Downsizing strategy warrants closer look

Has the Clinton administration really downsized the government across the board, or has it simply cut jobs in the Defense Department, an easy target? The Federal Workforce Restructuring Act of 1994 - part of the Clinton government "reinvention" process - called for a sharp reduction in federal full-time-equivalent positions from 2.08 million in fiscal 1994 to 1.88 million in 1999, and so far it looks like DOD has absorbed the bulk of the cuts.

Rep. John L. Mica (R-Fla.), chairman of the House Civil Service Subcommittee, said the numbers spell out exactly what's going on.

"The president's FY '97 budget makes it crystal clear what the Clinton reinvention was all about: getting a free ride from victory in the Cold War. After more than three years of downsizing, two-thirds of all personnel reductions have come from the Department of Defense. That's our peace dividend."

That's just the beginning for DOD, Mica said. More than 50,000 additional employees will be cut from DOD's payroll during the next 18 months, "while nine non-Defense agencies cut a total of only 5,500 positions. In fact, the departments of Justice, Labor, HHS, and Treasury - among others - are all slated for increases. This isn't reinvention; it's smoke and mirrors."

Is Mica right? That's the $64 question. He may be. According to Timothy P. Bowling, the associate director of the General Accounting Office, the administration called on agencies to restructure their workforces by directing their downsizing toward specific "management control" positions, including budget, procurement and personnel positions as well as managers and supervisors. Bowling said the cuts in management control positions called for by the National Performance Review (NPR) have barely happened - as a proportion of the workforce as a whole - and at some agencies, positions have actually increased.

The irony of all this is that fewer than 10 years ago, federal executives, spurred on by GAO, jumped on the management-controls bandwagon. The impetus behind this was the Federal Managers Financial Integrity Act of 1989. This law imposes management-control responsibilities on virtually every manager within the federal government. For GAO to now criticize agencies for not reducing their management-control positions is the height of irony.

Buyout programs have also reduced the federal workforce, with the Office of Personnel Management reporting that, as of Sept. 30, 1995, more than 112,500 feds opted for this route. GAO said the largest share of buyouts went to employees who took regular or early retirement.

According to GAO, one plus in all of this is that the buyouts enabled agencies to downsize without disproportionately affecting women and minorities. I'm not sure how GAO reached that conclusion, and I'm willing to bet that the agency had no basis for it, but talk is cheap on Capitol Hill, particularly when you're singing to the choir.

Mica did not use this as a very cost-efficient way to reinvent and downsize the government. He said normal attrition generates more than 50,000 retirements a year as well as 60,000 resignations and other separations. More than half of this "normal turnover" occurs outside DOD. Mica said, "Since more than 100,000 jobs turn over in federal agencies every year, we've got plenty of opportunity to manage some serious downsizing. In fact, outside of Defense, we're turning over 10 times as many jobs as the administration plans to reduce. There's no justification for these 'golden handshakes.' "

At a congressional hearing this May on downsizing and personnel issues, Mica concluded, "Since the administration has given up the task of restructuring government, Congress will have to do the job. My greatest concern is that employees be treated fairly and have ample opportunity to compete for the remaining jobs. We can achieve a great deal by managing normal attrition. If agencies have to resort to reductions in force, they should be administered quickly, openly and fairly. We have laws in place to guide these RIFs, and I want to make certain that the administration doesn't reinvent these rules at the expense of federal employees."

Well, I never thought Mica was a champion of the federal employee, and I don't think so now either, but I have to agree with him concerning his view of the NPR and what it's accomplished thus far. As many of you know, I am not an ardent fan of the NPR. I think it's a lot of PR, not NPR.

As far as the savings generated through buyouts compared with RIFs, a GAO study showed buyouts generate about 50 percent more in net savings than RIFs, if the RIFs involve bumping and retreating and if the RIFed personnel don't qualify for retirement.

"Bumping" means displacing an employee in the same competitive area - which is a form of job category - who is in a lower-tenure group, which is a type of appointment category. "Retreating" means displacing an employee in the same competitive area who has less service within the same tenure group. Virtually all RIFs involve bumping and retreating, and very few RIFed employees are ever eligible for retirement because RIF rules tend to favor senior employees at the expense of junior employees.

GAO's Bowling said he believes government downsizing goals could probably be met through attrition if historical quit rates continue. GAO said the Workforce Restructuring Act's target employment ceiling for fiscal 1999 could probably be met with an attrition rate as low as 1.5 percent a year. GAO also said the normal attrition from 1982 through 1992 was about 8 percent a year.

The only issue that's not addressed by GAO is whether attrition produces a reduction in the kind of jobs management wants to eliminate. Buyouts allow you to target only those positions you want to eliminate. But attrition is entirely random. However, we don't know how agencies have structured their buyouts. Did they target only certain slots, or were all employees eligible? GAO should have investigated this.

If attrition alone can meet downsizing goals, then it looks like the government acted prematurely when offering buyouts to federal employees and wasted taxpayer money. I don't think Mica gives a hoot about federal employees, but he is right about the errors the administration made in offering buyouts and tooting its own horn about reinventing government. I don't think the Clinton administration has reinvented anything except how to fool the public.

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Bureaucratus is a retired federal employee who is a regular contributor to FCW and the author of Bureaucratus Moneyline, a personal finance newsletter for feds, available by subscription on FCW's Web page at http://www.fcw.com. You can reach Bureaucratus via e-mail at bureaucratus@fcw.com.

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