnam, and Gulf War I A 17 – 22% reduction to the DoD budget  What will the reduction be after OIF/OEF? 7

In Tune with Army Financial Management DoD Funding vs. GDP 8

In Tune with Army Financial Management Managing Your Budget 9  “…to convert sufficient ‘tail’ to ‘tooth’ to provide the equivalent of the roughly two to three percent real growth…” Secretary of Defense Robert M. Gates  Set the Stage  Requirements ≠ Funding Schedule 8s Concept plans  Business School Answer  Divesture  Streamlining  Reduction in overhead  Eliminate redundant processes Over 300 Schedule 8s and Concept Plans approved for FY 2011 to compete for funding… but there is no funding!

In Tune with Army Financial Management Managing Your Budget Setting the Stage 10  Business School Answer  Divesture Wants vs. Needs Change in Mission  Streamlining Supposed to be cleaner Careful that we do not streamline into a mission failure  Reduction in Overhead Fastest growing component of budget Relationship to centralization of systems – finance, accounting, human resources, IT networks/communications  Elimination of Redundant Processes Do I have to do this? Why?  Recommendations to Find the Savings  Budgeting  Execution  Follow through!

In Tune with Army Financial Management Managing Your Budget Find the Savings in the Budget 11  Budgeting  Currently – Last years’ plus 2-3%  Set the baseline  Are the models still accurate?  Create a Cost Culture  Physical upgrades to access control points will equal a 26% reduction in guard requirements  1SG Barracks Initiative – recoup excess BAH; $130M savings in ten years  Defending the Budget  Idea formed  G8/PAE POMs for the idea with the PEG  ABO documents the idea in a “stub”  Army defends the idea to OSD  Army briefs and defends the idea to Congress  Congress appropriates budget If my grandmother can not understand the new idea, it will probably not get funded!

In Tune with Army Financial Management Managing Your Budget Find the Savings in Execution 12 Why Do We Reward 100% Obligation?  Get/Keep your commander involved  Live within your means—the base is the base  Get everyone invested  Reviews  Joint Reviews  Periodic Reviews—tradition vs. actual requirements  5 th Quarter analysis  Program Budget Advisory Committee  Develop a requirements consideration process  Accurate accounting--$$ in the details  Truth in lending  Cost/Benefit analysis; cost estimation  Train your subordinate unit resource managers  Moral courage....

In Tune with Army Financial Management Managing Your Budget Find the Savings in the Follow Through 13  After Action Reviews  Do the Models Give You What You Need?  Rate Adjustments for Estimation  What about Overhires?  Temporary  Permanent  Publish Successes – Reward Successes! Do You Conduct AARs? Do You Follow Thru?

In Tune with Army Financial Management  “I say the patriot today is the fellow who can do the job with less money.” President Dwight D. Eisenhower  Take Aways:  OCO limitations/rules  Status quo will not do  Involve your leaders and get everyone invested  Create a “cost culture”  Live within your means  Aim for success Conclusion 14

In Tune with Army Financial Management Building the Next Army Budget 15