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Running head: FINAL PROJECT: FINANCE AND BUDGETING FOR THE
PUBLIC SECTOR: FOOD AND DRUG ADMINISTRATION
	
  
	
  
	
  
	
  
Finance and Budgeting for the Public Sector
Food and Drug Administration
Clyde Knight Jr.,
Walden University
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 1	
  
Overview
In a review of the FY2010 – 2015 strategic plan for the Department of Health and
Human Services (HHS) goals are designed to strengthen several areas within our national
culture and society. These areas are comprised of health care, the advancement of
scientific knowledge and innovation and the advancement the health, safety and well-
being of United States citizens. The FDA role is the to implement the HHS’s strategy to
address the unmet public need for safety and healthy living. In 1906, President Theodore
Roosevelt signed into law the Wiley Act (Act) named after it's strongest supporter
Harvey Washington Wiley, Chief Chemist, of the Bureau of Chemistry in the Department
of Agriculture.
The Act was written to prohibit the transporting of any good or food that had been
adulterated. That is its – "standard of strength, quality, or purity of the active ingredient
was not either stated clearly on the label or listed in the United States Pharmacopoeia or
the National Formulary." Misbranding or the intentional adulterating of consumables
enabled Wiley's U.S. Department of Agriculture's Division of Chemistry (later Bureau of
Chemistry) USDA to lobby for new regulatory powers and use an aggressive campaign to
monitor manufacturers' use of chemical additives. Later the Bureau of Chemistry was
restructured, and regulatory powers redefined to a higher standard of proof of culpability
in the misbranding of consumables.
In the 1927 divestiture process the USDA's Bureau of Chemistry was renamed as
the "Food, Drug, and Insecticide organization" known today as the Food and Drug
Administration (FDA). The FDA has been relocated from Rockville along with its
satellite offices to the Washington Metropolitan Area's new Federal Research Center in
White Oak of Silver Spring, Maryland. The new location was opened in 2003 completed
in 2014 (Hamburg, 2014). The FDA was granted regulatory power over (25%) of the
United States economy estimated to be about one trillion dollars in consumables. Most of
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 2	
  
these are imported to the United States to include $466 billion dollars in food products,
$60 billion in cosmetics, $18 billion in vitamin supplements and $275 billion in drugs.
Its annual operating budget in 2012 was estimated to be $4.36 billion dollars and
it’s 2014 operating budget is $4.7 billion (with about $2 billion dollars generated in user
fees charge mostly to pharmaceutical companies) to expedite drug reviews. The source of
the FDA regulatory authority is contained mostly in the 1938 Food, Drug and Cosmetic
Act as outlined and defined under United States Code 21, Chapter 9. It also get its powers
from the Public Health Service Act, a portion of the Controlled Substance Act, and the
Federal Anti–Tampering Act, and shared regulatory powers with other federal agencies.	
  
Mission And Goals of The Organization
The purpose of the FDA or its stated mission promises to – “help more Americans
achieve the security of quality, affordable health care for themselves and for their
families, keep food and medical products safe, protect against chronic and infectious
diseases, help Americans find jobs, help parents access affordable child care, explore the
frontiers of cutting-edge biomedical research, and to fulfill our obligations to tribal
communities for health care and human services.” In the literature published by the HHS
and FDA one of the key goals is to garner public trust. Trust and reputation based on
ethics are the rationales focused upon during funding opportunities, especially at the U.S.
House Appropriation Committee where requests for taxpayer funding as recurring
revenue occurs (Moynihan, 2012).
Governments in general are implementing austerity measures upon their citizenry
and initiating right-sizing and performance management reform. Studies show they are
struggling to prove a public need or raison d'etre – purpose. That is – to provide services
through good leadership, stewardship, stakeholder confidence, management performance
and outcome-oriented goals. FDA literature indicates that the agency experienced
internalities, which resulted in dysfunctionality, equilibrium imbalance issues including
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 3	
  
but not limited to deleterious behaviors from negative influences from social and political
forces (Hamburg, 2012, p.8, para: 2; Bryson, 2011, p. 74, para: 9) during critical
decision-making processes. In the fiscally challenged global economy many governments
of market-driven economies are implementing austerity measures, divestiture protocols
and right-sizing.
Nutt (2002) talks about how in today’s economy that key decision makers practice
or promote less collaboration, cooperation and coordination as they face economic
environments that require doing more with less. So strategic planning and strategic
management are imperative as resources decline and competition for funding becomes
more intense. Top decision makers need to provide strategic plans and outcome-oriented
goals that are more in tune with real world macroeconomic practices in order to survive.
Strategic planning processes reveal that leaders possessing an acute sense of situational –
awareness of their organizational and stakeholder needs relative to the challenge rich
financial or economic environments are more successful.
Overview Of The Organization's Cash Management And Investment
Strategies
A brief overview of the FDA’s FY 2016 budget shows its plans to implement its
new FSMA strategies by increased appropriation of $301 million dollar capital
investment. With $109.5 million dollars in new budgeting authority earmarked for plan
strategy implementation to include “inspection modernization, education and technical
assistance, and import safety.” In the context the FDA outlines FSMA impact of it
mandates, fund gaps, funding history and accomplishments. Stakeholder participation is
key to achieving outcome-oriented goals and adhering to one’s mission, which in this
case would include the FDA’s responsibility to regulate healthy and safe consumables
and meeting the stakeholder needs. Stakeholder’s dissatisfaction, losing the public trust,
and confident in the HHS to fulfill its congressional mandates has led to some new
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 4	
  
innovative FDA short-term strategic initiatives that some speculate would have likely
been (Fig. 1) envisioned (Hamburg, 2012, p.8, para: 2).
(Fig 1.)
Plan to improve the FDA implementation of GPRA reform and effective communication of
performance management strategies. (1-4 years)
GOALS STRATEGIES
Top decision makers understand importance of
implementing follow through of GPRA or similar
initiatives
I. Use discovery and MCDM process to disclose
implementation failures
II. Assess GPRA or similar initiative are linked to
appropriate failures
Measure whether communication of strategic plan
mandates filter throughout inter-organizational
structure
I. Assign a performance manager to each tier to
evaluate mandate compliance
II. Assess mandate impact on organizational
equilibrium and economy of scales
Measure delivery of service to public perception of that
service and FDA’s social value.
I. Conduct ATLAS.ti qualitative data analysis on
consumer perception of management performance
II. Determine if public trust and confidence in FDA to
fulfill its congressional mandate improved
Unintended economic-behaviors such as organizational internalities and
externalities created functionality issues such as organizational equilibrium imbalance
issues including but not limited to susceptibility to social and political forces (Hamburg,
2012, p.8, para: 2; Bryson, 2011, p. 74, para: 9) that influence decision-making processes.
In this context Congress’ expectations and mandates are for the FDA to create new
initiatives to protect the safety and health of the American People. In a study Nutt (2202)
discusses several leadership and decision making conundrums faced by key decision
makers. One school of thought as a result of this study shows that – at the outset strategic
planning paradigms should be set by key decision makers to foster a work space in the
process where the talented can freely express themselves.
Providing ideologies, strategies and concepts that make pragmatic use of limited
funding, resources and human capital – which research indicates is becoming unreliable
and on the decline (Laureate Education, 2008e). In the Congressional Appropriation
Committee process, Congress’ expectations and mandates (fig. 2) for the FDA are to
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 5	
  
