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Full text of "Government shutdown I : what's essential? : hearings before the Subcommittee on Civil Service of the Committee on Government Reform and Oversight, House of Representatives, One Hundred Fourth Congress, first session, December 6 and 14, 1995"

lOVERNMENT SHUTDOWN I: WHAT'S ESSENTIAL? 



Y 4. G 74/7; SH 9 

Governnent Sbutdoun I: Hhat's Essei. .. 

HEARINGS 

BEFORE THE 

SUBCOMMITTEE OX 
CML SER\n:CE 

OF THE 

COMMITTEE ON GOVERNMENT 

REFORM AND OVERSIGHT 
HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTH CONGRESS 

FIRST SESSION 



DECEMBER 6, AND 14, 1995 



Printed for the use of the Committee on Government Reform and Oversight 




GOVERNMENT SHUTDOWN I: WHAT'S ESSENTIAL? 



HEARINGS 

BEFORE THE 

SUBCOMMITTEE ON 
CIVIL SERVICE 

OF THE 

COMMITTEE ON GOVERNMENT 

REFORM AND OVERSIGHT 
HOUSE OP REPRESENTATIVES 

ONE HUNDRED FOURTH CONGRESS 

FIRST SESSION 



DECEMBER 6, AND 14, 1995 



Printed for the use of the Committee on Government Reform and Oversight 




U.S. GOVERNMENT PRINTING OFFICE 
40-190 CC WASHINGTON : 1997 

For sale by the U.S. Government Printing Office 

Superintendent of Documents, Congressional Sales Office, Washington, DC 2O402 

ISBN 0-16-055139-0 



COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 



WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman 



BENJAMIN A. OILMAN, New York 
DAN BURTON, Indiana 
J. DENNIS HASTERT, Illinois 
CONSTANCE A. MORELLA, Maryland 
CHRISTOPHER SHAYS, Connecticut 
STEVEN SCHIFF, New Mexico 
ILEANA ROS-LEHTINEN, Florida 
WILLIAM H. ZELIFF, Jr., New Hampshire 
JOHN M. McHUGH, New York 
STEPHEN HORN, CaUfomia 
JOHN L. MICA, Florida 
PETER BLUTE, Massachusetts 
THOMAS M. DAVIS, Virginia 
DAVID M. Mcintosh, Indiana 
JON D. FOX, Pennsylvania 
RANDY TATE, Washington 
DICK CHRYSLER, Michigan 
GIL GUTKNECHT, Minnesota 
MARK E. SOUDER. Indiana 
WILLIAM J. MARTINI, New Jersey 
JOE SCARBOROUGH, Florida 
JOHN B. SHADEGG, Arizona 
MICHAEL PATRICK FLANAGAN, IlUnois 
CHARLES F. BASS, New Hampshire 
STEVEN C. LaTOURETTE, Ohio 
MARSHALL "MARK" SANFORD, South 

Carolina 
ROBERT L. EHRLICH, Jr., Maryland 



CARDISS COLLINS, IlUnois 
HENRY A. WAXMAN, CaUfomia 
TOM LANTOS, California 
ROBERT E. WISE, Jr., West Virginia 
MAJOR R. OWENS, New York 
EDOLPHUS TOWNS, New York 
JOHN M. SPRATT, Jr., South CaroUna 
LOUISE MCINTOSH SLAUGHTER, New 

York 
PAUL E. KANJORSKI, Pennsylvania 
GARY A. CONDIT, CaUfomia 
COLLIN C. PETERSON, Minnesota 
KAREN L. THURMAN, Florida 
CAROLYN B. MALONEY, New York 
THOMAS M. BARRETT, Wisconsin 
GENE TAYLOR, Mississippi 
BARBARA-ROSE COLLINS, Michigan 
ELEANOR HOLMES NORTON, District of 

Columbia 
JAMES P. MORAN, Virginia 
GENE GREEN, Texas 
CARRIE P. MEEK, Florida 
CHAKA FATTAH, Pennsylvania 
BILL BREWSTER, Oklahoma 
TIM HOLDEN, Pennsylvania 



BERNARD SANDERS, Vermont 

(Independent) 

James L. Clarke, Staff Director 

Kevin Sabo, General Counsel 

Judith McCoy, Chief Clerk 

Bud Myers, Minority Staff Director 



Subcommittee on Civil Service 

JOHN L. MICA, Florida, Chairman 
CHARLES F. BASS, New Hampshire JAMES P. MORAN, Virginia 

BENJAMIN A. OILMAN, New York BERNARD SANDERS, Vermont (Ind.) 

DAN BURTON, Indiana TIM HOLDEN, Pennsylvania 

CONSTANCE A. MORELLA, Maryland 

Ex Officio 

WILLIAM F. CLINGER. Jr., Pennsylvania CARDISS COLLINS, lUinois 

George Nesterczuk, Staff Director 

Ned Lynch, Professional Staff Member 

Caroline Fiel, Clerk 

Cedric Hendricks, Minority Professional Staff 



(II) 



CONTENTS 



Hearing held on: 

December 6, 1995 1 

December 14, 1995 491 

Statement of: 

Bachus, Hon. Spencer, a Representative in Congress from the State of 
Alabama; Hon. Peter Hoekstra, a Representative in Congress from 
the State of Michigan; Hon. Ken Calvert, a Representative in Congress 
from the State of California; and Hon. J.D. Hayworth, a Representative 
in Congress from the State of Arizona 509 

Broadnax, Walter, Deputy Secretary, Department of Health and Human 
Services; Dwight Robinson, acting Deputy Secretary, Department of 
Housing and Urban Development; Thomas P. Glynn, Deputy Secretary, 
Department of Labor; George Munoz, Assistant Secretary for Manage- 
ment and Chief Financial Officer, Department of the Treasury; Eugene 
A. Brickhouse, Assistant Secretary for Human Resources and Adminis- 
tration, Department of Veterans Affairs; and Shirley Chater, Commis- 
sioner, Social Security Administration 22 

Hoyer, Hon. Steny, a Representative in Congress from the State of Mary- 
land; Hon. George Gekas, a Representative in Congress from the State 
of Pennsylvania; Hon. Glen Browder, a Representative in Congress 
from the State of Alabama; Hon. Joe Barton, a Representative in Con- 
gress from the State of Texas; Hon. Karen McCarthy, a Representative 
in Congress from the State of Missouri; and Hon. Sonny Bono, a Rep- 
resentative in Congress from the State of California 580 

Koskinen, John A., Deputy Director for Management, Office of Manage- 
ment and Budget; Christopher H. Schroeder, Deputy Assistant Attor- 
ney General, Office of Legal Policy, Department of Justice; and Allan 
D. Heuerman, Associate Director for Human Resources, Office of Per- 
sonnel Management 219 

Letters, statements, etc., submitted for the record by: 

Bass, Hon. Charles F., a Representative in Congress from the State 
of New Hampshire, prepared statement of 15 

Bachus, Hon. Spencer, a Representative in Congress from the State of 
Alabama, prepared statement of 512 

Barton, Hon. Joe, a Representative in Congreess from the State of Texas, 
prepared statement of 596 

Boehner, Hon. John A., a Representative in Congress from the State 

of Ohio, prepared statement of 505 

Bono, Hon. Sonny, a Representative in Congress from the State of Cali- 
fornia, prepared statement of 605 

Brickhouse, Eugene A., Assistant Secretary for Human Resources and 
Administration, Department of Veterans Affairs: 

Information concerning lawn care workers 210 

Prepared statement of 68 

Broadnax, Walter, Deputy Secretary, Department of Health and Human 
Services, prepared statement of 25 

Browder, Hon. Glen, a Representative in Congress from the State of 
Alabama, prepared statement of 592 

Calvert, Hon. Ken, a Representative in Congress from the State of Cali- 
fornia, prepared statement of 522 

Chater, Shirley, Commissioner, Social Security Administration, prepared 
statement of 186 



(III) 



rv 

Page 
Letters, statements, etc., submitted for the record by — Continued 

dinger, Hon. William F., Jr., a Representative in Congress from the 
State of Pennsylvania, letter to Mr. Panetta, regarding management 

functions of 0MB, dated June 21, 1994 11 

Collins, Hon. Cardiss, a Representative in Congress from the State of 

Illinois, prepared statement of 20 

Ensign, Hon. John, a Representative in Congress from the State of Ne- 
vada, prepared statement of 508 

Gekas, Hon. George, a Representative in Congress from the State of 

Pennsylvania, prepared statement of 588 

Glynn, Thomas P., Deputy Secretary, Department of Labor, prepared 

statement of 36 

Hayworth, Hon. J.D., a Representative in Congress from the State of 

Arizona, prepared statement of 556 

Hoekstra, Hon. Peter, a Representative in Congress from the State of 
Michigan: 
Letters concerning Department of Labor's activities during recent 

lapse in funding 567 

Prepared statement of 551 

Horn, Hon. Stephen, a Representative in Congress from the State of 
California: 

Information concerning excepted and furloughed employees 209 

Prepared statement of 17 

Hoyer, Hon. Steny, a Representative in Congress from the State of Mary- 
land, prepared statement of 583 

Heuerman, Allan D., Associate Director for Human Resources, Office 

of Personnel Management 244 

Koskinen, John A., Deputy Director for Management, Office of Manage- 
ment and Budget, prepared statement of 225 

Lazio, Hon. Rick A., a Representative in Congress from the State of 

New York, prepared statement of 500 

McCarthy, Hon. Karen, a Representative in Congress from the State 

of Missouri, prepared statement of 601 

Mica, Hon. John L., a Representative in Congress from the State of 
Florida: 

Information concerning overtime 210 

Open letter to Federal employees 493 

Prepared statement of 495 

Moran, Hon. James P., a Representative in Congress from the State 

of Virginia, prepared statement of 6 

Morella, Hon. Constance A., a Representative in Congress from the State 

of Maryland, prepared statement of 560 

Munoz, George, Assistant Secretary for Management and Chief Financial 

Officer, Department of the Treasury, prepared statement of 47 

Schroeder, Christopher H., Deputy Assistant Attorney General, Office 

of Legal Policy, Department of Justice, prepared statement of 238 

Thompson, Hon. Bennie G., a Representative in Congress from the State 
of Mississippi, prepared statement of 502 



GOVERNMENT SHUTDOWN I: WHAT'S 
ESSENTIAL? 



WEDNESDAY, DECEMBER 6, 1995 

House of Representatives, 
Subcommittee on Civil Service, 
Committee on Government Reform and Oversight, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 9:10 a.m., in room 
2154, Rayburn House Office Building, Hon. John L. Mica (chair- 
man of the subcommittee) presiding. 

Present: Representatives Mica, Morella, Bass, and Moran. 

Ex officio present: Representative CUnger. 

Also present: Representative Horn. 

Staff present: George Nesterczuk, staff director; Garry Ewing, 
counsel; Ned Lynch, professional staff member; Caroline Fiel, clerk; 
Cedric Hendricks, minority professional staff; and Elisabeth Camp- 
bell, minority staff. 

Mr. Mica. Good morning. I would like to call this meeting of the 
House Subcommittee on Civil Service to order. 

The subject of today's hearing is government shutdown and what 
is essential? I will begin this hearing by welcoming our witnesses, 
guests and fellow colleagues. I have an opening statement, then we 
will hear from some of the other Members. 

Today the subcommittee will be reviewing the government shut- 
down, both as it affected our Federal work force recently and what 
might happen in the event of a future government lapse in appro- 
priations. Any review of the government shutdown must center on 
which activities of the Federal Government are essential and which 
are nonessential. 

The Constitution of the United States is clear in Article I, Sec- 
tion 9, that "No money shall be drawn from the treasury but in 
consequence of an appropriation made by law." Despite this con- 
stitutional restriction, we recognize that certain functions of our 
government are, in fact, essential, and its work force must continue 
to operate even when appropriations do lapse. 

By tradition, it is the President, together with 0MB and the indi- 
vidual agencies, that have been allowed to decide which functions 
in agencies are essential and which, in fact, are to be shut down. 
Part of the reason that I, and other new Members, sought election 
to Congress was really to come here with the intention of exploring 
these issues in a broader context. In our attempt to balance the 
Federal budget, we deal with this issue directly as we decide what, 
in fact, are essential national functions and activities. That, of 
course, is part of a larger question as we consider the proper role 

(1) 



of our Federal Government, including alternatives such as 
privatizing, downsizing, or shifting responsibilities to State and 
local authorities. 

No one can deny the fact that taxpayers and the average citizen 
outside the Beltway must ask some very serious questions when 
large segments of our Federal Government close down and they see 
no appreciable differences in their lives. Inside the Beltway, many 
people spoke of assessing blame for the government shutdown of 
nonessential services. 

Outside the Beltway, many citizens and taxpayers applauded 
closing down nonessential government activities. Others outside 
the Beltway, who have grown dependent on Federal Government 
benefits and services, were, in fact, appalled and dismayed, and 
had their lives severely disrupted by the shutdown. 

In this hearing today, I hope we can review, first, what took 
place in the recent shutdown; and, second, what plans are under 
consideration for any future government closure. It is important to 
note that the shutdown itself has not been a new idea to this ad- 
ministration. I believe it was part of a calculated strategy by the 
administration to close down the government this year. 

Planning for this supposedly spontaneous shutdown began as 
early as July of this year. In September, agencies were required to 
submit shutdown plans to 0MB. This was in marked contrast to 
the first shutdown, which occurred under President Reagan in 
1981, when the first 0MB guidance to agencies was issued less 
than a week before employees were sent home. 

In spite of the current administration's advanced planning, it is 
unfortunate that the execution of the shutdown was, in many in- 
stances, disorganized and illogical, at best, and oftentimes chaotic 
experience. Let me cite a couple of examples here, and we have 
people that will speak to this as witnesses. 

The Department of Housing and Urban Development [HUD], ini- 
tially released all but 136 of nearly 12,000 employees. As a result, 
some housing programs were shut down, even though funds were 
available for many major housing programs. Even with a 90 per- 
cent retention rate at the Department of Veterans Affairs, the ad- 
ministration announced that the processing of new applications for 
some major veterans benefits programs would be suspended. With- 
in a week of the shutdown, the White House announced the recall 
of more than 1,700 DVA employees. 

The Department of Education, as another example, furloughed 
86 percent of its work force, while the Bureau of Alcohol, Tobacco, 
and Firearms found it necessary to retain, so-called "essential," 15 
of 23 public affairs officers. The Social Security Administration fur- 
loughed 90 percent of its work force. Retirement claims processing 
ceased. At the same time, retirement claims for civil service retir- 
ees, at the Office of Personnel Management, were being processed 
at 100 percent capacity and activity rate. 

Three days into the furlough, the President initiated a recall of 
more than 50,000 Social Security personnel, raising questions 
about whether they should have been furloughed in the first place. 
Furthermore, in the middle of the shutdown, the President de- 
clared some activities nonessential on Monday, when on Friday 
these same functions were suddenly termed "essential." 



It's important that we look at the discrepancies and review the 
agencies, and see what is, in fact, a priority activity. We must also 
examine what activities are more costly to close down than to con- 
tinue. Finally, we must consider Federal employees whose lives are 
severely disrupted by this disorderly process. 

This may have been a well-planned shutdown, but I fmd some 
of the results very confusing. We heard a lot of rhetoric, and saw 
a lot of posturing and grandstanding from the administration. As 
cold reality set in, we saw backpedaling and the recall of employ- 
ees. And what about the question, what is essential? The adminis- 
tration seems not to have defined this consistently among its var- 
ious agencies. 

Was this poor management or premeditation? Should Congress 
have established better criteria or better defined guidelines? The 
priorities seem evident to me. First and foremost, we have a re- 
sponsibility to ensure national security. We have a duty to provide 
for the effective enforcement of our laws. We must take adequate 
measures to guarantee the public safety, health, and welfare. Next, 
we must ensure that those who cannot sustain themselves are pro- 
vided for adequately. 

Most of these functions were deemed essential last month. Most 
were carried out with only minor interruptions. But it is important 
that we look at the discrepancies in the implementation of the ad- 
ministration's first shutdown, if only to make certain that we avoid 
these problems in the future. 

We face the prospect of another shutdown within just a matter 
of 10 days affecting several of the agencies represented here today. 
We remain committed to approving legislation that will continue 
operations, but if another veto does shut down these agencies, we 
hope this hearing will result in a more consistent criteria for clo- 
sures and more effective operations of continuing activities. 

To explore these issues, we have assembled a panel of senior offi- 
cials who have responsibility for the management of major agencies 
that have implemented the shutdown in a variety of ways. 

They include Dr. Walter Broadnax, the Deputy Secretary of the 
Department of Health and Human Services; Mr. Dwight Robinson, 
Acting Deputy Secretary of the Department of Housing and Urban 
Development; Mr. Thomas Glynn, Deputy Secretary of the Depart- 
ment of Labor; Mr. George Muiioz, Assistant Secretary for Manage- 
ment and Chief Financial Officer of the Department of the Treas- 
ury; Mr. Eugene Brickhouse, Assistant Secretary for Human Re- 
sources and Administration of the Department of Veterans Affairs; 
and Ms. Shirley Chater, Commissioner of the Social Security Ad- 
ministration. 

Our second panel includes Mr. John Koskinen, Deputy Director 
of the Office of Management and Budget; Mr. Christopher Schroe- 
der. Deputy Assistant Attorney General in the Office of Legal Pol- 
icy at the Department of Justice; and Mr. Allan Heuerman, Associ- 
ate Director for Human Resource Systems Service in the Office of 
Personnel Management. 

Those are my opening remarks and comments. I will yield now 
to the ranking member of our panel, the distinguished gentleman 
from Virginia, Mr. Moran. 



Mr. MORAN. Thank you, Mr. Chairman. I am glad you are having 
this hearing on the government shutdown that never should have 
happened. In my view, it was clearly the Congress' fault. We did 
not get our appropriations bills passed in time. We had a year to 
do it, and we didn't do it. There was only 1, in my recollection, out 
of 13 bills that was enacted. 

There were a lot of complaints over the fact that the President 
vetoed the legislative branch appropriations bill, but thank God he 
did. That would have been the worst thing to have had the Con- 
gress paid and none of the rest of the government paid because we 
took care of our own salaries and operation expenses before the 
rest of the government. So I'm glad he vetoed that. 

But the fact is that we didn't get the appropriations bills passed. 
That's why we had the government shutdown. And then we delib- 
erately sent a continuing resolution to the President, calculated to 
draw a veto. Now, I grant you that the Speaker tried to lend some 
insight into why that happened by going into the fact that he didn't 
get a window seat on the plane to the Middle East, or he went out 
the wrong door, or something. 

I don't think it was so much the personal snubbing that he per- 
ceived occurred as the fact that the legislative branch did not act 
in an efficient and effective way. The reconciliation bill is far less 
important than getting these appropriations bills signed, and that, 
in the future, should be our highest priority. 

But 40 percent of the government did not operate, as a result, 
for 4 days. And I think that's something we should be ashamed of. 
We also ought to be embarrassed at the fact that we spent $700 
million of taxpayers' money and got no work out of it, no return 
from the Federal employees who were furloughed, all of whom 
wanted to be at work performing their jobs; none of them wanted 
to be getting paid for doing nothing, but 800,000 were sent home. 

I think that we need to clarify what is essential and nonessential 
in the first place. The definition that suggests that — and, in fact, 
I have the directive here, "essential employees are only those 
where, if they were unable to perform their jobs, the failure to per- 
form those functions would result in an imminent threat to the 
safety of human life or the protection of property." 

There's an inconsistent application of that criteria, but the func- 
tioning of the Federal Government goes far beyond that. Obviously, 
national park officials, for example, are not going to be involved in 
the safety of human life or protection of property, for the most part, 
but they are important for the proper functioning of the Federal 
Government. 

The people who issue visas. We had any number of people in my 
jurisdiction — I'm sure they are throughout the country — who need- 
ed visas, who needed to be able to travel, but couldn't get them. 
One woman's family member was dying and she couldn't get there 
because the people who would have issued her a visa were not able 
to get to work. The Social Security applications, the applications for 
veterans benefits were not processed when they were supposed to 
be, when people were eligible. The fact is that millions of dollars 
was wasted every day that should have been collected and wasn't. 

I know we're going to find a number of discrepancies between the 
various Federal agencies in the way that they interpreted the 



guidelines. As a result, some were harder hit than others, not just 
because some of the functions relate to the safety of human life and 
protection of property more than others, but because of different in- 
terpretations. I think that's due to a sincere effort to do the right 
thing and simply differences in honest judgment. 

The hearing that we are having today is particularly important 
because it could happen again. The continuing resolution expires 
on December 15. It is conceivable we could have another govern- 
ment shutdown at that time. We are making absolutely no progress 
on the 7-year balanced budget bill. We have agreed on how many 
people are going to sit at the table and what table it is, but we 
haven't gone beyond that. 

That being the case and the fact that we are running out of time, 
I don't see any possibility of all these bills being resolved, so a con- 
tinuing resolution is clearly going to be necessary. I would hope 
there would be a simple extension of the continuing resolution. If 
there is not, then the public is going to be absolutely right in iden- 
tifying the source of the problem, and it is us, as far as I'm con- 
cerned. Back in 1990, almost two out of three taxpayers figured it 
was the Congress' fault, and the figures were almost identical this 
year, as well. I think they are going to be higher if it happens 
again. 

So I think it behooves us to take measures now to avert this. One 
of the things that we could do is to pass legislation, and it ought 
to originate in this subcommittee, that I have introduced and Con- 
gressman Gekas, from Pennsylvania, has introduced, that would 
have Federal employees go to work in the event of any lapse of ap- 
propriations. They would be reimbursed after the fact, but at least 
the taxpayer would get effort for the money that is being paid for 
Federal employees' salaries. It would not disrupt the ability of the 
Federal employee work force to serve the public. 

Speaker Gingrich made it clear, in a letter that he gave to Re- 
publican Members of the Congress, that he was committed to pay- 
ing all Federal employees, including those who were furloughed. So 
this simply ensures that they would be performing work during 
that period of time. I can't imagine why people would be opposed 
to that other than for the political leverage that it gains people to 
be able to threaten the possibility of a government shutdown. 
That's wholly irresponsible. 

I think we also need to take into consideration the people em- 
ployed in the private sector who were severely and adversely £if- 
fected by the shutdown, people in the services, the retail sector, 
and government contracting and procurement. The losses that they 
suffered are not made up. They don't get any retroactive pay. And 
particularly in this Washington area, there's a lot of people who 
were hurt unjustifiably and unnecessarily. 

It's H.R. 2184 that we have introduced. I would hope we would 
consider that in this subcommittee and pass it on in an expeditious 
fashion. 

Beyond that, I am anxious to get into this hearing Mr. Chair- 
man. I am glad we have the occasion to see how it worked, and I 
hope, even more importantly, to get to work to make sure that this 
does not occur again. Thank you. 

[The prepared statement of Hon. James P. Moran follows:] 



GOVERNMENT REFORM 
AND OVERSIGHT 



Congresfs! of tlje Winitth States! 

^ouit of il^epresfentatibed 
?IBHa«f)ington, ©C 20515^608 



JAMES P. MORAN 

8th district of VIRGINIA 

WASHINGTON Of f ICE 

405 CANNON HOUSE 

OFFICE BUILDING 

WASHINGTON, DC 20515-4608 

12021 225-4376 



INTERNATIONAL RELATIONS 

SUBCOMMITTEE ON 

INTERNATIONAL OPERATIONS 

AND HUMAN RIGHTS 



Mr. Chairman: 



Statement of Rep. James P. Moran 

On the Government Shutdown 

Subcommittee on Civil Service 

December 6, 1995 



I appreciate your having this hearing today and focusing on 
this important subject. 

This was the furlough that never should have happened. 
Congress did not pass the Budget Reconciliation and had not 
passed a majority of the appropriations bills. Congress then 
exacerbated its own failures by submitting a continuing 
resolution calculated to draw a Presidential veto. As the press 
reported, all of this was done because the Speaker didn't get a 
window seat on Air Force One. Congress then failed to rectify 
the situation and pass a clean CR until the end of the week. 
Even though all employees were paid and no en^loyee was harmed by 
the shut-down, 40% of the federal government did not operate for 
four days because of bickering between the Congress and the 
President and pure pettiness. 

It is very important to stress that those employees sent 
home were not "non-essential" employees. They were non-emergency 
employees whose jobs did not directly affect human life or 
property. National Park officials are not emergency employees, 
but they are essential to the operations of our national park 
system. Personnel officers are not emergency employees, but they 
are essential to ensure that federal employees get paid. To 
claim that the government should be reduced by 800,000 employees, 
as some Republican freshman have done, because 800,000 employees 
were furloughed is absurd. This Subcommittee should never fall 
into that trap. 

There were wide discrepancies among the agencies. Different 
agencies interpreted the direction from the Justice Department 
differently. But this is more indicative of a honest effort to 
follow the guidelines than a concerted effort to play games with 
the shut-down. Some agencies were harder hit than others. Some 
agencies have less of a tie to protecting human life and property 
them others. And no agency was prepared for the severity or 
length of the shut-down. In the past, when the Congress and 
Administration were unable to agree on a CR or a budget bill. 



there was an honest effort to, at a minimum, ensure the 
continuing operations of the government while the process 
continued. This Congress is different. This Congress does not 
worry about the collateral damages it creates as it continues on 
its ideological juggernaut. An example of this irresponsibility 
is the Speaker's unwillingness to work with the Administration to 
pass the final appropriations bills. As members of the House 
leadership have stated, the Congress is unwilling to ensure the 
proper operation of the government because they fear they might 
lose leverage with the President on the budget. This is not the 
way government is supposed to operate. This is not the way a 
responsible Congress acts. 

This hearing is appropriate because it appears as if we may 
be heading towards another shut-down on December 15. Ten days 
before Christmas, we will once again unnecessarily threaten the 
jobs security and income of federal employees to make partisan 
political points. We will compromise the efficiency and 
effectiveness of the federal government to play political games. 
If anything is to come out of this hearing, it must be the 
message that shutting down the government is dangerous, short- 
sighted, and extremely irresponsible. The fault for this action 
rests solely with the Congress and, as the polls continue to 
show, the public is not fooled by Congress's attempts to point 
fingers. In October of 1990, about 57% of the public blamed 
Congress for the government shut-down. About 25% blamed the 
President. In November of 1995, the numbers were exactly the 
same. 

This past experience and the possibility of a repeat during 
the Christmas season demonstrates the immediate need for 
legislation such as I have introduced and Rep. Gekas has 
introduced that provides for continued government operations in 
the event of a lapse in appropriations. In essence, these bills 
are permanent continuing resolutions that take effect whenever 
the Appropriations Committee fails to pass its bills. It 
provides that the agencies can continue operations at prior 
funding levels and any costs incurred are taken out of the 
appropriations once enacted. This bill saves money because it 
allows the government to continue operating, and continue raising 
revenue, during a lapse in appropriations. As recent news 
reports have stated, the cost of the November shut-down was in 
excess of $700 million. This is a lot of taxpayer money to waste 
in order to make a political point. 

One of my bills, H.R. 2184, differs in that it only applies 
to government employees. It ensures that government employees 
will continue to be paid during a budget crisis period. While it 
is true that federal employees were paid for the last shut-down, 
it is also true that a number of Republican members objected to 
the retroactive pay. Federal employees, who play no part in the 
political games leading to a shut-down, should not be penalized 
for the inability of the Congress to pass its Appropriations 
bills. Since this bill was referred to the Government Reform 



Committee rather than the Appropriations Committee, it is my hope 
that we can mark-up the bill and have it enacted before we allow 
another government shut-down to occur. We should take this 
opportunity to learn our lessons and make any necessary 
corrections . 

Again, I appreciate your having this hearing today and I 
look forward to the testimony of our witnesses. 



Mr. Mica. I thank the gentleman and would now like to yield to 
the chairman of the full committee who has joined us this morning, 
Mr. dinger from Pennsylvania. 

Mr. Clinger. Thank you very much, Mr. Chairman, and thank 
you also for holding this hearing on the effect of the partial shut- 
down of the Federal Government on civil service staff and govern- 
ment functions. 

A great deal of planning and work went into the shutdown plans 
of the agencies, and we are here to learn about the actions taken 
by the Federal cabinet departments and independent agencies to 
prepare for a possible appropriations impasse, whether they took 
the appropriate steps to troubleshoot their own plans and asked for 
help when they needed it from the Office of Management and 
Budget. 

I think we also want to know what actions 0MB and/or the De- 
partment of Justice and the Office of Personnel Management took 
to assist in the planning, to help guide the agencies and to trouble- 
shoot the problem areas before a funding hiatus occurred. 

Dr. Rivlin and numerous other administration officials were com- 
menting publicly on the potential shutdown of the government real- 
ly for months before it actually took place. As early as July 26, I 
believe, Dr. Rivlin cautioned agencies to "take no actions such as 
reductions in force, office closings, or similar measures, until we 
have had time to assess the developing situation and put together 
a governmentwide plan," was her quote. 

By memo dated August 17 of this year, she directed the agencies 
to develop and submit for review any plans that "you believe are 
appropriate," she said, and she assured the agencies that 0MB 
would "review plans promptly and get back to the agencies with 
suggestions." And again, on November 9, she instructed agencies to 
begin to implement the plan "as approved by 0MB in September." 

So, clearly, 0MB had been planning for the funding hiatus since 
mid-summer and had also accepted full responsibility for reviewing 
and approving the plans and otherwise managing a cessation of 
government operations. However, we find that, during the shut- 
down, inconsistencies became apparent in the treatment and status 
of employees who perform very similar, if not identical, functions. 

For example, the Department of Veterans Affairs makes benefit 
payments for pensions and compensation. In its shutdown proce- 
dure, the VA strictly adhered to the Antideficiency Act, and veter- 
ans compensation was determined to be unpayable because it is 
funded through annual appropriations. The Social Security Admin- 
istration also, however, makes payments for pensions and com- 
pensation. But here, even though the Social Security Administra- 
tion is funded through indefinite appropriations, the SSA shut 
down to only 7 percent of its work force. 

On what basis, then, were these disparate decisions made? Is 
this a distinction based on funding stream only? 

I am also curious to know whether sufficient guidance was given 
by 0PM for the agencies to adequately prepare their shutdown con- 
tingency plans. The contingency plan of the Department of Health 
and Human Services was a mere two pages long, one of which was 
a chart, and the other a cover memo to Nancy Ann Min of the Of- 
fice of Management and Budget. By contrast, the contingency plan 



10 

for the U.S. Department of Labor was impressive and extensive, 
184 pages long, with the Treasury Department a close second at 
174 pages long. 

In its review of the plans, did 0MB consider the HHS shutdown 
plan to be adequate at two pages? Also, why were certain safety 
functions which are necessary to protect human life treated dif- 
ferently, as we understand it? 

The Mine Safety and Health Administration had more than 
1,400 safety inspectors on duty during the furlough. By contrast, 
OSHA, the Occupational Safety and Health Administration, re- 
tained a staff of about 250. No child labor inspectors were retained. 
Do child labor inspectors perform a safety function? I really con- 
tinue to be somewhat puzzled by this apparently disparate treat- 
ment of safety functions, and I look forward to hearing an expla- 
nation of this issue from the Department of Labor this morning. 

Were any of these inconsistencies observed by 0MB in their re- 
view of the plans, and of what did OMB's review and approval 
process consist? The bottom line is, how was this shutdown man- 
aged? 

In 1994, the Office of Management and Budget merged its budget 
and management functions. At that time, I sent a letter to then Di- 
rector Panetta expressing my concern. I was joined in that by then 
Chairman Conyers, expressing our concern about the impact of the 
OMB's reorganization on its management of the Federal Govern- 
ment. 

In examining this shutdown, I am again concerned that the man- 
agement functions of 0MB have been overshadowed by the ongoing 
budget work. Frankly, I am concerned that 0MB may not have re- 
viewed the shutdown plans thoroughly enough, at least on the 
basis of the information we have seen so far. If they had, it seems 
that they would have seen these serious inconsistencies in the 
plans and would have taken steps to address them. 

The partial shutdown of the Federal Government is an extremely 
complex process. If we have learned nothing else with this exercise, 
we have learned exactly how complex and complicated it is. It re- 
quires a tremendous amount of planning and sound judgment. It 
is my hope that 0MB will assess the responsibility it has for prop- 
erly managing future shutdowns so that expectations are fair and 
clear, and confusion and inconsistency are minimized. Frankly, we 
hope that we never have to go through this again, but, if we do, 
it surely needs to be better thought out beforehand. 

Finally, I wonder whether the subcommittee might consider rec- 
ommending that there be a process within 0MB by which shut- 
down plans will be reviewed and through which agencies can for- 
mally resolve questions and appeal those decisions. 

I want to thank you, Mr. Chairman. I would ask unanimous con- 
sent that the letter I referred to, from myself and Mr. Conyers to 
Mr. Panetta, with regard to the management functions of 0MB, 
dated June 21, 1994, be included in the record at this point. 

Mr. Mica. Without objection, so ordered. 

[The information referred to follows:] 



11 



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The Honorable Leon E. Panetta 

Director 

Office of Management and Budget 

725 17th Street, N.W., Room 252 

Old Executive Office Building 

Washington, D. C. 20503 

Dear Mr. Director 

As you know, we are interested in the changes, announced as OMB 2000, which are 
designed to improve the Office of Management and Budget's oversight by integrating the 
budget analysis, management review, and policy development roles. We share your goals to 
improve the breadth and quality of the analysis that goes into the budget and to strengthen 
OMB 's ability to oversee agency programs and policies. 

We are, however, concerned about the impact of the reorganization on the legislative' 
mandates within the jurisdiction of the Committee on Government Operations. It is 
important to us that the strength and operational effectiveness of the Office of Information 
and Regulatory Affairs, the Office of Federal Procurement Policy, and the Office of Federal 
Financial Management be maintained. We further want to ensure that broad management 
initiatives such as the Paperwork Reduction Act, the Chief Financial Officers Act, and the 
Government Performance and Results Act be effectively implemented. We understand that 
you anticipate that the new Resource Management Offices will strengthen OMB in this regard 
by employing interdisciplinary teams that can take a more integrated approach to 
management issues. We would like more detailed information on your strategy for 
implementing these changes. 

We also seek assurance that as former "management office" staff are assigned to the 
Resource Management Offices and as energy is devoted to making those interdisciplinary 
teams work, the functioning of the statutory offices and the implementation of the broad 
management initiatives do not suffer. We are interested in the specific objectives and 
measures you will use to gauge success. This information will serve as the basis toward 
reaching agreement with you on criteria we all can use to judge progress. We have called 
upon the General Accounting Office to assist us in our review. 



12 



The Honorable Leon Panetta 
June 21, 1994 
Page 2 



We look forward to a constructive conversation on these issues. 
Sincerely, 



J John Conyers, Jr/j ^\ 
v^ Chairman (-^ V-* 




William F. Clingef, \i. 
Ranking Republican" 



13 

Mr. Mica. I thank the gentleman for his opening statement, and 
I will yield now to Mrs. Morella. Mrs. Morella from Maryland is 
recognized for her opening statement. 

Mrs. Morella. Thank you, Mr. Chairman. 

I want to commend you for convening this hearing. Last month 
we experienced the longest government shutdown in our history. 
So, for me, there is no more opportune time to examine the criteria 
used by the administration to determine what functions would re- 
main operational during the shutdown, particularly with December 
15 staring us in the face. 

I didn't want a shutdown. No member of this subcommittee or 
full committee wanted it. The shutdown was a terrible experience. 
It was a demoralizing and divisive ordeal for our work force. It was 
costly and disruptive to the taxpayers. It hurt a number of busi- 
nesses, particularly in this local area. 

Clearly, I wish the President could have signed a continuing res- 
olution that would have kept the entire government running. But, 
for me, this hearing is not about that; this hearing is about review- 
ing the policies and the implementation of those policies, so we can 
devise solutions to better determine what needs improving and to 
fix what is broken. It is also about sitting here and talking through 
this matter, so that, just maybe, we wouldn't have to be in this po- 
sition again. 

There are issues that need to be reconciled. I have a hard time 
understanding, for instance, why cancer researchers were not con- 
sidered essential. I think most of you know how cancer has affected 
my life. I'm not certain, but I've heard also that AIDS research 
may have been affected during this period. The fact that the De- 
partment of Veterans Affairs was recalling employees to process 
claims for disabled veterans indicates some confusion over how the 
policy was implemented. Our veterans need special treatment. If 
the current policies don't afford this treatment, let's fix them. 

Before I conclude my statement, there are two other issues that 
I think need to be addressed. I have been reading statements in 
the paper and hearing people say that Federal workers who were 
furloughed came out ahead because they received their pay. And I 
was one who advocated that they not be victimized. Now I realize 
there is a question of equity out there, and we need to examine 
that in the future. 

But I find that these statements are highly offensive and insensi- 
tive, and an affront to the dedicated men and women who serve 
this Nation and who, through no fault of their own, were fur- 
loughed. I don't know how you come out ahead after having to wear 
the demoralizing title of "nonessential." I don't know how you come 
out ahead while you are sitting at home wondering how long it will 
last and how you and your colleagues will pay your bills in the in- 
terim. There was not one Federal worker screaming, "Please, 
please furlough me." So I hope that this will be an end to that kind 
of rhetoric. 

I also feel that the term "nonessential" must be eliminated from 
the Federal vocabulary. I can't think of a term more misguided or 
misleading. And with that said, I again want to thank Chairman 
Mica for calling the hearing, for his indulgence, and also look for- 
ward to hearing from the witnesses. 



14 

Thank you, Mr. Chairman. 

Mr. Mica. I thank the gentlelady and now would Uke to yield to 
the vice chair of the subcommittee, Mr. Bass from New Hampshire. 

Mr. Bass. 

Mr. Bass. Thank you very much, Mr. Chairman. 

I have an opening statement that I would like to submit for the 
record and to simply comment. Thank you for holding the hearing 
this morning. I am looking forward to hearing the testimony from 
our witnesses. I agree with my colleague, Mrs. Morella, that the 
term "nonessential" does not necessarily mean unneeded or unnec- 
essary. 

I think what we need to determine, in the course of these hear- 
ings, is what the nature, what the effect of the shutdown was on 
the operation of government; the difference between what worked 
and what didn't work in government; what was reactive versus 
proactive, in terms of government activities. Perhaps we can learn 
more about the internal workings of the Federal bureaucracy, and 
perhaps what we can learn from this experience is how to run a 
better, more efficient government, but certainly not stereotype any- 
body who was furloughed as being "nonessential." 

I want to thank the chairman for calling these hearings. I think 
they are important; I think they are timely. I look forward to hear- 
ing this testimony today. 

I yield back. 

[The prepared statement of Hon. Charles F. Bass follows:] 



15 



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Vloa CkalzBan, ClTll Sarrlca SubeoiBlttaa 
Ha«xlAg oo Hull ii iimiiI shntAoiiD 
DMaatoar (, 199S 

Mr. Chairman, I want to thank you for holding this hearing, and for focusing the 
agenda so squarely on the planning and implementation of the recent shutdown of the 
federal government. Controlling excessive federal spending is essential to 
fulfilling our commitment to the American people, and this hearing will help to 
focus attention on that central question. 

I will focus my opening remarks on the "Open Letter to Federal Employees" by the 
President and Vice President, which I would like to submit for the record. I 
believe that this letter has only served to divert attention from the real issues 
raised by the shutdown. As our hearing title makes clear, the essential character 
of federal employees is not the question; the less-than-essential character of many 
federal functions is. 

As Governor Fife Symington demonstrated in Arizona, where states and localities 
believe that parks are essential to their communities, they are willing and able to 
sustain operations. As millions of parents around the country demonstrate every 
day, federal intervention is not always necessary to provide quality education; 
making certain that children have opportunities for quality education at every level 
is primarily the responsibility of parents, not bureaucracies. Successful 
rehabilitation of many patients is accomplished every day by doctors, nurses, 
therapists and other skilled practitioners who work with families and friends to 
facilitate their patients' rehabilitation. Every day, millions of Americans depend 
on the private sector, relying on both for-profit and not-for-profit organizations 
to improve their lives. These private citizens also generate the tax revenue that 
was once the life-blood of big government before big government borrowed our nation 
beyond the bounds of spending restraints. 

For nearly twenty years, our citizens have been sending a message to everyone who 
must face the electorate. As President Reagan phrased that message, 'The problem is 
not that Americans aren't taxed enough. The problem is that government spends too 
much.' The Liberal establishment in Washington has resisted that message, and the 
administration's "Open Letter to Federal Employees" is merely another effort to 
divert attention from that message in order to protect big government bureaucracies. 

This- Congress was willing to enact continuing resolutions that would have averted 
this latest shutdown. We do not believe that the same scenario should be repeated 
in December, and we welcome this opportunity to clarify guidelines and to ensure the 
continued operation of every government function that has authorized and 
appropriated funding sources. If there were mistakes in implementing the first 
shutdown, they should not be repeated if there is a second one. None of our 
interests would be served by allowing that to happen. 

In closing, I would observe that Congress and the President are not that far apart 
from agreement on principles to bring our Nation's budget into balance. We need to 
eliminate the nonessential programs so that government employees can redouble their 
efforts and become more effective in delivering on the essential functions of 
government . 



16 

Mr. Mica. I thank the gentleman and now yield to Mr. Horn 
from California. 

Mr. Horn. Thank you very much, Mr. Chairman. I appreciate 
the opportunity to sit with your subcommittee during these hear- 
ings. As chairman of the Subcommittee on Government Manage- 
ment, we have major concerns about the processes by which these 
decisions were made. 

Let me just say that I agree with what I have heard from the 
gentleman from Virginia, the chairman, the gentlewoman from 
Maryland, and the gentleman from New Hampshire. There are a 
lot of significant questions, and I commend you for these hearings. 
I hope you will recommend to the full committee, and thus the 
House, the criteria by which these decisions have been made. 

My particular concern comes on an incident that occurred in my 
own district, and that is the Department of Defense withdrew the 
C-17 inspectors from the line. And if this shutdown had lasted a 
few more days, approximately 5,000 to 10,000 workers would have 
been furloughed, because there's no way you can keep production 
going unless the appropriate inspection has been made along the 
way. 

Now, if that policy was across the Nation, which I suspect it was, 
talking to various officials in the Pentagon, I think it is a wrong- 
headed policy that would damage this economy by the billions, but, 
more particularly, it would damage the efficiency of defense produc- 
tion, which has taken a long time, on the C-17 and other major 
projects, to be developed. And now that it's efficient, this kind of 
nonsense, of pulling C-17 inspectors and other defense production 
inspectors, I think needs a very careful review by this committee. 

Mr. Chairman, I would like to enclose, at this point in my re- 
marks, a statement I have made that raises some fuller questions. 

I do hope, whether I'm in the room or not, that you and your col- 
leagues will ask, did the White House directly or indirectly urge 
any particular closures? Because another series of closures that 
irks me deeply is the fact that park rangers are pulled from var- 
ious national monuments, when people have saved money for 5 to 
10 years to finally see those national monuments, and they are un- 
able to do it, not to mention, of course, the Social Security field of- 
fices and all the other things we all know about. 

[The prepared statement of Hon. Stephen Horn follows:] 



17 

Statement of Representative St ephen Horn 
Hearing on Government Shutdown - What's Essential? 

A review of the agency shutdown plans shows that some 
agencies treated similar functions, such as public affairs, training, and 
payment of benefits, very differently. It seems that agencies received 
very little guidance on how to decide on which employees were 
essential and which could be furloughed. They had to muddle through 
on their own, and a few, such as the Department of Veterans Affairs 
and the Social Security Administration, apparently underestimated their 
responsibilities because they had to make hurried preparations to recall 
employees to avoid a delay in distributing benefits payments. 
Leadership from an oversight agency was conspicuous by its absence. 

The Office of Management and Budget and the Department of 
Justice apparently were less than responsive to requests for guidance 
from the agencies. Today we would like to ask the representatives of 
0MB and Justice why this happened. Was it an oversight on their 
parts? Did they not have enough staff to monitor the agencies in their 
development and submission of shut down plans? Did they decide to 
adopt a "hands-off" approach and see what happened, hoping it would 



18 

-2- 

embarrass Congress? It will be interesting to hear from them what 
their reasons were. The results remain: agencies were left to their 
own devices, some making decisions to keep employees working if 
they were paid out of multi-year or no-year appropriation, some 
retaining only those employees involved in protecting life or property. 
Some departments shutting down almost completely, some remaining 
almost fully staffed. There was no coordination among the agencies. 

These are important management issues. We are trying to ensure 
that Government management improves. This shut down shows that 
at present Government management is barely adequate. Government 
agencies are operating in a vacuum, without taking into account what 
other agencies are doing. They are given no guidance or leadership. 
We need to have, within the Administration, an office able and willing 
to: take control of a situation; develop overall guidelines; make sure 
the agencies follow the guidelines consistently; and ensure that similar 
functions are treated consistently across all agencies performing those 
functions. 

It seems that this was lacking in the shut down that occurred 
from November 14 to 18. The administration must make sure that any 
future shut downs are managed better. 



19 

Mr. Mica. I thank the gentleman. 

Without objection, the statement will be made part of the record. 
I also have a statement and a request from Cardiss Collins, the 
ranking member of the full committee, and, without objection, her 
statement will be made part of the record. 

[The prepared statement of Hon. Cardiss Collins follows:] 



20 



<m^o»m ONE HUNDRED FOURTH CONGRESS 



Congreg£( of tte ^nitctJ ^tateg 

]l)oMt o( i^tprt^entatibed 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

2157 Rayburn House Office Building 

Washington, DC 20515-6143 



JCM tCAHOOM>X>* F\0<U>* 



-UAMTW^OW SOUTHC 

CMKCM jM.UAAn»« 



STATEMENT OF HON. CARDISS COLLINS, RANKING MEMBER 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

BEFORE THE SUBCOMMITTEE ON CIVIL SERVICE 

HEARING ON THE GOVERNMENT SHUTDOWN: 

WHAT'S ESSENTIAL? 

November 21, 1995 

Mr. Chairman, during the days preceding the recent government shutdown, the question 
of "What's Essential' was repeatedly asked by front-line employees across the Federal work 
force, and by the American public. The workers wanted to know whether or not they would 
be furloughed, and if so, what the consequences would be with respect to their pay and benefiU. 
The public wanted to know whether services they depended upon would be available to them. 

I understand that the Administration took a number of actions to inform both the workers 
and the public about effect a shutdown of the government would have on them. Whether or not 
these actions, and the determination of "What's Essential" which guided them, were reasonable 
and adequate should be the focus of today's hearing. I would hope that Members not use this 
hearing instead to continue the carping and finger pointing which has surrounded the debate over 
the budget. 

As we approach December 15th, and the prospect that a shutdown could reoccur, the 
public. Members of Congress, agency managers, and Federal and District of Columbia 
government workers alike all can benefit from the clarity of policy and procedure that this 
hearing could bring. 

The Department of Justice has issued three legal opinions addressing the permissible 
scope of government operations during a shutdown caused by a lapse in appropriations. The 
most recent one was prepared this past August by Assistant Attorney General Walter Dellinger 
and was distributed to agencies by the Office of Management and Budget to assist them with the 
development of plans for managing a shutdown, were it to occur. 



21 



The Dellinger opinion states that the Antideficiency Act prohibits the employment of 
federaJ personnel in advance of appropriations except in emergencies. It further states that the 
emergencies exception applies only to cases of a threat to human life or property where the 
threat can be reasonably said to be near at hand and demanding of immediate response. Those 
employees who met this test were to be deemed essential and required to work. In addition, 
other employees whose jobs are funded with multi-year appropriations, or who meet other 
limited exceptions could report to work as well. 

This guidance seems quite clear, yet there are reports it was applied inconsistently. 
Therefore, it is appropriate for this Subcommittee to examine the manner in which this guidance 
was disseminated and the manner in which agencies determined which of their personnel were 
essential. The array of witnesses scheduled to appear today should provide that information. 
I look forward to their testimony and the insight it will provide. 



Thank you, Mr. Chairman. 



22 

Mr. Mica. I have also had requests, I might say, from a number 
of Members now — it's growing — to testify and comment on the 
question of the impact of the shutdown and how we proceed. We 
are going to hold a Members' panel next Tuesday at 1:30 and give 
all of the Members who wish an opportunity to be heard at that 
time. If any Members do have a statement they would like to have 
made a part of the record today, we will also be glad to include 
that in the text. In order to be fair to everyone, I think we will pro- 
ceed in that fashion. 

I would like to now call our first panel. We have them before us: 
Dr. Walter Broadnax, Department of Health and Human Services; 
Dwight Robinson, Department of Housing and Urban Development; 
Thomas Glynn, Department of Labor; George Muhoz, Department 
of the Treasury; Eugene Brickhouse, Department of Veterans Af- 
fairs; and Shirley Chater, the Commissioner of the Social Security 
Administration. 

Some of you have appeared before us before; some of you are new 
members. This is an investigations and oversight subcommittee 
and committee of Congress, so if you would please stand, I would 
like to administer the oath. 

[Witnesses sworn.] 

Mr. Mica. The witnesses have answered in the affirmative. 

Again, I would like to welcome our panelists. Since we have sev- 
eral lengthy panels here, we are going to use the 5-minute rule. 
You are asked, if you have a lengthy, detailed statement, to submit 
it for the record, and it will be made part of the official record. We 
would appreciate your summarizing so that the members of the 
subcommittee will have an opportunity to discuss and ask ques- 
tions. 

We will start, first, by having a statement by Dr. Walter 
Broadnax, Deputy Secretary of the Department of Health and 
Human Services. 

Welcome, and you are recognized, sir. 

STATEMENTS OF WALTER BROADNAX, DEPUTY SECRETARY, 
DEPARTMENT OF HEALTH AND HUMAN SERVICES; DWIGHT 
ROBINSON, ACTING DEPUTY SECRETARY, DEPARTMENT OF 
HOUSING AND URBAN DEVELOPMENT; THOMAS P. GLYNN, 
DEPUTY SECRETARY, DEPARTMENT OF LABOR; GEORGE 
MUNOZ, ASSISTANT SECRETARY FOR MANAGEMENT AND 
CHIEF FINANCIAL OFFICER, DEPARTMENT OF THE TREAS- 
URY; EUGENE A. BRICKHOUSE, ASSISTANT SECRETARY FOR 
HUMAN RESOURCES AND ADMINISTRATION, DEPARTMENT 
OF VETERANS AFFAIRS: AND SHIRLEY CHATER, COMMIS- 
SIONER, SOCIAL SECURITY ADMINISTRATION 

Mr. Broadnax. Thank you. Chairman Mica and members of the 
committee, for the opportunity to speak to you today concerning the 
Department of Health and Human Services' implementation of the 
recent government shutdown. Mr. Chairman, this is my oral state- 
ment. I have submitted my full testimony for the record. 

The first casualty of a shutdown is the morale of our employees 
who were incorrectly termed "nonessential." I want to make the 
point clearly that all HHS employees are essential. During a lapse 
in appropriations, some employees may continue to work as a mat- 



23 

ter of law, others may not; a distinction made by law, not by the 
value of their work. 

The HHS shutdown plan was developed and implemented in ac- 
cordance with existing laws and guidelines contained in the legal 
opinions developed by the Department of Justice and 0MB guide- 
lines. Consequently, HHS determined that 33,600, or 55 percent, of 
our employees would continue to work during the shutdown, be- 
cause their work was excepted. HHS had to furlough approximately 
27,500, or 45 percent, because their work was not classified in one 
of the excepted categories. 

The Secretary and the Deputy Secretary kept HHS employees 
advised of key developments regarding a possible shutdown. The 
Secretary met personally with the heads of HHS operating divi- 
sions prior to the shutdown and assured them that she considered 
each and every one of our employees and the services that they 
provide to be essential. However, it was made clear to them that 
normal business would have to be suspended for the duration of 
the shutdown, consistent with legal requirements. 

I am proud of the efforts made by our shutdown team, who pre- 
pared a shutdown plan and managed that plan once 0MB officially 
announced a shutdown. Their efforts enabled HHS to proceed in an 
orderly manner to implement the shutdown. The team met fre- 
quently before and during the shutdown, and provided a vital focal 
point for information and guidance about the shutdown. 

It was necessary for the team to consider adjustments to the 
shutdown plan after initial implementation, since circumstances 
changed as the shutdown continued. For example, following the 
President's announcement that new Medicare beneficiaries should 
be enrolled during the shutdown, HHS identified employees of the 
Health Care Financing Administration, HCFA, who provided these 
services, and prepared to call them back to work. 

What about the costs of shutdown? They are extremely difficult 
to determine. Besides employee morale, we know that roughly $5 
million a day was lost due to HHS wages and rent. But there were 
significant nonpersonnel costs to the shutdown, as well. Each day 
we had to turn away 10,000 new Medicare applicants. New pa- 
tients could not be accepted into clinical research at the NIH clini- 
cal center; an average of 170 patients enter each week. The Cen- 
ters for Disease Control ceased disease surveillance; therefore, in- 
formation about the spread of disease, such as the flu and AIDS, 
was unavailable. 

The shutdown gave a holiday to deadbeat dads, since we had to 
shut down the parent locator service to which is referred, on aver- 
age, 15,000 to 20,000 cases per day. Hotline calls to the NIH con- 
cerning diseases could not be answered, and calls to our Inspector 
General concerning fraud and abuse could not be referred. 

Fortunately, the effects of the shutdown did not have an impact 
on some of our customers. For example, the Medicaid and Aid to 
Families With Dependent Children programs were already funded 
for the first quarter, prior to shutdown, from advanced appropria- 
tions, and Medicare claims were paid from trust funds, which were 
not affected by the shutdown. But these Medicare claims were paid 
by contractors who could not be paid during the shutdown and who 



24 

would have to cease Medicare payments if their cash ran out due 
to a longer hiatus. 

The impact of another shutdown on December 15 would be sub- 
stantially worse. We would have all the same problems that we en- 
countered in November, but we would add to them the lack of 
available funding for Medicaid, AFDC, and foster care, and all the 
other programs that are due to be funded for the second quarter 
on January 1, 1996. These grants are prepared and then awarded 
on January 1. This affects approximately 4,500 grant awards, total- 
ing more than $28 billion. 

Clearly, shutdown of the government is in no one's interest. The 
public is left without services that affect the most vulnerable 
among us. States are left to support a myriad of services that they 
cannot afford alone. Contractors providing excepted services, such 
as Medicare claims payment, are left in the position of either float- 
ing the government through the crisis or suspending payments. 

And employees are told they cannot come to work and do their 
jobs providing services, tracking diseases, and caring for the elderly 
in the people's department, simply because their job does not meet 
the legal definition of an excepted function. 

I am sure you will agree that these costs are simply too high for 
the country to bear, and therefore we must do all within our power 
to avoid another shutdown. 

Thank you, Mr. Chairman. I would be happy to answer any ques- 
tions the committee may have. 

[The prepared statement of Mr. Broadnax follows:! 



25 



TESTIMONY OF 

DR. WALTER BROADNAX, DEPUTY SECRETARY, 

DEPARTMENT OF HEALTH AND HUMAN SERVICES 

BEFORE THE HOUSE GOVERNMENT REFORM AND OVERSIGHT 

SUBCOMMITTEE ON CIVIL SERVICE 

HEARING ON HHS IMPLEMENTATION OF THE GOVERNMENT-WIDE SHUTDOWN 

DECEMBER 6, 1995 



THANK YOU CHAIRMAN MICA AND MEMBERS OF THE COMMITTEE FOR THE OPPORTUNITY TO 
SPEAK TO YOU TODAY CONCERNING THE DEPARTMENT OF HEALTH AND HUMAN SERVICES 
IMPLEMENTATION OF THE RECENT GOVERNMENT-WIDE SHUTDOWN WHICH RESULTED IN THE 
FURLOUGH or ::3,000 FEDERAL V. JRKERS WHO PROVIDE VITAL SERVICES TO THE AMERICAN 
PEOPLE. 

THE FIRST CASUALTY OF A SHUTDOWN IS MORALE. ESPECIALLY THE MORALE OF OUR 
EMPLOYEES WHO WERE INCORRECTLY TERMED "NON-ESSENTIAL". BEFORE TURNING TO SOME 
OF THE SPECIFICS OF THE HHS IMPLEMENTATION, I WANT TO MAKE THE POINT TFL\T ALL HHS 
EMPLOYEES ARE ESSENTIAL. DURING A LAPSE IN APPROPRIATIONS SOME EMPLOYEES MAY 
CONTINUE WITH THEIR WORK AS A MATTER OF LAW; OTHERS MAY NOT. BUT IT IS A 
DISTINCTION MADE BY LAW, NOT BY THE VALUE OF THEIR WORK. 

OUR FURLOUGHED EMPLOYEES WHO CONTROL AND PREVENT DISEASE ARE ESSENTIAL; 

OUR FURLOUGHED EMPLOYEES WHO ISSUE AND MONITOR HEAD START GRANTS ARE 

ESSENTIAL; 

OUR FURLOUGHED EMPLOYEES WHO INVESTIGATE MEDICARE FRAUD ARE ESSENTIAL. 

ALL OF OUR EMPLOYEES ARE ESSENTIAL. THE LAWS AFFECTING SHUTDOWN WILL ALLOW 
SOME TO WORK AND OTHERS, I REGRET, WILL NOT BE ALLOWED TO WORK BY LAW. 



26 



PAGE 2 



THE HHS SHUTDOWN PLAN WAS DEVELOPED AND IMPLEMENTED IN ACCORDANCE WITH 
EXISTING LAWS AND GUIDELINES CONTAINED IN THE LEGAL OPINIONS DEVELOPED BY THE 
DEPARTMENT OF JUSTICE AND OMB GUIDANCE. FOLLOWING THESE REQUIREMENTS, HHS 
DETERMINED THAT 33.600 OR 55% OF OUR EMPLOYEES WOULD CONTINUE TO WORK DURING 
THE SHUTDOWN BECAUSE THEIR WORK WAS "EXCEPTED": 

12,300 CONTINUED TO WORK BECAUSE THEY WERE PROVIDING EITHER DIRECT HEALTH 

CARE OR PERFORMING ACTIVITIES INVOLVING THE IMMINENT THREAT TO SAFETY OF 

HUMAN LIFE. THIS INCLUDES, FOR EXAMPLE, OUR NATIONAL INSTITUTES OF HEALTH 

(NIH) CLINICAL CENTER EMPLOYEES AND OUR INDL\N HEALTH SERVICE EMPLOYEES IN 

THEIR HOSPITALS AND CLINICS. 

1 1,000 CONTINUED TO WORK BECAUSE THEIR PROGRAMS AND SALARIES WERE NOT 

AFFECTED BY A LAPSE IN APPROPRIATIONS (THIS IS PRIMARILY MADE UP OF 

EMPLOYEES IN THE FOOD AND DRUG ADMINISTRATION WHOSE APPROPRJATIONS WERE 

ENACTED IN THE AGRICULTURE BILL. OTHER EXAMPLES INCLUDE THE AGENCY FOR 

TOXIC SUBSTANCES AND DISEASE REGISTRY (ATSDR) EMPLOYEES FUNDED BY THE 

SUPERFUND. 

5,000 CONTINUED TO WORK BECAUSE THEY HOLD OFFICES ESTABLISHED BY LAW 

(PREDOMINANTLY MEMBERS OF THE PUBLIC HEALTH SERVICE COMMISSIONED CORPS). 

3,000 CONTINUED TO WORK BECAUSE THEY WERE PERFORMING ACTIVITIES INVOLVING 

THE IMMINENT THREAT TO PROTECTION OF PROPERTY. THIS INCLUDES, FOR EXAMPLE, 

THE PROTECTION OF OUR ONGOING MEDICAL EXPERIMENTS AND OUR LAB ANIMAL 

CARETAKERS IN THE NIH. 

2,300 CONTINUED TO WORK TO CARRY OUT THE ACTIVITIES REQUIRED FOR ORDERLY 



27 



PAGE 3 



SHUTDOWN. EXAMPLES OF THESE ACTIVITIES ARE BUDGET, FINANCIAL, AND LEGAL 
OPERATIONS NECESSARY DURING THE HL\TUS. 

HHS HAD TO FURLOUGH APPROXIMATELY 27,500 OR 45% BECAUSE THEIR WORK WAS NOT 
CLASSIFIED IN ONE OF THE ABOVE "EXCEPTED" CATEGORIES. 

THROUGH A SERIES OF NEWSLETTERS, ELECTRONIC MAIL, AND OFFICE TO OFFICE VISITS, THE 
SECRETARY AND THE DEPUTY SECRETARY KEPT HHS EMPLOYEES ADVISED OF KEY 
DEVELOPMENTS REGARDING A POSSIBLE SHUTDOWN AND OF THE PRESIDENT'S COMMITMENT 
TO WORK WITH CONGRESS ON A BUDGET BILL THAT WOULD BE BENEFICLVL TO THE AMERICAN 
PEOPLE. THE SECRETARY MET PERSONALLY WITH THE HEADS OF HHS OPERATING DIVISIONS 
PRIOR TO THE SHUTDOWN AND ASSURED THEM THAT SHE CONSIDERED EVERY ONE OF OUR 
EMPLOYEES AND THE SERVICES THAT THEY PROVIDE TO BE ESSENTL\L. HOWEVER, IT WAS 
MADE CLEAR TO THEM THAT NORMAL BUSINESS WOULD HAVE TO BE SUSPENDED FOR THE 
DURATION OF THE SHUTDOWN CONSISTENT WITH LEGAL REQUIRENffiNTS. THEY WERE ALSO 
REMINDED OF THE PENALTIES ASSOCL\TED WITH LACK OF ADHERENCE TO SHUTDOWN 
GUIDELINES; NAMELY, THAT THE OBLIGATION OF FUNDS IN ADVANCE OF APPROPRIATIONS 
(EXCLUDING THE EXCEPTIONS DISCUSSED ABOVE) IS A VIOLATION OF THE ANTIDEFICIENCY 
ACT, WITH PENALTIES RANGING FROM ADVERSE PERSO^INEL ACTIONS TO FINES AND 
IMPRISONMENT.' 



'TITLE 31, SECTION 1350 OF THE U.S. CODE READS: AN OFFICER OR EMPLOYEE OF THE 
UNITED STATES GOVERNMENT OR OF THE DISTRICT OF COLUMBIA GOVERNMENT KNOWINGLY 
AND WILLFULLY VIOLATING SECTION 1341(A) OR 1342 OF THIS TITLE SHALL BE FINED 
NOT MORE THAN $5,000, IMPRISONED FOR NOT MORE THAN 2 YEARS, OR BOTH. 



28 



PAGE 4 



I AM PROUD OF THE EFFORTS MADE BY OUR SHUTDOWN TEAM, CONVENED BY THE ASSISTANT 
SECRETARY FOR MANAGEMENT AND BUDGET AND DEPUTY CFO, WHO CARRIED OUT THE TASK 
OF PREPARING A SHUTDOWN PLAN AND MANAGING THAT PLAN ONCE 0MB OFFICIALLY 
ANNOUNCED THE SHUTDOWN. THEIR EFFORTS ENABLED HHS TO PROCEED IN AN ORDERLY 
AND EFFICIENT MANNER TO NOTIFY AFFECTED EMPLOYEES AND TO IMPLEMENT THE 
SHUTDOWN WITHIN THE THREE HOURS SPECIFIED IN OMB GUIDELINES. THE TEAM, WHICH 
CONSISTED OF SENIOR MANAGEMENT OFFICIALS IN LEGAL, HUMAN RESOURCES, 
PROCUREMENT AND GRANTS POLICY, FINANCE AND OTHER KEY MANAGEMENT AREAS OF THE 
DEPARTMENT, MET FREQUENTLY BEFORE AND DURING THE SHUTDOWN. THE TEAM PROVIDED 
A FOCAL POINT FOR INFORMATION ABOUT THE SHUTDOWN AND WORKED CLOSELY WITH 
DESIGNATED SENIOR MANAGEMENT OFFICIALS ACROSS THE VARIOUS OPERATING AND STAFF 
DIVISIONS, INCLUDING REGIONAL OFFICIALS, WHO COORDINATED INFORMATION THROUGH 
OUR OFFICE OF INTERGOVERNMENTAL AFFAIRS. 

IT WAS NECESSARY FOR THE TEAM TO CONSIDER ADJUSTMENTS TO THE SHUTDOWN PLAN 
AFTER INITL^L IMPLEMENTATION. SINCE CIRCUMSTANCES CHANGED AS THE SHUTDOWN 
CONTINUED, WE HAD TO EVALUATE ADJUSTMENTS TO THE NUMBER OF EXCEPTED EMPLOYEES. 
FOR EXAMPLE, FOLLOWING THE PRESIDENT'S ANNOUNCEMENT THAT AGENCIES SHOULD 
REVIEW THEIR SHUTDOWN PLANS IN LIGHT OF THE UNPRECEDENTED LENGTH OF THE 
SHUTDOWN, IT WAS DETERMINED THAT NEW MEDICARE BENEFICIARIES SHOULD BE ENROLLED 
DURING THE SHUTDOWN. HHS IDENTIFIED EMPLOYEES OF THE HEALTH CARE FINANCING 
ADMINISTRATION (HCFA) WHO PROVIDED THESE SERVICES AND PREPARED TO CALL THEM 
BACK TO WORK. ALSO, WE WERE PREPARED TO BRING BACK SEVERAL EMPLOYEES TO OUR 
PERRY POINT MEDICAL DEPOT TO FILL MEDICAL SUPPLY ORDERS FOR OUR INDIAN HEALTH 
SERVICE HOSPITALS. HOWEVER, THE AGREEMENT REACHED BETWEEN THE PRESIDENT AND 



29 



PAGE 5 



CONGRESS TO END THE SHUTDOWN ON NOVEMBER 20 MADE IMPLEMENTATION OF THESE 
ACTIONS UNNECESSARY. HAD THE AGREEMENT NOT BEEN REACHED AT THAT TIME, 
APPROXIMATELY 100 EMPLOYEES WOULD HAVE BEEN RETURNED TO DUTIES THAT, DUE TO 
THE PROLONGED SHUTDOWN, HAD DEVELOPED INTO SAFETY OF HUMAN LIFE OR PROPERTY 
STATUS. 

WHAT ABOUT THE COSTS OF SHUTDOWN? THEY ARE EXTREMELY DIFFICULT TO DETERMINE. 
BESIDES EMPLOYEE MORALE, WE KNOW THAT ROUGHLY $5 MILLION A DAY WAS LOST DUE TO 
HHS WAGES AND RENT. BUT THERE WERE SIGNIFICANT NON-PERSONNEL COSTS TO THE 
SHUTDOWN AS WELL: 

EACH DAY WE HAD TO TURN AWAY 10,000 NEW MEDICARE APPLICANTS; 

NEW PATIENTS COULD NOT BE ACCEPTED INTO CLINICAL RESEARCH AT THE NIH 
CLINICAL CENTER (AN AVERAGE OF 170 PATIENTS ENTER EACH WEEK). 

THE CENTERS FOR DISEASE CONTROL CEASED DISEASE SURVEILLANCE. THEREFORE, 
INFORMATION ABOUT THE SPREAD OF DISEASE SUCH AS THE FLU AND AIDS WAS 
UNAVAILABLE. 

THE SHUTDOWN GAVE A HOLIDAY TO "DEADBEAT" DADS SINCE WE HAD TO SHUT 
DOWN THE PARENT LOCATOR SERVICE TO WHICH IS REFERRED, ON AVERAGE, 15-20 
THOUSAND CASES PER DAY. 



40-190 97 - 2 



30 



PAGE 6 



HOT LINE CALLS TO THE NIH CONCERNING DISEASES COULD NOT BE ANSWERED AND 
CALLS TO OUR INSPECTOR GENERAL CONCERNING FRAUD AND ABUSE COULD NOT BE 
REFERRED. 

FORTUNATELY, THE EFFECTS OF THE SHUTDOWN DID NOT HAVE AN IMPACT ON SOME OF OUR 
CUSTOMERS. FOR EXAMPLE, THE MEDICAID AND AID TO FAMILIES WITH DEPENDENT 
CHILDREN PROGRAMS WERE ALREADY FUNDED FOR THE FIRST QUARTER PRIOR TO SHUTDOWN 
FROM ADVANCE APPROPRL\TIONS AND MEDICARE CLAIMS WERE PAID FROM TRUST FUNDS 
WHICH WERE NOT AFFECTED BY THE SHUTDOWN. BUT THESE MEDICARE CLAIMS WERE PAID 
BY CONTRACTORS WHO COULD NOT BE PAID DURING THE SHUTDOWN AND WHO WOULD HAVE 
TO CEASE MEDICARE PAYMENTS IF THEIR CASH RAN OUT DUE TO A LONGER HIATUS. 

OTHER PROGRAMS HAD RECEIVED SMALL GRANTS UNDER THE TERMS OF THE FIRST 
CONTINUING RESOLUTION TO TIDE THEM OVER THE FUNDING CRISIS. BUT IF THE SHUTDOWN 
HAD CONTINUED -- OR IF IT OCCURS AGAIN -- MANY OF THOSE SERVED BY THESE PROGRAMS 
- THE VERY YOUNG, THE AGED, THE DISABLED - WOULD BE DENIED CRITICALLY-NEEDED 
SERVICES. FOR EXAMPLE, ON DECEMBER 1, 1995, APPROXIMATELY 122 HEAD START 
PROGRAMS, SERVING 60,000 CHILDREN, WERE SCHEDULED TO RECEIVE THEIR GRANTS. IN THE 
ADMINISTRATION ON AGING PROGRAMS WHICH PROVIDE COMPREHENSIVE SERVICES, 
INCLUDING MEALS, TO MANY SENIOR CITIZENS, SOME STATES INDICATED THAT THEY WOULD 
PROBABLY HAVE HAD TO CLOSE THEIR SERVICE DELIVERY PROGRAMS IF THE SHUTDOWN HAD 
CONTINUED MUCH LONGER. AT NIH, BESIDES DISRUPTION TO THE MANY RESEARCH RENEWAL 
GRANTS, WE ESTIMATE THAT AS MANY AS 2,000 NEW AND COMPETING AWARDS SCHEDULED 
TO BE FUNDED ON DECEMBER 1, 1995 WOULD HAVE HAD TO BE DELAYED UNTIL FUNDS WERE 
AVAILABLE. OBVIOUSLY, THE LONGER THE SHUTDOWN, THE MORE DISASTROUS THE EFFECTS 



31 



PAGE 7 

WOULD BE ON THESE PROGRAMS WHICH AFFECT THE MOST VULNERABLE POPULATIONS. 

THE IMPACT OF THE NOVEMBER SHUTDOWN WAS BAD ENOUGH; BUT THE IMPACT OF ANOTHER 
SHUTDOWN ON DECEMBER 15 WOULD BE SUBSTANTIALLY WORSE. WE WOULD HAVE ALL THE 
SAME PROBLEMS THAT WE ENCOUNTERED IN NOVEMBER, BUT WE WOULD ADD TO THEM THE 
LACK OF AVAILABLE FUNDING FOR MEDICAID, AFDC, AND FOSTER CARE, AND ALL THE OTHER 
PROGRAMS THAT ARE DUE TO BE FUNDED FOR THE SECOND QUARTER ON JANUARY I, 1996. 
THESE GRANTS ARE PREPARED AND THEN AWARDED ON JANUARY I. THIS AFFECTS 
APPROXIMATELY 4,500 GRANT AWARDS TOTALING MORE THAN $28 BILLION DOLLARS. 
EXAMPLES OF VULNERABLE POPULATIONS IMPACTED INCLUDE: 13 MILLION AFDC RECIPIENTS; 
273,000 FOSTER CARE CHILDREN; OVER 100,000 CHILDREN RECEIVING ADOPTION ASSISTANCE 
SERVICES; AND OVER 100,000 HEAD START KIDS. 

IN ADDITION, WE ARE CONCERNED ABOUT THE LONG RANGE IMPACT ON OUR EMPLOYEES. 
DURING THE NOVEMBER SHUTDOWN, WE PROVIDED OUR EMPLOYEES WITH INFORMATION ON 
APPLYING FOR UNEMPLOYMENT COMPENSATION IN ORDER TO COVER POTENTL\L CASH-FLOW 
PROBLEMS. IF A LENGTHY SHUTDOWN WERE TO OCCU" IN MID-DECEMBER, EXTENSIVE 
EFFORTS WOULD HAVE TO BE MADE TO ADVISE EMPLOYEES ABOUT ALTERNATIVE 
EMPLOYMENT AND THE AVAILABILITY OF UNEMPLOYMENT BENEFITS. 

