Skip Ribbon Commands
Skip to main content
Skip Navigation LinksAbout Us > OMB HISTORY
OMB History
Background
Creation of the Budget Bureau
Functional Budget
Performance Budgeting
Joint Budget
Expansion of Budget Management
Budget on Program Basis
Consolidated Budget
Zero Base Budget
Creation of the Office of Management and Budget​

Background

As a result of the Spanish-American War and as provided by the Treaty of Paris of 1898, Puerto Rico was declared a possession of the United States of America. Some months before the change of sovereignty, by Royal Decree on November 25, 1897, propagated by the Queen Regent, María Cristina, local authority for the creation of a budget was formally enacted. It was established that the Governor General would submit to the Legislatives Chambers each year, on or before December 31, the budget corresponding to the next fiscal exercise.
 
Congress passed the Foraker Act in 1900, establishing that the preparation of the Puerto Rico budget was the responsibility of the Executive Council, the upper chamber of the local legislative power at the time. This Chamber, in turn, delegated to the Puerto Rico Treausry the preparation and administration of the budget, reserving the right to approve it. The Jones Act of 1917 established that the Governor of Puerto Rico, at the time appointed by the president of the United States, would prepare a two-year budget which would be submitted to the Legislative Assembly for their review and approval.

During the decades from 1920 to 1940, changes occurred in the Puerto Rico budget system. In 1026, Governor Towner assigned to the Puerto Rico Auditor, the task of preparing and administrating the budget; and for the first time, the heads of each department of the executive branch prepared estimates of revenues and expenditures for a specific year and compared disbursements with preceding years. In 1929, the Puerto Rico Legislature passed Law No. 50, establishing the guidelines and procedures for preparing the budget, keeping the government accounts, and providing for payment of the assignments..


ri
ba ▲

Creation of the Budget Bureau

On May 12, 1942, the Puerto Rico Legislature passed Law 213 that jointly created the Budget Bureau and the Planning Board within the Governor’s Office. This measure provided the Governor with the necessary assessment mechanism in budget matters. Through a provision in this Law, the Governor appointed the Budget Director, who would be in charge of directing this Bureau.

Another of the basic provisions of this law established that the Budget Bureau would prepare an Annual Budget of operating expenses and capital improvements for the Governor. The First Executive would submit this document to the Legislative Assembly at the beginning of each ordinary session, indicating government objectives and programs proposed for the next fiscal year and consonant with the direction and long-term goals of the Four Year Economic Plan. In 1944, the Planning Board launched the preparation of this economic program, thus achieving the needed connection between economic and social planning and budget formulation.

The Constitution of Puerto Rico, passed in 1952, established the constitutional nature of the Governor’s function in formulating and managing the Puerto Rico budget, in addition to establishing the base limits and requirements to contract public debt.

iba ▲

Functional Budget

To facilitate the analysis and understanding of the Budget, the concept of functional classification was used in the budget for the 1953 fiscal year. This budget included an analysis of public expenditures, grouping government activities based on the more important government functions such as health, education, protection (public safety/security), etc..

r
iba ▲

Performance Budgeting

In 1955, preparation of the state government Budget was based on the concept of Performance Budgeting. This method emphasized achievement of results; it established quantifiable objectives and goals by function classification; maintained budget distribution by expense items; and linked expenses with the existing objectives and needs.

r
riba ▲

Joint Budget

The 1957 budget included for the first time the concept of “Joint Budget” and included expenses for operational and permanent improvements charged to the General Fund and to Special Funds. This was the first step towards the analysis and integrated presentation of the work plan and the budget for the Commonwealth of Puerto Rico

.

a
rriba ▲

Expansion of Budget Management

Between 1959 and 1963 there were several events that increased budgetary management. Greater attention was given to improving the organization and administration of government agencies and to this purpose, the Government Management Division, formerly the Division of Organization and Methods was created in the Budget Bureau. The practice of holding budgetary hearings between the different government agencies and the Director of the Bureau of the Budget for the purpose of reviewing budget requests began. In the 1969 fiscal year budget, information on public corporations, including their operational budgets, investments, and functions was presented for the first tim

e.

arriba ▲

Budget on Program Basis

In FY 1967 budget analysis of the Commonwealth of Puerto Rico was prepared on a programmatic basis (PPBS). The presentation of the budget following this model allowed the identification and definition of all classified government work programs, subprograms and activities. This new method helped the legislative chambers and in particular the Committees on Finance with their study of the budget. The budget by programs focuses on the socio-economic problems that the government program or activity is trying to solve and it is in these terms that the objectives and goals to be achieved are defined

Using this new concept, the Bureau introduced the Budget Document in 1972, based on the government’s goals and objectives with a distribution of resources for operating expenses and improvements, by area and program sector, source of funds, and by objects of expenditure. In this document, spending and public investment in an integrated perspective that facilitated gathering and linking in a work plan government efforts toward solving the fundamental problems of the island was visualized

.


Consolidated Budget

Until 1977 the budget was presented only in relation to the central government and was limited to operating costs from the General Fund and Special Funds.

In 1978, for the first time in the history of the budget process, all the responsibilities and resources of the Commonwealth of Puerto Rico were stated and explained. This includes recurrent expenditure and special allocations from the General Fund; contributions from the Government of the United States; allocations for capital improvements under the General Fund, Special Funds and Public Improvement Fund; and the net budget of public corporations, including inputs made to them by the Central Government.

Thus emerged a new budget concept called the Consolidated Budg

et.