create new initiatives to protect the safety and health of the American People. The
FY2010 – 2015 strategic plan for the Department of Health and Human Services (HHS)
goals and strategies are the Food Safety Modernization Act (FSMA), the FDA Safety and
Innovation Act (FDASIA), and the Drug Quality and Security Act (DQSA) the
framework of strategies that requires industry stakeholders and the FDA to revisit
approaches to safety and quality. Another of the FDA’s strategic goals outlined in its
FY2010 – 2015 strategic plan includes addressing its need to “strengthen its global-reach
including trade agreements with China for food and medical imports safety.”
Fig. 2.
Plan to improve the FDA synchronization to address public’s unmet needs (15-20 years)
GOALS STRATEGIES
Ensure senior accountable officials are effective
in improving performance management
mandates
I. Promote transparency of appropriation of funds as
recurring revenue
II. Conduct SWOT with CBA attached
Measure Impact of improved performance
mandates
I. Conduct comprehensive comparative analysis of
progress in delivering health care and safety.
II. Measure impact on mortality rates with insurance
health and life insurance matrices
Assess the overall happiness level of public
towards healthcare in general.
I. Survey of healthcare providers about overall
treatments, and recovery rates.
II. Compare US progress to other market driven
countries to measure satisfaction ratios.
Internal Factors Impacting Successful Strategic Financial Planning
The 2010 Government Performance and Results Act (GPRA) Modernization Act
developed programs to counteract the inherent nature within public organizations
(Bryson, 2011; Driving Federal Performance, 2010). Studies forecasts that an estimated
3.2 million healthcare jobs will be created between 2008 and 2018 in an industry that is
in constant flux and inherently complex in nature. In this context research suggests that
top-decision makers within organization in general and the FDA specifically develop the
capacity to address critical organizational and personnel conflict, change outdated ways
of thinking, and develop a new leadership paradigm.
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 6	
  
Conversely, commissioner Margaret A. Hamburg resigned at the end of first
quarter (Q1) 2015. Hamburg’s career began when appointed and affirmed by the Senate
on May 18, 2009. The organization’s succession process will create a position for the
new interim commissioner Dr. Stephen Ostroff, M.D. The former commissioner talks
about improving performance management issues at the FDA, acknowledging strategic
plan implementation failures. Some studies suggests that the complex and inherent nature
(behaviors) of social and political forces originates in both internally and externally
(Bryson, 2011, p. 41, para: 4; Nutt, 2002) and often negatively influence key decision
making processes e.g., parochial outlook, groupthink, conflict, and organizational
equilibrium imbalance issues.
Some my argue that the evidence for the need for change with the FDA policy,
leadership and short and long term goals comes in the documented short falls as a result
of its approval of adulterated consumables containing certain ingredients e.g., high
fructose corn syrup (HFCS). Studies suggest that (80%) of those afflicted with metabolic
disease from sugar sweetened beverages (SSB) or food products reside in poverty or
economically disadvantaged areas. The study found a statistical significant correlation
between consumption of HFCS and risk for metabolic diseases presenting in as a threat to
ones health (Walker, et al., 2014).
Ethical Considerations Related to Finance And Budgeting Within the Organization
Some of the claims about the FDA by researches and stakeholders alike are its
slow and inefficient reviewing and approval process for drugs and consumables that at
times cause a public harm. One of three core issues and ethical concerns is (1) the length
of approval time (on average 11 -14 years), the (2) high cost for the FDA to reviews of
drugs, and (3) plus the impact of high cost for FDA reviews (or approval) to provide no
economic incentive e.g., the recent 2014 Ebola outbreak vs. ZMapp (Horovitz, 2012,
March 29, SCOGS, 2014, August 19). Though FDA claims the United States Ebola
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 7	
  
outbreak response as one of it successes. The sugar industry’s nutritional guidelines for
the consuming public nationally and internationally is set by the World Health
Organization (WHO) and Food and Agriculture Organization (FAO) under the auspices
of the United Nations (U.N.) (Da Silva, 2014; Chan, 2014).
The U.N. reports 34 million children from infancy to age five with some 350
million adults globally are inflicted with the disease. The sugar industry reaches its
consumers with high percentage of fructose not only in sugar sweetened beverages
(SSB’s) but goods from baby food to health food with import tax incentives estimates to
the sugar industry of one billion dollars (Veracity, 2005; Sears, 2004, January 1). The
problem lies in the pervasive business practice of mislabeling SSB’s and – other
consumables, containing ingredients that do not adhere to “standard of strength, quality,
or purity of the active ingredient was not either stated clearly on the label or listed in the
United States Pharmacopoeia or the National Formulary.”
SSB’s were analyzed in separate independent laboratories using (3) methods.
Studies showed that results were consistent in SSB’s sweetened with HFCS “fructose was
(60.6% ± 2.7%) of sugar content.” Fruit juices with HFCS “fructose was (52.1% ± 5.9%)
of sugar content.” Fruit juices made from 100% fruit “fructose was (65.35 g/L)
accounting for 67% (Turner, 2012; Lewis, 2014; Lustig, 2012; Ruiz, 2008; Veracity,
2005; Walker, et al., 2014). The FDA’s strategic plan implementation failures alluded to
by Hamburg (2012) results in losing (p.8) the public’s trust from its stakeholders.
Research shows that failure to secure the public’s trust can be detrimental to
capital investment funding opportunities i.e., during the Congressional appropriation
process creating fiscal budget gaps in a global economy where market-driven nations are
being impacted by economic uncertainty. The result of which are governments that are
underperforming in the provision of even some of the most basis of public services.
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 8	
  
Applicable Laws, Regulations, And Policies Impacting The Organization's
Financial And Budgetary Operations
Some of the applicable laws, regulations, and policies impacting the FDA's
financial and budgetary operations begins first and foremost with its regulatory authority
written in language contained in the 1938 Food, Drug and Cosmetic Act as outlined and
defined under United States Code 21, Chapter 9. Congress now authors the legal statute
and mandate by which the HHS and its divisions such as the FDA operate and function to
provide public services for the American People. Current law provide a legal framework
and structure for agencies in terms of expected performance management strategies,
strategic goals, organizational behaviors, and to develop a means to holistic processes or
procedures to improve organizational management models (Public Law, 103-62, 103d
Congress, 1993, August 3).
Moynihan, (2012) developed a plan that emphasizes implementation
accountability and follow-through by assigning “senior accountable officials” as outlined
(p. 43) under ‘Key Actions In First 100 Days’ to effectively implement the time-critical
requirements in the Modernization Act, Office of Management and Budgets (OMB).
Unintended economic-behaviors such as organizational internalities and externalities
create functionality issues such as organizational equilibrium imbalance issues including
but not limited to social and political forces (Hamburg, 2012, p.8, para: 2; Bryson, 2011,
p. 74, para: 9) that influence decision-making processes.
In this context Congress’ expectations and mandates are for the FDA to create
new initiatives to protect the safety and health of the American People through
implementation of the Food Safety Modernization Act (FSMA) and the FDA Safety and
Innovation Act (FDASIA). Studies suggest that (80%) of those afflicted with metabolic
disease from sugar sweetened beverages (SSB) reside in poverty or economically
disadvantaged areas. A World Health Organization analysis projects that metabolic
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 9	
  