CLEARLY, SHUTDOWN OF THE GOVERNMENT IS IN NO ONE'S INTERESTS. THE PUBLIC IS LEFT 
WITHOUT SERVICES THAT AFFECT THE MOST VULNERABLE AMONG THEM. STATES ARE LEFT 
TO SUPPORT A MYRL\D OF SERVICES THAT THEY CANNOT AFFORD ALONE. CONTRACTORS 
PROVIDING EXCEPTED SERVICES SUCH AS MEDICARE CLAIMS PAYMENT ARE LEFT IN THE 
POSITION OF EITHER FLOATING THE GOVERNMENT THROUGH THE CRISIS OR SUSPENDING 
PAYMENTS. AND EMPLOYEES ARE TOLD THEY CANNOT COME TO WORK AND DO THEIR JOBS 



32 



PAGES 



PROVIDING SERVICES, TRACKING DISEASES, AND CARING FOR THE ELDERLY IN THE "PEOPLES- 
DEPARTMENT SIMPLY BECAUSE THEIR JOB DOES NOT MEET THE LEGAL DEFINITION OF AN 
"EXCEPTED" FUNCTION. I'M SURE YOU WILL AGREE THAT THESE COSTS ARE SIMPLY TOO 
HIGH FOR THE COUNTRY TO BEAR AND THEREFORE, WE MUST DO ALL WITHIN OUR POWER TO 
AVOID ANOTHER SHUTDOWN. 

THANK YOU MR. CHAIRMAN AND I WOULD BE HAPPY TO ANSWER ANY QUESTIONS THE 
COMMITTEE MAY HAVE. 



33 

Mr. Mica. I thank you, Dr. Broadnax. We are going to withhold 
questions till we finish the panel. 

I would like to recognize now Mr. Dwight Robinson, who is acting 
Deputy Secretary of the Department of Housing and Urban Devel- 
opment. 

Mr. Robinson. Thank you, Mr. Chairman and good morning. 

I want to thank you for this opportunity to discuss the planning, 
implementation, and oversight of the recent shutdown of the gov- 
ernment, including the Department of Housing and Urban Develop- 
ment. We believe that our actions followed the law, directions from 
0MB, the Department of Justice, and what was necessary under 
the regrettable circumstances. We are pleased to be able to answer 
your questions and to discuss with your committee how we thought 
through the process and how the plan unfolded. 

Like most Federal agencies, HUD had experienced short-term 
shutdowns before, although the most recent lasted just a half day 
in 1990. In compliance with a series of 0MB bulletins issued over 
the last 15 years, we had in place general guidance and procedures 
for implementing a shutdown. That possibility grew stronger late 
in the summer. In August and early September, the Department 
undertook a thorough legal review of opinions from the Department 
of Justice, and we also examined 0PM instructions and 0MB guid- 
ance to update and add detail to our plan for operations during a 
funding lapse. 

The plan was submitted and reviewed by 0MB in September. 
The plan is conceptual rather than administrative. It reviews each 
of the programs for which the Department is responsible, in terms 
of its legal authority to continue activities under the applicable 
statutes. 

What we found was that the length of the funding hiatus really 
determines the work that can be done. In a 1- or 2-day lapse in 
funding, we require only minimal emergency staff to protect life 
and property, and provide for an orderly shutdown of activities. 
But a longer shutdown would require more HUD staff to perform 
activities necessary to protect life and property. 

In October, we developed a contingency plan containing the ad- 
ministrative procedures and personnel guidance for implementing 
a shutdown. Employees were told of the possibility of a shutdown, 
advised of their personnel rights, and told how a furlough would 
affect benefits and emplojmient. Employees, over a 2-week period, 
were provided with materials. 

As we neared the critical date, assistant secretaries and program 
managers were asked to provide specific plans for a short-term 
shutdown, keeping only those few employees who would be protect- 
ing life and property or conducting the shutdown itself. 

On Monday before the shutdown, November 13, through a head- 
quarters public address system and a national conference call, the 
Secretary addressed all HUD staff, explaining the impending fund- 
ing problems and the possibility of a furlough. 

The shutdown began on the morning of Tuesday, November 14. 
0MB provided the official notice that employees should be released. 
Those employees who were excepted, per the plan, were provided 
with a letter containing the emergency conditions under which they 



34 

were retained. All other employees were provided with a furlough 
letter and other personnel guidance. 

Once again, the Secretary informed employees by conference call, 
facsimile transmission, and over the public address system in head- 
quarters of the shutdown. The shutdown was executed orderly. 
About 400 HUD employees were excepted during this period, and 
about 11,000 were furloughed. Consistent with our long-term plans, 
during the week we determined that we would need to bring back 
on board additional furloughed employees, if the funding lapse con- 
tinued beyond a week or so. 

For example, HUD provides operating subsidies and moderniza- 
tion funds to 3,400 local housing agencies, who in turn provide pub- 
lic housing and services to 1.4 million low-income households. 
These funds are drawn down by public housing authorities on a 
daily basis, as needed. Additional HUD public housing employees 
would have been needed to provide these funds of about $25 million 
per day. 

On Thursday, November 16, discussions were held on providing 
additional staff with 0MB. By the weekend, we had a plan to in- 
crease emergency staff to meet critical needs in public business. As 
it happened, the crisis was over before this next step took place. 

We have found that planning for contingencies is not a static 
process when planning for an event that is unknown. Longer shut- 
downs require a continuous assessment of staffing in order to 
gauge when the absence of providing some government function 
would cause an impending threat to life and property. We believe 
that our planning process worked the way it should have worked, 
within the law and the regulations, and with enough flexibility to 
adjust to circumstances. 

Thank you for this opportunity to discuss these matters. We have 
provided material to your staff in response to your specific request 
for documentation, and I would be happy to answer your questions. 

Mr. Mica. Thank you. 

I now recognize Thomas Glynn, the Deputy Secretary of the De- 
partment of Labor. 

Mr. Glynn. Thank you, Mr. Chairman. 

We appreciate this opportunity to appear before the committee 
this morning to discuss the planning and implementation of the 
shutdown plans at the Labor Department. I, too, am going to sum- 
marize my statement which will be submitted for the record. 

I thought it might be useful to just spend a minute on the histor- 
ical perspective of the Department on the question of shutdowns. 
The Department of Labor has developed shutdown plans regularly 
for more than a decade. Since 1985, only in 2 years, fiscal year 
1989 and fiscal year 1995, did we have an appropriation on October 

Therefore, in 10 out of the 12 most recent years, we have had 
to prepare for the possibility of a shutdown. Some years we have 
had a continuing resolution on October 1, and other years we 
haven't. This is probably particularly related to the history of the 
Labor/HHS/Education appropriation and sometimes the difficulties 
it has had getting through both Houses. 

The basis for the Department of Labor plan, as it has been re- 
vised on an almost annual basis, goes back to the guidance from 



35 

0MB in 1980, revised by Director Stockman in 1982, and the memo 
from Attorney General Civiletti in 1981. The Department of Labor's 
plan is actually published as a document entitled, "Suspension of 
Operations" Guidance. 

This document delineates the steps necessary to complete an or- 
derly shutdown. It requires each unit to develop a plan, and it re- 
quires each plan to have a listing of excepted employees in several 
categories: one, those who are in the category of protecting an im- 
minent threat to life and property; two, those in the category who 
manage mandatory benefit programs; three, those whose funding is 
not subject to annual appropriation; and, four, the support staff 
necessary to perform the above three functions. In addition, each 
unit is responsible for developing a list of employees essential to 
shut down the department on a temporary basis. 

In an effort to just touch on the questions which we were asked 
to address this morning, I would say, in terms of the process fol- 
lowed at the Department, we began with our published plan, as it 
has developed over the last 10 or 15 years, conducted an August 
review, received the memo from 0MB in late August, and commu- 
nicated to our agencies the need to develop plans by early Septem- 
ber. 

They were transmitted to 0MB in late September. A number of 
questions were raised by 0MB, and changes were made so that we 
had a final plan by the middle of November, which proposed 3,000 
excepted employees and 470 essential employees. 

On the question of the control agency guidance, I think we re- 
ceived approximately 10 communications from 0MB, 0PM, and the 
Justice Department between August 1 and mid-November. And I 
think, speaking for the Department of Labor, we found the 0MB 
to be cooperative and responsive to our questions, without trying 
to micromanage every decision that needed to be made at the De- 
partment of Labor. 

On the question of oversight, all the plans and modifications 
were reviewed by our Solicitor's Office, our Budget Office, and by 
0MB for the policy questions that they would raise. The informa- 
tion that we disseminated to our employees was similar to what 
you have heard from the Department of HHS and HUD. The costs 
to the Department of Labor we calculate at about $7.3 million, in 
payroll costs, for employees who did not work during that period. 

Mr. Chairman, that summarizes the Department of Labor shut- 
down plan and implementation. I thank you for the chance to ap- 
pear, and I would be happy to answer any questions or submit any 
further documentation that the committee might require. 

[The prepared statement of Mr. Glynn follows:] 



36 



STATEMENT OF THOMAS P. OLYMN 

DEPOTY SECRETARY OF LABOR 

BEFORE THE 

SOBCOMMITTEE ON CIVIL SERVICE 

COMMITTEE ON QOVERNMENT REFORM AND 

OVERSIGHT 

UNITED STATES HOOSE OF REPRESENTATIVES 

DECEMBER 6, 1995 



Mr. Chairman and Distinguished Members of the Subcommittee: 

I appreciate this opportunity to appear before the Committee 
to review our experience during the recent lapse in funding for 
the Department of Labor (DDL) . 

I believe that we did an effective job planning, managing 
and implementing the shutdown of the Department in mid-November 
while holding to a minimum the negative impacts these actions 
could have had on Ame^-ica's workers and their families. We also 
endeavored to minimize morale problems among the 17,000 employees 
in the Department. 

Historical Perspective 

DOL has regularly developed plans for more than a decade to 
address the possibility of funding interruptions. Since 1985, FY 
1989 and FY 1995 were the only two years when DOL had a full year 
appropriation enacted prior to the start of the fiscal year. 
Stated another way, DOL has not had a full-year appropriation on 
October 1 in 10 of the last 12 fiscal years. 

OMB issued broad guidance concerning a government shutdovm 



37 



in 1980 and revised it in 1982. That revision issued by 0MB 
Director David Stockman has been the basic building block for all 
shutdown plans and has been changed only slightly since then as 
noted below. This guidance relied heavily on Attorney General 
Civiletti's 1981 opinion regarding the Anti-deficiency Act. This 
opinion identified the types of operations that may continue and 
those that may not. 

For more than a decade, based on government-wide policy 
guidance such as the Stockman issuance, the Department has had in 
place a published procedure entitled. Continuing Resolution and 
Suspension of Operation Procedures . This guidance generally lays 
the foundation for the administrative control of funds, and 
specifically delineates the steps that need to be taken by 
Departmental staff — usually during the summer — to prepare for 
a funding interruption when it appears unlikely that funding will 
be enacted prior to October 1, the start of the fiscal year. The 
DOL policy requires that every Departmental agency develop a 
general contingency or shutdown plan for the suspension of 
operations if there is no DOL appropriation or continuing 
resolution enacted by October 1. The plans contain the following 
listings: 

o excepted employees, which includes (1) personnel recjuired 
to protect against imminent threat to life and property, (2) 
staff who are excepted by implication, such as all excepted 
employees in the Office of Workers Compensation Programs who 
are ensuring the continuation of FECA, Longshore, and Black 



38 



Lung benefits, funds for which remain legally available 
despite the lapse in annual appropriations, and (3) 
employees where the underlying funding for their mission is 
not controlled by the annual appropriation process. 

o employees performing the duties of closing the Department 
— building engineers, certain security staff, payroll, 
accounting personnel, and the staff who are required to 
phase down certain enforcement and grant programs. The 
Solicitor reviewed the DOL agencies' designations of 
excepted activities and the resulting staffing implications. 
This past August we conducted a review of previous funding 
interruptions and existing suspension of operations procedures 
and plans. We brought them up to date, and provided senior 
management with a detailed review of the law and previous 
experience. The Department worked with the central management 
agencies -- 0MB and 0PM -- to clarify existing requirements and 
obtain the latest information in these areas. 

In your letter of invitation, you requested that I respond 
to a series of questions. My testimony generally addresses these 
questions. 

I will begin with a brief chronology of the actions taken in 
this area by the Department prior to the suspension of 
operations. 



39 



Shutdown Plan Development 

On August 29, 1995, the Assistant Secretary for 
Administration and Management issued a memorandum directing all 
DOL agencies to prepare suspension of operations plans. The 
starting point was the Agency plans developed in prior years when 
a funding lapse was anticipated. Agency plans were required to 
contain a detailed list of all activities which are functions the 
agency is authorized by law to perform without regard to the 
availability of an appropriation. One list was required for 
excepted activities. A second list delineated the functions 
necessary for the orderly suspension of operations. The plans 
were also to include lists of employees performing excepted 
activities and lists of employees managing an orderly shutdown. 
Once again, agencies were asked to review the designation of 
excepted activities and to consult with the Solicitor regarding 
any proposed modifications. The Office of the Solicitor 
reviewed the DOL agencies' designations of excepted activities 
and the resulting staffing implications. Other issues such as 
notification to employees on furloughs, reporting to work, 
procedures for employees on travel, and for contractors were 
typically included in these plans. • 

To assist agencies in preparing their shutdown plans, the 
Assistant Secretary for Administration and Management, 
Solicitor's Office, the Office of Budget, and IX)L's Personnel 
Officer met with agency administrative officers to discuss 
various issues and concerns on how to proceed prior to and during 



40 



a government -wide shutdown. 

During the month of September, agencies submitted their 
plans for operations during a shutdown. These plans were 
reviewed, revised, compiled and sent to 0MB. 0MB reviewed and 
offered comments to ensure consistency across agencies. Those 
comments were considered and, along with continued internal 
review, resulted in modification of the plans. 

Agencies continued to revise their plans in consultation 
with the Solicitor and a revised plan was sent to 0MB on November 
17 which included approximately 3 , 000 employees in excepted 
activities and 470 employees for the orderly suspension of 
operations. 

Central Agency Guidance 

Formal guidance was received in the form of several 
docun.ents: 

On August 22, 1995, 0MB forwarded a revised Department of 
Justice opinion on shutdown activities resulting from the 1990 
amendment to the Antidef iciency Act. The opinion further details 
the necessary conditions to conclude that an activity meets the 
legal test of excepted activities. 

A November 9 directive (M-96-01) from 0MB Director Alice 
Rivlin updated Departments on recent developments and provided 
guidance regarding the implementation of an orderly suspension of 
operations. 

A Memorandum (M-96-03) was received from 0MB Director Alice 



41 



Rivlin on November 14 advising that funding for the period 
covered by the first continuing resolution had expired and that 
agencies were to implement close down plans. The DOL shutdown 
plan was implemented, non-excepted staff were placed in furlough 
status, and the Department began closing its operations. 

On November 16, the DOJ issued guidance concerning 
participation in congressional hearings during a shutdown. 

A memorandum from John A. Koskinen, 0MB 's Deputy Director 
for Management dated November 16, 1995, provided guidance to 
political appointees and other officials and their activities 
during periods of shutdown. 

Number and Functions of Excepted Employees/Types of Excepted 
Activities 

The suspension of operations plan for DOL specified that the 
number of employees urloughed was approximately 13,900 and that 
roughly 3,000 employees were designated as excepted and 470 were 
identified to perform and manage the orderly suspension of 
operations and continued to work. Examples of these functions 
include: 

> 2 00 OSHA staff to conduct safety enforcement in 
imminent danger situations, investigation of workplace 
fatalities, and reports of hazardous conditions presenting a 
high risk of serious physical harm in the near future. 

> 1,100 MSHA staff for targeted hazard specific and 
complaint based inspections of mines. 



42 



> 1,000 ESA staff for continuing Workers Compensation 
Programs and investigating emergencies. 

> And several hundred additional staff working to protect 
the assets of pension and welfare plans in imminent danger 
and other staff involved in certain enforcement and grant 
programs. 

The number of employees in these categories have not varied 
substantially over the years. 

In our initial suspension of operations plan submitted to 
OMB in late September, DOL had close to 4,200 personnel in 
excepted activities and performing functions in order to bring 
about an orderly suspension of operations. The final suspension 
of operations plans for DOL submitted to OMB on November 17, 1995 
reduced the number of employees designated by approximately 750. 
This was due to: 1) a reduction in management and administrative 
staff; and 2) the Solicitor's advice concerning the definition of 
types of activities deemed to be excepted. 

Shutdown Implementation Oversight 

Agencies requesting certain activities be considered 
excepted were required to submit their proposals to the Solicitor 
for review. The Assistant Secretary for Administration and 
Management met with DOL executive staff from the agencies to 
review the plans from the management point of view. The 
Solicitor reviewed the plans for consistency with the applicable' 
laws. 



43 



As I described earlier, 0MB reviewed the DOL plans to ensure 
consistency with plans of other agencies and suggested revisions 
which were incorporated into those plans. 

Inforaation Provided to Employees 

Employees were provided with continuous and extensive 
information concerning pay, benefits, employment outside the 
government, and unemployment benefits. We utilized newsletters 
and memoranda from the Secretary. Affected employees were sent 
furlough notices on November 16th. The notices explained when 
the furlough became effective, provided a hot-line telephone 
number to call for information, and provided additional 
information concerning unemployment compensation information, and 
grievance procedures. 

Shutdown Materials 

Copies of materials on shutdown that were provided to DOL 
employees will be supplied to the Committee separately. 

Shutdown Costs 

In terms of the costs associated with the DOL shutdown, 
approximately $7.3 million was paid to DOL employees that did not 
work during this period. There were other less significant costs 
such as postage for furlough notices totaling $8,000, and related 
printing, copy costs and paper, which cost an additional $3,900. 



44 



Assunptlons About the Length of sbutdovn 

The Department made no assumptions about the length of the 
shutdown. However, our plans recognized that one-time 
emergencies could occur and that we could need to recall the 
appropriate staff to respond to new circumstances threatening 
life and property. Therefore, the mix of employees could change 
at any point in time. 

Impact of Shutdown Length on Exempted Employees 

The Department's plans included contingencies as I have 
just described. Our plans did not need to be modified solely on 
the basis of the duration of shutdown. For example, the plans 
indicate that agencies would furlough most of the employees 
associated with bringing agency functions to an orderly 
suspension of operations when concluded. Thus as time 
progressed, the employee mix would change. 

Debt Ceiling and Shutdown 

A cash problem created by reaching the Federal borrowing 
limit would raise quite different questions that are best 
addressed by officials of the Treasury Department. 

This concludes my prepared statement Mr. Chairman. I would 
certainly be glad to answer any questions that you or other 
members of the Subcommittee may have. 



45 

Mr. Mica. Thank you. 

I now recognize George Mufioz, Assistant Secretary for Manage- 
ment and Chief Financial Officer of the Department of the Treas- 
ury. 

Mr. MUNOZ. Good morning, Mr. Chairman. 

I am pleased to be here, on behalf of Secretary Rubin, to testify 
on the Treasury Department's plans for and implementation of the 
recent partial shutdown of the Federal Government between No- 
vember 14 and November 19, 1995. I, too, will submit my formal 
presentation for the record and just want to highlight portions 
thereof. 

From the beginning. Treasury has approached this issue in a 
very methodical manner. Our process was managed taking into ac- 
count the interests of the American public and Treasury employees, 
within the legal parameters. This is not a matter that any of us 
looked forward to, but given that it was necessary, we made it run 
as smoothly as possible. 

To understand the impact of the shutdown it is important to 
keep in mind that the Treasury Department has 11 bureaus, all of 
which serve an important role in the overall government's respon- 
sibilities, with functions that are broad and critical to the Nation's 
well-being. 

One of the concerns that we identified in planning for the shut- 
down was the unfortunate misuse of the terms "essential" and 
"nonessential." We very much agree with the statements earlier 
made by Representative Morella on this matter. This terminology 
was not used in any of our shutdown plans. I know that I speak 
on behalf of the Secretary when I say that these are inappropriate 
terms that mistakenly convey a sense of relative importance among 
Federal employees. They perpetuate the false impression that some 
Federal workers perform jobs that are trivial or unnecessary. 

Every day Federal workers provide valuable service for the 
American taxpayer. Instead, our determinations of the work that 
can and cannot continue in the absence of appropriations are based 
on the Antideficiency Act's requirements and not on the basis of 
some abstract judgment of workers' value. 

In August, we put together a review team that examined all of 
the plans from our bureaus to ensure that those plans were consist- 
ent with the applicable legal principles that were well thought out 
and clearly communicated. The Treasury Department performed 
well only because in this review team we had representatives start- 
ing at the top with Secretary Rubin, myself, members of our CFO 
Organization, members of the General Counsel under Ed Knight, 
our Personnel Office, and our general managers. 

It was due to this review team that we were able to review our 
bureaus' plans and give guidance to them so that their plans would 
be complete and well communicated to all employees. Once the 
shutdown was ordered by 0MB, we used the network of bureau 
shutdown coordinators which we had established and the bureau 
heads to instruct them to begin implementation of their shutdown 
plans. The bureaus and the department began issuing furlough no- 
tices and ordered nonexcepted employees to begin to shut down of 
their operations and go home once that process was completed. 



46 

We established a hotline, which was in effect on the day of the 
shutdown, with the purpose of informing all Treasury employees of 
the status of the shutdown. This hotline proved effective and per- 
mitted questions to be answered. During the shutdown, our depart- 
mental review team continued to meet to evaluate exception re- 
quests that became necessary as circumstances changed. 

Through conference calls initiated twice daily between the de- 
partment review team and the shutdown coordinators in the bu- 
reaus, we provided continuous communication to the bureaus on 
the status of appropriations action, as well as answering oper- 
ational questions. We also used this team to ensure that depart- 
mental operations were back to normal as soon as possible after 
the Treasury Department shutdown was ended. 

In general, the system that was put in place worked extremely 
well and facilitated rapid and coordinated communications with 
Treasury's 154,000 employees, easing, to the extent possible, the 
negative effects on morale, and minimizing the negative impacts of 
the shutdown on productivity. 

Mr. Chairman, you have provided the Secretary with a list of 
questions to be answered, and the Department's written answers to 
these questions address in more detail our management of the 
process. We will be providing these answers for the record; we hope 
that you will find them complete. Please have your staff get back 
to us if there are any further extensions on those answers. 

This concludes my oral remarks. 

[The prepared statement of Mr. Munoz follows:] 



47 



NOT TO BE RfXEASED BEFORE 
9:00 AM ON DECEMBER 6, 1995 



STATEMENT OF 

GEORGE MUSOZ 

ASSISTANT SECRETARY FOR MANAGEMENT AND CFO 

DEPARTMENT OF THE TREASURY 

BEFORE THE 
HOUSE CIVIL SERVICE SUBCOMMITTEE 

DECEMBER 6, 1995 

MR. CHAIRMAN, I AM PLEASED TO BE HERE ON BEHALF OF THE 
SECRETARY TO TESTIFY ON THE TREASURY DEPARTMENT'S PLANS FOR AND 
IMPLEMENTATION OF THE RECENT PARTIAL SHUTDOWN OF THE FEDERAL 
GOVERNMENT BETWEEN NOVEMBER 14 AND NOVEMBER 19, 1995. FROM THE 
BEGINNING. TREASURY HAS APPROACHED THIS ISSUE IN A VERY METHODICAL 
MANNER. OUR PROCESS WAS MANAGED TAKING INTO ACCOUNT THE INTEREST 
OF THE AMERICAN PUBLIC AND TREASURY EMPLOYEES WITHIN THE LEGAL 
CONFINES. THIS IS NOT A MATTER THAT ANY OF US LOOKED FORWARD TO, BUT, 
GIVEN ITS NECESSITY. IT RAN AS SMOOTHLY AS POSSIBLE. 

TO BEST UNDERSTAND THE IMPACT OF THE SHUTDOWN, IT'S IMPORTANT 
TO UNDERSTAND THAT THE TREASURY DEPARTMENT SERVES AN IMPORTANT 
ROLE IN THE OVERALL GOVERNMENT'S RESPONSmiUTIES, WITH FUNCTIONS 
THAT ARE BROAD AND CRmCAL TO THE NATION'S WELL-BEING. THESE 
FUNCTIONS INCLUDE SUCH IMPORTANT ONES AS: 

♦ COLLECTING THE PROPER AMOUNT OF TAXES; 

♦ DISBURSING PAYMENTS TO OVER 100 MILLION CITIZENS 
ANNUALLY; 

♦ ENFORCING LAWS RELATED TO TARIFF AND TRADE, SMUGGLING OF 
DRUGS AND CONTRABAND; 

♦ PROTECTION OF THE PRESIDENT, VICE PRESIDENT AND OTHERS; 



48 



• MANUFACTURING OF CURRENCY AND COINS, AND 

♦ REGULAnON OF BANKS A>JD THRIFT INSTITUTIONS. 

ONE OF THE CONCERNS THAT WE IDENTIFIED IN PLANNING FOR THE 
SHUTDOWN WAS THE UNFORTUNATE MISUSE OF THE TERMS "ESSENTIAL" AND 
"NON-ESSENTL\L " THIS TERMINOLOGY WAS NOT USED IN ANY OF OUR 
SHUTDOWN PLANS I KNOW THAT I SPEAK ON BEHALF OF THE SECRETARY 
WHEN I SAY THAT THESE ARE INAPPROPRIATE TERMS THAT MISTAKENLY 
CONVEY A SENSE OF RELATIVE IMPORTANCE AMONG FEDERAL EMPLOYEES. 
THEY PERPETUATE THE FALSE IMPRESSION THAT SOME FEDERAL WORKERS 
PERFORM JOBS THAT ARE TRIVIAL OR UNNECESSARY. EVERY DAY, FEDERAL 
WORKERS PROVIDE VALUABLE SERVICE FOR THE AMERICAN TAXPAYER. 
INSTEAD. OUR DETERMINATIONS OF THE WORK THAT CAN AND CANNOT 
CONTINUE IN THE ABSENCE OF APPROPRIATIONS ARE BASED ON THE ANTI- 
DEFICIENCY ACT'S REQUIREMENTS, AND NOT ON THE BASIS OF SOME 
ABSTRACT JUDGEMENT OF WORKERS' "VALUE." SOME OF THE MOST 
IMPORTANT WORK OF THE DEPARTMENT WAS CONSIDERED "NON-EXCEPTED" 
BECAUSE A DELAY IN HS PERFORMANCE WOULD NOT IMMEDIATELY 
JEOPARDIZE LIFE AND PROPERTY. 

OUR PLANNING PROCESS STARTED BACK IN JUNE 1995, WHEN IT BECAME 
APPARENT THAT WE SHOULD BEGIN PLANNING FOR A POSSIBLE LAPSE IN 
APPROPRIATIONS AFTER OCTOBER 1 OUR PREVIOUS GUIDANCE WAS ISSUED IN 
1991 . INITIALLY, WE MODIFIED AND EXPANDED THIS EARLIER GUIDANCE TO 
PROVIDE AS MUCH INFORMATION AS POSSIBLE TO OUR BUREAUS IN ORDER FOR 
THEM TO DEVELOP THEIR OWN PLANS I ISSUED THAT GUIDANCE TO ALL 
TREASURY BUREAUS ON JULY 1 7, 1995. REQUESTING THAT THE BUREAUS 
SUBMn THEIR UPDATED SHUTDOWN PLANS TO THE DEPARTMENT IN AUGUST 
FOR REVIEW. 



49 



IN AUGUST. WE PUT TOGETHER A REVIEW COMMITTEE TO EXAMINE ALL 
BUREAU PLANS AND TO ENSURE THAT THOSE PLANS WERE CONSISTENT WITH 
APPUCABLE LEGAL PRINCIPLES, WELL THOUGHT OUT. AND CLEARLY 
C(»1MUNTCATED. IN ADDmON, JUSTMCATIONS FOR "EXCEPTED" POSmONS 
AND FUNCTIONS WERE REVIEWED FOR CONSISTENCY WTTH THE ATTORNEY 
GENERAL'S (AG) 1981 OPINION, AS UPDATED BY THE 1995 OPINION BUREAU 
PLANS ALSO WERE REQUIRED TO ADDRESS THE DIFFERING IMPACTS OF SHORT- 
TERM AND LONG-TERM SHUTDOWNS, AND PROVIDE FOR PHASING OVER THE 
COURSE OF THE SHUTDOWN. 

THE REVIEW COMMTITEE CONDUCTED FTS REVIEW IN AUGUST AND 
EARLY SEPTEMBER, NOTIFYING ME OF ITS FINDINGS. BASED ON THESE 
REVIEWS, WE BRIEFED THE SECRETARY AND OTHER TREASURY OFnCIALS ON 
THE TOTAL IMPLEMENTATION PLAN FOR THE DEPARTMENT. MEMORANDA 
WERE TRANSMITTED TO BUREAUS REQUESTING MODfflCATIONS, AS 
NECESSARY, AND/OR NOTIFYING THEM OF ACCEPTANCE OF THEIR SHUTDOWN 
PLANS. 

THE RESULTS OF THIS REVIEW WERE A PROCESS THAT FURLOUGHED 
APPROXIMATELY THREE OF EVERY FOUR TREASURY DEPARTMENT EMPLOYEES 
DURING THE NOVEMBER 4 TO 19 TIME FRAME. MANY OF THE REMAINING 
EMPLOYEES WERE COVERED BY OTHER FUNDING AUTHORITIES, SUCH AS 
REVOLVING FUNDS, AND ARE NOT SUBJECT TO THE ANNUAL APPROPRIATIONS 
PROCESS. 

ONCE THE SHUTDOWN WAS ORDERED BY 0MB. WE USED THE NETWORK 
OF BUREAU SHUTDOWN COORDINATORS AND BUREAU HEADS TO INSTRUCT 
THEM TO BEGIN IMPLEMENTATION OF THEIR SHUTDOWN PLANS. THE BUREAUS 
AND THE DEPARTMENT BEGAN ISSUING FURLOUGH NOTICES AND ORDERED 
"NON-EXCEPTED" EMPLOYEES TO BEGIN TO SHUTDOWN THEIR OPERATIONS 



50 



AND GO HOME ONCE THAT PROCESS WAS COMPLETED. THE SECRETARY 
PERSONALLY SPOKE AT A TOWN MEETING OF TREASURY EMPLOYEES THE DAY 
BEFORE THE SHUTDOWN TO ADDRESS EMPLOYEE CONCERNS AND QUESTIONS. 

A HOTLINE WAS PUT INTO EFFECT ON THE DAY OF THE SHUTDOWN WITH 
THE PURPOSE OF INFORMING ALL TREASURY EMPLOYEES OF THE STATUS OF 
THE SHUTDOWN. THIS HOTLINE PROVED EFFECTIVE AND PERMITTED 
QL'ESTIONS TO BE ADDRESSED. DURING THE SHUTDOWN, OUR DEPARTMENT AL 
REVIEW TEAM CONTINUED TO MEET TO EVALUATE EXCEPTION REQUESTS THAT 
BECAME NECESSARY AS CIRCUMSTANCES CHANGED. THROUGH CONFERENCE 
CALLS INITL\TED TWICE DAILY BETWEEN THE DEPARTMENTAL REVIEW TEAM 
AND THE SHUTDOWN COORDINATORS IN THE BUREAUS, WE PROVIDED 
CONTINUOUS COMMUNICATIONS TO THE BUREAUS ON THE STATUS OF 
APPROPRL\TIONS ACTION, AS WELL AS ANSWERING OPERATIONAL QUESTIONS. 
WE ALSO USED THIS TEAM TO ENSURE THAT DEPARTMENTAL OPERATIONS 
WERE BACK TO NORMAL LEVELS AS SOON AS POSSIBLE AFTER THE TREASURY 
DEPARTMENT'S SHUTDOWN WAS ENDED THE SECRETARY PERSONALLY HELD 
A SECOND TOWN HALL MEETING WITH TREASURY EMPLOYEES TO WELCOME 
THEM BACK AND TO SMOOTH THE TRANSITION BACK TO WORK. 

IN GENERAL, THE SYSTEM THAT WAS PUT IN PLACp WORKED EXTREMELY 
WELL AND FACILITATED RAPID AND COORDINATED COMMUNICATIONS WITH 
TREASURY'S 154,000 EMPLOYEES - EASING, TO THE EXTENT POSSIBLE, THE 
NEGATIVE EFFECT ON MORALE AND MINIMIZING THE NEGATIVE IMPACTS OF 
THE SHUTDOWN ON PRODUCTIVITY. 



51 



MR. CHAIRMAN, YOU HAVE PROVIDED THE SECRETARY WITH A LIST OF 
QUESTIONS TO BE ANSWERED, AND THE DEPARTMENT'S WRITTEN ANSWERS TO 
THESE QUESnONS ADDRESS IN MORE DETAIL OUR MANAGEMENT OF THIS 
PROCESS. WE WILL BE PROVIDING THESE ANSWERS FOR THE RECORD. WE HOPE 
THAT YOU WILL FIND THEM COMPLETE. PLEASE HAVE YOUR STAFF GET BACK 
TO ME IF YOU NEED ADDITIONAL INFORMATION. 

THIS CONCLUDES MY REMARKS. I AM AVAILABLE TO ANSWER ANY 
QUESTIONS YOU MAY HAVE. 



52 



"The Government Shutdown" 

Hearing before the House Civil Service Subcommittee 

December 6, 1995 

9:00 A.M., Room 2154 

Raybum House Office Building 



Please describe your agency's process for developing and implementing^ its 
shutdown plans. 

Answen The Department began reviewing it's existing "Shutdown" guidance in June 
of 1995, based on news media accounts that a budget impasse was looming on 
October 1. The Department's previous shutdown guidance had been issued in 1991. 
This earlier version was modified and, where applicable, expanded to provide the 
Treasury bureaus with as much information as possible to aid in the development 
and/or revision of their shutdown plans. The Assistant Secretary for Management and 
CFO issued guidance to Treasury Bureaus on July 17, 1995, requesting that bureaus 
update their plans and submit them to the Department in early August for review. 

The Assistant Secretary for Management and CFO formed a Review Team to review 
bureau shutdown plans as they were received, and to ensure that all the plans were 
consistent with applicable legal principles, well thought out and clearly 
communicated. Justifications for positions and functions "excepted" from a 
shutdown, should a lapse in appropriations occur, were reviewed for consistency with 
the Attorney General's (AG) 1981 and 1995 opinions. It also was important for the 
bureaus' plans to address the differing impact of short-term and long-term shutdowns 
and phasing for shutdowns of different lengths of time. All bureau plans were 
required to have the following key plan elements: 

► Preparation : identifies excepted and non-excepted functions; 

*■ Implementation : actions to be taken to notify bureau employees of their status in 
the event of a shutdown and actions to ensure an orderly shutdown of operations; 
and 

> Reactivation : actions to restart operations and notify employees to return to work 
after funding is provided by Congress and approved by the President. 

The Department held meetings on August 7, August 23 and August 30 that brought 
together Departmental and bureau representatives to discuss shutdown planning, 
including personnel-related matters. Bureau representatives (Shutdown «^oordinators) 
were provided with the latest guidance issued by the Department and 0PM. 

The Review Team and a subordinate review group, called the "Working Group," 
analyzed the bureau plans as they were received in August and September. The 
Review Group notified the Assistant Secretary for Management and CFO of their 
findings. Memoranda were transmitted to the bureaus requesting modifications, as 
necessary, and/or notifying them of acceptance of their plans. 



53 



A "Hot-line" was established in September to provide current information concerning 
FY 1996 appropriations and the possible shutdown of Treasury operations. In 
addition, separate bureau "Hot-lines" were established to address employees' bureau- 
specific questions. 

The Treasury Department submitted preliminary bureau plans to 0MB in e^i,y 
September. The bureau plans were reviewed continually and modified, as necessary, 
during this time in order to be consistent with the AG opinions regarding shutdown of 
agency operations and other Departmental concerns. 

Once the shutdown was ordered by 0MB, the Department notified the respective 
bureau "Shutdown Coordinators" and Bureau Heads to begin the implementation 
phase of their plans. The bureaus began issuing furlough notices and ordered the 
"non-excepted" employees to begin to shutdown their operations and go home once 
that was completed. "Non-excepted" employees were also instructed to listen to news 
broadcasts in order to learn when to return to work. 



Please explain to the Subcommittee what guidance your agency received with 
respect to its shutdown from the OfTice of Management and Budget (0MB), the 
Office of Personnel Management (OPM), and/or other federal agencies. 

Answer; 0MB and OPM provided the following: 

0MB Guidance : 

► August 16. 1995 . The Department of Justice responded to a request from Alice 
Rivlin (Director, Office of Management and Budget) for advice regarding the 
permissible scope of government operations during a lapse in appropriations. On 
August 22, 1995, 0MB requested that agencies: review their contingency plans in 
light of this opinion; make any changes necessary to conform to the opinion; and 
otherwise ensure that the plans were current. 0MB requested copies of the 
updated plans for review. 

► September 25. 1995 . 0MB notified agencies that they had completed their review 
of our shutdown plans. 0MB indicated that they would issue further guidance 
about whether and when a shutdown would be required. 

► November 9. 1995 . 0MB provided guidance designed to help ageriv,ic» to plan for 
shutdown activities prior to the November 14, 1995 shutdown. 

► November 13. 1995 . 0MB provided further guidance on a possible shutdown ~ 
requesting all employees to report for work on November 14 and wait for further 
word from 0MB. 

► November 14. 1995 . 0MB informed agencies to implement the close-down of 
affected operations promptly and in an orderly manner. 

*■ November 16. 1995 . 0MB provided guidance on the activities of political 



54 



appointees during periods of shutdown and examples of the impact of reduced 
government services. 

OPM Guidance : 

► August 1. 1995 . OPM provided updated guidance on furloughs including 
questions and answers on various personnel management aspects of furloughs. 

► September 6. 1995 . OPM provided supplemental questions and answers 
concerning furloughs. 

*■ November 13 - 19. 1995 . OPM provided information to furlough points of 
contact on a variety of issues, such as filing for unemployment, processing 
SF 50s, etc. 

► November 21. 1995 . OPM provided guidance on pay and leave treatment for 
employees affected by the shutdown. 

Please inform the Subcommittee of any guidance that you provided to the Office 
of Management and Budget and/or other federal agencies with regard to the 
management of agency Tmances, including appropriated and non-appropriated 
funds from all sources, that could affect the ability of agencies to operate under a 
lapse of appropriations. 

Answen No guidance was provided to 0MB or other agencies regarding 
management of finances during a shutdown. 

However, the Financial Management Service's (FMS) Assistant Commissioner areas 
notified their respective customers in writing of their intention to maintain an 
"Excepted" or "Non-Excepted" status during the shutdown. The Regional Finance 
Centers, which were open for business during the shutdown, sent out the following 
notification to their customers: 



CUSTOMER NOTIFICATION 

In the event of a lapse of appropriations, the Financial Management Service Regional 
Financial Centers will be in operation. 

Agencies are responsible for ensuring funds availability for any funds \'t.^j vcrtify. 



FMS also provides services other than disbursement of funds for other federal 
agencies. Customers for those services were informed that the services would 
continue to be provided to those agencies that had approved funding. As a final 
attempt to ensure that all customers had been notified, an announcement was also 
placed on the FMS Net. 



55 



Please inform the Subcommittee of the number of employees your agency 
furloughed and the number who continued working beyond the lapse of 
appropriations. Please describe the functions they perform, and explain your 
rationale for continuing those functions. Did you alter your determinations at 
any time after the shutdown began? If so, why? 

Answer : Shutdown of operations beginning November 14, 1995: 



Estimated On-Board 
Nov. 14, 1995 


Employees Furloughed on 
Nov. 14th 


Employees Remaining on 
duty during the shutdown 


154,000 


113,400 


40,600 



Activities continuing after shutdown : 

► Secret Service protection and law enforcement functions; 
*■ Mint circulating and numismatic coin production; 

► Customs Service: cargo inspections; commercial vehicle and passenger processing; 
law enforcement operations; air and marine interdiction; Law Enforcement 
Communications and data systems; and revenue collections; 

*■ ATF: agents involved in criminal enforcement; collection of occupational and 
excise taxes; and laboratories supporting the National Response teams; 

► FMS: operations to continue payments of government obligations and claims; and 
its government-wide accounting function; 

► IRS: processing of tax returns which included remittances and hardship cases; 
functions supporting the Social Security Administration; computer operations 
necessary to prevent loss of data in process and revenue collections; complete and 
test Tax Year 1995 Filing Season computer program; processing of cases with 
expiring statutes of limitation, bankruptcy, liens, and seizure cases; criminal 
investigation with undercover operations; and 1995 tax forms design and printing; 
and 

► minimal executive direction and duties necessary for an orderly shutdown of 
operations. 

The Department issued guidance, which was consistent with 0MB and Attorney 
General (AG) guidelines, intended to assist bureaus in updating their plans because 
the Anti-Deficiency Act, 31 U.S.C. 1341 & 1342, severely restricts the -^"'^uct of 
business by agencies during a lapse of appropriations (e.g., making or authorizing 
expenditures or obligations in excess of appropriations). The principal guidance 
regarding the types of functions that may be continued during a lapse of 
appropriations is the AG's opinion dated January 16, 1981, as updated by an August 
16, 1995 AG opinion. The functions of the Treasury Department that continued after 
the shutdown were consistent with the AG opinion. That opinion said that the 
following activities can continue during a shutdown of operations: 



56 



*■ those activities that have a continuing source of funding; 

► those activities that are authorized by law to continue even without funding; 

► those activities that are authorized by necessary implication of, e.g., the need to 
support, activities that continue under another authority, such as the FMS's 
disbursement of benefit payments for the Social Security program, which has continuing 
funding; / , 

*■ those activities covered by limited authority to employ (although not pay for) personal 
services for activities to the extent necessary to avoid imminent "emergencies involving 
the safety of human life or the protection of property;" 

»■ those activities that are necessary to discharge of the President's constitutional duties; 
and 

► functions necessary for a short period in order to ensure an orderly shutdown of 
operations. 

The bureaus, with Departmental encouragement, continually fine-tuned their plans before 
the shutdown, consistent with the AG exceptions identified above. After the shutdown 
occurred, some minor adjustments were made, primarily for Departmental Offices (DO), 
that were also consistent with the AG opinion. In all cases, these adjustments were 
authorized only after Departmental Review Group approval as to consistency with the AG's 
guidelines. 



5. What steps have you taken to ensure that your agency adhered to all applicable 

standards and guidelines in implementing the shutdown? What steps has 0MB taken 
to oversee your agency's implementation of the shutdown? 

Answer ; 0MB provided guidance as specified above (question #2) and made 
recommendations related to our shutdown plans. The Department of the Treasury was 
responsible for ensuring that the bureau plans adhered to guidance. 

*■ The Department issued guidance, in conjunction with 0MB and Attorney General (AG) 
guidelines, intended to assist bureaus in updating their plans. 

► Where applicable, all bureaus had contingency plans in place and identified "points of 
contact." The Assistant Secretary for Management and CFO issued guidance to 
Treasury bureaus on July 17, 1995, requesting that their plans be updated and submitted 
to the Department for review. 

» Comprehensive Q&As were developed and passed out to all bureau points of contact. 

*■ A "Hot Line" was established (1-800-566-6437 and locally 202-622-9191). 

► The Assistant Secretary for Management and CFO formed a Review Team to review 
bureau plans to ensure that all the plans were consistent with applicable legal principles, 



57 



well thought out and clearly communicated. All bureau plans were required to have the 
following key plan elements: 

— Preparation : identification of excepted and non-excepted functions; 

~ Implementation : actions to be taken to ensure an orderly shutdown of operations; 

and 
~ Reactivation : actions to restart operations after funding is provided/ 

The principal guidance regarding the types of functions that may be continued during a 
lapse of appropriations is the Attorney General's opinion dated January 16, 1981, as 
updated by an AG opinion dated August 16, 1995. Treasury's "excepted" activities 
were justified based on one or more of the following basis: 

1. continuing source of funding, such as assessments collected by OTS, OCC; 

2. authorized by law to continue even without funding; 

3. authorized by necessary implication of, e.g., the need to support, activities that 
continue under another authority, such as the FMS's disbursement of benefit 
payments for the Social Security program, which has continuing funding; 

4. limited authority to employ personal services for activities to the extent necessary to 
avoid imminent "emergencies involving the safety of human life or the protection of 
property;" 

5. necessary in order to discharge the President's constitutional duties; 

6. necessary for a short period in order to ensure an orderly shutdown of operations. 

"Excepted" activities were based on actual workload requirements. Plans recognized 
that as time passed, performance of activities that were "excepted" initially might no 
longer be required. Plans similarly recognized that activities initially shut down could 
become "excepted" because of changed circumstances. In either case, only staff 
necessary to perform activities that were at the time "excepted" were to report to duty. 

The Department required thorough documentation on all "excepted" functions. 

Customers/vendors were made aware of the potential lapse, how it could affect 
Treasury business operations and the steps the bureaus would take to ameliorate effects 
on customers and vendors; 

Shutdown plaiming is a dynamic process. Plans might have to be t'.- ""fl as events 
unfold, especially as more details on a potential shutdown and its duration are revealed. 
Bureaus were required to get approval from the Department for a change in their plans. 



58 



What, if any, guidance did your agency provide to subordinate agencies or furloughed 
employees with respect to such personnel issues as pay, continuation of benefits, and 
unemployment compensation? How was it provided? Have you received guidance 
from OPM on sudi issues? Please provide copies of all guidance or policy directives 
your agency issues with respect to the shutdown? 

Answer ; In addition to the initial Departmental guidance for developing bureau shutdown 
plans that was issued on July 17, the Department provided the bureaus with the 1995 AG 
opinion and OPM's updated Questions and Answers concerning personnel-related matters in 
the event of a shutdown. This guidance was provided in hardcopy format. 

The Department's August 23 and August 30 meetings were with the bureau personnel and 
labor relations offices. Those meetings discussed shutdown issues that included pay, 
benefits, unemployment compensation and other personnel issues. 

In addition, the Department responded orally on many occasions, as a result of bureau 
questions or "Hot-line" phone calls. During the actual shutdown, twice-daily conference 
calls were held with the bureau Shutdown Coordinators, the Assistant Secretary for 
Management and CFO, and the Review Group. Everyone was provided with current 
information relating to the shutdown of operations, including personnel related issues. 

Please provide the Subcommittee with copies of correspondence, memoranda, 
guidance, directives, instructions, news releases or comparable correspondence 
intended to convey to employees information about administration or agency policies 
related to the shutdown. Please provide copies of any comparable documents 
communicated to your agency's customers, whether individuals or organizations. 

Answer ; The Department has collected and organized all shutdown related items. We are 
providing the Subcommittee with this information. 

Please provide a description of your agency's functions and activities that were 
continued during this interruption of routine operations. Please indicate any special 
funding mechanisms (e.g., carry forward, trust funds, fee accounts, reimbursable 
agreements) used to support these continuing activities. 

Answen Treasury Department activities continuing after the shutdown were consistent 
with the AG opinion on activities that can continue during a shutdown .' operations: 

► Secret Service protection and law enforcement functions; 

► Mint circulating and numismatic coin production; 

► Customs Service: cargo inspections; commercial vehicle and passenger processing; law 
enforcement operations; air and marine interdiction; Law Enforcement Communications 
and data systems; and revenue collections; 

► ATF: agents involved in criminal enforcement; collection of occupational and excise 



59 



g 

taxes; and laboratories supporting the National Response teams; 
►• FMS: operations to continue payments of government obligations and claims; and its 
government-wide accounting function; 

► IRS: processing of tax returns which include remittances and hardship cases; functions 
supporting the Social Security Administration; computer operations necessary to prevent 
loss of data in process and revenue collections; complete and test Tax Year 1995 Filing 
Season computer program; processing of cases with expiring statutes of limitation, 
bankruptcy, liens, and seizure cases; criminal investigation with undercover operations; 
and 1995 tax forms design and printing; and 

► minimal executive direction and duties necessary for an orderly shutdown of operations. 

Several bureaus had exemptions from shutdown that were authorized by funding sources 
other than annual appropriations: 

► OCC and OTS operate with fee assessments; 

► BEP operates with reimbursements primarily from the Federal Reserve and the Postal 
Service; 

► Mint numismatic operations operate in a revolving fund; 

► Treasury Forfeiture Fund had carry-over funds; 

► FLETC had supplemental FY 1995 funding remaining available in FY 1996 that was 
used to continue training operations, as demand warranted; and 

► BPD was able to exercise authority contained in 31 U.S.C. 3129, which creates an 
indefmite appropriation based on a percentage of debt issued to continue operations. 

9. Please estimate the total costs to your agency associated with the interruption of 

operations between November 14 and November 20, 1995. Please provide descriptions 
of any unusual costs imposed on the agency or other unanticipated consequences of 
this interruption of operations. Please provide, too, an estimate of any savings 
associated with this interruption of activities. 

Answen 

SUMMARY COST OF SHUTDOWN 

The following sample information identifies the estimated costs as a result of partially 
shutting down some of Treasury's operations. The cost impact is still being evaluated. 

LOST REVENUE - Preliminary estimate $400 million. 

► We are still evaluating the estimate and methodology for the potential loss in revenues 
during the four day furlough period. 



60 



COSTS OF DEVELOPING CONTINGENCY SHUTDOWN PLANS AND 
DESIGNATING AND NOTIFYING EMPLOYEES -- Estimated at $404,000. 

(Includes the extraordinary costs associated with planning for and implementing the 
shutdown, such as: shutdown-related planning meetings and briefings; costs of shutdown 
plan development; review and approval; providing information and guidange to employees 
related to shutdown; and any operational costs which would not have occurred but for 
shutdown). 

Estimated Costs: 

► Printing -- iiSJflQ 

- Furlough Notices (Approximately 114,0(X) notices had to be printed or copied. 
114,000 @ 5C = $5,700). 

- Unemployment Forms (Approximately 114,000 @ 5C = $5,700). 
-- Recall Letters (Approximately 114,000 @ 5C = $5,700). 

-- Other (guidance, Q&As, etc.) = $1,000 

*■ Postage - $3.648 

~ Furlough Notices (Approximately 114,000 notices of which 5% were mailed. 5,700 

@ 32C = $1,824). 
~ Unemployment Forms (N/A). 
-- Recall Letters (Approximately 5,700 @ 32C = $1,824). 

► Staff Time - $375.000 

~ Approximately 130 employees (conservative estimate) spent a full 10 staff days 
related to shutdown planning and implementation. (Estimate average salary and 
benefits of $75,000/260 = $288 (daily rate) x 10 days = $2,884 x 130 employees 
= $375,000). 

*■ Treasury "Hot-line" - $7.000 

LOSS OF DISCOUNTS/PAYMENT PENALTIES - TBD 

CONTRACTUAL DELAYS 

► Vendor and employee payments were delayed. This resulted in cubiomer demands for 
payments, and strained our relationship with customer/vendors. 

~ Vendors submitting bills for services provided were not compensated promptly. 
Early indications are that there may be some penalties resutling from the delayed 
processing of payments. 



61 

10 
EMPLOYEE ISSUES 

► Employee morale may affect Treasury's support to CFC. Treasury has historically 
been a major supporter of charitable organizations through the Government's Combined 
Federal Campaign. 

► The shutdown will result in significant loss of productivity through: disruption in the 
flow of work; downtime due to planning, notification, and execution of the shutdown 
plan; low morale which in turn may result in increased attrition, more employee 
litigation; and possible recruitment and retention losses. 

►• The shutdown further exacerbated morale problems created by budget uncertainties. 

CUSTOMERS NOT RECEIVING SERVICES OR A DELAY IN SERVICES 

► Phones unanswered ~ IRS staff was not available to resolve tax issues. 

- Taxpayers who needed answers to key tax questions to pay their taxes found phones 
unanswered. 

~ Requests for tax forms and accounts assistance had to be deferred until after the 
shutdown, increasing taxpayer frustration. 

SALARY AND BENEFITS FOR THOSE EMPLOYEES FURLOUGHED FOR 
SCHEDULED WORK HOURS AND NOT WORKED. 

► We currently estimate approximately $80 million for salaries and benefits of furloughed 
employees. This again is under evaluation, and will be revised later. 

PROGRAMMATIC EFFECTS 

► Slippage in initiating, conducting and/or finalizing audits, investigations and program 
quality reviews critical to the effective management of Treasury programs and to the 
prevention of fraud, waste and abuse within the Department. 

► Loss of public confidence in our agency. 

► Undermining of fair and equal treatment of all taxpayers 

— The impact of the furloughs in the enforcement programs ~ processing tax 
remittances is considered an "excepted" activity — is unfair to the vast majority of 
taxpayers who fully comply with the tax laws. 



An.ion Q-i 



62 



11 

► Major delays in processing throughout Treasury. 

~ Processing of applications (such as, permits, labels, licenses) for alcohol, tobacco, 
firearms, explosives, customs brokers, and vendor petitions. 

- IRS did not process tax returns that did not include payments of tjixes owed. 

— IRS did not pursue investigative activities unless they were active, multi-agency, 
grand jury investigations or preparation for actual trial proceedings ~ this could 
seriously weaken the Government's case and result in fiirther losses in revenues. 

► TBD (Bureau reports on other impacts). 

10. No previous shutdown lasted more than 3 days. Did your agency make any 

assumptions about the length of the shutdown? If so, what was the time frame 
assumed, and how did it affect the agency's decisions with respect to the functions and 
positions it has continued after the lapse of appropriations? 

Answer ; Even though news media reports were pessimistic about the length of a 
government shutdown, the Department's July 17 guidance assumed no particular length of 
time for a shutdown. The Department prepared for the full range of possible shutdown 
periods. As the plans were being reviewed and fine tuned in August and September, it 
became evident that some bureau operations/functions could be successfully shutdown for a 
few days without serious impact. However, if a shutdown progressed for over a week or 
10 days, some operations would need to be reactivated, and some employees would have to 
be recalled to work. 

The bureaus were notified that the shutdown plans were flexible documents, and that fine 
tuning their plans to fit the particular circumstances and length of the shutdown was 
normal. The Department emphasized the importance of phased plans that addressed both 
short-term and long-term shutdowns. Some bureaus, particularly IRS, did revise their 
plans to consider operations if a shutdown lasted longer than a week. 

For example, IRS indicated that a long-term shutdown, if it began on October 1 and 
continued through November, would be detrimental to the 1995 Tax Filing Season. 
Employees in critical functions necessary to design and develop tax forms would have to be 
recalled in mid-November in order to meet publication and distribution ueaaimes for the 
upcoming Tax Filing Season. 

Other bureaus indicated that it might be necessary to recall employees that maintained and 
protected government property or performed some law enforcement functions if there was a 
long shutdown of operations. 



63 



12 

11. How would your determination with respect to what functions or positions to continue 
change if the interruption were to last: 

a. 10 days? 

b. 30 days? 

c. 90 days? 

Answer ; "Excepted" activities were to be based on actual workload requirements. As 
time passed, performance of some activities that were "excepted" initially were no longer 
required. Similarly, planned activities that initially were "non-excepted" could become 
"excepted" because of changed circumstances. In either case, only staff necessary to 
perform activities that currently were "excepted" were allowed to report to duty. Each 
bureau monitored its requirements and made changes as necessary to bring employees back 
to work. Justifications for those changes were to be sent to the Department for review and 
approval. 

12. Please provide the Subcommittee with a description of the differences in your agency 
plans, if any, that would ensue if the interruption of operations resulted from 
restrictions resulting from the debt ceiling rather than a lapse in appropriations. 

Answer : If an agency has funding under an appropriation/CR, but Treasury doesn't have 
cash due to the debt ceiling, all employees come to work. In that situation, we can incur 
obligations for salaries, we just can't pay them. 

13. Identify all of your revolving funds. 

a) How many full time and part time employees work at each one? b) How much 
money is involved in the revolving funds? c) How many employees were furloughed? 

Answen The Department of the Treasury has many revolving, special fund and general 
fund (with user fees) accounts. See Attachment 1 for details related to funding and 
employees. 

14. Identify all of the fee accounts, at least the ten largest. 

a) How many full time and part time employees work at each one? 

b) How much money is involved in the fee funds? 

c) How many employees were furloughed? 

Answen See Attachment 1. 



64 



13 



15. Identify the total Dumber of public affairs employees and how many were furloughed. 

a) How many public affairs employees were furloughed from the Bureau of Alcohol 
and Fu%arms? 

Answer ; Approximately 86 percent of all of the Treasury Department's public affairs 
staffing was furloughed. There are seven ATF public affairs positions, of which six were 
furloughed. See the chart on the next page. 



PUBLIC AFFAIRS STAFFING 

Diang Furlough Ptcnd 

FiKHYaar IBM 



Pi^iiu/r»r«»y7j»lnn Mm. 

Dipir1mert»IOnic»« 

Treasuv Fort8li/9 Fund 

Oftct rfhsoictor Oaia^l 

Federal Law Erriorcemert Trahing Cerlei 

Financial Managemen Sarvict 

Alcohol, Tobacco 4 Fireenns 

US. Cusioms S«t»IC8 

Financial Cnmes Erforeonent Network 

United Sl^tsMrl 

Buieauofine PiDIc Debt , 

Bureau of Engrmrg and Phrtng.... 

Wernai Revenu* Service — 

US Secret Semce. . 
Ccmplrctler of thaCunarcy 
once of ThtR SuDervisian 



NUMBER OF EMPLOYEES 1 


Tntai 


Fivlounhad I 


isj:- 




11 



























1 






6 


^9■■. 




18 






4 






2 









M-: 







300 ■: 




:9e 


U:- 







6;- 







b:-. 







398' 




341 



TOTAL. PUBLIC AFFAIRS.. 



Kkimbert are anaroitnnata Treasury bureaut/organiiations do not nacessarty have separate 
Pubic Airalrs ofllces Vne PtHlc AfTars nine lion is olten comtineo wtr LegEBlkiafCcniresS' 
iotallUeila andconcspondencefunctDns 



16. Do you have any special appropriations associated with any of your programs? 



Answer. Yes. The Bureau of the Public Debt has an indefinite appropriation 

( 31 U.S.C. section 3129) that enables the Bureau to continue to perfoim us borrowing 

responsibilities when there is a lapse in appropriations. 



65 



DEPARTMENT OF THE TREASURY 

Traatury Ravolving, UMr Fm, Spaclal Fund Accounu 



EMPLOYMBJT STATUS 



ACCOUWT 

Traasury Forfulur* Fund 
Pratidantial S^aCbon Campaign Fund 
imtmaJ Ravanuc C oH a cli oni from Puatto Rco 
BoRttr Sarvica* Uaar Faa 
Custom* SarvKaa at Smal Airports 
Conaga Profit Fund 

Rannb. to Stata 1 Local Law Enf Agsricias 
TOTAL. Spacial Fund* 

PuMIc Entarprtsa RavcMno Funds 

Offica of Thtrfl Suparviaion 
PEF. Fadsral Tax Lian Rsvotving Fund 
Exchanga Stabilization Fund 
TOTAL, PubHc EnL RavoMng Funds. 

mtafnovammantal RavoMna Fund* 

Wortong Capital Fund 
Fad. Fnancng Bank 
Buraau of Engravng and Printing 
Numomatic Pubkc Entarpnsa Fund 
ToUL Intargovammantal Ravolv. Fnd_ 



TOTAL, SpadaL Ravolving Funds- 



M97 

5M1 
5737 
5274 
SCM 
S<11 
50M 



41M 
4413 



4501 
4S21 
4S02 
4504 



Trvti Rtvptvlng Fwrtt 

Complrotor of tha CuiTancy 
TotaL Trust Ravolving Funds- 

CanaralFund* 

U.S. Customs Sarviea, StE 

Intamal Ravanua Sanica (AAM) 
Total, Ganaral Funds 



Spacial Fund 
Spacial Fund 



0602 
0912 



Misc. ParmananI Approp. Trust Fund 



Spaaal Fund 9922 



Est Amount 

tooo 


Numbar of 
! EmoloyMS On-t>oard 


Numbar of 
Furloughcd Employaa 


FYM 


FllH-Ttmt Pifl-Tlrw 


FullTlma Part-Tlma 


S22S.00O 

70.000 

232.447 

100,000 

1.406 






19 




30 































S62<.8S3 


49 











1 50.800 

3.036 

2.640!000 


1.476 




5 
















S2,79343< 


1.476 


5 








17Z060 

8.574.259 

515.000 

375.932 


233 



2.951 

1.176 




72 



215 











S9.S37.251 


4.380 


72 


215 





«13.0S9.»40 


5485 


77 


215 





393.250 


3.503 


129 








$393,250 


3,503 


129 








672.946 
119.000 


974 











i 

oi 
"1 


$791 ,946 1 


974 











188,112 

1 


365 








0: 



TOTAL, 0«partin*nt of th« Traasury $14,433,248 I 



10,727 



206T" 



66 

Mr. Mica. I thank you. 

I will recognize Eugene A. Brickhouse, Assistant Secretary for 
Human Resources and Administration, in the Department of Veter- 
ans Affairs. 

Mr. Brickhouse. Good morning, Mr. Chairman and members of 
the subcommittee. 

I appreciate the subcommittee's interest in how executive branch 
agencies planned for and implemented the recent government shut- 
down, and I will be pleased to share with you our experiences in 
the Department of Veterans Affairs. With your permission, I will 
provide a brief summary of my written statement, and then I will 
be glad to respond to any questions. 

VA started planning for a potential lapse of appropriations in 
early August. We had the benefit of previous guidance from 0MB 
and from the Justice Department. Also, 0PM issued extensive 
questions and answers regarding furloughs which were very help- 
ful. Current 0MB and Justice Department guidelines were received 
well before the end of the month and provided further assistance 
to us in our planning efforts. 

As you are aware, the VA is a large department with multiple 
missions, including health care for veterans, delivery of compensa- 
tion, education and other benefits, and operation of the National 
Cemetery System. Because of this diversity, we asked each of our 
operating components to develop shutdown plans appropriate to 
their individual programs. These were independently reviewed by 
our general counsel to ensure that legal requirements were met 
and were then incorporated in our VA-level plan. 

The plan was ready for implementation when needed on Novem- 
ber 14 and was put into effect by operating VA managers and su- 
pervisors. The plan called for continuation of direct medical care to 
veterans as well as other activities which are in the excepted cat- 
egory. This included police and security services, benefit determina- 
tions for excepted functions, receipt and processing of pajonents, 
management of government property, and interments in our na- 
tional cemeteries. 

VA had some activities which were not dependent on appro- 
priated funds, and these were allowed to continue. These included 
operation of the Veterans Canteen Service, certain medical re- 
search activities, operation of the VA supply system, and the medi- 
cal care cost recovery system for third-party insurers. 

At the close of the shutdown period, approximately 206,000 em- 
ployees had been designated as excepted, and another 33,000 were 
in furlough status. Clearly, the impact of the shutdown was felt by 
the veterans and family members whose calls went unanswered, 
whose appointments were canceled, whose claims for benefits were 
delayed. And although direct patient care continued, our medical 
facilities felt the strain of suppliers and contractors who were re- 
luctant to proceed with orders when there was no funding to back 
them up. 

I think all of us hope earnestly that another shutdown will not 
be necessary. With regard to VA's plan, we believe that it met the 
requirements of the law while malang use of every possible oppor- 
tunity to continue service to veterans. I would like to close with a 
word of praise for VA managers, supervisors, and employees. They 



67 

implemented the shutdown, unwelcome as it was, in an orderly, re- 
sponsible fashion, and we can be proud of them. 

Thank you, Mr. Chairman and members of the subcommittee. I 
would be glad to answer any questions. 

[The prepared statement of Mr. Brickhouse follows:] 



68 



statement of Eugene A. Brickhouse 

Assistant Secretary for Human Resources and Administration 

Department of Veterans Affairs 

Before the Committee on Government , Reform and Oversight 

Subcommittee on Civil Service 

December 6, 1995 



Mr. Chairman and Members of the Subcommittee: 

I am pleased to appear before the Subcommittee today to 
provide VA testimony relating to the recent Government 
shutdown. The following will detail, point -by-point, the 
concerns expressed in Chairman Mica's letter inviting VA to 
appear here. 

Process for developing and implementing shutdown plans 

The Department of Veterans Affairs (VA) initiated 
formal shutdown planning in August 1995, in anticipation of 
a potential lapse in appropriations on September 30. VA is 
a large, complex, and geographically dispersed organization 
with multiple missions and responsibilities. Our approach 
in shutdown planning was to develop an overall plan for the 
Department based on input from VA's three major line 
organizations (Veterans Health Administration, Veterans 
Benefits Administration and National Cemetery System) as 
well as headquarters staff offices. Advisory and 
coordination services were available from my office (Human 
Resources and Administration) , and we also assembled teams 



69 

of human resources specialists to assist Central Office and 
field activities with their planning efforts. 

Organizations within VA were asked to review their 
operations and identify the nximber of employees who should 
be excepted from furlough, based on long-standing criteria 
related to protection of life and property (0MB guidance 
issued in 1980, 1981, 1990) , as well as those who would be 
needed for the orderly shutdown of non-excepted activities. 
Plans, at a minimum, were to contain: 

• Excepted activities and number of employees necessary to 
carry out those activities; 

• Description of activities shutdown employees would 
perform, length of time needed, and number of employees 
necessary to carry out those activities; 

• Procedures to notify customers of suspension/reduction of 
activities; and 

• Procedures to notify employees of their status relative 
to excepted or non-excepted activities. 

Current guidance from the Office of Management and 
Budget (0MB) and the Department of Justice (DOJ) was made 



70 



available to VA planning officials on August 22, 1995, and 
assisted them in developing their plems and making the 
necessary determinations regarding excepted and non-excepted 
activities. 

Individual office plans were reviewed by VA's Office of 
General Covmsel in order to ensure legal compliance with 
guidelines from the Department of Justice on excepted 
activities. VA's Human Resources Management office then 
developed a consolidated Departmental plan, which was 
submitted to 0MB (Attachment A) . 

As an integral part of our planning process, employee 
unions were kept informed through communication with the VA 
National Partnership Council. This consists of 
representatives of VA's five unions with national bargaining 
rights, as well as key management officials from line and 
staff organizations. In addition, Memoranda of 
Understanding (Attachment B) were signed with two of the 
largest of VA's unions, the American Federation of 
Government Employees (AFGE) and the National Federation of 
Federal Employees (NFFE) ; these were shared with local 
facilities having applicable bargaining units. 

Although the lapse in appropriations did not occur on 
September 30, 1995, the Departmental plan was complete and 
ready for implementation when needed on November 13, 1995. 



71 



Guidance VA received with respect to its shutdown from 0MB, 
the Office of Personnel Management (OFM) , and/or other 
federal agencies 

Initial planning was developed in accordance with OMB 
Memorandum M-95-18 and accompanying guidance from the 
Department of Justice. As the situation developed, OMB 
continued to provide guidance on a range of policy and 
operational matters (e.g., whether employees should report 
to work on November 13 and 14, and when shutdown operations 
should actually commence) through Memoranda M-96-01 and M- 
96-02. (Copies provided at Attachment C) 

OPM was very responsive in providing assistance and 
guidance regarding the full range of personnel issues 
involved in the furlough. In addition, the Interagency 
Advisory Group (lAG) , which is a consortium of agency 
directors of personnel, met regularly with OPM, OMB and 
Department of Labor (DOL) representatives. The lAG provided 
a very helpful forum for discussion of furlough issues and 
dissemination of information and guidance throughout the 
Federal human resources management community. In addition 
to these resources, guidance on unemployment compensation 
matters was provided by DOL. 



72 



Number of VA employees furlougtaed, number who continued 
working beyond the lapse of appropriations, and VA services 
and functions performed during shutdown 

The data below provides the number of employees 
estimated in VA's original plan compared with revised 
estimates as of November 17, 1995. 

PLAN ESTIMATE REVISED ESTIMATE 

EXCEPTED FURLOUGHED EXCEPTED FURLOUGHED 

200,392 36,354 205,668* 33,411 

*This number includes 1,700 employees in the Veterans 
Benefits Administration who would have been recalled on 
November 20 if the furlough had continued to help with 
receiving and dating benefits claims. 

With regard to services which were continued during the 
shutdown, the vast majority of employees who were determined 
to be performing excepted activities serve in the Veterans 
Health Administration and are involved in providing or 
supporting medical services to veterans. Police and 
security services were also continued in order to ensure the 
safety of veterans, their families and employees while in a 
VA health care facility, and to protect government property, 
buildings and grounds. 

The Veterans Benefits Administration originally 
identified 442 employees nationwide as performing excepted 



73 



activities. These included determination of eligibility for 
benefits associated with other excepted VA activities (e.g., 
medical care and burial claims) , receipt and processing of 
payments, management of government property, and maintenance 
of automated records systems. At the time the furlough 
ended, an additional 1,700 employees were being recalled to 
receive and date benefits claims, assist applicants in 
filing claims and respond to inquiries about VA benefits. 
We determined that the potential for adverse effects of 
delays in receipt of applications qualified for an exception 
under the Antidef iciency Act. 

In the National Cemetery System, 438 employees were 
identified to continue interments and necessary management 
direction in the national cemeteries, since denial of burial 
would result in health hazards to employees or others, not 
to mention the resulting financial hardship and mental 
anguish to family members. Processing of applications for 
veterans gravemarkers and routine maintenance at national 
cemeteries were not considered excepted and employees 
associated with those activities were furloughed. 

Other excepted activities included arrangements for 
delivery for medical supplies and other essential goods to 
facilities where excepted activities were taking place; 
operation of automated systems needed in support of excepted 
or appropriate payroll functions; legal representation for 



74 



the Department at scheduled court appearances; and 
management direction and technical support to excepted 
activities in the field. Certain functions in the 
Department were not affected by the furlough because they 
are funded through revolving funds, or other mechanisms not 
dependent on current year appropriations. These are 
accounted for in the Department's shutdown plan and are 
discussed further below under the heading "Functions and 
activities that were continued." 

Compliance with shutdown guidance 

As previously mentioned, input to the Department's plan 
was reviewed by the Office of General Counsel to ensure 
legal compliance with applicable guidelines. This plan 
provided the framework for shutdown of operations on 
November 14, 1995, with management of the process overseen 
by the established chain of command within each 
organization. Immediately after the shutdown ended, 0MB 
requested information from agencies regarding costs and 
services to the public which had been impacted. This 
information was developed in VA based on input from the 
respective program offices and was forwarded to 0MB as 
requested (Attachment D) . Close coordination with employee 
unions through VA's National Partnership Council also 
provided independent perspective for monitoring the 
integrity with which the plan was implemented. 



75 

Guidance on personnel issues 

Information about continuation of benefits, pay, 
unemployment compensation and other personnel matters was 
provided to the designated human resources management 
liaison in the headquarters office of each Under Secretary, 
Assistant Secretary, and comparable official. They in turn 
distributed information to their employees through hard-copy 
handouts, fax messages, e-mail, and other electronic 
information systems as appropriate to their own 
organizations. Information was also communicated directly 
to human resources management officials at VA field 
facilities through regularly scheduled conference calls, 
during which there were opportunities to ask questions or 
request additional information or clarification on policies 
or procedures. Copies of agency guidance or policy 
directives issued are attached (Attachment E) . 

As previously mentioned, the Office of Personnel 
Management provided timely and responsive guidance and 
information throughout the planning period. 0PM guidance 
was included in the information distributed through the 
human resources management liaisons. 



76 



Communications on shutdown 



Copies of VA employee broadcast messages, media talking 
points, and similar items are attached (Attachment F) . As 
indicated previously, additional information was 
disseminated to employees through human resources management 
liaisons in the various administrations and staff offices. 

Functions and activities that were continued 

Information on activities that were excepted based on 
DOJ guidelines regarding protection of life and property are 
described above and in the VA shutdown plan. Also described 
in the plan are activities which continued because funding 
was not tied to annual appropriations. These include the 
following: 

• The Veterans Canteen Service operates through a revolving 
fund which permits it to operate to the extent that funds 
are available. It provides food, retail and other 
services for the benefit of VA medical center patients 
and employees. 

