OFFICE
OF MANAGEMENT AND BUDGET
Office
of Information and Regulatory Affairs
Estimating
Paperwork Burden
AGENCY:
Office of Information and Regulatory Affairs, Office of Management
and Budget
ACTION:
Notice of reevaluation of OMB guidance on estimating paperwork burden.
SUMMARY:
The Paperwork Reduction Act (PRA) seeks to ensure that Federal agencies
balance their need to collect information with the paperwork burden
imposed on the public in complying with the collection. Agencies
must estimate the burdens that their individual collections impose
on the public.
The public
learns of these burden estimates by PRA notices that agencies publish
in the Federal Register and with the forms used for collection.
The
Office of Management and Budget (OMB) has begun a preliminary reevaluation
of its guidance to agencies on estimating and reporting paperwork
burden. As part of this effort, OMB seeks comment on how to increase
the uniformity, accuracy, and comprehensiveness of agency burden
measurement. Based on comments that OMB receives, as well as its
experience in evaluating agency burden estimates, OMB will prepare
(and seek additional comment on) a more detailed proposal to revise
its guidance to agencies on estimating and reporting paperwork burden.
OMB will consider comments on its proposal before finalizing its
burden guidance.
DATES:
Written comments are encouraged and must be received on or before
January 12, 2000.
ADDRESSES:
Comments should be submitted to the Office of Information and Regulatory
Affairs, Office of Management and Budget, New Executive Office Building,
Room 10202, 725 17th Street, NW, Washington, DC, 20503.
Comments received on this notice will be available for public inspection
and copying at the Office of Information and Regulatory Affairs
Docket Library, New Executive Office Building, Room 10102, 725 17th
Street, NW, Washington, DC, 20503. To make an appointment to inspect
comments, please call (202) 395-6881.
FOR
FURTHER INFORMATION CONTACT: Alexander T. Hunt, Policy
Analyst, Commerce and Lands Branch, Office of Information and Regulatory
Affairs, at (202) 395-7860 or ahunt@omb.eop.gov.
SUPPLEMENTARY
INFORMATION:
I.
Background
Under
the 1995 PRA (44 U.S.C. Chapter 35) and OMB's implementing regulations
(5 C.F.R. Part 1320), we measure PRA paperwork burden in terms of
the time and financial resources the public devotes annually to
meet one-time and recurring information requests. The term "burden"
means the "time, effort, or financial resources" the public expends
to provide information to or for a Federal agency, or otherwise
fulfill statutory or regulatory requirements. 44 U.S.C. 3502(2);
5 C.F.R. 1320.3(b). This includes:
- reviewing
instructions;
- using
technology to collect, process, and disclose information;
- adjusting
existing practices to comply with requirements;
- searching
data sources;
- completing
and reviewing the response; and
- transmitting
or disclosing information.
Under
the Paperwork Reduction Act, agencies must take into account the
burden that their information collections impose on the public.
This burden is balanced with the "practical utility" of the information
to be collected. In earlier decades, when information was maintained
manually rather than through automation, paperwork burden could
be captured by estimating the "burden hours" that an individual,
a company, or other entity would have to expend in filling out a
form or otherwise responding to an agency collection. Over the succeeding
years, as computers and other automated systems have assumed an
ever-increasing role in society, paperwork burden has increasingly
come to be represented by the financial costs associated with information
technology. The financial costs imposed by a Federal collection
have been included as "burden" in the Paperwork Reduction Act and
in OMB's implementing regulations. See 44 U.S.C. 3502(2) (1995 PRA);
44 U.S.C. 3502(3) (1980 PRA); 5 C.F.R. 1320.3(b) (regulations issued
in 1995); 5 C.F.R. 1320.7(b) (regulations in effect during 1983-95).
Currently,
agencies separately estimate the "hour burden" and "cost burden"
of each particular information collection. This ensures that all
types of burden are taken into account, but requires two calculations
of burden, one in the form of "burden hours" and the other in the
form of "dollars." This approach also poses difficulties for evaluating
over the years a particular collection's overall burden. For example,
as respondents move from manual to automated information processing,
a collection's "hour burden" would typically decrease. Its "cost
burden" might increase or decrease, depending on the level of offsetting
"cost burden" reductions from electronic recordkeeping and reporting.