diseases associated with SSBs containing high fructose corn syrup (HFCS) will become
the seventh cause of death in 2030. The 2030 prediction will include but is not limited to
obesity, cancer, hypertension, diabetes, and more.
Impacting healthcare costs in the United States to increase by (36%), and
medication costs to increase by (77%), a statistic that Affordable Care Act, which is
comprised of two separate pieces of legislation: Patient Protection and Affordable Care
Act (P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L.
111-152) – fails to address. Current research also indicates that the FDA falls short in
delivering a quality service to the American People. In a National Institutes of Health, an
agency of the Department of Health and Human Services’ study under NIH grant # 2
T32ES013678-06, empirical evidence disclosed that some consumables contain (55%)
and as much as (67%) of high fructose corn syrup (Walker, et al., 2014).
So there are several regulatory laws, and policies that impact the FDA's financial
and budgetary operations. In many instances Congress failed in enforcing its own
mandates of adherence to achieve outcome-oriented goals (Driving Federal Performance,
2010). Management performance reform initiatives e.g., Government Performance and
Results Act (GPRA) Modernization Act of 2010, are designed to address the inherent and
complex nature within public [and private] organizations but over the years has not been
as effective (Poister, 2010, p. s250, para: 7) as researchers expected (Bryson, 2011;
Driving Federal Performance, 2010).
Evaluation Of The Organization's Budget Process And Revenue Sources
For example the FDA’s drug approval process has/is out of sync with the market
demand by consumers for pharmaceutical innovations and remedies. Financial documents
e.g., strategic financial plans (plan), functions as an iteration of an organization’s annual
financial transactions (Mikesell, 2014).
(Fig. 3) Annual Financial Reports
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 10	
  
Organizations in general and government entities such as the FDA specifically are legally
guided by commonly accepted financial record keeping practices and an accountability to
funding sources and stakeholders of how the money is being spent. For an example we
can see this accountability when we review the Government Finance Officers
Association’s (GFOA) language to identify (Fig.3) key items related to “recurring and
non-recurring revenues, recurring and non-recurring expenditures, and reserves” – to earn
the public’s trust and that of stakeholders (Government Finance Officers Association,
2014).
In this context the generally accepted accounting principles (GAAP) also outlines
General	
  Notes	
  
Detail	
  in	
  this	
  document	
  may	
  not	
  add	
  to	
  the	
  totals	
  due	
  to	
  rounding.	
  	
  Budget	
  data	
  in	
  this	
  book	
  are	
  
presented	
  “comparably”	
  to	
  the	
  FY	
  2016	
  Budget	
  since	
  the	
  location	
  of	
  programs	
  may	
  have	
  changed	
  
in	
  prior	
  years	
  or	
  be	
  proposed	
  for	
  change	
  in	
  FY	
  2016.	
  	
  This	
  approach	
  allows	
  increases	
  and	
  decreases	
  
in	
  this	
  book	
  to	
  reflect	
  true	
  funding	
  changes.	
  
	
  
The	
  FY	
  2015	
  and	
  FY	
  2016	
  mandatory	
  figures	
  incorporate	
  mandatory	
  proposals	
  reflected	
  in	
  the	
  Budget.	
  
$1,093	
  Billion	
  in	
  Outlays	
  
Children's	
  
Entitlement	
  
Programs	
  
3%	
  
Discretionary	
  Programs	
  
8%	
  
TANF	
  
2%	
  
Medicare	
  
53%	
  
Other	
  Mandatory	
  
Programs	
  
2.2%	
  
Medicaid	
  
32%	
  
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 11	
  
for government entities’ a list of accepted accounting and financial priorities
(Governmental Accounting Standards Board, 2014, p. iii). The hierarchy of these legal
declarations is specifically cleared as authoritative; officially establish accounting
principles by Governmental Accounting Standards Board. And included in the
Codification of Governmental Accounting (p. 1 – 3) and Financial Reporting Standards.
The GASB accepted guidelines are found in GASB Technical Bulletins; GASB
Implementation Guides; and literature of the American Institute of Certified Public
Accountants (AICPA).
These legal mandates are designed to standardized financial report formats for
government entities’ requirement to produce an annual comprehensive annual financial
report (CAFR) assigning value of the organization to stakeholders. The backdrop of the
(34) thirty-four tenets provided (GASB, 2014, p. 7 – 10) by the GASB illustrates
language for broad public exposure for the 1992 authoritative implementation and
conformity of the GAAP hierarchy set forth in AICPA literature. In the 158 pages of the
Health and Human Services (HHS) Agency Finance Report for 2016 is comprehensive
financial information to administration and stakeholders showing plans to adhere to
GASB guidelines and demonstrate to Congress the FDA’s ability to fulfill its mission to
protect the safety and health of the American People.
The Organization's Usage Of Cost-Benefit Analysis
The FDA, governments in general, and business alike are struggling to do more
with less. There is an abundance of literature on strategic planning (plan) initiatives such
as the Government Performance and Results Act (GPRA). Mikesell (2014) talks about
the inherent cultural behaviors such as those discussed within the FDA that impedes
rational and critical thinking alluded to by Hamburg (2012, p.8, para: 2) in decision-
making processes. Behaviors that Mikesell (2014) and others consider as an impetus
supporting constituent complaints, vitriol, and dissatisfaction in elected (p. 320, para: 3)
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 12	
  
officials who sponsor bailouts, poor investment strategies, poor leadership paradigms and
pervasive government culture that perpetuate inherent deleterious fiscal policies.
As a result to these fiscally irresponsible behaviors we see mêlées between
constituents and political pundits. In fact the majority of literature consists of some
innovative and workable solutions but rarely have they been effectively implemented.
Most approaches consider as part of any plan focused on outcome-oriented goals (p. 321,
para: 1) a cost benefit analysis comprised of “(1) categorizing project objectives, (2)
estimating the project’s impact on objectives, (3) estimating project costs, (4) dis-
counting cost and benefit flows at an appropriate discount rate, and (5) summarizing
findings in a fashion suitable for decision making.” The results of the HHS CBA and it
ability to fulfill its fiscally responsibility to stakeholders is outlined in its FDA-Track
implementation strategy (Hamburg, 2012, p. 28).
Technological Considerations For Improving The Efficiency Or Effectiveness Of
Finance And Budgeting Within The Organization
Casey and Seay (2010) write that communication of a vision or dream of a
mission statement to a strategic (p. 29 para: 6 – 8) focus within an organization requires
effective collaboration sharing information and recourses. As Nutt (2002) mentioned
earlier in the paper collaboration, corroboration, and cooperation however is not widely
practiced which may be the reason why performance management reform has not been as
effective holistic performance management reform.
The FDA-Track strategy is a comprehensive framework outlined in the FY2010
– 2015 strategic plan for the Department of Health and Human Services (HHS) goals
marrying those HHS’s Strategic Goals and Objectives with FDA’s Strategic Goals and
Objectives in (p. 28) a collaborative effort to implement strategized short and long-term
goals. The plan addresses implementation issue in 4 key areas as follows: reform health
care, advance scientific knowledge and innovation, advance the health, safety, and
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 13	
  
wellbeing of the American people, and the forth and finally area being to ensure
efficiency, transparency, accountability, and effectiveness of HHS programs.
But whether or no the FDA will be capable implementing a fiscally sustainable
performance management plan may be unlikely as will be illustrated in the “Assessment
Of The Organization's Overall Financial Condition” section later in this paper, if career
bureaucrats remain in place. And when it comes down to the talent needed during a
decision-making process Nutt (2002) explains that the strategic planning and strategic
management perspective is not viewed in a collaborative way with performance
management outcome-oriented goals by finance officials. These top decision makers see
short and long-term goals as opportunities for acquisitions. Studies show that the various
talents and skill of financial officials i.e., technical, operational awareness, resource
management and systems integrations - makes them uniquely qualified.
Their unique talents provide the opportunity to interact with wide variety of
department heads within an organization. In addition to the FDA senior finance officials
– the senior administrative officials (career bureaucrat), may be even more skilled,
talented or politically connected. But until and unless they resign themselves to inclusive
practices as mentioned in peer review literature of collaboration, cooperation and
coordination as a team, performance and financial reform is unlikely to be effective.
Casey and Seay (2010) seem to share previously mentioned concepts of collaboration,
cooperation and coordination as a team [of talent] instead of one central leader (p. 30,
para: 5) to include senior leaders and employees who are skilled and talented enough to
best strategize the direction of the organization.
According to Nutt (2002) and Casey and Seay (2010) collaboration between
departments is the structure needed to develop stewardship and financial planning and
improved usage of resources though out organizations – in this case the FDA. An
example of the Hanover County’s strategic objectives are outlined below:
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 14	
  
