federal – ChiefHRO.com

The federal government’s fiscal year began on Oct. 1, 2017. As of the date of this post that was 101 days ago. There is still no budget for the full year, just a continuing resolution (CR) that expires on January 19.

So what is a CR? The Government Accountability Office (GAO) defines it as “An appropriation act that provides budget authority for federal agencies, specific activities, or both to continue in operation when Congress and the president have not completed action on the regular appropriation acts by the beginning of the fiscal year.” In recent years we could also define it as “business as usual.” Some folks look at that and say “no problem.” They think that government spends too much anyway, so slowing down government spending is a good thing.

That might make sense if operating the government on continuing resolutions and last-minute omnibus spending bills actually saved money for the taxpayers. Sadly, the opposite is true. Not having a funded budget on Oct. 1 means agencies have to do countless workarounds, many of which cost money. Here are just a few examples of the problems created by the lack of timely appropriations.

New projects are delayed. A CR is exactly what it sounds like – it allows existing programs/projects to continue, often without an increase for inflation and sometimes with a reduction. Unless specifically provided for in the CR, new starts are not allowed. It does not matter how critical the new project might be, or who wants it.

Talent management. Government needs to replace key people who leave. Sometimes having a CR means they have no assurance they will have the money necessary to fill every job. So – being good stewards of the taxpayers’ money and not wanting to violate the Antideficiency Act – government managers hold back a bit to make certain they do not over hire. Sounds good, but what happens when they get the money? Now they have to rush to get the jobs filled. We all know how quickly the federal hiring process produces new hires. So now we have agencies trying to fill jobs quickly using a bad hiring process, overloading the HR staff, and often not getting the jobs filled during the fiscal year. That leads to talent gaps and what appear to be surplus dollars.

Contracts. Agencies cannot award contracts for programs where they have no money (the Antideficiency Act again). That means new contracts are often delayed until after the CR is replaced by a real appropriation act. That can get messy, because it delays the work that agencies need to do and puts an enormous burden on the contracting office staff once the appropriation is actually passed. If an ongoing contract is up for renewal, an agency may have no choice but to issue an extension rather than picking up an option year or awarding a new contract. That creates even more work for the contracting office. The net result is that the government wastes resources. It also causes agency spending to be concentrated in a few months of the year, which, combined with the talent management problem, then leads to the end of year money problem.

End of year money. Every year we see complaints from politicians and in the press about the government’s end of year “spending binge.” People lament the fact that the government appears to not spend money until the last quarter, when it rushes to obligate all of the leftover dollars. Does that happen? Of course. Does it happen because agencies, their leaders and their contracting staff are idiots or incompetent? Of course not. It happens because the budget process is broken. It happens because, like in fiscal 2018, we get a almost a third of the way through the year with no annual appropriation in place. It happens because the process of getting that money from a top line appropriation down through the agency budget process to the program managers who actually manage the money can take even longer. In recent years it has not been unusual for program managers to not know what their actual budget will be until the fiscal year is half gone.

So the answer to the question in the title of this post is that we should all care, because it is certainly no way to run a business, or a government. We have 535 Senators and Representatives who are paid to do a job. Article 1, Section 8 of the U.S. Constitution says “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States….” Whether you think the government spends too much money, or spends too little, or doesn’t spend it in the right way, the bottom line is that federal agencies should begin every fiscal year with a clearly defined budget. Not having that budget defined on day one makes agencies less efficient and costs the taxpayers money. Virtually no reasonable person, anywhere in the political spectrum, thinks the government should waste taxpayer money.

President Trump’s hiring freeze has been in place since January 23, 2017. Judging by the emails, comments, calls and questions I am receiving, there are still agencies that have questions about what they can and cannot do during the freeze.

