Sequestration would mean tens of thousands of furloughs

By SEAN REILLY   |   2  Comments

For large swaths of the federal workforce, automatic budget cuts set to take effect early next year would mean unpaid furloughs, according to current and former officials.

“We’re talking about at least tens of thousands [of employees] if it goes on a couple of months,” said John Palguta, vice president for policy at the Partnership for Public Service.

Particularly hard-hit could be agencies in which payroll and benefits make up a high percentage of the budget, such as the Social Security Administration, Equal Employment Opportunity Commission, and National Archives and Records Administration, Palguta said.

Early this year, for example, federal court administrators estimated that about one-fifth of about 21,000 employees could be forced to take four-week furloughs or face possible layoffs if early-out incentives and attrition didn’t succeed in cutting enough costs, a spokeswoman for the Administrative Office of the U.S. Courts said in an email.

In Chicago, officials already are considering closing district court offices one day a week from January through September, Chief Judge James Holderman wrote in a letter this month.

Furloughs and hiring freezes also are options at the Defense Department, the government’s largest civilian employer, top officials said at a congressional hearing last week without offering more details.

The looming budget cuts could even stall a high-priority push to speed up processing of new federal retirees’ pension claims, Office of Personnel Management Director John Berry acknowledged to Federal Times last week. Reducing overtime and cutting recently hired staff at OPM are both on the table if the cuts kick in, Berry said.

“It is serious enough that our hope is Congress can find a way to avoid this train wreck,” Berry said.

The across-the-board budget cuts, formally known as sequestration, were written into last year’s Budget Control Act as part of a tradeoff to raise the nation’s borrowing limit. They are set to begin Jan. 2 if Congress and the Obama administration can’t come up with a deal to reduce expected federal budget deficits by $1.2 trillion through 2021.

Overall, the cuts would carve about $109 billion out of fiscal 2013 government spending.

Many military programs would be chopped 9.4 percent in comparison with this year’s budget, the Office of Management and Budget said in a Sept. 14 report that explains how 1,200 federal budget accounts would be affected. For domestic discretionary programs, the cut is 8.2 percent. The figures could change based on spending levels in a six-month continuing resolution that won congressional approval last week.

Military personnel and all of the Veterans Affairs Department would be exempt from any sequestration cuts, according to the White House.

The cuts would “have a significant impact on the federal workforce,” a senior administration official told reporters in a conference call, although the report does not detail whether furloughs or layoffs would be needed.

Already, many agencies are not filling discretionary positions, said Gregg Prillaman, a consultant who previously served as chief human capital officer at the Department of Homeland Security.

“Any agency operating properly should be planning right now,” Prillaman said.

Although federal agencies have rarely used furloughs in the past, they have several advantages over a reduction-in-force (RIF), said Palguta, a former top official with the Merit Systems Protection Board. Under a RIF, agencies have to pay severance and allow employees to cash out unused sick leave and annual leave balances, he said.

A furlough, by contrast, brings immediate savings, while allowing managers more flexibility in scheduling unpaid time off.

“I don’t think a lot of agencies would be able to avoid” them, Palguta said.

The Obama administration remains officially optimistic about the odds of reaching a sequestration deal, even though a House-Senate supercommittee failed to deliver on that assignment last year. No action is likely until a lame-duck congressional session after the November elections.

“How and to what extent we’re going to address sequestration, nobody really knows at this point in time,” Sen. Saxby Chambliss, R-Ga., said last week at a breakfast sponsored by the Aerospace Industries Association. There is also the possibility that lawmakers could allow sequestration to begin but then quickly clinch a compromise that would end it with little impact on agency operations.

Detailed OMB guidance is considered essential for agency planning efforts. As of last week, however, the budget office’s only formal word on the subject has been a two-page July memo instructing agencies to continue “normal spending and operations since more than five months remain for Congress to act.”

At the same time, OMB will be consulting with agencies to figure out which accounts would be subject to the cuts and what percentage reductions would be needed, acting director Jeffrey Zients said in the memo. In an email last week, spokeswoman Moira Mack would add only that the budget office will “issue additional guidance regarding sequestration in the months ahead if necessary.”

Regardless, at least some agencies are already quietly preparing. At the Environmental Protection Agency, discussions have been underway for several months, Stanley Meiburg, deputy regional administrator in its Atlanta office, said in an interview last week.

Not since the Reagan administration has EPA faced a cut of similar magnitude, Meiburg said. “You just can’t wait for that guidance until you start to plan,” he said.

Among other factors, managers are looking at the potential effects on grants, employee salaries and revolving loan funds dedicated to construction of sewage and water treatment plants, Meiburg said, adding that a major challenge is balancing employee salaries with contract work. While EPA is relatively “personnel intensive,” he said, the agency has to contract out for some work for employees to be effective.

“It’s too soon to tell” what the potential workforce impact of sequestration would be, he added.

The Energy Department is doing no planning on the assumption that sequestration won’t occur, a senior official said, speaking on condition of anonymity. The Social Security Administration, the Housing and Urban Development Department, and other agencies referred questions to OMB, where Mack did not reply to requests for more information.

Across government, sequestration would be “deeply destructive,” the administration warned in this month’s report without offering specifics. The number of FBI and Customs and Border Protection agents would be “slashed,” scientific research halted or curtailed, and funding for new military equipment reduced, the report said.

“As far as the ability for contractors to plan and to be surgical about how to address the challenges, it [OMB’s report] did not provide a lot of insight,” said Trey Hodgkins, TechAmerica’s senior vice president of global public sector advocacy.

Within the limits of the law, however, agencies would have some flexibility in dealing with abruptly tighter budgets, experts agreed. Besides hiring freezes, managers could save money by dropping all probationary employees and part-timers, halting promotions and ending contracts, Prillaman said.

QTS, a Kansas-based data center provider, suspects the threat of sequestration has slowed a decision on a billion-dollar government project that the company bid on. The award, expected this month, has been delayed six months, said Vice President Scott Shinberg, who works for QTS’ Federal Systems Group.

“That is disappointing to us,” said Shinberg, who declined to name the agency involved.

Government managers could also face wrenching decisions on which missions and employees are most needed. For the National Weather Service to handle an 8.2 percent cut, all of its approximately 4,600 employees would have to be furloughed for four weeks, said Richard Hirn, general counsel for the National Weather Service Employees Organization. Under that scenario, Hirn saw no way for the agency to maintain around-the-clock operations at its 122 forecasting offices.

“It’s just not going to work,” he said.

DoD will take a $616 million cut just from its construction and environmental cleanup accounts, according to a review by Federal Times.

Jimmy Christianson, director of government affairs at the Associated General Contractors of America, said the automatic cuts come on top of already slashed construction budgets. Federal construction budgets took the brunt of the cuts passed in 2011 — nearly $22 billion of the $40 billion in cuts that year, according to calculations by AGC.

Agencies will further cut back on repairs and maintenance and will not be as likely to begin any large-scale new construction, he said.

“Basically, it’s the definition of kicking someone while they are down,” Christianson said.

For the Pentagon, sequestration would also turn back the clock on more than two years of work to get better value, improved efficiency and more capabilities to the war fighter, Frank Kendall, undersecretary of Defense for acquisition, technology and logistics, said at last week’s AIA breakfast.

“Now we’re about to go into an exercise where we simply throw that work out, force us to go back to the drawing board and start all over,” he said.

Staff writers Sarah Chacko, Nicole Blake Johnson, Stephen Losey and Andy Medici contributed to this report.