Sequestration forced agencies elsewhere for program funding, GAO says

Friday - 5/30/2014, 4:20pm EDT

By Stephanie Wasko
Special to Federal News Radio

The uncertainty surrounding the March 2013 sequester forced agencies to implement various strategies to adapt, including finding funding from other levels of government and reducing and/or delaying services to the public.

In a report released this week, the Government Accountability Office took an in-depth look at the effects of sequestration on four agencies and the steps each took to prepare.

This report follows the GAO's previous reviews released in March as well as their study on the sequester effects on the Defense Department in November.

GAO found with across-the-board cuts from sequestration, programs looked to other means of funding beyond the federal budget to continue services. For example, the Centers for Medicare and Medicaid Services relied on additional state funds to complete health-care facility inspections. For others, including seven federally-funded school districts, the combination of sequestration and previous budget reductions increased the effects of sequestration on public services.

All audited agencies, which included the Homeland Security's Customs and Border Protection, Health and Human Service's CMS, the Housing and Urban Development's Office of Public and Indian Housing, and Education's Office of Elementary and Secondary Education, were forced to make alterations to their programs and services.

"Sequestration reduced assistance for education, housing, and nutrition, as well as grants for health and science research and development," the report said. "Agencies also reported delaying investments such as information technology and facilities projects. Some federal agencies also reported backlogs and delays as a result of personnel actions, such as limiting hiring and furloughing employees."

Auditors also evaluated the implementation of sequester cuts on five programs, projects and activities (PPAs) from each agency.

Some of the effects of sequestration GAO found included:

  • Public and Indian Housing saw a 2.2 percent reduction in offered rental assistance.

  • CMS reduced the frequency of surveys to psychiatric hospitals and specialized organ transplant centers.

  • CBP was unable to fully staff inspection booths, which increased airport wait times by several minutes.

  • Office of Elementary and Secondary Education reported slight increases in classroom size due to their inability to fund more specialized instructors.

In addition to looking at the effects of the sequester, GAO evaluated how agencies prepared to make the budget cuts. Auditors found "uncertainty regarding the timing and amount of sequestration and technical questions about how to apply sequestration to certain complex accounts presented challenges for planning and implementation."

This uncertainty affected communication between agencies and program partners, making planning for the future budget difficult. For example, the report stated, "CMS officials had difficulty determining all of the types of provider payments that would need to be cut and which funding was subject to special sequestration rules."

GAO found components that already had initiated plans to improve efficiency had an easier time adjusting to the budget cuts.

The audit found agencies implemented sequestration in a variety of ways.

Many agencies implemented budget cuts by "reducing training and travel, reducing program management and support services, and rescoping or delaying grants."

Others cut from centralized, agency-level funding or required components or bureaus, while other agencies began at the component level. Where officials had some discretion, the report found that components "had to make trade-offs to protect higher priority activities in their resource allocation decisions," such as the DOD's decision to prioritize deployed and next-to-deploy training and to cancel or limit training for beyond the fiscal year. Other programs, such as HUD's Housing Choice Voucher Program, had less room to make adjustments and were forced to limit their issued vouchers.

With the current law, sequestration could impact agency direct spending through 2024.

"There is a limit to agencies' ability to achieve efficiencies and budget reductions by deferring or reducing funding for lower priority activities and agencies have limited authority to reprioritize many activities," the report said. "As we previously reported, implementing future budget reductions will likely require Congress and the executive branch to reexamine how agencies carry out their missions."

Stephanie Wasko is an intern with Federal News Radio.

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