• Prosthetic and medical research activities funded by 
grants from outside sources, funded under a multi-year 
appropriation which was still current, or which were at 
critical stages and could not be shutdown without 



77 



endangering the lives of participating patients, were 
continued. 

• Acquisition and Materiel Management activities are funded 
through the Supply Fund, a revolving fund, as are 
activities of the Office of Small and Disadvantaged 
Business Utilization, and were continued. 

• Medical Care Cost Recovery activities provide income to 
the government through recovery of third party insurance 
collections, and are funded through a revolving fund. 
These activities were continued. 

Costs or savings associated with the shutdown 

We estimate that the cost of shutting down VA during 
the period of the lapse in appropriation was approximately 
$27 million, the majority of which is payroll. 

Assumptions on length of shutdown for planning purposes 

VA based its plans on a relatively brief shutdown of 
one day or a very few days, which resulted in a shutdown of 
the majority of administrative support functions in 
headquarters and elsewhere. It was recognized that if the 
furlough were to extend beyond that period, additional 



78 



personnel would need to be called back at least for limited 
periods. Additional information is provided under the 
heading "Impact on functions and positions in VA if furlough 
would continue" below. 

Impact on functions and positions in VA if furlough would 
continue 

Attachment D contains information VA provided to 0MB 
regarding the impact of a continuing lapse of appropriations 
on agency operations. Although specific planning data is 
not available regarding longer term shutdown scenarios, some 
adjustments would be indicated to alleviate the more severe 
operational consequences. This would need to be considered 
in the context of legal requirements and any further 
guidance or interpretations from 0MB or the Attorney 
General's office. Also, plans would need to be adjusted to 
provide for activities such as compliance with 
administrative and personnel requirements should furloughs 
last beyond 30 days. 



79 
VA's plan in the event of debt ceiling restriction 

VA did not develop a separate plan for the debt ceiling 
restrictions. 

This concludes my statement, Mr. Chairman. I will be 
pleased to answer any questions you or members of the 
Subcommittee may have. 



80 



Attachnent A 

Department of Vetereuis Affairs Shutdown Plem 
September 1995 




81 



DEPARTMENT OF VETERANS AFFAIRS 
OEPtnV ASSISTANT SECRETARY FOR BUOGET 

Washington DC 2O420 



SEP 15 1995 



Ms. Toni S. Hustead 
Chief, Veterans Affairs Branch 
Office of Management and Budget 
Executive Office of the President 
Washington, DC 20503 

Dear Ms. Hustead: 

This wiD follow up on the Secretary's letter to Ms. Rivlin of September 5, 1995, 
forwarding the Department's shutdown plan in the event of a lapse in {^propriation. 

As VA organizational co^:^>onents continue to refine their contingency plans, some 
adjustments of the data provided earlier are in order. An updated copy of the plan is 
enclosed. An annotated copy of the previous plan and the Secretary's September 5 
transmittal letter are also provided, so that your staff can easily pinpoint the numbers 
which have changed 

The revised figures are based on further consideration of operational requirements 
at health care facilities under shutdown guidance and a determination that fewer staff 
would be continued at veterans benefits facilities. As you can see, this results in a slight 
increase in the total number of employees who would be furloughed immediately, and a 
decrease in those who would be retained to perform excepted activities. 

We will continue to keep you informed should funher developments result in any 
significant changes to our planning scenario. Questions may be referred to Ron Cowles, 
Deputy Assistant Secretary for Human Resources Management, at 273-4920 (executive 
level contact) and Jim Kirk, Title 5 Staffing Division, at 565-8836 (staff level contact). 

Sincerely yours, 

■ Shirley C. Caiozza yj) 
Enclosure 



82 



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83 



Plans for Implementing a Shutdown 
Department of Veterans Aflairs 
Veterans Health Administration 

Impact of Absence of Appropriations 



The Veterans Health AdministrBtion will discontinue all nonexcepted activities in its 
headquarters offices, medical centers, outpatient dimes, and other health care support 
facilities. Employees will be notified of thdr status and those who peifonn nonexcqjted 
activities will be given finlough notices on September 29 or 30, I99S, and be wimsed to 
listen to news broadcasts during the wedoead to team if the budget situatioa has dunged. 
Excq)ted activities to provide health care; rcseardi, and protection of life and propeity 
will'be fiilly maintained. 



Medical Care 

No veteran will have his or her care ddayed, deferred, canceled, or othenwse adversdy 
impacted as a result of shutdown activities. In the field, excepted activities have been 
identified to indude all direct patient care activades and those support activides necessary 
to assist direct patient care provideis and maintain service to patients. All excepted 
activities will be fiiUy maintained during any furiou^ period. All employees engaged in 
nonexcepted activities will be furioughed. 



Canteen Service 

The VA Canteen Service operates on non-appropriated funds, therefore, all VCS activities 
will be fiiUy maintained during ai^ finiough period to support employees engaged in 
excepted activities. 



Protection of Life and Property 

Police and Security services will be provided in order to ensure the safety of veterans and 
their families and employees while in a VA facility. Continuation of these services is also 
necessary to protect and secure government property, buildings, and grounds. These 
services will be fiiUy maintained during any furlough period. 



84 



Prosthetic and Medical Research 

Many research projects in VA are funded by grants from outside sources, therefore, they 
will be fully maintained during any furlough period. Additionally, a number of projects are 
at critical stages where their shutdown could endanger the lives of patients who are 
participating in them as test subjects. These activities will be fiilly maintained during any 
fliriough period. All employees not identified with these excepted activities or not 
otherwise funded will be fiirioughed. 



VHA Headquarters Staff 

Medical Administration and Miscellaneous Operating Expenses is a personnel intensive 
activity. Twenty-five employees have been identified to perform excepted activities such 
as manage VHA's overall operations, organ transplantation issues, operational and policy 
issues for VA medical centers, allocation of resources to excepted acti>nties, and oversee 
construction contractual obligations. These activities wall be fiiUy maintained during any 
furiough period. An additional 770 employees not identified vnth these limited excepted 
activities will be fiirioughed. 



Staffing Requirements 

Employees performing excepted activities 
Central Office 25 

Field Facilities 199,012 

Employees performing shutdown activities, then fiirioughed 
Central office 10 

Field Facilities Not applicable 

Employees to be fiirioughed immediately 
Central office 760 

Field Facilities 18.443 



Updated 9/15/95 



85 



Plans for Implementing a Shutdown 

Department of Veterans Aflairs 

Veterans Benefits Administration 

Impact of Absence of Appropriations 



The Veterans Benefits Administration will discontinue all nonexcepted activities in its 
headquarters offices. Area Offices, Benefits Centers, and R^onal Offices. Employees 
who perform nonexcepted activities will be ^en notices of their status on September 29, 
1995, and be advised to listen to news broadcasts to learn if there is a change in the 
fiinding situation. Employees performing excq)ted services will be available to serve 
veterans and their families. 

VBA has identified 442 employees nationvnde as performing excqited activities. The 
employees in Central Office will oversee management of VBA excepted operations. The 
excepted employees at field fitdlities will determine digibility for benefits associated with 
other excepted VA activities (claims for burial, temunal illness, medical care), recdve and 
process payments, manage issues invol^ong government property, and maintain VBA's 
automated records systems. These acti\nties will be fiilly maintained during any fiirlough. 
period. 



Staffing Requirements 

Employees performing excepted activities 
Central Office 13 

Field Facilities 366 

Employees performing shutdown activities, then fiirloughed 
Central office Not applicable 
Field Facilities Not applicable 

Employees to be furloughed immediately 
Central office 483 

Field Facilities 12.529 



Updated 9/15/95 



86 



Plans for Implementing a Shutdown 

Department of Veterans Affairs 

National Cemeteiy System 

Impact of Absence of Appropriations 



The National Conetety System tvill discoothme all Donexcq)ted activities in the absence of 
appropriations. Employees will be notified of their status on September 29 or 30, 199S, 
and be advised to listen to news broadcasts to leant if th^ are to return to work on 
October 2, 1995. 

Veterans and their &milies have placed rdiance on the National Cemeteiy System to 
provide gravestes at their time of need. Denial ofbtnial to these a^Iicants would impose 
financial hardslap, and in many cases, mental aqgiash. Ddsyofinteraient may also result 
m health hazards for employees or others. Thetelbrc; the National Cemeteiy System will 
continue to buiy di^le veterans during the period covered by the absence of 
appropriations. Central Office employees perfomm^ excqited activities vnll provide 
management direction and control, and operational support to the fidd. Employees in the 
fidd peifoiming excqited activities determine dipbtSty for burial, supemse interment 
operations, and provide for property protection. 



Staffing Requirements 

Employees performing excepted activities 
Central Office 9 

Fidd Facilities 429 

Employees performing shutdown activities, then fiirioughed 
Central office Not applicable 
Field Facilities Not applicable 

Employees to be fiirioughed immediately 
Central office 160 
Field Facilities 834 



87 



Plans for Implementing a Shutdown 

Department of Veterans Affairs 
Headquarters Support Organizations 
Impact of Absence of Appropriations 



In the absence of approptiadoos, headquarters support organizations and their 
outstationed activities \vtixii provide teduiical assistance to other headquarters elements 
atKl to field operations will shutdown all nonexcqited activi^. This will result in 3,14S 
employees being ^ven finlough notioes September 29, 1995, and an additional 48 
employees when th^ complete shutdown activities. The lemainiog headquarters stafi; 
including 319 outstationed employees will be on duty to perform excepted activities. 
Employees vnH be advised to listen to news broadcasts to leara if the fiindiog dtuation 
changes. Ifthe budget is sgned or a continuing resolution is passed, they vnll return to 
work as usual on Monday, October 2, 1995. 

Employees retained to perform shutdown activities will secure all files and government 
property, notify customers of our reduced activity levd, turn off computer operations, and 
leave their ofiSces and enter fiulough status. 

Excepted activities performed during the fiiriough period will include management of the 
dqjartment, including outstationed components of 222 Acquistion and Materiel 
Management employees paid through the nonappropriated supply fimd, 13 employees of 
the Office of Small and Disadvantaged Bu^ess Utilization paid through a revolving fimd, 
40 information resources and finandal management employees in Austin, and 57 members 
of the Office of the General Counsel distributed throughout the United States. 

Acquisition and Materiel Management personnel will continue to secure and arrange for 
delivery of medical supplies and other essential goods to fedlities where excepted 
activities are taking place. They vnXL maintain contacts with vendors and ensure on time 
delivery of requested items. 

The information resources and financial management employees in Austin will operate on- 
line systems run situation-dependent required batch processing operations as needed in 
support of excepted activities. They will also process payroll for the periods prior to fimd 
interruption and process payroll for staff of excepted activities. 

The General Counsel's employees throughout the United States will continue with 
ongoing court appearances and provide guidance and advice to excepted activities as 
needed. 



88 



Employees performing excepted activities in headquarters will pro>ade technical support 
to excqited activities in the field as well as to other headquarters organizations. 
Protection of Cfe and property activities will continue. Induded in these activities are 
protection of the Secretary, ongoing undercover work associated with criminal 
investigations, and investigations of incidents related to excq>ted activities. 



Staflfing Requirements 

Employees pei&nning excq)ted activities 
Central Office 219 
FiddFadlities 319 

Enqiloyees petfoiming shutdown activities, then fiuloaghed 
Central office 39 

Field Facilities 9 

Employees to be furioughed immediately 
Central office 2,001 
Field Facilities 1,144 



89 



Action Plan for Lapsed Appropriation Furloughs 



Date 


Action Item 


Responsible Oflidal 








July 26 


004 and 006 staff meet to begin the FY 
1996 lapsed appropriation foriough 
process. 


004 and 006 


July 26 


Contact 0MB and 0PM regarding 
guidance updates. 


004 and 006 


August 10 


Devdop memo with attached guidance to 
direct VA oigaiuzadons to submit 
organization plans to acconq)Iish flirioughs 
and to identify excq}ted activities from 
fiiriough to continue patient care and 
protect propetty. and essential employees 
for ordcffy shutdown of nonexcq)ted 
acdvides. 


004 and 006 


August 14 


Memo handed out at Key StaflFMeeting. 


Deputy Secretary 


August 18 


Provide memo and guidance to VANPC 
members. Inform them they will be briefed 
on organizational plans. 


006 


August 28 


Plans submitted by Organizations. 


Organization Heads 


August 3 1 


Provide copies of organizational plans to 
VANPC members and brief them by 
teleconference. Concurrently meet national 
consultation/bargaining obligations as 
appropriate. 


006 


Sept I 


VA plan submitted to the Deputy 
Secretary. 


004 and 006 


Septs 


Plan approved and sent to OMB. 


Deputy Secretary 


Sept 13 


Set of master employee furlough letters and 
furiough guidance ready, distribution 
process to CO and field finalized. 


006 


Sept 14 


Review OMB response to plan. 


004 and 006 


Sept. 28-30 


Distribute furiough notices upon direction 
fi-om OMB. 


006 and Organizations 


Oct. 1 


Begin initial furlough of employees not 
required for orderly shutdown. 


Organizations 


Oct. 2-6 


Furiough personnel involved in orderly 
shutdown. 


Organizations 


Post Oct 1 


If furiough delayed based on some form of 
a continuing resolution, maintain readiness. 


004 and 006 



90 ^ 

VA Plan for Implementation of Furloughs in Event of Lapsed Appropriations 

Responsible Organization . ~ 

The Office of Human Resources and Administration (OHR&A) will be the responsible VA 
office for coordinating activities necessary to implement lapsed appropriation and sintilar 
fiirioughs, including the following: 

1) be the point of contact with 0MB and OPM on all related matters to potential 
furioughs, 

2) provide infonnation r^arding plans for furiou^ to the VA National Partnership 
Council, 

3) prepare instnictions and guidance to all VA fedlities regarding fiiriougb issues, and 

4) conduct briefings/conferences to fidd and central office offidals r^arding fliriough 
information and procedures, 

Furlough Process 

OHR&A wll pro\ade in advance written procedures and jnaster furlough notices to all VA 
organizations and ensure complete pre-fiiriough distribution to all facilities through a 
variety of electronic media. 

OHR&A will initiate conference calls to ensure that each facility's lapsed appropriation 
contact official has complete understanding of procedures and the budget situation as it 
develops. 

OjEQl&A will plan with all VA fecilities that in the event that 0MB advises that there will 
be no VA appropriations on October 1, fliriough notices to be delivered to aflFected 
employees on September. 29 unless OMB provides for an alternative date. 

Facilities keep employees and unions informed as to the status of possible furlough, 
including exclusions from furlough. 

Facilities will individually deliver all furlough notices to affected employees. 

Each facility will inform all employees of the means by which employees will be notified to 
return to work afler the furlough. 



91 



Attachment B 
Memoranda of Understeuidlng with AFGE/NFFE 



92 



The following constitutes agreement between the Department of Veterans 
Affairs (Management and the American Federation of Government 
Emplmrees, AFL-CIO, National VA Council (Union) concerning furlough as 
a result of the lapse in appropriations for FY 1995. 

1 . Management will inform employees of the effects of the 
furlough on their entitlement to retirement, life and health insurance and 
other benefits. -, 

2. Title 5 and Title 38 employees shall be informed of their ri^ts 
to grieve or appeal, as appropriate. 

.. , . .3, . . Management agrees not-to object to «mplpyees(s) filing for . . - 
unemployment boiefits during the tiulough. 

4. Consistent with applicable law and r^ilations, management 
will continue to provide the nm employer contribution to health benefits 
under the Federal Emplqsrees Hraltn Benefit Pn^^ram for employees 
affected by the change (FPM Oiapter 890 and Supplement 890-1). 

5. Upon request, furloughed employees will be provided 
assistance by the Department in locating outside employment so as to 
avoid or minimize income lost as a result of the fiiriough. Such assistance 
shall include among otlier things: 

(a) use of local facilities for groups and individual meetings 
to pursue outside employment; 

(b) waivers of restriction on outside employment to the. 
extent permissible under applicable law and government regulations. If 
approval of outside employment is required, the employer wUl give it 
priority consideration following the submission of the necessary oral 
explanation or documentation and will attempt to provide a response as 
soon as possible prior to the furlough day(s). 

(c) use of sufficient administrative leave to contact Federal 
job placement officials and employment agencies. 

(d) use of sufficient administrative leave for counseling on 
and appl3dng for unemployment benefits. 

6. The Department of Veterans Affairs shall not in accordance 
with law attempt to dissuade its employees from exercising their 1st 
amendment rights, i.e., to express their feelings, perception and factual 
matters concerning the proposed furlough. 

7. In the event funding is subsequently provided to the 
Department and the Department has the discretion to retroactively pay 
employees, the Department will grant employees who suffer a loss of pay 
through furlough administrative leave equal to the lost time. 



93 



8. In rating employees on annual performance, management 'will 
take into consideration the impact due to absence finom work of employees 
as a restilt of the ftuiough. 

9. Employees will not be denied performance dwards or rated 
lower for ptuix>se8 of sudi awards due soldy to fuilougb. 

10. Any ofiSdal time lost as a result of a furiough will be recouped 
at a later date and scheduled as expropriate. . 

11. The Departmeht does not intend to assign overtime work due 
to a shortage of enq)lpyees during the fiulou^ 

12. The Department shall make a good £aith effort to minimize the 
number of furlough days and thereby limit the monetaiy impact on 
employees. 

13 . If a funding measure is passed during the period of furlough, 
the Department will attempt to contact all employees to return to work. If 
such contact is not successful, employees will not be considered to be 
AWOL. Those employees \dll be granted LWOP or annual leave as 
appropriate upon their return to duty. 

14. Once excepted positions are identified, employees within those 
positions may volunteer to be furloughed and such volunteers will be •♦ 
considered. 

15. In accordance with E.O. 12871, 5 US. C 7106 (b)(1) matters 
are mandatory subjects for local bargaining. 

16. If for some unforeseen reason or unusual circumstance, 
employees are in travel status when the furlough occurs, the Department 
will return said employees to their duty station at government expense. 

17. Facilities will seriously consider NPR guidance with respect to 
employee/ supervisor ratio in determining who will be furloughed. 

18. If local conflicts cannot be resolved in a timely manner, 
seniority will be the tie breaking factor for retention during furlough. 

19. Except under the most unusual circumstances, when the 
furlough ceases, employees furloughed will return to their same tours of 
duty, duty locations and work schedules. 

20. When determining which positions are excepted from 
furlough, it should be considered that Union officials have a statutory 
obligation to represent its constituents. 



40-190 97 - 4 



94 

3. 

21. Wheofbasible and if the local paxtie« agree, ftxiiooghs will be 
spread out ttmanc cnqiloyees in^ffected com pe UUv e leydo to mfnfTnigr . the 
ixnpact oa cadx ennflcgves eod tbedisnqtdon <^ 
Mempkg^ee diaU be aoottcded ^ 
inax t&is fifijceenieat 

. 22. Witiiinl^f2)wizkdaiy8,theDqsartzii^ 
«snMa£reeQieiittok)cal£ajdUtiM«ndiastnacttii^ Che 

local U]iioaiq;>oaxeodpt Thel/>cg1UitfoainflyyeqaeStbBH)Bafaiingaad 
audi a request <hfl]l be honored. 



UboLfcfc^ /l^xJ^ ^ 



For Managoneat FV)r Unlcm 

' DME 



95 



NFFE FURLOUGH AGREEMENT 

The following constitutes agreement between the Department of Veterans 
Affairs (Management) and me National Federation of Fedanal Employees, 
NFPE, National VA Coimdl (Union) on behalf of its locals concerning 
impact and implementation baigaming as it r^ards fiulough as a result 
of the lapse in expropriations for ¥Y 1996. 

1 . Management will inform employees of the effects of the 
ftirlough on their entitlement to retiremeni life and health insurance and 
other benefits. 

~ -2."' TiUe5suadTitle38«mployee8-8haUbeMonned'OftheiFfj§^}ts 
to grieve or app^d, as appropriate. 

3. Management agrees not to object to en^Qyees(s) filing for 
unemployment benefits during the furlough 

4. Condstent with applicable law and r^;ulations, management 
will continue to provide the fuU employer contribution to health benefits 
under the Federal Employees Health Benefit Program for employees 
affected by the change (FPM Chapter 890 and Supplement 890-1). 

5. Upon request, furloughed employees will be provided 
assistance b^ the E)epartment in locating outside employment so as to 
avoid or minimize income lost as a result of the furlough. Such assistance 
shall include among other things: 

(a) use of local facilities for groups and individual meetings 
to pursue outside employment; 

(b) waivers of restriction on outside employment to the 
extent permissible under applicable law and government regulations. If 
approval of outside empIoyTnent is required, the employer will give it 
priority consideration following the submission of the necessary oral 
explanation or documentation and voll attempt to provide a response as 
soon as possible prior to the furlough day(s), 

(c) use of sufficient administrative leave to contact Federal 
job placement officials and employment agencies. 

(d) use of sufficient administrative leave for counseling on 
and applying for unemployment benefits. 

6. The Department of Veterans Affairs shall not in accordance 
with law attempt to dissuade its employees from exercising their 1st 
amendment rights, i.e., to express their feelings, perception and factual 
matters concerning the proposed furlough. 

7. In the event funding is subsequently provided to the 
Department and the Department has the discretion to retroactively pay 
employees, the Department will grant employees who suffer a loss of pay 
through furlough administrative leave equal to the lost time. 



96 



8. In rating employees on annual performance, management will 
take into consideration the mipact due to absence from woik of employees 
as a result of the furiou£^ 

9. Employees will not be denied performance awards or rated 
lower for purposes of such awards due solely to furlough. 

10. - Any <^Gdal time lost as a result of a fiiilough will be recouped' 
at a later date and scheduled as appropriate. 

1 1 . Hie Department does not intend to assign overtime woiic due 
to a shortage of employees during the furlough. 

12. The Department shall make a good faith effort to minimise the 
number of furlough days and thereby limit the monetaiy impact on 
employees. 

13. If a funding measure is passed during the period of furlough, 
the Department will atten^t to contact all employees to return to work. If 
such contact is not successful, employees will not be considered to be 
AWOL. Those employees wfll be granted LWOP or annual leave as 
appropriate upon their return to duty. 

14. Once excepted positions are identified, employees within those 
positions may volunteer to be furloughed and such volunteers will be 
considered. 

15. In accordance with E.O. 12871, 5 US. C 7106 (b)(1) matters 
are mandatory subjects for local bargaining. 

16. If for some unforeseen reason or unusual circumstance, 
employees are in travel status when the furlough occurs, the Department 
will return said employees to their duty station at government expense. 

17. Facilities will seriously consider NPR guidance with respect to 
employee/supervisor ratio in determining who will be furloughed. 

18. If local conflicts cannot be resolved in a timely manner, 
seniority will be the tie breaking factor for retention during furlough. 

19. Except under the most unusual circumstances, when the 
furlough ceases, employees furloughed will return to their same tours of 
duty, duty locations and work schedules. 



97 



20. When detenniolQg wUcfa positions are excepted £rom 
fUi1oi^li» it tfaould be considered that Union ofBdals have a statutoty 
obUgabon to repreaent ita constituenta. 

21. When fearible and if the local parties acree. furloughs will be 
spread out Amoog en^dosrees in aflbcted competitive leviels to minifnite the 
impact on taOx «mplog«e and the disniption of the Depaitment activities. 
AH emploTcea ahalfbe aooordod fiir aha eqiiitahle tratmefltxohaistent 
with this agreement. 

22. Witliin two (2) workdays, the Department villlbrwranl this 
signed agreement to local iadliUes and instruct them to give a copy to the 
local uzuon ttpon recdpt 



UtUL(M^ 



For Management 




wji/£§r 



98 



Attachment C 
OMB/DOJ Guidelines 



99 




EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON. O.C 20503 

August 22, 1995 



U'{X9X. 



M-95-18 



MEMORANDDM FOR HEADS OF EXECOTIVE DEPARTMENTS AND AGENCIES 

FROM: Alice M. RivliivJ^^^ 

Director k 



SUBJECT: 



Agency Plans for Operations During Funding Hiatus - 



0MB Bulletin 80-14, dated August 28, 1980 (and amended by 
the 0MB Director's nietnorandum of November 17, 1981} requires all 
agencies to maintain contingency plans to deal with a possible 
appropriations hiatiis. The bulletin re^iires agency plans to be 
consistent with the January 1€, 1981 opinion of the Attorney 
General on this subject. 

The Office of Legal Oounsel of the Department of Justice has 
issued an opinion dated August 16, 1995 that updates the 1981 
opinion. A copy of the August 16th opinion is attached. You 
should review your plans in light of this opinion, mcike cuiy 
changes necesscury to conform to the opinion, and otherwise ensure 
your plsin is up to date. 

Please send a copy of your updated plan to your 0MB program 
examiner no later tham September 5, 1995. Any questions should 
be directed to your program examiner. 



Attachment 



100 




U- S. Department of Justice 
Office of L^al Counsel 



Office of Ax »!M*h«i«..D.C VBiO 

AsMCUoi'Aaofney G«nenl 



August 16. 1995 



MEMORANDUM FOR AUCE RIVLIN - - . ..r.. . 

DIRECTOR, OFFICE OF MANAGEMErTT AND BUDGET 

From: Walter Ddlinger f^^ /tC^ 

Assistant Attorney General ^ 

Re: Govemmeat Opeiations in the Event of a Lapse in Approptiations 

This memorandum responds to your request to the Altoniqr General for advice 
r^arding the peonissible scope of govenunent operations during a lapse in appropriations.* 

The Constitution provides that "no money shall be drawn from the treasuiy, but in 
consequence of appn^iiations made by law." U.S. ConsL ait. I, § 9, cl. 7. The treasury is 
further protected through the Anddefidcocy Act, which among other things prohibits all 
officers and employees of the federal government from entering into obligations in advance 
of appropriations and prohibits employing federal personnel except in emergencies, unless 
otherwise authorized by law. See 31 U.S.C. § 1341 et seq.^ 

In the early 1980s, Attorney General Civiletti issued two opinions with re^>ea to the 
implications of the Antideficiency Ad. See "Applicability of the Antideficicncy Act Upon A 
Lapse in an Agency's Appropriations," 4A Op. O.L.C. 16 (1980); "Authority for the 
Continuance of Government Fiiiictions During a Temporary Lapse in Appropriations," 5 Op. 
O.L.C. 1 (1981) (1981 Opinion). The 1981 Opinion has frequenUy been cited in the ensuing 
years. Since that opinion was written, the Antideficiency Act has been amended in one 



' Wc do not in this memorandum address the different set of issues that arise when the limit on the public 
debt has been reached and Congress has failed to raise the debt ceiling. 

' For the purposes of this inquiry, there are two relevant provisions of the Antideficiency Act. The first 
provides that "[ajn officer or employee of the United States Govemmeot or the District of Columbia government 
may not . . . involve either govenunent in a contract or obligation for the payment of money before an 
appropriation is made unless authorized by law." 31 U.S.C. § 1341(a)(1)(B). The second provides that '[aJn 
officer or employee of the United Suies Government . . . may not accept voluntary services ... or employ 
personal services exceeding that authorized by law except for emergencies involving the safely of human life or 
the protection of property * 31 U.S.C. § 1342. 



101 



respect, and we analyze the effect of that amendment below. The amendment amplified on 
(he emet]gendes exception for employing federal personnel by providing that *(als used in 
this section, the tenn *emeigeocies involving the safety of human life or the proccction of 
property* does not include ongoing, r^ular functions of govemmeat the suspension of which 
would not imminently threaten the safety of human life or the protection of property.* 31 
U.S.C. § 1342. 

With respect to the effects of this amendment, we continue to adbeie to the view 
esqnessed to Genend Counsel Sobeit Damus of the Office of Management and Budget that 
"the 1990 amendment to 31 U.S.C. § 1342 does not detract from the Asxomey General's 
earlier analyses^ if anything, the amendment darifted that the Antidefkaenqr AcCs exoeptioa 
for emetgeocies is" narrow aiid nitfittte applied only when a threat to life or proper^ is 
imminent.*' Letter fipom Waller Dellinger to Robcit G. Damus. October 19, 1993. In cider 
to ensore that (he daiification of the 1990 ameadmeat is ixM overiooked, we believe that one 
a^KCtof the 1981 Opinion's desaiptioo of emergency goverBmentalfiinctions should be 
inodxfied. Otherwise, the 1981 Opinion continues to be a sound analysis of the l^al 
aiidtorides respecting goveroment operations when Congress has £aikd to enact r^ular 
appropriations bills or a continuing resolution to cover a hiatus between r^ular 
appropriations. 



Since the issuance of the extensive 1981 Opinion, the proq)ea of a general 
appixjpriations lapse has arisen fiequendy. In 1981, 1982, 1983, 1984, 1986, 1987 and 
1990, lapses of fimding ranging from several hours to three days actually did occur. While 
several of these occurred entirely over weekends, others required the implementation of plans 
to bring government operations into compliance with the requiremenls of the Antideficiency 
Act. These prior responses to the threat of or actual lapsed appropriations have been so 
commonly referred to as cases of "shutting down the government" that this has become a 
nearly universal shorthand to describe the effect of a lapse in appropriations. It will assist in 
understanding the true extent of the Act's requirements to realize that this is an entirely 
inaccurate description. Were the federal government aaually to shut down, air traffic 
controllers would not staff FAA air control facilities, with the consequence that the nation's 
airports would be closed and commercial air travel and transport would be brought to a 
standstill. Were the federal government to shut down, the FBI, DEA, ATP and Customs 
Service would stop interdicting and investigating criminal aaivities of great varieties, 
includ'mg dnig smuggling, fraud, machine gun and explosives sales, and kidnapping. The 
country's borders would not be patrolled by the border patrol, with an extraordinary increase 
in illegal immigration as a predictable result. In the absence of government supervision, the 
stock markets, commodities and futures exchanges would be unable to operate. Meat and 
poultry would go uninspected by federal meat inspectors, and therefore could not be 
maiiceted. Were the federal government to shut down, medicare payments for vital 
operations and medical services would cease. VA hospitals would abandon patients and close 

- 2 - 



102 



their doors. These are simply a few of the significant impacts of a federal govcmmenl shut 
down. Cumulatively, these actions and the others required as part of a true shut down of the 
federal government would impose significant health and safety risks on millions of 
Americans, some of which would undoubtedly result in the loss of human life, and they 
would immediately result in massive dislocations of and losses to the private economy, as 
well as disniptions of many a^iects of society and of private activity generally, producing 
incalculable amounts of suffering and loss. * 

The Antideficteticy Act imposes substantial restrictions on obligatiiig fiinds or 
contracting for services in advance of appiopiiations or beyond appropriated levels, 

testrictions that will cause significant hariship should any lapse in approprialioos extend 

mudi-b^ond Ibose-we-iiave historically expeiienoed. To be sute, even the ^rt lapses that '- 
bave occurred have caused serious dislocations b the provisioo of services, generated 
wasteful expenditures as agencies bave dosed down ceitaia operaiioas and then restaited 
Aem, and disnqxed federal activities. Nevettfaeless. for any dwrt-teim lapse in 
appropiiations, at least, the federal govenunent will not be tiuly 'shut down' to the degree 
just described, amply because Congress has itself ptoWded .that some activities of 
govertunent should continue even «^ien annual appropriations have not yet been enacted to 
fund cuirent aaivities. 

Tbe most significant piovisoos of the Anddeftctem^ Aa codify three basic 
restrictions on the operation of govenunent activides. Fiist, the Act implements the 
constitutional requirement that "No Mon^ siail be drawn from the Treasuiy, but in 
Consequence of Appn^iiations made by Law." U.S. Const ait. I, § 9, cl. 7. Second, 
when no current appropriations measure has been passed to fund contracts or obligations, it 
restricts entering into contracts or incurring obligations (except as to situarions authorized by 
other law). Third, it restricts employing the services of employees to perform government 
fiinaions beyond authorized levels to emergency situations, where the failure to perform 
those functions would result in an imminent threat to the safety of human life or the 
protection of property.' The 1981 Opinion elaborated on the various exceptions in the 
Antideficiency Act that permit some continuing government fiinaions, and we will only 
summarize the major categories here; 

• Multi-year appropriations and indermite appropriations. 

Not all government functions are funded with annual appropriations. Some operate 
under multi-year appropriations and others operate under indefinite appropriations provisions 
that do not require passage of annual appropriations legislation. Social security is a 
prominent example of a program that operates under an indefinite appropriation. In such 



•' These restrictions arc enforced by criminal penalties. An officer or employee of the United States who 
knowingly and willfully violates the restrictions shall be fmcd not more than $5,000. imprisoned for not more 
than 2 years, or both. 31 U.S.C. §1350. 

-3 - 



103 



- cases, benefit checks continue to be honored by the treasuiy, because there is no lapse in the 
relevant appropriation. 

• Express authotizations: contracting authority and borrowing authority. 

Congress provides express authority for agencies to enter into contracts or to borrow 
funds to acoompUsfa some of their fiinctions. An example is the 'food and forage* authority 
given to the Dqnitment of Defense;, wfaidi audioiizes contracting for necessary dothing, 
siibsistence, forage, siqiplies, etc. widiout an a p piopi ia tion. In such cases, obligating fiuids 
or contracting can continue, because the Antkkfideocy Act does ixx bar such actiWties when 
thQT are authorized by law^- As the 1981 Opimon emphaazed, the ample atitboiizatioa or 
even direction to petfoim a certain acdoo diat standanOy can be found in^ agencies' enabling 
or organic legidation is insufiideat to support a findiog of oqness aotfaoiization or oeoessaiy 
impGcalion (the exceptioo addnessed oext in the tesoQ, standing akme. There must be some 
additional indication of an evident intention to have the acdvity continue despite an 
ap prop ri ations lapse. 

• Necessary implications: authority to obligate that is necessarily implied bv statute. 

The 1981 Opinion concluded that the Antidefidency Act contemplates that a limited 
number of govenunent functions funded tfarou^ annual appropriatioas must otherwise 
continue deq)ite a lapse in their appropriations because the lawful continuation of other 
activities necessarily implies tint these fimctioos will continue as well Examples indude the 
dieck writing and distributing functions necessary to disburse the social security benefits that 
operate under indefmite apprc^riations. Further examples indude contracting for the 
materials essential to the performance of the emergency services that continue under that 
separate exception. In addition, in a 1980 opinion, Atomey General Civiletli opined that 
agencies are by necessary implication authorized "to incur those minimal obligations 
necessary to closing [the] agency." The 1981 opinion reiterated this conclusion and 
consistent practice since that time has provided for the orderiy termination of those functions 
that may not continue during a period of lapsed appropriations. 

•. Obligations necessary to the discharge of the President's constitutional duties and 
powers. .■ ■ • 

Efforts should be made to interpret a general statute such as the Antideficiency Act to 
avoid the significant constitutional questions that would arise were the Act read to critically 
impair the exercise of constitutional functions assigned to the executive. In this regard, the 
1981 Opinion noted that when dealing with functions instrumental in the discharge of the 
President's constitutional powers, the "President's obligational authority . . . will be further 
buttressed in connection with any initiative that is consistent with statutes - and thus with the 
exercise of legislative power in an area of concurrent authority - that are more narrowly 
drawn than the Antideficiency Act andthat would otherwise authorize the President to carry 



104 



out his constitutionally assigned tasks in the manner he contemplates.* 1981 Opinion, at 6- 
7/ 

• Personal o r voluntary services "for emergencies involving the safety of human life or 

the protection of property." 

The Antidefidenqr Act prohibits oontractixig or obligating in advance of 
appropriations generaUy, except for drcumstanoes just summarized above. The Act also 
contains a sqMuate exceptioa applicable to personal or voluntary services that deal mth 
emergendes. 31 U.S.C. § 1342. This section was amended in 1990. We will analyze the 
effects of that ametxlateat in Bait n of tbis mcfnoiaiKjun^ 

Finally, one issue not explicitly addressed by the 1981 Opinion seems to us to have 
been settled by oondstent adminisfrafive practice. That issue concerns wbetber the 
emergency status of gove rnm ent fimctions should be deterauned on the assumption that the 
private economy wiU continue opeiating during a lapse in appropriations, or whether the 
proper assumption is that the piivalB economy will be intentqXed. As an exzmp\c of the 
difference this might make, oonader that air traffic controllers perform emergency functions 
if aircraft continue to take off and land, but would not do so if aircraft were grounded. The 
correct assumption in the context of an anddpated long period of lapsed appropriations, 
where it might be posdble to phase in some alternatives to the government actiwiy in 
question, and thus over time to suspeoi the govenunent fimcdon without theid)y imminently 
threatening human life or piopetfy, is not entirely dear. However, with respect to any short 
lapse in appropriations, the practice of past administrations has been to assume the continued 
operation of the private economy, and so air traffic controllers, meat inspectors, and other 
similarly situated personnel have been considered to be within the emergency exception of 
§ 1342. 



' The Atlomcys General and this office have declined to catalog what actions might be undertaken this 
heading. In 1981, for example. Attorney General Civilctti quoted Attorney General (later Justice) Frank 
Murphy. 'These constitutional powers have never been specifically defmed. and in fact caiuiol be, since their 
extent and limitations are largely dependent upon conditions and circumstances. . . . The right to take specific 
action might not exist under one state of facts, while under another it might be the absolute duty of the 
Executive to take such action." 5 Op. O.L.C. at 7 n.9 (quoting 39 Op. Aify Geji 343, 347-48 (1939)). This 
power should be called upon cautiously, as the courts have received such executive branch assertions 
skeptically. See, e.g. . Younestown Sheet & Tube Co. v. Sawyer . 343 U.S. 579 (1952); George v. Ishimaru . 
849 F. Supp. 68 (D.D.C.). vacated as moot . No. 94-5111, 1994 WL 517746 (DC. Cir.. Aug. 25, 1994). But 
sec Haig v. Agee . 453 U.S. 280 (1981); In re Neagle . 135 U.S. 1 (1890) 

- 5 - 



105 
n. 

The text of 31 U.S.C. §1342, as amended in 1990, now reads: 

An officer or employee of the United States Government or of the District of 
Columbia govenmient may not accept voluntary services for either govenunent 
or employ personal services exceeding that auttwrized by law except for 
emeigendes involving the safety of human life or the protection of propetty. 
This section does not apply to a ooipoiation getting amounts to make loans 
(except paid in capital amounts) without legal liatnli^ of the United States 
- GovemmenL. As used in this secdoo, Ihe tenn 'emergencies involving the . 
safety of human life or the piotecdoo of propef^' <k)es not include ongoing, 
r^ularfimctionsof govenimetit the suspen^oo of wfaidi would not imminently 
threaten the safety of human life or the piotectioa of pcopeity. 

31 U^.C. § 1342. Because of the § 1342 bar on eti^)lo^i^ posonal services, officers and 
employees may employ personal services in excess of other authorizations by law only in 
emeigency situations.^ This section does iKM by itself authorize paying employees in 
emeigency situations, but it does authorize entering into obligations to pay for such labor. 

The cential mtetptetlve task imder § 1342 is and has always been to construe the 
scope of the emergencies exccpdoa of that section. When the 1981 Opinion undertook this 
task, the predecessor to § 1342 did not contain the final sentettce of the current statute, 
whldi was added in 1990. Examining that earlier veraon, the Attorney General concluded 
that the general language of the provision and the ^>arse legislative history of it did not 
reveal its precise meaning. However, the opinion was able to glean some additional 
understanding of the statute from that legislative history. 

The Attorney General noted that as originally enacted in 1884, the provision forbade 
unauthorized employment "except in cases of sudden emergency involving the loss of human 
life or the destruaion of property." 23 Stat 17. He then observed that in 1950, Congress 



The 1981 Opinion conduded thar: 

(djespitc the use of the term 'volunury service.' the evident cancem underlying this 
provision is not government agencies' acceptance of the benefit of services rendered 
without compensation. Rather, the original version of § |1342| was enaaed as part of an 
urgent deficiency appropriation aa in 1884, Act of May 1, 1994, ch. 37, 23 Stat. 15, 17, in 
order to avoid claims for compensation arising froin the unauthorized provision of services 
to the govemmeni by non-employees, and claims for additional compensation assened by 
government employees performing extra services after hours. This is, under (§ 1342|, 
governmeni officers and employees may not involve govemmeni in contract for 
emplovmeni . i.e., for compensated labor, except in emergency situations. 30 Op. Att'y 
Gen. 129, 131 (1913). 

-6- 



106 



enacted the modern version of the Antideficieocy Act and accepted revised language for 
§ 1 342 that originally had been suggested by the Director of the Bureau of the Budget and 
the Comptroller General in 1947. In analyzing these different fomiulations, the Aaoraey 
General stated that 

[wjithout elaboration, these officials proposed that 'cases of sudden 
emergmcy^ be amended to 'cases of emeigency,* 'loss of human life' to 
'safety of human life,' and 'destiuction of propei^* to *protfiction of propeity. 
These changes were not qualified or explained by the iqmit accompanying the 
1947 psoommendation or by any aspect of the legislative history of the general 

appropriadons act for fiscal year l9Si. which included the modern §[1341 j. - 

Act of September 6, 1950. Pub. L. No. 81-759, §1211. 64 StaL 765. 

Consequently, we infer from the plain impoit of the language of tbeir 
amendments that (he drafteis intended to broaden the audiority for emergency 
employment 

5 Op. O.L.C. at 9. 

The 1981 Opinion also sought guidance from the consistent administrative practice of 
the Oflioe of Management and Budget in applying identical "emefgendes" language found in 
another provision. That other provision pitatiHiits OMB from appoitioning apptv^iiated 
fiinds in a manner that would indicate the need for a deficiency or supplemental 
appropriation, except in cases of 'emeigendes involving the safety of human life, [or] the 
protection of property' — phraseology identical to the pre-lS>90 version of § 1342.* 
Combining these two sources with the statutory text, the Anoniey General aiticulaied two 



* 31 U.S.C § 1515 (recodified from § 665(c) a( the time of the Civiletii opinion). Analyzing past 
adinini.<<tra(tvc praaice under thu> siatute. Attorney General Civileiti found that: 

Directors of the Bureau of the Budget and of the Office of Management and Budget have 
granted dozens of deficiency rcapponionments under this subseaion in the last 30 years, 
and have apparently imposed no test more stringent than the aniculation of a reasonable 
relationship between the funded aaivity and the safety of human life or the protection of 
property. Activities for which deficiency apponionments have been granted on this basis 
include [FBI] criminal investigations, legal services rendered by the Dcpanmeni of 
Agriculture in connection with state meat inspeaion programs and enforcement of the 
Wholesome Meat Act of 1%7, 21 U.S.C§§ 601-695, the proteaion and management of 
commodity inventories by the Commodity Credit Corporation, and the investigation of 
airaaft accidents by the National Transportation Safety Board. These few illusiratlon> 
demonstrate the common sense approach that has guided the interpretation of § 665(c). 
Most imponant, under § 665(c)(2), each apportionment or reapportionment indicating the 
need for a deficiency or supplemental appropriation has been reported coniemporanctiusly 
to both Houses of Congress, and, in the face of these reports. Congress has not acted in 
. any way to alter the relevant 1950 wording of § 665(c)(1)(B), which is, in this respect, 
identical to § 665(b). 

-7 - 



107 



niles for identifying functions for which govenuneat officers may enter into obligations to 
pay for personal services in excess of I^al authority other than § 1342 itself: 

Fir5t,,there must be some reasonable and aiticulable connection between the 
function to be perfoimed and the safety of human life or the protection of 
property. Second, there must be some reasonable likelihood that the safety of 
human life or the protection of prtqierty would be compromised, in some 
d^ree, by delay in the peifonnanoe of the function in question. 

While we continue to believe that the 1981 articulation is a fair reading of the 
AntidefideiK^ Act cveii after the 1990 aiiieodtitetit, 2Se Letter from Walter Dellitiger to 
Robert'G. Damusr October 19,'i993; we ve aware of the possibility the second of these two 
niles might be read aMte expansivdy than was intended, and thus might be applied to 
funcdons that are not emergencies within the meaning of the statute. To foitstall possible 
misinteqnetations, (he seoood criteria's use of the phrase 'in some degree' should be 
fcplaoed with die phrase, "in some significaiit degree.' 

The reasons for this change rest on our understanding of the function of the 1990 
amendment, which comes from considering the content of the amendment, its structure and 
its sparse l^islative history. That histoiy consists of a solitary reference in the conference 
report to the Omnibus Budget Recooctliation Act of 1990, Pub. L. No. 101-S08, 104 Stat. 
1388: 

The conference rqx>tt also makes conforming changes to title 31 of the United States 
Code to make dear that . . . ongoing, tegular operations of the Government caiuiot 
be sustained in the absence of appropriations, except in limited circumstances. . These 
changes guard against what the conferees believe might be an overly broad 
interpretation of an opinion of the Attorney General issued on January 16, 1981 , 
regarding the authority for the continuance of Government functions during the 
temporary lapse of appropriations, and affirm that the constitutional power of the 
purse resides with Congress. 

H.R. Rep. No. 964, 101st Cong., 2d Sess. 1170 (1990). While hardly articulating the 
intended scope of the exception^ .the conference report does tend to support what would 
otherwise be the most natural reading of the amendment standing alone: because it is phrased 
as identifying the functions that should be excluded from the scope of the term "emergency," 
it seems intended to limit the coverage of that term, narrowing the circumstances that might 
otherwise be taken to constitute an emergency within the meaning of the statute. 

Beyond this, however, we do not believe that the amendment adds any significant new 
substantive meaning to the pre-existing portion of § 1342, simply because the most prominent 
feature of the addition -- its emphasis on there being a threat that is imminent, or "ready to 
take place, near at hand," see Webster's Third New International Dictionary 1 130 (1986) - 
is an idea that is already present in the term "emergency" itself, which means "an unforeseen 

-8- 



108 



combination of circumsunces or the resulting state thai calls for immediate aaion" to 
respond to the occurrence or situation. Id^ at 741 .' The addition of the concept of 
"imminent" to the pre-existing concept of "cmeigency" is thus largely redundant. This 
redundancy does, however, serve to emphasize and reinforce the requirement that there be a 
threat to human life or property of such a nature that immediate aaion is a necessary 
response to the situation. The structure of the amendment offers further support for this 
approach. Congress did not alter the operative language of the sutute; instead. Congress 
diose to enact an interpretive provision that simply prohibits overly expansive interpretations 
of the "emergency' excq}tion. 

Under the formulation of the 1981 Opinion, govenunent functions satisfy § 1342 if, 
inter alia, the safety .of human life or the protection of property -would -bc-'comptDmisedr in 
some d^iee.' It is coned vable that some would interpret this phrase to be satisfied even if 
the threat were de minimis, in the sense that the increased risk to life or property were 
insignificant, so long as it were posable to say that safety of life or protection of ptopeny 
bore a reasonable likelihood of bdng oompromised at alL This wouM be too expansive an 
applicadon of the emergency provision. The brief delay of routine maintenance on 
government vehicles ought not to constitute an "emergency," for example, and yet it is quite 
possible to conclude that the failure to maintain vehicles properly may "compromise, to some 
d^ree' the safety of the human life of the occupants or the protection of the vehicles, which 
are government property. We believe that the revised articulation clarifies that the 
emergencies exception applies only to cases of threat to human life or property where the 
threat can be reasonably said to the near at hand and demanding of immediate response. 



Sec also Random House Diciionary of ihc English Language UnahriOccd (>M\ (2(1 cd 1987) 
('emergency'" means 'a sudden, urgcni, usuailv unexpected occurrence or occaNom requiring immediaic 
action'); Webster's (I New Riverside University Dictionary 427 (I9.S.S) ("an uncvpoctcd. serious occurrence 
or situation urgently requiring prompt action"). 

-9 - 



109 




EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND 8UOCET 

WASHINOTON. aC. 20SO3 

November 9, 1995 

THE DIRECTOR 

H-96-01 

MEMORANDUM FOR HEADS OF EXECOTIVE DEPARTMENTS 
AND AGENCIES 






r 



FROM: Alice M. Rivlin 
Director 

SUBJECT: Planning For Agency Operations 

This memorandum is designed to help you plan your agency's 
activities for next week, in light of recent developments on 
fiscal 1996 appropriations. 

The cxirrent Continuing Resolution (CR) expires at midnight 
on Monday/ November 13, 1995- At this point, only two 
appropriations bills have been enacted for fiscal 1996 . Me do 
not know if Congress will pa£s a second acceptable CR by Monday 
that will continue funding for activities that lack 
appropriations. Because there is a real chance that this may not 
occur, you shoxild begin planning now, as a contingency matter, as 
follows : 

Today, Thursday. November 9 . You shoxild review your 
shutdown plans and ensure that yovtr eoployees are properly 
Informed. As noted above, the CR expires at midnight, Monday. 
Therefore, Monday, November 13th will be a normal workday for the 
Federal Government. You should advise employees to report for 
work on Monday. 

Monday, Nov<'mV>er 13 : All en5>loyee6 should report for work. 
We will advise you of further developments, including whether a 
CR will likely be enacted. If not, you should prepare to 
implement your shutdown plan on Tuesday. 

Tuesday . Novf'Tn'her 14 ; Regardless of whether a CR has been 
enacted, all employees should report to work on Tuesday, We will 
advise you on whether your shutdown plan is to be implemented, as 
follows . 

Shutdown . If no CR has been enacted or will likely be 
enacted Tuesday, we will issue instructions initiating 
a phase-down of activities for non-excepted employees. 
You should complete such phase -dovm activities for non- 
excepted personnel, if called for, during the first 
three hours of the workday. 



no 



Normal Qperacions ; If a CR will likely be enacted on 
Tuesday, we will advise agencies to operate in a normal 
manner. 

Attached is a siimmary of our general guidance on algency 
operations in the absence of appropriations. 

Thank you for your cooperation in these difficult 
circumstances. We will keep in close touch with you as 
developments unfold. 



Attachment 



Ill 



General Guidance on Agency 
Operations in tlie Absence of Appropriations 

OMB Bulletin 80-14, dated August 28, 1980 (and amended by 
the OMB Director's memorandtim of Novetnber 17, 1981), requires 2d.l 
agencies to maintain plans to deal with an appropriations hiatus. 
If a shutdown ocoirs, we assume each agency will be operating 
under its shutdown plan as approved-by OMB in September. As a 
reminder, the Attbraey General's opinion dated January 16, 1981, 
t^dated by the opinion of the Office of Legal Coxmsel dated 
August 16, 1995, remains in effect. In general: 

o En5)loyees of affected agencies performing non-excepted 
activities (as discussed in the Department of Justice 
opinions) may not perform any services other than those 
involved in the orderly siispexision of non-excepted 
activities; excepted activities that may be continued 
are generally those that are authorized by law or that 
protect life and property. 

o Agencies may not permit voluntary performance of non- 
excepted services; and 

o Agency heads make the determinations that are necessary 
to operate their agencies during an appropriations 
hiatus (within the guidance established by the. 
Department of Justice opinions and this memorandum, and 
pursuant to normal agency processes for the resolution 
of issues of law and policy) . 

Please address any questions to your CX4B budget examiner (s), 
or to OMB General Coxmsel Robert Damns (395-5044) , or Associate 
General Counsel for Budget Rosalyn Rettman (395-4778) . 





112 

00 1^ 



EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINSTON, aC 2OS03 

November 13, 1995 

THE DIRECTOR 
M-96-02 

riEMORANDOM FOR HEADS OF EXECOTIVE DEPARIMENTS 
AKD AGENCIES 

FROM: Alice M. Rivl 

Director 

SUBJECT: Planning for Agency Operations in the Absence 
of Appropriations 

This memorandum follows up on my memoremdum of last week, 
and is intended to provide further guidance on planning for 
shutdown . 

The c\irrent Continuing Resolution (CR) expires at midnight 
tonight, Monday, November 13, 1995. We have no indication yet 
whether Congress will act today and pass an acceptable CR. 
Therefore, beginning tomorrow morning, Tuesday, November 14, 
1995, the head of each agency must be prepared to inclement his 
or her existing plan for closing down operations funded by 
accounts that have not received appropriations. 

All employees should report to work tomorrow. During the 
day tomorrow, we will advise you on whether your shutdown plan is 
to be implemented, as follows: 

Shutdown . If no CR has been enacted or will likely be 
enacted Tuesday, we will issue instructions initiating 
a pHase-down of activities for non-excepted employees. 

Normal Operations . If a CR will likely be enacted on 
Tuesday, we will advise agencies to operate in a normal 
msinner . " • 

Again, we thcuik you for your cooperation in these difficult 
circumstances. We will continue to keep in close touch with you 
as developments unfold. 



113 



Attachment D 
Post-Shutdown Report on Costs/Service Impact 



114 



The Deputy Secretary of Veterans Affairs 
Washington 



NOV 21 1995 



Mr. John A. Koskinen 

Deputy Director for Management 

Office of Management and Budget 

Executive Office of the President 

Room 260, Old Executive Office Building 

Washington, DC 20503 

Dear Mr. Koskinen: 

Enclosed are the Department's responses to your requests for 
Information concerning costs Incurred by VA resulting from the shutdown and 
for a list of services to the public which were curtailed or denied during the 
shutdown. 

Sincerely yours. 



Hershel W. Gober 
Enclosure 



115 
Department of Veterans Affairs 

Cost VA incurred dmini^ shutdown 

VA incurred some costs as a direct result of the shutdown. Following are some 
Items that resulted in these costs. However, the actual costs to VA are not yet 
available. 

Interest payments and lost discounts on vendor pa3mients 

Lost discounts on property taxes 

Loss of prepaid tuition for training 

Services to the Public which were cnrtafled or denied: 

Telephone calls finom veterans to Veterans Benefits ofiBces went unanswered 

Mail from veterans was neither oi>ened nor answered 

Veterans Benefits oflfices were closed to ""walk-in" veteran-dlents 

Vocational rehabilitation counseling appointments were canceled 

Pending claims for comp>ensation, pension, education and vocationad 
rehabilitation were not processed 

Retroactive pa3rments for compensation, pension and education claims were 
not processed 

Pa5nments of Gl Bill education checks and insurance death claims were delayed 

Loan Guaranty certificates of eligibility and certificates of reasonable value 
were not issued 

Property appraisals were not conducted 

Counseling and services were not provided to veterans to help them avoid 
foreclosures 

Beneficiary travel to VA medical facilities was decreased 



116 



Services to the P ublic which were ct tTtnneid or denied rp.ontinn«Hl)t 

Access was diminished to "800" numbers for inforaiation on CHAMPVA and for 
recruitment and placement services 

Board of Veterans Appeals case processing and hearings were delayed 

Applications for headstones and markers were not processed and orders were 
not placed for private, state, and national cemeteries 

Markers and headstones received at national cemeteries were not placed on 
graves 

Processing of requests for Presidential Memorial Certificates ceased 

Applications fixjm states for grants to btilld or improve state veteran cemeteries 
were not processed 

Access was denied to some national cemeteries for some purposes 

Weekend scheduling of inteiments for the following week was canceled for all 

national cemeteries 

Pa)nTients to contractors for services already rendered at national cemeteries 
were not made. This was of great impact to small and minority contractors 

Calls to the IG's Hotline went unanswered 

FOIA requests from the media and public for IG reports went unanswered 

IG internal audit opei^atiojis were curtailed - including Congressionally- 
mandated CFO work 

Nearly all IG criminal investigative work was halted 

Acceptance of discrimination complaint and sexual harassment cases was 
halted 

Collection ceased of monies owed the Department involving Medical Care Cost 
Recovery, bankruptcy cases, and other legal programs 

Cases pending before the Court of Veterans Appeals were continued 



117 



Services to the Public which \yere curtailed or denied (continued): 

Final agency decisions were not processed on FOIA/ Privacy Act requests from 
the public 

Review of contracts and other procurement matters was delayed which affected 
completion of various Department projects/facilities used by the public 

Legal matters relating to veteran patients and claimants may have been 
delayed 

Administrative hearings afifecting Department employees and managers were 
delayed 

Routine responses to Members of Congress and Committees were unavailable. 
One hearing was canceled. Casework In Senate and House liaison offices was 
suspended. 

On-time payment of vendor invoices were not made 

Vendor access to information on payment status was limited 



118 



Attachment E 
Agency Shutdown Guidance 



119 



Department of Memorandum 

Veterans Affairs 

0... AUG 14 1995 

F«>m Assistant Secretary for Human Resources and Administration (006) 
Sum Shutdown of Department Operations Due to an Absence of Appropriations 
To Administration Heads, Assistant Secretaries, and Other Key Officials 



1. At this time it is unclear if VA's budget for Fiscal Year 1996 will be 
approved by October 1, 1995. In the event that it is not approved, the 
Department will be required to either operate under a continuing resolution, 
at current or reduced levels of funding, or absent a continuing resolution, to 
cease all non-excepted activities beginning October 1, 1995. 

2. In the event of an absence of appropriations, we will need to shutdown 
non-excepted activities and furlough employees performing these activities. 
In the past, excepted activities that may be continued include those that 
protect life and property. In addition, employees performing non-excepted 
activities may be retained for as long as it takes to complete an orderly 
suspension of that activity (usually one-half day). For a more detailed list of 
excepted activities, we have attached some historical guidance, most notably 
an Office of Management and Budget (OMB) memorandum entitled A gency 
Operations in the Absence of Appropriations , dated November 17, 1981. 

3. I am asking each of you to review your operations and identify the number 
of employees that should be excepted and those that are necessary to 
accomplish shutdown activities. Those identified to accomplish the shutdown 
would themselves be furloughed as soon as that work is accomplished. In 
reaching your decision, you should be guided by the attached guidance from 
OMB which includes the following criteria: 

Excepted Employees: 

Employees necessary for the protection of life and property, 
including medical care of inpatient and emergency outpatient 
care, protection of federal lands, buildings, equipment, and other 
property owned by the United States, law enforcement and 
criminal investigations, emergency and disaster assistance, and 
the protection of research property. 



120 



Page 2 

Administration Heads, Assistant Secretaries, and Other Key Officials 

Shutdown Employees: 

Those necessary for the orderly shutdown of non-excepted 
activities. 

4. By August 25, 1995, please submit your shutdown plans for both Central 
Office and field activities to my office. We will be sharing your plans with the 
National Partnership Council prior to implementation. In addition, we may 
have to submit the Department's overall plan to 0MB as we have done in the 
past. At a minimum, your plan should contain: 

(1) Excepted activities and number of employees necessary to carry 
out those activities; 

(2) Description of activities shutdown employees will perform, length 
of time needed, and number of employees necessary to carry out activities; 

(3) Procedures to notify customers of suspension/reduction of 
activities; and 

(4) Procediu-es to notify employees of their status relative to excepted 
or non-excepted activities. 

5. To assist in this effort, I have also attached copies of the shutdown plans 
previously developed for your organization. If you have questions regarding 
the development of plans or furlough procedures, you or members of your 
staff may contact Richard Norman, Director, Employment and Training 
Service or Dennis Curley, Chief, Title 5 Staffing Division. Mr. Norman can 
be reached on 565-8804 and Mr. Curley on 565-8842. 




121 

Appendix Al 




EXECUTIVE OFFICE OF THE PRESIDENT 
OFFICE OF MANAGEMENT AND »UDCrr 

WASMINOTON, O.C. KM9 

October 5, 1990 



HEKORANDUM rOR HEXDS OT SXECtTIVE OEPARTOEKMV 

AKD ACEHCIES ^ ^'XsWC-^^^ . 
FROK: Rieh«rd C. *»**-— ^^'^ 

SUBJECT: Aganey Op«xmHon* in the M>s«nca o£ 
Appropriations 

The Continuing Kaaolution (CR) axpirea at aidnlght 
tonight. October 5, 1990. Wa have no indication yat vhather 
Congress vill act today and pass a CR. The Prasldant has 
stated that it is his Intention not to sign a CK imtil there 
has been satisfactory Congressional progress on the budget. 
At this point, there has clearly not been satisractory 
Congressional action. Therefor*, beginning toaorrov aomlng 
(Saturday) , October 6th, rh« head o£ aach agency Bust be 
prepared to implenent bis or her existing plan for dosing 
dovn operations funded by accounts that have not received 
appropriations . 

0KB Bulletin 80>14, dated August 28, 1980 (and amended 
by the 0KB Director's neaorandum of Noveaber 17, 1981), 
requires all agencies to aaintain plans to deal vith such an 
appropriations hiatus. Purtharftore, the Attorney General's 
opinion dated January 16, 1981, supporting this bulletin, 
reaaine in effect. In general: 

o Eaployees of affected agencies perforaing non- 

excepted activities (as discussed in the Attorney 
General's opinion) aay not per f era any services 
ether than those involved in the orderly suspension 
of non-excepted activities; excepted activities 
that aay be continued are generally those that are 
euthoriced by lav or that protect life and 
property. 

c Agencies aay not perait voluntary perforaanca of 
non-excepted services. 

lapleaentation of this shutdown process vill be 
particularly difficult because any lapse of appropriations 
vill occur over a vee)cend (vith a Monday holiday) . 

■o Weekend Ewplovees — Agency shutdown plans should 

be iapleaented for non-excepted weelcend employees, 



122 



vho ahould be instructed to report Xor their first 
scheduled work turn for the sole purpose ot 
cngeging in orderly shutdown activities. Excepted 
weekend enployees should be inctructed to report 
tor work and to psrCom their excepted activities. 

o ^11 Other EffiPleveeB — All regular enployees 
perfomlng non-exceptad activities, as well as 
excepted enploycea, should be instructed to report 
ioT work on Tuesday, October 9th, as scheduled. 

Over the weekend and during the day on Tuesday, we will 
provide further instructions, depending on the status of 
appropriations action, as follows: 

o Worrnal Qperatiena ; If a CK that suspends sequester 

is clearly likely to be enacted on Tuesday (or has 
been enacted over the weekend} , agencies will be 
instructed to operate in a noznal Banner. 

o Shutdown ; If no CR is likely to be snaeted on 
Tuesday, we will issue instructions Initiating a 
phase-down of activities for non-axcapted 
e&ployees. Such phase-down activities for non- 
excepted personnel. If called for, shotild be 
co&pleted during the first three hours of the ■ 
workday. 

o Sequester ; If (on or before Tuesday) a CR is 

enacted that does not suspend sequester, you should 
begin iapleaenting your sequester plan. 

Please address any question to your 0KB budget 
ex&Biner(B), or to OKB Acting General Counsel Robert Damus 
(395-5044), or Associate General Counsel for Budget Koealyn 
RettJoan (395-5600). 




123 



EXECUTIVE OFFICE OF THE PRESIDENT ,„„„ ^. .^ 

Appendix A> 

OFFICE OF MANAGEMENT AND BUDGET 
WASHiNOTON. e.c. xuei 



Bulletin No. 80-14, Supplement No. 1 August 20, 1982 

TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS 
SOBJECT: Agency Operations in the Absence o£ Appropriations 

1. Purpose . This supplement updates OMB Bulletin No. 60-14, 
dated August 28, 1980, and requires the submission of contin- 
gency plans for review by OMB. The purpose of the review is 
to - assure adequate contingency planning and Government-wide 
compliance with the provisions of the Antideficiency Act. 

2. Baclcqround . OMB Bulletin ^o. 80-14 instructed agencies to 
develop plans for an orderly shutdown in the event o.£ a 
funding hiatus. It became necessary to carry out these plans 
during the November 1981 hiatus. In reviewing that experience 
and the operational plans in effect during the period inmedi- 
ately preceding enactment of the March 31, 1982 Continuing 
Reeolution, certain difficulties were observed:. 

— some agencies have not fully complied with the 
requirements of OMB Bulletin 80-14, and do not have 
fully operational contingency plans; 

, — disparities appear to exist between some agencies as 
to the definition of activities necessary to protect 
life and property; and 

— disparities appear to exist between some agencies as 
to the time necessary to complete the orderly shutdown 
of nonexcepted activities. 

3. Actions required ; 

a . Amend the date that appears in section 2 to 
January 16, 1981. 

b. Delete the last sentence of subsection 3.c. 

c. Add subsection 3.d. as shown in the attachment. 



/:iuuj A. fUU-^ 



David A. Stoc)anan 
Director 



Attachment 



124 



Attachment 



Material to be added to 

OMB Bulletin No. 60-14, 

Section 3 

d. Reporting . The plans required in subsection c will 
be submitted to OHB by September 15, 19B2. 

The following information will be provided with the plans: 

(1) Estimated tine to the nearest one-half day to 
complete the shutdown in accordance with the plan. 

(2) Number o£ employees expected to be on-board 
before implementation of the plan. 

(3) Total number of enployees to be retained, under 
the plan because (a) they are engaged in m.ilitary, law 
enforcement, or direct health care activities, or (b) thelT 
compensation is financed by other than annual appropriations. 

(4) Number of employees, not otherwise exempt, to be 
retained to protect life and property. 

within the guidance established by the Attorney General's 
opinion of January 16, 1981, and this bulletin, agency heads 
are to make such determinations as are necessary to operate 
their agencies during an appropriations hiatus, and to do so 
pursuant to normal agency processes for the resolution of 
issues of law and policy. Questions that cannot be deter- 
mined by an agency should be addressed to OMB. '. All 
unresolved questions relative to the construction of the 
Antidef iclency Act will be jointly referred to the Office of 
Legal Counsel of the Department of Justice. 

If It is estimated that more than one-half day will be needed 
to complete the shutdown or that the number of employees to 
be retained to protect life and property will exceed five 
percent of the number of employees on board at the beginning 
of the hiatus less those exempt for reasons specified in item 
(3) above, agencies will submit policy statements and legal 
opinions supporting those estimates. 





125 



Appendix A3 

EXECUTIVE OFFICE OF THE PRESIDENT 
orricE or management and »uocrr 

WAKMINCTON. O.C SBKl 



■ Uwwtotr 17, 1981 
tSM0?AK3M FCM KLUS OP PjCUnVE JSiyJCD^gS MO ASOICZES 
ntOrt: tavid A. StocSsaan 

'S0B7£Cr: Agenc^ CSpentions In the Abs«net eC KfptQprUtions 

Public X^tf 97-51, the Contlnuino Kesolution «naet«9 ty the Oangrcss oo S^enber 
30, 19S1 %o 'Provide for- tpprvptijiiioTit for all executive md Judieiil branch 
ecco;nts, vill c^.lr«'.on-aidnigt)t ftiday, ttovesfaer 20. lb rtgulcr 
.expropriations bills for Fiacal Year 1982 bcve been sdbsitted to the President 
'Ccsirq the period of the Cbntinolng Feaolotlon, and the Boose of KejresenUtives.- 
and Senate ere presently considering videly divezgent Second Oootlining ^ 

P^solutions. Tnere is, therefore,, a. possibility that no ip^rppriatlaas will be 
enacted es of K3ver,ber 21. 

Under the circ-jTjtenees, you should begin orderly planning to deal vith this 
possibility. 

CK3 Bulletin 80-14, dated August 28, 1980, requires all agencies to s&intain 
caiti:>;en::y pi ens to deal with the cventuali^ of en ippropriatism bietias. 
Additicrally, the opinion of the Attorney General dated January 16, 1S31, - 
«ttecr>%d, Te.T.Ains in effect. 

Cx&rples of excepted activities were developed tditn the Executive Bzsd) last 
. faced the possibili^ of an apprioriatiom hiatus, and were eent to agencies t>y 
forrer Otii Director Jenes HcInQre en Scptcnbcr 30, 1980. ' Tbay are: 

Ee^ inning (N7ve(9ber.21, 1981], agencies e^ continue activities otherwise 
ajtnorized fcy law, those that protect life and property and txose 
nMessary to begin ];hasedosn of other activities. Prinaxy axzsples of 
ectivities egineies nay continue are those Wiich say be found 0)der 
er?li cable statutes to: 

1 . Provide for the national aecuri^. Including the conduct cf foreign 
relations essehtiel to the national aecurity or the a&fcty cC life and 

property. 

2. Provide for benefit payments end the perfocnance cf i-r<n ^rmr t 
obligations under no-year or itulti-year or other funds remalairQ 
(v^leble for those purposes. . 

3. CcnSjct essential activities to the extent that they protect life end 

prcyerty, incluiirq: 

£. Hedic&I caxe of ijpetients and cinergency outpatient csre; 



40-190 97 - 5 



126 



t). Activities essential to eisure oontinueiS public heiJth enS safe^, 
including safe uae of fr«rj ard drugs anS safe uae of hertxdeus 
eatcrials; 

c. Oie osntinuiinc* of «ir traffic awittol anS ether trampartation 
safety functions and Uie protection of tnnspsrt property; 

6, border and osutil pnottctlon and aurvtlllancc} 

e. Protection of Fc<3eral lands, buildings, «aUrways, eTiipwnt and 
other property o«r>ad by the Oaittd SUtasj 

f . Care of prisonta and btltcr pizsons la the costaiy cf the mitcd 
Steterr 

g. law enforcement tni crininal invtstigations} 

h. &i«rgen£y .and disaster asslstaneei 

i. i^tivltlcs essential to the preservation of the essential elements 
of the troney an3 barvcing >yst*i of the United States, Ineludlrg 
odrrowir^ anj tax collection activities ef the Treasury} i 

j. Activities that ensure production of po^^r and naintcnsnoe of the 
power distrioution aysteaj and 

X. Activities necessary to j»intaln protection of researdi pcpperty. 

you shDuld iiainuin the staff and support senrices necessary to continue 
these essential functions. 

In edition, the follovirq policies %*ill be in effect In the event of a Vovtxixz 
21 afprcpriations hiatus: • 

1. All employees perfotning non-excepted activities defined by this serorandum 
arri ty tne Attorney General's opinion of January 16, 1981, are permitted to 
perfona ro's*n^ic«» other tnan those Involved in the orderly suspension of 
egeacy operations. 

2. Kith regard to ron-excepted sgency activities and agency personnel 
perfomur^ then, particular attention should be paid to thoke prwisions c£ the 
Antibeficiency Act that do rot permit agency acceptance of voluntary, i.e. . 
non-excepteij services. Accordingly, in the event that the appropriations hiatus 
continues reasorably be^w^d Hsnday, KTvertber 23, 1961, agency ocads will be 
re^jiretJ to Ri&>:e oetermlnations as to whether non-exceptad personnel have 
ooc^pleted all p^ase^Twn tas)cs incident to the orderly suspension cf agency 
cperetions. At such ti;t», the services of those enployees oan ts longer be 
accepted in the a^tsenee of appropriations. 



127 



3. SUs tseroraTtdun is principally directed towazdi the ability of agencies to 
cbliqatc f a'kis in the assence of apprppriations. Xt ahould be eate dear tnat« 
during a eppropriatiou hiatus^ fur^s soy not be ■vailable to pcn&it agency 
payment of obligations. All personnel performing excepted Mrvices, includix>g 
Activities incident to the orderly csspension et agency cpcratians, should be 
assured that the United Sutes will not contest its lagal obUgation to aaxs 
payncnt for such services, even in the absence of apprppriations. . 

4. Agencies are requested to report prcnptly.to CMi staff sap Bomally handle 
their budgets any najor dlsrvptiens of activities or services that's^ oar tfdll 
iinminently result f ron the absence of awtppri atioos. 

5. Kithin the guidance established by tne Attorney General's cplAion of Janoazy 
Jjg, 1981« and tnis nororandixv agftn^ beads arc to aani such detetninatiom as 
are 'tiecessary to operate' their agencies during an appropriations biatos, snd to 

.do so pursuant to normal agency processes for the resolution of issues of la^ . 

/and policy. Qjestions tiiat cannot be determined by an agency should be 
^iressed to Or&3. All unresolved questiom: relative to the oonstructioo of thfe 
Antidsficlency Act will be jointly referred to the Office of Legal Counsel of 
the Deparbnent of Justice. 




128 



FVPr-ifTiw,. Appendix A4 

EXECUTIVE OFFICE Or THE PRESIDENT 
OFFICE OF MANAGEMENT AND BUOGET 
%VAXHINCTON. O.C *3U9 



Bulletin No. 8O-14 -August 2B, 1980 

TO TBI -ECAOS OF EXBC07ZVE OEPAItSMEHTS ARD CSTABLXSBHQtTS 

SUBJECT: Shutdown of Agency Operations Ojpon rallart bj the 
Congress to Snact Appropriations 

1. Purpose arid -^Ibveraqe . This Bulletin provides policy 
guidance ^ and- . ^instructions, for actions to - be taXen by 
.X^ecutive Branch' agencies vhcn - failure by the Congress to 
cn&et either regulai; appropriations / a continuing resolution, 
or needed supple&entals results in interruption o£ fund 
av&il&bility. This* -BUlietin does not apply to specific 
appropriations action by the Congress to deny program 
funding. In the instance of partial funding Interruptions/ 
e.g., failure of the Congress •. to act on program 
supplenentals, special procedures beydnd those outlined in 
this Bulletin may be warranted. In. such cases, 0^Q 
representatives responsible for the affected agency** budget 
estinates should be consulted. 

