Shutdown: It Ain’t Over When It’s Over

With a few hopeful signs of movement on the budget/shutdown/debt ceiling/ front, I am hearing people talking about how quickly the shutdown can be turned off everyone can get back to work. As I have written before, some folks have the mistaken idea that the shutdown is like a toggle switch – just flip it off and everything will come back on. It is true that most employees can be brought back quickly. Agencies will contact employees via phone, email, radio, television and their web sites to get their employees back on the job. If it ended today, almost all federal employees could be back at work tomorrow. That should be the end of the shutdown story – right?

I wish that were true, but it is not. The repercussions of the shutdown will be felt for a long time to come. Here are just a few examples of how:

  • Year-end spending. Members of Congress and Administration officials always lament the annual “year-end spending spree” that occurs in many agencies. The year-end spending is driven by the fear of losing money if it is not obligated by the end of the fiscal year. The problem is far worse now than it was in the past because Congress is not passing appropriations bills on time. All 12 of the appropriations bills are supposed to be passed by October 1. That hasn’t happened in years. For fiscal 2014, we are likely to end up with a continuing resolution that funds the government at sequestration levels until January. Congress is supposed to pass full-year appropriations by then. Once the budget (most likely an ombibus appropriations bill or another continuing resolution) has passed, agencies will have to sort through their appropriations and then distribute the money to their component parts. That could easily take another month or two. Agencies may not have  a clear understanding of where they stand until March 2014. The uncertainty will make another year-end spending exercise almost unavoidable.
  • Combined Federal Campaign (CFC). Since its creation by President Kennedy in 1961, CFC has raised more than $7 billion for charities. CFC supports local, national and global causes and is one of the most successful fundraising campaigns ever. CFC contributions peaked $282.6 million in 2009 and have dropped each year since. Last year, CFC raised over $258 million. The 2013 campaign, beginning on September 1, 2013, had hoped to raise that much or more.  The decreasing CFC contributions, driven in part by the pay freeze and fed-bashing, are being felt by the charities that rely on CFC contributions. The 2013 campaign in DoD was suspended due to the shutdown. Other agencies have done the same. Although the campaigns will resume when shutdown ends, no one expects to see a massive outpouring of contributions from people who just got sent home without pay for a few weeks. Many smaller local organizations rely heavily on CFC and their programs and the people they serve are likely to suffer as a result.
  • Training. Many large-scale training programs in the government are run by centers/academies that have fully booked calendars. The time they have lost due to sequester can never be restored. For example, Homeland Security’s Federal Law Enforcement Training Center (FLETC) runs highly regarded law enforcement training programs that are used by much of the federal government. Many law enforcement professionals consider FLETC to be the “gold standard” for training. DHS shutdown planning guidance indicated only 61 of FLETC’s 1074 employees would be exempt from shutdown. That means training operations come to a halt. Students in residence at FLETC are returned to their homes and their training has to be rescheduled. Given the demand for FLETC training and the reduction in capacity caused by losing 2 – 3 weeks on the calendar, it is likely crucial training classes will be deferred for weeks or months. The loss of capacity and additional cost of transportation are casualties of the shutdown.
  • Recruiting. The federal government, like any other employer, experiences significant amounts of turnover every year. Even with the budget shrinking and numbers of federal employees dropping, data from OPM’s Fedscope reporting tool show the government is likely to hire almost 200,000 new employees in Fiscal 2014, just to replace people who are leaving. That number is a significant drop from the more than 309,000 in Fiscal 2009. Recruiting for federal jobs has been hard enough in the past few years, with potential hires routinely asking why they should go to work for a government that has not granted a general pay raise in 4 years. Shutdown politics are another strike against the federal government as an employer. Supporters of big government and small government alike agree that, whatever its size, the government should have talented employees.
  • Retention. The pay disruption, stress and uncertainty the shutdown caused will most like push more employees out of government. While there is a lot of attention paid to how it might affect those who are at or near retirement age, the potential effects on younger employees should not be ignored. Study after study tells us millenials do not expect to stay with an employer for an entire career. Combine that with the portability of the Thrift Savings Plan and the pay issues and it is reasonable to conclude younger employees will be likely to leave government in larger numbers. Losing highly experienced older workers and the up-and-comers who are the future of the federal workforce is a one-two punch that will have lasting effects on the government’s ability to have the right people for the job.
  • Contracts. Many businesses that have federal contracts have received “stop work” notices from contracting officers. They have to wait for another “start work” notice to be able to start work again. The disruption in work will directly affect schedules and will result in increased costs for the government.
  • Morale. Jack Moore has a great piece on FederalNewsRadio.com about the effects of the shutdown on morale. Nothing about the shutdown is motivating to federal workers. Given all of the research on the effects of morale and engagement on productivity and other key workplace measures, we should expect to see the shutdown dragging the workforce down for months or even years.
  • Scientific Research. The National Institutes of Health furloughed most of their employees. New clinical trials are not starting and new patients are not being accepted. Those with life-threatening illnesses are not getting care that may prolong or save their lives. Science Magazine has a new piece showing more lasting effects of the shutdown on research.
  • Housing. Bloomberg has an excellent piece outlining the effects of the shutdown on the housing market. The effects are driven by shutdown-driven delays in mortage approvals.
  • Adding to Backlogs. The shutdown stopped work in many agencies that already have backlogs of cases awaiting review and approval. The delays caused during the shutdown will extend far beyond because many cases are added to the pile awaiting review. Not only are those already in the queue being delayed, new cases will face a much longer queue.
  • Cost. Backpay for employees idled by the shutdown (800,000 employees off work for a week – 400,000 for another 8 days, at an average annual cost of $79,000 per employee) will exceed $2 billion. Agencies will not be given extra dollars to pay for it – it will come out of budgets that have already been squeezed by sequestration. Even in today’s inflated dollars, $2 billion is still folding money. The effects of losing that $2 billion will be felt by countless programs.

