Sequestration, budget cuts taking their toll on DoD financial managers

Thursday - 6/20/2013, 6:54am EDT

Unprecedented chaos in the federal budget, impending civilian furloughs and an increasing workload are all contributors to a sharp, sudden decline in the morale of the staff that manages and executes the Defense Department's budget, according to an annual workforce survey released Wednesday.

The study, prepared by the American Society of Military Comptrollers and Grant Thornton, found that out of more than 1,000 financial management professionals surveyed, senior government executives were most likely to report a decline in morale. Within that group, 86 percent of respondents said they enjoyed their jobs "a lot" in last year's survey. By this year, the figure had plummeted to 53 percent. Lower-level financial managers reported a similar, though smaller decline in morale: 20 percent reported high job satisfaction compared to 24 percent in 2012.

"I think this is a significant issue," said retired Vice Adm. Lou Crenshaw, a former Navy senior budget official who now leads Grant Thornton's aerospace and defense practice. "It's not something we've seen in our prior surveys."

The morale of the workforce was one of three challenges managers were most likely to cite in response to the survey. The others were general uncertainty over the budget and the outlook toward DoD meeting its legally-mandated deadlines to become audit-ready. Altogether, 65 percent of financial managers said 2013 was the most challenging year they'd seen in their careers so far.

Perpetual state of indecision

With respect to budget uncertainty, the survey reflects deep dissatisfaction with the inflexibility of the across-the-board budget cuts under sequestration, the fact that the government seems to be in a perpetual state of continuing resolutions rather than full-year appropriations, and the ongoing indecision in the political arena about whether sequestration is here to stay.

"The fiscal 2013 budget has plenty of challenges they have to deal with, and DoD is way behind schedule on the 2014 budget, which we already know is about $40 billion short because the effects of sequestration were not factored into the President's budget submission. And they're already struggling with the 2015 budget, so they're pretty busy over there," Crenshaw said. "Then you throw in the challenges of getting ready for audits, and then, guess what, bingo, we're going to furlough the very people who have to deal with all of this."

Among the most senior members of the financial management workforce, the survey also revealed deep pessimism about DoD's ability to meet its Congressional mandates to assemble its financial statements so that they can be scrutinized by independent auditors. The survey found 23 percent of senior executives admitted they have zero confidence that their respective organizations will be audit-ready by the 2014 deadline for DoD to undergo a partial audit. Only three percent said they were "highly confident" that their organization would be prepared.

Training shortfalls being felt

Underlying that pessimism is a cutback on resources available to train rank-and-file members of the workforce on what it takes to become audit-ready, and a slow bleed of the department's most experienced financial management experts.

"Executives respond that they are losing staff and they are unable to back-fill the positions. In addition to the lost knowledge base, this translates to more work for the remaining workforce, and the pressures will only multiply if planned furloughs occur," the authors wrote. "While the impact [of retirements] is felt at a moderate rate, concerns among executives are evident. This factor contributes to a potentially significant loss of institutional knowledge throughout all organizations. Knowledge transfer becomes more important as a result of this possibility, and has a direct relationship to the development of documentation to support audit readiness efforts."

The survey also uncovered dissatisfaction in the ranks with DoD's overall Financial Improvement and Audit Readiness plan. A majority of respondents said DoD's plan to get ready for audits was "a hindrance" to its stated goals, and complained that the department continues to move the goalposts in determining what it means to be "audit ready."

"They're confused about those changing goals," Crenshaw said. "But one of the interesting responses we get from the field is, ‘Let's stop just preparing for audits. Let's just do one and see how it turns out. Let's get on with it.'"

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