2. BacVground . - The Attorney General issued an opinion on 
April 2S, IS'.eo that the language and legislative history of 
the Antidefi'ciency Act (31 U5C 665) unatsbiguously prohibits 
agency officials from incurring obligations in the absence of 
appropriations. The essential -clcacnts of the Attorney 
General's advice are tbatt 

a. In the absence . of «ev appropriations. Federal 
officers may incur no obligations that cannot lavfally be 
funded fron prior appropriations unless auch obligations are 
otherwise authorized by law. 

b. Under authority of the Antideficiency Act, Federal 

officers nay incur obligations as . necessary for orderly 
termination of an agency** functions, but bo funds say be 
disbursed. 

c. Under its enforcement responsibilities, the Depart- 
ment of Justice will take actions to apply the criminal 
provisions of the Antideficiency Act in the future when 
violations of the Act ape alleged under such circumstances. 



129 



3. Actions required . Agenciee laced, with funding 
interruptions oust take «teps to forestall interruptions In 
operations and assure that they are In a position to linit 
their activities to those directly related to orderly 
shutdown of the agency. 

«. Reallocation cf funds prior to shutdovm . Prior to 
initiation of orderly shutdovn aetiviticSf cgency heads will 
linit their operations to aininoa essential activities and 
vi'll reallocate to the extent pcraittcd by law all available 
funds in order to forestall the fund Interruption date as 
long as possible. Reallocation of funds will be «ade aubject 
to the following requlrcaentsi 

(1) Reallocation below the appropriation and fund 
account level will be eceoBplished by telephonic revision to 
allotments ' and suballotaents (each revisions vill be 
documented and ' iiancdiatcly reflected in forxaal vritten 
changes :to .the .regul|ir.--allotnent/suballotaent docoaents). 

.<;2:) .Agencies that have specific statutory authority 
«o reallocate and transfer funds between appropriation and/or 
fund a'tbounts will effect the transfers in accordance with 
current standard fi-scal. procedures. Such transfers generally 
vill be effected on Standard Form (S?) llSlf "Nonexpenditure 
Transfer of Funds' (see 0KB Circular No. A-llf section 21.2, 
for a description of when expenditure transfers night be 
required). This Bulletin does not convey new authority to 
transfer funds. 

(3) . For this purpose adjustnent to snounts contained 
in 0KB apportionments 'may be nadc without submission of a 
reapportionment request. 

b. Orderly shutdovn activities . When all available 
■funds, including reailotted/reallocated funds, are exhausted, 
orderly shutdown setivitles Must begin. Each agency bead 
must determine the specific actions that will be taken; 
however, all actions nust contribute to orderly shutdown of 
the agency and give priaary consideration to protecting life 
and safeguarding Government property and records. Such 
actions should be acconpllshed. in a way that vill facilitate 
reactivation when funds are sude available. Agency beads 
will notify 0KB, OPK, Treasury, and CSA iBnediatcly when 
shutdown activities are being initiated. . These central 
agencies vill be responsible for notifying their own regional 
offices, except as noted in paragraph (3). 



130 



, , , J}J Appropriations and funds . Ag«ncy heads will 
Jlir.it obligations incurred to those needed to nalntaln the 
ir.lnimura level of «sientiel activities necessary to protect 
life and property; to process the necessary personnel 
actions; to process the personnel payroll for the periods 
prior to fund Interruptioni and to provide for orderly 
transfer of custody of property and records to the General 
Services Administration (GSA) and the Office of Personnel 
Management (0P«) for disposition. 

(2J. Personnel and personnel . records « Mcccssary 
personnel, actions will Be taken to release aoploytes ' In 
accordance '■ with applicable law and Office of Personnel 
Management's regulations. Preparation of aaployet notices of 
furlough and processing of personnel and pay records in 
connection with furlough 'actions 'are essential shutdown 
•actiyiti-es. Agencies shbald plan for .these functions to be 
performed J>y' en^tloyces who arc retained for orderly 
■'term'lTkatlon of agency activities, as *long as those esployees 
ar£^available. As soon as agencies detcraine the date after 
which they will no longer be able to Kalntain custody of 
personnel records', .'they should sotify the Office of Personnel 
Management to arrange -for orderly transfer of custody of the 
personnel records to 0PM and GSA, jointly, for carctaking and 
protection of the records. If -necessary to protect the. 
Interests of individual employees during the period when all 
er.ployees of the agencies are on furlough, OPH will provide 
access to the appropriate personnel records "^tir retrieve 
information and/or process personnel actions, e.g., 
separation-transfer of an employee who secures eiq>loyaent in 
another agency. Guidance for planning such actions and 
relevant questions and answers as to employees* benefits will 
be provided separately by'OPM. 

(3) Property and nenpersonnel records . Inventories 
of property end records will be made to assure protection of 
the Government's interests and the dains of affected private 
entitles and individuals (including vendors and beneficiaries 
of Federal programs). Upon determination that agency funds 
are no longer available, agency officials should contact the 
appropriate Regional Administrators, General Services 
Administration, for assistance in determining the disposition 
of agency records, real and personal property, aChd 
outstanding requisitions, contracts, grants and related 
items. Detailed guidance on such natters are contained int 

— 41 crK 101-11.4; Clsposltlons of records. 

— 41 CFR 101-43 and 101-47; Disposition of personal 
property and real property. 



131 



— FP^1R 101-36.5, 101-37.203(0, and 101-37.307-1; 
Dispositions ©f aotonatic data processing, 
communications, and telephone equipment. 

— CSA motor pool accounting and record system 
operations guide; Disposition of inotor vehicles. 

7he transfer to the General Services Administration of 
property and records shall not be atade until 30 days have 
elapsed from the start of shutdown activities and then only 
after a determination is Bade that the funding hiatus will 
continue indefinitely. ' 

c. Plarinihq- ' Agency heads should develop plans ^or an 
orderly shutdown that reflect the policy and guidance 
provided in this Bulletin. Such plans necessarily . will be 
tailored to each agency's , needs -in recognition of the unique 
nature>vof>its -funding- sources, aissionsr . and authorities. 
Vhile every agency 'should 'have a plan, the scope and detail 
of the plan '-should .be cpnmensurate with the likelihood that 
s'hutdown^. will be necessary and vith the complexity of 
shutting down the agency. 

4. Effective dates ." The • instructions in this Bulletin are 
effective immediately and remain in effect until rescinded. 

5. Inquiries . Budgetary questions should 'be directed to the 
0MB representatives responsible for review of each agency's 

budget estimates. 

Fiscal proce.dures questions should be directed to the 
Division of Government Accounts and Reports, Bureau of 
Government Financial Operations, Department of the Treasury, 
Treasury Annex fl, Washington, D.C. 20226 (Telephone: 
(202) 566-5844). 

Agency officials nay obtain additional information and 
technical assistance on personnel natters by contacting their 
agency officer at the Office of Personnel Hanagcncnt. 

Property and nonpersonnel records disposition questions 
should be directed to Office of Plans, Prograns, and 
Financial Management, General Services Administration, 
Washington, D.C. (Telephone: (202) 566-1807). 



(202} St)t-1BH7). A 

0_ C7. jif^Ur.^. 



JA;(ies T. Mclntyre, Jr. 
Director 



132 



Memorandum 

DATE: September 19, 1995 

TO: VA Field Human Resource Management Officers 

FROM: Director. Employment and Training Service (054) 

RE: Lapse of Appropriation Furlough Guidance 

1) Lq)se of Appropriation fiirioughs present unique circumstances regarding suspension of 
standard adverse action notice periods to employees, yet do not lessen management's 
desire to keep employees informed regarding the possibility of fiuiough, as well as pay, 
benefit and other issues that may a£fect them. This memo transmits to you information to 
help you and management prepare for and implement such furloughs should they be 
necessary. 



2) The diskette that contains tbis Microsoft memo (file name: Lapsemem.doc) also 
contains two other files, Q&As and a master fiirlough notice with attachments and 
instructions. 



3) Lapsed appropriation fiirlough Q&As are found in file lapseq&a.doc. This file can be 
used as is for HRM staff, management and employees, or can be tmlored to fit the 
intended audience. 



4) The fiirlough notice file is lapsefijr.doc. Included in this file are the following: 

1) master notice of fiiriough, 

2) attachments A-D, appeal rights. 

3) instructions for handling notices, and 

4) instructions and guidance for distributing notices to employees. 



5) Although it is entirely possible that an interim budget solution may be adopted by 
October 1, this information is provided for your use in planning for the possible shutdown, 
either October 1 or at the end of any continuing resolution that may be temporarily 
adopted by the legislative and executive branches. 



Richard L. Norman 



To: 

Subject; Notification of Furlough not to exceed 30 Calendar Days 

1. This is to notify you that a decision has been made to furlough you without pay 
effective October 1, 1995 for a period not to exceed 30 calendar days for the following 
reason: 

Since neither an appropriation for Fiscal Year 1996 nor a continuing resolution 
extending the Fiscal Year 1995 appropriation has been enacted, no further 
financial obligations may be incurred by the Dqwrtment, except for those 
related to the orderly suspension of operations or performance of excepted 
activities, such as work necessary for national security, preservation of life, 
or protection of government property . Because your services are not needed 
for the orderiy suspension of operations and you arc not engaged in one of the 
excqjted functions, it is necessary to furlough you for the period specified above. 

2. This action is being taken because of a sudden emergency requiring curtailment of 
the DqMirtment's activities; therefore no advance notification was possible. The 
customary 30 day advance notice period and opportunity to answer are suspended 
under the provisions of 5 CFR 752. 404 (d) (2). 

3. If employees are being retained in your competitive level, they are required for 
orderly suspension of £)q)artment operations or they are performing an excq>ted 
activity. 

4. During the furlough period, you will be in a non-pay, non-duty status. Also during 
the furlough, you will not be permitted to serve as a unpaid volunteer and must remain 
away from your workplace until VA has authority to pay your salary. 

5. It is your responsibility to listen to public broadcasts. When you hear that a 
continuing resolution or a FY 96 appropriation for VA has been approved, you will be 
expected to return to work at the beginning of your next regularly scheduled tour of duty 

6. The furlough will have no effect on your entitlement to life and health 
insurance. Neither will it change your service computation date. 

7. Any appeal rights to which you may be entitled are provided in the attachment to 
this notice. If you have any questions regarding your appeal rights or any other 
matters related to this letter, you should contact the Human Resources Management 
Service/Division. 



Deciding Official Date 

I acknowledge receipt of this decision letter. 



Employee's signature Date 



134 



ATTACHMENT TO NOTICE OF DECISION TO FURLOUGH(Appeal Rights- 
Attachment A) 



You are entitled to appeal to the Merit systems Protection Board. Appeals to the 
Merit Systems Protection Board (MSPB) must be in writing and must be filed with the 
Board no later than 30 calendar days after the effective date of this action (i.e. the first day of 
furlough). Any Bppeal to the Board must be filed either by mail or in person. A copy of the 

appeal form is enclosed. You may review the MSPB's regulations in . You 

may be represented by an attorney or other rq>resentative of your choice. Following is the 
address of the MSPB Regional Office having jurisdiction as indicated: 



135 



ATTACHMENT TO NOTICE OF DECISION TO FURLOUGH (Appeal Rights- 
Attachment B) 

You have the right to appeal this action to the appropriate decision official, in 
accordance with VA grievance procedures, at any time after you receive this decision but not 
later than IS calendar days after the effective date of this action Ci.e. the first day of furlough). 
The appeal must be in writing and set forth the specific reasons, facts, and circumstances 
which make you believe that the action taken was unwarranted. 

In an appeal, you have the right to a hearing before an examiner under the provisions 
of KfP-S, Part, Chapter 771. To obtain a hearing, you must request it in writing in your 
appeal. If you do not indicate in writing that you want a hearing, your case will be decided on 
the basis of the record. At the hearing, if one is held, you may be rq)resented by a person of 
your choice and you may present evidence and wimesses who are willing to testify. The 
Human Resources Management Office, upon your request, will advise you further regarding 
the procedures for filing and processing grievances. 



136 



ATTACHMENT TO NOTICE OF DECISION TO FURLOUGH (APPEAL RIGHTS- 
ATTACHMENT Q 

You are entitled to ^ppeai this action to the Merit Systems Protection Board (MSPB), 
or under the n^otiated grievance procedure, but not both. You shall be deemed to have 
exercised your option to appeal this action to the MSPB, or under the negotiated grievance 
procedure at su<^ time as you timely initiate action to appeal to the Board or timely file a 
grievance in writing under the negotiated grievance procedure. If you elect to file a grievance 
under the n^otiated grievance procedure, you will be entitled to union rq)resentation as 
provided for in the n^otiated agreement 

If you appeal to the MSPB, your appeal must be in writing and must be filed with the 
Board no later than 30 calendar days after the effective date of this action Ci-e. the first day of 
furiough). Any appeal to the Board must be filed either by mail or in person. A copy of the 

appeal form is enclosed. You may review the MSPB's regulations in . You may be 

rq)resented by an attorney or other rq)resentative of your choice. Following is the address of 
the MSPB Regional Office having jurisdiction as indicated: 



137 



ATTACHMENT TO NOTICE OF DECISION TO FURLOUGH (Appeals Rights- 
Attachment D) 



As a temporary employee oi' one who is serving a trial or probationary period, you 
have no appeal rights on the f\irlough. 



138 



INSTRUCTIONS FOR DISTRIBUTING FURLOUGH 
SHUTDOWN NOTICES TO EMPLOYEES 



1. Shutdowns due to lapse of appropriations are considered to be "emergency" equivalent 
situations because they cannot be anticipated with certainty. Authorization from OMB to 
implement such furloughs usually occurs only after all efforts to avoid shutdown have taken 
place. 

2. Since shutdown is a last resort, ihe reason for furlough only exists at the last minute, hence 
the suspension of luU adverse aciion procedures, especially tlie 30-day no'Jce, and the 
subsequent need to distribute notices quickly while employees are still on the job./ 

3. Furlough notices are not to be distributed to affected employees until the station receives 
VACO authorization. This authorization will most likely come with short advance notice 
firom OMB, perhaps less than a day before furloughs are to b^in. 

4. Complete distribution of notices to all employees, present and absent on the last workday, 
should be incorporated into plans for orderly shutdown of non excq)ted activities. 

5. Each station should assess the lead time necessary to mass produce, address, and distribute 
q)propriate notices to all affected employees on station on any given day, and plan 
accordingly. 

6. Appropriate plans also are needed to ensure quick receipt of notices by those employees 
not at work when the furlough begins. A means of securing home addresses prior to the 
furlough is needed. 

7. A means of accounting for all employees fiirloughed and notified will be necessary at the 
local level. All organizational units distributing notices should have persons accountable for 
quickly providing information (also see INSTRUCTIONS FOR HANDLING FURLOUGH 
DECISION NOTICES) of this type to the HRM Office or other designated office as 
fiirloughed employees b^in departing the work site on their last work day. 

8. Consistent with the type of activities/occupations and numbers of employees already 
identified by organizations as excepted from shutdown and reported to OMB, confirmation of 
information of this type is often requested by OMB and/or other oversight agencies, perhaps 
within several hours of the begiiming of the shutdown. 



139 



INSTRUCTIONS FOR HANDLING FURLOUGH DECISION NOTICES 
Lapse of Appropriations 



1. The employee's name should be typed on the notice. 

2. The Human Resources Management OfQce should complete the address for the Merit 
Systems Protection Board Office havingjuiisdiction in their area, in the appropriate spaces in 
the Attachment. 

3. A copy of the MSPB iq)peal form should be attached to the notice and Personnel Offices 
should fill in the room number where the MSPB regulations can be reviewed. 

4. The employee should be given two copies of the decision letter to sign. The employee 
will retain the original and the copy should be retained by the deciding official. If an 
employee refuses to sign, the supervisor should document the employee's refusal on the copy. 

5. NOTE: Public Law 101-376, dated August 1990, has expanded Merit Sy/stems Protection 
Board Appeal rights coverage to the following two categories of excq)ted service employee: 

Individual in the excq)ted service, other than preference eligibles, who have completed 2 
years of current continuous service in the same or similar positions under other than a 
temporary appointment limited to 2 years or less, 

Individuals in the excq)ted service, other than preference eligibles, who are not serving a 
probationary or trial period under an initial appointment pending conversion to the 
competitive service. 

This new guidance has been incorporated in the appeal right attachment of the furlough 
decision notice. 

6. A standard Form 8 (SF-8), Notice to Federal Employees About Unemployment Insurance, 
must also be given to each employee who is to be furloughed. 



140 



7. Personnel Service/Divisions or supervisors should attach to the decision letter, the 
appropriate appeal rights attachment based on the employee's status as follows: 



Attachment A Employees who have completed a probationary or trial 
period, or 1 year of continuous service in the 
competitive service under other than a temporary 
appointment; 

Preference eligibles in the excepted service who have 
completed 1 year of current continuous service in the 
same or similar positions; 

Individuals in the excepted service (other than a 
preference eligible) who are not serving a probationary 
or trial period under an initial appointment pending 
conversion to the competitive service; 

Individuals in the excepted service (other than a 
preference eligible) who have completed 2 years of 
current continuous service in the same or similar 
positions under other than a temporary appointment, 
limited to 2 years or less. 

Senior Executive Service career employees. 

Attachment B Employees in the excepted service (other than a 

preference eligible) who have completed more than 1 
year (but less than 2 years) of current continuous 
service in the same or similar positions. 

Attachment C Employees in the competitive service who have 

completed a probationary or trial period, or one year 
of continuous service under other than a temporary 
appointment, and who are in a bargaining unit covered 
by a negotiated grievance procedure. 

Attachment D Employees on temporary appointments and those 
serving probationary of trial periods. 



141 



FOHLOOOH ODIE TO ABSKNCS OF APPSOFRIATIOtlS 
' (Furlough Under Adverse Actions Procedures (General) 1 

This is a discussion of "shutdown" or "emergency" furloughs. In a "shutdown" furlough, 
the agency no longer has the necessary funds to operate and must shut down those 
activities which are not excepted by 0MB standards. In many cases, the agency will have 
very little lead time to plan for the furlough, making it an "emergency" furlough. A good 
example of a "shutdown" or "emergency" furlough is if there are no fiscal year 1996 funds 
appropriated for an agency by October 1, 199S. 

1. Q. What is a furlough? 

A. A furlough is the placing of an employee in a temporary nonduty, nonpay 

status because of lack of work or funds, or other nondisclplinary reasons. 
For most employees. A furlough of 30 calendar days or less is covered under 
5 CFR part 752, adverse action procedures. 

2. Q. What can agencies do to prepare for the likelihood that there may be no 

appropriations passed by the beginning of the new fiscal year? 

A. 0PM recommends agencies take the following steps: 

o Communicate with employees and their representatives regarding 

agency plans if it becomes necessary to effect an orderly suspension of 
agency operations . 

o Prepare draft "emergency" furlough decision notices and plans for 

distribution to employees to the extent possible within the limited time 
available. 

o Determine which positions are excepted under the guidelines estaiblished 
by the Office of Management and Budget (OMB) . See Appendix A for 
copies of OMB bulletins and memoranda. 

3. Q. For furloughs necessitated by lapsed appropriations, is an agency required to 

provide 30 calendar days advance written notice and an opportunity to 
respond prior to Issuing a decision to furlough? 

A. No. OPM's regulations provide for emergency adverse action furlough 
without the necessity for advance written notice proposing the action. 
Section 752.404 (d)(2) of 5 CFR provides: 

The advance written notice and opportunity to answer are not 
necessary for furlough without pay due to unforeseeable 
circumstances, such as sudden breakdowns in equipment, acts of 
God, or sudden emergencies requiring curtailment of activities. 

OPM's position that this regulation applied to lapsed appropriations was 
upheld by the Federal Circuit in Horner v. Andrzjewski et. al., 811 F.2d 571 
(Fed. Cir. 1987). Similarly, under 5 CFR 359.806 (a), the full notice period 
for career SES appointees may be shortened or waived in the event of 
unforeseeable circumstances, such as sudden emergencies requiring 
immediate curtailment of activities. 

4. Q. In the event of lapsed appropriations, can an employee be furloughed 

without first receiving a written notice of decision to furlough? 

A. Yes. While an employee must ultimately receive a written notice of decision 



142 



^ to furlough. It is not required that such written notice be given prior to 

effecting the furlough. Issuance of prior written notice is preferable, but 
when prior written notice is not feasible, then any reasonable notice 
(telephonic or oral) is permissible. 

5. Q. What information should be Included in the notice of decision when no 

advance notice is Issued? 

A. The notice must specify the reason for the furlough and state that the usual 
30 calendar days advance notice was not possible due to the emergency 
requiring curtailment of agency operations. If some employees in a 
competitive level will not be furloughed because they are performing one of 
the excepted activities defined by 0MB guidelines, we recommend a 
statement such as the following: 

If employees are being retained in your competitive level, they are 
required for orderly suspension of agency operations, or they are 
performing one of the excepted activities defined by the Office of 
Management and Budget. 

The notice must Include a statement of applicable appeal and grievance rights. 
Agencies are reminded that adverse action coverage for excepted service eiq>loyees 
was substantially expanded by the Civil Service Due Process Amendments of 1990, 
(P.L. 101-376). If a copy of the MSPB- appeal form is not attached to the decision 
notice, the notice should include information on how to obtain a copy of the form. 

6. Q. During a furlough due to an absence of appropriations, may management alternate 

the employees performing excepted activities? 

A. Nothing in law or regulation prohibits discontinuous furloughs, and they 
have been upheld by MSPB on appeal . Moreover, discontinuous furloughs 
can be advantageous to both employees and the agency by distributing the 
furlough days over time, thereby minimizing the financial Impact on 
employees as well as lessening disruption of agency services to the public. 

In 0PM, 22 FLRA No. 29, the Federal Labor Relations Authority held that a 
proposal giving the furloughed enqjloyee the right to determine whether 
his/her furlough was to be continuous or discontinuous is a negotiable 7106 
(b)(1) "appropriate arrangement." That decision was affirmed by the D.C. 
Circuit in an unpublished opinion: 0PM v. FLRA, 829 F.2d 191 (1987). 

7. Q. In addition to statutory and regulatory procedural requirements, what 

additional forms of cpnimunlcatlon should an agency consider in effecting a 
furlough? 

A. Considering the uncertain and changing circumstances surrounding 

furlough, agencies should majce efforts toward assuring that employees are 
provided with up-to-date and accurate information as warranted. This may 
be done through effective union-management communication, employee 
briefings, periodic bulletins, newsletters or other means available to 
agencies. 

8. Q. How should the decision letter be framed if the agency has not set a specific 

number of furlough days in the proposal? 

A. While it is desirable when possible to Inform the affected employee of a 

specific number of days in the decision letter, the agency needs only to set 
out the maximum time that may be involved, so employees have as much 
information as possible, if they choose to appeal. 



143 



Dnployee Coverage and Procedural Requirements 

9. Q. What procedures are applicable for probationers, employees under temporary 

limited appointments in the competitive service, employees who are 
nonpreference eligible employees in the excepted service with less than 2 
years of continuous service, and others not covered by 5 U.S.C. chapter 757 

A. There are no mandated procedures; however, agencies should ensure that all 
procedures required by negotiated agreements or internal personnel policies 
are followed. 

10. Q. What about SES appointees? 

A. Furloughs of SES career appointees (other than reemployed annuitants) are 
covered under S U.S.C. 3S9Sa and subpart H of S CFR part 359. The 
regulations provide only for a single 30-calendar day advance written notice, 
v*ich must tell the appointee: the reason for the furlough; the expected 
duration of the furlough and the effective dates; the basis for selecting the 
appointee when some but not all SES appointees in a given organizational 
unit are being furloughed; the location where the appointee may inspect the 
regulations and records pertinent to the action; the reason, if the notice 
period is less than 30 calendar days; for a probationer, the effect (if any) on 
the duration of the probationary period; and the appointee's appeal rights to 
the MSPB, including the time limit for the appeal and the MSPB office to 
which it should be sent. A career appointee may appeal a furlough of any 
length. Competitive procedures are required to select career appointees for 
any furlough of more than 30 calendar days (or 22 worJcdays) . An agency 
may furlough an SES noncareer or limited appointee, or a reemployed 
annuitant holding a career appointment, under agency designated 
procedures. 

11. Q. Are individuals appointed by the President subject to furlough? 

A. Individuals appointed by the President, with or without Senate confirmation, 
who otherwise are not subject to 5 U.S.C. 6301 and attendant regulations 
governing leave in the Federal service, are not subject to furlough. The 
salary of such a Presidential appointee is an obligation incurred by the year, 
without consideration of hours of duty required. Thus, the Presidential 
appointee cannot be placed in a nonduty, nonpay status. If a Presidential 
appointee, however, chooses to be in a nonpay status, he may return part of 
his salary to his employing agency, provided that the agency has authority 
to accept gifts, or to the Treasury. Regardless of the Presidential appointee's 
choice, his entire salary is recorded for tax purposes. The following 
exception must be noted: former career SES appointees who too)c 
appointments at level V of the Executive Schedule or higher and elected to 
retain SES leave benefits under 5 U.S.C. 3392 (c), are subject to furlough at 
the discretion of the agency. 

12. Q. What about persons worlcing for Federal agencies under mobility agreements 

pursuant to the Intergovernmental Personnel Act (IPA) 7 

A. The specific authority for furloughing persons who are worlcing under 
mobility agreements pursuant to the IPA, either inside the Federal 
government or with other organizations, will depend upon the nature of 
individual agreements, the status of the appointments, and/or the funding 
arrangements for the assignments. As a general rule, the following 
principles are applicable in determining whether to furlough personnel on 
IPA mobility assignments: 

o Personnel from non-Federal organizations on appointments to the 



144 



Federal government are subject to furlough in the same manner as other 
employees . 

o Personnel on detail to Federal agencies from non-Federal organizations 
may continue working, provided that the non-Federal organizations pay 
the total costs of the detail. 

o Personnel on detail to Federal agencies from non-Federal organizations 
which share part of the costs of detail may continue to work if the 
Federal portion of the cost was obligated from prior appropriations at 
the time of the IPA mobility agreements. In the event that a furlough 
takes place in the second year of the agreement at which time no funds 
are appropriated, the assignment should be terminated. 

o Personnel on detail to Federal agencies from non-Federal organizations 
which do not pay or share the costs of the detail are subject to furlough 
in the same manner as other employees. 

13. Q. Would enyloyees who are detailed or assigned outside the agency during 

part, or the entire period, of furlough be sxibject to furlough? 

A. Qnployees on a reimbursable detail from the agency would not be subject to 
furlough due to lack of funds if full reimbursement continued. If 
reimbursement were reduced or eliminated, the employee would be subject 
to furlough. Agencies may prorate the required furlough time fot^ employees 
being paid by the outside organization during only part of the furlough 
period. Federal employees assigned to non-Federal organizations who are on 
leave without pay from their Federal positions may continue working. 

Qnployment during Furlough 

14. Q. May employees take other jobs while on furlough? 

A. Even while on furlough, an individual is an employee of the Government. Therefore, 
the Executive Branch-wid standards of ethical conduct (the standards), at 5 CFR Part 
2635, which Include rules on outside employment, continue to apply to employees on 
furloughs. Additionally, there are statutes which prohibit certain outside 
activities. Agencies also have varying supplemental rules regarding the requirement 
for prior approval of outside eiq>loyment, and some prohibit certain types of outside 
employment. Therefore, before engaging in outside employment, employees should 
review these regulations and then consult their own agencies ethics official to 
learn if there are any agency-specific supplemental rules governing the en^loyee. 

Except for conflict of Interest restrictions (which preclude outside 
employment in a non-government facility that contracts with a Federal 
agency, and other incon^atible activities as well as those which give the 
appearance thereof) or Hatch Act restrictions (which deal with political 
activities of Federal employees), employees may accept employment outside 
the Federal service while on furlough. Employees must obtain agency 
approval of any such outside employment. Furloughed employees may, 
absent any agency restrictions, accept temporary appointments with other 
Federal agencies during furlough. 

15. Q. What happens to employees' benefits (e.g., retirement, health benefits, life 

insurance, leave) if they receive temporary appointments in another agency 
while furloughed? 

A. The leave should be transferred as if the employees had been transferred 
(see Comp. Gen. opinion B-167975, September 1, 1970). Retirement, health 
benefits, life insurance, and leave should be handled as if the employees had 



145 



been Cransfecred. 

16. Q. May an employee volunteer to do his or her job on a nonpay basis during a 

furlough period? 

A. No. Unless otherwise authorized by law, an agency may not accept the 
voluntary services of an individual. (31 U.S.C. 1342) 

Service Credit for Various Puirposes 

17. Q. Is furlough or leave without pay (LHOP) a break in service? 

A. Ko, either merely places employees in a nonpay status. 

16. Q. To triiat extent does nonpay status affect civil service benefits and 
programs? 

A. Nonpay status (which includes furlough, LWOP, absence without leave, and 
suspension) is credited as follows: 

o For career tenure, the first 30 calendar days of each nonpay period is 
creditable service. 

o For completion of probation, an aggregate of 22 wor)cdays in a 
nonpay status is creditable service. 

o For X-118 qualification standards, there is no requirement to extend 
qualifying periods by the amount of nonpay status. However, agencies 
may require such extensions in order to meet training requirements or 
ability to perform. 

o For tlme-in-grade requirements, nonpay status is creditable service. 

o For retirement purposes, an aggregate nonpay status of 6 months in 

any calendar year is creditable service. Coverage continues at no cost to 

the en^loyees while in a nonpay status. When employees are in a 

nonpay status for only a portion of a pay period, their contributions are 

adjusted in proportion to their basic pay (5 U.S.C. 8332 and 8411) . 

The exception would be an employee who had substantial time in a 

nonpay status earlier in the year if the furlough causes him or her to 

have more than six months time in a nonpay status during the calendar 

year. 

o For health benefits, enrollment continues for no more than 365 days in 
a nonpay status . The nonpay status may be continuous or brolcen by 
periods of less than four consecutive months in a pay status (5 CFR 
890.303 (el). The government contribution continues while employees 
are in a nonpay status. The employee can choose between paying the 
agency directly on a current basis or having the premiums accumulate 
and be withheld from his or her pay upon returning to duty. 

o For life insurance, coverage continues for 12 consecutive months in a 
nonpay status without cost to the employees (5 CFR 870.401 (c) ) or to 
the agency (S CFR 870.401 (d) ) . The nonpay status may be continuous 
or it may be bro)cen by a return to duty for periods of less than four 
consecutive months . 

o For wi thin-grade increases, an aggregate of 2 wor)(weeks nonpay 

status in a waiting period is creditable service for advancement to steps 
2, 3, and 4 of the General Schedule; four workweeks for advancement to 



146 



steps S, 6, and 7; and six workweeks for advancement to steps 8, 9, and 
10 (S CFR 531.406 (b) ) . For prevailing rate employees (WG, HL, and 
HS schedules), an aggregate of one workweek nonpay status Is 
creditable service for advancement to step 2, three weeks for 
advancement to step 3, and four weeks for advancement to steps 4 and 5 
(5 CFR 532.417 (b) ) . 

o For annual and sick leave, when an employee accumulates 80 hours of 
nonpay status, his or her annual and sick leave credits are reduced by 
an amount equal to the eunount of leave the employee earns during that 
pay period (5 CFR 630.208) . For purposes of computing annual leave 
accrual rates, creditable service is limited to an aggregate of 6 months 
nonpay status in a calendar year (S U.S.C. 6303 (a) and 8332 (f)). 

o For reduction in force, an aggregate of 6 months nonpay status in a 
year is creditable service. 

o For severance pay, nonpay status time is fully creditable for the 12-month 
continuous employment period required by 5 U.S.C. 5595 (b) (1) 
and 5 CFR 550.705. However, for purposes of determining service 
creditable towards the computation of an employee ' s severance pay fund 
under 5 U.S.C. 5595 (c) (1) and 5 CFR 550.707-708, no more than 6 
months of nonpay status time per calendar year is creditable service. 
(This is the same rule used in crediting nonpay status time as "service" 
in determining annual leave accrual rates . ) 

o For the Thrift Savings Flan, agencies should refer to the Thrift 

Savings Plan Bulletin for Agency TSF Representatives, No. 95-15, dated 
May 12, 1995. For additional Information, the agency representative 
should contact the Federal Retirement Thrift Investment Board at (202) 
942-1460. 

o For militarry duty or workers' compensation, nonpay status for 

employees who are performing military duty or being paid workers' 
compensation counts as a continuation of Federal employment for all 
purposes upon the employee's return to duty. 

Retirement 

19. Q. When a furlough occurs during the three years of service prior to retirement, 

what effect will time in a furlough status have on an employee's high-3 
average? 

A. Generally there will be no effect on the high-3 average unless the furlough 
causes the employee to be in a nonpay status for more than 6 months during 
the calendar year. 

20. Q. Are the retirement rules concerning the effect of a furlough the same for 

employees under the Civil Service Retirement System and the Federal 
Employees Retirement System? 



Q. What happens if employees cancel FEHB coverage while in a nonpay status 
in order to avoid the expense? 

Employees are cautioned not to cancel FEHB coverage to avoid payment of 
premiums while in a nonpay or reduced-pay status. Normally, an employee 
must wait for an FEHB open season to re-enroll. Further, cancellation of 
FEHB coverage may affect an employee's right to carry such coverage into 



147 



retirement or while in receipt of workers' conpensatlon. 
Holidays 

22. Q. If employees are furloughed on the last workday before a holiday or the first 

workday after a holiday (but not on both days), will they be paid for the 
holiday? 

A. Yes. The general rule is that an employee Is entitled to pay for a holiday so 
long as he or she is in a pay status on either the workday preceding a 
holiday or the workday following a holiday. The employee is paid for the 
holiday based on the presumption that, but for the holiday, the employee 
would have worked. (45 Comp. Gen. 291 (1965)) (Note: A holiday should 
not be the first or last day of the period covered by a furlough.) 

23. Q. If employees are furloughed on the last workday before a holiday and the 

first workday after a holiday, will they be paid for the holiday? 

A. No. If a furlough includes both the last workday before the holiday and the 
first workday after the holiday, the employee is not entitled to pay for the 
holiday because there is no longer a presumption that, but for the holiday, 
the employee would have worked on that day. (See Comptroller General 
opinion B-224619, August 17, 1987.) 

Requests for Leave during Furlough 

24. Q. If employees request annual, sick, court, military leave, or leave for bone 

marrow or organ donation after receiving a notice proposing specific days of 
furlough, can the requests be denied for those days that coincide with the 
dates of furlough? If an agency has approved requests for these categories 
of leave before Issuance of the proposed furlough notice, can the approval be 
rescinded and the employees furloughed on the days that coincide with the dates 
of furlough? 

A. The answer to both questions is yes. If employees request leave for a day 
designated as a furlough day, the agency Is not required to grant leave. 
Further, if employees have been granted leave for a day subsequently designated 
as a furlough day, that leave is automatically canceled because the necessity to 
furlough supersedes leave rights. To avoid confusion, it is advisable to state 
in the furlough notice that any annual, sick, court, military leave, or leave for 
bone marrow or organ donation approved for use on the furlough days is canceled 
if this is the intent of agency management. Furlough days are nonworkdays. 
Annual, sick, court leave, and leave for bone marrow or organ donation cannot be 
granted on a nonworkday. However, military leave must be charged on a nonworkday 
when the nonworkday occurs wholly within the period of military leave for 
military duty. Employees who serve as witnesses or jurors on furlough days 
will retain all monies received from the court. 

25. Q. May employees performing excepted activities during the period of furlough be 

granted sick or annual leave? 

A. 0PM says this is technically possible. All positions in VA that were determined 
to be excepted were so identified because performance of those duties was vital 
to continued provision or direct support of health care services and protection 
of life and property. VA has no Department-wide policy covering this situation, 
but granting emergency sick leave to an individual performing an excepted 
activity could be done at the discretion of local management. However, granting 
annual leave to an employee in a position identified as necessary to carrying 
out the Department's mission should be avoided since the position was excepted on 
the basis of its crltlcality to performance of mission. 



II 



148 



' Management should bear In mind that under antl-defldency spending regulations, 

funds may be expended only for approved excepted activities. Payments for annual 
leave do not seem to fit this criteria. 

26. Q. If an employee Is on leave under the Family and Medical Leave Act of 1993 ' 

(ETOA) during furlough days, do the furlough days count towards the 12-week 
entitlement to FMIA leave? 

A. No. Bsployee cannot take leave (either paid or unpaid) under the FMLA on days 
that coincide with the dates of furlough. Therefore, the furlough days 
cannot be counted towards the 12-week entitlement to EMLA leave. 

Leave Without Pay (LWOP) 

27. Q. If employees are on approved LWOP, can the LWOP be terminated and the 

employees furloughed? 

A. Yes. The LWOP can be terminated, but if there Is no expectation that the 
employees may return to duty on the proposed furlough days. It Is 
unnecessary to cancel the LNOP, since there is no work or funds Involved. 
However, If the employees may potentially return to duty during the 
approved LWOP, the agency may propose to furlough on the days of approved 
LWOP and cancel the LWOP. 

Continuation of Pay (COP) 

26. Q. If employees are receiving COP due to job-related injuries, can the COP be 
terminated or Interrupted by furlough? 

A. No. According to the Department of Labor, esployees are maintained on 
COP status during periods of furlough. 

Injury While on Furlough or LWOP 

29. Q. If employees are Injured while on furlough or LWOP, are they eligible for 

workers' compensation? 

A. No. Workers' compensation is paid to employees only if they are injured 
while performing their duties. Employees on furlough or LWOP are not in a 
duty status for this purpose. 

Unemployment Compensation 

30. Q. Are employees entitled to unemployment compensation while on furlough? 

A. It is possible that employees may be eligible for unen^loyment 

condensation, especially if they are on consecutive furlough days. State 
unemployment compensation requirements differ. Agencies or employees 
should submit their questions to the appropriate State office. 

Documentation of Furlough 

31. Q. How is time on furlough and leave without pay documented? 

A. An SF-50, "Notification of Personnel Action," must be prepared for each 

individual subject to furlough (or a list form of notification for a group of 
employees who are to be furloughed on the same day or days each pay 
period) . A return-to-duty SF-50 is necessary only for return from a 
consecutive furlough, not for a return from a discontinuous furlough. (See 



149 



Chapters IS and 16 of The Guide to Processing Personnel Actions.) 

If the specific furlough dates are knovm vrhen a 471/Furlough action is 
prepared, these dates must be shovm in the remarks section of the 
471/rurlough action document (SF-50, or list form) . If specific dates are not 
Icnown, then agencies must prepare an 002/Correction action (SF-SO) to the 
471/Furlough action (or a list form of notification fot a group of employees 
similarly situated) with remarlcs documenting the total number of days or 
hours of the furlough when those dates become Icnown. 

When the total number of days for a 472/Furlough NTE is increased, a 
772/Ext of Furlough NTE (date) must be prepared. For new calendar 
periods of furlough, a new furlough action must be prepared. For all other 
changes in the dates on which a furlough will occur, an 002/Correction 
action must be prepared. 

Agencies are reminded that for members and former members of the 
uniformed services who are subject to the "pay cap' reporting procedures, a 
copy of the furlough notice, and of the return to duty notice when one is 
Issued, must be sent to the appropriate tiniformed service finance center 
(addresses of the centers are in Chapter 6 of The Guide to Processing 
Personnel Actions), since days in nonpay status will affect the person's 
retirement pay. When an SF-50 or a list form of the notice is issued to 
document a furlough, the copy of the notice which is sent to the pay center 
must have the employee's SSN and DOB and dates of furlough added to it to 
ensure proper adjustment of his/her retirement pay. 

Note: When using the list form of notification in any of the instances cited above, 
agencies must be aware of their obligation, under the Privacy Act, to ensure that 
only identifying information pertaining to the individual employee is placed in 
the Official Personnel Folder (OPF) or is shown on the copy given to the 
employee. Therefore, in using the list form, all Information pertinent to other 
employees must be deleted before a copy of the list form may be placed in the 
OPF or distributed to the affected employees. 

Labor Management Relations Implications 

The following section provides general information about agency bargaining 
obligations during a time of reduced budgets . Officials responsible for preparing 
for furloughs, reductions in force, hiring and promotion freezes, or the li)ce, 
should woric closely with the agency's labor relations staff. 

Agencies should worl( with their partnership councils in planning and 
implementing changes required by reduced budgets. Many of the actions 
agencies may find necessary are protected by the management rights section of 
the Federal Labor Relations Statute. However, this should not prevent agencies 
and unions from worlcing together to meet the challenge of budget cuts with the 
least possible disruption. Employees and their representatives have an 
important stalce in this area and their suggestions can be valuable. 

32. Q. What is an agency's obligation to bargain when it becomes necessary to 
furlough employees? 

A. The decision to furlough employees is a management right protected from 

collective bargaining by 5 U.S.C. 7106 (a)(2)(A). However, the agency must 
bargain over the impact and implementation of its decision and over 
appropriate arrangements for employees affected by the furlough, unless the 
matter of furloughs is already "covered by" the agreement. See, in this 
connection, 47 FLRA Nos. 96, 99 and 114, and other cases in which the 
Authority has applied its "covered by" doctrine to determine whether the 



150 



agreement pcovlslons relieve the agency of any duty to bargain on Impact 
and implementation on this matter. If In doubt, prudence dictates that the 
agency give adequate notice and bargain on Impact and implementation 
rather than rtin the risk of being ordered to pay backpay to furloughed 
employees as a remedy for coinnltting a refusal-to-bargain unfair labor 
practice. 

33. Q. In the event of a lapse of appropriations necessitating a "shutdown" 

furlough, what is an agency's obligation to bargain? 

A. Agencies still have a duty to notify the union and bargain 

upon request on whatever negotiable Impact and implementation proposals 
the union may submit. Because the agency must act by a date certain, 
whatever bargaining that takes place must be accomplished -in the- l.ittle time 
available before action is necessary. If agreement isn't reached in the time 
allowed, the agency should tell the union what actions it will take. Although 
the union may try to invoke the services of the Impasses Fanel, it is unlikely 
that, in the drctimstances posed by this question, the Fanel will have time 
to get involved. But whether or not FSIP gets involved, the agency can 
justify Its actions — as FLRA put it in Treasury, 18 FLRA No. 61 — where 
"consistent with the necessary functioning of the agency." 

Some of the urgency could be reduced if the agency, as it approaches the 
lapse of its appropriation, were to notify the union of the actions it plans to 
take were certain scenarios to take place and ask the union for its views and 
suggestions. That is, nothing prevents the parties from bargaining in 
advance of a looming crisis so as to eliminate any need for bargaining when 
the crisis actually occurs. FLRA has frequently held that there is no need to 
engage in Itl bargaining on matters already "covered by" the agreement. 
See the cases mentioned in answer 48. 

34. Q. What steps should an agency take to meet its obligation to bargain? 

A. Under the labor-management statute, the agency must give the union 

"adequate" notice of its intent to furlough employees who are represented by 
the union. "Adequate" is not defined and the Federal Labor Relations 
Authority determines what is adequate notice based on the nature of the 
action taken by the agency and amount of time it judges adequate to 
bargain. These statutory notice requirements may have been augmented or 
modified by any negotiated agreements. 

35. Q. What are the implications if an agency furloughs employees before it gives 

the union timely notice and meets its bargaining obligations? 

A. It is an unfair labor practice to refuse to negotiate in good faith. If the 
Federal Labor Relations Authority finds that the agency engaged in an 
unfair labor practice it may order the agency to renegotiate an agreement 
with retroactive effect and may require reinstatement of affected employees 
with backpay. 

36. Q. What is the effect of outside directives on the obligation to bargain or to 

continue to abide by existing agreement provisions? 

A. This depends on the nature of the outside directive. Any agreement must 
conform to existing law and any laws enacted during the life of the 
agreement. The FLRA has held that, in certain situations. Presidential Executive 
Orders are to be considered "applicable law.' ( Bureau of the Public Debt , 42 FLRA 
Ho. 92 (1991)). Thus any provisions imposed by an Executive Order issued by the 
President would preempt any agreement provisions or bargaining proposals. In 
addition, any 0MB directive determined by the FLRA to be an "applicable law," and 



151 



not reversed by a court of appeals, would preempt existing contract provisions that 
are contrary to the directive. 

With respect to other kinds of directives, it is an unfair labor practice for an 
agency "to enforce any rule or regulation . . . which is in conflict with any 
collective bargaining agreement if the agreement was in effect before the 
date the rule or regulation was prescribed. " This means that any 0MB 
directive would not preempt existing agreement provisions. However, 
because agreements must conform to Governmentwide regulations, adlrective from 
0MB, or any agency, that is binding on other agencies would limit bargaining over 
new agreement provisions. 

Agency-wide regulations or directives do not supersede existing agreement 
provisions and cannot be enforced until the agreement ^expires . Also, they do 
not limit negotiations unless the agency can support a "compelling need" for 
the regulations. The Authority rarely finds a compelling need for an agency-wide 
regulation. 



152 



SUPPLEMENTAL OUEgnON S DEVELOPED BY VACO/COHRMS; 9/W9S 

(Revised 9/2fi/9S) 

Q. ^Vhac are the features of Unemployment Compensation for Federal Employees (UCFE): 

ideral employees are covered for Unemployment Insurance (UI) under the UCFE. 

x,xi The UCFE program is administered by the individual states, and the UCFE benefits are generally determined and 
paid under the UI law of the Sute in which the Federal employee worked. 

(2) UCFE program claims would be filed with the State agency that administers the UI program in that State. 

C3) State laws provide for the payment of partial weekly amounts when individuals are employed less than full time 
during a week. 

(4) State laws vary but in most cases, an individual in furlough status for 1 or 2 days during a week would not be eligible 
for a partial payment for that week. 

(5) Individuals at grade levels of 9 step S and higher would need to be on furlough status for at lea.q 4 days per week to 
receive a partial payment for the week. 

(6) Most State laws provide that the first week of eligibility is a non-paid "waiting week" (e.g., DC and VA. MD has' no 
waiting week) and payments would not actually start until the second week of eligibility in States with a "waiting week." 

Q. When may VACO employees apply for unemployment assistance? 

A. Employees may apply immediately in the District of Columbia and in Virginia; however, no benefits will be 
allowed until the employee has been off the job for one week (5 work days). In Maryland, applications may he 
submitted immediately, with no waiting period. 

Q. Where should employees file for unemployment assistance? 

A. Payment is made by the state where the work site is located, and normally employees should file in that state. If, 
foi ivenience sake, filing is done in another area, the location of the work site should be noted. Rates of 

ployment assistance also vary from state to state; in general, DC pays one of the higher rates of unemployment 

.a nee. 

Q. If unemployment benefits are paid and, at a later date. Congress determines to pay Federal employees, is there an 
obligation to pay back funds to the Unemployment Office? 

A. Yes, a call to the District of Columbia revealed that in cases where there has been payment and later salary 
reimbursement for the same period, an employee would be in an overpayment situation. In this situation, it is recommended 
that employees arrange to direct repayment to the Unemployment Office. 

Q. How will time and attendance information be recorded for employees in excepted activities during the furlough? 

A. During the furlough, time and attendance information will not be entered in the timekeeping sy.<;tem.<;. i.e.. OLDE or 
ETA. Each organization may designate an excepted employee to keep track of time and attendance information for employees 
in the excepted activitity or may instruct excepted employees to keep track of their own time and attendance information. 
Once activities that were suspended due to lack of appropriation funding resume, designated timekeepers will enter time and 
attendance information for employees who were excepted during the furlough. 

Q. When will excepted employees receive pay for work during the furlough period? 

A. Payroll processing will not occur until an appropriation or other authorization to operate is approved. Once operation 
resumes, pay for excepted employees will be processed as soon as possible. 

. ill fiirloughed employees receive retroactive pay for the furloughed period? 

A. Although employees were compensated in the past for furloughed periods, there are no indication.': thcie provisions will 
apply in this particular case. Congressional mandate-; and other legislative requirements will determine if furloughed 
employees will be compensated. 



153 



>_. Wh«t happens to my TSP account? Can I ttill contribute? Will the VA pay into my account? 
an I boROw fiom my account? 

.. fiy law, employee contributions to TSP must be made through payroll deductions and must be determined by using the 
'*. pay the employee earned for the pay period. Therefore, if you are in a nonpay status for one or more pay periods (that 
u receive no basic pay for the pay period), you cannot contribute to your TSP account. Also, if you are a FERS 
uployee and you are in a nonpay status for one or more pay periods, you will not receive VA contributions (1 %) or VA 
latching contributions. (TSP Bulletin 95-15, 5/12/95) 

(1) You may make intertund transfers while on furlough. 

(2) You caiuiot receive a TSP loan if you are in a non-pay status. 

(3) If you are in a nonpay status and have a TSP loan and your pay for any pay period is insufTtcient to cover your loan 
repayment, contact the Payroll Division, 565-8403. 

(4) TSP accounts can be withdrawn only if you separate from Federal service. Consequently, you cannot 
withdraw your account while you are in nonpay status. 

>. Can the employee share of the TSP contribution be adjusted should an employee be in a non-pay status for at 
ntire pay period? 

.. An employee cannot make up missed TSP contributions when he/she returns to pay status. An employee may 
iiange the amount withheld only during Open Season. The next TSP Open Season is scheduled for November IS, 
995 through January 31, 1996, with changes to take effect in January, 1996. 

I. What happens to my health insurance while I'm on fiiriough? 

I. "ou are in a nonpay status, your health insurance continues for up to 12 months. You are still re.<;ponsible for payment 
f your portion of the health benefits premium. If you are in a nonpay status for one pay period. Payroll will adjust die 
ealth benefits premium upon your return to a pay status. 

'/W the computer system be available to excepted employees who are in the office? 

». Yes. The nationwide computer system will be in operation. The Austin Help Desk will be open to as.<;i.";t with 
roblems; the number is 512-326-6780. In VACO the network will be in operation and IRM staff will be available 
trough the Austin Help Desk to assist with any problems. 



154 



\ 



THRIFT SAVINGS PLAN 

FACT SHEET 



Effect of Nonpay Status on 
Thrift Savings Plan Participation 

This Faa Sheet is for employees who are placed in nonpay sums (for example, furlough or 
leave without pay) for one or more pay periods. It explaiiu the effea of the nonpay status 
on an employee's Thrift Savings Plan (TSP) participation. 

This Faa Sheet does not apply to employees who are in nonpay status performing an 
assignment with a state or lo<^ government agency under the provisions of the Intergov- 
ernmental Personnel Act (IPA) or to employees who are in nonpay status serving as hill- 
time officers or employees of a union. IJF you are in nonpay status for one of these reasons, 
see your servicing personnel office for information about your TSP participation. 



Can J contribute to nr^ TSP account if I 
am in nonpay status? 

\y law, employee contributions to TSP accounts 
.nust be made through payroll deductions and 
must be detemiined by using the basic pay the 
employee earned for the pay period. Conse- 
quently, if you are in nonp>ay sutus for one or 
more pay periods (that is, you receive no basic 
pay for the pay period), you cannot contribute 
to your TSP account.' 

What if I am receiving workers' 
compensation? 

Workers' compensation benefits received from the 
Department of labor's Office of Workers' Com- 
pensation Programs (OWCP) are not basic pay as 
defined by law. Consequently, you cannot con- 
tribute to your TSP account nor can you make 
loan payments while you are in nonpay status 
and receiving OWCP benefits. 



Witt I receive agency contributions if I 
am in nonpay status? 

Agency Automatic (1%) Contributions made to 
the TSP accounts of employees covered by FERS' 
must be determined by using the basic pay 
earned by the empksyees during the pay period. 
AgeiKy Matching Contributions are made to the 
TSP accounts of FERS employees only if the em- 
ployees make their own contributions for the pay 
period. Consequendy, if you are in nonpay status 
for one or more pay jjcriods, you will not receive 
agency contributions for those pay periods.' 

Can I make an open season election if 
I am in nonpay status? 

Yes. If you complete the TSP Eleaion Form 
(TSP-1) and submit it to your personnel office 
during the TSP of)en season, your eleaion will be 
processed even though no contributions can be 
made to your account while you are in nonpay 
status. As soon as you return to pay status, your 
TSP contributions and, if FERS, your agency con- 
tributions will begin based on your most recent 
TSP eleaion. 

(Conilnued on page 2) 



If you are in nonpay sucus lo perform military service, you 
.nay be enliUed to make and receive reiroaclive TSP conuibu- 
bons when you return lo pay sums. See your persoruiel office 
for tTK>re information when you relurn 



' FHKS refers to the Federal Employees' Reuremeni System, the 
Foreign Service Pension System, and other equivalent Govem- 
metM reliremeru plans. 



Fetteral Retiremenl Thrift Investment Board 



OC9S-<(S/9SI 



155 



Can I make interfutul transfers tfl am 
in nonpay status? 

Yes. An inierfund transfer is the movement of 
some or all of your existing account balance 
among the three TSP investment funds. Conse- 
quently, you may make inteifiind transfers just 
like employees in pay sutus. 

Can I receive a TSP loan tvbile I am in 
nonpay status? 

Under the TSP loan program, loan payments can 
be made only through paynsU deductions. Conse- 
quently, if you are in nonpay status (even though 
you may be receiving workers' compensation 
benefits), you can not receive a"rSP'IS)in until 
you return to pay status. 

What iff have a TSP loan attd I am 
placed in nonpay status?^ 

Because loan payments can only be made 
through payroll deductions, you cannot make 
payments while you are in nonpay status. If your 
absence from duty has been approved, yon must 
take one of the foUowing actions: (1) send a 
copy of your SF-50, Notification of Personnel 
Action, documenting your nonpay status and its 
jegirming and ending date to the TSP recordkeep- 
er or (2) ask an agency official (your supervisor 
or your personnel or payroll office representative) 
to send written notification to the TSP record- 
keeper on Form TSP^l, Notification to TSP of 
Nonpay Status, or agency letterhead to document 
your nonpay status and its beginning and ending 
dates. If your nonpay status is extended, you 
must provide the TSP recordkeeper with docu- 
mentation of the extension. 



* Application of the njles in paragraphs two and three of this 
answer may be different if you are in nonpay status to perform 
mUitary service Contaa the TSP recordkeeper at (504) 25^-6000 
for a 



If you miss correa toan payments for less than 
90 days, your loan payment schedule will be ex- 
tended. However, your education, medical, or fi- 
nancial hardship toan must be repaid in full by 
the fifth anniversary of the loan issuance date; 
your residential loan must be repaid in full by the 
eighteenth anniversary of the loan issuance date. 
If you carmot repay your loan within the required 
time frame, you will be notified by the TSP 
recordkeeper. 

If your payments resume more than 90 days from 
the last correa payment, but less than one year 
from the start of nonpay status, you mtist ream- 
onize your loan. If you do not reamonize your 
loan, you will have to prepay the loan in M\ or a ' 
taxable distribution of the unpaid balance and 
any accrued interest will be declared. 

If you do not return to pay status and resume 
your loan payments within one year, you will 
have to prepay your loan in full by the one-year 
anniversary of your nonpay status, or a taxable 
distribution of the unpaid balance and any 
accrued interest will be declared. 

For more information about TSP loans and your 
responsibilities, see the booklet. Thrift Savings 
Plan Loan Program, available from your person- 
nel office. Questions regarding your loan pay- 
ments should be direaed to your servicing 
personnel or payroll office. Questions regarding 
notifications, reamortizations, or taxable distribu- 
tions should be direaed to the TSP recordkeeper 
at (504) 255-6000. 

Can I withdraw my TSP account while 
I am in nonpay status? 

By law, TSP accounts can be withdrawn only 
after participants separate from Federal service. 
Consequently, you cannot withdraw your account 
while you are in nonpay status. 



156 



\ 



Thrift Savings Plan 



TSP-20-H 

Hardship Loan 
Application 



December 1988 



157 



THRIFT SAVINGS PLAN 

HARDSHIP LOAN APPLICATION TSP-20-H 



Beginning in December 1988, ycxj may apply (or a financial hardship loan in an amount greater than $1,000. To 
do so, you must use this Hardship Loan AppOcation (Form TSP-20-H). Appfications for self-certified hardship loans 
of $1 ,000 (for which you may use the Loan AppTication, Form TSP-20) will be accepted only through March 31 , 
1989. TOs Hardship Loan Application, Form TSP-20-H, must be used for all financial hardship loan appfications 
received after March 31 , 1989. 

Information on your current financial situation (income, expenses, and financial assets) Is required to document your 
finandal hardship loan application. You may qualify for a financial hardship loan if your regular monthly expenses 
exceed your net monthly income (that is, your income after taxes and retirement deductions), and if you do not 
have sufficient finandal assets to draw upon. You may also qualify (or a hardship loan if you fwve certain extraor- 
dinary expenses Itwt you cannot cover with one month's net -income, and if you do not have sufficient financial 
assets to cover the expense. 

In addition to meeting the requirements for financial hardship, you must have at least $1 ,000 of your own contribu- 
tiofis and associated earnings in your Thrift Savings Plan accoofit in order to otitain a toaii, and the amount of tfie 
loan Is subject to limits in Federal tax law. Finally, you must meet a pay test— the amount left in your paycheck 
after a loan payment is deducted must equal at least 10% of your basic pay. (See the booklet. Thrift Savings Plan 
Loan Prognam.T 
• This application form consists of six sections; 

I. Information About You 

II. Information About Your Spouse 

III. Rnandal Statement 

IV. Loan Request 

V. Documentation Required 

VI. Certification 

The instnictions for all sections t)egin on the back of this page. It is very important that you read all tfw Instructions 
carefijily t»efore you begin to complete this form. Please type or print your responses. Note ttiat you must sign and 
date, under penalty of peijury, Section VI, Certificafion, which certifies that the information you provide is true and 
complete to the best ol your knowledge. 

At the end of this application, there is an optional wor1<sheet (Wori<sheet to Calculate Your Loan Amount), which 
uses Kerns from Section III, Financial Statement (These items are highlighted with a ■^.) Your erigit)irity will be 
calculated for you, but if you want to know before you send in your application whether you qualify for a toan in the 
amount that you request (subject to the amount of your own contributions and associated eaimings and the Hmits 
in Federal tax law), you can use the Worksheet to perfortn the necessary calculations. Do not submit the Worksheet 
with your application. 

The Thrift Savings Plan Service Office will perfonn the cakxjiations to detemiine the toan amount for wtiich you 
quafify. When your application is processed, you will be sent a copy of a completed Wori<sheet eind a Loan Agree- 
ment/Promissory Note in the amount you requested (or the amount you are eligible for, if it is less and you choose 
to accept a lesser amount). 



Please send your completed application and the required documentation to: 

National Rnance Center 

Thrift Savings Plan Service Office 

P.O. Box 61500 

New Orieans, LA 70161-1500 



40-190 97 - 6 



158 



INSTRUCTIONS 



l» 1—7: Please note that the address you provide 
BIPORMATIOH on this forni will be used only to return your Loan 
ABOUTYOU Agreement to you. The loan check and all other 
corresponderKe regarding the loan will t>e sent to 
the address on record for your Thrift Savings Plan 
account. If ttie address on your last semiannual 
Participant Statement is incorrect, and you tiave 
not asked your agerx^y to change it, please notify 
your agerx^ personnel or payroll office imme- 
diately to ensure that ttie correct address is pro- 
vided to the Thrift Savings Plan. 
8: Daytime Phone (area code and phone 



numtjet). If you have an FTS number, write "FTS" 
In the area code field and the RS phone number 
in the number fieW (e.g.. (FTS) 555-1234). 

S: Do you have a dual appointment? If you 

work at two Federal Government jobs, this informa- 
tion may affect tfie processing of your kian. 

1 0: Pay Schedule. Your pay sctiedule is used to 
compute ttie ariKXJnt of your loan payments. If you 
have a dual appointment, you should ctieck ttie 
pay schedule for the payroll office ttiat you want 
to tiandle your loan payments. 



Ill 11: Are you married (even tf separated from 
INFORMATION your spouse)? ff you are married, even if sepa- 
ABOUTYOUR rated from your spouse, you must check the "Yes" 
SPOUSE box and complete ttie rest of tfiis section. 

17: NotHication or consent of spouse not 
possible. There is a requirement tfiat your spouse 
be notified of your loan application if you are 
covered by ttie C^ivil Service Retirement System 



(CSRS), or equivalent retirement plan, or give 
consent to your kjan if you are covered try the 
Federal Enptoyees' Retirement System (FERS), or 
equivalent retirement plan. If your spouse's wtiere- 
atxxitsare unknown to you, or if you are covered 
by FERS and exceptional circumstances make it 
inappropriate to secure your spouse's consent, 
we will send you Form TSP-1 6, Request for Waiver. 



Ill» Complete each iterrv rounding to ttie nearest 
FI NAN CIAL dollar. II your income, deductions, expenses, or 
STATEMENT assets for a particular item are 0, enter 0. 
This form requests information on you. your 
spouse, and dependents. Dependents are de- 
fined as individuals wliom you can dalm as de- 
pendents lor Federal income tax purposes at ttie 
time you apply for ttie loan. 
If you are manried and not separated, report 
income, expenses, and assets for tioth you and 
your spouse. If information cannot be assigned to 
you or your spouse individually, enter the total 
only. II you and your spouse are separated, report 
only your own income, expenses, and assets. 
You must provide monttily income and expense 
figures to apply for a hardship loan: 

■ If you are paid monthly (12 times a year), you 
can take your salary or wages, tax withholding, 
FICA (Social Security)/h/ledicare deduction, 
and bther retirement deductions directly from 
your current earnings and leave statement 

■ II you are paid semimonthly (24 times a year), 
add the amounts from your last two earnings 
and leave statements. 

■ II you are paid biweekly (26 times a year), 
multiply the biweekly amounts on your current 
earnings and leave statement by 26 and divide 
by 12 

■ If you are paid weekly (52 times a year), multiply 
the weekly arrxxjnt from your txjrrent earnings 
and leave statement by 52 and divide by 12 

■ II your monthly amounts fluctuate due. lor 
example, to variations in numtser ol hours 
worked and/or fiourly rates ol pay, total your 
actual monthly amounts for income and deduc 
lions lor the last three months and divide by 3 



■ fx)r ottier income, deductions. arxJ expenses 
that are not received or paid monttily. be sure 
to calculate ttie monthly amount, e.g.. divide a 
quarterly payment tiy 3. 

1 8: FAMILY SIZE Family size includes you. you' 
spouse, and your dependents. If you are sepa- 
rated or divorced, it includes you and your depen- 
dents only if your dependents are living with you. 
II your deperidents are living elsewfiere and you 
conlritxjte to tfieir support do not include ttiem in 
family size txrt include in Item 37 the amount of 
suppiDrt you pay II children you cannot claim as 
dependents are living with you and you receive 
support lor them. Include them in family size and 
enter the amount of support you receive In Item 21 . 
MONTHLY INCOME 

19: Monthly Gross Salary or Wages. Enter 
current monthly salary or wages (or enter average 
lor the last three months and ctieck the tiox). Enter 
income from all jobs if more ttian one job is field. 
20: Monthly Dividends and/or Interest Total 
your annual dividends and interest from the assets 
listed In Items 42-52 and divide by 12 
21: Monthly Alimony, Maintenance, and/or 
Child Support Enter the amount ol alimony, 
maintenance, and/or child support received each 
month If payments are Irregular, enter the average 
ol the last three months. 

22: Other Monthly Income. Descritie and enter 
other monthly cash Income. Include royalties and 
net income Irom real estate Investments and a 
lamlly business (I e . monthly cash Income minus 
monthly cash outlays) II net income is negative, 
enter a minus sign and remember to subtract it 
when you total your income in Item 23. 
23: Total Monthly Income. Add all the entries in 



159 



THRIFT SAVINGS PLAN 

HARDSHIP LOAN APPLICATION TSP-20-H 



I. 

inpormahon 
about you 



1. Name. 



2. Date of Birth /" / 3. Social Security Numt>er —___—_ 

Mo* Day Year 

4. Street Address 

5. C3ty 6. State 7. Zip Code. 

8. Daytime Phone (area code and number) ( ) — _: - 



9. Do you have a dual appointment? D Yes O No 

10. PaySchedule (check box thai indicales when you are paid): 

D Weekly D Semimoothty (Vice <n each cafendarmon/h, 

D BiweetdyCeve/y'vw weeks. 24 times a year) 

26 times a year) D Mortiii(orKeir\ each calendar rmnth) 

D Other (specify) 



lla 11. Are you mamedfeventfseparafed from your spousej? D Yes ' D No 

^FORMATION n yes, please give the r)ame and address of your spouse: 

ABOUTYOUR 

SPOUSE 12. Name 



Lki Fnl 

13. Street Address 



14. CSty 15. State 16. Zip Code. 



III. 

FINANCIAL 
STATEMENT 



17. D Check here if you do not know where your spouse is <CSRS or fiEflS; or if exceptional 
circumstances make it impossible to otitain your spouse's consent for your toan (FERS only). 



18. FAMILY SIZE as defined in the instructions. 



CMrehjtir bekye you beff^ 
tfiis teaion. Be surv ro 



MONTHLY INCOME 

19. Monthly Gross Salary or Wages 
''™*^"""i^SC^ Q Check here if you are using a three-month average 

20. Monthly Dividends and/or Interest 

21. Monthly Allrtxxiy, Maintenance, and/or ChikJ Support 

22. Other Monthly Income 



23. Total Monthly Income 



YOUR 
SPOUSE 


TOTAL 

.00 




.00 


_ 


.00 




.00 


_ 


.00 


_ 


.00 




.00 



160 



INSTRUCTIONS Continued 



MONTHLY MCOME TAX AND 

RETmEMBrr DBHJCnONS 

24-26: Monthly Federal, State, and Ijocal 

Income Tax WHtUioldlng. Enter the amount o( 

moottily tax wittiholding fcx each. 

27: Monthly Payments of Estimated Taxes on 

Income. If you make estimated tax payments on 

your income, calculate the amount you are paying 

monttily. 

28: Monthly RCA (Social Security)/Medicare 

Deduction. If you or your spouse fiave more ttian 

one job. be sure to include ttie RCA (Social 

SecurityVMedicare deduction for ttiat other job 

also. 

29: Other Monthly Retirement Deductions. 

These dedudioos do not include contritx/tions to 

an Individual Retirement Account (IFtA). 

■ If ttie retirement plan Is FERS or a FE(^ equiva- 
lent plan, enter the amount of salary or wages 
that is withheld for the FEPS Basic Benefit 
annuity. 

■ It the retirement plan is CSFtS or a CSRS equiva- 
lent plan, enter the amount of salary or wages 
that is withheld for the CSRS annuity. 

■ Enter the amount of your own contritxjtion to the 
thrift Savings Plan (TSP) and. if applicable, 
your spouse's own contribution to the TSP. 

■ If you or your spouse tiave more than one job. 
enter the amount ttie ottier employer withholds 
each month for the retirement plan of the other 
job. 

30: Total Monthly Income Tax and Retirement 
Deductions. Add all the entries in ttie Total column 
lor Items 24 through 29. 

31: TOTAL MONTHLY INCOME NET OF TAX 
AND RETIREMENT DEDUCTIONS. Subtract the 
Total Monthly Income Tax and Retirement Deduc- 
tions in Item 30 from the Total Monthly Income in 
Item 23. 

MONTHLY SCHEDULED 
HOUSEHOLD EXPENSES 

32: Monthly Household Rental or Mortgage 
Payment Enter your monthly rental payment or. if 
applicable, your monthly mortgage payment on 
your primary residence II real estate taxes and 
txxneowner's insurance are included in your 
payment, include them tiere and enter in Items 
33 and 34. If additional mortgages are outstanding 
on your primary residence, include the monthly 
payment on them as well. II you have a TSP loan 
for purchase of a primary residence, include the 
nxjnthly payment lor ttial loan also. 
33: Monthly Household Real Estate Tax. If you 
pay your real estate tax separately from your 
mortgage payment, enter an anxxjnt representing 
one rrvxith's real estate tax lor your primary resi- 
dence 

34: Monthly Household Homeowner's Insur- 
ance. II you pay your homeowner's insurance 



enter an amount representing one rrxxith's home- 
owner's insurance payment (or your primaty 
residence. 

35: Monthly Household Utilities. Bgure your 
total payments for utilities (for example, gas, 
electric, telephone, and water bills) over tt>e last 
12 mcnttis and divide by 12. Do not duplicate any 
items that are included in your monttily rental. 
36: Monthly Household Dependent Care. 
Enter ttie amount you pay each month (or care for 
your spouse, a dependent child, or a dependent 
adult who cannot iDe left alone while other adults 
are at worit 

37: Monthly Expense for Alimony, Mainte- 
nance, and/or ChOd Support. Enter the amount 
paid each month in alimony, maintenance, and/or 
child support. 

38: Monthly Loan Payments. Describe and 
enter monthly payments (or installment loans 
with set monthly payments ((or example, auto- 
mobile and unsecured personal loans). Do not 
include payments (or credit card purchases. Do 
not include payments (or TSP loans (or educa- 
tion, medical, or hardship purposes. 
39: Total Montiiiy Scheduled Household 
Expenses. Add all the entries in Items 32 
through 38. 

40: EXTRAORDINARY EXPENSE Enter the 
total amount of tfie expense in Item 40. An 
extraordinary expense is defined as one of the 
following: 

■ The cost of household improvements or 
household help required due to illness of or 
accident to you, your spouse, or your depen- 
dents that: 

— is not yet paid for. 

— was incurred no more than 12 months 
ago or will be incurred over no more than 
the next 12 months. 

— is not eligible lor deduction as a medical " 
expense for Federal income tax purposes 
(expenses deductible as medical 
expenses qualify tor a TSP medical loan 
and should not be entered here), and 

— is not covered by insurance. 
"Household Improvements" are changes to 
your living quarters or the installation of spe- 
cial equipment which is necessary to accom- 
modate the circumstances of the incapaci- 
tated person. "Household help" is the service 
ol a person wfio is hired to do housework that 
the incapacitated person cannot perform 

■ Uninsured personal casualty loss within the 
last 12 months that would be eligible for 
deduction lor Federal income lax purposes. 
This is sudden property loss resulting Irom 
damage or destmction by (ire. storm, or other 
casualty, or due to theft of property 

■ Unpaid legal costs associated with a separa- 
tion or divorce that were incurred no more 
than 12 months ago or will be incurred over 



161 



Dale o( Birth: 



Social Security Number 



MONTHLY INCOME TAX 

AND RETIREMENT DEDUCTIONS 

24. Monthly Federal Income Tax Withholding 

25. Monthly State Income Tax Withholding 

26. Monthly Local Income Tax Withholding 

27. Monthly Payments of Estimated Taxes on Income 

■ Federal 

■ State 

■ Local 

28. Monthly FICA (Social Security)/Medicare Deduction 

29. Other Monthly Retirement Deductions 

■ FERS or FERS Equivalent Basic Benefit Anrwity. 

■ CSRS or CSRS Equivalent Annuity 

■ TSP Contributions 

■ Ottier 

30. Total Monthly Income Tax and Retirement Deductions 

31. TOTAL MONTHLY INCOME NET OF TAX AND 
RETIREMBIT DEDUCTIONS (Item 23 minus hem 30) 



YOU 



YOUR 
SPOUSE 


TOTAL 

.00 


_ 


.00 


_ 


.00 




.00 


_ 


.00 


^ 


.00 


_ 


.00 




.00 


_ 


.00 


^ 


.00 


_ 


.00 




.00 
.00 



MONTHLY SCHEDULED HOUSEHOLD EXPENSES 

3Z Monthly Household Rental or Mortgage Payment 

33. MonthlyHousehokJFtealEstateTaxYJfpa/dseparafeiyfromrenra/ormortgagej 

34. Monthly Household Homeowner's Insurance fifpaid separately from rental or mortgage) 

35. Monthly Household Utilities (it paid separately from rental) 

36. Monthly Household DeperxJent Care 

37. Monthly Expense for ATimony, Maintenance, arxj/or Child Support 

38. Monthly Loan Payments 



39. Total Monthly Scheduled Household Expenses 

40. EXTRAORDINARY EXPENSE as defined in the instructions. 
Check the expense(s) you have: 

D Household help/improvements 

D Uninsured casualty loss 

D Legal expenses for separation/divorce 



162 



INSTRUCTIONS Continued 



FINANCIAL ASSETS 

Rnanctal assets are cash or other assets that 
are readily converted to cash. If you do not know 
the precise anvxint of an asset, estinnate the 
amount t>ased on the balance at the end of the 
last period (or which you tiave a statement and 
any changes since Uien. Do not include your 
Individual Retirement Account (IRA) if you have 
one. Do not list any non-liquid asset (for exam- 
ple, jewelry, your car, or your residence) or any 
asset tfiat is used as collateral for a debt. 