“• Information Technology (IT) Governance. Departments that make budget requests
for technology enhancements must get their technology requests approved.
• Operational Action Plans. Departments develop action plans to define tasks for board
initiatives and operational projects.
• Integrated Dashboards. The finance department summarizes and interprets
performance measures that are reported on department-level dashboards, helping senior
leaders assess the affects of strategic decisions.
• SharePoint. SharePoint software allows the county to communicate and share results
and services that result from the financial and strategic planning process.”
The Hanover county plan incrementalism process formed a comprehensive strategic
planning and strategic management procedures for the provision of services through good
leadership, stewardship, stakeholder confidence, management performance and outcome-
oriented goals. Casey et al, (2010) explains that the framework of these strategies needs
to be in place (p. 30) to ensure that top decision makers, and key employees are ready to
strategize and lead.
The first point is to develop strategic leadership skills requirements for all
department heads, director and assistance directors. Secondly, the top decision makers
need to develop formal actionable strategic plan goal for human services and public
safety. And third to find a reputable program that orient them on what questions to ask,
educational tool to use and discussion points needed to be explored in order to be
successful and develop sustainable goals. Additionally Nutt (2002) would suggest
creating a safe space that would allow those with talent to express ideas freely without
fear of retaliation or ostracism. To make that connection between the tiers or structures
of an organization talented decision makers must have the decision making authority to
effect change, to ensure that the communication of outcome-oriented goals are not only
understood, but delegated to those with the skill to follow though to completion
effectively. Included in this strategy is a succession plan that incorporates orientation
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 15	
  
programs to newly elected officials, newly appointed or newly hired decision makers to
the direction and mission of the organization through interaction with sitting decision-
makers during the formalization of the strategic planning process (Casey & Seay, 2010).
Assessment Of The Organization's Overall Financial Condition
To summarize this paper Nutt (2002) talked about the importance of
collaboration, cooperation, and coordination in support of strategic planning first requires
an agreement amongst key decision makers on acceptance of a means towards guidance,
motivation and vision (Bryson, 2011, p. 272, para: 4). The former FDA commissioner
talked about some of the short falls and successes that the prior strategic plan achieved.
And where the new FY2010 – 2015 strategic plan for the Department of Health and
Human Services will (p. 274, para: 2) focus on goal implementation. And where Casey et
al (2010) research (p. 29, para: 4) indicate strategic planning, strategic management and
incrementalism can define strategic pathways from comparison analyses between peers in
terms of outcomes.
To achieve the outcome-oriented goals the FY2010 – 2015 plan the Congressional
Budget Office (CBO) estimates that the FDA’s, Food Safety Modernization Act (FSMA)
requires its $538 billion dollar budget to be increased from 2011 – 2015 annually. FY
2011 – 2012 the FSMA saw an increase of 100 million dollars with a $400 – 450 million
dollar-funding gap for 2013. The increase climbed to $138 million thru FY 2014 with a
balance-funding gap of $300 million dollars according to the HHS. Again in 2015 the
increase is $24 million with a funding gap of 276 million dollars. The prediction for FY
2016 is for 109.5 million dollars for the new budget authority reducing the funding gap
going forward into 2017 at 166 million dollars with a request for fee revenue to sustain
the FSMA long term.
Conversely, in recent history the American People have experienced several FDA
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 16	
  
short falls including but not limited to such threat to public health as the N1H1 virus,
Avian Flu virus, Swine Flue virus, Ebola outbreak, West Nile virus, and various
metabolic diseases with statistical significant correlation to consumption of high fructose
corn syrup (HFCS) and other artificial sugars approved by the FDA. In this context
transparency is a key component to a strategic plan’s initiatives where failure can be (or
should be) traced back e.g., FDA-Track strategy, to inept decision makers who impose
their own solutions, limit any logical searches for alternatives and are influenced by
social and political forces.
FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 17	
  
References
Bryson, J. M. (2011). Strategic planning for public and nonprofit organizations: A guide
to strengthening and sustaining organizational achievement (4th ed.). San Francisco,
CA: Jossey-Bass.
Casey, J. T., & Seay, K. T. (2010). The Role of the Finance Officer in Strategic Planning
Government Finance Review; Dec 2010, ProQuest Central pg. 28 - 36
Chan, M. (2014, January 1). About WHO. Retrieved November 7, 2014, from
http://www.who.int/about/en/
Da Silva, J. (2014, January 1). Food and Agriculture Organization. Retrieved November
7, 2014, from http://www.fao.org/home/en/
Driving Federal Performance. (2010). Retrieved March 24, 2015, from
http://www.performance.gov/
Governmental Accounting Standards Board. (2014). Retrieved from
http://www.gasb.org/
Government Finance Office Association. (2014). Distinguished Budget Presentation
Award Program (Budget Awards Program). Retrieved from
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Hamburg, M. (2014, October 29). U.S. Food and Drug Administration. Retrieved
November 6, 2014, http://www.fda.gov/AboutFDA/CommissionersPage/default.htm
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602.pdf
Horovitz, B. (2012, March 29). Vegans bash Starbucks for beetle coloring in
frappuccinos. Retrieved November 8, 2014, from
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http://usatoday30.usatoday.com/money/industries/food/story/2012-03-28/starbucks-
strawberry-frappuccino-beetle-juice/53839006/1
Laureate Education (Producer). (2008e). Strategic planning: Future vision and
implementation[Video file]. Baltimore, MD: Author.
Lewis, T. (2014, June 4). USC study finds more fructose in soda than label indicates.
Retrieved November 7, 2014, from http://www.consumeraffairs.com/news/usc-
study-finds-more-fructose-in-soda-than-label-indicates-060414.html
Lustig, R., M.D. (2012, December 27). What You Need to Know About Sugar. Retrieved
November 6, 2014, from http://ideas.time.com/2012/12/27/what-you-need-to-know-
about-sugar/
Mikesell, J. L. (2014). Fiscal administration: Analysis and applications for the public
sector (9th ed.). Boston, MA: Wadsworth.
Moynihan, D. P. (2012). Creating a performance-driven federal government. Public
Manager, 41(4), 41–44. Retrieved from the Walden Library databases.
Nutt, P. (2002). Why decisions fail avoiding the blunders and traps that lead to debacles.
San Francisco, CA: Berrett-Koehler.
Poister, T. H. (2010). The future of strategic planning in the public sector: Linking
strategic management and performance. Public Administration Review,
70(s1), s246–s254. Retrieved from the Walden Library databases.
Public Law 103-62 103d Congress. (1993, August 3). Retrieved May 4, 2015, from
http://history.nih.gov/research/downloads/PL103-62.pdf
Ruiz, R. (2008, November 17). The Skinny On Sugars And Sweeteners. Retrieved
November 6, 2014, from http://www.forbes.com/2008/11/17/calories-health-sugar-
forbeslife-cx_rr_1117health.html
SCOGS (Select Committee on GRAS Substances). (2014, August 19). Retrieved
November 8, 2014, from
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http://www.accessdata.fda.gov/scripts/fdcc/index.cfm?set=SCOGS&sort=Sortsubsta
nce&order=ASC&startrow=301&type=basic&search=
Sears, W. (2004, January 1). Corn Syrup in Formula. Retrieved November 9, 2014, from
http://www.parenting.com/article/corn-syrup-in-formula
Turner, L. (2012). Food Choice: How the ingredients on food packaging influence the
foods we eat. Retrieved November 6, 2014, from
http://www.yale.edu/ynhti/nationalcurriculum/units/2012/1/12.01.08.x.html
Veracity, D. (2005, July 21). The politics of sugar: Why your government lies to you
about this disease-promoting ingredient. Retrieved November 7, 2014, from
http://www.naturalnews.com/009797.html#ixzz3IOQH7e81
Walker, R., Dumke, K., & Goran, M. (2014). Fructose content in popular beverages made
with and without high-fructose corn syrup. Nutrition, 30(7 - 8), 928-935. Retrieved
November 6, 2014, from http://www.nutritionjrnl.com/article/S0899-
9007(14)00192-0/abstract?cc=y