Add to that the uncertainty about the FY 2018 (and beyond) budget, and it is understandable that many federal employees worry that winter is coming for the federal workforce. President Trump’s Executive Order today directing OMB to come up with a plan for reorganizing the Executive Branch adds even more urgency to the discussion regarding the size of the workforce. After watching the goings on for the last 2 months, I am not ready to pronounce gloom and doom for the workforce, but I do believe federal agencies and the workforce are in for more change than they have experienced in the past several decades.

Let’s take a look at a few examples. The Department of Defense is on the list of favored agencies that are likely to receive a plus up from the budget process. In a typical year, Defense hired just over 90,000 people last year. With the freeze in place, they are continuing to hire in a lot of positions, but they are also building up a backlog of unfilled jobs. Other Departments are in the same position. Homeland Security has exempted many of its jobs because they are engaged in border security, immigration enforcement, and other national security related jobs. But what about the rest? Last year DHS hired almost 21,000 people. Other agencies that have few jobs that are tied directly to national security or public safety are continuing to amass a large backlog of unfilled jobs.

Trying to catch up after the freeze is lifted would be a big problem if the intent is to do some trimming of agency payrolls. In this case, it appears that the intent is to do more than trim. Rather than modest cuts that rein in the federal payroll, it appears the administration is interested in far more significant cuts. Recent reporting in the Washington Post, Fox News and other outlets is pointing to much larger cuts, with some agencies seeing double-digit reductions in their labor budgets.

So why am I not taking the gloom and doom view? Presidential budget requests are not enacted by the Congress with no changes. In fact, the reception the President’s budget gets from the House and Senate is typically rejection. The likelihood of the Congress enacting all of the cuts the President is suggesting and doing them all at once in 2018 is remote. Many of the agencies are very popular with the American people. Many of the programs they run are popular. Decimating popular programs and/or agencies can have electoral consequences that members of Congress do not want. That said, republican budget proposals in recent years have called for some significant cuts in non-Defense programs. I expect to see budget cuts in many agencies, but I expect them to be tempered by Congress.

So – does that mean agencies have no worries and do not need to prepare for the worst? Absolutely not. In fact, any responsible agency that is in the budget crosshairs should begin planning TODAY for a significant reduction in Fiscal 2018. Even agencies that may be safe from a mission perspective will have to look at the cost of mission support services. That means not adding new staff (even if the freeze is lifted) unless not hiring them risks mission failure. It means preparing a plan to do downsizing in an orderly way. Agencies should be running the numbers to see what kind of attrition they can expect. What would early retirement produce? Would buyouts help? If so, how much? Does the agency have the money in FY 2017 to incentivize turnover now, to lessen the burden on the 2018 budget?

Downsizing effectively is far more than just letting people go out the door and not replacing them, Agencies must rethink their work, their missions, and how they get things done. An agency with 10,000 employees cannot operate in exactly the same way if it has to make do with 9,000 employees. That means new organizations, new job descriptions, new performance objectives, better work processes, and more. All of that takes time.

Agencies should also begin planning for reduction in force. No one wants to hear that, but the truth is that few agencies are prepared to run a RIF. Getting ready takes months. Running the RIF takes months. Doing the right thing and trying to minimize the number of people who are involuntarily separated takes months. If agencies wait until a budget is passed, or at least until the numbers are more certain, they will box themselves into a corner that is almost impossible to get out of. As I said in a post on March 3, RIF is expensive and the aftermath of RIF is more expensive.

If agencies do decide to begin planning now for what might happen with the Fiscal 2018 budget, they are not selling out their workforce. They are doing the right thing and trying to be prepared for what might happen. That is what leaders do. Because it is so important, agency leaders should be upfront with their workforce about what they are doing. Do not plan behind closed doors, hoping the workforce will not find out about it and get scared. They will find out about it. And they are already scared. Federal employee should be treated like the adults they are. Planning for downsizing without telling the employees builds more fear and it builds mistrust. When an agency is facing tremendous change, more communication is not only better, it is absolutely essential.

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