In the past few years, we have invested steadily in our technology to the point
where, as mentioned earlier, every employee has up-to-date hardware and
software, and our internal network and data communications are among the
best in government. That level of accomplishment allows us to reduce new
hardware and software spending somewhat in fiscal years 2001 and 2002 to
accommodate major systems development efforts. Thus, in fiscal years 2001
and 2002, we will:

migrate our mission-critical Budget Analysis Data System to a
new platform;

Conclusion

automate or replace older systems for administrative processes.
including ones for project tracking, requisition and procurement,
invoice tracking, supply distribution, inventory, applicant
tracking, and human resource management functions;

further develop our intranet as a primary delivery mechanism for
internal services and communications;

update a limited number of network and desktop software
packages and further improve computer system reliability and
security; and

develop a secure facility to house confidential and sensitive data
we expect to utilize in our modeling efforts.

Streamline Procurement - Our goal is to modernize our procurement process
so that it is a streamlined, paperless process with greater emphasis on
competition.

During fiscal year 2000, we investigated processes and supporting software
used by other organizations and began redesigning our current procurement
process. We are now implementing a new automated system for processing
purchase requests, issuing purchase orders, and tracking obligations, orders,
and payments to vendors.

Mi Chairman, during the last two years we have worked very hard to meet the needs of the Congress and to rebuild our staff during a period of great competition in the

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labor market. To do this, we have raised starting salaries for new graduates and undertaken a variety of efforts to make CBO a more desirable employer for talented economists and policy analysts. The budget increase you provided last year remedied our earlier financial problems and, along with our extensive efforts to reduce our nonpayroll costs, has allowed us to make good progress. Nonetheless, we are still having difficulty attracting new Ph.D.s, and we must maintain competitive wages for all our analysts in order to retain them. Our budget request will allow us to continue our progress and meet the goals we have set for ourselves.

11

STANFORD LIBRARIES

We began to examine the concept of the "New Economy," convening a conference of experts to examine trends in productivity, the effects of new technology on certain industries, and the implications of relatively strong productivity growth in 1995 through 1999 for monetary and fiscal policies. And we provided analyses in support of Congressional consideration of proposals relating to patients' rights, increasing the number of people covered by health insurance, military health care, national missile defense, federal national disaster insurance, and increasing the federal minimum wage.

The Congress's view of the quality of the agency's assistance in the budget process is made clear by the numerous times CBO was asked to testify and the many occasions on which it was asked by the Congress to provide answers on budget questions in the waning hours of the fiscal year 2001 budget process. During the year, CBO officials testified 14 times for a variety of committees, including several appearances before the House and Senate Budget Committees, House and Senate Appropriations Committees, House Ways and Means Committee, and other House and Senate legislative committees.

In 2000, we continued to publish our Budget Options report detailing hundreds of possible methods for reducing spending or raising revenues. The report also included a discussion of major proposals to increase spending or cut taxes that have been prompted by the emergence of large budget surpluses.

Work Priorities for Fiscal Years 2001 and 2002

As always, our emphasis must be on producing the budget projections, cost estimates, and other information that the Congress relies on to do its work. In particular, issues related to the projected budget surpluses have been prominent this year, and Social Security and Medicare reforms are expected to continue as priorities during this Congress. Tax issues will also likely require significant effort as the 2002 budget process unfolds.

In fiscal year 2001, CBO will produce long-range cost estimates and impact analyses of Social Security for both current law and what is expected to be a large number of reform proposals. As part of the agencywide effort to analyze Social Security reform options, we will expand and enhance our actuarial and microsimulation models for estimating Social Security over the long term (75 years). Our analytic agenda includes integrating analysis of the long-term macroeconomic effects and fiscal (budgeting) implications into our long-range models. And we will begin development

of long-range models for estimating Medicare. We anticipate a continuing high level of interest in estimating Medicare proposals over both the short and the long terms.

Other important policy work that will be completed in 2001 includes an analysis of the effect of estate and gift taxes on charitable giving; a primer on Social Security; an analysis of the California electricity crisis; and a study of military operations and maintenance accounts.

Also important to our work this year and next will be our access to new data on income, Social Security, and Medicare. That data will enhance our long-term modeling efforts but will also put demands on our staff and ADP resources as we integrate, process, and safeguard these new resources.

Internal Management Strategy, Progress, and Priorities for 2001 and 2002

In addition to focusing directly on its mission, CBO, like any effective and highly successful organization, must devote resources to attracting talented people, developing their skills, and properly equipping them. It must also organize its key work processes to be as efficient as possible.

Enhancing Recruitment and Retention. During the next two years, we will expand on the initiatives undertaken last year to identify, hire, and retain a highly talented and diverse workforce by strengthening our recruitment efforts, investing more in training and staff development, and reconfiguring our space so that it better meets the needs of our staff.

Strengthen Recruitment Strategy - Our goal has been to focus our efforts on quickly filling key vacancies, particularly in hard-to-attract disciplines, while building a more diverse workforce.

In 1998 the agency experienced an unusual number of vacancies and was unable to quickly replace the individuals who left. Consequently, staffing dropped from 227 full-time-equivalent positions in 1997 to 205 in December 1998. We recovered somewhat in 1999, but still ended the year far short of our staffing needs. We met our mandates, but the shortfall created a hardship for our staff, and it meant that our ability to produce nonstatutory cost estimates and major studies suffered. Early in fiscal year 2000, a CBO task force made significant recommendations on how to build a better recruitment program. As a result, we created a recruitment program that allowed us to fill

vacancies more quickly and to reach our fiscal year 2000 staffing objective of 225 staff years. Our program included:

raising offering salaries for new Ph.D. and Master's candidates
and enhancing our internship programs;

simplifying our application process and drastically shortening
the time from application to interview and job offer;

creating a high-quality recruitment brochure for our college
recruitment program and strengthening the employment pages
on our Web site (www.cbo.gov);

developing new systems to track recruitment contacts and job
applicants; and

more aggressively advertising critical vacancies and beginning
the use of recruitment bonuses in hard-to-fill specialities.

We also expanded the number of schools where we recruit and began sending recruitment materials to more institutions with relevant programs in economics and public policy, and to a wider variety of schools with diverse student populations.

In fiscal years 2001 and 2002, we will further expand our campus visits to include more schools with diverse student populations, provide additional training to staff on effective recruitment techniques, complete our automation efforts, and implement an expanded training and orientation program for new employees.

Furthermore, to help retain high-performing employees and to be more competitive in recruiting, we are providing larger merit pay increases to entrylevel employees and continuing what we believe is a very successful awards program for outstanding performers. The awards program benefitted roughly a third of our permanent employees in fiscal year 2000.

Improve CBO's Training Programs - Our goal is to improve management and job skills by investing in our people through training, education, and professional development.