41—45: Enter the face value of the specified 
assets. 

46—50: Enter the current mar1<et or redemp- 
tion value of the specified assets. 
51i LHe Insurance. Enter the cash value of 
universal or wtiole life insurance pwlicies. 
52: Other Financial Assets. List and enter the 
value of other finarxyal assets you may have. 
53: Total Rnandal Assets. Add the entries in 
Items 41 through 52. 



I V« 54: Amount of Loan You Are Requesting. 
LOAN You may fXJt borrow more ttian the amount of 
REQUEST your contritxitions to the TSP and the earnings . 
on your contriljutions. You may not twrrow less 
than $1 .000. To figure the maximum amount you 
can txxrow (subject to the amount of your own 
contritHJtions and associated earnings in your 
TSP account, ttie limits in Federal tax law. and 
the (jay test), you may use the attached Work- 
sfieet. (Do not sutxnit the Worteheet with your 
application.) The maximum amount you qualify 
for will \x calculated for you based on the infor- 



mation you provide, whether you complete the 
Wort«heet or rx)t. 

55: Requested Amount Too Large. If the 

anxKint you request is more than the amount for 
wtiich you qualify, indicate whether you want to 
apply for the maximum amount that is available 
to you. You will be notified whetfier you are 
eligible (or the kan amount you request. 
56: Amount of Time to Repay. l=or a loan for 
financial hardship, you have tjetween one and 
four years to repay 



We l^ake sure you have attached a copy of your 
OCUMENTATION cunent earnings and leave statement. Your state- 
REQUIREO ment will be used to verify that the anxxjnt left in 



your paycheck after a loan payment is deducted 
will equal at least 10% of your tiasic pay 



V l« Read the certification, sign your name, and enter 
CERTIHCATiON the date you signed the form. 



163 



Don't forget to: 

■ Enclose a copy of your current 
earnings and leave statement 

■ Sign and date your application 
(Section VI) 



■ 



Keep a copy of your application 
for your records 



164 



Oat0O(6i(1h: 



Social Security Nucrtber. 



RNANCUU. ASSETS 

41. CashonHand 

42. Checking Aaxxjnts 

43. Savings Accounts 

44. Money Mari<el Funds 

45. Ceitificates of Deposit 

46. Stocks 

47. Cotporate Notes and Bonds 

48. U.S. Savings Bonds 

49. Other U.S. Government, Federal Agency, State, or 
Municipal Securities 

50. Mutual Funds 

51. Life Insurance 

52. Other Finanaal Assets 



S3. Total Financial Assets 



YOUR 
SPOUSE 


TOTAL 

.00 


„ 


.00 


_ 


.00 


_ 


.00 


_ 


.00 


_ 


.00 


_ 


.00 


_ 


.00 




.00 


_ 


.00 


_ 


.00 


= 


.00 


_ 


.00 


_ 


.00 




.00 



IV» 54. Amount of loan you are requesting 
^jAN 55. If the amount you are requesting is more than the 

maximum you can obtain, do you wish to tx>rrow the 
maximum availatile to you? 
5 Mam^^MliSi^ 56. Amountof time to repay 

kMnyoucanobain 



REQUEST 



D Yes D No 
year(s) and _ 



_nxxith(s) 



DOCUMENTATION 
REQUIRED 



Attach a copy of a current earnings and leave statement. 



W l» I certify, under penalty of perjury, that Itie information in this Hardship Loan Application is true and 

CERTIFICATION complete to tfie t)est of my knowledge. Warning: Any intentional false statement in this application or 

willful misrepresentatton concerning it is a violation ol the law and is punishable by a fine of as much as 
$10,000 or imprisonment for as long as five years, or both. 



Signature. 



Date. 



PRIVACY ACT 
NOTICE 



We ve auOvxaed to request Ihts anlotmai«n unoet Trite 5 U S CocJe Chapiet 84 fedeiai Employees' Retiremeni System. Sut>chapte( IM 
T>Miti Savings Plan ExecuUve Oder 9397 authoiaes us to ask (or yout sooai socunly nfrbet. »*icJi w* be used to K*ertj(y your account We wiii 
use the nkxmatcn you g<ve us to process your ban applcalcri TNs ntormalcn may tx shared wttx other Federal a^eroes n order to 
adrrw^er your account or lor statisicai. audrtng or arctwtng purposes It may also be shared wrih Federal, state, and local ageocies lo 
delermme tsenefrts ixtder the* programs lo obta*i»iJormal«in necessary uncJer th« program, or lo report ncome lor lax purposes tnaddrton 
vte may sf«re this ntormaicn wdh the Parent Locata Service Department d HeaHh and Human Servces. (or the purpose o< en(ofC"Tg chdc 
support obfcgatois aga«si the ISP partopa^t We may s*«ic lh«s Mitormaicn ¥rtth taw enkxcemenl agerxaes when they are tr^vcatoalBTg a 
volatKXi o( ovi or cr*T«r\ai law V'te may grwe ttKS ailurmatcn to Itrxanoal nstduicr^. private sector audit (irrrts. annuly vendors, current spouses 
arx] 10 a i»T«ed extern benefoar^s ana former spouses realty, (h^rtormaion nay also be (*sc*Bed toothers on your wmien request While 
the law does not requ^e you to gtve ar»y ol the rtorrrwicn teqoesled on this kxm, « may not be possible lo process your appK:at<in A you do noi 
gtve us ttos nlorTTuton 



Please send your completed application and the required documentation to: 

National Finance Center 

Thrift Savings Plan Service Office 

P.O. Box 61500 

New Orleans, LA 701 61 -1 500 



165 

WORKSHEET to calculate your loan amount 

The toOowing Worksheet will help you calculale the ban amount tor which you qualify, sutjject to the amount of your own cxmbixiOons 
and associated earnings In your TSP aaxxjnt end to ttie (mtts set in Federal tax law (see the txxjMel, Thrift Savings Plan Loan 
Pix>gramO. H the result In Item S of the Worksheet Is $1 ,0(M or tnore, you quaTrfy kv a financial hardship loan In that anK)unt, Eut^^ 
to the trnits rrieritioned atxive arid the requkertient ttul the arnount left In your paycheck after your k>an paymerit, payroll allotmerits, 
and ottier tleductions win equal at least 10% of your tjaslc pay. You do not need (o complele this Wotksheet uriess you want to 
krxiw the maximum amount you can txinow before you apply (or a loan. 

TO DETERMINE IF YOUR REGULAR EXPENSES EXCEED YOUR NET MONTHLY INCOME: 

A. Total Monthly Scheduled Household Expertses: Item 39 In the Financial Statement 

B. Alkiwance lor Ordinary Monthly Recurring Expenses: 

A set amount is allowed for ordinary monthly recurririg 
expense items, kx example, food, clothing, househokj 
operations, enlertainrrienl. education, health care, and 
ottier miscellaneous expenses. Tfiat amount is deter- 
mined t3y a factor tiased on your monthly income and 
your family size. 

In tfie left-hand column of the adjacerit table, find Ifie 
nxxithly income range Itial matches your Total Monthly 

Income (Item 23 in the Rnandal Statement). Go across Multiply the lackx from this table t>y the amount of your 

that tne to fmd the laclor that applies to you on the tiasis Total Monthly Income Net of Tax and Retiremert Deduc- 

o( your family size (Item 18 in the financial Statement). tions (Item 31 in the Financial Statement), and enter the 

(These factors are derived from data from the U.S. answer. Round to the nearest whole dollar. 

Bureau ol Labor Statistics.) _ 







A 




Total 
Monthly Income 


1or2 


Family Stas 

3or4 SornHHC 


Less than $1,250 


.75 


.90 


50 


$1^50-1,666 


.65 


.75 


.75 


$1,667-2,499 


.60 


.65 


.65 


$2,500-3532 


.SO 


£5 


,60 


$3,333 + 


.45 


.45 


,50 



C. Total Monthly Regular Household Expenses: Item A phis Item B. 

D. Total Monthly Income Net of Tax and Retirement Deductions: 
Item 31 in the Financial Statement 

E. Kern C minus Item D: II Item C is less than Item O, enter 0. 

F. Hem E times 12: 12 ■ 



Heme 

C7 TO DETERMINE IF YOUR EXTTIAORDINARY EXPENSE EXCEEDS YOUR 
NET MONTHLY INCOME: 

G. Total Monthly Regular Household Expenses: Item C. 

H. Extraordinary Expense: Item 40 in the Financial Statement 

I. Item G plus Item H. 

J. Total Monthly Income Net of Tax and Retirement Deductions: 
Item 31 in the Financial Statement. 

K. Item I minus Item J : If Item I is less than Item J, enter 0. 

L. The smaller of Item H or Item K. 

icr TO CALCULATE THE HNANCIAL ASSETS YOU HAVE TO DRAW UPON: 

M. Total Rnandal Assets: Item S3 in the Financial Statement. 

N. Financial Reserve: Item D limes 6. 6 x 

llemO 

O. Item M minus Item N: II Item M is less than Item N, enter 

O- TO CALCULATE THE MAXIMUM LOAN YOU MAY OBTAIN: 

P. Amount by which a year's regular expenses exceed net Income: Item F. 

Q. Amount of the defined extraordinary expense that cannot be covered by one month's 
net Income: Item L. 

R. Amount of financial assets considered available to meet your need: Item 0. 

S. Item P plus Item Q minus Item R. This Is the amount of the hardship loan for which 
you qualify (subject to the limits mentioned above). 



166 

November 22, 1995 ^ ^ 

Director, Central Office Hirnian Resources Management Service (055) 

Pay and Leave Treatment of Employees Affected by the Lapse |n Appropriations 

Human Resources Management Liaisons 

1. Attached is guidance from the-Office of Personnel Management dated 
November 21, 1995, that provides information regarding pay, leave, and 
documentation of personnel actions. 

2. Also attached are timekeeping instructions in the form of Questions and Answers. 
Please note that tiiese timekeeping iitstructions will also be issued to timekeepers by 
the Central Office (CO) Finance Service. 

3. OPM's guidance should answer most of the questions necessary in order to ensure 
timely pajTwll processing. While we anticipate that there will be other questions, 
those will be addressed separately since we wanted to get this information out to you 
as soon as possible. 

4. Questions regarding leave may be referred to a representative of Central Office 
Himian Resources Management Service on 565-8687. Questions regarding 
timekeeping may be referred to CO Finance Service on 565-8403. 



George W. Williams 
Attachments 



TIME AND ATTENDANCE Q&As 

1. How will absences be recorded for the period of November 14 
through November 19? 

A. Except as noted below, absences occurring during the lapse 
in appropriation period will be recorded on the Time and 
Attendance Report as "Authorized Absence". This provision 
applies to employees who were initially given furlough notices 
as well as essential/excepted employees who were permitted 
periods of absence during the furlough. (See exceptions below 
for employees on approved Office of Workers' Compensation 
Program (OWCP) status or continuation of pay (COP).) 



167 



Kote: En^loyees who were on approved leave on Hovember 14, 
1995, must be charged leave for the approximate period of time 
from the beginning of their tour to the time other similarly 
situated en^loyees departed work after receiving furlough 
notices. Each organization roust determine the approximate 
period of leave charge for affected employees. 

2. How will absences be recorded for employees on approved 
OWCP? 

A. Employees on annual or sick leave as a result of an approved 
OWCP case will continue to be charged annual or sick leave as 
appropriate during the furlough period. These employees may 
elect to buy back the leave in same manner as is if there was no 
furlough . 

3. How will absences be recorded for employees in a COP status? 

A. Eii^>loyees on COP will continue in a COP status. Absences 
during the November 14-19 period do not serve to extend the 45- 
day period of entitlement. 

4. How will absences be recorded for employees on LWOP or AWOL 
status? 

A. Employees in a LWOP/AWOL status immediately prior to 
November 14 and immediately after November 19 will be considered 
in a LWOP/AWOL status during the furlough period. For enployees 
who were on LWOP or AWOL status either before or after the 
furlough period, supervisors roust roake a determination on the 
amount of LWOP to be charged. 



168 



Page 2, 



5. How will absences be recorded for employees on court leave 
or military Leave? 

A. Enployees on court or military leave will be recorded as 
"Authorized Absence." 

6. Should compressed work schedules be changed for employees 
placed in a furlough status? 

A. Compressed work schedules will not be changed. 

7. How is "use or lose" annual leave that was scheduled but not 
charged for the period of November 14 through November 19 
affected? 

A. *Use or lose" leave scheduled but not used due to absences 
resulting from furlough notices may be restored if appropriate 
authority determines that the employee was prevented from using 
the leave due to an "exigency of the public [service] , namely, 
the need to furlough en^loyees due to lack of work funds". 
NOTE: Enployees should stu.ll be make every effort to schedule 
*use or lose" leave before the end of the leiave year. 

8. How is compensatory time that was scheduled but not charged 
for the period of November 14 through November 19 affected? 

A. Payment to FLSA exempt enployees for lost conpensatory time 
may be made if the overtime approving official provides a 
written statement that the employee's failure to use the 
compensatory time was the result of exigency of public service. 
Payment to FLSA non-exempt employees will be automatically made 
by the payroll office for any forfeited compensatory time. (See 
MP-6 Part V Supp 2.2 Paragraph 105.05) 

9. How is employee's pay affected. 

A. Employees absent due to the lapse in appropriation must 
receive the same pay they would have received had they actually 
worked. This includes regularly scheduled overtime, night 
differential and any other premium pay, allowances or 
differentials the employee would have otherwise received. 



169 

November 21, 1995 
MEHORAKDDM FOR DIRECTORS OF PERSONNEL (CFH-9S-8) 



FROM: M.LAN D. HEUERMAN 
ASSOCIATE DIRECTOR 

FOR HUMAN RESOURCES SYSTEMS 

SUBJECT: Pay and Leave Treatment of Employees Affected by 
the Lapse in Appropriations;- Documentation of 
Personnel Actions 



Congress has passed and the President has signed legislation 
providing as follows: 

Any Federal employees furloughed as a result of a lapse 
in appropriations, if any, after midnight November 13, 
1995, vmtil the enactment of this Act shall be 
compensated at their standard rate of compensation for 
the period during which there was a lapse in 
appropriations . 

The purpose of this legislation is to make Federal employees 
whole by ensuring that they receive their "standard rate of 
compensation" for the entire period of the lapse in 
appropriations. With regard to persons who would have been 
in a previously approved paid leave status if the lapse in 
appropriations had not occurred, the policy set forth below 
is consistent with the instructions provided to agencies on 
November 17, 1995. These instructions were based on the 
premise that, during the lapse in appropriations, employees 
must be (1) at work performing excepted activities, or (2) 
furloughed, and that they cannot therefore be in a paid 
leave status during that period. Such employees must 
receive the same pay they would have received for an 
equivalent period of work performed for the agency, without 
regard to any previously approved paid leave. 

The following guidance has been prepared by the Office of 
Personnel Management in consultation with the Office of 
Management and Budget. As used below, the term "excepted 
employees" refers to employees who were excepted from a 
furlough because they were performing functions related to 
national security, protection of life or property, or the 
orderly suspension of agency operations. 



170 



Pay 

For periods of time during which employees were furloughed, 
they must receive the same pay they would have received for 
an equivalent amount of work performed for the agency. 
Therefore — 

* Employees are entitled to receive their rate of basic pay 

for all periods of time during which they would have 
been in a pay status but for the furlough; 

* Employees who were regularly scheduled to perform 

overtime work or to perform work at night or during a 
period for which any other form of premium pay would 
otherwise be payable are entitled to receive overtime 
pay, night pay, or other premium pay as if the work had 
actually been performed; 

* The hours of duty during which employees were fxirloughed 

(including regularly scheduled overtime hours and 
standby duty) must be considered "hours of work" for 
pay administration purposes under the Fair Labor 
Standards Act; and 

* Allowances, differentials, and other payments must be 

paid as if the employee actually continued to work. 

Excused Absences and Charges to Leave 

* Except as provided below, absences resulting from the 

furlough of employees during the lapse in 
appropriations must be recorded as excused absences and 
may not be charged to any form of paid leave (i.e., 
annual leave, sick leave, or other paid leave) , 
compensatory time off, or credit hours under a flexible 
work schedule. 

* In the case of employees who were on approved leave 

without pay during the lapse in appropriations, 
absences during the lapse in appropriations must 
continue to be charged to leave without pay for the 
duration of the period of approved leave without pay. 

* In the case of employees who were on approved paid leave 

(or compensatory time off or credit hours) on November 
14, leave (or compensatory time off or credit hours) 
should be charged only for the approximate period of 
time from the beginning of each individual employee's 
normal workday until the time other similarly situated 
employees departed from work after receiving furlough 
notices. The remaining period of time in the 
employee's regularly scheduled tour of duty must be 
recorded as an excused absence. 



171 



"Use or Lose" Annual Leave 



* Employees and agencies should nedce every effort to 

schedule, within the time limits specified by 
regulation, any additional "use or lose" emnual leave 
now made available to a furloughed employee because 
previously approved annual leave was canceled during 
the lapse in appropriations. If, however, the employee 
is unable to reschedule such annual leave and it is 
forfeited at the end of the leave year, the «ano\int of 
annual leave that was canceled during the lapse in 
appropriations may be considered for restoration under 
5 CFR 630.308. 

Alternative Worlc Schedules (AWS) 

* Each agency should have a policy specifying when flexible 

work schedules must be established and may be changed. 
Normally, such schedules are established in advance of 
the pay period involved. Under such a policy, an AWS 
nonworkday scheduled to occur during a lapse in 
appropriations should not be changed after the pay 
period begins. 

Docvuaentation of Personnel Actions 

* Agencies should not process SF 50 's to document a 

furlough resulting from the lapse in appropriations on 
November 14 , and SF 50 • s that were processed must be 
canceled using Nature of Action Code "001." Do not 
record the furlough with any document designated for 
long-term filing in the Official Personnel Folder. 

* Agencies need not provide a furlough notice to an 

employee who did not receive a notice during the lapse 
in appropriations. 



172 




Cotrrnmriil of Ihr Oialrirl of Columbia ^^^^^ Or|Mirtiiirnl of Ein|ilo«iiirn) S«rWcn 

• SOO C Sirctt. N.W. • Wishiogton. D.C 20001 



OFFICE OF UNEMPLOYMENT COMPENSATION 

IMPORTAMT MOTICE 

TO ALL FEDERAL EMPLOYEES ZN THE DISTRICT OF COLUMBIA: 

You can file for unemployment insurance benefits if you are 
furloughed on or after November 13, 1995, due to the absence of a 
FY 1996 Appropriations or Continuing Resolution. If you are 
unemployed as the result of a government wide or agency wide shut 
down and want to file, please complete the 'Initial Claim For 
Furloughed Federal Government Employees" form provided with this 
letter to you by your personnel authority and return to the 
designated staff of your personnel office. This form must also be 
completed by your personnel office. 

Your claim will be processed upon receipt of your claim form from 
your agency if the furlough lasts more than one week. After 
processing, you will be mailed your first biweekly payorder card 
along with instructions and other information about your claim. The 
effective date of your claim will be the first day that the 
furlough begins. The District of Columbia has a one-week waiting 
period. 

YOU MAY WOT OSE THIS PROCESS FOR THE FILING OF AHY ONEMPLOYMENT 
CLAIM EXCEPT FOR A CLAIM RESULTING FROM A GOVERNMENT WIDE OR AGENCY 

WIDE FURLOUGH. Unemployment claims resulting from agency 
downsizing and/or normal terminations will continue to be taken 
using the regular in-person claim taking process. 

IF YOU ARE PAID RETROACTIVELY FOR THE FURLOUGH PERIOD, YOU WILL BE 
REQUIRED TO PAY BACK ANY UNEMPLOYMENT INSURANCE BENEFITS YOU 
RECEIVED. 



JOBi 

SERVICE g^ "HelpiDg People Help ThemMlvef" 



173 



Covernmrul of ttxr OUtricI of CoIumbU 




Orparlmrni of Eai|iloriiinil SrrtlcM 



SCO C Sjrert, N.W. 



Wuhinpon. D.C 20001 



IMSTROCTIONS FOR COMPLETIHG AMD FILING A FEDERAL FURLOUGH CLAIM 

The Federal employing agency must complete an INITIAL CLAIM FOR 
FDRLOUGHED FEDERAL GOVERNMENT EMPLOYEES for each affected employee 
and returned the forms with documentation to" the District of 
Columbia Department of. Employment Services for processing. These 
forms should be completed and returned within 7 days of the date 
the furlough begins to the address below. A copy should be retained 
by the Federal Agency and a copy given to the Federal Employee. 

O. C. DEPARTMENT OF EMPLOYMENT SERVICES (DCDOES) 
OFFICE OF UNEMPLOYMENT COMPENSATION 
SOO C Street, Room S17 
WASHINGTON, D. C. 20001 



Items 1 through 20: 



Please have furloughee print clearly when 
answering these questions. 



Item 1. Print Last Name, First Name, Middle Initial 

( including Jr, Sr, II, etc. following Last Name 
Item 2. Enter Social Security Number) 
Item 3. Print Street Address ( Do not abbreviate and include 

apartment number if applicable) 
Item 4 . Print city ( Do not abbreviate) 
Item 5. Print state 
Item 6. Enter zip code 

Item 7. Indicate sex with a "X" in the appropriate box 
Item 8. Enter number of completed years (High School -12, College 

Degree, BS or BA - 16, Master Degree - 18, PH-D - 19) 
Item 9. Enter Marital Status 

Item 10. Enter Date of Birth (Month, Day, Year) 

Item 11. Enter Ethnic Group (White, Hispanic, Black, Indian, other) 
Item 12. Enter Union Status (union or non-union) 
Item 13. Enter telephone number ( Include area code) 
Item 14. Duty station address (city and state) 

Duty station should be recorded as shown on personnel 

document for your agency. 
Item 15. Enter Employer's mailing address ( Use address where 

finance office is located) 
Item 16. Enter dates of most recent employment 



JOB 
SERVICE 



"Helping People Help TbemMlvet" 



174 



Item 17. Indicate unemployment compensation status with 'X" 
Item 18. Enter citizenship status (If an alien, indicate green 

card alien registration number. 
Item 19. Indicate Retirement status with a *X*. 
Item 20. Indicate whether worked for Federal Governnent in past 30 

days with a 'X". 

Items 21 through 26: Leave blank: To be completed by DCDOES Staff 
only. 

Items 27 through 30, please print clearly when furnishing this 

information. 

Item 27. Preprinted. 

Item 28. Enter all gross wages information in federal civilian 
service amounts and the account number. 

Item 29. Attach documentary proof showing federal civilian 

employment. (Federal Agency letterhead notice or the SF-6) 
Item 30. Already preprinted 

Item 3.1: Please have furloughee sign. 

Item 32: Please have Agency Representative sign. This form is not 
complete unless it is signed and dated. Please enter 
signer's title and telephone number. 

The claim form must be sicmed by both the eiaploYe e and an 
authorized agency representative . 



175 



Initial Claim For Furloughed 
Federal Government Employees 

Claimant: Please complete items Numbered 1 through 20 (Please Print Clearly) 



1. CUMMnt'* n*iim: |U^ 



l>.a<i«T«k«A«al ' 



2. t aaiil S «ounty Mowh^ r "' 



U-CuUiThm: ' 
Qm. Q 

imza 



a. tMMAd*»«« 



TSS 



srasTKCT' 



K'ERMnnur- 



ifr 0«u o( Bim 



I*. o«u« ol Ea»l«>ii>« w t~ 



IS. EnvlsyWa Uaiing A^Mraaa <F«4:5' 



>4. Outr tu«on «4dr«M~ 



IT. Hiv* you cuinwd. ranivw), or (pplMd for urwnvloynMM compwuation tn tlw p«si ivniv* monilttT M *Y«t* Mmr daw, dty, and tuu 
o( lh» eUim. Q Vm Q M« 

ie. (OMCkOna) 

I tint citizen or ntlionti of lt«U.S. Qv-mOhs t «m in ( uuftctory immigrtiion cutut Q Vm Q He 

Ali«n R«gitu*lion Nuruxr ____^ 

19. Did you raeatv*. will you rtotiv*. or tr« you racelving p*ynwni inder «ny lyp* of rtUremeni plan, pension, cociil ucurity. WA, KeOQH, 
etc. baud upon praviout wnploymraT Q Vm Q H< 

If y»«. How much nwnttilyl 

20. H«v* you wortiad lor iha FtdertI Govanvnani (or at laatl tha past 30 dayt7 Q Y«« Q Ns 



Federal Agency: Please complete Gross Wages Information for Items Numbered 27 through 29 



27. Bate Period 

July 1.1994 
Juna 30. 199S 



Quartar Ending Yaaf 



Code 
Calendar 
Quarter 



28. Annual Salary In Federal 
Civilian Service 



29. Documentary evidence (Federal Agency 
Notice or SF-8) Showing Federal Civilian 
employment 



ACCOUNT MUM8ER 



30. Reason for Separation: 



Furlough 



L fix dtimant. undamind: ttwt p«Mlii«t ut pmidad ty l«w lor an iMMdutl making ItiM luiinwnu to oMtln tanaflu: tnai any d««nitlnation taaM • 
«»i •rfHlivli K not final; H K wDiKi lo (wraoioo uoon racaipl o( wag* md Moarition Momtilion from tha Fadaral ag^Ky (of wMdi I workaU; thubani 
paymtnii mtda u I n>u<i Of «<icK diiamwMiKin miy t* adjuttad on fix aatii o< InlooMiwn fumiUwd by Iha Fadaral agancy: and OM any amount evatpi 
may ftava lo ba raoaid or otfMl againal futura banalitt. 

I. tha claimant, twaar, or affirm, that tfw atx>va itaian>ants. to tha bast of my knowladga and balial. ara true and corracL ' 



3 1 . Signaiura of Claimant 



I HEREBV wima t s the itionature of |W« efaimanf and CeRIJFY thai lf» clalmani has rnit the W9is <nMtoora<;t)irarMrils^i^^ 



^^^ ^.Sio>ia«Jfe of Fadaral Agancy fiapresantativa/Tille ^^A^taOifn^ti^^^M^"^ 



'luy Talaphona Numbar 



Employer's Sell Claim Filing Fo 



176 



UNEMPLOYMENT COMPENSATION FOR FEDERAL GOVERNMENT 
EMPLOYEES IN THE DISTRICT OF COLUMBIA 



Q 



uestions and rTinswers 



Q. What Benefits Are Fuiloughed Federal Government Employees Entitled To Who 
Work in the District of Columbia? 

A. Federal employees who are unemployed as a result of a hiHough are entided to the 
same benefits as any employee on a temporary layoff. Benefits are based on gross weekly 
earnings. In the District, benefits are calculated at approximately 50% of the employee's gross 
weekly wage up to a maximum weekly benefit of S347 per week. The minimum amount of 
benefits is S50 per week 

Q. Are All Federal Employees Entitled To District of Columbia Benefits? 

A. No. The federal employee's duty station determines the state in which the daim is filed. 
Federal employees whose duty station is in the District of Columbia will receive benefits 
calculated on the above formula. Employees outside the District of Columbia will receive 
benefits based on the formula in the state in which thdr duty station is located. The determining 
hctor is where the duty station is located, not the location of the agency headquarters or payroU 
office. 

Q. How Long Must the Furlough Continue For Federal Employees To Be Elipble For 
Benefits? 

A. The District of Columbia has a one-week waiting period. Therefore, the first week of 
unemployment is not compensable and no benefits may be paid for the first week claimed. If a 
furlough should last longer than one week, the second week and succeeding weeks are 
compensable. 

Q. How Will Furloughed Federal Employees Apply For Benefits? 

A. To handle the anticipated large volume of claims, Federal agendes are being provided a 
spedal self-filing daim form with instructions on how the daim must be filed. The daim forms 
and instTuctions will be distributed by agency personnel authorities should it become- necessary. 



D.C. Department of Employment Services **^t Government of ttte District of Columbia 

Joseph P. Yeldell, Director •_ Marion Barry, Jr^ Mayor 



177 

Q. How Long Will Benefits G>ntinue? 

A. The maximum duration of benefits in the CKstrict of G>lumbia is 26 weeks. 

Q. When WUl I Receive My Fitst Check? 

A. The initial payment is generally issued within 10 days of the receipt of your first mall 
daim card. While payments are made by the District of Columbia, the fimds to pay benefits are 
provided by the federal government If federal funding authority is not available, however, the 
actual payment of benefits may be delayed. 



D.C. Department o( Employment Services *** Government of the District of Columbia 

Joseph P. Yeldell, Director SSS Marion Barry, Jr^ Mayor 



178 



Attachment F 
Broadcast Messages, Media Talking Points, Etc, 



179 



Secretary Brown's Daily Message to VA Employees 
November 17, 1995 

I just want to thank each VA employee during this difficult time for yoxii 
dedication to helping our veterans. Once again, you are showing Americans 
that our mission comes first, no matter the adverse circumstance. That you 
would place your responsibilities to our patients and beneficiaries above the 
uncertainties and disruptions of this period makes me very proud of the 
caUber of people who are "putting veterans first" throughout VA I wish I 
could tell you how long this furlough period will last and that your pay is not 
in jeopardy. However, no VA employees -- neither those who remain on the 
job or those who were furloughed - wiU be paid on Dec. 1 if there is no 
agreement on funding by Nov. 29. We all hope for a quick resolution. I will 
do all within my authority and power to make certain that veterans -- and VA 
employees -- do not become budget casualties. 



Message from Secretary Brown, Decernber 4, 1995 
The government shutdown did not stop the processing of VA 
home loans for many of our veterans. Loan Guaranty divisions 
that left their automated systems up and running during the 
shutdown were able to continue to provide appraisal 
assignment service. The many lenders who participate^ our 
lender appraisal processing program were able to continue to 
receive appraisal reports directly from fee appraisers, make 
value determinations and close loans. Over the years, 
dedicated VA Loan Guaranty employees have helped make 
homeownership dreams come true for nearly 15 million 
veterans. It's reassuring to know that with our private 
industry partners and automation, we have the means to 
continue that fine work temporarily during a crisis. 



180 



lecretary Brovm's Daily Message, August 30, 1995 

»s you are likely aware, there is a strong probability, given the position 
of the Congressional leadership on the appropriations bill, that there will 
be no agreement on FY96 funding in time to avert a shutdown of the federal 
government early in the fiscal year. As a result, a significcint number of 
VA employees will likely be furloughed for a period in October. While we 
wait and hope for the funding picture to clear, we must prepare for this 
shutdown. In doing so, our paramount concern must continue to be our 
veteran patients and customers - minimizing the impact on their health care 
and benefits. I regret that such a drastic measure may be imposed on the 
most dedicated group of employees in government - VA employees . I hope 
this action, which would be so disruptive to the lives of so many good 
people, can be avoided. If not, rest assured that you will not be 
forgotten and I will do all I can to bring an end to this difficult time. 



SPECIAL SECRETARY BROWN'S DAILY MESSAGE. November 13. 1995 

The Federal agencies have been operating under a Continuing Resolution (CR) 
since October 1, 1995. The current CR expires at midnight on Monday. 
November 13. 1995. At this point appropriations bills for the VA and most other 
Federal agencies have not been enacted. Because there Is a real chance that the 
Congress will not pass an acceptable CR by Monday, agencies have been advised 
by the Office of Management and Budget to review their plans for shutting down 
agency operations in the absence of appropriations and to inform their employees 
of the following: 

ALL EMPLOYEES SHOULD REPORT FOR WORK ON MONDAY. 
NOVEMBER 13, 1995. MONDAY WILL BE A NORMAL WORKDAY 
FOR THE FEDERAL GOVERNMENT. 

REGARDLESS OF WHETHER A CR HAS BEEN ENACTED. ALL 
EMPLOYEES SHOULD REPORT FOR WORK ON TUESDAY. 
NOVEMBER 14, 1995 TO RECEIVE FURTHER INSTRUCTIONS. 

JESSE BROWN 



181 



Pay Slip Message 
MESSAGE FROM SECRETARY JESSE BROWN (Dec. 5, 1995) 

I am delighted that all VA employees are back to work continuing our mission of 
"putting veterans first" I want those of you who were furloughed recently to 
know that I believe each and every one of you provides an essentisd service for 
our nation's vetenms and their families. And Tm thaiUcful you have returned to 
work. I want to thank those of you who were on duty during the shutdown for 
your dedication and hard work. VA employees are special and truly know and 
live the meaning^of service and compassioa I am proud of all of you. 



182 



Media Talking Points 



IMPACT OF FEDERAL SHUTDOWN ON 
VETERANS BENEFITSA'A EMPLOYEES 



MEDICAL CARE 



Medical care will not be disrupted. No veteran will have his or her care 
delayed, deferred, canceled or otherwise adversely impacted as a result of 
shutdown activities. 

VETERANS' BENEFIT PAYMENTS 

Excepted VBA employees at field facilities will continue to determine 
eligibility for benefits associated with other excepted VA activities (claims 
for burial, terminal illness, medical care), receive and process payments, 
manage issues involving government property and maintain automated 
records systems. Otherwise, new claims for benefits will not be processed. 

In addition, if there is no appropriation as of Dec. 1 when the next benefits 
checks are to be mailed, these payments WELL NOT BE MAILED to 
veterans or other beneficiaries. These checks include disability 
compensation, pension and DIC. The number of individuals affected is as 
follows: 

Compensation 2.5 million 

Pension 787,000 

DIC 301,000 

TOTAL: 3.58 million 

NATIONAL CEMETERIES 

NCS will continue to bury eligible veterans in national cemeteries. 

IMPACT ON VA EMPLOYEES 

Excepted/Funded Perform Shutdown Act. Immed. Furloughs 

VACO 266* 49 3,404 

Field 200,126 9 32,950 

♦Includes Presidential appointees 
11/13/95 



183 



Media Talking Points 

Veterans Benefits Administration 
Clarification of Shutdown Impact 



In the event of a week long shutdown Ac followng would occur: 

• C&P checks scheduled to be delivered December 1, would not be delayed tfz. 
Second Continuing Resolution is enacted by November 22. 

• C&P retro diecks averaging $13 million Would be delayed for nearly 7,000 
recipients. 

« Education checks averaging $10 million would be delayed to approximately 
30,000 recipients. 

• Insurance death claim benefits would be delayed to approximately 3,500 
survivors at a value of $19.2 million. 

• Insurance dividend payments of Si 8 million to nearly 45,000 veterans would 
be delayed. 



I 



184 

Mr. Mica. Thank you, Mr. Brickhouse. 

I would like to recognize now Shirley Chater, Commissioner of 
the Social Security Administration. 

Welcome. 

Ms. Chater. Thank you, Mr. Chairman and members of the com- 
mittee. 

My written testimony has been presented to you for the record. 
With my time this morning, I would like to answer some of the 
questions about the number of Social Security Administration em- 
ployees who were furloughed. I would like to tell you about the 
services that were maintained during the shutdown and the serv- 
ices, of course, that were interrupted. 

On November 14, the Social Security Administration furloughed 
about 61,000 nonexcepted employees and retained about 4,800 ex- 
cepted employees. The vast majority of those employees who re- 
mained on the job were directly involved in the processes involved 
in paying benefits to currently enrolled Social Security, Supple- 
mental Security Income, and Black Lung beneficiaries. We also re- 
tained some employees who maintained records for those bene- 
ficiaries currently on the rolls. 

Social Security continued to perform functions related, of course, 
to the protection of life and property, and all of the administrative 
activities necessary to support the excepted functions. I want you 
to know, however, that none of our Social Security district offices 
were closed. 

Now, let me tell you about the suspensions. There were a num- 
ber of agency functions that we suspended during the shutdown. I 
want to make it clear to you that Social Security never used the 
term "nonessential" to describe either the services that were dis- 
rupted during the shutdown period nor the employees who provide 
those services. Although the functions that were suspended did not, 
at that time, meet the definition of excepted activities under the 
statute, they are critical to the mission of Social Security, and we 
feel very strongly about that. 

Now, if I can tell you about the work that was not done, I need 
to paint a context for you so that you understand how far behind 
we are. The Social Security Administration receives, on average, 
about 28,000 retirement and disability benefit applications every 
single day. We receive an average of about 53,000 applications for 
Social Security numbers every day. And every day we answer about 
200,000 telephone calls on our 800 number. Every day we conduct 
approximately 2,700 hearings for claimants who appeal the denial 
of benefits. 

Well, Social Security, during the shutdown, did not process appli- 
cations for new benefits or Social Security numbers. We provided 
only an automated message on the 800 number, so we were not 
available to answer questions. And, of course, there were no hear- 
ings conducted during this 4-day period. 

These numbers make it very clear that an appropriation lapse 
has a severe impact on Social Security's ongoing ability to properly 
administer the Social Security programs. If several days elapse in 
which no benefit applications are handled and no hearings are con- 
ducted, it could seriously impair the agency's capacity to process 
pending claims and appeals. 



185 

Because of our deep concern about the potential impact on serv- 
ice to the public, we were prepared to make appropriate adjust- 
ments in our initial SSA shutdown plan, if we suspected a pro- 
longed lapse in appropriations. The President asked SSA to review 
its shutdown plan in light of the potential length of the shutdown. 
We were ready to act. We were ready to accept and process new 
claims applications. 

I decided, at that point, should it come, I would expand the num- 
ber of excepted employees effective November 20 and bring back 
50,000 people, especially to our field offices and to the telephone 
centers. On the other hand, those not directly involved in paying 
benefits, or accepting and processing claims, would have remained 
on furlough. Because all Federal employees returned to work on 
November 20, I did not have to take this action. 

In closing, I can say with confidence that Social Security imple- 
mented the shutdown in an orderly manner and in full compliance 
with the applicable statutes and directives and guidance from the 
Office of Management and Budget and others with governmentwide 
responsibility for ensuring the consistency of individual agency 
shutdown plans. 

I would be happy to answer your questions. 

[The prepared statement of Ms. Chater follows:] 



186 



SJ? 7^^% ^-E 



USA 
STATEMENT ON 

THE GOVERNMENT 
SHUTDOWN 

BY 

DR. SHIRLEY S. CHATER 

COMMISSIONER OF 

SOCIAL SECURITY 

BEFORE THE 

HOUSE COMMITTEE ON GOVERNMENT 

REFORM AND OVERSIGHT 

CIVIL SERVICE COMMITTEE 

DECEMBER 6, 7995 

^1^^ FOR RELEASE ON DELIVERY .^TIT 

n"l± ±l"a 



187 



Mr. Chairman and Members of the Subcommittee: 

As we are aware, a lapse of appropriations for most Federal 
agencies, including the Social Security Administration (SSA) , 
recently led to a temporary shutdown of many Government 
functions. I appreciate the opportunity to explain how SSA 
planned for this contingency and implemented its shutdown plans. 

I would like to clarify that nowhere in either the statute 
or guidelines does the word "essential" appear. It is extremely 
unfortunate that this word was used during the recent furlough to 
refer to Federal employees as being "essential" or "nonessential" 
employees. In fact, the statute says that when there are no 
appropriations, all employees are furloughed except those 
performing emergency activities that include, among others, the 
provision of mandatory benefit payments and the protection of 
life and property. If we were furloughing only "nonessential" 
employees, no employee would have been furloughed because they 
are all essential. 

Shutdown Plans 

My testimony will generally address the questions you raised 
in your letter of invitation, beginning with a description of 
SSA's process for developing and implementing shutdown plans. 

Office of Management and Budget (0MB) guidance requested 
that each agency develop an operational plan for an orderly 
shutdown in the event of a lapse of appropriations. SSA's 
contingency plan consists of individual plans, approved by the 
Commissioner, which are developed and maintained by Deputy 
Commissioner (DC) level components. If notified by 0MB of a 
funding lapse, the Commissioner will activate the SSA Command 
Post, which will oversee the implementation pf SSA's contingency 
plan and provide guidance. The Command Post, which is comprised 
of representatives of the Office of Personnel and each DC 
component, will immediately notify the DC- level component heads 
to implement their individual contingency plans. 

I am attaching to my testimony a summary of SSA's procedures 
for shutdown and startup due to lapse of appropriations. This 
document contains more detailed information regarding SSA's 
shutdown plans. We informed 0MB of our shutdown plan in advance 
in order to ensure consistency among Federal agencies in the 
interpretation and application of pertinent statutes. 



188 



We received a number of issuances providing guidance and 
information from 0MB and the Office of Personnel Management 
(0PM) . I can assure you that SSA has adhered to all guidelines 
and standards with respect to developing and implementing an 
appropriate contingency plan. 

Impact of Furlough on SSA 

You asked about the number of SSA employees furloughed, the 
number who continued working, the functions they performed, and 
the rationale for continuing chose functions. 

During the orderly shutdown effected on November 14, and 
consistent with our shutdown plans, SSA furloughed approximately 
61,000 non-excepted employees and retained about 4,800 excepted 
employees beyond the lapse of appropriations. This was 
consistent with SSA's previously established shutdown procedures. 
The attached chart shows the categories of activities for which 
employees were retained and the number of excepted employees 
involved in those activities. 

The functions these employees performed were mainly in 
direct support of paying benefits to currently enrolled Social 
Security, Supplemental Security Income, and Black Lung 
beneficiaries and to maintain essential records for those 
beneficiaries. It is our view that, because there were 
appropriations for the program costs of paying benefits, this 
necessarily implied authority to incur obligations for the costs 
necessary to administer those benefits. Other functions 
permitted under applicable statutes, including the Anti- 
Deficiency Act, during a lapse in appropriations related to areas 
such as protection of life and property and all activities 
necessary to support the excepted functions. 

You also asked about the cost impact on SSA of the shutdown. 
While we have not completed our review of the cost to SSA of the 
shutdown, SSA's major cost was the cost of paying furloughed 
employees. We estimate that payroll costs for furloughed 
employees amounted to $43 million for the four full business days 
during the shutdown period. Additional costs incurred include 
full rental costs for SSA facilities, even though most were 
minimally staffed, and costs for services which we paid for, but 
did not receive, such as training. 



189 



Guidanc e to Furlouahed Employees 

With respect to the guidance provided to furloughed 
employees concerning such issues as pay and unemployment 
compensation, I am pleased to report that we were able to keep 
employees fully informed before, during, and after the furlough. 
0PM was helpful in providing us with information from the 
Department of Labor about unemployment compensation, and we were 
able to pass this information along to our employees. 

As SSA updated its contingency plans, we provided written 
questions and answers about furlough issues to all employees 
before the start of the fiscal year. I updated this information 
by means of electronic mail messages to all employees as the 
possibility of a funding hiatus increased. A communications 
network of designated furlough contacts was established to 
disseminate information quickly throughout SSA via electronic 
mail, conference calls, and meetings. 

We have also been operating a telephone hotline to provide 
employees with information and instructions before, during, and 
after the furlough. For example, du"ing the furlough, the 
hotline assured employees that they would receive on time their 
pay due on November 21 and gave specific instructions for filing 
applications for unemployment compensation. 

SSA has no subsidiary agencies. We do, however, provide 
100 percent of the funding for the operations of State Disability 
Determination Services (DDS) , which make disability 
determinations for SSA. Although DDS employees are State 
employees, their salaries are fully funded through SSA's 
appropriated funds. We notified the State DDS ' s of the impending 
shutdown and informed the Governors we could not fund DDS 
operations for the shutdown period. 



Impact of Prolon ged Shutdown 

Finally, you raised several questions regarding our 
assumptions about the length of the shutdown, and the effect of 
such assumptions on decisions as to which functions should be 
continued during the shutdown period. 



40-190 97 - 7 



190 



Before addressing these questions, let me briefly mention 
some workload statistics to put in perspective the scope of SSA's 
activities. These activities represent basic services to the 
public- -services that were denied to them during the shutdown 
period. For example: 

o We receive an average of about 28,000 retirement and 
disability benefit applications per day; 

o We receive an average of about 53,000 applications for 
Social Security numbers per day; 

o An average of about 200,000 calls per day are made to 
our toll-free 800-number; and 

o We conduct about 2,700 hearings per day. 

Although a very brief shutdown only slightly disrupts the 
services we provide, I think it is obvious that an appropriations 
lapse of one to two weeks would cripple SSA's ongoing ability to 
properly administer the programs for which it is responsible, and 
could seriously impair its capacity not only to distribute 
accurate payments to current beneficiaries of all of its 
programs, but also to process pending, claims and appeals. 

Although we did not make any specific assumptions about the 
length of the shutdown, our contingency plan provided for a range 
of appropriate adjustments we could make in the event of a 
prolonged shutdown. Thus, when the President asked that SSA 
review its shutdown plan in light of the length of the shutdown, 
we decided to implement a phase of the plan that expanded the 
number of excepted employees by about 50,000 effective November 
20, in order to ensure that SSA could accept and process new 
claimb applications. Of course, since the shutdown ended and all 
employees returned to work on November 20, we did not have to 
implement this decision. 

Conclusion 

I deeply regret any hardship or inconvenience which members 
of the public and SSA employees may have suffered as a result of 
the shutdown. However, I believe that SSA implemented the 
shutdown in an orderly manner and in full compliance with 



191 



appropriate directives and guidance from 0MB. Obviously, in the 
interest of the public we serve and the employees who provide the 
services, I want to express my sincere hope that we will not have 
to implement shutdown procedures in the future. 



Attachments 



192 



Social Security Administration 
PROCEDURES FOR SHUTDOWN/STARTUP DUE TO LAPSK OF APPROPRIATIONS 



The Office of Management and Budget (OMB) guidance requires that 
each agency develop an operational plan for an orderly shutdown, 
in the event of a lapse of appropriations. SSA's contingency 
plan (CP) consists of individual plans which are developed and 
maintained by Deputy Commissioner (DC) -level components. If 
notified by OMB of a funding lapse, the Commissioner will 
activate the SSA's Command Post, which will oversee the 
implementation of the Agency CP and provide guidance. The 
Command Post (comprised of a representative from the Office of 
Personnel and each DC component) will immediately notify the DC- 
level component heads to implement their individual CPs . 

The following are basic steps to be used by each DC-level 
component to activate individual CPs in the event of a shutdown. 
(More specific guidelines are provided in the SSA AIMS 17.01) : 

IMPLEMENTATION 

General 

o Select, immediately, a minimum number of support staff to be 
retained to perform work authorized by law during a lapse in 
appropriations. The remainder of employees will be 
furloughed. 

o Notify the Office of Systems of component telecommunications 
requirements, as soon as the number of support staff 
has been determined. 

o Provide, immediately, to the Office of Personnel (OPE) , 
Office of Human Resources (GrfR) , the names and number of 
employees to be retained and/or furloughed. This list 
should include the employees' retention/furlough status, 
SSNs and timekeepers' numbers. 

--Managers should also maintain a separate list with 
employee home telephone numbers and addresses. 

- -Managers should notify employees that they are either 
excepted or nonexcepted from the furlough. 



193 



o Immediately notify those employees, verbally, who will be 
released and inform them of their rights and 
responsibilities . 

o OPE will use the public address system at Headquarters to 
convey information regarding lapsed appropriations and the 
release of employees scheduled to be furloughed. 

o DCs with field components will advise them to implement 
their individual CPs. 

o Terminate all work activities not authorized by law during a 
lapse in appropriations, imr ediately. 

--A checklist of basic functions/activities is provided in 
SSA's Administrative Instructions Manual System 17.01 
(Contingency Planning, Policy and Procedures- -Funding 
Lapse) to determine which functions are authorized and 
which functions are not authorized during a lapse in 
appropriations . 

o Cancel, immediately, scheduled conferences/meetings, and 

discontinue training not authorized by law during a lapse in 
appropriations . 

o Advise employees in travel status to immediately return to 
duty stations; no further travel will be authorized. 

o Cancel, immediately, overtime and compensatory time, unless 
authorized by the Commissioner for excepted functions (via 
the Command Post) . 

o Notify, the Command Post, as soon as possible, when 

individual component CPs have been fully implemented. 

S pecific 

DC-level CPs contain action steps unique to the mission of the 
component . For example : 

o The Deputy Commissioner for Finance, Assessment and 

Management is responsible for determining which services are 
needed for continuing functions in each location (e.g., 
lights, water, air-conditioning, etc.), and coordinating 
shutdown of facilities. 



194 



o The Deputy Commissioner for Human Resources is responsible 
for the processing of furlough actions (if a continuing 
resolution or an appropriations bill is not passed within a 
few days of furloughing employees) . 

o The Deputy Commissioner for Operations is responsible for 

ensuring that appropriate signs/notices are posted at public 
contact offices, stating that offices will be open to 
continue to carry out activities authorized by law, on a 
limited basis. 

o The Deputy Commissioner for Programs, Policy, Evaluation and 
Communications is responsibl'= for notifying the Federal, 
State, local and public agencies (dependent upon SSA for 
information) of the cessation o£ SSA activities. 

o The Press Office is responsible for maintaining contact with 
the news media to keep the public and furloughed employees 
informed. 

o The Deputy Commissioner for Systems is responsible for 
coordinating any equipment shutdown/startup (including 
telecommunications equipment) to avoid power surges, systems 
overloads, etc. 

RESTART / RESUMPTION 

Once the word is received from 0MB to resume operations, the 
Command Post will communicate thi,9 to che DC- level component 
heads, who will implement the startup/recall provisions of their 
CPs. 

o The Press Office will immediately notify the media to 
announce resumption of SSA's operations. 

--Employees would already know to listen co certain radio 
and TV stations for the announcement. 

o Office heads will notify subordinate managers, by telephone, 
who will notify employees of date and time to return to 
work. 

o As startup functions are resumed, managers should, 

immediately, relay information upward to the next level of 
command; the DC-level component heads will, in turn. 



195 



communicate this to the Command Post . 

--Any significant problems should be reported promptly to 
the Command Post . 

The Command Post will be dismantled, as soon all DC- level 
components have reported attainment of a normal level of 
operations . 



196 



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197 

Mr. Mica. I thank you and each of the panelists for your testi- 
mony this morning and for the comprehensive coverage each of you 
provided the subcommittee with how you approached this question 
of a shutdown. 

I would like to begin some of the questioning by asking if, in 
fact — let's see, we have several different plans for shutdown. I have 
an HHS plan here which I guess is basically a two-page plan. 
Maybe there is more to this. You have 60,000 employees, and I be- 
lieve 27,000 were deemed essential. Then I have another plan here 
which is a little bit thicker, from the Department of Labor, and this 
one is 184 pages. You have a total of 16,000 employees, of which 
somewhere in the neighborhood of 700 were deemed essential and 
retained. It seems to be sort of a wide disparity. 

Maybe I could ask HHS, is this your full plan or do you have 
something additional? 

Mr. Broadnax. Mr. Chairman, the document that you are hold- 
ing, the two-page document, really acts more as a summary. The 
detailed plan behind that summary is approximately 30 pages. It 
still does not come to the 184 pages that the Department of Labor 
has. I would go on to say that, in this particular case, I think the 
difference is probably in the details, in terms of the difference in 
the two roles and functions, at least at some level, that the two de- 
partments play. 

Mr. Mica. Well, the other question I have for both of you, now, 
you know, the shutdown doesn't appear to be any new idea. I think 
we had testimony from Mr. Glynn, and maybe Mr. Munoz also 
spoke to it, shutdowns are not new. I think in 10 of 12 years we 
didn't have appropriations measures. 

But I have a memo dated July 26, which doesn't say anything 
about whether the Speaker gets to speak with the President on the 
plane or not, but, in fact, it is by Alice Rivlin, and it says, "Plan- 
ning in light of appropriations actions," very clearly directing you 
all, on the 26th, to come up with plans. It says, "we recognize that 
there may be delays, or reflects sharp disagreement with the Presi- 
dent's requests, and that there may not, in fact, be funding." 

Did each of you see this, each of you receive this? It's my under- 
standing, too, that you were to respond by September 5; is that cor- 
rect? Did everyone here respond? I'm getting affirmative head 
shakes. So it wasn't anything, first of all, new; and, second, that 
there were some very direct actions by the administration to plan 
for the shutdown. 

My question is, do you feel this is adequate? I don't see a great 
deal of distinguishing between what is essential and nonessential, 
either with functions or employees, and I see a great disparity be- 
tween the plans that have been developed. 

I would like you to respond. Maybe Mr. Broadnax, you could re- 
spond, and Mr. Glynn. And the others, feel free to comment. 

Mr. Broadnax. Sort of back to where we stopped with the com- 
parison between the two plans, Mr. Chairman. If you look at the 
Department of Health and Human Services, what we did was to 
apply the guidelines as outlined by the law and the 0MB guide- 
lines that were issued, and applied that to the work of the depart- 
ment from the bottom to the top. 



198 

After applying the law and the guidelines, with the guidance of 
0MB in that process, we then came out with a number of people 
that we felt that we could furlough, in the first instance, and the 
number that would be required or excepted, as it were, to carry on 
the work of the department, in the first instance, but understand- 
ing, as outlined in our plan, that this was an evolving process, so 
the number we began with might change after a period of time, de- 
pending on the length of the shutdown. 

Mr. Mica. Mr. Glynn, how do you see this? Is this adequate? Do 
you see these guidelines as adequate? You prepared a more com- 
prehensive response. 

Mr. Glynn. Well, as I indicated and as you mentioned, the De- 
partment of Labor, along with several other agencies in our Appro- 
priations Subcommittee, has had numerous opportunities, over the 
last 10 or 15 years, to prepare shutdown plans because of the dif- 
ficulty of getting our appropriation approved by October 1. 

So we found the guidance issued by 0MB adequate. I think per- 
haps it would be fair to say that, over the years, a certain amount 
of boilerplate has been developed. In terms of how the shutdown 
plans have been developed by our department and reviewed by 
0MB, we chose to submit to 0MB a full plan, with all the 
boilerplate attached. It sounds like, at HHS, they recognized that 
perhaps 0MB had a certain amount of this because it has been 
done over the years. 

So I'm not sure that there's as much difference, in terms of the 
two documents, as it might appear at first blush. 

Mr. Mica. The other question I had is with some of the rationale 
for closing down certain functions, and then with some of the sta- 
tistics that have been quoted. Mr. Broadnax, did you say that there 
were 1,500 or 15,000 deadbeat dad requests a day? 

Mr. Broadnax. Fifteen to twenty thousand per day. 

Mr. Mica. Per day. That would be 3 million a year? 

Mr. Broadnax. This is through the referral service. 

Mr. Mica. Three million a year? 

Mr. Broadnax. Well, these are calls coming in. So you could 
have, you know, a call every day about the same person, presum- 
ably, but that's the number of calls coming in. 

Mr. Mica. Let me, if I may, go to the VA here. Mr. Brickhouse, 
there seem to be some changes in what was essential and non- 
essential, as far as what the administration considered essential on 
one day versus another day. I believe the President decided to call 
back 1,700 VA field staff and change this after your initial deter- 
mination. 

Did you have direction from the administration to make these 
changes, or did you initiate this? 

Mr. Brickhouse. Mr. Chairman, when we developed our plan 
that was submitted to 0MB at the start of the shutdown, we out- 
lined the numbers that we thought were appropriate. However, in 
that planning, we planned for a shutdown perhaps in the neighbor- 
hood of 3 or 4 days, at maximum. What happened on the last Fri- 
day of the shutdown, when we began to look at our activities, we 
recognized that perhaps, if this shutdown was going to go into 
Monday of the next week, that we felt it appropriate to identify and 
bring some additional people in. 



199 

Mr. Mica. So you initiated that request rather than vice-versa? 
It was a request to the administration and the President? 

Mr. Brickhouse. We initiated the request, yes. 

Mr. Mica. And did any of you request changes as far as essential 
and nonessential? You did, Mr. Robinson? 

Mr. Robinson. Yes, sir, we did. 

Mr. Mica. What was that? 

Mr. Robinson. Well, similar to the VA, we reviewed our shut- 
down plans, which, as indicated, have been longstanding across the 
government, in light of the guidance that we received from OMB, 
and we submitted a plan that indicated a certain nature of flexibil- 
ity, because, based on the experience of the government, a short 
shutdown had been the experience that our agency had been 
through and the government had been through. 

Our plan called for us to review, based on the length of the shut- 
down, and we had initiated discussions during the week of the 
shutdown with OMB, petitioning them to modify our plan. 

Mr. Mica. Since the last shutdown, we have Defense and Treas- 
ury; Postal has been passed. We have seven appropriations bills in 
place. Have there been any additional requests from either OMB 
or from the administration to redefine what is essential or non-es- 
sential? If we get into a second shutdown, has there been any re- 
quest to redefine the terms? Are any of you aware of anything? 

Mr. Glynn. Mr. Chairman, I would say OMB has asked us to re- 
view the success and the lessons from the first shutdown, and 
make any appropriate amendments to the plan, which does not 
speak directly to the question, but we haven't had to. 

Mr. Mica. Did you have a deadline for submitting that? 

Mr. Glynn. I think it is due a week from tomorrow. 

Mr. Mica. A little close, but I guess we're looking at December 
15th as the next possible day. That is a week from tomorrow, next 
Thursday. 

Mr. Glynn. Yes. Actually, I have the memo with me, if you want 
to wait 1 second. 

Mr. Mica. I think it is important that we find out what steps are 
being taken to see what services should be continued, what func- 
tions should be continued, what personnel, and how these matters 
should be handled. 

Mr. Glynn. I'm sorry. It is due to OMB on December 10th. 

Mr. Mica. December 10th. Well, I have some additional ques- 
tions, but I don't want to take all the time. I will yield now to the 
ranking member, Mr. Moran. 

Mr. MORAN. Thank you, Chairman Mica. The thing that I found 
most troubling and disappointing about the way in which the exec- 
utive branch reacted to the shutdown was the bizarre situation you 
created on the first day of the shutdown, with everyone coming in 
to work and then being told whether or not they were essential and 
being sent back home again. 

As far as I'm concerned that was inexcusable and, in fact, we 
knew by the end of the prior week whether or not people should 
be coming in to work. 

It seems to me, when there was clear indication and plans being 
put together in the last summer of this year, in July and August, 
that we may very well reach a situation that could cause a govern- 



200 

ment shutdown and, clearly, that very short-term continuing reso- 
lution that was passed as of October 1st indicated we had a poten- 
tial problem coming at the expiration of the first continuing resolu- 
tion, there should have been contingency plans made for the first 
day when you would have lapsed appropriations; and it appears 
that there were not. 

I just can't imagine why you would create a situation where em- 
ployees came in and were told to go back home again. It is demean- 
ing, it is amateurish, it is irresponsible, et cetera. 

Now, if you disagree, tell me, but I would like to know how that 
situation developed at some of the larger agencies, and why — why 
there were not contingency plans made by 0MB and the White 
House, and made available to the agencies and, if there were, why 
they were not carried out. 

Let's start with Dr. Broadnax from the largest agency, I guess, 
represented here, in terms of employees, a substantial number of 
whom came in first day on Monday and were sent back home 
again. Why? 

Mr. Broadnax. Congressman, there are roles for people to play 
during that 3-hour period that you are talking about when people 
came back in, and people secured their various areas depending on 
the work that they were carrying out during that 3-hour period. 

People weren't just coming back in and sort of standing around 
wringing their hands, as it were, but were actually working to se- 
cure the areas where machinery was involved, or secure machinery, 
and make other arrangements to get us into the full shutdown. 

The full shutdown began 3 hours subsequent to those employees 
having arrived, carried out their tasks and duties, and then were 
sent home. 

Mr. MORAN. What you are telling me is, for the first 3 hours of 
the day, their services were considered essential, even though there 
was no reimbursement for that effort available at the time. 

See, the problem is, if we are going to operate within a strict 
legal construct here, the only way you can justify any members of 
the Federal work force going to work is to consider them essential, 
and we have a definition of essential: the safety of human life and 
protection of property. I guess the latter is probably what you used. 

You would have to have some type of legal opinion, to get around 
the Antideficiency Act, that these people were, at some point, es- 
sential. In other words 100 percent of your employees you would 
have to legally justify were essential at the time, for those 3 hours, 
and then, all of a sudden, they are not essential. 

I don't know why that wasn't done the end of the work week, 
rather than waiting until not the 11th hour or the 12th hour, but 
12:05, after the expiration period. 

Mr. MuNOZ. Could I? 

Mr. MORAN. Yes, I would like for you to, Mr. Muiioz. 

Mr. MUNOZ. Sir, let me just say that I think 0MB did an excel- 
lent job of having a contingency plan, because we were on hold. We 
were informed by 0MB — by Alice Rivlin in particular — that we 
were to not notify anyone of a shutdown until we received notice, 
and that could have been on Monday, we were told, so be on hold 
for a possible Monday notification, or not until Tuesday. 



201 

Now, I don't know what went into the thinking as to whether or 
not to not do it on Monday so that people don't have to come back 
on Tuesday but, as I understand it, 0MB very much respected the 
prerogative of Congress to decide whether or not, after midnight 
Monday night, there was going to be — before midnight, there was 
going to be anything. 

A perfect example of that was, in fact, when the shutdown was 
terminated, as we understand, in a period of a very few hours, set- 
tlement was arrived at between the President and the Congress on 
terminating the shutdown. I believe that was what was the think- 
ing. 

Second of all, there are certain legal procedures that need to take 
place when you get into an orderly shutdown. Coming back Tues- 
day morning was very positive for the Treasury Department and, 
I may add, the legal authority that defines excepted and non- 
excepted also says that you can maintain people for an orderly 
shutdown. 

We read that legally, based on our General Counsel's opinion, 
that, for the whole morning on Tuesday, the hours that it took for 
people to close down the files and make sure that there is no risk 
or exposures from their retiring from work. 

Second, we have a legal obligation to give furlough notices in 
writing, and have some indication of receipt of notice. All that was 
taken on after we knew that the Congress and the President de- 
cided not to agree that there was going to be some funding. 

We think that that was probably the best way to approach it, 
and we felt very comfortable. By Tuesday afternoon, there was a 
good, clear communication as to who was going to stay and who 
wasn't. 

At the Treasury Department, for example, sir, we have some 
functions that are funded because they have a revolving fund, or 
have other means of appropriations that would not be subject to 
this furlough. 

Nevertheless, because of the media communications, employees 
sometimes got confused as to what is overridden and what isn't. 
We made it very clear on Tuesday morning, and we made very ef- 
fective use of Tuesday morning to hand out the furlough notices 
and to make further communications to the employees. 

Mr. MORAN. You just did an excellent job of defending 0MB and 
clarifying the situation, but there are some problems with it. 

For one, we had a different situation on the Sunday when we ter- 
minated the shutdown, and that was not comparable to what hap- 
pened on Monday. Presumably, the White House knew whether or 
not it was going to veto the continuing resolution it received, and 
it certainly knew what the continuing resolution was going to look 
hke. 

Now, I am not going to ask you that. That is OMB's job, to ex- 
plain why they didn't act or why the President didn't give some 
earlier indication, but I think it is a different situation that oc- 
curred on the Sunday when the government shutdown ended. 

I have the sense that some employees, even on Monday, knowing 
that anybody that had been watching it closely would have known 
that there was not going to be work on Tuesday for at least 40 per- 



^02 

cent of the work force, some of them did not know whether they 
were essential or non-essential. 

Now, did everyone in your respective agencies know whether 
they were classified essential or non-essential on Monday? Is there 
anyone who did not? 

[No response.] 

Mr. MORAN. Every agency represented here informed their em- 
ployees as to whether they made the cut or not? That is true? Is 
there any exception? 

[No response.] 

Mr. MoRAN. If not, forever hold your peace, I suppose. You want- 
ed to say something further? 

Mr. JNiuNOZ. Sir, the clearest indication to an employee is when, 
in fact, they receive the furlough notice. That is the ultimate and 
clearest. You don't want to wait until that instant happens. 

Mr. MORAN. That is for sure. 

Mr. MuNOZ. We did have communications beforehand, so that 
there would be some clear communications on that; but, according 
to law and for all practical purposes, especially when you have a 
very large agency spread around the country, the clearest indica- 
tion was that Tuesday morning. It was an effective use of that 
Tuesday morning, to give the written notice and further instruc- 
tions of how to shut down their offices. 

Mr. MORAN. It is just that, since it was so likely, by the end of 
the prior week, it seemed to me, the planning should have taken 
place certainly by that Friday through the weekend, and no ques- 
tion about it, on Monday. 

The other thing I want to get into, although I don't want to take 
time from my colleagues, but I think an important area of consider- 
ation is whether those employees who had to stay at work, getting 
reimbursed the same as their colleagues who were not at work, 
whether there was ample communication so that those who were 
on the job knew how to carry out not just their own function, but 
the necessary functions of their colleagues. 

That is the kind of forward planning that seemed to be nec- 
essary. I have a lot of Federal employees, as you know, in my dis- 
trict. I don't have a sense that much of that took place, that it was 
almost a shock to the vast majority of Federal employees that this 
happened; they were really unprepared, and a lot of the people who 
were left on the job didn't know how to handle the responsibilities 
of their colleagues who were not on the job. I think there are prob- 
lems. 

The best way to deal with this is to simply make sure everybody 
stays on the job next time, and we don't have one of these inane 
furloughs and, if people are going to get reimbursed — which they 
certainly should — then they be reimbursed for work that they per- 
formed in the interim, and we are going to try to get that legisla- 
tion through. 

I do think there are some problems in the forward planning of 
this situation which, at some point in advance of when it occurred, 
was inevitable. Thank you, Mr. Chairman. 

Mr. Mica. I thank the gentleman and yield now to Mr. Bass. 

Mr. Bass. Thank you very much, Mr. Chairman. To follow on the 
very last comment that Mr. Moran made, I think it can be observed 



203 

that the issue of giving an employee compensation for time not 
served on the job further exacerbated the humiUation of being 
deemed non-essential and not going to work, then getting paid for 
not going to work. 

My question is a general question that any of you can address, 
if you wish. 

That is, do any of you have any specific suggestions for congres- 
sional action that might clarify for you the definition of "essential" 
versus "non-essential," or even redefine the term, to establish bet- 
ter procedures for implementing a shutdown, which may, in some 
instances, be unavoidable, in order to address Mr. Moran's question 
about what happened to the employees during a specific period of 
time, to establish consistency from one agency to the next so that 
there aren't different standards adopted in different agencies and, 
last and, perhaps for some of us, most importantly, to mitigate — 
to attempt to mitigate — the impact — or the political impact — of a 
shutdown so that a shutdown cannot, to the extent possible, be 
used to make a political statement? 

With that, I will just turn it over to anyone who wishes to ad- 
dress those. 

Ms. Chater. I would like to address the question, if I might, sir, 
from the sense that it is probably going to be difficult to be thor- 
oughly consistent across agencies, because the nature of our work 
differs so much. 

For Social Security, for example, where we are an extremely cus- 
tomer-focused agency, we had appointments to take care of, ap- 
pointments to cancel, and now appointments to make up, in a very 
one-on-one kind of activity. Our work is, therefore, different from 
another agency that perhaps doesn't deal with the public in a face- 
to-face way. 

While I think consistency across government is a good idea, I just 
suggest that it might be difficult, based on the work we do and how 
we do that work. 

Mr. MUNOZ. One suggestion I might have is, the thing that was 
constantly in our mind at Treasury when we were planning this 
was the criminal penalties that accompany any running afoul of 
the Justice Department guidelines on this issue. 

Given that there are criminal penalties, you run the risk, on the 
one hand, that if you read the opinions too broadly, so that you try 
to put everything under protection of property, you run the risk of 
running afoul of those criminal penalties. 

If you read it too narrowly, then you run into some of the exain- 
ples that were cited earlier this morning in terms of the public 
being harmed in some fashion because they didn't fall within the 
guidelines — the criminal guidelines. 

Mr. Bass. How many prosecutions have occurred under that, 
since its inception? 

Mr. MUNOZ. Well, I am sure that, if there have been any, they 
are not here today. [Laughter.] 

I am not aware of any. Although, as a lawyer, I know that these 
are very serious things and our good General Counsel that night 
at the Treasury Department kept us aware that is the ultimate law 
that we have to live by. 

Mr. Bass. If nobody else has any comments, I will yield back. 



204 

Mr. Mica. I thank the gentleman, and yield now to Mrs. Morella 
for a question. 

Mrs. MORELLA. Thank you, Mr. Chairman. 

I'm curious — and, again, I would ask all or any one of you, or 
multiples of whatever, who might want to respond. I am curious 
about whether or not your shutdown plan would be altered if the 
shutdown occurred because of the debt ceiling versus the lapse in 
appropriations. Would it be different, or would it be the same? 
Have you had any instructions from 0MB or Justice on that? 

Mr. MUNOZ. We have had no instructions, but those would be 
two very different situations. 

Mrs. Morella. You anticipate that it would be a different proce- 
dure? 

Mr. MuNOZ. The shutdown that we went through had a constitu- 
tional basis, based on Congress's prerogative to appropriate or not 
appropriate and, if appropriations were not granted, then we can 
really not run afoul of that, lest we face criminal penalties. 

If the government shuts down for another reason — a liquidity 
point, it doesn't have cash — my sense is — and I don't know that we 
would ever reach that point — my sense is that you don't have the 
same guidelines, the constitutional basis of appropriations. We may 
have appropriations appropriated to us but, if there is no cash, my 
sense is that the thinking would go differently. 

To answer your first question, we have not received any guidance 
on it, but instantly I see a very different standard by which you 
would develop your plans. 

Mrs. Morella. A difference. Would you all agree, first of all, that 
you have not received any guidance on it? 

Mr. MuNOZ. Ma'am, can I just underscore, then, the point that 
you made, and that some Members here have made also? That is 
because the guidelines is not essential versus non-essential. If it 
were, maybe there would be some great similarity. The guidance is 
really whether you are excepted under the law or not. 

Mrs. Morella. I don't know whether it would be a greater im- 
pact or not. I mean, that would be an interesting point, also, for 
any one of you to comment on. 

Maybe I will address this one to Mr. Robinson. It deals with the 
recall question. You indicated that there was a plan in place that 
acknowledges the need to recall additional staff if the shutdown 
continued beyond a week, and yet you had to go to 0MB to discuss 
recalling people. 

Were these recalls in your initial plan? Were they reviewed by 
0MB prior to the week of November 13th. Because what I sense 
you are saying is that 0MB approves our plan and then, if we need 
to implement it, or part of it, or need a recall, we have to go back 
to 0MB to get another part of it approved. Is this sort of like over- 
kill? 

Mr. Robinson. What I meant to indicate, Congresswoman, is 
that our plan originally called for flexibility dependent upon cir- 
cumstances. That is part of our plan that, as the circumstances un- 
fold, we would reassess what needs we would have related to prop- 
erty and safety, and modify our plan accordingly. 

As the week proceeded, as I indicated, we determined that, in 
fact, that was the case and that we needed to modify our plan. In 



205 

doing so, we had to submit it to 0MB, and that was the process 
that we had undertaken. 

Mrs. MORELLA. Do you think that is the most expeditious proc- 
ess? 

Mr. Robinson. Well, I have been in government 2 years now. It 
is the only process I am aware of. [Laughter.] 

I don't mean to be flippant in my answer, but there certainly is 
a tremendous amount of oversight in terms of what we do, not only 
in terms of our necessity to work with the Office of Management 
and Budget, but our necessity to work across the board. 

It is, I think, important that we not only address the law, but 
we address the requirements of the personnel issues that are in- 
volved and, certainly, the Office of Management and Budget has 
the expertise and the responsibility in that area. 

Mrs. MORELLA. Yes? 

Mr. MuNOZ. Ma'am, could I just add something? 

Mrs. MORELLA. Yes, certainly. 

Mr. MuNOZ. In the last hypothetical, you posed the question of 
would the plans differ any if there were a shutdown because of a 
debt ceiling issue. 