Zero Base Budget

The 1979-1980 Budget introduced a new budgeting technique known as zero-base budgeting. This technique is an effective tool for budgetary and managerial tasks because it provides the organization with a systematic way to evaluate operations and programs carried out under the same. It also allows locating resources where they will yield greater benefits. The "zero-based" approach requires the periodic evaluation of existing programs. In light of priority and effectiveness, each assignment for a program or activity included in the budget must be justified and approved in its entirety, as if for the first time. This approach is different from the incremental method used before, in which the allowance established for the current budget is accepted and it increases or decreases depending on the resources availabl

.

arriba ▲

Creation of the Office of Management and Budget

With the creation of the Office of Budget and Management, by virtue of Law No. 147 of 1980, a new dimension is achieved in the budgetary and managerial work of the Commonwealth of Puerto Rico. The fundamental objective of the Act is defined in terms of improving and strengthening the functions related to the formulation of public policy and management and administration of the Commonwealth of Puerto Rico, especially in the areas of fiscal and programmatic policy, and budgetary and financial management. Under this Act, the Operational Audit Division of the Office of Management and Budget was created. Its main function was to assess objectively and analytically management, operational problems, and effectiveness of government programs

.


Renaming to Office of Management and Budget

Law no. 110 of 1995, as reads the preamble, presents the urgency to understand the structural and programmatic changes that the Commonwealth of Puerto Rico had experienced, as well as new approaches and trends in the managerial, administrative, and technological fields globally. These changes led to the reevaluation of some of the organizational and procedural aspects of the agencies that make up our system of government and which requires dynamic public bodies that temper and modernize their efforts and strategies to achieve greater efficiency, economy, and effectiveness in services.



The Governor's Authorized Representative to FEMA (GAR)

In 2013, the Governor signed Executive Order 2013-71 to appoint the Executive Director of the State Agency for Emergency Management and Disaster Administration of Puerto Rico as the Governor’s authorized representative before the Federal Emergency Management Agency FEMA, and order the corresponding transfer of functions and resources from the Office of Management and Budget to the Agency, thus closing a 16 year period, since 1998, that the GAR had been operating in the OMB.

The Office of Management and Budget is one of these government agencies that, due to the powers and responsibilities granted by Act No. 147 of June 18, 1980, as amended, should remain alert to these changes and re-evaluate itself as needed, to be at the forefront, efficiently addressing complaints and trends in delicate, wide-ranging, and dynamic aspects such as government management, budgeting, and auditing.

When the office was created, the main intention was to temper the powers granted to the Bureau of Budget with the changing realities of a modern system of management and budget. This time, the scope and importance acquired by the Office within the organizational scheme of government, as well as the complexity of some related processes, forced us to reassess their roles and those which, although granted to other organisms, were inherent and should be part of this agency.

From a managerial point of view, the importance and wider dimension acquired by this function in both government and private sectors, as well as new responsibilities or claims assigned to the Office, also demanded renaming this body, of so that its name be more descriptive of itself and more in tune with these responsibilities. This Office was established as an aid and advisory body to assist the Governorship in the discharge of management and administration duties and responsibilities. In this sense, it is the operational arm of the Governor on matters of management and budget. Moreover, the management functions of this office increased due to new responsibilities that were conferred to it. This function is broad; it permeates everything regarding approaches/perspectives, strategies, systems, techniques, mechanisms, operations, organization, administrative processes, tools, and utilization of human, physical, and fiscal resources, in order to ensure sound public administration and optimization of resources.

Moreover, general powers are added to the Office aimed at establishing an information system that promotes, facilitates, and expedites the processes of the agencies of the Executive Branch in their relationship and interaction with the Office and within the Office itself. It is also empowered to establish general criteria that effectively achieve economy, efficiency, and effectiveness and require the participation of two or more agencies in multiagency projects to achieve this purpose.

By law, the Office of Management and Budget is the advisory body on matters of budgetary, programmatic, and administrative management nature. To fulfill this role, the agency must keep abreast of new techniques, systems, and methods to facilitate and expedite the processes involved, in order to improve the quality of their services. Moreover, the dynamics of processes and the agility with which services are required as well as the complexity of the issues it addresses and changes in public policies and approaches in the functions of budget and management at the federal government level which have repercussions in Puerto Rico, require the establishment of greater coordination. This coordination seeks to avoid duplication, facilitate communication and information sharing among government agencies, streamline processes and decision making, produce better reports, and achieve greater standardization and economy in the information systems. To this end, the functions of the Electronic Data Program of the General Services Administration are transferred and the Governor's Committee on Information Systems, attached to the Office of Management and Budget, is created. This will allow adopting and implementing a uniform public policy and a systems installation process articulated in a coherent and consistent manner, that in turn provide better advice to the Governor, the Legislature, and government agencies themselves

arriba ▲

​​

Gobernador Rexford Guy Tugwell 
Gobernador Rexford Guy Tugwell
bajo su mandato se crea el Negociado de Presupuesto
Louis Sturkce
Louis Sturkce Primer Director designado al  
 Negociado de Presupuesto
Negociado de Presupuesto en los Predios de la Fortaleza
Creacion del Negociado de Presupuesto
Firma de la Ley que crea el Negociado de Presupuesto 12 mayo de 1942 Ley 213
 Franklin Delano RooseveltEl Presidente Franklin Delano Roosevelt Extesión del programa del Seguro Social a Puerto Rico

Operacion "Manos a la Obra"

1er documento de presupuesto bajo el Estado Libre Asociado
Preparación del documento de presupuesto

Uno de los primeros sistemas de procesamiento de datos

Tarjetas perforadas IBM 

Personal del Centro de Procesamiento de Datos

Grupo de trabajo en la planificación del presupuesto

Personal Dactilógrafo

Centro de Cómputos

Personal secretaria

Máquina utilizada en las labores presupuestarias
Antiguo Hotel Palace, actual edificio de la oficina de la OGP
Edificio de la oficina de la OGP


© Company 2013