1. The December Baseline Follow the money … …Study the Trends

2. What’s the Baseline 2 ● Not a prediction – a projection of spending and receipts under current law:  Mandatory programs: spending with no change in law (except for certain expiring programs)  Discretionary programs: funding at the most recent appropriation level, with inflation (caps accounted for in aggregate) Provide basis for Outlook report What CBO uses to calculate the deficit What you will use as basis for cost estimates

3. The Circle of BAD Life 3 All exercises are related Decisions you make now will affect how you use/do other exercises

4. Which Baseline? 4 December/January = “Preliminary” (basis of Outlook report) February/March = “Revised” (in conjunction with APB) “Budget Resolution baseline” = CBO February/March baseline (usually) New Economic forecast incorporated in December, not updated in February

5. Developing Your Baseline: Steps in the Process 5 Step 1: Get Organized Step 2: Estimating (incorporate what you learned from AoA) Step 3: Reviewing your accounts & function totals Step 4: Documenting your results Step 5: Anticipating projection and legislative issues Step 6: Preparing handouts for your review meeting Step 7: What to do after database locks

6. Triage: December vs. February 6 What can you do in December to complete the best “preliminary” baseline possible?  Study and incorporate any changes implied from the recent “analysis of actuals” exercise  Review appropriations and other laws recently enacted. Does anything need to be added? What has to wait for February?  Some data for most-recent fiscal year not available in Dec.  Some agency/program details regarding current-year operations not available until the Pres. Budget is released

7. Step 1: Getting Organized 7 Set up notebooks/files for key accounts  Make copies of relevant language from recent appropriations and other legislation, U.S. Code cites  Gather historical data, background notes, etc.  Do what you can now (things you may not have time for later) Review and fix up data base  Is the account structure and coding correct?  Does it properly reflect recent legislation?  Would it be better to change subaccount structure? Have a plan for tracking changes/taking notes

8. Step 2. Estimating Individual Accounts (focus on “the trees”) 8 Check discretionary BA levels: account for rescissions, collections, transfers, split accounts… Review trends: any implications from recent analysis? Adjust spendout rates… …And priors: you don’t have to use all of them, but don’t use more than you have Update model parameters: population data, participation rates, cost factors, etc. Focus on current year AND budget year: each is important for different exercises and products throughout the year

9. Account Information Consistent with Administration’s coding Inflators>> Vary with type of account Spend out rates Vary with type of account>> BA= new authority provided each year>> Priors…money left from prior year’s BA>> Apply spend out rates>> Setting up a Model Account

10. Spend out rates>> How quickly funds outlay Inflators>>> How discretionary authority adjusts Over time Analysts pick from a list provided by Macro Division Treasury ID code>> Account Name>> Type of account>> Setting up a Model Account

11. Step 3. Review Your Work (step back and look at “the forest” -- totals) 11 ● Account-by-account o %-changes year-to-year o Relationship of BA to outlays over time o Check spreadsheets & BADS/CAS for typos and other errors o Have someone else take a look ● Review at the big picture (by function, agency) o Do the function or subfunction totals makes sense? o Tip for discretionary totals: Look at WODI to check for smooth trend.

12. 12 Year by year comparisons for function as a whole. Look for patterns

13. Sources of Information 13 Agency contacts OMB Treasury Department CRS experts News reports Other interested parties: Ask around!

14. Step 4. Document 14 Annotate a computer run (reasons for changes, sources for data, etc.) Keep separate notes about data sources and reasons for changes in key baseline assumptions Create a binder and put it all together Back up your files (in particular, key spreadsheets) Tip: Save first and last runs

15. Step 5. Anticipate Issues 15 Think about what appropriations-related questions are likely to arise. Is there a pending reauthorization? What program changes are likely to be considered? How specific do your baseline assumptions need to be to properly deal with future legislation?

16. Step 6: The Review Meeting 16 Summary Table (function or subfunction level) Hit the highlights (not too much detail unless it’s important) Start with a review of AoA (what did you learn? How did you apply it?) Be prepared to answer the 50/50 question Know your computer run

17. After Baseline Locks 17 May need to contribute to text of Outlook report Interested party tables for larger, more complicated programs/accounts Budget Resolution options

18. Federal Building Fund DiscretionaryMandatory Showing historical trends in Spending What do they imply for your projections?

19. Sandy Recovery Funds-HUD Is the big jump in outlays in 2014 unrealistic? Katrina CDF funds increased significantly in second year. Amounts for homeowner assistance tends to spend quickly. Similar amounts for that activity for Sandy. Sandy Appropriations by Agency $M

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