The '97 Budget: Touting Reform, Continuing Cuts

EXECUTIVE MEMO

The '97 Budget: Touting Reform, Continuing Cuts

n his fiscal 1997 budget proposal, released in mid-March, President Clinton offered federal civil servants a 3 percent raise, increased retirement contributions, more downsizing and continued management reforms.

Clinton said he would once again consult unions and management groups about how to split the 3 percent pay hike between nationwide and locality pay increases. Calculations under the 1994 pay reform law would have given employees a 2.3 percent nationwide hike and locality pay that could have topped 5 percent in some areas.

The budget plan would raise employees' retirement contributions by 0.25 percent in April, another 0.15 percent in January 1997 and 0.1 percent more in 1998. Currently, employees in the Civil Service Retirement System contribute 7 percent of pay, while those in the Federal Employees Retirement System contribute 0.8 percent plus Social Security deductions.

President Clinton proposed to increase agency retirement contributions for CSRS employees from the current 7 percent of payroll to 9.8 percent in 1999 and increase them yearly through 2002 to 17.6 percent. Forcing agencies to spend more of their appropriations on pension costs could lead to more layoffs, employee groups fear.

Clinton's budget touts reinvention and downsizing and promises more of the same. It notes that agencies cut 185,000 full-time equivalent positions between 1993 and 1995, and reduced the number of supervisors by 45,000. The budget promises the Federal Acquisition Reform Act, signed by Clinton earlier this year, will speed procurement. No doubt in response to the deregulatory mood of the Republican Congress, the budget presentation also highlighted efforts to reduce the burden of federal regulations.

As for the coming years, Clinton promises more improvements in delivering government services. Here's how:

• Performance-based organizations. The 1995 experiment that transformed the Patent and Trademark Office into a performance-based organization will expand to six other organizations. They will hire chief executives on fixed-term contracts that include specific goals for better customer service, performance and, in some cases, taxpayer savings. Executives will be paid market rates and large chunks of their compensation will be tied to performance. The organizations also can negotiate reforms in procurement and civil service rules. Creating performance-based organizations requires legislation, but a number of agencies reportedly hope to join the six awaiting legislators' approval.

• Performance partnerships. More agreements between federal agencies and state and local governments will set specific performance goals for intergovernmental programs. In exchange, other governments will get more flexibility in meeting the goals.

• Increased competition. The administration is working with Congress on pilot programs allowing agencies to compete with each other and with the private sector to provide common administrative services. The Office of Management and Budget also is revising the rules for service contracting.

The Clinton budget provides some agencies modest funding and staffing increases over the numbers for 1995, the last year for which actual amounts are available. The Justice Department plans to add 6,200 employees to the Border Patrol, the Bureau of Prisons and other law enforcement functions.

The President also wants to spend more on the Commerce Department's Advanced Technology Program, weather service modernization and the National Information Infrastructure project. Those proposals fly in the face of vehement congressional opposition to the technology programs and Republicans' efforts to dismantle Commerce.

The Environmental Protection Agency, another congressional target, is slated for a relatively hefty increase over 1995 funding. The Social Security Administration would gain 500 employees to trim ineligible recipients from disability insurance rolls.

The Clinton budget was hardly all good news for agencies, though. The Energy Department would take a cut, felt most strongly in the area of environmental cleanup. Contract employees would be dropped to achieve most of the savings. And the Department of Veterans Affairs would take its first real staffing hit under Clinton, as the agency begins reorganizing into a regional budgeting plan. NASA's long-term budget is slated to be trimmed by $4 billion by fiscal year 2000. Restructuring is projected to save $1.6 billion; moving services to the private sector should cut another $1.45 billion. And the Office of Personnel Management will continue its downsizing effort, although no new layoffs are foreseen.