While the use of automation can decrease overall burden, the current
reliance on separate categories of burden poses difficulties for
arriving at precise comparisons over time of a collection's overall
burden. For similar reasons, the current reliance on separate burden
categories can sometimes pose difficulties for comparing the overall
burden imposed by different collections of information, since collections
can involve significantly different mixes of "hour burden" and "cost
burden." For example, in the case of collections involving household
respondents, overall burden would typically consist primarily of
"burden hours." In the case of collections involving large business
respondents, "cost burden" would assume a larger significance, due
to the greater reliance on automation.
- Given
these complexities, agency estimation methodologies can produce
imprecise and inconsistent burden estimates. A detailed description
and assessment of current burden estimation practices is provided
in the FY 1999 Information Collection Budget. See Information
Collection Budget of the United States Government, Fiscal Year
1999, Office of Management and Budget, pp. 31-36 (available
at /OMB/inforeg/icb-fy99.pdf).
II.
Burden Measurement
In
reevaluating its guidance on estimating burden, OMB has relied
on a number of principles:
-
- Consistency.
Burden estimation techniques should be applied consistently to
help ensure that a burden hour reported by one agency represents
a burden hour equal to that of a burden hour reported by any other
agency. Since the value of precise burden estimates increases
with the size of information collections, we must use competent
professional judgement to balance the thoroughness of the analysis
with its practical limits.
- Accuracy.
Burden measurement should incorporate recent developments in methodological,
data collection, and estimation techniques and reflect changes
in the collection, storage, processing, preparation, and transmission
of information.
- Integrity.
Measurement should provide proper incentives to agencies to undertake
initiatives that actually reduce burden, as opposed to
initiatives that simply reduce burden estimates. Such
measures, for example, would not rely exclusively on proxies for
burden, such as the number of lines on a form.
- Sensitivity.
A burden measure should allow agencies to assess the impact of
ongoing improvements in procedures and customer service that are
not measured by current methodologies.
- Comprehensiveness.
The measurement of burden must capture all burden (time and out-of-pocket
expenses) without double-counting and must reflect the real costs
imposed on the public.
- Practicality.
Agency personnel must be able to implement measurement methods
in a practical and straightforward way.
- Transparency.
Improved burden estimates should improve our understanding of
the tradeoffs among burden, customer satisfaction, and the utility
of collected information.
- In
relying on these principles, OMB hopes to minimize variation in
paperwork burden measurement so that future estimates are more
useful in comparing agency inventories and evaluating individual
agency and governmentwide performance. It also hopes to improve
the comprehensiveness, consistency, and accuracy of burden hour
measurement and the way agencies now measure and report out-of-pocket
dollar costs. Agencies can continue to report time and financial
costs, but estimates of burden hours and financial costs will
reflect improved estimation methodologies.
III.
Issues for Comment
OMB
invites comment generally on all aspects of measuring and reporting
paperwork burden. OMB welcomes any suggestions on how to address
problems with the current agency practices, as well as recommendations
on methodologies to improve estimates of time burden and financial
burden. It specifically requests comments on burden measurement
options.
-
- Please
give particular attention to these issues:
- Monetizing
Burden Hours. OMB seeks comment on the idea of monetizing
the "burden hour" calculation by converting a collection's burden
hours into a dollar measure of burden. If a dollar-equivalent
value is calculated for a given collection's "burden hours," a
single estimate - in dollar terms - of the collection's overall
burden could be provided by combining the monetized "burden hour"
calculation with the "cost burden" calculation. This approach
would raise a number of implementation issues. Two issues deserve
particular attention. The first involves improving agency burden
accounting practices to resolve salient differences and improve
the dollar measure of out-of-pocket expenses. The second issue
involves revising OMB guidance to agencies to provide consistency
in the measurement of time and financial burden.
- One
potential benefit of developing a unified dollar measure of burden
is that it would be available for cost-effectiveness analysis.
Analytically, a dollar measure has the potential to better capture
opportunity cost (as explained below), as well as the burden of
PRA requirements not easily measured in hours (e.g., recordkeeping).