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Food and Drug Admin. Analysis

  • 1. Running head: FINAL PROJECT: FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FOOD AND DRUG ADMINISTRATION         Finance and Budgeting for the Public Sector Food and Drug Administration Clyde Knight Jr., Walden University
  • 2. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 1   Overview In a review of the FY2010 – 2015 strategic plan for the Department of Health and Human Services (HHS) goals are designed to strengthen several areas within our national culture and society. These areas are comprised of health care, the advancement of scientific knowledge and innovation and the advancement the health, safety and well- being of United States citizens. The FDA role is the to implement the HHS’s strategy to address the unmet public need for safety and healthy living. In 1906, President Theodore Roosevelt signed into law the Wiley Act (Act) named after it's strongest supporter Harvey Washington Wiley, Chief Chemist, of the Bureau of Chemistry in the Department of Agriculture. The Act was written to prohibit the transporting of any good or food that had been adulterated. That is its – "standard of strength, quality, or purity of the active ingredient was not either stated clearly on the label or listed in the United States Pharmacopoeia or the National Formulary." Misbranding or the intentional adulterating of consumables enabled Wiley's U.S. Department of Agriculture's Division of Chemistry (later Bureau of Chemistry) USDA to lobby for new regulatory powers and use an aggressive campaign to monitor manufacturers' use of chemical additives. Later the Bureau of Chemistry was restructured, and regulatory powers redefined to a higher standard of proof of culpability in the misbranding of consumables. In the 1927 divestiture process the USDA's Bureau of Chemistry was renamed as the "Food, Drug, and Insecticide organization" known today as the Food and Drug Administration (FDA). The FDA has been relocated from Rockville along with its satellite offices to the Washington Metropolitan Area's new Federal Research Center in White Oak of Silver Spring, Maryland. The new location was opened in 2003 completed in 2014 (Hamburg, 2014). The FDA was granted regulatory power over (25%) of the United States economy estimated to be about one trillion dollars in consumables. Most of
  • 3. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 2   these are imported to the United States to include $466 billion dollars in food products, $60 billion in cosmetics, $18 billion in vitamin supplements and $275 billion in drugs. Its annual operating budget in 2012 was estimated to be $4.36 billion dollars and it’s 2014 operating budget is $4.7 billion (with about $2 billion dollars generated in user fees charge mostly to pharmaceutical companies) to expedite drug reviews. The source of the FDA regulatory authority is contained mostly in the 1938 Food, Drug and Cosmetic Act as outlined and defined under United States Code 21, Chapter 9. It also get its powers from the Public Health Service Act, a portion of the Controlled Substance Act, and the Federal Anti–Tampering Act, and shared regulatory powers with other federal agencies.   Mission And Goals of The Organization The purpose of the FDA or its stated mission promises to – “help more Americans achieve the security of quality, affordable health care for themselves and for their families, keep food and medical products safe, protect against chronic and infectious diseases, help Americans find jobs, help parents access affordable child care, explore the frontiers of cutting-edge biomedical research, and to fulfill our obligations to tribal communities for health care and human services.” In the literature published by the HHS and FDA one of the key goals is to garner public trust. Trust and reputation based on ethics are the rationales focused upon during funding opportunities, especially at the U.S. House Appropriation Committee where requests for taxpayer funding as recurring revenue occurs (Moynihan, 2012). Governments in general are implementing austerity measures upon their citizenry and initiating right-sizing and performance management reform. Studies show they are struggling to prove a public need or raison d'etre – purpose. That is – to provide services through good leadership, stewardship, stakeholder confidence, management performance and outcome-oriented goals. FDA literature indicates that the agency experienced internalities, which resulted in dysfunctionality, equilibrium imbalance issues including
  • 4. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 3   but not limited to deleterious behaviors from negative influences from social and political forces (Hamburg, 2012, p.8, para: 2; Bryson, 2011, p. 74, para: 9) during critical decision-making processes. In the fiscally challenged global economy many governments of market-driven economies are implementing austerity measures, divestiture protocols and right-sizing. Nutt (2002) talks about how in today’s economy that key decision makers practice or promote less collaboration, cooperation and coordination as they face economic environments that require doing more with less. So strategic planning and strategic management are imperative as resources decline and competition for funding becomes more intense. Top decision makers need to provide strategic plans and outcome-oriented goals that are more in tune with real world macroeconomic practices in order to survive. Strategic planning processes reveal that leaders possessing an acute sense of situational – awareness of their organizational and stakeholder needs relative to the challenge rich financial or economic environments are more successful. Overview Of The Organization's Cash Management And Investment Strategies A brief overview of the FDA’s FY 2016 budget shows its plans to implement its new FSMA strategies by increased appropriation of $301 million dollar capital investment. With $109.5 million dollars in new budgeting authority earmarked for plan strategy implementation to include “inspection modernization, education and technical assistance, and import safety.” In the context the FDA outlines FSMA impact of it mandates, fund gaps, funding history and accomplishments. Stakeholder participation is key to achieving outcome-oriented goals and adhering to one’s mission, which in this case would include the FDA’s responsibility to regulate healthy and safe consumables and meeting the stakeholder needs. Stakeholder’s dissatisfaction, losing the public trust, and confident in the HHS to fulfill its congressional mandates has led to some new
  • 5. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 4   innovative FDA short-term strategic initiatives that some speculate would have likely been (Fig. 1) envisioned (Hamburg, 2012, p.8, para: 2). (Fig 1.) Plan to improve the FDA implementation of GPRA reform and effective communication of performance management strategies. (1-4 years) GOALS STRATEGIES Top decision makers understand importance of implementing follow through of GPRA or similar initiatives I. Use discovery and MCDM process to disclose implementation failures II. Assess GPRA or similar initiative are linked to appropriate failures Measure whether communication of strategic plan mandates filter throughout inter-organizational structure I. Assign a performance manager to each tier to evaluate mandate compliance II. Assess mandate impact on organizational equilibrium and economy of scales Measure delivery of service to public perception of that service and FDA’s social value. I. Conduct ATLAS.ti qualitative data analysis on consumer perception of management performance II. Determine if public trust and confidence in FDA to fulfill its congressional mandate improved Unintended economic-behaviors such as organizational internalities and externalities created functionality issues such as organizational equilibrium imbalance issues including but not limited to susceptibility to social and political forces (Hamburg, 2012, p.8, para: 2; Bryson, 2011, p. 74, para: 9) that influence decision-making processes. In this context Congress’ expectations and mandates are for the FDA to create new initiatives to protect the safety and health of the American People. In a study Nutt (2202) discusses several leadership and decision making conundrums faced by key decision makers. One school of thought as a result of this study shows that – at the outset strategic planning paradigms should be set by key decision makers to foster a work space in the process where the talented can freely express themselves. Providing ideologies, strategies and concepts that make pragmatic use of limited funding, resources and human capital – which research indicates is becoming unreliable and on the decline (Laureate Education, 2008e). In the Congressional Appropriation Committee process, Congress’ expectations and mandates (fig. 2) for the FDA are to