These are but a few examples of how shutdown damage will linger far beyond the day federal employees go back to work. Every agency in government will have its own collection of shutdown after effects. It may be months or years (or never) before the true cost and effects are known.

Shutdown Roulette

The press is filled with reports of a pending government shutdown and what the political effects may be. Who will be blamed? Republicans? Democrats? All of them? With all of the focus on the politics, it is probably a good time to look at some of the effects on the real world of government.

Employees

If a shutdown occurs, some employees will be sent home. Others who are doing law enforcement, health, safety, security and other work that is deemed essential to safety and health will stay on the job. Others whose work is funded by fees, permanent appropriations or other non-apprpriated sources may also keep working. Essential for shutdown purposes is not the same as essential for weather or other emergencies. Every agency has developed and is most likely updating their shutdown plans. When I was Chief Human Capital Officer for DHS, in 2011 we developed shutdown plans for the Department that outlined who would continue working and why. The Washington Post did a great article following that shutdown near-miss and described the 2011 shutdown plans for most agencies. It is still available on the Post’s website. On September 23, DoD issued shutdown guidance to its workforce, including OPM’s 2011 guidance on  shutdown furloughs. DoD’s Defense Civilian Personnel Advisory Service also issued an excellent Q&A.

Other than those whose work is funded by non-appropriated dollars, there may be no means of paying the employees who must continue to work. If a shutdown continues beyond a pay period, people may be working but not getting paid until after the shutdown is over. Refusing to work during that period is not an option – employees who are told to report for work must comply or face disciplinary action. Those who are required to report cannot take leave. The reason for being exempt or excepted does not extend to sick or annual leave, or to holidays. For those who are not working, pay for the shutdown days is not guaranteed. In the past, the Congress has voted to make those employees whole, but there is no requirement that they do so. Employees who are sent home because of a shutdown will have to rely on the good will of the Congress.

HR Offices

At the headquarters level HR offices are actively engaged in shutdown planning. That means they are helping update the plans, responding to employee questions, and dealing with the logistics of notifying employees of their status as exempt (source of money) or excepted (type of work) from being sent home, or subject to being sent home when the shutdown occurs. They have to look at vacancy announcements that may close during a shutdown and decide whether to extend closing dates now. There may not be a choice in cases where collective bargaining agreements require announcements to be open for a minimum number of business days. That could lead to delays in filling jobs after the shutdown is over. There are also issues to deal with regarding people who plan to retire while the shutdown is in effect, employees who are injured on the job, training that is contracted for and scheduled, and countless others. HR is working with the Chief Financial Officer, Chief Operating Officer (usually the Deputy Secretary), the General Counsel, OPM, OMB and the agency head to communicate with the unions and keep them up to date on what is happening. In 2011, some agencies wanted to do the communications with employees and unions earlier than they did, but had to wait for clearance from the Office of Management and Budget (OMB) to do so. OMB was hesitant to provide clearance, in part because of the likelihood the Administration would be accused of planning for a shutdown rather than trying to work with the Congress to get the budget standoff resolved. The truth is they absolutely had to do both. Not planning for a potential shutdown would have been grossly irresponsible. This year the planning appears to be more transparent and guidance is more readily available.

Quick Reference Guide to Determine Exempt and Excepted Positions

I’ve been asked by a number of people if there is such a guide. The answer is no. Each agency has to make decisions regarding positions that are exempt or excepted, following guidance from OMB and the Department of Justice. DoJ issued an opinion in 1995 that shows the complexity of the decision-making process. There are so many issues to consider that each agency or department has to review its own positions and make those decisions. While some are easy, many are judgment calls and the agency responsible for the work is in the best position to make those decisions.

The Value of Shutdowns

One thing we learned in the 2011 shutdown drill was the futility of it for Federal agencies and the taxpayers. We consumed millions of dollars planning for something that is a Constitutional responsibility of the Congress and the President. We produced no benefits for taxpayers, didn’t make our borders more secure, didn’t improve national security, didn’t protect the environment, or anything else constructive. We planned because we had no prudent option to do otherwise. Productive work was diminished or stopped, and nothing came of it. As leaders in agencies that had real work to do, my colleagues and I found it maddening. People who are in government today are saying the same thing about the precious time and resources they are being forced to expend on a wasteful exercise. It reminds me of Shakespeare’s Macbeth. Just substitute shutdown for life in this quote:

Life’s but a walking shadow, a poor player, that struts and frets his hour upon the stage, and then is heard no more; it is a tale told by an idiot, full of sound and fury, signifying nothing.

Let’s hope the idea of shutting down the government has its hour upon the stage and then is heard no more.