Office of Information and Regulatory Affairs; Estimating Paperwork Burden

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.

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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

[[Page 55789]]

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 [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

Under the 1995 PRA (44 U.S.C. Chapter 35) and OMB's implementing

regulations (5 CFR 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 CFR

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 CFR 1320.3(b) (regulations issued

in 1995); 5 CFR 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 http://

www.whitehouse.gov/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 judgment 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:

[[Page 55790]]

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 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, Office of Information and Regulatory Affairs.

[FR Doc. 99-26846 Filed 10-13-99; 8:45 am]

BILLING CODE 3110-01-P