As I said, we have received no guidance on that, but I want to 
re-emphasize, for those agencies that have appropriations already, 
the debt ceiling really is not an issue as to whether you would face 
a shutdown or not. It is a question of we still would have authority 
to obligate the government to pay for the activities that take place; 
so we don't anticipate the hypothetical that you pose to be an issue. 

Mrs. MORELLA. It might be wise to have some kind of a tentative 
plan that is thought about when you get the 0MB regulations with 
regard to reporting for 3 hours on that morning, et cetera. That is 
all spelled out in the 0MB statement that was made, or was sent 
to all of you. 

I guess, Mr. Brickhouse, in regards to the 1,700 employees who 
are being recalled to receive and come up with date benefit claims, 
you stated that Veterans' Affairs determined that the potential for 
adverse effects of delays in receipt of applications qualified for an 
exception under the Antideficiency Act. 

I wondered if you might elaborate on why the Antideficiency Act 
allowed for this recall and why the determination was not made 
earlier? You began planning in August. Plans were set by Septem- 
ber 30th. The shutdown happened in November, and you had to re- 
call 1,700 people. I am just kind of mystified by it. 

Incidentally, your percentage of furlough was, I think, the lowest, 
wasn't it? 

Mr. Brickhouse. Yes. That is primarily because our primary 
mission in the VA is to deliver health care and, in those areas, we 
elected not to defer or delay any treatment in our hospitals that 
we have, the 72 hospitals that we have across the Nation. 

Mrs. Morella. You could not anticipate that? 

Mr. Brickhouse. In regard to your question, if I understand it 
correctly, we did not anticipate initially the need for those 1,700 
people. As I mentioned earlier, as we moved through the week and 
saw this shutdown going longer than we had previously antici- 
pated, we decided that it was necessary to bring in people to make 
sure that they received and logged in claims. 



206 

Now, it is a legal requirement, that we must date-stamp claims 
that veterans submit to us, so we felt that it was necessary to bring 
in those people to do that, and also answer questions and also deal 
with telephonic inquiries about these matters. 

We also felt so strongly about this that we asked 0MB for per- 
mission to, in essence, change our numbers. You are exactly right, 
that they did come back and tell us that they felt that this was an 
excepted function under the Antideficiency Act. 

To answer your question, no, we did not anticipate it. However, 
as we moved through the shutdown, we identified some areas of 
concern in that area. 

Mrs. MORELLA. Then you went to 0MB. Did you have to go to 
Justice, too? 

Mr. Brickhouse. I think the Justice Department collaborated on 
this particular issue, yes. 

Mrs. MoRELLA. With 0MB. You determined that as the result of 
discussions with them? Do you discuss it with them or you tell 
them? 

Mr. Brickhouse. Yes, it was primarily through telephonic dis- 
cussions with OMB, and we submitted written material on it, too. 

Mrs. Morella. Fine. 

Mr. Brickhouse. I might add that we did not fmd that it was 
any problem for us to have dialog with OMB. I think, as I recall, 
that decision was made in a matter of hours, if you will, from the 
time we submitted the request. 

Mrs. Morella. I see. I am just trying to understand the process 
and the anticipation of what concerns would arise and whether or 
not you have an extra layer to go through and how well it is 
planned. Thank you. 

In the interest of time, I will yield back, Mr. Chairman. Thank 
you. 

Mr. Mica. I thank the gentlelady, and recognize Mr. Horn from 
California. 

Mr. Horn. Thank you very much, Mr. Chairman. I have basically 
two questions, and I want to followup on Mrs. Morella's question, 
which was an excellent question in terms of a liquidity crisis, cash- 
flow crisis, with regard to the debt ceiling. 

One, Mr. Chairman, I would like to put a letter in the record 
that a number of us wrote the President a month ago, that said if 
we are serious about controlling the debt ceiling, we ought to freeze 
nonessential travel, nonessential purchases, and deal with the not 
absolutely essential workers. 

Obviously, health care in the VA and others would be absolutely 
essential workers, so you would not have to worry about that. 

Perhaps that situation has passed. Perhaps it has not. I think it 
is very clear, Mr. Munoz, that a debt ceiling shutdown would be a 
lot more serious, I think, than what we've gone through. You would 
not be making up for lost pay. You couldn't afford to do it. Am I 
wrong on that? Is that your hunch or inclination? 

Mr. MuNOZ. Sir, on the hypothetical that was posed, there is an 
assumption that the debt ceiling would also create a shutdown pos- 
sibility. The possibility of that is very small, because that would be 
a discretionary call. 



207 

I am going to look to my legal counsel here, if he wants to correct 
me, but once we have appropriations in place, we have a respon- 
sibility to continue working. If there is a liquidity question, then 
the question is as to whether or not or when you are going to get 
paid, but we still have an obligation to continue working, and there 
is an obligation of the government to pay. 

There would not necessarily have to be a shutdown of govern- 
ment operations. 

Mr. Horn. Well, there is something, Mr. Chairman, you might 
want to consider. It seems to me it is an important question and 
you ought to give some guidance on that. 

Let me get to my two basic questions, and I would like to ask 
this of all of you, since you are under oath. Either directly or indi- 
rectly, prior, during, or since the shutdown, did any member of the 
White House staff influence what categories of workers you stated 
were non-essential or essential, and that includes 0MB staff, who 
said, "We are getting the word from the White House"? Anybody? 
Let's just get a "Yes," "No" answer. 

Mr. Broadnax. No. 

Mr. Horn. No. 

Mr. Robinson. No. 

Mr. Horn. No. 

Mr. Glynn. No. 

Mr. Horn. No. 

Mr. Brickhouse. No. 

Mr. Horn. No. How about you, Mr. Muhoz? 

Mr. MuNOZ. No. 

Mr. Horn. No. Commissioner Chater? 

Ms. Chater. No. 

Mr. Horn. All right. You are probably the wrong people. We 
ought to be asking the Cabinet officers that. [Laughter.] 

Now, for the hearing record, I would just like to have filed, of 
those on the staffs reporting to those at and above the bureau 
chief, administrator level, institute head level, comparable levels, 
for the categories such as public affairs, management, human re- 
source personnel, general counsel, et cetera, the traditional staff 
agencies, I would like to know, one, how many people are qualified 
at that level, what percent were determined non-essential or essen- 
tial? 

Of those in direct contact with the customer taxpayer, such as 
Social Security Administration and the Immigration and Natu- 
ralization Service, how many were actually furloughed? I need an 
absolute number of how many are there and then what percent 
was essential, non-essential, in terms of direct customer contact. 

Based on 30 hearings I've held this year on the Government 
Management Subcommittee, there is no doubt in my mind that, 
since President Eisenhower, regardless of party, we have had a 
thickening of government, as Professor Light calls it, and we have 
a bloated staff level at the commissioner, the bureau chief level, on 
up, that you would not have recognized 30 years ago. 

It does not relate to increased appropriations, it does not relate 
to a growth in population. It just relates, regardless of party and 
power, to the bloated nature of staff that, frankly, are crippling you 
more than helping you. 



208 

I would like to get that in the record, Mr. Chairman. 

Mr. Mica. Mr. Horn, how did you want them to respond? 

Mr. Horn. I just want them to respond in writing. 

Mr. Mica. OK. 

Mr. Horn. We will put it in the record. 

[The information referred to follows:] 



209 



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210 

Mr. Mica. I think we could spend the rest of the day doing the 
calculations here. [Laughter.] 

I appreciate your understanding. As we wrap up this panel, I 
have a couple of questions. 

First of all, Mr. Glynn, under DOL, you estimated the cost at 
$7.3 million. Was that for personnel alone? I ask that question, be- 
cause each of you incurred costs and you paid people after the fact. 

I notice that the Office of Personnel Management has released a 
guideline as far as the subject of pay and leave treatment of em- 
ployees affected by a lapse in appropriations, and this guideline al- 
lows for payment of overtime not worked. 

It is bad enough that they did not work in the first place, but 
got paid, or were not allowed to work; but I wonder, Mr. Glynn, 
was any of this $7.3 million paid in overtime? 

Mr. Glynn. I am not aware of any, Mr. Chairman, but we would 
be happy to double check. 

Mr. Mica. Has anyone paid overtime since, according to these 
guidelines, that we pay overtime for not working in the time that 
we did not work in the first place? 

[No response.] 

Mr. Mica. I would like each of you to check that. I think it would 
be interesting. 

[The information referred to follows:] 

The Social Security Administration has not paid overtime to any employee for 
overtime work not performed during the furlough period. 

Mr. Mica. Also, as far as VA is concerned, Mr. Brickhouse, it is 
my understanding that you kept on all field people in the hospitals, 
and there was no differentiation between different types of person- 
nel activities there. For example, while you had some claims proc- 
essors for disabled veterans who were not kept on, the gardeners 
at the VA hospitals were, in fact, deemed essential. 

Mr. Brickhouse. Congressman Mica, if I may, we did furlough 
in excess of approximately 20,000 people in our health care delivery 
system. 

Mr. Mica. I have reports that gardeners and lawn care personnel 
were kept on and claims processors for disabled veterans were fur- 
loughed. Of course, I guess they were called back. Can you check 
that for us? 

Mr. Brickhouse. Sure. I would be glad to. 

[The information referred to follows:] 

Over the past 10 years, significant numbers of facilities throughout the Veterans 
Health Administration have contracted out for their gardening and lawn care activi- 
ties (i.e., services are provided by businesses in the private sector rather than by 
government employees). Many of these contracts were already paid for, which al- 
lowed contractors to continue to work. After the shutdown extended for several 
days, depending on the part of the country involved, it may have been necessary 
to call back either contractor or in-house personnel to provide maintenance required 
to prevent loss of landscaping previously installed with taxpayer dollars. 

Mr. Mica. I would like to know. Then, as far as PR shops, did 
all of you keep your PR shops open or was there a decrease in the 
staffing of the Public Affairs Offices? Mr. Broadnax. 

Mr. Broadnax. There was a very, very sharp decrease. There 
were several people kept to help the Secretary stay in touch with 
the employees throughout the department on a daily basis. 



211 

Mr. Mica. You had some down. How about you, Mr. Robinson? 

Mr. Robinson. There was a very sharp decrease. 

Mr. Mica. Mr. Glynn. 

Mr. Glynn. A very significant reduction. 

Mr. Mica. Mr. Munoz. 

Mr. Munoz. A significant reduction. 

Mr. Brickhouse. Very significant reduction. 

Ms. Chater. The same, a significant reduction. 

Mr. Mica. OK. The other general question, I noticed that there 
were a variety of plans. For example, in Social Security, you pre- 
pared a plan for a 2-week shutdown, and it seemed like some of 
you had a shutdown for a shorter period of time. 

Was there any continuity? You did 2 weeks; is that correct? 

Ms. Chater. Well, we started, in our contingency planning, sir, 
with the notion that we could have a smaller number of people ex- 
cepted in the beginning of the shutdown; and, not knowing, of 
course, how long it would take, we made another plan, consistent 
with our objectives, for what we might do at a later time. 

While a 2-week duration was sort of a talking period, it was 
never meant to be specifically contingent on 14 days, it was to be 
what happened based on our experience. 

Mr. Mica. You had a short-term and a longer-term? 

Ms. Chater. That is about it, Mr. Chairman. 

Mr. Mica. What about you, Mr. Brickhouse? 

Mr. Brickhouse. In the VA, our initial plan was that the shut- 
down would not go longer than 1 week and, as we have talked 
about, that is why we started making changes. 

Mr. Mica. We had some problems there. Mr. Munoz. 

Mr. Munoz. We looked at short and longer term, and longer 
meant beyond 10 days. 

Mr. Mica. In your volume, Mr. Glynn, what did you plan for? I 
haven't read the whole thing, but am going to take it home tonight 
and go through it. Go ahead. 

Mr. Glynn. As long as you don't ask me if I've read the whole 
thing, Mr. Chairman. [Laughter. 1 

We anticipated a shorter-term shutdown when we put the plan 
together, although we had started thinking about the implications 
of a longer shutdown as the shutdown unfolded. 

Mr. Mica. This really is just for short-term. Mr. Robinson. 

Mr. Robinson. As I testified, short-term longer-term, sir. 

Mr. Mica. OK. Mr. Broadnax. 

Mr. Broadnax. Short-term and long-term. 

Mr. Mica. In your two-page summary, with a 30-page addendum. 
Well, those are, I think, some of the questions that I had. 

Oh, there is one other area, too. In multi-year funding, for exam- 
ple in HUD, there are some programs, I think, that have multi- 
year funding, and some of these, I understand, were closed down. 
What was the rationale for that, where the funds were there that 
they were closed down, anyway? Because you had the biggest close- 
down, didn't you, Mr. Robinson? 

Mr. Robinson. I understand that is the case, sir. Our thinking 
was that we would apply the law in terms of property and safety, 
and we attempted to do that. 



212 

Funding in many of these multi-year programs is done on what 
we call a lock-box basis, so the recipients have a line of credit 
against which they draw down funds, and so funds would have 
flowed, over a period of time, out of these lock-box situations. 

In a short circumstance, we would have been able to cover fund- 
ing, or funding would have been covered through that lock-box 
process. 

Mr. Mica. You still closed them down, anjrvyay? 

Mr. Robinson. The lock-box process requires us to maintain a 
number of systems in order to do that and, in our longer-term proc- 
ess, we were bringing back people to maintain those systems. 

Mr. Mica. I think Mr. Fazio wants to talk to you later. The other 
panelists, did you have any other areas where there was a continu- 
ation of funding in a multi-year fashion? 

Mr. Broadnax. In our case of Medicare, it is a trust fund, so the 
trust funds were there. 

Mr. Mica. You kept everything going in Medicare? 

Mr. Broadnax. Well, no, we did not. In terms of the applications, 
taking applications, initially we did not. 

Mr. Mica. Then you changed? 

Mr. Broadnax. We thought, if we go longer-term, we would 
begin to take them. 

Mr. Mica. OK. 

Ms. Chater. For Social Security, I would answer the same way. 

Mr. Mica. Yes. 

Ms. Chater. We have a trust fund, of course, which we interpret 
as an indefinite appropriation and, for our second program, the 
Supplemental Security Income program, we are forward funded for 
the first quarter of the year, so we could continue functioning until 
December 31. 

Mr. Mica. In some of the activities that have multi-year funding 
or are self-funding, we should possibly look at those categories for 
future reference in functions to be continued. 

Mr. Moran. Excuse me. 

Mr. Mica. Mr. Moran. 

Mr. Moran. Following up on that, I appreciate the fact that I am 
the only Democrat here, so I would make an urgent plea that we 
at least extend the current continuing resolution that is currently 
in effect for at least another month. 

The reason for making it at least 30 days deals with several rea- 
sons, but I think foremost is something that the chairman was get- 
ting at, and that is the grant funding. It extends far beyond the 
lives of Federal employees. 

If, for example, we don't have adequate funding at the beginning 
of the year, we would not be able to issue the grants for Medicaid, 
Aid For Dependent Children, social services, foster care, adoption, 
and so on. That is a matter of billions of dollars and, more impor- 
tantly, millions of people who are wholly dependent, in many cases, 
upon those Medicaid and cash assistance grants — the very poorest, 
the very neediest in our country. 

There wasn't a problem this time because, since it occurred in 
November, the original or continuing resolution enabled you to pay 
those grants out to the States October 1st, the beginning of the fis- 
cal year. 



213 

The second quarter would occur as of January 1st and, if there 
is not an adequate continuing resolution, then the lives of tens of 
millions of people are going to be adversely affected. 

I am both sending a message to my colleagues, but also raising 
an issue that I think perhaps you should address, particularly Dr. 
Broadnax, on behalf of the Department of Health and Human Serv- 
ices, because those are probably the largest grants that go out to 
States. 

I don't know what happens if the AFDC payments are not made 
and Medicaid and Title 20 and foster care and the like. That could 
be a disastrous shutdown to the people who can afford it the least. 

Dr. Broadnax, could you respond to that? 

Mr. Broadnax. I agree with the Congressman's description. It 
would be very, very painful for the recipients, but also place the 
States in great difficulties, because they are our partners in terms 
of administering many of the programs that you have described. 

As I said in my formal testimony, this is something we hope to 
avert at all cost. 

Mr. MORAN. Thank you. The legislation that I referred to, that 
I would hope we could get passed, that would keep Federal employ- 
ees on the job in the event of lapsed appropriations, does not cover 
this eventuality because, clearly, that would not provide adequate 
funds for your grants and, while they may be on the job, in the ab- 
sence of a continuing resolution, we clearly would have to suspend 
those payments; and I don't see any way we could possibly pass 
legislation that would get around that. 

I have heard various versions of short-term continuing resolu- 
tions. They don't share their entire strategy with us all the time. 
In fact, we don't know, oftentimes, until the very last minute, what 
the plan is. I would urge the leadership of this body to propose an 
extended continuing resolution that gets us through early January, 
so that those grants can be made. 

With that point, maybe we should move on to the next panel, Mr. 
Chairman. 

Mr. Mica. I thank the gentleman. Mrs. Morella has requested 
one additional question. 

Mrs. Morella. Thank you. Right. I just wondered, Mr. 
Broadnax, since I talked about medical research in my opening 
statement, if you might tell us about what research activities did 
continue during the shutdown, and how the determination was 
made in terms of what research activities should be continued or 
not. 

Mr. Broadnax. First of all, Congresswoman, let me say that our 
approach to particularly the NIH and the National Institutes was 
to discuss, of course, the broad guidelines with the scientific and 
medical leadership there, but to have those best qualified, then, to 
guide our hand, or to guide the process, if you will, in terms of im- 
plementing those guidelines as related to the various institutes and 
the research taking place therein. 

Where research was in progress and, to cease or to shut that re- 
search down it would have been destructive to it, arrangements 
were made to keep it going. It was on a case-by-case basis that 
those decisions were made. The attempt was not to be destructive 



214 

to any research or trials or so forth that were in progress during 
the shutdown, so those would have been kept going. 

Mrs. MORELLA. It was done on a case-by-case basis, which means 
that it tends to be arbitrary, somewhat capricious, because I know 
of a lot of researchers who were so frustrated because they really 
felt they had to get back to the laboratory to continue with the re- 
search which, again, was going to pay off in terms of health, as 
well as financially, too. 

I guess that is a problem that you face in the medical field. 

Mr. Broadnax. It is a big problem. We do not like to be in the 
position of looking at a researcher across his or her bench and say- 
ing that we do not think that his or her research is important, as 
we don't want to be looking across that bench saying that any of 
our employees are not essential; but it is on a case-by-case basis, 
and I said we do it in collaboration with the scientific and medical 
leadership within the various institutes. 

Mrs. MORELLA. A mention had been made of trust funds for So- 
cial Security. The Medicare trust fund, how would you feel about 
using that for the new Medicare recipients or clients, because you 
held off signing them up under the shutdown, right? Could you not 
have used trust fund money for that? 

Mr. Broadnax. Yes, we could. As I said before, we were about 
to. Remember, I said we had a short-term and a long-term plan. 

Mrs. MORELLA. Yes. 

Mr. Broadnax. In the short-term, we were not receiving applica- 
tions. We knew, in the longer term, because of the backlogs and the 
destruction that now starts as a result of developing those back- 
logs, that we would have to bring people back and start to take the 
applications. 

Mrs. MORELLA. I think Mr. Horn probably wants to continue 
with that question. Just one final point. I just wondered, did you 
all come up with some plans for those employees that were consid- 
ered non-essential, even though we hate that term? 

Because they would call my office, panic stricken, about "What 
do I do if I need money for cash-flow, even though I have an assur- 
ance I will be paid later? Do I file for unemployment?" What is the 
status? 

I know some of you mentioned hotlines were available. Did you 
have anything that was kind of consistent, uniform that came, 
whether it would be from 0MB or whether you put it together and 
met together, in terms of discussing how to ease the panic that peo- 
ple had who had to pay mortgages and tuition and whatever? Does 
anybody want to comment on it? 

Ms. Chater. Yes, I would like to respond to that, because I think 
there were a number of initiatives that took place during this time. 

First of all, for our employees, you have heard us testify that 
many of the agencies set up a hotline for their own employees; and 
ours was used to the maximum. We also prepared, on our own, 
questions and answers about unemployment, when to file, whether 
to file, the pros and cons of doing so. We made the applications 
available to all of our field office employees throughout the United 
States. 

The hotline was for all 66,000 employees scattered all over the 
country. I think it is important that we remember that not every- 



215 

one of our Federal employees reads the Washington Post or watch- 
es C-SPAN or CNN, and so there really was a need for much com- 
munication, particularly outside of the Beltway. 

We did that, and I know that many of the agencies represented 
here and elsewhere put together very detailed communication 
plans for their employees. Most of us have employee assistance pro- 
grams that are ongoing. 

I know that we had many psychological problems brought to our 
attention because of the worries about pajonents and so on, and I 
think we provided the best we could for that particular purpose. 

I would also like you to know that there is a group of us called 
the President's Management Council that meets on a monthly 
basis. It is chaired by Mr. Koskinen. In that President's Manage- 
ment Council, those of us who are responsible for managing agen- 
cies have an opportunity to talk with each other. 

In addition to the formal kinds of things that you have been talk- 
ing about today, there was a great deal of informal communication 
between and among us: "What did you do since you were here 
longer than I?" "How would you handle this?" "How do you deal 
with patient care, because we're worried about our SSI bene- 
ficiaries?" That sort of thing. 

There was a great deal of concern, I think, expressed by the 
agencies, and a wonderful informal system for sharing information, 
as well. 

Mrs. MORELLA. That sounds like a great idea, in terms of con- 
tinuing the kind of networking and sharing ideas. It just seems as 
though, maybe, from what you said, there also needs to be put into 
effect some consistent policy for how to respond to the needs, real- 
izing that some of them will be different from agency to agency, but 
in general, so that you all have combined the information and have 
it available. 

Thank you, Mr. Chairman. 

Mr. Mica. I thank the gentlelady and jdeld to Mr. Horn for one 
final question. 

Mr. Horn. Thank you, Mr. Chairman. 

A number of my colleagues, including the chairman, have men- 
tioned the subject of Medicare. I would just like to pursue a few 
things on that. 

As I understand it, new applications for Medicare had to be 
turned away initially; is that correct? 

Mr. Broadnax. That is correct. 

Mr. Horn. Now, Medicare does operate from a trust fund that 
we all contribute into. Was the processing of applications paid for 
from that trust fund? 

Mr. Broadnax. That is my understanding. 

Mr. Horn. Would the Department of Health and Human Serv- 
ices support legislation to make the costs of processing new appli- 
cations payable from that trust fund when there has been a lapse 
of appropriations, or do you need that authority? 

Mr. Broadnax. As I understand it, by there being a trust fund, 
that is why we were able to continue to operate because, under the 
trust fund's authority, even though there was a lapse, we could 
continue to use trust fund dollars. 



216 

Mr. Horn. What was the reason why we turned away Medicare 
appHcations in the beginning? 

Mr. Broadnax. By when we apphed the law, and the guideUnes 
as we interpreted them. That is why I said earUer on there was a 
short-term and a long-term plan but, in the initial application, if 
it was going to be a short-term shutdown, under the guidelines, as 
we looked at issues related to health, safety, and the protection of 
property, it was appropriate to have the first instance shutdown 
and, by that, turning away the applicants. 

As time went on then, applying those same guidelines, that logic 
then shifted where, under the same set of guidelines, it was then 
appropriate to entertain bringing people back to process those same 
applications. 

Mr. Horn. Was that shifting logic helped by a call from the 
White House? 

Ms. Chater. No. No. Because we process applications for Medi- 
care, I would like to say no. 

Mr. Horn. You process them? OK. You are saying no, you got no 
further guidance? It seems to me that is a fairly political hot potato 
and, if I were sitting in the White House, I would say, "What nin- 
compoop said we shouldn't take applications in this area?" 

Ms. Chater. What you have to say about applications for Medi- 
care applies, of course, to the fact that we didn't take applications 
for disability benefits or for new Social Security benefits. 

I like to think of it a little bit like a leaky roof. If your roof leaks, 
you can put a pot under the leak and collect the water, and you 
can do that for a few days but, as the leaks magnify, and pretty 
soon your whole roof is leaky, then you have a very, very damaged 
house. 

The assumption that we made in the beginning was that the fur- 
lough would be very short-lived and we could do that in a short pe- 
riod of time but, based on our experience, we know that backlogs 
accumulate and, over time, there is no way we could implement the 
intent of the trust funds if we keep delaying. Therefore, the Phase 
2, or the plans came into play for recalling more employees than 
we had in the first place. 

In the case of Medicare, we send out a notice to beneficiaries a 
month or so before they turn 65, and we ask the people to come 
in ahead of time to give us ample time to process the applications. 
There wasn't an emergency. It's not as though somebody needed 
Medicare tomorrow, because we hopefully would have them come 
into the office a week or 2 weeks or a month ahead of time to file. 

That was the nature of the taking of Medicare applications in our 
offices. 

Mr. Horn. You are sajdng, Commissioner, that you made the de- 
cision to reopen the application line for Medicare; is that correct? 

Ms. Chater. OMB, as far as I am concerned, reviewed our plans, 
but I was responsible for making the decision about how to and 
when to recall additional employees to implement the trust fund 
charge. 

Mr. Horn. What did your initial memorandum or planning docu- 
ment say as to the extent of a short-run shutdown? Are we talking 
3 days, 4 days, 2 days, what? 



217 

Ms. Chater. We were working on a theoretical short-term, long- 
term, never expecting that we would have to think about a long 
term. In the beginning, for planning purposes, I think some of our 
staff started to operate on a "What would happen if this went on 
for 2 weeks?" 

After the first day, when we realized that we had 28,000 applica- 
tions that we couldn't take and 200,000 telephone calls that we 
couldn't answer, we knew that it could never, ever go on that long 
if we were to, indeed, carry out the intent of the law. 

Mr. Horn. OK. The original plan, that there is such a thing as 
a short run, was simply in error; is that correct? 

Ms. Chater. It was a short-term best guess based on some as- 
sumptions. 

Mr. Horn. In other words, as far as you are concerned, if we 
went through this again — hopefully we won't, but if we did — you're 
saying we should not be furloughing anybody that has anything to 
do with these thousands of applications that pour into your admin- 
istration, and that you handle, you say, for Medicare, that we 
shouldn't even have a 24-hour furlough? 

Ms. Chater. If we were to do this again, I would want to fur- 
lough a very minimum number of our employees, because we are 
now already behind; so it is not just the new cases that we 
wouldn't be able to process, it is the ones that we are now working 
on with increased productivity to make up for what we lost. 

Mr. Horn. Yes. The short-term, long-term distinction really 
makes no sense when it comes to this type of government oper- 
ation; is that correct? 

Ms. Chater. It made sense in the beginning. 

Mr. Horn. I don't see that it made any sense. You knew that vol- 
ume coming in every day. It hasn't changed, presumably, over the 
years. 

Ms. Chater. Well, one always suspects that a furlough would be 
short-lived and, therefore, we can make do, because we only need 
one bucket to catch the water in the leaky roof. 

Mr. Horn. It is an interesting analogy, but it doesn't have any 
relationship to reality is my conclusion, after hearing the leaky roof 
approach. 

It seems to me, if you go through this again, we shouldn't as- 
sume it will be short. Unless the President signs on the appropria- 
tions bill or the continuing resolution, it could be very long. How 
do we know? 

It seems to me, I would hope, the next time, we do not, on essen- 
tial health services, shut down the operation, since there is a choice 
to be made. I take it neither the President nor the Secretary of 
HHS called and said, "What are you people doing over there?" 

Ms. Chater. The Secretary of HHS wouldn't have called, in any 
event, because we are now an independent agency. 

Mr. Horn. I know you are independent. 

Ms. Chater. However, I would say this to you. 

Mr. Horn. She does have HCFA, still. 

Ms. Chater. Yes, she does. My point is that one of the issues 
that we have not really discussed in this whole problem has to do 
with the interaction of agencies, the cooperativeness that we expe- 
rience on a weekly basis. SSA can make some assumptions, but we 



218 

have to work cooperatively with the Department of Health and 
Human Services, as we do all the time. 

We have also had to be in contact with the Immigration and Nat- 
uralization Service, because we do a lot with INS. There is a whole 
cooperative element within government that we need to pay atten- 
tion to, as well. 

Mr. Horn. Just to get the record complete, when I asked you the 
question initially, Mr. Secretary, you really didn't answer it. I take 
it there was no influence — since the Medicare administration is 
still in your agency — there was no influence from the President, the 
White House, anyone else to get you to help unravel the mistake 
of not taking applications? 

Mr. Broadnax. As I said before. Congressman, I received no 
phone call. We had a short-term, long-term approach. I understand 
your concern and disagreement with that. I think we were operat- 
ing off of history. That is all we had to guide us. History had dem- 
onstrated shutdowns had been very short in duration. In the past, 
some had been averted altogether. 

That is why I said in my opening statement, I think the only way 
we can be on solid ground here is to make sure we do everything 
possible, both branches of government working together, to avoid 
at all cost any shutdowns in the future. 

Mr. Horn. We hope you are right. 

Mr. Mica. I thank our panelists for their testimony today. We 
may have additional questions, which we will submit in writing. 
Time does not permit us to offer all the questions from both sides 
of the aisle at this point. 

I hope, Mr. Munoz, you will also tell the Secretary of the Treas- 
ury, Mr. Rubin, that we are carefully watching his raid on the em- 
ployee retirement funds, and also extend our regards to him for the 
holidays. We will be watching that issue. You will hear more about 
that later on. 

I would like to thank each of the panelists for their cooperation 
and close with a comment that President Clinton and Vice Presi- 
dent Gore made to all the Federal employees after the closedown. 
I will just quote one line: "You remain good people caught in what 
Churchill called 'the worst system of government devised by the wit 
of man, except for all others.' " 

Thank you so much, and we will excuse this panel. 

I would like to welcome our second panel today. We have in our 
second panel the Honorable John Koskinen, Deputy Director for 
Management of the Office of Management and Budget; we also 
have Christopher Schroeder, Deputy Assistant Attorney General, 
the Office of Legal Policy, the Department of Justice; and we have 
Allan Heuerman, Associate Director for Human Resources Systems 
Service, the Office of Personnel Management. 

Most of the panelists have been before us previously. If we could, 
have everyone go ahead and exit, and get order in the hearing 
room. 

Most of you have been before us before and know it is the custom 
to swear in our witnesses. If you will rise and raise your right 
hand. 

[Witnesses sworn.] 



219 

Mr. Mica. Thank you. Welcome back, Mr. Koskinen, the Office 
of Management and Budget. As you know, we try to have you ab- 
breviate your statement, and we will make your entire comments 
part of the record. We welcome you, and you are recognized. 

STATEMENTS OF JOHN A. KOSKINEN, DEPUTY DIRECTOR FOR 
MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET; 
CHRISTOPHER H. SCHROEDER, DEPUTY ASSISTANT ATTOR- 
NEY GENERAL, OFFICE OF LEGAL POLICY, DEPARTMENT OF 
JUSTICE; AND ALLAN D. HEUERMAN, ASSOCIATE DIRECTOR 
FOR HUMAN RESOURCES, OFFICE OF PERSONNEL MANAGE- 
MENT 

Mr. Koskinen. Thank you, Mr. Chairman. I may ask your indul- 
gence to add a few seconds to my response, because I would like 
to build into my oral testimony responses to some of the questions 
that the panel has raised. 

Mr. Mica. That is fine. Go right ahead. 

Mr. Koskinen. I appreciate the invitation to appear today before 
the House Civil Service Subcommittee to discuss the shutdown of 
government service that occurred in the middle of November, be- 
cause of the lack of appropriations. 

The Federal Government shut down because neither a complete 
set of appropriation bills nor a continuing resolution was enacted 
in a timely way. The Constitution and the Antideficiency Act re- 
quire that an agency only incur obligations to make payments 
when the Congress has passed and the President has signed either 
an appropriation bill for the agency or a temporary appropriation, 
known as a continuing resolution. 

I think at this point I would like to make a couple of points clear 
that I am sure the committee understands. 

First, as Mr. Munoz noted, the law is very clear that it is a viola- 
tion of the criminal law to, in fact, misapply the Antideficiency Act. 

Second, the Congress made it clear, after the last shutdown in 
1990, by adding the word "imminent" before a "threat to life or 
property," that the act is to be applied narrowly. 

Third, I would like to note that it is not a matter of choice by 
the agencies whether they might do something they would like to 
do, nor can the agency respond to the interests of anyone. The 
questions are, what are the legal guidelines, what are the applica- 
ble guidelines, and how is the law to be interpreted and applied? 

The failure to enact an appropriation bill has resulted in sub- 
stantial cost to taxpayers and degradation of government services. 
The clearest lesson to be drawn from the recent government shut- 
down is that it should not be allowed to happen again. Disputes 
over budget priorities should not be resolved in a crisis atmosphere 
in which Federal workers and recipients of government services are 
needlessly harmed. 

With regard to the governmentwide impact of the shutdown, we 
asked the agencies to submit preliminary estimates of the effects 
of the shutdown on their operations and the resulting costs. The 
monetary costs are currently estimated at more than $700 million, 
with approximately $400 to $450 million of that being payroll costs 
for furloughed employees. 



220 

Significant additional costs, that cannot be determined at this 
time, include interest pajrments to third parties required under the 
Prompt Payment Act and the Cash Management Improvement Act 
when the Federal Government does not pay its bills on time. There 
will also be additional personnel costs necessary to deal with the 
backlog of work resulting from the shutdown. 

As significant as the monetary costs are the denial of basic and 
important services to the American public. Millions of Americans 
were inconvenienced or will be delayed in the receipt of payments 
and benefits to which they are entitled. 

Some agencies and activities were already funded and, therefore, 
were allowed to continue to function during the shutdown. For ex- 
ample, the Department of Agriculture did not shut down, because 
its appropriation bill had been enacted into law. The U.S. Postal 
Service did not shut down, because it is funded through fees. 

A major exception to the prohibition against incurring an obliga- 
tion without an appropriation is for emergency actions to protect 
against imminent threats to life or property. 

For the record, I would like to clear up a very unfortunate use 
of the terms "essential" and "non-essential," which, unfortunately, 
we've continued to talk about this morning. These terms do not ap- 
pear anywhere in the statute. I would emphasize that: these terms 
do not appear an3rwhere in the statute. 

When there are no appropriations, all employees are furloughed, 
except for those performing activities that provide for national se- 
curity, relate to the conduct of foreign relations, provide for con- 
tinuing mandatory benefit payments and, most importantly, which 
covers most of the workers we are talking about, are engaged in 
emergency activities to protect life and property — for example, 
medical care of inpatients and emergency outpatient care. 

If the distinction were between essential and non-essential, no 
employees would have been furloughed. In light of this subcommit- 
tee's long interest in, and backing of, a properly supported work 
force, I know that you will join me to ensure that, henceforth, the 
shutdown distinctions are between emergency and non-emergency 
employees. 

As under past administrations, the Office of Management and 
Budget was responsible for preparing for the possibility of a shut- 
down. During the summer, in light of the delays in congressional 
actions on virtually all appropriation bills, speculation increased 
about a possible government shutdown due to a funding hiatus. 

As a result, Director Rivlin asked me to lead a working group to 
prepare for an orderly shutdown. This group was composed pri- 
marily of 0MB staff but included outside representatives from 
agencies such as the Department of Justice. 

Director Rivlin asked the Attorney General for advice regarding 
the permissible scope of government operations during a lapse in 
appropriations because, as I noted earlier, after the last shutdown 
in October 1990, Congress had amended the Antideficiency Act to 
insert the word "imminent" before the words "threat to life or prop- 
erty." 

On August 16, 1995, the Office of Legal Counsel in the Depart- 
ment of Justice updated the 1981 opinion of the Attorney General 
interpreting the law pertaining to government operations during a 



221 

lapse in appropriations. On August 22d, Director Rivlin asked that 
the heads of all executive departments and agencies send 0MB up- 
dated contingency plans to deal with a funding hiatus based on the 
1981 Attorney General's opinion as updated by the Department of 
Justice. 

There has been a tone of irony in this hearing. On the one hand, 
we have been accused of planning too far ahead and providing too 
much planning and, on the other hand, we have been accused of 
not providing enough planning. Let me make a few things clear. 

Chairman dinger referred to the July 26th advice to the agen- 
cies from Director Rivlin. That advice clearly states, as does the 
subsequent advice on August 17th, that the advice there to the 
agencies was with regard to the ultimate impact of declines as a 
result of appropriation bills that might be passed. Neither of those 
guidances asked for updated shutdown plans. The actual request, 
as noted in my testimony, came on August 22d. 

Questions have been raised about inconsistences, across the 
board. As noted by Administrator Chater, inconsistencies are built 
into the operation of the government. 

Social Security is forward funded, has a continuing obligation 
and, therefore, historically, limited administrative functions have 
been implied from those facts to be appropriate. VA benefits are 
appropriated. 

In the absence of an appropriation, there is no ability to imply 
an exception for employees, unless there is an emergency. You 
talked about the Civil Service Retirement Fund. The Civil Service 
Retirement Fund continued to operate because, in fact, those oper- 
ations were paid for by the retirement fund. 

As we go across-the-board, the inconsistencies arise not because 
of a difference in view of the agencies, but because of a difference 
in the legal and financial situations of the programs being consid- 
ered. 

When agencies were asked to review their plans, they were told 
to assume a short shutdown, witli the understanding that plans 
would need revision in light of a more protracted shutdown, and 
might need to be adjusted for unforeseeable circumstances. 

0MB assumed that this was appropriate, because shutdowns, 
since 1981, had averaged 2 days. With the participation of the De- 
partment of Justice, we reviewed the plans for general conformity 
with the Attorney General's opinion and governmentwide consist- 
ency. 

The working group also developed a common set of questions 
with appropriate answers for distribution to the agencies. These 
materials were integrated with those developed by the Office of 
Personnel Management for employment issues, such as the impact 
of furloughs on employees' pay, leave, and benefits. 

Fortunately, a continuing resolution was enacted before the be- 
ginning of the fiscal year, providing funding through November 
13th. Again, we asked for plans on August 22d, planning for a po- 
tential shutdown on September 30th, 6 weeks in advance. 

I might note, in passing, that one of the reasons we were plan- 
ning in advance was the Speaker of the House had made it clear 
in April and June that his plan was, in fact, to shut the govern- 
ment down. 



222 

However, by November 9th, only two appropriations bills had 
been enacted for fiscal year 1996. Therefore, Director Rivlin in- 
formed the heads of executive departments and agencies that it 
was possible the Congress would not pass a second acceptable con- 
tinuing resolution by Monday, November 13th. 

With regard to Congressman Moran's very good question about 
what happened on the 13th, on November 9th, there is guidance 
the committee has a copy of from Director Rivlin advising the agen- 
cies that they should review their shutdown plans and ensure "that 
your employees are properly informed." 

On November 13th, we advised the agencies that there was great 
risk that there would not be a continuing resolution. I would re- 
mind the committee, in response to Congressman Moran's question, 
that the continuing resolution, or the appropriations in the continu- 
ing resolution, did not expire until midnight Monday. We, there- 
fore, were obligated through the night on Monday to see what the 
Congress would do. 

On many occasions in the past, the Congress has actually acted 
the day after the appropriation. 

The judgment was made that, rather than furloughing employees 
and having no one here on Tuesday in the face of a potential con- 
tinuing resolution, we should behave as we had historically always 
done, which was to bring everyone in, with notification beforehand 
as to who were going to be emergency employees and who were not 
going to be designated emergency and, if there were no continuing 
resolution on Tuesday morning, by the middle of the day, in an or- 
derly shutdown, activities would be shut down and those would, in 
fact, be obligations incurred by the government for the employees 
through the time that they spent working on that day. 

On the morning of November 14th, Director Rivlin advised the 
agencies to proceed with the shutdown in the face of the absence 
of a continuing resolution. 

As the shutdown continued for an unprecedented period of 
time — and I think that is one of the things this committee should 
bear in mind, that Congress had never in history caused the gov- 
ernment to shut down for more than 2 working days — by the time 
we got to Thursday and Friday, we were in uncharted, unprece- 
dented history. The Congress, for the first time, had shut the gov- 
ernment down for a period of 4 working days, heading into the 
weekend. 

As the shutdown continued, agencies were asked by 0MB to re- 
view the implementation of their plans in case of developing emer- 
gency situations. As a result, on Friday, November 17th, the Social 
Security Administration and the Veterans Administration received 
approval to call back a number of personnel to work on Monday, 
November 20th. On Sunday, November 19th, HUD and the Depart- 
ment of Defense announced plans to recall a number of other work- 
ers to address developing emergencies. 

I am sorry that Congressman Horn is not here. The question has 
been raised, "Isn't it inconsistent to say that someone is not an 
emergency employee on the first day and then, on the fifth day, de- 
termine that they are?" 

I think Administrator Chater's response is exactly right. The law 
imposes a criminal fine and a criminal penalty on anyone who 



223 

over-interprets the act. It is logical to assume that what is an 
emergency on the 1st day may not be an emergency on the 4th day 
and, conversely, what you can tolerate for a day or two becomes in- 
tolerable with the passage of time. 

There is no way in response to Congressman Horn's question, 
that if we do it again, we will plan on a day-by-day basis if there 
is a shutdown and, for the first 2 or 3 days we will, in fact, have 
a shutdown, depending upon who are emergency employees, in 
functions for the first 2 or 3 days. 

If we go for a longer period of time, I would expect that the agen- 
cies would continue to monitor and review their plans and, after 5 
or 7 days, we would have additional determinations made as to 
who is now an emergency employee and who is not an emergency 
employee. 

In some areas like parks, you may have an emergency activity 
for the first 3 days, shutting the parks down, at which point you 
then can have those employees furloughed because they are no 
longer engaged in emergency activities. 

Therefore, I think it is important to bear in mind that it is not 
a sign of inconsistency on the part of the agencies that determina- 
tions continue to be made, especially as we move into unprece- 
dented territory. If we started again, I think that we would find, 
in the cases of HUD and other places, that for the first day or two 
we could tolerate the situation in a way that we could not tolerate 
at the end of 5 or 7 days. 

You asked how our determination would differ if the lapse of ap- 
propriation were to last another 10 days, 30 days, or even 90 days. 
I would like to stress — and I cannot stress it too hard — that a shut- 
down of more than 2 weeks would be so disruptive that it should 
not even be considered. 

In such extreme circumstances, the hardship to all Federal em- 
ployees — emergency and non-emergency — as well as military per- 
sonnel, all Federal contractors, grantees, and anyone else dealing 
with the Federal Government, with the exception of recipients of 
certain mandatory benefits, none of whom would receive payment, 
would be without precedent. 

Again, I would remind the committee that there is an assump- 
tion that, if we bring back a furloughed employee to perform an 
emergency function, that that solves the problem. 

As we noted on that weekend, we were about to move beyond a 
situation of who were emergency employees and who were not, and 
deal with the situation that the government had no money to pay 
either the emergency employees or the non-emergency employees, 
was about to have no money to pay the military employees, was 
about to not have money to pay any bills that were not subject to 
appropriation. 

The Antideficiency Act does not allow us to make payments. The 
Antideficiency Act, in emergency circumstances, only allows us to 
incur the obligation to have workers and contractors performing 
emergency activities. We have no authority to pay them. We have 
no funds to pay them, because of the lack of an appropriation. 

Mrs. MORELLA [presiding]. Mr. Koskinen, your testimony is very 
valuable to us, but we only have about 6 minutes to vote. 

Mr. Koskinen. Can I just close, then, with my last sentence? 



224 

Mrs. MORELLA. I will let you close with the last sentence, and 
then we will recess for 15 minutes. 

Mr. KOSKINEN. Shutting the Federal Government down is a seri- 
ous matter, with substantial costs and significant dislocations for 
the American public. For more than 200 years, major budgetary is- 
sues between the Congress and the executive branch were settled 
without major disruptions in government operations. 

Our goal should be to emulate that minimum standard of suc- 
cess. If that goal is unattainable, we should at least not subject the 
country to another shutdown this year. 

Thank you, Madam Chairman. 

[The prepared statement of Mr. Koskinen follows:! 



225 



TESTIMONY OF 

JOHN KOSKINEN 

DEPUTY DIRECTOR FOR MANAGEMENT 

OFFICE OF MANAGEMENT AND BUDGET 

BEFORE THE 

CIVIL SERVICE SUBCOMMITTEE 

OF THE 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

HOUSE OF REPRESENTATIVES 

December 6, 1995 



Chairman Mica and Members of the Subcommittee: 

I appreciate the invitation to appear today before the House Civil Service Subcommittee 
to discuss the shutdown of government service that occurred in the middle of November because 
of lack of appropriations. 

The Federal government shut down because neither a complete set of appropriations bills 
nor a continuing resolution was enacted in a timely way. The Constitution and the Anti- 
Deficiency Act require that an agency only incur obligations to make payments when the 
Congress has passed and the President has signed either an appropriation bill for the agency or a 
temporary appropriation known as a continuing resolution. This failure to enact appropriations 
bills resulted in substantial costs to taxpayers and degradation of government services. The 
clearest lesson to be drawn fi'om the recent government shutdown is that it should not be allowed 



226 



to happen again. Disputes over budget priorities should not be resolved in a crisis atmosphere in 
which federal workers and recipients of government services are needlessly harmed. 

Government-wide Impa ct of Shutdovm • • 

We asked the agencies to submit preliminary estimates of the effects of the shutdown on 
their operations and the resulting costs. The monetary costs are currently estimated at more than 
$700 to $750 million with ^proximately $400 to $450 million of that being payroll costs for 
furloughed employees. Significant additional costs that caimot be determined at this time 
include interest payments to third parties required under the Prompt Payment Act and the Cash 
Management Improvement Act when the Federal government does not pay its bills on time and 
additional persoimel costs necessary to deed with the backlog of work. 

As significant as the monetary costs are the denial of basic and important services to the 
American public. Millions of Americans were inconvenienced or will be delayed in the receipt 
of payments and benefits to which they are entitled. The following examples of services delayed 
or denied during the shutdown is illustrative only and does not represent a comprehensive audit 
of the costs and impacts on services of the shutdown. 

• The Social Security Administration was forced to turn away 1 1 2,000 claim applications, 
212,000 requests for new or replacement Social Security cards, 360,000 individual office 
visits, and 800,000 toll-free phone calls for information and assistance. 



227 

• 40,000 individuals were delayed in enrolling in Medicare. 

• More than two million visitors were denied access to National Park Services facilities. 

• More than 80,000 passport applications were delayed. 

• More than 80,000 visas to visitors who spend an average of $3,000 on their trips were 
delayed with a negative impact on airlines, hotels, and tourist facilities. 

• Veterans Benefits offices were closed to "walk-in" veteran clients, pending claims for 
compensation, pension, education and vocational rehabilitation were not processed, and 
payments of GI Bill education checks and insurance death claims were not processed. 

• Customer Services at the Intemal Revenue Service were halted for four days. More than 
400,000 calls were not answered ~ built-up taxpayer demand will restrict the IRS' ability 
to respond in a timely manner. More than 80,000 walk-in requests were not met and as a 
result taxpayers were delayed in obtaining tax forms or other account assistance. 

• Because verifications of Social Security numbers (at SSA) and immigrant status (at INS) 
could not be carried out, processing of Federal college aid applications were delayed for 
80,000 students and families. 



228 

• "Deadbeat Dads" received a four-day holiday as the referral of 80,000 cases to the 
Federal Parent Locator Service was delayed. 

• More than 1 0,000 home purchase loans and refinancings totaling $800 million worth of 
mortgage loans for moderate-and low-income working families nationwide were delayed 
by the closing of the Federal Housing Administration. 

• More than 1 60,000 National Guardsmen did not drill over the weekend. 



Government Functions which Continued during the Shutdown 

Some agencies and activities were already funded and therefore continued to fimction 
during the shutdown. For example, the Department of Agriculture did not shut down because its 
appropriation bill was enacted into law, and the U.S. Postal Service did not shut down because it 
is funded through fees. Basic fimctions of the Courts and the Legislature continued to function 
as Constitutional arms of the government. The major "exception" to the prohibition against 
incurring an obligation without an appropriation is for emergency actions to protect against 
imminent threats to life or property. 

For the record, I would like to clear up a very unfortunate use of the terms "essential" 
and "nonessential." These terms do not appear anywhere in the statute. When there are no 

4 



229 

appropriations, all employees are furloughed except those performing emergency activities that 
(1) provide for the national security; (2) relate to the conduct of foreign relations; (3) provide for 
continuing mandatory benefit payments; and (4) protect life and property, for example medical 
care of inpatients and emergency outpatient care. If the distinction were between "essential" and 
"nonessential," no employees would have been furloughed. In light of this subcommittee's long 
interest in and backing of a properly supported Federal work force, I know that you will join me 
to ensure that henceforth the shutdown distinctions are between "emergency" and "non- 
emergency" employees. 

OMB's Role in Preparation and Execution of Shutdown 

As under past administrations, the Office of Management and Budget was responsible for 
preparing for the possibility of a shutdown. During the summer, in light of the delays in 
Congressional action on virtually all appropriation bills, speculation increased about a possible 
government shutdown due to a fimding hiatus. As a result, Director Rivlin asked me to lead a 
working group to prepare for an orderly shutdown. This group was composed primarily of 0MB 
staff, but included outside representative from agencies, such as the Department of Justice. 

Director Rivlin asked the Attorney General for advice regarding the permissible scope of 
government operations during a lapse in appropriations because there had been an amendment to 
the law which mandates shutdown during a funding hiatus. In particular, after the last shutdown 
in October of 1990, Congress had amended the Anti-Deficiency Act essentially to insert the word 

5 



230 



"imminent" before the words "threat to life or property." On August 1 6, 1 995, the Office of 
Legal Counsel in the Department of Justice updated the 1981 opinion of the Attorney General 
interpreting the law pertaining to government operations during a lapse in appropriations. 

On August 22, Director Rivlin asked that the heads of all executive departments and 
agencies send to OMB updated contingency plans to deal with a funding hiatus. The agencies 
were guided by the 1981 Attorney General's opinion as updated by the Department of Justice. 

When agencies were asked to review their plans, they were told to assume a short 
shutdown, with the understanding that plans would need revision in light of a more protracted 
shutdown and might need to be adjusted for unforeseeable circumstances. OMB assumed that 
this was appropriate because shutdowns since 1 98 1 had averaged two days. 



OMB, with the participation of the Department of Justice, reviewed the agency plans for 
general conformity with the Attorney General's opinion and govemment-wide consistency. For 
example, questions were raised about training activities across the government, including in the 
Departments of Defense and Justice. The agencies that gather and publish statistics were told 
that such activities were not within the excepted activities under the Anti-Deficiency Act. 
Military hospitals and VA hospitals both had questions about whether elective surgeries were 
excepted activities. In late September copies of the final agency shutdown plans were 
transmitted to Congress. 

6 



231 

The working group developed a set of commonly asked questions with appropriate 
answers for distribution to the agencies. These materials were integrated with those developed 
by the Office of Personnel Management for employment issues, such as the impact of furlough 
on employees' pay, leave, and benefits. Where necessary, answers were reviewed with the 
Department of Justice. The Office of Personnel Management provided guidance on "Main 
Street" which is OPM's electronic bulletin board. 0PM also convened weekly meetings of an 
interagency group of personnel officers and at least one member of my working group attended 
the meetings to keep the interagency group informed of the working group's progress. 

Also, as in the past, the Department of the Treasury concentrated on the problems of what 
would occur if there were a failure to increase the statutory limit on the public debt. I would like 
to take a moment to clarify the difference between a lapse in appropriations, such as the one that 
began on November 1 4, and a debt ceiling crisis. These are two very different circumstances, 
which operate independently of each other. When there is a lapse in appropriations, the 
government is without authority to enter into obligations at all. That means no new contracts, no 
grants, no new loans, no new processing of applications for most programs. The non-emergency 
Government functions just stop. In contrast, a debt ceiling crisis occurs when the Government 
hits the maximum amoimt that we are authorized to borrow. When this happens, the government 
continues to operate but is unable to borrow more cash. As a result, the government lacks cash 
to pay bills as they become due. This can be characterized as a liquidity crisis and is ( at least 
analytically) independent of the question of the government's authority to enter into obligations. 



232 

Fortunately, a continuing resolution was enacted before the beginning of the fiscal year. 
It provided temporary appropriations from October 1 through November 13. However, by 
November 9 only two appropriation bills, the Agriculture Appropriations Act and the Energy 
and Water Appropriations Act, had been enacted for fiscal year 1996. Therefore, Director Rivlin 
informed the heads of executive departments and agencies that it was possible that Congress 
would not pass a second acceptable continuing resolution by Monday, November 13. The agency 
heads were asked to review their shutdown plans and ensure that their employees were properly 
informed. 

On November 13, Director Rivlin issued a memorandum to all department and agency 
heads to be prepared to implement their shutdown plans on November 14 if no continuing 
resolution was enacted. On the morning of November 14, she advised them to proceed with the 
shutdown. As this shutdown continued for an imprecedented period of time, agencies were asked 
to review the implementation of their plans for developing emergency situations. As a result, on 
Friday, November 17, the Social Security Administration and the Veterans Administration called 
back a number of personnel to work on Monday, November 20. On Sunday, November 19, 
HUD and DOD announced plans to recall a niunber of other workers to address additional 
developing emergencies. 

You asked how our determination would differ if the lapse of appropriations were to last 
another 10 days, 30 days, or even 90 days. I would like to stress that a shutdown of more than 
two weeks would be so disruptive that it should not even be considered. In such extreme 

8 



233 

circumstances, the hardship — to all Federal employees, emergency and non-emergency, as well 
as military personnel, all Federal contractors, grantees, and anyone else dealing with the Federal 
government (with the exception of recipients of certain mandatory benefits), none of whom 
would receive payment — is without precedent. 

The shutdown ended on Sunday, November 1 9, when the Congress and the President 
agreed on acceptable extensions of the continuing resolution. That evening, department and 
agency beads were contacted and told to instruct their employees to report to work on Monday 
morning. Funding is now provided through December 15 for agencies whose fiscal year 1996 
appropriation bills have not been enacted into law. 

OMB's Own Shutdown Plans 

In addition to reviewing the plans of other agencies, 0MB developed a shutdown plan 
for its operations, originally as a contingency for a possible lapse in appropriations on October 1 , 
and subsequently updated for the lapse on November 14, 1995. Criteria were established for 
"emergency activities" based on the following functional analysis: 

core staff (Director, Deputies, Associate Directors, Deputy Associate Directors, 
etc.) 47 staff; 

reconciliation tracking and analysis (staff with specific responsibilities in the 
reconciliation process) S3 staff; 
9 



234 



a ppropriations tracking and analysis (staff with specific responsibilities on 
unsigned appropriation bills) 77 staff; and 

. ' technical supp ort (support staff, specied economic and technical analysis staff) 45 
staff. 

0MB kept 222 staff on board doing the above "emergency activities," and flirloughed 
314 staff. The staffing of excepted activities fluctuated slightly through the course of the 
week (plus or minus 10 staff), based on the passage of an appropriation bill 
(Transportation —signed on 1 1/15/95) and the work needed on reconciliation legislation. 
A daily staffing plan was prepared each evening with approved excepted staff for the 
following day. 

C9ngl\i?i(?P 

Shutting the Federal Government down is a serious matter with substantial costs and 
significant dislocations for the American public. For more than two hundred years, major 
budgetary issues between the Congress and the Executive Branch were settled without major 
disruptions in Government operations. Our goal should be to emulate that minimum standard of 
success. If that goal is unattainable, we should at least not subject the country to another 
shutdown this year. 

1 would be pleased to answer any questions that you have. 



10 



235 

Mrs. MORELLA. The subcommittee will now recess for 15 minutes 
for the vote. 

[Recess.] 

Mr. Mica [presiding]. I will call the meeting of the subcommittee 
back to order, and we will resume. I thank Mr. Koskinen for his 
testimony and we will get back to you with questions but, at this 
time, I want to call on Christopher Schroeder, Deputy Assistant At- 
torney General, Office of Legal Policy, the Department of Justice. 
Excuse me if I have slaughtered your name a couple of times here. 
I've said Schroeder. 

Mr. Schroeder. That's very close, Mr. Chairman. 

Mr. Mica. OK, good. We are glad to have you with us. You are 
recognized and, again, if you want to submit a lengthy statement 
for the record, we will do that without objection and, if you could, 
summarize. The other Members will be returning, and are inter- 
ested. Thank you. 

Mr. Schroeder. Thank you, Mr. Chairman, and members of the 
committee. This is the first time I am appearing before your com- 
mittee, and I hate to start it with an apology, but I must. My testi- 
mony arrived late this morning, contrary to your request for it 
being here in advance and, when it arrived, it was without fairly 
extensive appendices. I understand that those are now available. 
Again, my apologies for the late arrival. It is inexcusable, and I will 
not attempt to excuse it. 

I will offer to be available for questions at the staff level or in 
any other way you would think appropriate in order to accommo- 
date the committee's interests. 

Mr. Mica. That's fine. Just proceed. Thank you. 

Mr. Schroeder. Mr. Koskinen has covered a number of the 
points I make in my testimony, so let me just briefly summarize 
the role of the Justice Department with respect to implementing 
governmentwide application of the Antideficiency Act. 

The Justice Department's function is to provide general legal ad- 
vice, working with the Office of Management and Budget and, in 
recent years, that responsibility within the Department has fallen 
primarily on my office, the Office of Legal Counsel. 

The advice we have given over the years, however, originated 
with an Attorney General opinion in 1981, from then Attorney Gen- 
eral Civiletti. His basic interpretation of the legal regime governing 
a situation of lapsed appropriations has been in place since 1981 
and has been consistently followed by the administrations of Presi- 
dents Carter, Reagan, Bush, and now President Clinton. 

Assistant Attorney General Dellinger of the Office of Legal Coun- 
sel issued a memorandum on August 16th of this year in response 
to a request from Director Rivlin to assess the implications of an 
amendment to the Antideficiency Act that was enacted in 1990. 
That was the occasion of the August 16th memorandum. 

That memorandum largely reiterates the Civiletti opinion and its 
views of the proper legal standards to be applied in this situation, 
views which have been in place at least since 1981. It does amend 
the Civiletti advice with respect to the interpretation of the emer- 
gency exception, which was the subject matter that was addressed 
in the 1990 amendments. 



236 

It is our function to provide legal advice, and the most significant 
laws we must interpret are Article I, Section IX of the Constitu- 
tion — as you noted, Mr. Chairman, the appropriations clause — and 
Sections 1341 and 42 of Title 31 of the Code, the Antideficiency 
Act. 

The only point where I will be somewhat repetitious is to simply 
reiterate the point that has been made a number of times already 
this morning. 

The structure of the Antideficiency Act is such that, in the situa- 
tion of a lapse of appropriations, first, no funds can be withdrawn 
from the Treasury and, second, there are limited exceptions pro- 
vided in the act for the incurring of obligations, such as commit- 
ments to pay employees who are not furloughed and who remain 
at their posts. In no event in the recent shutdown were furloughed 
employees who were coming in on that basis in a position actually 
to receive a paycheck, if we went to a payday that covered periods 
of the shutdown period. 

We can obligate the government to honor those compensation 
promises but, unless and until there is an appropriation, it would 
not have been possible to meet the normal pay periods. Fortu- 
nately, we have never confronted a payless or a partially payless 
payday, because the matter has been resolved prior to then. 

It is fundamental to note that, when the government is function- 
ing in this period, it is functioning essentially on the basis of its 
ability to make contractual obligations, and that ability is limited 
to those categories that are defined under the Antideficiency Act as 
what we refer to as excepted activities. 

Nowhere is the concept of an "essential worker" or an "essential 
function" found in any of those definitions of excepted activities. 
What we do analyze are activities and functions to see whether, 
under the facts and circumstances that exist, on a fairly case-by- 
case, basis, there is a justification for an employee performing that 
function. 

Those circumstances can and do change over time which, as Mr. 
Koskinen explained, is one of the reasons why employees might be 
asked to perform a function at a certain day during a shutdown pe- 
riod and not on others. 

We used an example in one of our memoranda of truck or vehicle 
maintenance not being an excepted function, assuming a short- 
term shutdown but, obviously, if you were maintaining a motor ve- 
hicle fleet to perform some otherwise authorized government activ- 
ity, as time went on, you would have to perform some maintenance 
on those vehicles, or they would become unsafe to a degree that the 
protection of property or the safety of human life would be in- 
volved, so that the longer a shutdown went on, the more likely it 
would be that some agencies' motor pool would have to call mainte- 
nance staff in to perform rudimentary services. 

A contrary example would be the kind of situation some of the 
large national parks may have faced, in which, although there was 
no funding available to continue the operation of those parks, when 
the lapse in appropriations occurred, there were still people in the 
interiors of large parks like Yosemite or Yellowstone or the Grand 
Canyon, and there was a rationale for Park Service personnel stay- 
ing at their stations to ensure the safety of those individuals while 



237 

they hiked out of the park, which often can take a couple of days, 
so that at the beginning of a shutdown, there would be a health 
and safety rationale for maintaining some personnel, that would 
then cease. 

The facts and circumstances are definitely a factor that agencies 
take into account, and that is one significant reason that plans and 
staffing levels have to be updated and reassessed in light of the cir- 
cumstances, or the best estimates and understandings of the cir- 
cumstances that obtain at the time those decisions are made. 

With that, I will conclude my remarks and be more than happy 
to respond to any questions you may have. 

[The prepared statement of Mr. Schroeder follows:] 



238 



TESTIMONY OF 

CHRISTOPHER SCHROEDER 

DEPUTY ASSISTANT ATTORNEY GENERAL 

OFFICE OF LEGAL COUNSEL 

DEPARTMENT OF JUSTICE 

HEARING BEFORE THE 

HOUSE COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

SUBCOMMITTEE ON CIVIL SERVICE 

ON GOVERNMENT SHUTDOWN 

DECEMBER 6, 1995 



Chairman Mica and Members of the Subcommittee: 

Good morning. My name is Christopher Schroeder. I am a Deputy Assistant 
Attorney General in the Office of Legal Counsel at the Justice Department. I am pleased to 
appear before the subcommittee today to provide information concerning the Department of 
Justice's role in implementing the Antideficiency Act. 

Much of the responsibility within the Department for providing legal advice to 
Executive agencies on this subject currently falls within the purview of the Office of Legal 
Counsel. With respect to that role of the office, Assistant Attorney General Dellinger issued 
a memorandum on August 16, 1995 to the Director of the Office of Management and Budget 
("0MB"), Alice Rivlin, that to a very considerable degree restated the legal interpretation of 
the Antideficiency Act rendered by then- Attorney General Civiletti in 1981. I have attached 
that memorandum to my testimony. 



239 



2 

Attorney General Civiletti's interpretation of the statute has been followed by the 
administrations of Presidents Carter, Reagan. Bush, and Clinton. Mr. Dellinger's 
memorandum did modify the contents of the Civiletti opinion in one respect, to take account 
of an amendment to the AntideHciency Act that was enacted in 1990. 

The memorandum reiterated the functions and activities of the Federal government that 
may be maintained during a period of lapsed appropriations. In general, during such a 
period, the Antideficiency Act permits the following categories of functions and positions to 
continue: those funded through multi-year appropriations and permanent appropriations; those 
for which there is express authority to continue during an appropriations lapse; those for 
which authority to continue during an appropriations lapse arises by necessary implication; 
certain functions and positions that relate to the discharge of constitutional duties and powers; 
and those relating to "emergencies involving the safety of human life or the protection of 
property." A more complete explanation of the functions that may continue also is contained 
in Mr. Dellinger's testimony of September 19, 1995, before a joint hearing of the Senate and 
House Budget Committees, which has been attached to my testimony. 



240 



3 
I would like to emphasize that these are the only functions that the Antideficiency Act 
permits to continue during an appropriations lapse. All other functions must cease and 
federal workers who perform non-excepted functions must be furloughed, even though these 
furloughed employees are essential. Let me be absolutely clear, the Antideficiency Act 
makes no distinction between "essential employees" and "non-essential employees" or 
between "essential fiincitons" and "non-essential functions." Furthermore, our legal advice in 
no way called for agencies to make any such distinction. 

In addition to the August 16 memorandum, the Office of Legal Counsel provides 
ongoing advice to the Executive branch, including the Office of Management and Budget and 
the President, concerning the legal standards that apply to Federal functions and activities 
during the period of a lapse in appropriations. We were not involved in monitoring agency 
compliance during the recent period of lapsed appropriations, nor was any other component 
of the Justice Department. 

The subcommittee also has requested information concerning the Department's 
contingency planning and operational activities during the recent period of lapsed 
appropriations. As these matters are within the primary responsibilities of the Department's 
Justice Management Division, I have attached a document prepared by them that responds to 
these questions. 



241 



4 
Thank you for holding this hearing on an issue of great importance to the American 
public and to federal employees. I would be pleased to respond to any questions the 
subcommittee may have. 



Attachments: 

OLC Guidance on Government Operations in the Event of a Lapse in Appropriations 

(Aug. 16, 1995) 
Prepared statement of Walter Dellinger (Sept. 19, 1995) 

Information on Contingency Planning and Operational Activities During Shutdown 
OLC Guidance on Participation in Congressional Hearings During an Appropriations 

Lapse (Nov. 16, 1995) 



242 

Mr. Mica. Thank you, and we will get back to questions. At this 
time, I will recognize Allan Heuerman, Associate Director for 
Human Resources Systems Service of the Office of Personnel Man- 
agement. 

Mr. Heuerman. Mr. Chairman and members of the subcommit- 
tee, I appreciate the opportunity to be here today to discuss the Of- 
fice of Personnel Management's role in the partial shutdown of the 
Federal Government that began on November 14, 1995. The role of 
0PM under a government shutdown is to provide agencies with 
guidance and technical assistance related to the personnel manage- 
ment aspects of furloughing Federal employees. 

Last July, based on media reports about the possibility of a lapse 
in appropriations, I, on my own initiative, instructed my staff to 
begin updating OPM's furlough guidance, which was last issued on 
August 15, 1990. On August 1, 1995, we distributed our updated 
guidance to agencies. 

This guidance was in the form of questions and answers which 
covered a broad range of information on personnel management as- 
pects of a furlough, such as information on procedures, the effect 
of the furlough on pay and leave and retirement and health insur- 
ance coverage, and other benefits. The guidance did not, because it 
is not within OPM's authority, include guidance on the kinds of ac- 
tivities which would be excepted under the Antideficiency Act dur- 
ing the lapse in appropriations. 

After issuing this guidance, we engaged in continuing discussions 
with Federal agencies to help plan for a possible lapse in appro- 
priations to assure that they were kept informed and up to date. 
Our activities included: 0PM staff briefings for personnel at a 
number of agencies; weekly meetings of agency personnel directors, 
where we continued to address the personnel implications of fur- 
lough as new issues arose; arranged for representatives from 0MB 
to speak on budgetary matters relating to shutdown; for represent- 
atives from the Department of Labor to discuss unemplo3mient 
compensation issues; and for representatives from the Thrift In- 
vestment Board to discuss thrift savings plan issues regarding 
loans; we also distributed to agencies additional questions and an- 
swers pertaining to new issues on the personnel aspects of fur- 
lough; a Justice Department opinion on the 1990 changes to the 
Antideficiency Act relative to determining excepted and non-ex- 
cepted activities; and information on unemployment compensation 
and thrift savings plans. 

Prior to and during the shutdown, 0PM responded to individual 
inquiries from agencies, employees, unions, and the media on per- 
sonnel aspects of furlough. On November 17, we issued to directors 
of personnel questions and answers addressing leave issues affect- 
ing excepted and non-excepted employees. 

On November 21, the day after the law authorizing retroactive 
pay was enacted and employees returned to work, we issued guid- 
ance on personnel documentation and on how to handle the pay 
and leave of employees for that period. 

Mr. Chairman, you asked about the assumptions made by 0PM 
with respect to the length of the shutdown. We made no assump- 
tions and none were needed with respect to our guidance. Our Au- 



243 

gust guidance provided information on furloughs of 30 days or less 
and on furloughs of more than 30 days. 

The reason for this distinction is that there are different provi- 
sions in law governing furloughs depending on the length of the 
furlough. Furloughs of less than 30 days require adverse action 
procedures; furloughs of more than 30 days require reduction in 
force procedures. Therefore, OPM's guidance was designed to cover 
both scenarios. 

If, as a shutdown continued, it appeared that it would last for 
an extended period, we would encourage agencies to provide em- 
ployees with additional information, such as on employee assist- 
ance programs and financial counseling. However, our basic guid- 
ance on the personnel aspects of furlough would remain the same. 

You asked about the effect of a debt ceiling crisis on our guid- 
ance. The debt ceiling limits the government's ability to borrow 
cash and, therefore, our guidance dealing with furlough procedures 
would not be affected. 

You also asked for a description of those 0PM functions that 
were continued during the lapse in appropriations. 0PM continued 
to carry out its responsibilities with regard to administration of 
Federal employee benefits programs, such as retirement, health 
and life insurance, background suitability investigations, and man- 
agerial and executive training. 

These activities are funded out of either the retirement or insur- 
ance trust funds, or OPM's revolving fund, and so were not affected 
by the lapse in appropriated funds. 0PM also conducted activities 
related to the orderly shutdown of both 0PM itself and other Fed- 
eral agencies. 

With regard to the costs associated with the furlough, we esti- 
mate that the salary and benefits paid to 0PM employees who 
were furloughed totals approximately $1,238,700. We also incurred 
some incidental costs, such as printing, mailing, and travel in con- 
nection with the orderly shutdown. 

We are providing you with all of the information you requested, 
including copies of all materials we issued in regard to the govern- 
ment shutdown and all pertinent documents associated with the 
shutdown at 0PM. 

I want to thank you for the opportunity to discuss this with you 
today, and I will be glad to respond to questions. 

[The prepared statement of Mr. Heuerman follows:! 



244 



STATEMENT OF 

ALLAN D. HEUERMAN 

ASSOCIATE DIRECTOR 

FOR HUMAN RESOURCES SYSTEMS 

OFFICE OF PERSONNEL MANAGEMENT 

before the 

SUBCOMMITTEE ON CIVIL SERVICE 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

U.S. HOUSE OF REPRESENTATIVES 



THE GOVERNMENT SHUTDOWN 
December 6, 1995 



MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: 

I APPRECIATE THE OPPORTUNITY TO BE HERE TODAY TO DISCUSS THE 
OFFICE OF PERSONNEL MANAGEMENT'S ROLE IN THE PARTIAL 
SHUTDOWN OF THE FEDERAL GOVERNMENT THAT BEGAN ON NOVEMBER 
14, 1995. 

THE ROLE OF OPM UNDER A GOVERNMENT SHUTDOWN IS TO PROVIDE 
AGENCIES WITH GUIDANCE AND TECHNICAL ASSISTANCE RELATED TO 
THE PERSONNEL MANAGEMENT ASPECTS OF FURLOUGHENG FEDERAL 
EMPLOYEES. 

LAST JULY. OPM BEGAN TO UPDATE ITS 1990 FURLOUGH GUIDANCE IN 
PREPARATION FOR A POSSIBLE LAPSE IN APPROPRIATIONS. ON AUGUST 



245 

1, 1995, WE DISTRIBUTED OUR UPDATED GUIDANCE TO ALL AGENCIES. 

THIS GUIDANCE WAS EN THE FORM OF QUESTIONS AND ANSWERS WHICH 
COVERED A BROAD RANGE OF INFORMATION ON THE PERSONNEL 
MANAGEMENT ASPECTS OF A FURLOUGH. THE GUIDANCE INCLUDED 
INFORMATION ON THE PROCEDURES NECESSARY TO PLACE EMPLOYEES 
ON FURLOUGH, THE EFFECT OF FURLOUGH ON PAY, LEAVE, 
RETIREMENT. HEALTH AND LIFE INSURANCE COVERAGE, AND OTHER 
FEDERAL BENEFITS. IT IS NOT WITHIN OPM'S AUTHORITY TO PROVIDE 
GUIDANCE ON THE KINDS OF ACTIVITIES WHICH WOULD BE EXCEPTED 
UNDER THE ANTI-DEFICIENCY ACT DURING A LAPSE IN APPROPRIATIONS. 