  • 6. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 5   create new initiatives to protect the safety and health of the American People. The FY2010 – 2015 strategic plan for the Department of Health and Human Services (HHS) goals and strategies are the Food Safety Modernization Act (FSMA), the FDA Safety and Innovation Act (FDASIA), and the Drug Quality and Security Act (DQSA) the framework of strategies that requires industry stakeholders and the FDA to revisit approaches to safety and quality. Another of the FDA’s strategic goals outlined in its FY2010 – 2015 strategic plan includes addressing its need to “strengthen its global-reach including trade agreements with China for food and medical imports safety.” Fig. 2. Plan to improve the FDA synchronization to address public’s unmet needs (15-20 years) GOALS STRATEGIES Ensure senior accountable officials are effective in improving performance management mandates I. Promote transparency of appropriation of funds as recurring revenue II. Conduct SWOT with CBA attached Measure Impact of improved performance mandates I. Conduct comprehensive comparative analysis of progress in delivering health care and safety. II. Measure impact on mortality rates with insurance health and life insurance matrices Assess the overall happiness level of public towards healthcare in general. I. Survey of healthcare providers about overall treatments, and recovery rates. II. Compare US progress to other market driven countries to measure satisfaction ratios. Internal Factors Impacting Successful Strategic Financial Planning The 2010 Government Performance and Results Act (GPRA) Modernization Act developed programs to counteract the inherent nature within public organizations (Bryson, 2011; Driving Federal Performance, 2010). Studies forecasts that an estimated 3.2 million healthcare jobs will be created between 2008 and 2018 in an industry that is in constant flux and inherently complex in nature. In this context research suggests that top-decision makers within organization in general and the FDA specifically develop the capacity to address critical organizational and personnel conflict, change outdated ways of thinking, and develop a new leadership paradigm.
  • 7. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 6   Conversely, commissioner Margaret A. Hamburg resigned at the end of first quarter (Q1) 2015. Hamburg’s career began when appointed and affirmed by the Senate on May 18, 2009. The organization’s succession process will create a position for the new interim commissioner Dr. Stephen Ostroff, M.D. The former commissioner talks about improving performance management issues at the FDA, acknowledging strategic plan implementation failures. Some studies suggests that the complex and inherent nature (behaviors) of social and political forces originates in both internally and externally (Bryson, 2011, p. 41, para: 4; Nutt, 2002) and often negatively influence key decision making processes e.g., parochial outlook, groupthink, conflict, and organizational equilibrium imbalance issues. Some my argue that the evidence for the need for change with the FDA policy, leadership and short and long term goals comes in the documented short falls as a result of its approval of adulterated consumables containing certain ingredients e.g., high fructose corn syrup (HFCS). Studies suggest that (80%) of those afflicted with metabolic disease from sugar sweetened beverages (SSB) or food products reside in poverty or economically disadvantaged areas. The study found a statistical significant correlation between consumption of HFCS and risk for metabolic diseases presenting in as a threat to ones health (Walker, et al., 2014). Ethical Considerations Related to Finance And Budgeting Within the Organization Some of the claims about the FDA by researches and stakeholders alike are its slow and inefficient reviewing and approval process for drugs and consumables that at times cause a public harm. One of three core issues and ethical concerns is (1) the length of approval time (on average 11 -14 years), the (2) high cost for the FDA to reviews of drugs, and (3) plus the impact of high cost for FDA reviews (or approval) to provide no economic incentive e.g., the recent 2014 Ebola outbreak vs. ZMapp (Horovitz, 2012, March 29, SCOGS, 2014, August 19). Though FDA claims the United States Ebola
  • 8. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 7   outbreak response as one of it successes. The sugar industry’s nutritional guidelines for the consuming public nationally and internationally is set by the World Health Organization (WHO) and Food and Agriculture Organization (FAO) under the auspices of the United Nations (U.N.) (Da Silva, 2014; Chan, 2014). The U.N. reports 34 million children from infancy to age five with some 350 million adults globally are inflicted with the disease. The sugar industry reaches its consumers with high percentage of fructose not only in sugar sweetened beverages (SSB’s) but goods from baby food to health food with import tax incentives estimates to the sugar industry of one billion dollars (Veracity, 2005; Sears, 2004, January 1). The problem lies in the pervasive business practice of mislabeling SSB’s and – other consumables, containing ingredients that do not adhere to “standard of strength, quality, or purity of the active ingredient was not either stated clearly on the label or listed in the United States Pharmacopoeia or the National Formulary.” SSB’s were analyzed in separate independent laboratories using (3) methods. Studies showed that results were consistent in SSB’s sweetened with HFCS “fructose was (60.6% ± 2.7%) of sugar content.” Fruit juices with HFCS “fructose was (52.1% ± 5.9%) of sugar content.” Fruit juices made from 100% fruit “fructose was (65.35 g/L) accounting for 67% (Turner, 2012; Lewis, 2014; Lustig, 2012; Ruiz, 2008; Veracity, 2005; Walker, et al., 2014). The FDA’s strategic plan implementation failures alluded to by Hamburg (2012) results in losing (p.8) the public’s trust from its stakeholders. Research shows that failure to secure the public’s trust can be detrimental to capital investment funding opportunities i.e., during the Congressional appropriation process creating fiscal budget gaps in a global economy where market-driven nations are being impacted by economic uncertainty. The result of which are governments that are underperforming in the provision of even some of the most basis of public services.
  • 9. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 8   Applicable Laws, Regulations, And Policies Impacting The Organization's Financial And Budgetary Operations Some of the applicable laws, regulations, and policies impacting the FDA's financial and budgetary operations begins first and foremost with its regulatory authority written in language contained in the 1938 Food, Drug and Cosmetic Act as outlined and defined under United States Code 21, Chapter 9. Congress now authors the legal statute and mandate by which the HHS and its divisions such as the FDA operate and function to provide public services for the American People. Current law provide a legal framework and structure for agencies in terms of expected performance management strategies, strategic goals, organizational behaviors, and to develop a means to holistic processes or procedures to improve organizational management models (Public Law, 103-62, 103d Congress, 1993, August 3). Moynihan, (2012) developed a plan that emphasizes implementation accountability and follow-through by assigning “senior accountable officials” as outlined (p. 43) under ‘Key Actions In First 100 Days’ to effectively implement the time-critical requirements in the Modernization Act, Office of Management and Budgets (OMB). Unintended economic-behaviors such as organizational internalities and externalities create functionality issues such as organizational equilibrium imbalance issues including but not limited to social and political forces (Hamburg, 2012, p.8, para: 2; Bryson, 2011, p. 74, para: 9) that influence decision-making processes. In this context Congress’ expectations and mandates are for the FDA to create new initiatives to protect the safety and health of the American People through implementation of the Food Safety Modernization Act (FSMA) and the FDA Safety and Innovation Act (FDASIA). Studies suggest that (80%) of those afflicted with metabolic disease from sugar sweetened beverages (SSB) reside in poverty or economically disadvantaged areas. A World Health Organization analysis projects that metabolic
