Buyouts, furloughs among budget cut options

Friday - 6/17/2011, 7:22am EDT

WFED's Jason Miller

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By Jason Miller
Executive Editor
Federal News Radio

As agencies brace for dramatic budget cuts, many are signaling furloughs or voluntary reductions-in-force are inevitable. And it's not a matter of when, but how many employees.

House lawmakers are giving agencies every indication that their 2012 budgets and beyond are going to be much smaller than at any time in the previous decade.

"We have 10 health care services that have about 88,000 employees and we expect to see as much as a 15 percent to 20 percent cut in our budget next year," said Denise Wells, the deputy assistant secretary for human resources and chief human capital officer at the Department of Health and Human Services. "We are telling our operating divisions we can't save 15 percent or 20 percent based on cuts to training and other short term things. We need to look program-by-program and figure it out. We just can't trim around the edges."

Wells, speaking during a panel discussion at the Senior Executive Association's 2011 conference in Washington Thursday, said the agency will have to look at all its options to deal with such a potentially large decrease.

"HHS along with all federal agencies will consider a myriad of human capital planning options should significant budget cuts be realized in the out years," Wells said. "While no decisions have been made to date some options may include hiring controls, voluntary early retirements and part-time employment opportunities."

And HHS is not alone in considering its options. The Justice Department's Bureau of Alcohol, Tobacco, Firearms and Explosives also will have to figure out how to make ends meet in light of a reduced budget. He said ATF could see as much as a $50 million shortfall in 2012.

Rick Holgate, ATF's chief information officer, said ATF may have to shed 500 to 700 employees over the next few years because of a smaller budget. ATF already has a hiring freeze in place and Holgate said attrition alone will not reduce its workforce enough to match its budget.

"We may have to move non-core functions to other service providers," he said. "We also will have to look at our real estate portfolio and other areas where there may be potential for efficiencies."

ATF spends about $100 million a year on office space. Holgate said with the changing workforce, which is becoming more mobile, office space is a prime candidate for savings.

Holgate said buyouts or furloughs also are among the options his agency will have to consider.

"We may have to get back to the size of ATF in 2003 or 2005 so we will have to decide what areas we gained as an organization that we no longer will be able to do," he said.

Audience members who work in federal agencies echoed Wells' and Holgate's comments during the panel. One audience member said their agency is in a similar situation as ATF with a reduced budget and rising personnel costs. The federal worker, who didn't identify themself, said eventually something has to give. The audience member said it just makes sense that reducing personnel is the way many agencies will go to address insufficient budgets.

Wells said, for example, if HHS furloughed everyone in her office for one day, the agency could save $182,000. She said expanding that across HHS could mean greater savings.

"If your agency may need a furlough or reduction in force in 2013, you have to start planning now," Wells said. "We are meeting with all 10 of our agencies to find a customized solution that works for them."

She said during a recent meeting with the Centers for Disease Control and Prevention the idea of furloughs was a potential option if the agency felt it could cut programs no further.

Wells said agencies really should look for cuts today that will come to fruition in 2015 because many times at this stage that is how long it will take for the change to occur.

She said agencies should put programs in one of four categories:

  • High priority, high performing
  • High priority, low performing
  • Low priority, high performing
  • Low priority, low performing

She said by doing this, the agency starts thinking about where it can make cuts, or at least suggested cuts, to Congress.

Wells and others say they realize cutting certain programs may face push back on Capitol Hill but it's a way of better controlling the process instead of waiting for Congress to tell the agency where to cut.