First CFO Survey of Trump Era Spotlights Skepticism Over Agency Reorganization Plans

Most agency finance chiefs harbor doubts that the strategies will actually improve efficiency, though some see opportunity.

Coping with an unorthodox presidential transition, high-level vacancies and ongoing budget uncertainty, chief financial officers expressed mostly skepticism on whether Trump White House-mandated agency reorganization efforts would produce the intended improvements in efficiency, according to a new survey.

Many CFOs, however, see these times of change as an opportunity to embrace efficiency reforms while asserting a bold role for their non-policymaking position.

In the 22nd annual CFO survey, released on Wednesday at a panel discussion convened by the Association of Government Accountants and Grant Thornton LLP, respondents appeared doubtful that their agencies would make dramatic improvements in complying with the executive order requiring all agencies to create reorganization plans in time for next month’s fiscal 2019 budget submission.

On whether the coming plans will increase operational efficiency,  47 percent of the hundreds of respondents predicted no improvement, 14 percent said moderate improvement, only 2 percent chose significant improvement, and 21 percent actually foresaw the result being a significant decline in efficiency.

 “This administration is trying to get things done, but they don’t understand the bureaucracy; they don’t understand that you can’t break certain rules,” said one unnamed CFO. “With our strategic plan—should we start before we get new leaders appointed?” asked another. “The answer is: no, wait. But this order requires us to move ahead. However, without knowing who the appointees will be, it is difficult to make all those decisions.”

Analysts for the report titled “Navigating Disruption” wrote that “though disruption like the one we’re currently experiencing is more common in the private sector during mergers and acquisitions, it comes slowly and rarely to government. This year’s survey clearly shows some CFOs have chosen to take advantage of what’s going on and continue to make progress while there is a political leadership void, whereas others expect this period to pass quickly.”

The CFOs generally want direct hiring authority to recruit new employees with data skills, but, the report noted, “Given the hiring freeze still in place in many federal agencies, CFOs will be challenged to obtain the skillsets needed to make progress.” The top goal cited: more evidence/analysis-based decision-making.

Three incumbent CFOs told a Washington audience Wednesday that neither the unusually high number of vacancies in the Trump transition nor the required reorganization plans are impeding movement—thanks largely to career employees stepping in. “I’m one of the official disrupters coming in to crash the party, and the career staff helped our political leaders get off to a running start,” said Keith Nelson, assistant secretary for administration at the Transportation Department.

Praising Secretary Elaine Chao for her nine years of detail-oriented experience as a Cabinet member and previous stint at his department, Nelson said that preparation is proceeding with modernizing air traffic control and infrastructure. “Some critical jobs are not fully staffed in the safety areas, such as the Federal Railroad Administration, which is not as good as it could be,” he acknowledged.

In fulfilling its assignment to create a reorganization plan, Transportation relied on an open website for employee ideas, and its chief financial officer “helped put numbers on the ideas for savings.” One promising area is increasing shared services in areas such as human resources and information technology, Nelson said. He cited a consultant from Hewlett-Packard’s view that the department could merge operations and “right-size with fewer resources.”

One of the agencies that was “elevated in status” during the Trump transition is the Homeland Security Department, said Chip Fulghum, its deputy undersecretary for management. “DHS was extremely well prepared for the transition—I’ve never seen it done as well,” he said, while acknowledging that the existence of acting secretaries over the months created some uncertainty. “I haven’t seen any disruption per se.” Taking over during appointee vacancies “is what the career civil service is for,” Fulghum said. “We have a tremendous, tremendous Senior Executive Service workforce, and we haven’t seen it stop us.”

DHS’s approach to the reorganization solicited what became 50,000 ideas from the public. “Unfortunately, 49,000 simply said do away with DHS,” he joked. The deputy secretary took 2,200 ideas mostly from the workforce and boiled them down to eight overarching themes. Though the Office of Management and Budget “pressured us to put stuff in the 2019 budget, there are issues that need to be resolved,” he added, so some long-term improvements will hold off for 2020.

CFOs within DHS, he added, are not waiting for OMB’s budget for what now “is a huge opportunity” to pursue some 10 reform initiatives. The time is ripe, Fulghum added, for such efforts as reducing the number of network security centers and financial centers. CFOs can also encourage a move from mere transactional data to “higher-order analytical” use of financial data that allows CFOs to “add value” by helping policymakers through suggesting positive solutions.

 The Health and Human Services Department’s “Reimagining HHS” effort involved “the entire workforce and will be memorialized in the budget next month,” said Sheila Conley, its deputy CFO. Vacancies at the top levels have meant “there is no chief from start to finish to get this done,” but CFOs from different components are complementing and helping one another.

“This transition is taking longer than in the past, and there is a wider cone of uncertainty,” Conley said, but she and her team have decades of experience in such transitions so that that reforms for the most part continue “uninterrupted.” A chief reason, she added, is the five-year-old pursuit of enterprise risk management. “At this critical juncture, it really begins to pay dividends” in allowing HHS to look across portfolios and align resources with risks, she said.

Career staff, Conley added, when political appointees are not in place, have an incentive to “tease up ideas,” as long as they are evidence-based. If career people say, “We’ve been waiting a year for [the political policymakers] to come around,” then “we don’t need” those career individuals, she said.

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