  • 10. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 9   diseases associated with SSBs containing high fructose corn syrup (HFCS) will become the seventh cause of death in 2030. The 2030 prediction will include but is not limited to obesity, cancer, hypertension, diabetes, and more. Impacting healthcare costs in the United States to increase by (36%), and medication costs to increase by (77%), a statistic that Affordable Care Act, which is comprised of two separate pieces of legislation: Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) – fails to address. Current research also indicates that the FDA falls short in delivering a quality service to the American People. In a National Institutes of Health, an agency of the Department of Health and Human Services’ study under NIH grant # 2 T32ES013678-06, empirical evidence disclosed that some consumables contain (55%) and as much as (67%) of high fructose corn syrup (Walker, et al., 2014). So there are several regulatory laws, and policies that impact the FDA's financial and budgetary operations. In many instances Congress failed in enforcing its own mandates of adherence to achieve outcome-oriented goals (Driving Federal Performance, 2010). Management performance reform initiatives e.g., Government Performance and Results Act (GPRA) Modernization Act of 2010, are designed to address the inherent and complex nature within public [and private] organizations but over the years has not been as effective (Poister, 2010, p. s250, para: 7) as researchers expected (Bryson, 2011; Driving Federal Performance, 2010). Evaluation Of The Organization's Budget Process And Revenue Sources For example the FDA’s drug approval process has/is out of sync with the market demand by consumers for pharmaceutical innovations and remedies. Financial documents e.g., strategic financial plans (plan), functions as an iteration of an organization’s annual financial transactions (Mikesell, 2014). (Fig. 3) Annual Financial Reports
  • 11. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 10   Organizations in general and government entities such as the FDA specifically are legally guided by commonly accepted financial record keeping practices and an accountability to funding sources and stakeholders of how the money is being spent. For an example we can see this accountability when we review the Government Finance Officers Association’s (GFOA) language to identify (Fig.3) key items related to “recurring and non-recurring revenues, recurring and non-recurring expenditures, and reserves” – to earn the public’s trust and that of stakeholders (Government Finance Officers Association, 2014). In this context the generally accepted accounting principles (GAAP) also outlines General  Notes   Detail  in  this  document  may  not  add  to  the  totals  due  to  rounding.    Budget  data  in  this  book  are   presented  “comparably”  to  the  FY  2016  Budget  since  the  location  of  programs  may  have  changed   in  prior  years  or  be  proposed  for  change  in  FY  2016.    This  approach  allows  increases  and  decreases   in  this  book  to  reflect  true  funding  changes.     The  FY  2015  and  FY  2016  mandatory  figures  incorporate  mandatory  proposals  reflected  in  the  Budget.   $1,093  Billion  in  Outlays   Children's   Entitlement   Programs   3%   Discretionary  Programs   8%   TANF   2%   Medicare   53%   Other  Mandatory   Programs   2.2%   Medicaid   32%  
  • 12. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 11   for government entities’ a list of accepted accounting and financial priorities (Governmental Accounting Standards Board, 2014, p. iii). The hierarchy of these legal declarations is specifically cleared as authoritative; officially establish accounting principles by Governmental Accounting Standards Board. And included in the Codification of Governmental Accounting (p. 1 – 3) and Financial Reporting Standards. The GASB accepted guidelines are found in GASB Technical Bulletins; GASB Implementation Guides; and literature of the American Institute of Certified Public Accountants (AICPA). These legal mandates are designed to standardized financial report formats for government entities’ requirement to produce an annual comprehensive annual financial report (CAFR) assigning value of the organization to stakeholders. The backdrop of the (34) thirty-four tenets provided (GASB, 2014, p. 7 – 10) by the GASB illustrates language for broad public exposure for the 1992 authoritative implementation and conformity of the GAAP hierarchy set forth in AICPA literature. In the 158 pages of the Health and Human Services (HHS) Agency Finance Report for 2016 is comprehensive financial information to administration and stakeholders showing plans to adhere to GASB guidelines and demonstrate to Congress the FDA’s ability to fulfill its mission to protect the safety and health of the American People. The Organization's Usage Of Cost-Benefit Analysis The FDA, governments in general, and business alike are struggling to do more with less. There is an abundance of literature on strategic planning (plan) initiatives such as the Government Performance and Results Act (GPRA). Mikesell (2014) talks about the inherent cultural behaviors such as those discussed within the FDA that impedes rational and critical thinking alluded to by Hamburg (2012, p.8, para: 2) in decision- making processes. Behaviors that Mikesell (2014) and others consider as an impetus supporting constituent complaints, vitriol, and dissatisfaction in elected (p. 320, para: 3)
  • 13. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 12   officials who sponsor bailouts, poor investment strategies, poor leadership paradigms and pervasive government culture that perpetuate inherent deleterious fiscal policies. As a result to these fiscally irresponsible behaviors we see mêlées between constituents and political pundits. In fact the majority of literature consists of some innovative and workable solutions but rarely have they been effectively implemented. Most approaches consider as part of any plan focused on outcome-oriented goals (p. 321, para: 1) a cost benefit analysis comprised of “(1) categorizing project objectives, (2) estimating the project’s impact on objectives, (3) estimating project costs, (4) dis- counting cost and benefit flows at an appropriate discount rate, and (5) summarizing findings in a fashion suitable for decision making.” The results of the HHS CBA and it ability to fulfill its fiscally responsibility to stakeholders is outlined in its FDA-Track implementation strategy (Hamburg, 2012, p. 28). Technological Considerations For Improving The Efficiency Or Effectiveness Of Finance And Budgeting Within The Organization Casey and Seay (2010) write that communication of a vision or dream of a mission statement to a strategic (p. 29 para: 6 – 8) focus within an organization requires effective collaboration sharing information and recourses. As Nutt (2002) mentioned earlier in the paper collaboration, corroboration, and cooperation however is not widely practiced which may be the reason why performance management reform has not been as effective holistic performance management reform. The FDA-Track strategy is a comprehensive framework outlined in the FY2010 – 2015 strategic plan for the Department of Health and Human Services (HHS) goals marrying those HHS’s Strategic Goals and Objectives with FDA’s Strategic Goals and Objectives in (p. 28) a collaborative effort to implement strategized short and long-term goals. The plan addresses implementation issue in 4 key areas as follows: reform health care, advance scientific knowledge and innovation, advance the health, safety, and
  • 14. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 13   wellbeing of the American people, and the forth and finally area being to ensure efficiency, transparency, accountability, and effectiveness of HHS programs. But whether or no the FDA will be capable implementing a fiscally sustainable performance management plan may be unlikely as will be illustrated in the “Assessment Of The Organization's Overall Financial Condition” section later in this paper, if career bureaucrats remain in place. And when it comes down to the talent needed during a decision-making process Nutt (2002) explains that the strategic planning and strategic management perspective is not viewed in a collaborative way with performance management outcome-oriented goals by finance officials. These top decision makers see short and long-term goals as opportunities for acquisitions. Studies show that the various talents and skill of financial officials i.e., technical, operational awareness, resource management and systems integrations - makes them uniquely qualified. Their unique talents provide the opportunity to interact with wide variety of department heads within an organization. In addition to the FDA senior finance officials – the senior administrative officials (career bureaucrat), may be even more skilled, talented or politically connected. But until and unless they resign themselves to inclusive practices as mentioned in peer review literature of collaboration, cooperation and coordination as a team, performance and financial reform is unlikely to be effective. Casey and Seay (2010) seem to share previously mentioned concepts of collaboration, cooperation and coordination as a team [of talent] instead of one central leader (p. 30, para: 5) to include senior leaders and employees who are skilled and talented enough to best strategize the direction of the organization. According to Nutt (2002) and Casey and Seay (2010) collaboration between departments is the structure needed to develop stewardship and financial planning and improved usage of resources though out organizations – in this case the FDA. An example of the Hanover County’s strategic objectives are outlined below:
