6 hidden costs of continuing resolutions

No one really expects the appropriations process to function seamlessly these days. Congress and the president have produced full appropriations for all branches of government only four times in the last 40 years. This year looks like no exception.

Barring an unlikely outbreak of bipartisanship, there doesn't appear to be enough time left in the fiscal year and the congressional calendar to enact all the appropriations bills before fiscal 2016 begins Oct. 1. That means either a continuing resolution or a shutdown.

Missing the fiscal year deadline isn't anything to be too alarmed about, according to Doug Criscitello, formerly the CFO at the Department of Housing and Urban Development and at the Small Business Administration and now head of the MIT Center for Finance and Policy.

It's fairly routine for Congress to pass a six-week continuing resolution early in the fall session, to provide time  to resolve outstanding budget issues before the Thanksgiving recess. However, sometimes multiple CRs are required to keep the government open. In 2011 there were seven CRs, and in 2012 there were five. While these multiple short-term CRs are less disruptive than a full or partial government shutdown, they do carry costs borne by agency officials working in the trenches.

1. OMB gets in your face

Relationships between agencies and the Office of Management and Budget can be strained in the best of times. But during a continuing resolution, OMB handles the tricky business of apportionment – doling out funds to agencies in a way consistent with the length and terms of the CR. During that time, OMB can "take on an aura of the trustees role in a corporate bankruptcy," Criscitello said. Do you have an expense that is outside the ordinary? OMB has to approve it.

OMB's guidance makes this point painfully clear. "Because of the nature of CRs, you should operate at a minimal level until after your regular fiscal year appropriations is enacted," per OMB documents.

2. Lost productivity

From a compliance point of view, agencies have to spin up a lot of activity for each short-term CR. "From a management perspective, it's a lot of paperwork," said John Palguta, a longtime government human resource manager, and currently vice president for policy at the Partnership for Public Service. "That's certainly a big headache for CFOs and others. You feel like you're spinning your wheels sometimes."

This activity includes creating guidance for programs and offices, making and disseminating new spending plans for each CR, and responding to congressional and intergovernmental requests for information. The FBI estimated that its accountants and others spent 600 hours on CR-related management activity in 2009, according to a Government Accountability Office study.  

3. De facto hiring freeze

The hiring cycle for college and grad students begins in the fall, as major recruiters make the rounds of career fairs, targeting promising job candidates. Agencies have a harder time with candidates, Palguta said, when their funding is mired in a series of short-term spending bills. By the time an agency gets its full-year funding, "some of the best talent is already taken," Palguta said.

And the problem isn't just at the entry level. "The whole process of filling jobs becomes more complicated," Palguta said. Sometimes an agency with a high-level vacancy will issue a job announcement in the hope that by the time applications are screened and interviews are conducted, the money will be there to make a hire. Sometimes, however, "you may have someone you want to hire but you can't make an offer, yet," Palguta said. The most promising, sought-after candidates aren't likely to wait out funding uncertainty. "Those are people who have options. They're not waiting around for Congress to get its act together."

4. Delayed procurement and training

Under a CR, IT upgrades, training, and other optional expenditures can often get kicked to the curb. Agencies have already adjusted in some ways to the inevitable funding delays by trying to push spending to later in the fiscal year. "The first quarter is a terrible time to plan conferences and training," Criscitello said. The constraints also take a toll on acquisition, because program managers don't know what they'll end up having to spend for the full year.

Sometimes delaying training can diminish core agency mission delivery. In one instance noted in the GAO report, a Food and Drug Administration official reported that the agency wasn't able to meet targets for inspections because of a lack of trained personnel.

"The biggest hidden cost is from a management perspective. You do not know how much you're going to be able to spend to manage your organization," Palguta said.

According to the GAO report, agencies have already begun backloading needed annual services contracts, such as janitorial services and maintenance, into the third and fourth quarters. But the administration of contracts becomes a big headache under a CR because of the necessity to perform administrative tasks associated with spending for each short-term measure.

5. The mad dash once funding comes

Once a real appropriation or full-year CR is in place, activity really ramps up. The frenetic pace to finish agency work on a compressed schedule can result in sub-optimal performance. The acquisition staff juggling a number of procurements "may not have time to negotiate the best deals," Palguta said. "It increases the odds that both the government and the taxpayer are losing out a bit."

6. Morale

Careering from short-term CR to short-term CR takes a toll on personnel. "The psychic costs are probably higher than the actual costs," Criscitello said. The cycle of responding to CRs and then ramping up activity once funding comes through can be dispiriting, and it certainly doesn't resemble the image of government service that drew employees to federal careers.

Moreover, agency employees are personally under the gun to make sure they comply with the limits put in place. The Anti-Deficiency Act, the statute that governs how federal agencies comply with appropriations, contains criminal penalties for individuals who spend government money that is not properly appropriated and programmed. "I don't know if anyone has gone to budget jail," Criscitello joked. Most ADA violations are accidental or technical, but the law looms over any agency employee tasked with implementing spending restraints during a CR.

Finally, there is no upside. It's not as though agencies are freed from their obligations to Congress during a CR. All the policy riders, requests for information and reports, and other demands contained in appropriations bills and reports from the previous year carry over into continuing resolutions, until supplanted by new legislative language.