AFTER ISSUING THIS GUIDANCE, WE ENGAGED IN CONTINUING 
DISCUSSIONS WITH FEDERAL AGENCIES TO HELP PLAN FOR A POSSIBLE 
LAPSE IN APPROPRIATIONS TO ASSURE THAT THEY WERE KEPT 
INFORMED AND UP TO DATE. OUR ACTIVITIES INCLUDED: 

OPM STAFF BRIEFINGS FOR PERSONNEL AT A NUMBER OF 
AGENCIES. 

WEEKLY MEETINGS OF AGENCY PERSONNEL DIRECTORS 
WHERE WE CONTINUED TO ADDRESS THE PERSONNEL 



246 



IMPLICATIONS OF FURLOUGH AS NEW ISSUES AROSE; 
ARRANGED FOR REPRESENTATIVES FROM 0MB TO SPEAK ON 
BUDGETARY MATTERS RELATING TO SHUTDOWN, INCLUDING 
EXCEPTED AND NONEXCEPTED ACTIYITIES; REPRESENTATIVES 
FROM THE DEPARTMENT OF LABOR TO DISCUSS 
UNEMPLOYMENT COMPENSATION ISSUES; AND 
REPRESENTATIVES FROM THE THRIFT INVESTMENT BOARD TO 
DISCUSS THRIFT SAVINGS PLAN ISSUES REGARDING LOANS. 

DISTRIBUTING TO ALL AGENCIES ADDITIONAL QUESTIONS 
AND ANSWERS PERTAINING TO NEW ISSUES ON THE 
PERSONNEL ASPECTS OF FURLOUGH; A JUSTICE DEPARTMENT 
OPINION ON THE 1990 CHANGES TO THE ANTIDEFICIENCY ACT 
RELATIVE TO DETERMINING EXCEPTED AND NONEXCEPTED 
ACTrvrriES; and information on UNEMPLOYMENT 
COMPENSATION AND THRIFT SAVINGS PLANS. 



PRIOR TO AND DURING THE SHUTDOWN, 0PM RESPONDED TO 
INDIVIDUAL INQUIRIES FROM AGENCIES, EMPLOYEES, UNIONS, AND THE 
MEDIA ON THE PERSONNEL ASPECTS OF FURLOUGH. ON NOVEMBER 17, 
WE ISSUED TO DIRECTORS OF PERSONNEL QUESTIONS AND ANSWERS 



247 

ADDRESSING LEAVE ISSUES AFFECTING EXCEPTED AND NONEXCEFTED 
EMPLOYEES. 

ON NOVEMBER 21. THE DAY AFTER THE LAW AUTHORIZING RETROACTIVE 
PAY WAS ENACTED AND EMPLOYEES RETURNED TO WORK, WE ISSUED 
GUIDANCE ON PERSONNEL DOCUMENTATION AND HOW TO HANDLE THE 
PAY AND LEAVE OF EMPLOYEES FOR THAT PERIOD. 

MR. CHAIRMAN. YOU ASKED ABOUT THE ASSUMPTIONS MADE BY 0PM 
WITH RESPECT TO THE LENGTH OF THE SHUTDOWN. WE MADE NO 
ASSUMPTIONS. OUR AUGUST GUIDANCE PROVIDED INFORMATION ON 
FURLOUGHS OF 30 DAYS OR LESS AND ON FURLOUGHS OF MORE THAN 
30 DAYS. THE REASON FOR THIS DISTINCTION IS THAT THERE ARE 
DIFFERENT PROVISIONS GOVERNING FURLOUGHS DEPENDING ON THE 
LENGTH OF THE FURLOUGH. FURLOUGHS OF LESS THAN 30 DAYS 
REQUIRE ADVERSE ACTION PROCEDURES; FURLOUGHS OF MORE THAN 
30 DAYS REQUIRE REDUCTION IN FORCE PROCEDURES. THEREFORE, 
OPM'S GUIDANCE WAS DESIGNED TO COVER BOTH SCENARIOS. 

IF, AS A SHUTDOWN CONTINUED, IT APPEARED THAT IT WOULD LAST 
FOR AN EXTENDED PERIOD, WE WOULD ENCOURAGE AGENCIES TO 
PROVIDE EMPLOYEES WITH ADDITIONAL INFORMATION, SUCH AS 



248 

INFORMATION ON EMPLOYEE ASSISTANCE PROGRAMS AND FINANCIAL 
COUNSELING. HOWEVER, OUR BASIC GUIDANCE ON THE PERSONNEL 
ASPECTS OF FURLOUGH WOULD REMAIN THE SAME. 

YOU ASKED ABOUT THE EFFECT OF A DEBT CEILING CRISIS ON OUR 
GUIDANCE. THE DEBT CEILING LIMITS THE GOVERNMENT'S ABILITY TO 
BORROW CASH, AND THEREFORE, OUR GUIDANCE DEALING WITH 
FURLOUGH WOULD NOT BE AFFECTED. 

YOU ALSO ASKED FOR A DESCRIPTION OF THOSE 0PM FUNCTIONS THAT 
WERE CONTINUED DURING THE LAPSE IN APPROPRIATIONS. OPM 
CONTINUED TO CARRY OUT ITS RESPONSIBILITIES WITH REGARD TO 
ADMINISTRATION OF FEDERAL EMPLOYEE BENEFIT PROGRAMS SUCH AS 
RETIREMENT, HEALTH, AND LIFE INSURANCE; BACKGROUND SUITABILITY 
INVESTIGATIONS; AND MANAGERIAL AND EXECUTIVE TRAINING. THESE 
ACTIVITIES ARE FUNDED OUT OF EITHER THE RETIREMENT OR 
INSURANCE TRUST FUNDS OR OPM'S REVOLVING FUND AND SO WERE 
NOT AFFECTED BY THE LAPSE IN APPROPRIATED FUNDS. OPM ALSO 
CONDUCTED ACTTVITIES RELATED TO THE ORDERLY SHUTDOWN OF BOTH 
OPM ITSELF AND OTHER FEDERAL AGENCIES. 

WITH REGARD TO THE COSTS ASSOCIATED WITH THE FURLOUGH. WE 



249 

ESTIMATE THAT THE SALARY AND BENEFITS PAID TO OPM EMPLOYEES 
WHO WERE FURLOUGHED TOTALS APPROXIMATELY $1,238,700. WE ALSO 
INCURRED SOME INCIDENTAL COSTS SUCH AS PRINTING, MAILING, AND 
TRAVEL IN CONNECTION WITH THE ORDERLY SHUTDOWN OF OPM AND 
OTHER FEDERAL AGENCIES. 

WE ARE PROVIDING YOU WITH ALL OF THE INFORMATION YOU 
REQUESTED, INCLUDING COPIES OF ALL MATERIALS WE ISSUED IN 
REGARD TO A GOVERNMENT SHUTDOWN AND ALL PERTINENT 
DOCUMENTS ASSOCIATED WITH THE SHUTDOWN AT OPM. 

THANK YOU FOR THE OPPORTUNITY TO DISCUSS THIS TOPIC WITH YOU 
TODAY. I WILL BE HAPPY TO RESPOND TO ANY QUESTIONS YOU MAY 
HAVE. 



250 

Mr. Mica. Thank you, Mr. Heuerman and also the other wit- 
nesses today, for their testimony. I have a few questions to start 
out with, first for Mr. Koskinen. 

Do you think that the Antideficiency Act is deficient? 

Mr. Koskinen. Is which? 

Mr. Mica. Deficient. 

Mr. Koskinen. No, I think whatever modifications you make in 
it, I think ultimately you are dealing with a provision of the Con- 
stitution that provides that the executive branch cannot incur obli- 
gations without appropriations. 

The Antideficiency Act basically, as I noted in my testimony, pro- 
vides some very narrow exceptions for having employees perform 
emergency activities and other activities. It does not provide any 
exceptions, and cannot, to the constitutional requirement that we 
can't make any payments and can only incur very limited obliga- 
tions in the absence of an appropriation. 

If there is any deficiency, it is in fact in our inability to produce 
either appropriation bills or continuing resolutions to avoid this 
problem. As I said, we avoided it for 200 years. It is not quite clear 
to me why suddenly it has become a term of art. 

Mr. Mica. I think everyone who has testified today has said that 
shutdowns have been sort of a way of life of governing the past 10, 
12 years, given the fact that I guess it has occurred on at least 10 
occasions. The difference, I think, in this particular shutdown was 
the duration. 

Mr. Koskinen. Yes. 

Mr. Mica. One of the things that we heard from the previous 
panelists was a variety in their plans for such an eventuality. Some 
prepared, it seems, short term and long term. 

Do you feel that the guidelines that you issued or were requested 
to prepare were sufficient and how they responded was adequate? 
Then we saw a great disparity between the plans. As I did in the 
presentation of this 184 pages of Department of Labor versus the 
2 pages and 30 page addendum for HHS. 

What is your reflection on this? 

Mr. Koskinen. My reflection is the agencies were advised that 
they should plan for a short shutdown, in light of the history that 
we had never had a shutdown for more than 1 or 2 days. When 
an agency asked for more detailed guidance we said, as you heard, 
that it would be in the range of 5 to 7 days. 

All of the plans and all of our discussions with them con- 
templated that, if the shutdown lasted longer, it would begin to 
cause people to have to re-examine developing emergencies in their 
activities. It did not surprise us and, in fact, we encouraged the 
agencies as the first week drew to a close, to review their plans in 
light of the unprecedented nature of the shutdown. 

I would note, a question was raised about your other point about 
the difference in the size of the plans. The agencies have been re- 
quired to maintain shutdown plans since 1980. 

The guidance from Director Rivlin on August 22d specifically 
notes that the purpose of the review was for the agencies to review 
those existing plans in light of the new legislation and the updated 
Attorney General's opinion provided by the Office of Legal Counsel, 
and make whatever changes seemed appropriate. 



251 

In the case of some agencies, they went back, as Labor did and 
redid their plans entirely. The Defense Department, perhaps for 
the first time in history, actually developed a shutdown plan. Other 
agencies, like HHS, that had relatively straightforward questions 
and pre-existing plans had an easier time of it. 

It was left to the discretion of the agency to determine how much 
work was necessary to update their pre-existing plans. 

Mr. Mica. One of the other points that you raised, that one of 
the reasons for different degrees of shutdown was, in fact, the legal 
parameters that have been established. One of the areas mentioned 
today, that stirred some controversy, has been Social Security. 

I have this Department of Justice Office of Legal Counsel memo- 
randum that was prepared August 16, 1995, and the subject is 
"Government Operations in the Event of a Lapse of Appropria- 
tions," and then it goes on. It is pretty lengthy, and it defines some 
terms. I think you might be familiar with it. 

It says, "Multi-year appropriations and indefinite appropria- 
tions." Let me quote from it. It says: "Not all government functions 
are funded with annual appropriations. Some operate under multi- 
year appropriations and others operate under indefinite appropria- 
tion provisions that do not require passage of annual appropria- 
tions legislation." 

I am not an attorney, but I would interpret that that they could 
go on. 

"Social Security is a prominent example of a program that oper- 
ates under an indefinite appropriations." 

Given this guideline, prepared from the administration, and then 
the Social Security commissioner, who furloughed what, 60,000 em- 
ployees — is this a difference in understanding of the legal param- 
eters; or how do you interpret these actions? 

Mr. KOSKINEN. The original opinion by Attorney General Civi- 
letti, which drew the distinction and discussed Social Security, 
talked about situations where you have ongoing continuing obliga- 
tion authority, as Social Security does. 

In those cases, it said, by implication one could assume that lim- 
ited administrative functions, even though not funded, could con- 
tinue. That is the basis under which, historically, Social Security 
benefit checks have been issued. 

The question is, beyond the limited administrative functions of 
paying existing beneficiaries, can you, at the start, have an excep- 
tion — because of an emergency activity or otherwise — for the proc- 
essing of and the volume of work that is done in new applications. 

Social Security's judgment in their plan, and it was very clear in 
their plan, was that they did not think that, as Administrator 
Chater said, for the first day or two, there was an emergency or 
that that would be the kind of work that would be excepted under 
the Attorney General's opinion. 

On the other hand, it was clear, as Administrator Chater said, 
once we got into the unprecedented shutdown because of the inabil- 
ity to provide a continuing resolution, after several days, what had 
been tolerable for a day or two became intolerable over time. It 
began to create an emergency. That was their legal judgment 
under the basic original Attorney General's opinion. 



252 

The original opinion talks about ongoing obligation authority and 
limited functions derived by implication from that. 

Mr. Mica. Do we need changes in the law to ensure that some 
essential activities continue? It seems that there is adequate au- 
thority because, in fact, some of these things were restored by fiat. 

Mr. KOSKINEN. They were not restored by fiat. They were re- 
stored because of a determination that an emergency had devel- 
oped with the passage of time. That is not fiat. 

Mr. Mica. Well, but someone must have the authority; the Presi- 
dent or the administrator has to have that legal authority. 

Mr. KOSKINEN. Correct. 

Mr. Mica. It can't just suddenly appear. 

Mr. KOSKINEN. No. That is why it is not fiat. There is a set of 
legal guidelines that give you a determination if you determine 
that a function, at any point in time is necessary because it is an 
emergency. 

Mr. Mica. We have basically a moving target, then? 

Mr. KOSKINEN. Of course. 

Mr. Mica. You don't need additional clarification; what is in law 
is adequate? 

Mr. KOSKINEN. The law has been changed in the past. It cer- 
tainly can be changed going forward. As I say, the last change in 
the law was an attempt to restrict and make it clear that the Con- 
gress intended that the only emergency actions were imminent 
threats to life or property. That was what we updated; and the 
Congress has spoken, and said that this is to be narrowly defined. 
A criminal penalty applies otherwise. 

If the Congress decided to take another tack, that could be done 
and there is nothing that would prevent them from doing that, if 
the Congress so decided. Several proposals are before the Congress 
to either provide permanent continuing resolutions or permanent 
payments afterwards or even to redefine, in the Congress's judg- 
ment, what an appropriate exception is. The Congress can do that. 

Mr. Horn. Would the gentleman yield? 

Mr. Mica. Yes, I will. I know you have some interest in this area; 
and the witness referred to you while you were out of the room, so 
I will yield. 

Mr. Horn. The chairman has raised a fascinating question. As 
the opinion of Assistant Attorney General Walter Dellinger, a dis- 
tinguished scholar of the Constitution, goes on, he says, "In such 
cases, benefit checks continued to be honored by the Treasury be- 
cause there is no lapse in the relevant appropriation." 

My query is, are employees of Social Security paid out of the 
same trust fund that the checks are paid out of? 

Mr. KOSKINEN. My understanding is no, that they are in fact 
free-standing. They are paid out of an S and E account that is an 
appropriated account. 

Mr. Horn. When Mr. Dellinger wrote this multi-year appropria- 
tion, you are sajdng that his definition that some operate under 
multi-year appropriations and others operate under indefinite ap- 
propriations provisions that do not require passage of annual ap- 
propriations legislation, you are saying that it is one thing to pay 
benefit checks, it is another to pay people; is that correct? 



253 

Mr. KOSKINEN. If you look on page 4 of his opinion, he says — and 
referring back to the 1981 opinion, it said, "It contemplates that a 
limited number" — I would quote — "a limited number of government 
functions could continue." The next sentence says, "Examples in- 
clude the check-writing and distributing functions necessary to dis- 
burse the benefits that operate under indefinite appropriations." 

That is what Social Security continued to do. There was never 
a threat to existing benefits. The exception is to a limited number 
of functions and the example has always been check- writing. The 
issue facing Social Security was, for the first few days, would it be 
a legitimate interpretation to say, "Will we have thousands of 
workers necessary to process new applications?" 

Their interpretation of that situation was that that was not an 
exception created for emergencies until, with the passage of time, 
we passed into an unprecedented area where, in fact, now we had 
a backlog that was an emergency. 

Going back to day one, if we started and you told me we were 
going to shut the government down for 1 day, would Social Security 
have people there, I would say our position would be to ask Social 
Security, "Is that going to create an emergency?" 

Their answer the first time was no; they would again, in light 
of the experience, be able to answer it, but it would not be incon- 
sistent for them to say, "We can tolerate the situation for 2 days; 
we cannot tolerate the situation for 5." 

Mr. Horn. Is it not true that the Financial Management Service 
of the Treasury writes the Social Security checks? 

Mr. KOSKINEN. That is my understanding, but actually, FMS 
writes those checks in response to information forwarded by Social 
Security. 

Mr. Horn. Absolutely, but there is also a payment to the Treas- 
ury by Social Security for that service, is there? 

Mr. KOSKINEN. A payment for the check-writing function? 

Mr. Horn. Yes. 

Mr. KOSKINEN. At some point, surely. 

Mr. Horn. That includes the employees in the Financial Manage- 
ment Service that have to get those checks processed? 

Mr. KOSKINEN. That is right. Both the FMS employees and the 
Social Security employees necessary to process the benefits for 
check-writing are excepted under the Attorney General's opinion. 

Mr. Horn. Right, under the Bellinger opinion, those are ex- 
cepted. 

Mr. KOSKINEN. No, it is actually under the Civiletti opinion. It 
has been the rule for 14 years. 

Mr. Horn. Yes. OK. Well, I notice in your testimony, at the bot- 
tom of page 2, you say, "The Social Security Administration was 
forced to turn away 112,000 claim applications." 

Everywhere else you say, in the case of Medicare, "40,000 indi- 
viduals were delayed in enrolling in Medicare." You go on to talk 
about the Park Service — another beef I have — "More than 2 million 
visitors were denied access to the national park services"; "More 
than 80,000 passport applications were delayed"; "More than 
80,000 visas to visitors who spend an average of $3,000 on their 
trips were delayed"; et cetera. Then you get down to customer serv- 
ice, Internal Revenue, "were halted." 



An.ion 07 . 



254 

Social Security, you say, "was forced." The only person that 
forced them was the commissioner of Social Security that made the 
decision and 0MB that backed her up. 

Mr. KOSKINEN. Because they made a determination that, under 
the law, the law passed by Congress, that was the action they had 
to take. It goes back to the chairman sajdng if you would like to 
change the law, that is open to you. That was an interpretation, 
their judgment, in response to, as I say, the threat — as Secretary 
Muhoz noted — that, if you make a violation, you are, in fact, sub- 
ject to criminal penalties. 

The fact that nobody has been prosecuted that I know of, because 
we have never had a shutdown that lasted more than 5 or 6 days, 
does not seem to me particularly of great comfort to anyone you are 
asking to make these judgments. 

Mr. Horn. Yes. Well, Mr. Chairman, we obviously have a clear 
case where your committee can render a service to straighten out 
the law on this subject one way or the other. 

Mr. Mica. Again, a number of questions have been raised. I am 
wondering whether we should file criminal charges against those 
gardeners at VA that were non-essential. 

Mr. KOSKINEN. It is my understanding that, as noted, that 10 
percent of the 200,000 or 220,000 who work in the VA hospitals 
were furloughed and, in fact, my understanding is non-emergency 
activities like gardeners were furloughed. You will hear from VA, 
but my understanding is they actually looked at that question in 
terms of what were support services necessary to support the emer- 
gency activities. 

Mr. Mica. The same thing relates to PR shops. We have thou- 
sands of PR people in the various agencies. Someone could make 
a case for going after some of these folks that did keep their shop 
open and that were non-essential and should be charged with a 
criminal violation. 

Mr. KOSKINEN. First of all, they would be non-emergency, not 
non-essential. Second, you heard from six different agencies here, 
all of whom said they made substantial cuts in their Public Affairs 
Departments. They will all provide you with those numbers and, I 
think, in fact, they are prepared to stand behind those. 

I do not think it is fair to assume that there were violations of 
that law. 

Mr. Mica. The folks that we did hear from — there are other 
agencies, and activities — I was stunned at the number of PR and 
public information officers that we have throughout the vast num- 
ber of agencies and activities. 

One other final point is, we have gone through one shutdown and 
it has been the longest one in history. Next Friday, we may be fac- 
ing another one and it may be a very long shutdown. 

I also heard testimony — and I am not sure, maybe you could de- 
fine it — that your agency, 0MB, has requested an additional up- 
date, based on the experience of bad experience. Was that the 
10th? Someone said the 10th? 

Mr. KOSKINEN. This Sunday evening we want them, so that we 
will have the full week to review them. 

Mr. Mica. OK, that's 5 working days, I believe. Do you feel that 
is enough time? Because one of the agencies, HUD, said they had 



255 

asked for an opinion from you relating to some grant programs, in 
the timeframe prior to the shutdown, and did not get a response. 

Do you think that you can adequately respond, review their 
plans, and get back to them by the 15th? 

Mr. KOSKINEN. Yes. Again, as I said, the irony of this is, on the 
one hand, we have been attacked for having spent too much time 
in planning. I think the appropriate response is, the agencies have, 
we think good plans. We have asked them to review them because 
we think it is appropriate to be prepared for the following Friday. 

We do also think that, even before this, we have asked the chief 
financial officers, the President's Management Council, and other 
interagency groups, to give us their response over the last month 
of experiences they had — the "lessons learned," as we are calling 
them — and we think we will be able to respond and we will be able 
to run — if necessary, which we hope it is not — again an efficient 
and effective shutdown. 

It is not exactly one of the things we would like to be involved 
in. 

Mr. Mica. If you think you are having problems being charged 
with doing too much or too little, you ought to join the new major- 
ity in Congress. We get criticized for either doing too much or too 
little, too. 

Mr. MORAN. I think you ought to think twice about that. [Laugh- 
ter.] 

Mr. Mica. With those comments, I defer to the ranking member 
for questions. 

Mr. MORAN. Thank you, Mr. Chairman. 

John, will 0MB support the legislation that I have introduced 
that will keep Federal employees at work and get reimbursed after 
the fact in the same way that 60 percent of Federal employees did 
this last time? 

Mr. KOSKINEN. Yes. We are in favor of whatever we can do to 
provide continuity in management of the government and, to the 
extent that we could avoid unnecessary shutdowns and termination 
of important work, we think that would be an important step for- 
ward. 

Mr. MORAN. You would support H.R. 2184 that does that? 

Mr. K0SKI^fEN. We have not cleared that bill through our normal 
processes but, in my personal opinion, yes, we should support that. 

Mr. MORAN. I am glad to hear that, although we have very little 
time. I think that, if the White House was to support that, it would 
help. 

By my calculations, as of December 15th, we would only be wor- 
rying about 10 percent of the Federal work force not going to work? 

Mr. KOSKINEN. Our estimate is that, if the situation holds that 
exists today, and there were a shutdown the end of next week, 
without further appropriation bills passing, assuming the plans — 
the agency plans — were consistent with their previous plans, we 
would be looking at furloughs in the range of 330,000 to 350,000 
employees. 

Mr. MORAN. Why? That doesn't make sense. 

Mr. KOSKINEN. You have several large agencies. You have State, 
Justice, Commerce whose appropriation bill has not passed; you 
have the VA, HUD appropriation bill has not passed; you have 



256 

EPA, which has not passed. As part of that, you have NASA. You 
have a number of very large agencies that do not have appropria- 
tions. 

Labor, HHS I guess is the third. When you take the Labor De- 
partment, HHS, State, Commerce, and Justice, EPA, Department 
of Education and NASA, you have a fairly significant number of 
agencies that will not have appropriations. 

Mr. MORAN. What I did was to assume that VA, HUD will not 
pass; Labor, HHS will not pass; Interior will not pass. 

Mr. KOSKINEN. That's right. State, Justice, and Commerce. 

Mr. MoRAN. State, Justice, and Commerce will not pass, is my 
assumption, that it is going to get vetoed. It will come to us this 
afternoon and, when it gets to the President, I think he will veto 
it. 

I made those assumptions, and then took the number of employ- 
ees who were furloughed in each of those agencies, and that adds 
up to something less than 200,000 Federal employees. 

Mr. KOSKINEN. I would be delighted to share with you our cal- 
culations. 

Mr. MORAN. OK. I would very much be interested in that, be- 
cause it certainly impacts not necessarily on what is the right pol- 
icy, but it certainly impacts on the consequence of that policy, if we 
are only talking about less than 200,000 versus three to four hun- 
dred thousand. 

Either way, I think this is the time to set in motion a policy that 
would prevent the type of situation that occurred last month from 
recurring, but I also think it is important to know the scope, the 
depth of the impact of a lapsed appropriation. 

I think it is terribly important for the White House to give some 
expedited review of H.R. 2184 that would keep Federal employees 
at work. I would like to ask you, would you anticipate a change in 
the proportion of employees who were furloughed the last time the 
government shut down versus those that you would furlough as of 
December 15th if there was a recurrence of a lapsed appropriation 
situation? 

Mr. KOSKINEN. We can't answer that question until we hear back 
from the agencies. Again, our process from the start, beginning in 
the middle of August, has been to rely on the agencies and their 
counsel and their managers to make the judgments. I assume we 
will rely on them to make their adjustments according to what they 
now know. Nothing has occurred that, thus far, would lead me to 
conclude there will be significant changes. 

Mr. MORAN. I understand that, but you need to hear from the 
agencies. We just heard from the agencies, shall we say the com- 
missioner of Social Security used the analogy of a leaking roof and 
that, if it goes very long, you have to put far more people back to 
work to ensure that you don't have a chaotic situation. 

In the testimony from the deputy secretary of HHS, he indicated 
that a second shutdown would necessitate more people being em- 
ployed. That seemed to be consistent with the opinion of all of the 
agency representatives we heard from this morning. 

One reason might be that this could occur at a time when you 
have to prepare for the issuance of major grants, like the AFDC 
and Medicaid and social services, Head Start, and the like; so you 



257 

would need to have those people on board, which you didn't in 
early November because they had just been issued for the first 
quarter of the fiscal year. 

I am assuming that there would be a change in terms of the pro- 
portion of people furloughed and that, in fact, that change would 
reflect the need to have a higher proportion of the work force on 
board in the event of a second lapsed appropriation period. 

I think we need to look at that, and I would like to see your fig- 
ures, because they don't jibe with mine. It would appear that, at 
the very most, you wouldn't have more than 200,000 people fur- 
loughed out of a total of something over 2 million. Do you want to 
comment on that? 

Mr. KOSKINEN. I will share those with you. As I say, they are 
subject to change, and that is why we have asked the agencies for- 
mally to give us their updates. Our number is over 300,000; and 
I will share that with you. 

Mr. MORAN. OK. We need to look at that. What measures is the 
White House or 0MB, in the sense of recommending to the White 
House, taking to avoid the kind of chaos that occurred during the 
first government shutdown, in other words, to create a different sit- 
uation? How have you learned from the last experience to improve? 

Mr. KOSKINEN. I guess, first of all, I would challenge the ques- 
tion of whether it was chaos. Actually, as the one who fielded all 
the calls for the 10 days and responded to the agency inquiries, it 
appeared to us that, in fact, and the agencies' response was, that 
the shutdown ran smoothly. 

Some of your constituents, I understand, have given you anec- 
dotal information otherwise. Our judgment is that the agencies 
made the right judgments, and they informed their employees in 
a proper time. Clearly, this time around, everyone who was a non- 
emergency employee the last time will have fair notice of that. 

As I say, it is not my goal in life to say "The trains ran on time," 
but the shutdown, we think, ran efficiently and effectively. We are 
prepared to do it again if necessary. 

We think it would be a major unfortunate and hopefully avoid- 
able event, and we would hope that the Congress, if it cannot com- 
plete the work on the appropriation bills by the middle of Decem- 
ber, would pass a continuing resolution to allow the government to 
continue to function. 

Mr. MoRAN. I understand that. I would agree that "chaos" is too 
strong a term. I think that 0MB did a commendable job in many 
areas in preparing for this. It could have been a far more chaotic 
situation had 0MB not been as well-managed and communicating 
as well with the agencies, almost all of whom reacted in a respon- 
sible, professional fashion. 

A more appropriate term would be "imperfections" in the process. 
I think, and I would hope that you would agree, that there were 
some areas that could be improved upon were this to occur. The 
first would be how do we prevent it from occurring, whether 
through legislation that would keep employees at work — which I 
have mentioned — or more advance notice, those types of things. 

I don't want to put words in your mouth, but I would like to get 
a sense of how things are going to occur on December 12th, 13th, 



258 

14th, and 15th versus how things occurred on — what was the date, 
November 12? 

Mr. KOSKINEN. 13th and 14th. 

Mr. MORAN. Yes. 

Mr. KOSKINEN. Well, as I say, I think to the extent your constitu- 
ents have talked to you, in any particular agency, it is up to the 
agency to make sure employees receive appropriate notification. 

As I say, that problem is mooted to some substantial extent be- 
cause the people who were non-emergency employees in November 
obviously are on notice that they are likely to be non-emergency 
employees in mid-December, subject to changes by the agencies. 

We think that the guidance was clear. We need to make clear the 
area in which we are working with the agencies to make clear is 
this issue about funding activities, that if you have an ongoing obli- 
gation authority, such as Social Security or programs that have 
been adopted this year by the government, then you can, in fact, 
make payments. 

The question is, if there has been no obligation this year, it is 
an obligation of prior years, then some agencies, a couple of agen- 
cies decided they could spent S and E or incur S and E obligations 
in this fiscal year, even though there was no congressional action 
in this year. 

Most agencies took the other tack, which was consistent with the 
advice we gave, and we will make sure that there is consistent re- 
sponse to that, and we will review the agencies' plans, because 
again, to the extent that they think, on the basis of what their ex- 
perience was the first time around, they want to make changes in 
those plans, that is what we are encouraging them to do. 

Our instructions from the start — and it goes back to the question 
Congressman Horn asked — from the start, in August, with all the 
meetings we had and all the guidance we gave, our instruction to 
the agencies was to take the legal guidance, take their earlier 
plans, and play it right down the middle. We did not reach to go 
in one direction or another. 

We think that — and I continue to believe — this is too serious a 
matter to run the risk of being legitimately accused of having shut 
down more of the government than is legally necessary, and that 
decision has to be made initially by the agencies. 

On the other hand, I understand several of the Members here 
today have said there are a number of activities that people are un- 
happy about having shut down. Congressman Horn talked about 
being unhappy that people could not go to the parks. Again, those 
are not judgments we make. Those are legal decisions that are re- 
quired by the statute, and our role here is to simply apply the law 
as best we can. 

Mr. MORAN. I understand what you are saying. I do think, 
though, that they are judgments. They may be legally oriented 
judgments, but it is still a judgment call. 

Another judgment call is with regard to when grants go out, be- 
cause there is a certain amount of discretion in terms of when 
grants are awarded. I would hope that the grants folks would be 
busy right now making sure that there is a minimal disruption. 

I don't think that they should be granting the whole year's fund- 
ing level if that is not the custom, but I would hope that those 



259 

grants, that could go out within a period between say December 
10th and December 30th, would go out on December 10th — I am 
just suggesting that — to cause minimal disruption out in the field 
with grantees. 

I would think our objective would be to cause the least suffering 
possible, the least disruption, the least chaos. 

Another area where I would think there might be value in some 
feedback is those employees who had to remain on the job might 
have got a better sense of how many other employees and which 
employees were also necessary, given the work that had to be han- 
dled during that interim 4-day period. I would think that that 
would result in some adjustment of the numbers of people fur- 
loughed and who would get furloughed. 

Has there been any of that type of adjustment that has gotten 
back to you from any of the agencies? 

Mr. KOSKINEN. My understanding is the agencies have done, in 
some cases, very detailed reviews of the experience of the shut- 
down. We have encouraged them all to do that, not necessarily to 
plan for the 15th. One of the things we hope to leave behind is 
more guidance and more easily accessible material, so the people 
don't have to reinvent the wheel next time around. 

The last time 0MB looked at shutdown plans, for instance, was 
1985. We think that we will leave behind, both at the overall level 
at 0MB and the Justice Department, clear records of what hap- 
pened, but we are encouraging the agencies to do the same thing. 

I think we will get more efficient at this although again, as I say, 
in the long run, the bottom line is you have to understand that, in 
these situations, the Congress has made a decision not to fund the 
agencies. We do not have the funding. We do not have authority. 

We are looking at narrowly defined exceptions, keeping emer- 
gency activities going. It's not that anybody — and that is why, as 
I say, the distinction between "non-essential" and "essential" evapo- 
rates as you listen to the comments made across-the-board about 
things that people think are very important that cannot be done 
because, legally, we have not been authorized to do them. 

The question really is, the only window in the statute are what 
are the emergency exceptions for imminent threats to life or prop- 
erty. There is a significant amount of important work that gets 
done by the government. 

If there is any positive to this shutdown, I think more and more 
Americans discovered that, contrary to some of the assertions made 
around about "Well, nobody noticed," that there were significant 
amounts of activities that were not done because, in fact, the gov- 
ernment had shut down. 

Mr. MORAN. I appreciate what you are saying, and I also support 
what you have been doing; but 60 percent of the Federal Govern- 
ment doesn't fall under the category of imminent threat to safety 
and protection of property. I don't argue with the legal basis of 
what you're saying, but the interpretation was much broader than 
what is in the law. 

I prefer that interpretation, and I support it, and I think the ma- 
jority of the Congress would, but I think it is a valid point to make 
that there is a certain amount of judgment and discretion involved 
here, and I would hope that we would continue to exercise that 



260 

judgment and discretion and, as I suggest, minimize the disruption 
to people's lives. 

We are not just talking about Federal employees. We are talking 
about the lives of American citizens who pay their taxes and have 
a right to have that money spent in the way that they have come 
to expect and should be able to. 

Mr. KOSKINEN. That's right. Again, the chairman's comment will 
reverberate through the system and, as Mr. Muiioz noted, every 
counsel in every department reminds all of the people making 
these judgments that it is, in fact, a statutory requirement with 
criminal penalties. 

I know the chairman was not necessarily totally serious but, 
when you say, "Should we provide prosecution for people who kept 
too many people in X, Y, or Z positions," a perfectly legitimate ap- 
proach, but the answer is, you can't, there are judgments, but you 
have to understand this is — as I have told the agencies — this is not 
beanbag, this is actually serious matters that affect, as you say, life 
and property, that affect the interests of the public. 

It is one of those things we should bear in mind when we ask 
questions like, and as the others have suggested, that we could 
have a shutdown for 30, 60, or 90 days, and what difference would 
it make? The difference it would make is, it would bring home even 
more significantly, as I noted in my testimony, even after 10 to 14 
days, the really catastrophic effects of talking about shutting down 
the government. 

We ought to not gratuitously reach out to create any more prob- 
lems than we have to. But you have to understand that we are op- 
erating against the backdrop of the Congress not providing author- 
ization at all for any activities, except emergencies. 

Mr. MORAN. I understand the backdrop. I have read the legal 
analyses. I am just suggesting we exercise as much good judgment 
as we are capable of, which is a lot of it, and we don't necessarily 
maximize our capacity for good judgment in every situation all the 
time. 

I just have one quick question for 0PM. You have all the health 
care plans, FEHBP. The open season is just closing. There is a lot 
of switching that has been going on this year because of the in- 
crease in premiums. Is there going to be any problem in getting 
those affected on time by 0PM if there is a shutdown on December 
15th? 

Mr. Heuerman. No, there will be no impact, because, in terms 
of December 15th, 0PM does have an appropriation, and so all of 
our employees will be working. 

Mr. MORAN. I thought they come from the agencies first, but I 
guess they go directly to 0PM, and you can make the changes nec- 
essary for the agencies by whom the people are employed? 

Mr. Heuerman. Yes, I believe so; I believe that is the case. 

Mr. Moran. You think you can? OK. Thank you. 

Mr, Mica, I thank the gentleman. I think we are getting a clear 
definition here, Mr, Moran, I think we can't jail the gardener, but 
we can jail the VA administrator who told the gardener to go to 
work. 



261 

Mr. MORAN. For those gardeners who may be watching this, I 
don't think you are Ukely to be incarcerated any time soon. [Laugh- 
ter.] 

Mr. Mica. I yield to the gentlelady from Maryland. 

Mrs. MORELLA. Three strikes, and you are out. I just wanted to 
ask, perhaps Mr. Schroeder, I wondered if you might elaborate on 
the issue of the interruption of the private economy, what the im- 
plications are in a shutdown. 

Mr. Schroeder. Well, in trying to assess what government func- 
tions can legitimately stay in operation under the law when there 
is a lapse in appropriation, one of the cases you confront which 
raises this issue most starkly is the FAA air traffic controllers. 

So long as planes are flying, those individuals are obviously per- 
forming functions that are necessary to avoid imminent threats to 
the safety of human life; and as long as you make an assumption 
that they will stay operating, we believe there is a valid justifica- 
tion under the law for keeping people in that kind of situation at 
their posts, even when there is a lapse in appropriations. 

It has been, from time to time, raised or speculated during prior 
shutdown experiences that the only justification under the law 
with respect to the FAA was to have them operate for whatever pe- 
riod of time it took them to safely land all the planes that were 
then aloft, so that after 3 or 4 hours, all the FAA employees in the 
various air traffic posts around the country who didn't have appro- 
priated funds should walk off their jobs because they didn't any 
longer satisfy the emergency exception. 

We thought, and Attorney General Civiletti thought, and it has 
been a consistent interpretation of past administrations that, in the 
situation of a short shutdown, it is legitimate to assume that pri- 
vate activity over which the government doesn't have any direct 
legal control will continue operation. So, instead of sending out a 
warning to passengers all around the country, don't fly after the 
first 3 hours of shutdown, because the FAA controllers aren't there, 
we have made the other assumption, that we should assume that 
that activity will keep going, and that was beyond the legal re- 
quirements of the statute to literally close all of the commercial 
and non-commercial air traffic in the country. 

Mrs. MORELLA. How did you determine what Federal contracts 
should be continued or held in abeyance during the shutdown? Ob- 
viously, there is a tremendous impact on the private economy when 
we have a shutdown. I am wondering how those determinations 
were made. 

Mr. Schroeder. Well, there again, the fundamental legal guid- 
ance that we provide relates to drawing a distinction between con- 
tracts for which there is funding and contracts for which there are 
not. 

Mrs. Morella. Right. 

Mr. Schroeder. Under normal appropriations practice and 
under the terms of the Antideficiency Act, where the funding is ab- 
sent for the contract, there is no authorization for the agency to 
continue incurring obligations during a period of lapse of appro- 
priation. If a contract is funded with multi-year or no year or in- 
definite appropriations, then those contracts can continue. 



262 

Mrs. MORELLA. So, other than the FAA, purely on the basis of 
whether there is funding? 

Mr. SCHROEDER. Excuse me? 

Mrs. MORELLA. Except for the FAA, purely on the basis of wheth- 
er or not there is an appropriation, whether there is any funding 
for it? 

Mr. KOSKINEN. That's right, with one small exception, and that 
is, it is possible that contractors could be performing excepted ac- 
tivities for emergencies. 

You may have building guard contracts or others where there 
may not be legal authority otherwise, as Mr. Schroeder said, to 
continue the contract, but the function that they are performing is 
an emergency function and, therefore, you can incur that obligation 
going forward. 

Otherwise, in the absence of funding, obviously, those contracts 
terminate. 

Mrs. MORELLA. Fine. Thank you, Mr. Chairman. 

Mr. Mica. I thank the gentlelady, the ranking member and other 
colleagues, for their participation today. I want to also thank our 
witnesses. 

First of all, we do have additional questions, Mr. Schroeder, or 
Schroeder — I will cover my base there with both pronunciations. 

Mr. Schroeder. I actually respond to either. 

Mr. Mica. Either one? You should hear what I have to respond 
to sometime. [Laughter.] 

In any event, since we got your testimony later, we will have 
some additional questions, probably from both sides of the aisle. 

Mr. Koskinen, of 0MB, if you could send the subcommittee, as 
soon as you get that, any revised plans from the agencies, we 
would appreciate that, so we have an opportunity to review what 
you are reviewing. Mr. Heuerman, if you have any instances of 
overtime being paid, according to the memorandum which you is- 
sued, the subcommittee would also like that. We will have some 
questions on that and also, if you intend to keep this guideline, for 
paying overtime. 

Mr. Heuerman. I might just mention in that regard, Mr. Chair- 
man, that that guidance is the same guidance that had been issued 
back in 1986 and 1990, based upon the same statutory language 
authorizing retroactive pay, which talks about paying people based 
on their standard rate of compensation. 

Mr. Mica. I think that might be something we want to look at, 
so we will have additional questions. I appreciate your participa- 
tion in the hearing as witnesses. It is a very serious business, gov- 
ernment shutdown. 

This subcommittee doesn't have the authority or the charge to 
determine whether or not there will be a shutdown, but we cer- 
tainly have the responsibility, if there are shutdowns to determine, 
one, how we are prepared for it; two, what we have done in the 
past and what we are preparing for in the future; and also that we 
act in a responsible manner, both for the public who depend on 
these services and benefits and activities, and also to fulfill our re- 
sponsibility as Members of Congress. 

We thank you for your participation. Yes? 



263 

Mr. Horn. I would like to just say one last word. I think the im- 
pression has been given that we have been looking for finding 
fault, because this was a hearing to determine how the shutdown 
was implemented. 

It would be appropriate for the last word to be one of congratula- 
tions to the gentlemen here, particularly, and the agencies they 
represent, in particular to Mr. Koskinen, who was responsible for 
the operation of the government shutdown from OMB. He has the 
management section of OMB, and really did do an outstanding job. 

I think by any reasonable measure you performed with brilliance 
in a very challenging situation, so I would like to make that point. 

Last, Mr. Chainnan, I want to ask you publicly, do you think we 
could mark up a bill that would enable Federal employees to stay 
on the job rather than stay off the job and get paid nevertheless? 

Mr. Mica. That is one thing that we should consider, and we will 
have the opportunity to hear from you and other individual Mem- 
bers who have suggestions. There are some lengthy suggestions 
and detailed suggestions for some improvements in the process. 

I hope we can reconvene this subcommittee on that subject next 
week and, hopefully, make the changes that are necessary in the 
law. You don't have to be a political scientist to realize that there, 
in fact, are some tremendous differences of opinion with this Con- 
gress, this administration, with the new freshman class, to see that 
we could have more instances of what we experienced just a few 
weeks ago. - 

We should be prepared for it and we will consider that legisla- 
tion. 

There being no further business to come before the subcommit- 
tee, this meeting is adjourned. Thank you. 

[Whereupon, at 12:50 p.m., the subcommittee was adjourned, 
subject to the call of the Chair.] 

[Additional information submitted for the hearing record follows:] 



no Co. Govt Complex 
725 St, John St. 

3unNE.FL 32941-0007 



264 



Congrcsfsf of tfje Winittti ^tateg 

^ouie of i^epregentatibed 

mai\)inqfon, 2BC 20515 

December 13, 1995 



The Honorable John Mica 
336 Cannon HOB 
Washington, D.C. 20515 

Dear John: 

I want to share the attached letter with you for use in your hearing on the federal 
shutdown. 

I have received calls and letters from several of my constituents and others around the 
country who received this letter and were upset by the tone and the political nature of 
it. They expressed to me that the President and the Vice President have no business 
politicizing the federal workforce and trying to make political gains by distorting the 
realities of the shutdown. 

When I first saw this letter I believed it to be a hoax. I thought for certain that the White 
House would not draft a letter of this nature and tone. I was shocked when my staff 
confirmed with the Legislative Affairs Office of the White House that this letter was 
indeed authentic. We were told that it originated in the Office of the Vice President. 

I appreciate your efforts to expose the abuses of the Clinton Administration and hope 
that this letter will assist you in this effort. 

Again, thank you for your attention to this matter 

Sincerely, 



Dave Weldon 
Member of Congress. 






265 



Open Letter to Federal Employees 

front 

President CUntoo and Vice President Gore 

We are proud of the people who work for the federal govemsient Aay Fortune 100 
company would be lucky to have luch a work fi>rcc. Your work makes all Americans 
more ujk, ttte, and p rosper o us. We are glad you aie all back on die job. 

We know it hasnt been easy fi>r you, waQderiogwfaeaandifyouwcaldgetyoiirnext 
pay check. And mfiny of you hiid to bear the indisnity of bebg called "non-esaeotia],'' 
— lomc by govcnuDcat oitic^ some even by yoor own supervisors. Calling 
fiirioagbedworksraaoo-esieatial is deq>lyof&nsive and just plain wrong. Tbelaw 
fixoed OS to fiirioagh 800.000 worken whose jobs were not of an emergency natnre. 
The law uys oaOdag about "essentlaL'' 

NoooeoouIdsqrthatmet&calieseardiisnQo-essentia]. Or hd(»ig Americans fo Id 
conege. Or mhahilitwfing a miUioo disabled Americans. Or supporting the wdowi 
■nd orphans of vetetau. Or keq^g our drinking WMtersafb. Or recruiting new 
volimtBers for fte armed fisrces. Oraayofth*IongBftofesseatialeovenunect 
activities tfaat had to bo teinpoiaiily suspended. In the short turflxtbeywcra not 
e(nergeaeies;ioth0lawprohibitBdthem. But &ey remain deariy easaatiaL 

You an know tiiat the law under which most of the govenunent is operating expires 
en December 15th. and the debate that led to the November shut down is not over. 
We can^ promise yoo tiiat yonr jobs and your lives wont be tntemiptBd again. Too 
much is at stake tot America. If you are held hostage again, we knowyou would not 
want us to fbifbit tiie nation's fiiture as ruuom. 

So, antU this issue is settled the way we settle great issues in a demooBoy — through 
peacefiil debate and compromise — you remain good people caught in what Qmrchill 
called "^e worst system of govmunent devised by the wit of man, eatcept fiar all the 
others." And when it is settled, it is you federal workers who wiD once again cany 
out the will of the people, who will once again make it possiblB for America to be the 
winner. We salute you, and we thank you. 

Bill Clinton Al Gore 

November 22, 1995 



266 




DEPUTY DIRECTOR 
FOR MANAGEMENT 



EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON. DC. 20503 



February 5, 1996 



The Honorable John L. Mica 

Chainnan, Subcommittee on Civil Service 

Committee on Government Reform and Oversight 

U.S. House of Representatives 

Room B371C Raybum House Office Building 

Washington, DC 20515-6143 

Dear Chairman Mica, 

This is in response to your letter of January 18, 1996 (which arrived January 26, 1996) in 
which you pose a number of questions about government shutdowns. I am pleased to provide the 
following answers in the order of your questions. 

1 . 0MB 's role in planning, implementing, and overseeing the shutdown was not 
substantially modified between the November and December shutdowns. 

2. With respect to changes in agency operating plans, enclosed is a copy of my letter 
to you of December 22, 1995 which transmitted revised agency shutdown plans. 

3. With respect to our assurance of adherence to OMB guidance, OMB program 
examiners interacted with their agency counterparts in standard ways. There were no 
substantial changes in these procedures during the second shutdown with the noteworthy 
exception that some agency contacts were fiirloughed which made conmiunication more 
difficult. 

4. OMB does not have records for agency pay, including overtime or other premium 
pay. The best source of such information is each individual agency. 

5. OMB did not interrupt its own operations nor furlough employees in the 
December shutdown because the relevant Appropriations bill had already become law. 

6. There were no changes in OMB operations during the lengthy second shutdown, 
but there was a significant delay in those activities that require interaction with shutdown 
agencies. Forexample, preparation oftheFY97 Budget was significantly delayed. OMB 
did not provide any revised guidance concerning a longer shutdown because the original 
guidance asked agencies to review plans for both a short and a more protracted 
interruption of agency operations. 



267 



7. Attached is a short document siunmarizing the estimated costs of the two 
shutdowns. Please note that the attached document contains illustrations of the impacts 
of the shutdown, but does not represent a comprehensive audit of all effects of the 
shutdown. 

8. Attached are two tables which provide estimates of the number of employees 
furloughed and the number of employees working during the two shutdowns. In general, 
funding for employees who worked and were paid during shutdowns came from cany- 
over balances, enacted full-year appropriations bill, and fees which were already 
appropriated or were otherwise available without further annual appropriation action. 

9. Each agency is responsible for dealing with the backlogs of work which 
accumulated during the shutdown while accommodating employees' use of annual leave. 
OMB does not have special procedures for monitoring such agency activities. 



I hope that the enclosed information addresses your questions and concerns. Please 
contact me if I can provide you with any additional information. 




-V> — ^ 

John A. Koskinen 



268 

January 19, 1996 

EXAMPLES OF HARM DURING THE PARTIAL GOVERNMENT SHUTDOWNS 

The two partial shutdowns of the Federal Government totalled 27 days. The overall cost of the 
November 14-19 and December 16 - January 5 shutdowns is estimated to be over $1.4 
billion and created numerous backlogs in government services that will, in many cases, take 
months to overcome and will slow the delivery of futxare services. 

The shutdowns hjid serious impacts on services including: 

• Approximately 170,000 veterans did not receive their December Montgomery GI 
Bill education benefits on time. Due to the shutdown, there are an additional 87,000 
initial education benefit claims pending and 69,200 ongoing certifications pending. Over 
200,000 additional veterans disability compensation and pension claims were added to 
the backlog during shutdown, and each of the 350,000 existing claims in the system 
experienced a 30-day additional delay in adjudication time. Shutdown resulted in an 
additional pending 25,000 home loan claims and 8,000 life insurance actions. VA was 
unable to provide over 1 5,000 personal interviews and 8 1 ,000 telephone interviews to 
veterans, their survivors, or dependents. Currently, there are nearly 400,000 pieces of 
unopened mail that are over five days old. 

• Over 200,000 passport applications were not processed and are now backlogged as a 

result of the shutdown. 

• Pay for over three-quarters-of-a-million Federal employees was delayed. Most 
affected employees received only half pay after the December 15 shutdown and were 
facing the real possibility of no pay checks after that. This total includes both the 
480,000 emergency workers who worked but could not be paid until Congress approved 
funds (such as VA doctors and nurses. Federal prison guards, FBI, DEA, and other law 
enforcement personnel), and the 280,000 non-emergency workers who were not allowed 
to work. 

• Approximately 7 million National Park visits were prevented. 

• Over 2 million visits to the Smithsonian museums. National Gallery of Art, National 
Zoo, Holocaust Museum, and the Kennedy Center were prevented. 

• Approximately 5,200 small businesses were delayed in receiving SBA guaranteed 
financing. 

• During the shutdown, small businesses lost the opportunity to bid on an estimated 
1,036 contracts valued at $244 million, because SBA's Surety Bond guarantee program 
was not available. In addition, small businesses were unable to obtain final Surety Bond 



269 



guarantees for an estimated 306 contracts valued at $55 million. 

• General assistance payments to about 53,000 Indian families and individuals were 
delayed from the Bureau of Indian Affairs. 

• The unemployment offices in Kansas shut down for two days and an estimated 1,000 
to 1,300 newly unemployed people found the doors closed and were delayed in filing 
their initial claims for unemployment compensation. 

• About 1,300 workplace safety complaints went unanswered and 3,500 investigations 
involving pension, health, and other employee benefit plans were suspended by the 

Labor Department. 

• There is now a backlog of 250,000 cases for the Federal Parent Locator Service which 
helps States locate parents who are delinquent in their child support payments. 

• Hundreds of Superfund toxic waste cleanups were shut down, delaying cleanup of 
these sites and unnecessarily continuing exposure to dangerous chemicals for the citizens 
living near them. 

• Approximately $60 million in environmental fines, injunctive relief, and Superftmd 
settlements against polluters were not collected, assessed, or negotiated. 

• Over 1,000 export licenses valued at more than $2.2 billion in U.S. exports were 
delayed because the Department of State and the Bureau of Export Administration were 
unable to process export licenses. 

• Many transactions in the telecommunications industry, including the Turner/Time 
Warner and Disney/Capital Cities mergers, were held up partly because the Federal 
Communications Commission (FCC) review process was shut down. The 
Communications Act of 1934 requires FCC approval of spectrum license transfers which 
occur in most of these transactions to ensure protection of the public airwaves. 

• Over 30,000 FHA single-family home loans could not be insured by the FHA ~ either 
forcing FHA home-buyers to delay their purchase or requiring FHA lenders to 
temporarily carry the credit risk of such loans on their own books. 

• Federal research: Public investment in science and engineering research yields high 
aimual rates of return to society (well over 20 percent). During the shutdown about 
$100-200 million of the National Science Foundation research grants were delayed, idling 
some 2,000 researchers that help support this important public investment. In addition, 
all panels scheduled to peer review research proposals were canceled delaying future 
research funding for these highest priority projects. Similar impacts were felt at many 
Federal R&D agencies, including NASA, NIH, Commerce, EPA, and others disrupting 
research on AIDS, cancer, the environment, and advanced technologies. 

• Important statistical releases that American businesses rely on were significantly 
delayed by the shutdown ~ most importantly the Bureau of Economic Analysis' Gross 



270 



Domestic Product and Corporate Profits for the third and fourth quarters of 1995, the 
October and November U.S. International Trade in Goods and Services, Personal Income 
and Outlays for October through December and Retail Sales for December and January. 
Also postponed were the scheduled releases on Import and Export Price Indexes, Durable 
Goods, Housing Starts, and Single Family Home Sales. There were also delays in 
releasing data on State and metropolitan employment and unemployment statistics, the 
producer price index, and the consumer price index. The shutdown will cause delays in 
future releases as well. The Department of Commerce estimates that its statistical 
releases will not be back on a regular schedule until May, 1996. 

Some 5,000 requests for data from the National Oceanic and Atmospheric 
Administration's archives went unfulfilled due to the shutdown of the National Climate 
Data Center. This impacted customers in commercial, legal, state and local, and research 
activities. As a result, state and local business planners were forced to delay commercial 
ventxires requiring environmental information, and private value-added environmental 
firms could not get climate data to support their agricultural customers. 

Preparation for the launch of the next NOAA Polar satellite (which provides data for 
NOAA forecasts) was slowed down thereby increasing the likelihood of a gap in future 
polar orbiting weather satellite coverage. If another shutdown occurs, NOAA would halt 
further preparation activities. Failure to launch NOAA K (the next satellite in the polar 
series) to replace a failed satellite, would likely result in the degradation of weather 
forecasts by up to 1 5%. 

The shutdown inconvenienced companies, universities, hospitals, and defense and 
law enforcement agencies which depend upon the National Institute of Standards 
and Technology's laboratory-based research and services. For example, NIST 
provides in excess of 20,000 measurement samples and performs thousands of calibration 
tests each year for more than 3000 large and small companies. Specific examples of 
NIST services not provided include: 

NIST had to delay verification of radiation dose standards through measurement 
quality assurance programs which are used annually on over 600,000 cancer 
patients and 26 million women who receive diagnostic mammograms. 

NIST was unable to issue a new standard for lights and lamps (limien) that was 
supposed to go into effect on January 1, 1996. The standard affects the U.S. 
lighting industry - a multi-billion dollar/ year business (includes Sylvania, GE, 
Philips, etc.). The shutdovm therefore resulted in delayed product delivery and 
lost sales. 



271 




DEPUTY DIRECTOR 
FOR MANAGEMENT 



EXECUTIVE OFFICE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON, DC. 205O3 

December 22, 1995 



The Honorable John L. Mica 

Chairman, Subcommittee on Civil Service 

Committee on Government Reform and Oversight 

U.S. House of Representatives 

Washington, DC 20515-6143 

Dear Chairman Mica, 

I am in receipt of your letter of December 21, 1995 in which you indicate you have not 
received copies of revised agency shutdown plans. Please find enclosed a copy of a letter from 
me dated December 15, 1995 which transmitted a fiiU set of the revised agency shutdown plans 
to you. Also enclosed is additional information we have received since then. You also requested 
copies of any additional guidance forwarded to agencies by my office. Please find enclosed a 
copy of a letter from me dated December 19, 1995 which previously transmitted a set of such 
materials to you. In addition, please be aware that a similar set of such materials was faxed to 
Edward J. Lynch of your staff several days ago. Enclosed is additional guidance sent since my 
earlier letter to you. 

These materials should address the first three information requests in your December 21 
letter. I would refer you to 0PM or individual agencies for the fourth item, "a tabulation of 
annual leave reports from all agencies for the month of December of each of the past five years," 
as 0MB does not collect such information. 

Finally, you requested a briefing for the Subcommittee on Wednesday, December 27 at 
2:30 p.m. I understand from a telephone conversation with Edward J. Lynch that was relayed to 
me that this would be a briefing of Subcommittee staff. Unfortunately, I will be unable to brief 
your staff on December 27. If parts of the Federal government continue to be shutdown next 
week due to Congress's failure to pass a Continuing Resolution, I will be working on shutdown 
related matters. Hopefully, the government will be reopened by that time and, in that event, I 
will be out of town on a long planned family vacation. Of course, I look forward to meeting with 
Members of the Subcommittee at a more appropriate time. 

I hope that the enclosed information sent to you previously with the additional 
information provided fully addresses your questions and concerns. Please contact me if you have 
additional questions. ' 

^incerely,'->, 



John A. Koskinen 



272 



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275 



ONE HUNDRED FOURTH CONGRESS 

Consre£(£( of ttje ^niteb States; 

Jl^onit of j&epresfentatibeii 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

2157 Rayburn House Office Building 

Washington, DC 20515-6143 



January 18, 1996 



M»<ORmr—(aaa 225-6061 



J-ea:^^'<\ |\i-<'lqC- 




The Honorable John A. Koskinen 
Deputy Director for Management 
Office of Management and Budget 
Old Executive Office Building 
Washington, D.C. 20503 

Dear Mr. Koskinen: 



I am writing to request that you provide additional information that will complete the Civil 
Service Subcommittee's record related to the hearing on Wednesday, December 6, 1995, on "The 
Government Shutdown: What's Essential?" We appreciate the additional information that you 
provided in December, but we believe it necessary to supplement our record with additional matters, 
including some related to the shutdown that began on December 16, 1995. Questions in this letter 
will be in addition to requests that we will make of the individual agencies that also testified during 
that hearing. 

1 . Was OMB's role in planning, implementing, and overseeing the shutdown modified in 
any way between the November and December shutdowns? 

2. What, if any, changes in agency operating plans did OMB approve prior to the 
shutdown that began December 16, 1995? The Subcommittee is particularly interested in any 
information developed during the December 6, 1995, hearing that was considered in modifying 
subsequent shutdown plans. 

3. What steps has OMB taken to ensure that executive agencies adhered to its guidance? 
Were any modifications of these procedures made during the second shutdown? If so, please 
describe those changes. 

4. Please provide the Subcommittee with an account of overtime and other premium pay 
received by furloughed federal employees as a result of the two shutdowns. Please include an 
estimate of the savings that would be realized by eliminating premium pay for periods when 
work is not performed. 



276 



5. What steps did OMB take to interrupt its own operations during the December 
shutdown? Please provide a description of the numbers of employees furloughed and the 
fiinctions they performed as well as a description of persons retained and their functions. Please 
describe the source of any fimding for continuing fiinctions if the fiinding is other than 
appropriations. 

6. During the December 6 hearing, you spoke disparagingly of the possibility of an 
extended shutdown. What changes in OMB operations were occasioned by the length of the 
December- Janucuy shutdown? Did OMB provide any revised guidance to other agencies to ease 
adjustments from short-term to long-term interruptions of routine operations? 

7. Please estimate the total costs, to your agency and the government, that you attribute 
to the November 14-20 and the December - January interruptions of operations. Your 
submission for the November shutdown should make any necessary revisions to the estimate 
included in your December 6 testimony. Please describe any unusual costs imposed on agencies 
or any other unanticipated consequences of this interruption of routine operations. Please 
provide, too, an estimate of any offsetting savings associated with this interruption of routine 
operations. 

8. Please provide the Subcommittee with an estimate of the total niunber of federal 
employees fiirloughed at each agency as a result of this inteiiuplion during botli shutdowns. 
How many employees were considered exempt from furlough requirements? Please identify 
sources of funding for any employees considered exempt from furlough requirements. 

9. Testimony provided to the Subcommittee's December 6 hearing included several 
references to backlogs of work that would accumulate during any shutdown. After the 
December- January shutdown, the Office of Personnel Management issued guidance to agencies 
regarding the management of accumulated annual leave resulting from the shutdowns. What 
procedures will your office use to ensure that agencies accomplish the work accumulated during 
furlough periods while accommodating employees' use of additional annual leave? 

Thank you for your assistance in developing this information. We would appreciate a 
response by February 2, 1996. Please direct your response to the Subcommittee office, Room 
B371C Raybum House Office Building. 




Chairman 
Subcommittee on Civil Service 



277 



U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 
THE DEPUTY SECRETARY 

WASHINGTON. D.C. 20410-0050 

February 2, 1996 



The Honored^le John L. Mica 

Chairman, Subcommittee on the Civil Service 
Committee on Government Reform and Oversight 
2157 Rayburn House Office Building 
Washington, D. C. 20515-6143 

Dear Representative Mica; 

Please find attached my responses to the questions you posed 

in your January 18 letter. If I can be of any further assistance 

to you or your committee please do not hesitate to contact me. 

Thank you. 




Enclosures 



278 



Question 1 Please describe any changes in planning, 

procedures, and operations that your Department 
made between the November and December- January 
shutdowns. Please submit any revisions and/or 
supplements to your department's shutdown plans. 
In light of the substantial change between 
shutdown numbers reported in the second shutdown, 
what changes are contemplated regarding the 
Department's definition of emergency functions? 
Please provide the new legal reasoning that 
supports this change from previous shutdown plans. 

For the purposes of the initial November shutdown planning, 
the Department had assumed that this shutdown would be of 
relatively short duration, as all previous shutdowns had 
been. A short shutdown in the middle of the month generally 
means a delay in payments for public housing and community 
development activities, but does not usually grievously 
threaten life and property. Accordingly, we planned to keep 
on board only a minimum staff to protect life and property. 
As the duration of the shutdown grew, however, it was 
apparent that as we approached the end of the month, since 
HUD deals with physical property and life and death 
situations, to continue the basic emergency functions, HUD 
would require a greater staff presence . 

Additional staff would be needed to open the automated 
payments system for assisted housing; to provide for 
emergency repairs and maintenance on HUD-held properties; to 
renew and extend contracts to protect properties; and to 
arrange for closing on mmultifamily FHA insured loans and 
projects with legally binding commitments. 

(A copy of the revised plan for the December- January 
shutdown is attached as B . ) 

The legal reasoning for the revision to the plan is as 
stated above: for a very few days in the middle of the 
month, most Departmental operations can be briefly suspended 
without creating imminent threat to life and property; after 
a few days, however, financial systems that were paused must 
resume, and Federal employees must be on the job in order to 
protect life and property. 

Question 2 . Please submit the numbers of persons furloughed in 
each agency during the two shutdowns . For each 
function which was subject to furlough during the 
first shutdown, but exempted from furlough during 
the second shutdown, please provide policy and 
legal reasons supporting the decision to change 
the status of the fxinctions. 



279 



During the first shutdown, a Departmental total of 11,231 
employees were furloughed. During the second shutdown, 9,839 
employees were furloughed. 

Policy and legal reasons for each activity originally 
suspended, but resumed over the longer term shutdown, are 
provided in the revised shutdown plan sent to 0MB on 
December 13, 1995, and enclosed in response to Question 1. 



Question 3. Please provide a report, by agency and by 

category, of all eimoiints and forms of premiiim pay 
(overtime, night differential, etc.) that was paid 
to agency employees who were furloughed during 
each shutdown. 

Our reports are done on a bi-weekly basis. The first 
shutdown was three days out of a pay period. It would not 
be possible to isolate the data pertaining to those days. 

Data for the second shutdown shows that we paid $4,768.35 in 
overtime pay for general HUD workforce employees and 
$85,018.00 in overtime pay for the Office of the Inspector 
General. In addition, we paid a small portion of $326.40 in 
Sunday and night differential. 

Question 4. Please provide a report, by agency, of the numbers 
of furloughed employees who filed for unemployment 
compensation during the shutdowns and amounts paid 
to agency employees. Please describe any costs 
that will be incurred by your Department as a 
result of efforts to collect reimbursement of 
these payments after routine pay is restored. 

According to our records 778 employees applied for 
unemployment compensation based on the November 1995 
shutdown. Based on the December- January shutdown, 2,603 
employees have applied. 

We have no way of knowing any amounts paid to employees 
until we receive reports from the States {not before 
February 1996) . 

The costs of collecting reimbursements of unemployment 
benefits are, of course, an unknown. The Department of 
Labor in a memorandum dated January 24, 1996 indicates the 
information agencies need to provide to the States in order 
for them to identify employees that have been overpaid. 
Computer program specifications will be developed in order 



280 



to report this information to each State. Additional 
administrative costs will be incurred, but the cost 
associated with providing this information is unknown at 
this time. 

The memorandum further states that under some States' laws, 
the burden of initiating the collection of the overpayment 
from the employee rests with the agency. In those 
instances, we will incur additional personnel and 
administrative costs to perform this service, report back to 
the various States, and follow up on future quarterly 
chargeback listings to ensure that our account has been 
adjusted to reflect the amount (s) collected. 

Until we receive our quarterly listings from the 53 State 
agencies, verify the charges that are unrelated to the 
November and the December - January furloughs, we will not 
be able to determine the volume and/or additional personnel 
services costs. 

Question 5. Please estimate the total costs to your agency 
associated with the interruption of operations 
during November and December- January . Please 
provide descriptions of any unusual costs imposed 
on the agency or other unanticipated consequences 
of these interruptions of operations. Please 
provide, too, an estimate of any savings 
associated with these interruptions. 

Total costs to the Department for salaries and benefits of 
employees during the November shutdown were 
$10,211,000. During the December- January shutdown, those 
costs were $32,116,000, for a total of $42,327,000. 

Unusual costs incurred during interrupted operations, and 
unanticipated consequences of interruptions of operations, 
include costs of cancelling training courses, travel 
expenses incurred when employees were recalled to their duty 
stations to be furloughed and printing costs incurred to 
print furlough notices. No estimated savings were identified 
for either shutdown. 



Question 6. Please indicate the shutdown's impact on programs 
fvmded through trust fluids, fees, carry over 
funds, or other revenues not tied to annual 
appropriations . Please describe any changes made 
in implementing these programs during the 
December- January shutdown. 



281 



The Office of Federal Housing Enterprize Oversight (OFHEO) , 
within the Department, is funded through assessments of the 
enterprises it regulates, rather than through 
appropriations. OFHEO operations were not affected by the 
shutdowns and none of its staff was furloughed. 



Question 7. Please provide staffing levels for all public 
affairs offices in the Department during the 
shutdown . 



During the November shutdown the staffing level for the 
Office of Public Affairs was 4 . 

During the December/ January shutdown, the Office of Public 
Affairs staffing level was 4 staff 

Question 8 . Please provide a report of the n\iinber and furlough 
status of political appointees, noncareer Senior 
Executive Service personnel, and Schedule C 
appointees, by agency during each shutdown. 

November Excepted Furloughed 

Noncareer SES personnel 18 2 

Limited SES personnel 3 

Schedule C appointee 32 52 

December /January 

Noncareer SES personnel 17 2 
Schedule C appointee 31 4 5 

Question 9 . Please provide estimates of the numbers of 

employees and the amount of accrued annual leave 
that will be restored by your Department as a 
result of employees required to work during the 
second shutdown. Please describe any other 
effects that the second shutdown will have on the 
administration of employees' leave programs. 

' Based on revised guidance by the Office of Personnel 

Management (0PM), dated January 17, 1996, agencies were 
instructed to restore forfeited annual leave to each 
employee who was not permitted, because of the lapse in 



282 



appropriations, to use annual leave that had been scheduled 
in advance in writing according to 0PM regulations. This 
includes both excepted and furloughed employees. Based on a 
preliminary internal report, there is a potential for 
restoration of 182,189.50 hours of annual leave forfeited by 
4,132 employees. Procedures have been established to 
request verification of the forfeited hours and a 
certification by the employee's supervisor that the leave 
was scheduled in writing by November 25, 1995 as required by 
0PM regulations. 

In addition, the shutdown greatly increased the number of 
requests for guidance, as well as the workload required to 
actually correct the leave records of employees. Also, a 
number of employees approved as leave recipients under the 
Voluntary Leave Transfer Program did not receive donations 
of unscheduled leave subject to forfeiture, which otherwise 
would have been donated. 

Question 10 Several functions identified as subject to 

furlough are listed in agency plans as funded 
through multiple year appropriations. How was 
this factor considered in your planning? 

For HUD, most employees salaries are paid from Salaries and 
Expense account . Program funding of departmental employees 
is paid from a variety of other accounts. The decision to 
furlough employees was based on the lack of funding in the 
departmental Salaries and Expenses account . The only 
employees for whom obligations were incurred to pay salaries 
were those needed on account of imminent threats to life or 
property, the conduct of the shutdown, or in the case of 
employees of the Office of Federal Housing Enterprise 
Oversight, those not paid from the departmental Salaries and 
Expense account . 

FH&EO 

Staff in the Fair Housing Initiatives Program Division were 
retained to approve payments to current recipients of Fair 
Housing Initiatives Program (FHIP) funds (from the FY 93, FY 
94 and FY 95 competitions) because the organizations funded 
provide fair housing services to individuals who are subject 
to discrimination in housing which can involve threats to 
life or property of the individuals involved. 

Question 11. During the November shutdown, HUD made statements 
that approximately 2,500 mortgages would not be 
processed each day under the FHA single family 
mortgage insurance program. Yet, HUD, in its 
September 7, 1995 shutdown contingency document, 
the Department mentions on page 2, in part, that 
certain exceptions include: 



283 



"activities essential to the preservation of the 
essential elements of the money and banking system of 
the United States." 

In your opinion, is the FHA Single Family program 
(Mutual Mortgage Insurance Fund) essential to the money 
and banking system of the United States in that banks 
and mortgage brokers depend on an efficient and 
continual system to operate and process mortgage 
applications? 

Yes. However, FHA delegates to lenders the authority 
to endorse loans and perform other insurance functions, 
with the assistance of certain FHA systems and support. 
After the loan closes, FHA reviews the application and 
issues the mortgage insurance certificate (MIC) that a 
lender needs to issue mortgage -backed securities and 
access new capital . FHA does not review most insurance 
applications before the loan closes. Thus, some FHA 
lending could continue despite the shutdown. The 
anticipated duration of the shutdown determined whether 
it was essential for FHA to perform certain functions 
to avoid an adverse impact on the money and banking 
system. 

If the answer is yes: Why did the Department, if it 
deems the Mutual Mortgage Insurance Fund as essential, 
shutdown and stop processing mortgage insurance 
applications? 

The November shutdown was not anticipated to last a 
long time. HUD could not argue that the ability of FHA 
to process mortgage insurance applications for a few 
days was essential to the money and banking system. 
Thus, FHA shut down its systems and did not issue MICs . 
However, when the government shut down for a second 
time in December and the prospect of reopening was less 
certain, we kept certain systems open to make it easier 
for lenders to close loans, assuming that FHA would 
provide insurance (MICs) when it reopened. This 
created difficulties in many cases, but did not 
threaten the money and banking system. If the second 
shutdown had lasted even longer, we would have had to 
consider whether the operation of the money and banking 
system required FHA to begin issuing MICs again. 

If the answer is no: What does your Department 
consider essential to the money and banking system, 
notwithstanding GNMA payments, etc.? 

See above . 



284 



Question 12 . What FHA single family mortgage insurance 
activities were affected by the shutdovm? 

See above . 

Question 13. "Today's Focus at HUD, Thursday, November 30, 

1995" states that FHA will process single family 
mortgages during the November 14-19 shutdown. 
What precipitated that change in policy from the 
one published in the November 14 HUD Focus 
statement? 

The question misinterprets the November 14 and November 30 
FOCUS statements . The later does not represent a change in 
policy. 

During the November 14-19 shutdown, FHA systems were down 
and it did not process insurance applications. Some lenders 
did, however, make some FHA loans. After FHA reopened, it 
took steps -- announced on the November 3 FOCUS -- to be 
flexible if a lender varied from standard procedures because 
HUD was shut down. For example, lenders are supposed to get 
a case number from FHA before beginning to process a loan 
application. Since FHA' s systems were down during the first 
shutdown, lenders could not obtain the case number. The 
November 3 FOCUS statement said that FHA would accept for 
insurance loans for which the lender had not obtained the 
case number in advance . 

Question 14 . When did the secretary agree to process those 
applications, supposedly delayed during the 
shutdown? 

There was never any suggestion that FHA would not process 
backlogged insurance applications when it reopened. When 
the furlough ended, FHA immediately began processing the 
backlogged applications for insurance. 

Question 15. Were there any indications before November 30th 
that the Secretary would allow FHA processing of 
these types of loans, particularly during the 
shutdown? 