  • 15. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 14   “• Information Technology (IT) Governance. Departments that make budget requests for technology enhancements must get their technology requests approved. • Operational Action Plans. Departments develop action plans to define tasks for board initiatives and operational projects. • Integrated Dashboards. The finance department summarizes and interprets performance measures that are reported on department-level dashboards, helping senior leaders assess the affects of strategic decisions. • SharePoint. SharePoint software allows the county to communicate and share results and services that result from the financial and strategic planning process.” The Hanover county plan incrementalism process formed a comprehensive strategic planning and strategic management procedures for the provision of services through good leadership, stewardship, stakeholder confidence, management performance and outcome- oriented goals. Casey et al, (2010) explains that the framework of these strategies needs to be in place (p. 30) to ensure that top decision makers, and key employees are ready to strategize and lead. The first point is to develop strategic leadership skills requirements for all department heads, director and assistance directors. Secondly, the top decision makers need to develop formal actionable strategic plan goal for human services and public safety. And third to find a reputable program that orient them on what questions to ask, educational tool to use and discussion points needed to be explored in order to be successful and develop sustainable goals. Additionally Nutt (2002) would suggest creating a safe space that would allow those with talent to express ideas freely without fear of retaliation or ostracism. To make that connection between the tiers or structures of an organization talented decision makers must have the decision making authority to effect change, to ensure that the communication of outcome-oriented goals are not only understood, but delegated to those with the skill to follow though to completion effectively. Included in this strategy is a succession plan that incorporates orientation
  • 16. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 15   programs to newly elected officials, newly appointed or newly hired decision makers to the direction and mission of the organization through interaction with sitting decision- makers during the formalization of the strategic planning process (Casey & Seay, 2010). Assessment Of The Organization's Overall Financial Condition To summarize this paper Nutt (2002) talked about the importance of collaboration, cooperation, and coordination in support of strategic planning first requires an agreement amongst key decision makers on acceptance of a means towards guidance, motivation and vision (Bryson, 2011, p. 272, para: 4). The former FDA commissioner talked about some of the short falls and successes that the prior strategic plan achieved. And where the new FY2010 – 2015 strategic plan for the Department of Health and Human Services will (p. 274, para: 2) focus on goal implementation. And where Casey et al (2010) research (p. 29, para: 4) indicate strategic planning, strategic management and incrementalism can define strategic pathways from comparison analyses between peers in terms of outcomes. To achieve the outcome-oriented goals the FY2010 – 2015 plan the Congressional Budget Office (CBO) estimates that the FDA’s, Food Safety Modernization Act (FSMA) requires its $538 billion dollar budget to be increased from 2011 – 2015 annually. FY 2011 – 2012 the FSMA saw an increase of 100 million dollars with a $400 – 450 million dollar-funding gap for 2013. The increase climbed to $138 million thru FY 2014 with a balance-funding gap of $300 million dollars according to the HHS. Again in 2015 the increase is $24 million with a funding gap of 276 million dollars. The prediction for FY 2016 is for 109.5 million dollars for the new budget authority reducing the funding gap going forward into 2017 at 166 million dollars with a request for fee revenue to sustain the FSMA long term. Conversely, in recent history the American People have experienced several FDA
  • 17. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 16   short falls including but not limited to such threat to public health as the N1H1 virus, Avian Flu virus, Swine Flue virus, Ebola outbreak, West Nile virus, and various metabolic diseases with statistical significant correlation to consumption of high fructose corn syrup (HFCS) and other artificial sugars approved by the FDA. In this context transparency is a key component to a strategic plan’s initiatives where failure can be (or should be) traced back e.g., FDA-Track strategy, to inept decision makers who impose their own solutions, limit any logical searches for alternatives and are influenced by social and political forces.
  • 18. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 17   References Bryson, J. M. (2011). Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement (4th ed.). San Francisco, CA: Jossey-Bass. Casey, J. T., & Seay, K. T. (2010). The Role of the Finance Officer in Strategic Planning Government Finance Review; Dec 2010, ProQuest Central pg. 28 - 36 Chan, M. (2014, January 1). About WHO. Retrieved November 7, 2014, from http://www.who.int/about/en/ Da Silva, J. (2014, January 1). Food and Agriculture Organization. Retrieved November 7, 2014, from http://www.fao.org/home/en/ Driving Federal Performance. (2010). Retrieved March 24, 2015, from http://www.performance.gov/ Governmental Accounting Standards Board. (2014). Retrieved from http://www.gasb.org/ Government Finance Office Association. (2014). Distinguished Budget Presentation Award Program (Budget Awards Program). Retrieved from http://www.gfoa.org/index.php?option=com_content&task=view&id=33&Itemid=57 Hamburg, M. (2014, October 29). U.S. Food and Drug Administration. Retrieved November 6, 2014, http://www.fda.gov/AboutFDA/CommissionersPage/default.htm Hamburg, M. (2012, September 1). U.S. Food and Drug Administration / FDA Strategic Priorities 2014–2018. Retrieved April 25, 2015, from http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/UCM416 602.pdf Horovitz, B. (2012, March 29). Vegans bash Starbucks for beetle coloring in frappuccinos. Retrieved November 8, 2014, from
  • 19. FINANCE AND BUDGETING FOR THE PUBLIC SECTOR: FDA 18   http://usatoday30.usatoday.com/money/industries/food/story/2012-03-28/starbucks- strawberry-frappuccino-beetle-juice/53839006/1 Laureate Education (Producer). (2008e). Strategic planning: Future vision and implementation[Video file]. Baltimore, MD: Author. Lewis, T. (2014, June 4). USC study finds more fructose in soda than label indicates. Retrieved November 7, 2014, from http://www.consumeraffairs.com/news/usc- study-finds-more-fructose-in-soda-than-label-indicates-060414.html Lustig, R., M.D. (2012, December 27). What You Need to Know About Sugar. Retrieved November 6, 2014, from http://ideas.time.com/2012/12/27/what-you-need-to-know- about-sugar/ Mikesell, J. L. (2014). Fiscal administration: Analysis and applications for the public sector (9th ed.). Boston, MA: Wadsworth. Moynihan, D. P. (2012). Creating a performance-driven federal government. Public Manager, 41(4), 41–44. Retrieved from the Walden Library databases. Nutt, P. (2002). Why decisions fail avoiding the blunders and traps that lead to debacles. San Francisco, CA: Berrett-Koehler. Poister, T. H. (2010). The future of strategic planning in the public sector: Linking strategic management and performance. Public Administration Review, 70(s1), s246–s254. Retrieved from the Walden Library databases. Public Law 103-62 103d Congress. (1993, August 3). Retrieved May 4, 2015, from http://history.nih.gov/research/downloads/PL103-62.pdf Ruiz, R. (2008, November 17). The Skinny On Sugars And Sweeteners. Retrieved November 6, 2014, from http://www.forbes.com/2008/11/17/calories-health-sugar- forbeslife-cx_rr_1117health.html SCOGS (Select Committee on GRAS Substances). (2014, August 19). Retrieved November 8, 2014, from
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