We seek comments on whether this and/or any other potential benefits
would outweigh possible negative effects of this approach.
- Monetizing
burden hours would present a daunting methodological challenge
and raises issues concerning certainty and ease of administration
by agencies. The key issue would be how to estimate the value
of the time devoted by the public to complying with the government's
information collection requirements. Monetizing time burden presents
different issues when considering information collections from
firms versus collections from households. When information is
collected from firms, it may be relatively easy to estimate the
employee cost associated with responding to the collection. Indeed,
some agencies already do this, using, for example, data on wage
rates provided by the Bureau of Labor Statistics. The challenge
in firm-based collections is primarily one of implementation.
In order to assure a meaningful basis for comparison of costs
across agencies, it will be necessary to obtain appropriate wage
rates.
- In
estimating the appropriate wage rate, it is critical that the
wage be properly "loaded" to include overhead and fringe benefit
costs associated with the employee's time. For example, although
a technical employee's wage may be $20 per hour, she may also
receive benefits from her firm such as health and life insurance,
paid vacation, and contributions to a retirement plan. To support
her work activities, her employer must also purchase office supplies
and services, including office space, furniture, heat and air
conditioning, electricity, a telephone and telephone service,
a personal computer, printer and photocopier access, and various
office supplies. These costs need to be accounted for when assessing
the overall impact of the Federal information collection on the
resources of the respondent.
- For
household-based collections, the issue is inherently more complex.
People are generally not paid a wage for non-work activities that
they perform at home. Instead, for burden measurement purposes,
the value that people place on their time is usually expressed
in economic terms as "opportunity cost," or the value of an activity
(for example, spending time with family or developing a new professional
skill) that a person would expect to engage in were he or she
not occupied in complying with a government reporting requirement.
Economic theory suggests that the opportunity cost of giving up
an hour of leisure will be equal to the wage foregone from the
next hour the individual would have worked. In most cases, this
will be the same as the respondent's average wage. In other cases
- for example, if the respondent is eligible for overtime pay
for her forty-first hour of work in a week - it may be more than
the average wage.
- Alternatively,
to measure the value of leisure time, agencies could observe the
actual fees paid by individuals and businesses to others (e.g.,
paid tax preparers, contractors) to prepare and submit information
to the government. This measurement approach is sometimes referred
to as "revealed preference."
- Given
the methodological and implementation challenges involved with
monetizing burden hours, OMB requests responses to a number of
specific questions:
- What
are the advantages and disadvantages to trying to monetize
burden hours?
- Is
monetization worth doing at all?
- Should
a single valuation of time (as represented, for example, by
a respondent's wage rate or the fee paid to a contractor)
be used for all collections, or it should it be derived separately
for different types of collections? A successful methodology
may need to be tailored to individual collections and agencies.
- If
the latter, should a single valuation be used for all respondents
to a particular collection, or should valuations differ according
to respondent characteristics. A successful methodology may
need different values of time for collections responded to
by individuals in different circumstances.
- Should
OMB establish a means for reporting annual burden estimates
rather than the three-year average burden estimates that are
commonly reported today?
- Categories
of Burden. OMB also seeks comment on the advantages and disadvantages
of expanding the categories of burden that agencies report to
OMB. Such an approach could involve dividing estimates of Federal
paperwork burden into three categories, with a fourth category
representing an aggregate measure of burden. The first two categories,
burden hours and financial costs, are used under the current approach,
but could be improved using new procedures designed to address
problems with burden estimation practices. A possible third category
could be burden hours converted, or "monetized," into dollars,
depending on resolution of the issue discussed above. A possible
fourth category might combine financial costs and monetized burden
hours to create, for the first time, a dollar measure of total
Federal paperwork burden.
- Estimating
Burden Hours. Whether or not the categories of burden are
expanded, OMB plans to provide guidance to agencies intended to
help them improve their estimates of time burden, measured in
burden hours. OMB seeks comments specifically on ways to improve
current agency hour burden estimation methodologies.
- OMB
will review and consider all comments received in response to
this notice. It will then prepare a draft revised guidance to
Federal agencies and provide another opportunity for public comment
before issuing final guidance to agencies.
Dated:
October 4, 1999
John
T. Spotila
Administrator
|