While Congress works to avert another government shutdown and address sequestration limits, money management practices used by some federal departments might offer helpful advice in preparing for hardship.

A Government Accountability Office report, released Oct. 30, looked at four agencies and eight accounts, and how they handled the 2013 sequestration and shutdown using unobligated balances.

“Both the 2013 sequestration and government shutdown highlighted the importance of actively managing public funds,” the report said. “Effective management of unobligated balances that are carried over for use in the next fiscal year presents agencies with an opportunity to better respond to unexpected events in the future.”

Auditors studied the Commerce, Energy and State departments and NASA. GAO said it chose those agencies to review “based on their use of balances to address sequestration, and large or significant changes in the balances.”

Of the eight accounts studied under those agencies, seven of them offered a glimpse at how the agencies were able to use money management to address sequestration and shutdown. The Department of Commerce’s Economic Development Assistance Programs account, however, was not sequestered “due to a reduction in account funding,” according to the report. Because EDAP accounts fund “grant activities, not salaries and expenses,” the unobligated balance could not be used to offset the shutdown.

Department of Commerce

Aside from the Commerce’s EDAP account,  GAO also looked at the salaries and expenses (S&E) account.

The S&E account within Commerce found that its unobligated balance was mostly impacted by the changing costs of agency operations and patent and trademark fee operations, the report said.

From 2012 to 2014, the unobligated balance rose from $238 million to $503 million.

“[U.S. Patent and Trademark Office] officials reported that unobligated balances were used to mitigate the effects of sequestration; however, the agency’s spending during sequestration was cautious given the high variability in patent fee collections in 2013 resulting from the implementation of a new patent fee schedule in March 2013,” the report said. “Prior to the government shutdown, USPTO held discussions with the Office of Management and Budget and received permission to continue operating with fee collections from the preceding year that had not been obligated. As a result, USPTO did not shut down during the lapse in appropriations.”

Department of Energy

The GAO looked at the DoE’s Western Area Power Administration’s Construction, Rehabilitation, Operation and Maintenance (CROM) account; the Office of Environmental Management’s Defense Environmental Cleanup (DEC) account and; Energy Efficiency and Renewable Energy (EERE) account.

The CROM account had unobligated balances of $369 million in 2012, $496 million in 2013 and $556 million in 2014.

“WAPA officials reported that sequestration reductions resulted in lower than necessary funds in the CROM account for construction projects,” the report said. “Therefore, officials decided to reprogram approximately $4.7 million in unobligated balances within the CROM account to mitigate the effect of sequestration on the construction portion of the account. According to WAPA officials, WAPA used unobligated funds in the CROM account to continue operations during the government shutdown.”

The DoE’s Office of Environmental Management (EM) avoided a complete shutdown, the report found, by using unobligated program direction funds to pay staff and avoid furloughs.

Within the EERE account, the study found, managers can request permission to re-allot funds from the unobligated balances, in the following fiscal year.

“During the government shutdown, according to officials, the office used no-year funds from the EERE account to continue projects, and, under the guidance of the Energy chief financial officer, used unobligated program direction funds to pay staff and avoid furloughs,” the report said.

Department of State

The two accounts studied within the State Department were the diplomatic and consular programs, and international narcotics control and law enforcement.

The latter account did not use its unobligated balances to offset sequestration “to maintain fairness among the countries that receive assistance,” according to the report, but State used the balances during the shutdown for continuing operations.

Within the D&CP account, “State notified the Office of Management and Budget and Congress of its intent to reprogram $64 million from the non-OCO Iraq war funds to other account activities to mitigate the effects of the 2013 sequestration. According to officials, during the shutdown, State used unobligated balances from D&CP to continue to operate.”

According to the GAO Report, NASA officials told GAO that no unobligated money was used to offset the 2013 sequestration nor did it use unobligated balances from its Science account to help with the 2014 shutdown.

Recommendations and OMB review

GAO made two recommendations:

• The Secretary of Energy should direct WAPA’s Administrator and chief executive officer to finalize and implement a strategy to reduce excess unobligated balances within the CROM account. For the CROM account, as appropriate, these strategies may include (1) reprogramming or transferring funds to other activities, as allowed by appropriation law, (2) reevaluating fees to ensure fee revenues match program needs, or (3) reducing budget authority requests in future years.

• The Secretary of State should direct the assistant secretary of State for Consular Affairs to finalize Consular Affair’s strategy for the management of its unobligated balances, and to continue efforts to reduce excess unobligated balances allocated to CBSP in the D&CP account. For the D&CP account, as appropriate, these strategies may include (1) reprogramming or transferring funds to other activities, as allowed by appropriation law, (2) reevaluating fees to ensure fee revenues match program needs, or (3) reducing budget authority requests in future years.

Both the Energy and State departments agreed with GAO’s recommendations and offered their own comments. The Commerce Department also provided technical comments, according to the GAO, but they were not included in the report. NASA had no comments.

The 16-day government shutdown in 2013 forced federal employees to miss millions of days of work, and agencies to lose millions of dollars in revenue, according to OMB.

In its post-shutdown analysis from 2013, OMB estimated that federal workers missed 6.6 million days of work and cost more than $2.5 billion in lost productivity, and pay and benefits for employees.

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