FHA never processed applications for insurance during the 
shutdown. Nor did it suggest that it would not process 
applications for insurance after it reopened. 

Question 16. If there is another shutdown, what will be the 
procedure for FHA mortgages? 



285 



In the January 6, 1996 continuing resolution, H.R. 1358, 
Congress included language that authorizes all FHA single 
family insurance activities through September 30, 1996, 
regardless of whether the government is shut down again or 
not . 

Question 17. How many FHA single family employees were exempted 
from furlough in each shutdown? On what basis 
were these decisions made? What changes could we 
anticipate if another shutdown were to occur? 

During the first furlough , the excepted single family staff 
were : 

Headquarters 3 
Field 

Total 3 

During the second furlough , the excepted single family staff 
were : 

First week - 12/18 
Headquarters 3 
Field 71 

Total 74 



Second week - 12/26 

Headquarters 8 

Field 71 

Total 79 



Third week 



1/2 



Headquarters 8 
Field 116 

Total 124 



Decisions were made to except those staff necessary to carry 
out the functions deemed to be essential to protecting 
property and the banking and money system. Thus, there was 
one person in almost every single family field office. 
Single family systems and activities necessary to protect 
property were also supported by excepted employees from the 
Office of the FHA Comptroller and Office of Information 
Policies and Systems. 

As noted in question 16 above, all FHA single family 
employees will be authorized to work, notwithstanding an 
further government shutdowns, under the terms of the 
Continuing Resolution passed on January 6th. 



Ar\ ion OT _ in 



286 



Question 18 The Department Issued a statement on the first day 
o£ the shutdown that homeless providers and AIDS 
patients needing housing assistance would suffer, 
or to quote: 

-related to AIDS sufferers 

"If the Government shut down, their funds 
will be delayed and homeless AIDS sufferers 
will be needlessly condemned to the streets." 

-related to Homeless persons 

"Homeless persons will suffer even more than 
they do now, as many providers will not be 
able to secure funds previously appropriated 
for the shelter and services they deliver to 
America's most needy people." 

a. HUD'S September 7th shut down guidelines 
exempt programs that affect safety and 
health. Are these two programs [homelessness 
and HOPWA] under the category of "safety and 
health"? 

b. If yes: Why did the Department make 
statements and alarm the public that these 
programs would not continue? 

c. If no. Why not? 

18a. Yes. The plan which was submitted to the Office 
of Management and Budget on September 7, 1995, 
identifies these program activities as ones that could 
be continued in the event of a shutdown. On page 13, 
the plan states, "Activities related to the 
administration of ongoing McKinney homeless assistance 
and HOPWA programs, since failure to do so would 
imminently threaten the safety of human life by making 
housing and services unavailable to particularly 
vulnerable populations. 

18b. During the November shutdown, HUD's Line of Credit 
Control System (LOCCS) , through which grantees draw 
funds, was not operational. Therefore, grant awards 
that had been made prior to that point in time for 
which the funds were "in the system," could not be 
accessed by providers. 

In planning for a second shutdown, the Department 
broadened the scope of excepted activities and, from 
the start, identified a portion of Homeless and HOPWA 
staff as excepted personnel . 

10 



287 



Question 19 How many homeless persons and AIDS sufferers were 
adversely affected, or "put on the streets" as the 
Secretary noted, by each government shut down? 

The two shut downs reduced opportunities for State and local 
governments and for nonprofit organizations that provide 
assistance to take the normal steps in planning, opening and 
operating projects that provide housing assistance and 
related services for persons who are homeless or persons 
living with HIV/AIDS and their families. 

During the first furlough, because of it's duration, we 
estimate that minimal effect was felt by grantees and the 
homeless persons they serve. During the second furlough, 
however, grant agreements for 66 projects that were ready 
for approval were held up until after the shutdown, delaying 
implementation of projects serving several thousand persons. 
These delayed projects would have provided transitional 
housing and services, as well as permanent housing for the 
mentally ill and other homeless individuals and families at 
the beginning of the winter season who were already on the 
streets or in emergency shelters. 

In addition, there were 370 other projects delayed which, 
while not ready for execution of the grant agreement, were 
being assisted by HUD Field Offices in the preparation of 
necessary legal documents prior to agreement execution. 
These projects are designed to serve well over 100,000 
homeless persons. 

In the HOPWA program, some commitments of FY 1995 funds were 
delayed due to the furlough. In 1995, $153.9 million was 
made available to States and cities by formula allocations 
and $17.1 million was made available by competitive award. 
HUD offices were not able to approve programs and authorize 
access to program funds for 16 of the 21 competitively 
selected grants, including identification and training of 
project staff who will access funds and account for the use 
of such funds. The estimated number of clients to be served 
by these projects was 7,953 persons with housing assistance 
and an additional 4,308 with related services. During the 
interim between these interruptions, HUD staff were able to 
approve five grant agreements and one project expended 
funds. Formula programs in all 66 eligible jurisdictions 
were required to accommodate a rescission of part of the FY 
1995 program funds, including holding additional public 
hearings or consultations, and resubmitting revised plans. 
No action was taken on formula revisions during the furlough 
periods . 



11 



288 



Question 21 Please Identify the 21 local HOPWA [Homeless 
People With AIDS] groups, cited in HUD's 
November 14th Focus, that did not receive 
their funds? 

These competitively-awarded projects were pending technical 
submission reviews, financial procedure authorizations and 
other actions during the first furlough and 16 were pending 
during the second furlough. 



Table 1. 1995 HOPWA Competitive Grants 


. 


Grant Recipient 


Project 
Location 


Award 
Amount 


AIDS Task Force of 
Alabama, Inc. 


Birmingham, 
Alabama 


$ 

756, 992 


Alaska Housing 
Finance Corp. 


Fairbanks & 
Juneau, Alaska 


716,166 
LT 


Marin County 
Community Development 
Agency 


San Francisco 
metro area 


1, 100, 
00 


State of Connecticut 
Dept . of Social 
Services 


State-wide, 
Connecticut 


998,648 


Cornerstone Services, 
Inc. 


Joliet, 
Illinois 


465, 991 


Travelers & 
Immigrants Aid of 
Chicago 


Chicago, 
Illinois 


1, 030,0 
00 


UNITY for the 
Homeless 


New Orleans, 
Louisiana 


1,099,2 
30 


City of Baltimore 
Department of Housing 
and Community 
Development 


Baltimore, 
Maryland 


1,076,7 
18 


State of Maryland, 
Department of Health 
and Mental Hygiene 


Eastern Shore 
& Western 
Maryland 


1,000,0 
00 LT 


AIDS Housing 
Corporation 


Boston, 
Massachusetts 


990,534 



12 



289 



Hospice of 
Southeastern Michigan 


Detroit metro 
area, Michigan 


572, 932 


State of Missouri, 
Department of Health 


Areas outside 
of St. Louis 
and Kansas 
City, Missouri 


888, 065 

LT 


Community Counseling 
& Mediation 


Brooklyn, New 
York 


66,950 


Episcopal Social 
Services of New York, 
Episcopal Action 


Harlem 
neighborhood 
of New York 
City, NY 


1,099,9 
99 


Greyston Foundation, 
Inc . 


Yonkers, New 
York 


1,100,0 
00 


Souths ide Community 
Mission 


Brooklyn, New 
York 


975,572 


Asociacion de 
Puertorriquenos en 
Marcha 


Philadelphia, 
Pennsylvania 


1,030,0 
00 


State of Rhode 
Island, Housing and 
Mortgage Finance 
Corporation 


Providence, 
Rhode Island 


943,440 
LT 


State of Vermont, 
Housing and 
Conservation Board 


State-wide, 
Vermont 


719,950 
LT 


AIDS Housing of 
Washington 
(2 projects) 


National & 
Seattle area 
projects, 
Washington 


1,042,7 
70 


TOTAL HOPWA 1995 
Awards 


21 Grants 


17,673, 
957 



LT denotes Long-term projects,- others are Special Projects of 
National Significance 



Question 22 What is the spend-out rate for Homeless programs 
euid HOPWA f\inds? For how long can these programs 
continue to operate on carry-over funding? 



13 



290 



Both the Homeless and HOPWA programs spend out (are drawn 
down by grantees) over 5 -plus years, primarily due to the 
nature of the projects that are undertaken -- building of 
shelters and other types of housing, provision of services 
over a period of time, continuing rental assistance, etc. 

Homeless competitive program funds, awarded since 1987, have 
assisted more than 2,000 projects at an average annual rate 
of $71.6 million. These figures do not incorporate the 
recent 1995 awards. The Supportive Housing Program, the 
largest of the homeless programs, as well as the Shelter 
Plus Care program have a very limited amount of carry-over 
funds. The Section 8 Moderate Rehabilitation Single Room 
Occupancy Program, which is for a ten year period, has some 
carry over funding. 

Over the four fiscal years 1992-1995, the HOPWA program 
allocated funds by formula to 34, 43, 54 and 66 
jurisdictions, respectively, in each year, and provided for 
an additional 62 competitively-selected projects. During 
the most recent 3 -month period, expenditures from all 
funding years was about $8.9 million per month, for an 
annual equivalent of $106.9 million. These amounts have 
increased by about nine percent over amounts spent in the 
last two quarters. 

Potential Funding Gaps. Many grantees exceed this average 
use rate and will complete full use of funding before the 
end of their 3 -year use period. For example, the State of 
Tennessee has used 100 percent of its FY 1995 funds; with a 
small residual amount from prior years (about 10 percent) , 
the State will soon rely exclusively on FY 1996 
appropriations, if approved, to maintain programs. 

Question 23 During the shutdown, what efforts were made by HUD 
to continue to make contract payments to section 8 
project-based owners? 

Section 8 payments to project -based project owners were made 
during each shutdown by the LOCCS system after the input 
vouchers were processed by excepted HUD staff in the Field 
Accounting Divisions (FADs) . These payments were contract 
obligations incurred prior to the shutdown. 

Were there payments made to section 8 tenant-based holders? 

Yes, during the government shutdown the Department's 
financial systems were up and operating as HUD continued to 
ensure that PHAs with Section 8 tenant -based holders 
received payments and that no tenants lost housing during 
this period. 

14 



291 



Question 24 What is the basic function to provide processing 
payments to section 8 holders? b. How many- 
employees are necessary to operate the computers 
that process the Section 8 payments? 

The basic function to process payments to Section 8 holders 
begins with entry of a twelve month payment schedule into 
the Department's accounting system by a financial analyst in 
the field, which must be approved and processed by a 
supervisor before payments can be generated by the 
accounting system. Once the approved payment schedule is 
entered into the system, spendout will occur against 
available funds based on the schedule. During the shutdown, 
if the field offices had entered and approved schedules for 
their respective PHAs into the Department's accounting 
system, the Section 8 payments continued to flow to the 
applicable PHAs. However, some PHAs did not have approved 
payments already scheduled in the accounting system prior to 
the shutdown, and those payments were reviewed and approved 
by excepted employees in HUD headquarters . 

Field Office Financial Analysts were called back to work 
during the shutdown in order to assess which PHAs would 
experience a funding shortfall by February 1 in the event 
funds did not become immediately available under a new 
Continuing Resolution. Financial Analysts also calculated 
the renewal funding requirements for January expirations so 
that funds could be immediately assigned as soon as the 
shutdown ended. 

b: Approximately 119 employees were necessary to operate 
the computers that process the Section 8 payments. 
This number is calculated by estimating that two 
employees (one financial analyst and one supervisor) 
would be needed per 59 Field Offices (i.e. 52 Field 
Offices, 6 Native American Offices, and the Beaumont 
Office.) One employee was also be needed in 
headquarters . 

Question 25 In most cases the Section 8 payments are made from 
previously appropriated f \inds . How are these 
previous appropriated fiinds affected by the shut 
down for FY 96? 

Not affected by the shutdown. We are continuing to make 
payments to the housing authorities. 



15 



292 



Question 26. During your testimony before the Subcommittee, you 
cited several examples of backlogs that would 
accvimulate for each day of a potential shutdown. 
Please provide the Subcommittee with an inventory 
of the workload backlogs that your Department 
associates with the shutdowns. In light of 0PM' s 
January 17, 1996 guidance to restore all annual 
leave, please provide the Subcommittee with your 
management plan for reconciling the accumulated 
leave and the workload backlogs that resulted from 
the furlough periods . 



FHA 



Complete inventory is not possible. Addition examples of 
Office of Housing backlogs include: 

-Reserves for Replacement, 

-Rent Increases 

-Physical Inspections 

-Financial Statement Reviews 

-Endorsements 

-TPA's 

-Closings 

-Flex Subsidy Releases 

-Section 8 Extensions/Amendments 

-Vouchers 

-Production processing including; Preapps, Inspections, 

-Appraisals, Cost, Mortgage Credit. 



Unopened mail received by the Lender Approval and 
Recertif ication Division during 2nd furlough: 

Initial applications 88 

Branch applications 149 

Additional sponsor applications ....589 
Financial statements for review ....322 
Misc . correspondence 119 

Significant backlogs from the Office of Mortgage Insureuice 
Accounting and Servicing 



@12/15 ®1/12 



-Mortgage insurance applications 

pending endorsements 
-Exceptions 
-Record changes 
-Terminations 
-Premium Refunds 
-Claims 
-Vendor payments (properties) 



16 



100, 


,000 


200, 


,000 


1, 


,250 

5, 900 


6, 


,250 


2, 


,200 


18, 


,200 


2, 


,933 


10, 


,500 


7, 


,000 


17, 


,000 







6, 


,000 



293 



significant Office of Housing procurements delayed three-to- 
four weeks include : 

• SF auctioneer services (for property disposition) 

• Computer support for Single Family Asset 
Management System 

• Advanced micro-simulation actuarial model 

• Technical assistance for Multifamily SWAT teams 

• Demonstration contracts for Single Family property 
disposition activities in Maryland, California, 
and Louisiana 

• HUD Homes hotline services 

• Asset sales (notes) 

Finally, we attach a workload information summary of the 
number of single family cases logged in but not endorsed as 
of January 18, 1996 by single family field office. The 
actual backlog is higher because some cases have been 
received by the office but not yet logged in. (Attachment 
A.) 



FAIR HOUSING AND EQUAL OPPORTUNITY 

Based on the average number of fair housing cases opened per 
week during the previous fiscal year and our long term 
average for case closure we estimate that 464 fair housing 
complaints would have been filed during the shutdown and 450 
cases closed. These are National figures and include both 
HUD and FHAP cases. Although the state and local FHAP 
agencies were still open, HUD was unable to refer cases or 
process those cases the FHAP's investigated. In addition, 
approximately 250 claims or inquires concerning 
discrimination would have been submitted that would have 
received service from HUD but not result in the filing of a 
fair housing complaint. 

ADMINISTRATION 

Because of the shutdowns, incoming mail accumulated and 
required considerable time to sort through. This 
contributed to delays in processing actions that were in the 
pipeline, extensions of vacancy announcements, rescheduling 
of merit staffing panels, delays in issuing selection 
certificates and in rating and ranking job applications. 
Decisions regarding proposals to remove and discipline 
employees were also delayed. Delays occurred in initiating 
4 7 reimbursable personnel security investigations and in 
closing 24 others. 



17 



294 



Examples of other impacts include a processing and 
counselling backlog to accommodate retirements and 
separations, many of which occurred during the shutdown. 

Optional retirement/buyout 74 employees 

Early retirement/buyout 38 employees 

Resignation/buyout 5 employees 

Declined/buyout 31 employees 

Extended/buyout 2 employees 

Optional retirement 9 employees 

Early retirement 6 employees 

Disability retirement 6 employees 

The December - January shutdown caused several problems, 
including incorrect pay checks. Since pay was issued in 
three installments, there was insufficient pay after required 
deductions to cover individual obligations. Regular 
deductions for financial allotments, court-ordered 
garnishments for child support/alimony and commercial debts 
were either not processed or significantly reduced. 

Pay problems caused a considerable increase in workload- - 
countless telephone inquiries from employees respondents, and 
attorneys, etc., concerning missing deductions; requests for 
pay reconciliations, and coordination with the Department's 
payroll agent in New Orleans, Louisiana. Processing delays 
occurred in 24 court orders covering actions such as 
garnishments, tax levies, child support, and alimony. 

Other shutdown impacts included timekeeping. Since employees 
were paid manually by NFC with a supplemental pay check and 
paid automatically for one week based upon the employee's 
work schedule, corrected timecards had to be prepared for 
every employee . Employees who should not have been paid 
because they were in a non-pay status, were paid; collection 
procedures must now be implemented. Due to the overload of 
submitting corrected pay data, all actions had to be 
resubmitted due to failures in the automated systems. 
Personnel Assistants have had to literally spend days 
explaining the errors in pay checks created by salary 
payments generated during the furlough. 



18 



295 



PUBLIC AFFAIRS 

♦Editing of the Annual Report was delayed 

♦Invoices for services provided by vendors prior to the 
shutdowns were not processed in a timely manner as required 
by the prompt payment act . 

PUBLIC AND INDIAN HOUSING 

The Office of Public and Indian Housing (PIH) accumulated a 
backlog during the government furlough that include the 
inability to do following: 



•Assess 5 very large public housing developments and 
develop a guide for PHAs to use in assessing the future 
viability of their stock. 

•Review by field office staff of the formula 
characteristics reports data for the CGP Housing Agencies 
in preparation for running the FY 1996 CGP formula. 
There are approximately 904 PHAs, with well over 21,000 
data records, involving all 52 field offices and 
headquarters staff. 

•Review demolition\disposition applications in 
headquarters . 

•Progress in the computer matching systems development 
effort to detect fraud by tenants in reporting their 
incomes for purpose of determining their rent . 

•Provide technical assistance to Native American tribes, 
housing authorities, or resident organizations. 

•Complete processing of regulatory reductions. 

•Complete PHMAP assessments for PHAs with FYE 6/30/95. 
This meant that these PHAs were not notified of possible 
incentives they were eligible for which may have impacted 
on other PIH program areas and grant applications. 



19 



296 



COMMONITY PLANNING AND DEVELOPMENT/HOMELESS 

During the second furlough, work on 66 grant agreements for 
Homeless Assistance projects were delayed and were not 
approved until after the shutdown ended. Accompanying these 
grant agreements, in some cases, were security and financial 
documents which would allow for the assignment and 
disbursement /draw down of homeless assistance funds. These 
delays forced recipients to explore other areas of funding, 
incurring undue hardships or actually closing down their 
facilities . 

Additionally, technical assistance was not provided to 370 
additional projects which were moving toward grant agreement 
execution, thereby delaying both the execution of the grant 
agreements and the implementation of these projects. 

In the HOPWA program, HUD staff were not able to approve 
programs and authorize access to program funds for 16 of the 
21 competitively selected grants, including identification and 
training of project staff who will access funds and account 
for the use of such funds. 



20 



297 



ATTACHMENT A 



WORKLOAD INFORMATION 

SINGLE FAMILY ENDORSEMENTS 

NUMBER OF CASES LOGGED IN (RECEIVED) - NOT ENDORSED 

AS OF 1/18/96 



0102 


BANGOR 


16 


0106 


BOSTON 


2 


0110 


BURLINGTON 


1 


0126 


HARTFORD 


391 


0136 


MANCHESTER 





0143 


PROVIDENCE 


180 


0202 


ALBANY 


33 


0206 


BUFFALO 





0216 


CAMDEN 


66 


0236 


NEW YORK 


86 


0239 


NEWARK 


111 


0306 


BALTIMORE 


408 


0315 


CHARLESTON 


25 


0326 


PHILADELPHIA 


371 


0328 


PITTSBURGH 


66 


0336 


RICHMOND 


260 


0339 


WASHINGTON D. C. 


1,046 


0344 


WILMINGTON 


31 


0406 


ATLANTA 


42 


0409 


BIRMINGHAM 


306 


0414 


CORAL GABLES 


954 


0416 


COLUMBIA 


45 


0419 


GREENSBORO 


795 


0426 


JACKSON 


177 


0429 


JACKSONVILLE 


395 


0436 


LOUISVILLE 


17 


0437 


KNOXVILLE 


12 


0440 


MEMPHIS 


152 


0443 


NASHVILLE 


22 


0444 


ORLANDO 


677 


0446 


CARIBBEAN 


503 


0450 


TAMPA 


266 


0506 


CHICAGO 


2,187 


0510 


CINCINNATI 


1 


0512 


CLEVELAND 


325 


0516 


COLUMBUS 


366 


0528 


DETROIT 


268 


0533 


GRAND RAPIDS 


145 


0536 


INDIANAPOLIS 


774 


0539 


MILWAUKEE 


6 


0544 


FLINT 


23 


0546 


MINNEAPOLIS ST. PAUL 


223 


0550 


SPRINGFIELD 


212 


0602 


ALBUQUERQUE 


127 


0616 


DALLAS 


158 


0621 


FORT WORTH 


87 


0624 


HOUSTON 


48 


0637 


LITTLE ROCK 


442 



298 



0641 LUBBOCK 92 

0648 NEW ORLEANS 120 

0656 OKLAHOMA CITY 8 

0659 SAN ANTONIO 163 

0662 SHREVEPORT 21 

0670 TULSA 35 

0705 DES MOINES 236 

0716 KANSAS CITY 288 

0726 OMAHA 240 

0736 ST. LOUIS 95 

0740 TOPEKA 75 

0805 CASPER 39 

0806 DENVER 222 
0815 FARGO 1 
0820 HELENA 12 
0830 SALT LAKE CITY 15 
0835 SIOUX FALLS 2 
0905 FRESNO 797 
0908 HONOLULU 112 
0916 LOS ANGELES 21 
0920 PHOENIX 250 
0925 RENO 
09 30 SACRAMENTO 425 
0933 SAN DIEGO 2 
0939 SAN FRANCISCO 327 

0943 SANTA ANA 210 

0944 LAS VEGAS 27 

0945 TUCSON 183 
1006 ANCHORAGE 46 
1008 BOISE 
1016 PORTLAND 263 
1019 SEATTLE 63 
1025 SPOKANE 24 

NATIONAL TOTAL 17,262 



299 



Attachment B 



U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 
THE DEPUTY SECRETARY 

WASHINGTON, DC. 20410-0050 



December 13, 1995 



Mr. Alan B. Rhinesmith 

Deputy Associate Director 

Housing, Treasury and Finance Division 

Office of Management and Budget 

725 17th Street, NW 

Washington, DC 20503 

Dear Mr. Rhinesmith: 

SUBJECT: Revised Contingency Plan for Agency Shutdown 

This letter responds to 0MB 's Budget Data Request Number 
96-21. It amends the detailed shutdovm plan for the Department 
of Housing and Urban Development (HUD) submitted in September, 
and constitutes a revised shutdown plan in the event of an 
appropriations lapse after December 15, 1995. Our plan is based 
on the assumption that a shutdown of short duration can be 
managed relatively easily with a minimal staff. However, after a 
day or so without funding, the critical needs of HUD clients and 
beneficiaries require that more Departmental activities would 
necessarily resume, and more HUD employees would be required to 
perform them. Details of the proposed staffing levels in each 
instance are shown in the enclosure to this letter. To assure 
the protection of life and property in programs in the 
Department's jurisdiction, we propose the following: 

For a short-term shutdown, we would retain on board 
essentially the same employees who were working on the last day 
(November 17, 1995) of the last shutdown (about 500) . They would 
perform activities essential for the protection of life or 
property, activities funded by resources remaining available from 
funds other than annual appropriations, and activities necessary 
for the orderly shutdown of Departmental operations. Most of our 
data processing systems would be shut down, which would mean that 
most of the Department's financial activities would be suspended. 
All non-excepted employees would be furloughed. 



300 



After the first day of a shutdown, HUD beneficiaries would 
begin to feel the effects of the absence of funds, and life and 
property would be threatened. It would be necessary to open 
payments systems to provide funding to local housing authorities 
so that tenants would not suffer unduly from the cold weather and 
deferred maintenance. 

If the funding lapse lasts more than a day, we would begin 
to implement our plan for a longer-term shutdown. Some 
activities that had been suspended would be resumed, to protect 
life or property, and some employees who had been furloughed 
would be brought back on board to perform these activities. 
Reopening the payments systems would require a large number of 
excepted employees, and our excepted staffing level for a longer- 
term shutdown would be about 1,900. 

Over a longer term, 

1 . We would continue to disburse funds for public housing , 
with operating subsidies and modernization funds provided through 
local housing agencies providing housing and services to 

1.4 million low- income households. For tenant-based rental 
assistance , we would propose to reopen the line-of -credit control 
system and to add an additional 200 employees to the "excepted" 
list to carry out these functions. 

2 . For Section 8 project-based rental assistance , we would 
reopen the Housing Assistance Payment System, to cover 
disbursements for over 1.9 million units of privately-owned 
rental housing. Over 4 million people live in these 
developments. For Housing, we would add 100 employees to the 
excepted list for these functions. 

3 . For the FHA Single-Family Mortgage Assignment Program , 
to help moderate -income homebuyers who are experiencing 
difficulty in paying their mortgages stay in their homes, we 
would add 70 employees to provide guidance to lenders concerning 
assignment of mortgages in case of default. 



301 



4. For FHA Multifamily Properties , to authorize the release 
of Federal funds to address emergencies (e.g. fires, vandalism, 
repairs) in insured and assisted properties, we would add an 
additional 150 multifamily Housing employees to the excepted 
list, and 60 administrative employees to the excepted list. 

5 . For Homeless Services. Services for Persons with HIV/ 
AIDS and Funds to Cities and Communities , we would add an 
additional 120 employees to the excepted list. Reopening the 
data systems would provide for the delivery of essential housing 
and emergency services to at least 32,000 homeless persons; 
provide assistance to approximately 8,200 to 9,500 persons with 
HIV/AIDS each day, and provide access to funds for over 1,500 
cities and counties which receive HOME and Community Development 
Block Grants. 



6. If payments are to be resumed under the reopened systems 
noted above, an additional 215 employees of the Chief Financial 
Officer will be required to be excepted, and another 180 
administration employees, most in ADP, will need to be added to 
the excepted list. Additional legal staff to provide litigation 
support and advice will also be needed. 

In total, we are requesting exceptions for up to 1900 
employees in the event of a longer-term shutdown. 

Please let me know if you have any questions. 

Sincerely youi 



Enclosure 





302 

ENCLOSURE 

AGENCY: HOUSING AND URBAN DEVELOPMENT 
REVISED SHUTDOWN PLANS 
Update on excepted/furloughed employees 



Short-term Shutdown 
Estimates 



Employees : 


Excepted 


Furlouqhed 


Housing 


28 


5307 


PIH 


24 


1383 


GNMA 


9 


56 


CPD 


12 


855 


PD&R 


5 


105 


FHEO 


16 


667 


OGC 


31 


490 


CFO 


10 


385 


FDOS 


130 


207 


Admin. 


40 


977 


LBP 





22 


Dep't Mgmt. 


34 


67 


Total, SiE 


339 


10,521 


IG 


191 


426 


WCF 


25 


284 


OFHEO 


68 


, 


Total HUD 


623 


11,231 




December 


13, 1995 



Longer-term Shutdown 
Estimates 

Excepted Furlouqhed 



415 


4920 


250 


1157 


9 


56 


150 


717 


5 


105 


29 


654 


62 


459 


243 


152 


132 


205 


150 


867 





22 


34 


67 



1,479 



1,888 



9,381 



191 


299 


150 


159 


68 






9,839 



303 



United States 

*^ Office of 

^gjijg^f Personnel Management 




Washington. D.C^ 20415 



MAR 13 1996 



Honorable John L. Mica 

Chairman 

Subcommittee on Civil Service 

Committee on Government Reform 

and Oversight 
U.S. House of Representative 
Washington, D.C. 20515-6143 



Dear Mr. Mica: 



Enclosed are responses to questions you sent as a followup to the 
hearing held on December 6, 1995, regarding the Government 
shutdown. If any additional information is needed, please do not 
hesitate to let me know. 

Sincerely, 

Allan Heuerman 
Associate Director 

for Human Resources Systems 

Enclosure 




304 



Enclosure 



1. Q. Please describe any changes in planning, procedures, and 

operations that your agency made between the November 
and the December- January shutdowns. Please submit any 
revisions and/or supplements to your agency's shutdown 
plans. In light of the substantial change between 
shutdown numbers reported in the second shutdown, what 
changes are contemplated regarding the agency's defini- 
tion of emergency functions? Please provide the new 
legal reasoning that supports this change from previous 
shutdown plans. 

A. The Office of Personnel Management (0PM) was not affect- 
ed by the December- January shutdown. 

2. Q. Please submit the numbers of persons furloughed in each 

agency during the two shutdowns. For each function 
which was subject to furlough during the first shutdown, 
but exempted from furlough during the second shutdown, 
please provide policy and legal reasons supporting the 
decision to change the status of the functions. 

A. 0PM does not collect this information from other agen- 
cies. It is up to each agency to carry out its furlough 
by determining those activities that are exempt from 
furlough and by identifying those employees who will be 
furloughed. 

With regard to our experience, 0PM placed 2,124 employ- 
ees in furlough status during the November shutdown and 
was not affected by the December- January shutdown. 

3. Q. Please provide a report, by agency and by category, of 

all amounts and forms of premium pay (overtime, night 
differential, weekend differential, etc.) that was paid 
to employees who were furloughed during each shutdown. 

A. 0PM does not have access to the data that would be 
needed to respond to this question. Each agency is 
responsible for administering its own payroll system, 
and there is no Governmentwide data source that contains 
the amount of premium pay paid by each agency to each 
employee who was furloughed. However, the law governing 
premium pay for most employees is contained in title 5, 
United States Code, and furloughed employees who other- 
wise would have been regularly scheduled to worlc during 
the recent lapses in appropriations are entitled to 
retroactive payments for the following types of premium 
pay: 

overtime pay (5 U.S.C. 5542 and 5544(a)) 

• night pay/night differential (5 U.S.C. 5545(a) 
and 5343 (f) ) 



305 



-2- 

Sunday premium pay (5 U.S.C. 5546(a) and 
5544 (a) ) 

holiday premium pay (5 U.S.C. 5546(b)) 

- hazard pay differential (5 U.S.C. 5545(d)) 

environmental differential (5 U.S.C. 
5343 (c) (4) ) . 

Affected employees also are entitled to the following 
types of premium pay, although few, if any, employees 
receiving such payments were furloughed: 

annual premium pay for standby duty (5 U.S.C. 
5545(c) (1) ) 

annual premium pay for administratively uncon- 
trollable overtime work (5 U.S.C. 5545(c)(2)) 

availability pay for criminal investigators (5 
U.S.C. 5545a) . 

"Regularly scheduled work" is defined in 0PM 's regula- 
tions as "work that is scheduled in advance of an admin- 
istrative workweek under an agency's procedures for 
establishing workweeks . . . ." (See 5 CFR 550.103.) 
The policy described above has been followed consistent- 
ly with respect to retroactive payments following each 
lapse in appropriations since at least 1986. 

The only category of premium pay that was paid to em- 
ployees who were furloughed in 0PM was night differen- 
tial. To that end, 8 hours of night differential was 
paid to furloughed 0PM employees totaling approximately 
$ 9.12. 

Q. Please provide a report, by agency, of the numbers of 
furloughed employees who filed for unemployment compen- 
sation during the shutdowns and the amounts paid to 
agency employees. Please describe any costs that will 
be incurred by your agency as a result of efforts to 
collect reimbursement of these payments after routine 
pay is restored. 

A. 0PM does not collect this information from other agen- 
cies. With regard to our experience, 0PM was affected 
by only the November shutdown. Since the November 
shutdown was too brief for employees to qualify for 
unemployment compensation, a collection effort is not 
necessary. 



306 



Q. Please estimate the total costs to your agency associat- 
ed with the interruption of operations during November 
and December- January . Please provide descriptions of 
any unusual costs imposed on the agency or other unan- 
ticipated consequences of these interruptions of opera- 
tions. Please provide, too, an estimate of any savings 
associated with these interruptions. 

A. The salary and benefits paid to 0PM employees who were 
furloughed in November totaled approximately $1,238,700. 
We also incurred some incidental costs such as printing, 
mailing, and travel in connection with the orderly 
shutdown of 0PM and other Federal agencies. 

Q. Please indicate the shutdowns' impact on programs funded 
through trust funds, fees, carry over funds, or other 
revenues not tied to annual appropriations. Please 
describe any changes made in implementing these programs 
during the December- January shutdown. 

A. In accordance with guidance provided by 0MB Bulletin 80- 
14, dated August 28, 1980, (amended by the 0MB 
Director's memorandum of November 17, 1981 and updated 
by the Department of Justice opinion date August 16, 
1995) , positions in programs funded through trust funds, 
fees, carry over funds, or other revenue, were excepted 
from furlough in 0PM. Funded exemptions in 0PM included 
our training and investigations functions funded through 
a revolving fund, our retirement and insurance benefit 
functions funded through a trust fund, political ap- 
pointees who are not subject to furlough, and fee-sup- 
ported work in our employment service function. 0PM was 
not affected by the December- January shutdown. 

Q. Please provide staffing levels for all public affairs 
offices in the agency during the shutdown. 

A. 0PM 's Office of Communications was responsible for 

keeping Federal agencies and departments informed with 
up-to-date furlough and re-opening guidance, as well as 
unemployment information. This included fielding calls 
from thousands of furloughed employees. Accordingly, 
six out of seventeen positions were excepted from fur- 
lough. 

Q. Please provide a report of the number and furlough 

status of political appointees, noncareer Senior Execu- 
tive Service personnel, and Schedule C appointees during 
each shutdown. 

A. The following chart depicts the number and furlough 

status of 0PM employees in political appointments during 



307 



-4- 

the November shutdown. 0PM was not affected by the 
December- January shutdown. 



Political 
Appointment 


Subject to 
Furlough 


Excepted from 
Furlough 


Total 


Noncareer SES 


1 


4 


5 


Schedule C 


10 


3 


13 


Presidential 





3* 


3 



♦Presidential appointees cannot be placed in a non-duty, non-pay 
status since they are not subject to 5 U.S.C. 6301 and attendant 
regulations . 

9. Q. Please provide estimates of the numbers of employees and 

the amount of accrued annual leave that will be restored 
by your agency as a result of employees required to work 
during the second shutdown. Please describe any other 
effects that the second shutdown will have on the admin- 
istration of employees' leave programs. 

A. 0PM was not affected by the second shutdown. 

10. Q. Please describe for the Subcommittee the procedures 

required to complete the personnel actions for each 
furloughed employee. What efforts has 0PM initiated to 
minimize the processing involved in these actions? What 
recommendations could you make to the Congress that 
would reduce the administrative burden associated with 
furloughs related to lapses in appropriations? 

A. Section 7513 of title 5, United States Code, establishes 
the procedures agencies must follow in furlough situa- 
tions. Under normal circumstances, each agency must 
prepare and distribute to each affected employee a 
proposed notice of furlough 3 days in advance; provide 
at least seven days for employees to answer orally and 
in writing to the proposed notice; notify employees of 
their right to representation and their right to appeal 
the action; and finally, issue a written decision notice 
to employees. The action would then be processed by the 
agency through the issuance of a Standard Form 50 (SF 
50) . In emergency situations such as lapsed appropria- 
tions, agencies are not required to provide 30 days 
advance written notice of the proposed furlough (5 CFR 
752.404(d) (2)). However, agencies must still issue a 
written notice. 

0PM took several steps to minimize the processing in- 
volved in these actions. We reminded agencies that the 
provisions of 5 CFR 752.404(d) (2) do not require an 
advance written notice and that employees could be 



308 



orally notified that they were furloughed, so long as a 
written notice of furlough was later provided. 

Since Congress historically has authorized Federal 
employees to be paid for periods of furlough due to 
lapses in appropriations, we advised agencies to delay 
the processing of SF 50 's pending completion of the 
furlough. Since employees were paid following each of 
the two recent shutdowns, agencies were not required to 
process SF 50 ' s for the furloughed employees. This 
permitted agencies to avoid considerable administrative 
expense . 

With regard to the issue of how to reduce the adminis- 
trative burden associated with furloughs, we recommend 
that in situations where agencies have no discretion 
about whether employees should be furloughed (i.e., 
lapse in appropriations) the statutory requirements for 
furloughs be eliminated. Section 7513 of title 5, 
United States Code, requires that employees who are fur- 
loughed for 30 days or less be provided with certain 
rights and procedures similar to any other adverse 
action procedure, such as removal or suspension of more 
than 14 days. We believe that a furlough due to a la pse 
in appropriations is not the same as other adverse 
actionu, where agencies have great discretion in deter- 
mining what course of action to take. If the statutory 
requirements were eliminated in this situation, we 
would, of course, similarly eliminate the implementing 
regulatory requirements . 

11. Q. During testimony the Subcommittee heard several examples 
of backlogs that would accumulate for each day of a 
potential shutdown. Please provide the Subcommittee 
with an inventory of the workload backlogs that your 
agency associates with the shutdowns. In light of 0PM 's 
January 17, 1996 guidance to restore all annual leave, 
please provide the Subcommittee with your management 
plan for reconciling the accumulated leave and the 
workload backlogs that resulted from the furlough peri- 
ods . 

A. 0PM was affected by only the November shutdown. As a 

result of the shorter duration of the November shutdown 
and the amount of time that has elapsed since that 
shutdown, 0PM does not currently have a backlog asso- 
ciated with the November shutdown. Additionally, since 
the November shutdown took place early in that month, we 
do not anticipate any annual leave restoration requests 
resulting from the November shutdown. 



309 

SOCIAL SECURITY 

Office of the Commissioner 
February 12, 1996 

The Honorable John L. Mica 

Chairman, Subcommittee on Civil Service 

Committee on Government Reform and Oversight 

House of Representatives 

Washington, D.C. 20515 

Dear Mr. Chairman: 

This is in reply to your letter of January 18, in which you 
submitted a number of questions regarding the Social Security 
Administration's (SSA) operations during the recent lapses in 
appropriations . 

The responses to most of your questions are enclosed, but we have 
deferred answering those involving payroll and attendance data 
until we can obtain that information from our contract payroll 
provider. As a result of furloughs, there have been delays in 
updating the automated payroll and attendance system, and it will 
take several weeks for this information to become available. We 
will, of course, provide answers to those questions as soon as we 
can. 

As you know, although lapses in appropriations do not affect 
funding for our benefit payments, they do affect funding for our 
administrative expenses. Thus, during these lapses, we are only 
authorized to carry out activities authorized by the Anti- 
Deficiency Act. Therefore, the actions we took were dictated by 
and fully consistent with the law and with actions 
of previous Administrations. We continued to administer our 
programs within the constraints of the Constitution and 
applicable statutes. 

During a lapse of short duration, few SSA activities beyond 
continued payment of benefits were allowed. Thus, in 
November, we initially stopped all activities except those 
involving the payment of benefits. 

An extended funding lapse, however, changes the circumstances and 
thus the application of the law. A growing backlog of 
unprocessed claims would jeopardize our ability to make timely 
and accurate payments. Thus, we determined that a lapse of more 
than a few days would require us to carry out certain additional 
activities, including accepting and processing new benefit 
claims . 



SOCIAL SECURITY ADMINISTRATION BALTIMORE MD 2 1 235-000 1 



310 



While I am extremely proud of how our employees pulled together 
to continue to meet the basic needs of our customers, there is 
no doubt that the shutdowns affected our operations. SSA 
developed and committed to a plan to meet detailed performance 
objectives both in the President's Budget and at the House-passed 
funding level for Fiscal Year 1996. The furloughs resulting from 
funding lapses, combined with the continuing uncertain budget 
picture and multiple continuing resolutions throughout this 
fiscal year, have severely compromised our ability to meet these 
important performance objectives. 



Sincerely, 




,^^ 



Shirley S/ Chater 
Commissioner 

of Social Security 



Enclosure 



311 



1 . Please describe any changes in planning, procedures, and 
operations that your Agency made between the November and 
December- January shutdowns. Please submit any revisions and/or 
supplements to your Agency's shutdown plans . 

The changes in the operations of the Agency between the November 
and the December- January shutdowns are reflected in the four 
attached memorandums from SSA to 0MB. 

Attachments 



312 



SCXJAL SECURITY 

Of/icc of the Commluioner 



January 5, 1996 

The Honorabl* Alica Rivlln 

Director 

Office of Kanageaent and Budget 

Vaahington, D. C. 20503 

Dear Dr. Rivlin: 

Thle is to infom you that the Social Security Adninistration 
(SSA) has amended the contingency plan in effect during the 
ongoing lapse in Federal appropriations to include the processing 
of annual wage reports (AWR) . 

Beginning this week, SSA will receive nearly 235 nillion earnings 
reports for calendar year 1995 fros enployers and self-enployed 
individuals. If processing of these reports does not begin 
inaediately, the accuracy and reliability of SSA's clains 
processing would be seriously coaproBised, and a serious and 
pervanent disruption of the Adainistration's ability to 
adainister the trust funds would occur. Tiaely posting of wage 
inforaation is necessary to recoaputc the benefit payaents for 
three aillion working Social Security beneficiaries, as well as 
to compute the national average wage index for 1997. If AWR 
processing does not begin iaaediately, SSA will not be able to 
accurately conpute the 1997 wage base by the statutorily required 
date, resulting in a peraanent loss of receipts for the trust 
funds, as well as untiaely or inaccurate benefit adjustaants for 
1997. 

As a result, SSA is returning to duty 949 SSA eaployees, and in 
following past practices, is hiring 253 seasonal eaployees to 
handle this workload. Becauae this activity Bust take place at 
the Wilkcs-Barre Data Operations Center, other alternatives are 
not available. 

Sincerely, 



Shirley S. Chater 
Coaaissioner 

of Social Security 



tOCUaSKCmUTYADMINOTIIATION WASKINC70N DC SOIM 



313 



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SOQ AL SECURITY 

Office nf the Coinmi!>.si(in(.'r 

DEC I 2 1995 



The Honorable Alice Rivlin 

Director 

Office of Management and Budget 

Washington, D.C. 20503 

Dear Dr. Rivlin: 

In reaponee to your request for the Social Security 
Administration's (SSA) contingency plan for activities during a 
potential second lapse in Federal appropriations, I have enclosed 
a chart detailing those functions that would continue to be 
performed, and the staff that would be needed to perform them, in 
such eventuality. As you can see, I have determined that our 
trust funds and benefit programs could not tolerate another 
interruption of claims-taking activities at this time. Based 
upon our experience during the November 14 to November 19 lapse 
in appropriations and, more importantly, the loss of four full 
days of work occasioned by that lapse, any further interruption 
in service would have a devastating long-term impact on SSA's 
ability to process Social Security, Supplemental Security Income 
(SSI) and Black Lung claims. Due to the previous appropriations 
lapse, we must recover from our inability to process 112,000 new 
applications, 5,000 administrative hearings, 800,000 telephone 
calls, and a number of other workloads. As a result, SSA's field 
offices will remain operational for the taking of new 
applications and the continued processing of claims, including 
operation of State disability determination services and SSA's 
toll-free telephone service. These actions are necessary to 
appropriately administer the trust funds and benefit programs 
under our jurisdiction. 

Social Security disability, retirement arid survivor's benefits 
are funded through an indefinite appropriation that does not 
require the- passage of annual appropriations legislation. Funds 
for Supplemental Security Income (SSI) and Black Lung benefits • 
under the Federal Coal Miners Health and Safety Act have been 
appropriated through December 31, 1995. Although the 
administrative costs necessary to administer these programs are 
subject to annual appropriations that have not, as yet, been 
enacted, Department of Justice opinions indicate that continued 
appropriations for the benefit payments "necessarily implies" 
lawful administration of these programs, even in the absence of 
appropriations . 

As I have indicated, any further interruption of claims 
processing would present dif f i.cultie.-j which would be practically 

SOQAL SECURJTY ADMINISTRATION BALTIMORE MD 21 1350«)1 • 



315 



insurmountable and would cripple SSA'a ongoing ability to 
properly administer its trust funds and provide service to the 
public. The work that accumulated during the previous lapse, 
when added to what are already large backlogs in some areas, have 
placed the trust funds and benefit programs that we administer in 
a tenuous position. Any further hiatus could irreversibly impair 
SSA'B capacity not only to distribute accurate payments to 
current beneficiaries, but also to process new claims and appeals 
"in the pipeline. " 

With our contingency plans, in the event of another lapse in 
appropriations, not only would SSA continue to pay benefits to 
current beneficiaries, it would take new applications for SSI and 
Social Security benefits, process pending applications and 
appeals, undertake critical post-entitlement actions, and perform 
those other activities necessary to properly carry out these 
functions. However, SSA would not process applications for 
Social Security numbers or replacement Social Security cards and 
would cease issuing personal earnings and benefit estimates and 
performing annual wage reporting activities. Those employees 
whose primary duties are staff support would be furloughed. 
Total staffing would be 55,992, and 10,203 employees would be 
furloughed. 



Sincerely, 




^.2^ 



Shirley S. Chater 
Commissioner 

of Social Security 



Enclosure 



316 



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317 






SOCIAL SECURITY 

Office of the Commissioner 
November 16. 1995 



The Honorable Alice Rivlin 

Director 

OSice of Management and Budget 

Washington, DC. 20503 

Dear Ms Rivlin: 

In response to the President's request for a review of agency shutdown plans in light of the 
unprecedented shutdown of the Federal government, we have determined that SSA must begin 
implementing Phase II of its contingency staffing plan on Monday morning, November 20, 1995 
in order to begin accepting and processing claims. SSA is taking this action in order to 
appropriately administer the trust funds. 

In addition to continuing benefit payments under the Social Security, Supplemental Security 
Income (SSI), the Federal Coal Miners Health and Safety ("Black Lung") programs. Phase II will 
involve recalling suflBcient staff from furiough to administer these programs, including the taking 
of new applications. This action is essential for the SSA to carry out its responsibilities to the 
public to administer the trust funds for which it is responsible, and is consistent with the 
Department of Justice's advice concenung activities authorized during a lapse in appropriations 

Social Security disability, retirement and survivor's benefits are funded through an indefinite 
appropriation which does not require annual appropriations legislation Funds for SSI and Black 
Lung Benefits have been appropriated through December 31, 1995. Although funds for the costs 
necessary to administer these programs have not been appropriated, the Department of Justice 
opinions indicate that continued appropriations for the benefit payments "necessarily implies" 
lawful continuation of such administration An appropriations lapse which lasts for more than one 
to two weeks would cripple SSA's ongoing ability to properly administer its trust funds, and 
could irreversibly impair its capacity not only to distribute accurate payments to current 
beneficiaries of all of its programs, but also to process new claims and appeals "in the pipeline." 



SOCIAL SECURmfADMIMSTP»"n'^N WASHINGTON DC JOIM 



iin.iQn 07 . 11 



318 



Phase II of SSA's contingency staffing plan would operationalizc SSA's field facilities, including 
the reopening of SSA's toll-free telephone service, and State DDS facilities Under Phase II, SSA 
would take and process new applications for SSI and Social Security benefits, and the agency 
would resume processing appeals Under Phase II, however, SSA would not process applications 
for Social Security numbers, personal earnings and benefit estimates and annual wage reporting 
activities. Employees whose primary duties are staff support would continue to be fijrloughed 
Approximately 49,715 staff will be recalled from fijrlough to ensure the payment of benefits to 
individuals who are eligible under our programs Total staffing under Phase II of the contingency 
staffmg plan will be 54,495. 1 1,700 employees will continue to be furloughed 



Sincerely, 



^C^ 



Shirley S Chater 
Commissioner of Social Security 



Enclosures 



319 



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^^ 



SOCIAL SEC URITY 

Office of the Ciimniissinncr 
September 14, 1995 

The Honorable Alice Rivlin 

Director 

Office of Management and Budget 

Washington, D.C. 20503 

Dear Ms. Rivlin: 

In response to your request of August 22, 1995, and following 
discussions with your staff, we are providing our contingency 
plan to deal with a possible appropriations hiatus. We have 
developed a staffing plan for suspension of operations in the 
event that neither a regular appropriations bill nor a fiscal 
year 1996 continuing resolution to allow operations at the 
current rate is enacted by October 1, 1995. The plan would be 
operational for 14 days. 

According to the summary of the Justice Department's memorandum 
to the Office of Management and Budget (OMB) , the Social Security 
program operates under an indefinite appropriation. Previously, 
the Department of Health and Human Services and OMB further 
interpreted Justice's opinion to mean that with respect to 31 USC 
1341 (the Antideficiency Act), SSA has funding authority to 
continue to pay currently enrolled beneficiaries and maintain 
essential records for them. Legal authority also permits funding 
for Supplemental Security Income (SSI) and Black Lung benefits 
payable during the first quarter in the new fiscal year. 

The staffing plan which is enclosed would provide for the minimum 
amount of activity necessary to assure the continued issuance of 
Social Security and SSI payments to those already entitled to 
receive them. This includes the retention of approximately three 
employees per field office and an additional 160 employees in 
other direct service positions. A total of 4,780 staff would be 
needed and 61,415 employees would be placed on furlough. The 
enclosure provides additional details on type of activities and 
staffing levels that would be needed during any appropriations 
hiatus. Under our plan, our national 800 number would not be in 
operation and callers would hear a recorded message advising them 
of the situation. We would not process applications for Social 
Security numbers nor would we process any applications for Social 
Security or SSI benefits. We would not process postentitlement 
(PE) actions, except for critical matters that affect payments. 
Our entire appeals process would also shut down. The State 
Disability Determination Services (DDS) would also be affected by 
any funding lapse. Therefore, we intend to notify the Governors, 
in writing, of the potential impact. 



SOCIAL SECURITY ADMINISTRATION BALTIMORE MD JmSOOll 



322 



Once a funding lapse begins, if it appears that it could continue 
beyond a short period, we would need to reassess our ability to 
adequately administer the trust funds and SSr and Black Lung 
benefits consistent with existing law. We remain hopeful that 
actions can be taken to avert putting our plan into effect but we 
will be prepared to implement it if it becomes necessary to do 
so. 

Sincerely, 



Shirley S. Chater 
Commissioner 

of Social Security 



Enclosure 



323 







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324 



2 . Please submit the number of persons furloughed in your Agency 
during the two shutdowns. 



The answer to this question is contained in the attached 
memorandums referenced in Question 1. 



325 



3 . Please provide a report, by Agency and by category, of all 
amounts and forms of premium pay (overtime, night differential, 
weekend differential, etc.) that was paid to Agency employees who 
were furloughed during each shutdown . 

We will provide this information as soon as it becomes available. 



326 



4 . Please provide a report of the numbers of furloughed 
employees who filed for unemploYment compensation during the 
shutdowns and the amounts paid to Agency employees. Please 
describe any costs that will be incurred by your Agency as a 
result of efforts to collect reimbursement of these payments 
after routine pay is restored . 

During the shutdowns, we provided employees with information on 
the procedures for filing claims for unemployment compensation in 
their state. These procedures vary from state to state and many 
provide for employees to file claims directly with the states. 
Since the states handle the claims filed with them, we do not 
have information on the numbers of employees who filed claims and 
the amounts paid to them. With regard to the collection of 
reimbursement of these payments after pay is restored, we are 
following the instructions in the Labor Department memorandum of 
January 24, 1996. A number of states did not pay unemployment 
compensation to furloughed employees before pay was restored, so 
overpayments need not be collected for them. In the remaining 
states, there is some variation in the procedures for collecting 
overpayments. We do not know what the costs will be for 
collecting overpayments because we are currently working with the 
various states to determine what information we need to provide 
to them. 

Attachment 



327 



U.S. Department of Labor 

JAN 2 4 1996 



Employmenl and Gaining Admnistralion i 
200 Conslitution Auernje. NW 
VV&shingtoo. DC 20210 




MEMORANDUM FOR: 



SUBJECT : 



ALL FEDERAL AGENCY ASSISTANT SECRETARIES 
FOR ADMINISTRATION AND MANAGEMENT 
AND/OR DIRECTORS OF PERSONNEL 



'^"^-^fe^ 



MARY ANN WYRSCH 

Director 

Unemployment Insurance Service 

Unemployment Compensation for Federal 
Employees (UCFE) Program Overpayments Made to 
Furloughed Employees 



During the recent partial shutdovm of the Federal Government from 
December 15, 1995 to January 6, 1996, several States issued UCFE 
payments to furloughed Federal employees who were subsequently 
issued retroactive salary payments for the period of their 
furlough. This is likely to result in the establishment of 
overpayments for the furloughed employees who received UCFE 
payments . 

Under the regulations of the UCFE program, the establishment and 
recovery of UCFE overpayments are made uncJer the provisions of 
State unemployment compensation law. Accordingly, State 
Employment Security Agencies (SESAs) must determine if a UCFE 
overpayment has occurred under its State law, and after that 
determination has become final, the SESA commences the 
overpayment recovery actions permitted under its State law. 

The Federal agencies affected by this partial shutdown have 
responsibilities under the UCFE program to assist the SESAs in 
carrying out their UCFE overpayment determination and recovery 
responsibilities. The Federal agencies should- 

o Provide, as soon as possible, the following information 
to each SESA with whom UCFE claims were filed by furloughed 
employees- - 

- the name and social security account number of the 
furloughed employees, 

- the amount of the retroactive salary payment made to 
each furloughed employee, and 

- the period of time to which the retroactive salary 
payment applied. 



328 



- 2 - 

This action is necessary to initiate the claims review and 
overpayment determination process. Unless the Federal 
agency notifies the SESA, it may not be able to commence the 
process. 

o Fully cooperate with the SESAs in their establishment and 
recovery of UCFE overpayments made to furloughed Federal 
employees . 

Some State unemployment compensation laws provide that the 
employer (the Federal agency in this case) , rather than the SESA, 
shall recover the overpayment from the claimant. In these States 
the employer, rather than the claimant, shall reimburse the State 
for the recovery of the overpayment. If a State unemployment 
compensation law has such a provision, the SESA of that State 
will contact the appropriate Federal agency to coordinate the 
recovery of the outstanding overpayment by the Federal agency and 
the Federal agency's reimbursement of the State. 

This process is explained on pages VI -24 and VI -25 of the UCFE 
Instructions for Federal Agencies , issued March 1995. 

If you have any questions concerning the contents of this 
memorandum, please contact Bob Gillham of the Unemployment 
Insurance Service at 202-219-5312. 



329 



5 . Please estimate the total costs to your agency associated 
with the interruption of operations during November and December- 
January. Please provide descriptions of any unusual costs 
imposed on the agency or other unanticipated consequences of 
these interruptions of operations. Please provide, too, an 
estimate of any savings associated with these interruptions . 

We estimate the total cost of the two funding lapses to be 
$77 million. These costs relate to salaries for furloughed 
employees, rent and maintenance for buildings that were not fully 
utilized and fees paid for services not rendered as discussed 
below: 

SSA Payroll ($66 million) 

During the furlough periods payroll for SSA employees was 
about $11.7 million per day. We estimate that the daily 
payroll cost for SSA employees furloughed during the first 
period was $10.8 million and the daily payroll cost for SSA 
employees furloughed during the second period was $1.8 
million. Based on the duration of each furlough, the total 
SSA payroll cost of the shutdowns was $66 million. 

Disability Determination Services (DOS) Payroll ($2 million) 

All state DDS ' s remained open during the second furlough 
period temporarily using state funds until federal funds 
became available. However, thirteen state DDSs closed their 
offices during the first furlough period. Payroll and 
related costs for state employees who did not work during 
this period are estimated at about $2 million. 

Facilities ($8 million) 

SSA facilities were not completely closed during the two 
shutdown periods because some employees remained on duty to 
carry out excepted functions. We incurred full rental costs 
even though facilities were not fully utilized. 

Services Paid for but Not Rendered ($1 million) 

During the shutdown periods some services were paid for but 
not rendered such as training classes paid for but not 
attended, guard services, medical/vocational expert fees, 
rent and maintenance of equipment, etc. We estimate the 
related costs at about $1 million. 

Although the agency clearly spent less during the shutdown 
periods we do not consider this to be "savings". Costs not 
incurred due to the lapses in funding (such as training) are 
costs deferred rather than saved. 



330 



6 . Please indicate the shutdowns' impact on programs funded 
through trust funds, fees, carryover funds or other revenues not 
tied to annual appropriations. Please describe any changes made 
in implementing these programs during the December- January 
shutdown . 

Title II benefit payments continued despite the shutdowns because 
they are covered by indefinite, permanent appropriations from the 
Social Security trust funds. Supplemental Security Income (SSI) 
and Black Lung benefits also continued despite the fact that they 
are paid from general fund appropriations. This is because 
Congress previously appropriated advance funds for the first 
quarter of fiscal year (FY) 1996 to cover SSI and Black Lung 
benefits . 

Nonetheless, activities which are important to the integrity and 
overall effective management of our programs were interrupted 
during the shutdown periods. For example, issuance of new or 
replacement Social Security numbers (SSN) and verification of 
SSNs were deferred as was issuance of personal earnings and 
benefit estimate statements. Quality assurance reviews for all 
programs were interrupted. Payments to vendors were delayed. 
Monitoring of SSA's 800 number accuracy was stopped. Six hundred 
pending fraud complaints and 300 new complaints were not 
investigated. Job-related training was deferred. Collection and 
analysis of management information critical to efficient program 
administration was stopped. 



331 



7. Please p rovide staffing levels for all public affairs 
activities in t he agency during the shutdown. 

SSA had a total of fourteen public affairs employees on duty 
during the shutdown, four at Headquarters and 1 in each of the 
10 Regional Offices. They handled public information requests, 
including claims-related telephone calls. Congressional 
inquiries, and other sensitive inquiries. 



332 



8 pio pc^ pvnvi Ho . ^Pnnrt. of the number flnd furlough Rtatus of 
^2; iU : 2i ^T c" h^^"^p r ^"noinrops in Your fin^nry during eaoh 

phntdown. 

Of eight noncareer SES appointees, six were excepted from both 
furlouqhs The Agency had one Schedule C appointee who was 
furloulhed. Decilions relating to political appointees were made 
in accordance with the same criteria applied for all Agency staff 
members . 



333 



9. PTfiase provide estimates of the numbe rs of employees and the 
amount of accrued annual leave that will be restored by your 
Agency as a result of employees requ ired to work during the 
second shutdown. Please provi de the number of employees who 
might lose accrued annual leave as a result of their status 
during the shutdown. Please d escribe any other effects that the 
second shutdown will have on the adm inistration of employees' 
leave programs . 

We will provide this information as soon as it becomes available. 



334 



10 Please provide information about the numbers of employ ees 
who have taken annual leave during the months of December and 



Januarv fnr each of the past five years. Please estimate the 

portion of staff taking leave durin g these times and the portion 
nf the workforce on the job during these months in these years. 

We will provide this information as soon as it becomes available. 



335 



11 . The Subcommittee has received reports that your agency's 
managers gathered in San Francisco for a professional conference 
during the November shutdown. Please provide the Subcommittee 
with a schedule for this conference, the number of managers 
participating, the rationale for including this function under 
the definition of "emergency" activities. Please provide any 
guidance from the Office of Management and Budget, the Office of 
Personnel Management, the Department of Justice, or any other 
agency that might have provided guidance about the legal or 
operational necessity of this conference . 

The conference in question was sponsored, scheduled, and funded 
by the National Council of Social Security Management 
Associations, Inc. (NCSSMA) , which is a professional organization 
whose members are supervisors and managers in SSA' s field offices 
and teleservice centers. The conference was scheduled for 
Tuesday, November 14, 1995, through Thursday, November 16, 1995, 
with some committee meetings scheduled for Monday, November 13 . 

Fifty-eight SSA employees attended the conference as NCSSMA 
officers, delegates, or alternate delegates and several members 
of SSA's executive staff attended as invited speakers to discuss 
current issues of interest to SSA field managers. In addition, 
some employees attended as nondelegates . No SSA funds were used 
to pay for travel or other expenses of NCSSMA members. 

Due to travel considerations and committee meeting commitments, 
many attendees had arrived at the conference site in advance of 
the start of the shutdown on November 14 . NCSSMA decided to 
continue the conference when the shutdown began. At that point, 
furloughed employees were free to continue in attendance. We 
understand that most excepted employees, including SSA executive 
staff, left the conference to take up their assigned duties as 
soon as travel arrangements could be made. 

Should there be further questions concerning the conference, 
Mr. Don Seatter, President of NCSSMA, may be reached at (803) 
727-4397. 



336 



12 . Please provide the Subcommittee information about any 
overtime or other premium pay awarded to managers of Social 
Security field offices during the November shutdovm. Please 
provide comparable data for the December- January sh utdown. 
Please provide copies of the personnel guidance, whethe r internal 
or from 0PM or other sources, that support decision s to provide 
premium pay for managerial responsibilities . 

We will provide this information as soon as it becomes available. 



337 



13 . During your testimony before the Sub committiee . you cited 
several examples of backlogs that would accumulate for each day 

of a potential shutdown. Please provide the Subcommitte e with an 

inventory of the work load backlogs that your agenc y associates 
with the shutdowns. In light of 0PM' s January 17. 19 96 guidance 
to restore all annual leave please provide the Subcommittee with 
your management plan for reconciling the accumulated leave and 
the workload backlogs that resulted from th e furlough periods . 

Backlogs created by the shutdowns include: 

Public Inquiries 

Approximately 3,500 inquiries are pending as a result of the 
furlough. We estimate that approximately 25% of those 
letters are from members of Congress and the majority of the 
remainder are from individuals regarding claims. 

Hearings 

Nearly all of the 10,000 hearings that were delayed because 
of the November furlough have been rescheduled . 

Appeals 

The appeals backlog has grown by approximately 1,000 cases 
as a direct result of the November furlough. 

Certificates of Coverage 

800 requests, which will require approximately 2,000 
certificates, are currently pending. Prior to the furlough, 
we were able to issue certificates within 3 weeks of 
receiving the request. Because of the backlog created by 
both furloughs, it now takes 10 weeks to issue a 
certificate. 

Social Security Nu mber Applications 

Processing of about 500,000 applications for Social Security 
numbers or replacements of Social Security cards was 
deferred until after the furlough ended. Most of this 
backlog was cleared quickly because it is not a labor- 
intensive operation. 

Requests to use restored annual leave will be treated in the same 
manner as any request to use annual leave, including 
consideration of the impact of the employee's absence on office 
workloads. The additional accumulations of leave resulting from 
leave restoration are not expected to cause any significant 
problems because employees have until the end of 1998 to use 
restored leave . 



I 



338 




Department of Veterans Affairs 

Assistant Secretary for Human Resources And Administration 

Washington DC 20420 



iffB 12 1996 



The Honorable John L. Mica 

Chainnan, Subconunhtee on Civil Service 

House of Representatives 

2 1 57 Rayfourn House OfBce Building 

Washington, DC 20515-6143 

Dear Mr. Chainnan: 



BECtlVEO 

FEB ' ' 1^'=''^ 

Hf> ISE O^^'T^ ^£ ''*' „o„sLrr 



This responds to your letter of January 18, 1996, with follow-up questions from 
the Subcommittee's December 6, 1995 hearing, "The Government Shutdown: What's 
Essential?" 

Because of the decentralized nature of VA operations and the detailed nature of 
the questions, not all of the information is readily available. Enclosed are responses to 
questions 1, 2, 4, 7, 8 and 10. Responses to the remaining questions will be provided in 
approximately 30 days. 

Sincerely yours. 




Enclosure 



339 



Follow-up Questions 

Subcommittee on Civil Service 

Hearing December 6, 1995 

"The Government Shutdown: What's Essential?' 



1. Please describe any changes in planning, procedures, and operations that your 
Department made between the November and the December-January shutdowns. 
Please submit any revisions and/or supplements to your Department's shutdown 
plans. In light of the substantial change between shutdown numbers reported in the 
second shutdown, what changes are contemplated regarding the Department's 
deflnition of emergency functions? Please provide the new legal reasoning that 
supports this change from previous shutdown plans. 

Attached are copies of Departmental shutdown plans developed for Fiscal Year 1996: 

• September 15, 1995 (implemented during November shutdown) 

• November 17, 1995 (supplementary plan to recall a limited number of employees if the 
November shutdown had lasted more than one week) 

• December 14, 1995 (implemented during December-January shutdown) 

• January 23, 1996 (developed on the basis of the continuing resolution then in effect, 
PL 104-92; not implemented as no shutdown occurred) 

Functions in VA which were originally determined to be excepted from shutdown during a 
lapse in appropriations include health care for veterans; police and security services; burial 
in VA national cemeteries; eligibility determinations for excepted activities; technical and 
support functions such as operation of automated systems and legal representation for 
excepted activities; and executive management and direction of the Department. These 
functions were determined to meet the exceptions for protection of life, safety and 
property permitted under the Antideficiency Act. Additional functions which are funded 
through revolving funds or means other than annual appropriations were also continued. 

As reported in VA testimony at the December 6, 1995 hearing, an additional 1,700 
employees of the Veterans Benefits Administration were determined to be excepted at the 
close of the November 1995 shutdown. These employees were needed to receive and date 
benefits claims, assist applicants in filing claims, and respond to inquiries about VA 
benefits. This was the only significant change in VA planning based on provisions of the 
Antideficiency Act. 



340 



Additional updates to planning data were made as necessary to reflect current employment 
information, to provide appropriate support for functions that had already been 
determined to be excepted, or (as described below) to incorporate terms of the current 
continuing resolution, rather than on new determinations regarding excepted versus 
nonexcepted functions. 

The most recent plan (January 23, 1996) was developed based on the continuing 
resolution then in effect, PL 104-92, which provided for payment of all veterans benefits 
and for payment of contractors for goods and services necessary to patient care through 
the end of the fiscal year. Under this plan all those functions previously determined to be 
excepted under the Antideficiency Act (protection of life, safety and property) were 
continued, plus fianctions associated with the new categories of fimded activities. This 
included field ofiSces of the Veterans Benefits Administration, the Board of Veterans 
Appeals, and associated support activities such as legal representation and computer 
operations. At the time the January plan was prepared, a preliminary determination had 
been made to include "in kind" benefits such as provision of veterans grave markers, 
however, legal advice has since indicated that the continuing resolution would only apply 
to benefits involving financial payments. This issue has been clarified in the current 
continuing resolution, PL 104-99, and future plans, should they become necessary, will be 
modified appropriately. 



2. Please submit the numbers of persons furloughed in each agency during the two 
shutdowns. For each function which was subject to furlough during the first 
shutdown, but exempted from furiough during the second shutdown, please provide 
policy and legal reasons supporting the decision to change the status of the 
functions. 

Employees Furloughed November 1995 

(Plan Dated 9/15/95) 

36,354 

Employees Furloughed December 1995 - January 1996 

(Plan Update 12/14/95) 

33,767 

The decrease in number of employees furloughed reflects a determination that 1,700 
employees of the Veterans Benefits Administration would be recalled to receive and date 
applications, assist applicants in filing claims, and respond to inquiries about VA benefits. 
Additional adjustments reflect more current planning data, such as the gradual decline in 
overall VA employment levels during the plaiming period, and more accurate estimates of 
the actual number of employees needed to perform excepted functions. 



341 



4. Please provide a report, by agency, of the numbers of furloughed employees who 
filed for unemployment compensation during the shutdowns and the amounts paid 
to agency employees. Please describe any costs that will be incurred by your 
Department as a result of efforts to collect reimbursement of these payments after 
routine pay is restored. 

All furloughed employees were given the necessary forms and instructions to file for 
unemployment compensation. Some employees filed their forms through the employing 
activity (in VA approximately 230 facilities), some filed directly with the unemployment 
offices, and some never filed. Employees exercised their own options and judgment 
regarding this matter, and VA has no centralized source of information on the disposition 
of their claim forms. 

Every quarter VA Central Office receives firom each of the fifty States and the District of 
Columbia a list that contains the social security number, name, and amount of 
unemployment compensation paid each claimant charged to VA. This list is received 
approximately six weeks after the quarter ends. Most employees paid unemployment due 
to the furloughs will be reflected in the current quarter that ends March 30, 1996. We wdll 
receive the list approximately May 15, 1996 and will be pleased to provide the Committee 
with the total amount of unemployment compensation indicated. It should be noted, 
however, that the quarterly consolidated reports fi-om the states and Department of Labor 
do not indicate the reason for unemployment (e.g., fliilough, separation, resignation), and 
that the amount will presumably include costs which are not directly related to the 
shutdowns. Similar information for the same quarter of the previous year will also be 
provided, which may give the Committee some basis for comparison 

Each State and the District of Columbia have laws covering the collection of over- 
payments. Some States collect the over-payments, some States require the employer to 
collect over-payments, and some States do not consider retroactive pay an over-payment 
and allow the claimants to keep both pay and compensation. Given the diversity of 
policies and procedures in each jurisdiction, it is not possible to determine associated 
costs. However, we currently have all the employing facilities contacting their local 
Unemployment Offices to determine local State policies and to assist the State with any 
over-payment collections. 



i 



342 



7. Please provide stalling levels for all public affairs offices in the Department 
during the shutdowns. 

Two employees from the VA public affairs staff were excepted during the November 1995 
shutdown (the Assistant Secretary for Public and Intergovernmental Affairs and the 
Deputy Assistant Secretary for Public Affairs), and three employees were excepted during 
the December 1995-January 1996 shutdown (the two employees excepted during the 
November shutdown plus one clerical support employee). 



8. Please report the number and furlough status of political appointees, noncareer 
Senior Executive Service personnel, and Schedule C appointees, by agency, during 
each shutdown. 



Category Employees Excepted November Excepted Dec 1995/ 

1995 January 1996 

13 13 





1 1 
14 14 



10. How many FTEs are needed to run the tape to pay the VA's compensation and 
pension benefits? 

We do not have information solely on processing compensation and pension benefits. We 
do have an estimate on the number of employees required to process both compensation 
and pension and education benefits. A total of 3 1 employees were required to run the 
February tape. 



Presidential 


13 


Appointees 




Schedule C 


13 


Noncareer SES 


7 


Total 


33 



343 



List of Attachments (Shutdown PlansAJpdates FY 1996); 

• September 15, 1995 (implemented during November shutdown) 

• November 17, 1995 (supplementary plan to recall a limited number of employees if the 
November shutdown had lasted more than one week) 

• December 14, 1995 (implemented during December- January shutdown) 

• January 23, 1996 (developed on the basis of the continuing resolution then in eflFect, 
PL 104-92; not implemented as no shutdown occurred) 



I 



344 



Addendum to Shutdown Plan November 17, 1995 

Supplementary Plan to Recall Limited Number of Employees if November Shutdown Had 
Lasted Over One Week 



345 




THE DEPUTY SECRETARY OF VETERANS AFFAIRS 
WASHINGTON 



iWOV 1 7 ISSb 



Mr. John A. Kosklnen 
Deputy Director for Management 
OflBce of Mana:gement and Budget 
Executive Office of the President 
Room 260 Old Executive Office Bldg. 
Washington, DC 20503 



Dear Mr. Kos] 







E^ndosed as requested Is the Department's response to questions related 
to a continuing lapse of appropriations and Its affect on our operations. 

Should the shutdown last more than one week, we would need to recall 
additional employees \dio are currently furloughed so that operations vital to 
the delivery of benefits and health care can be maintained. 

Your early approval of this revised shutdown plan will be appreciated. 

Sincerely yoi 




Hershel W 



Enclosures 



346 



QUESTION 1 



DEPARTMENT OF VETERANS AFFAIRS 
UPDATE ON EXCEPTED/FURLOUGHED EMPLOYEES 



CURRENT ESTIMATE REVISED ESTIMATE 

EXCEPTED FURLOUGHED EXCEPTED FURIjOUGHED 

200392 36^54 205,668* 33.411 



* This number includes 1,700 eoqdoyees being recalled to help with beo^its processing 
and 2,929 eaq)loyees in Veterans Health Administratioa which is a more accurate estimate 
of the actual number of ei]q>loyees needed to provide and to support of delivery of health 
care. 



347 



QUESTION 2 



EFFECT OF CONTINUING LAPSE 

OF APPROPRIATION 

VETERANS HEALTH ADMINISTRATION 



An extended government shutdown will have significant impact on the ability of the 
Department of Veterans Affairs to continue providing quality health care to the nations 
veterans. A VA facility's ability to purchase goods, equipment, supplies, or services is 
dependent on the willingness of vendors and contractors to extend credit to the government 
As long as vendors and contractors choose to continoe providing goods and services without 
leimborsement, VA can continoe to provide healdi care.' In the absence of this willingness to 
'^oaT VA payments, health care may be curtailed. Exarq>les of potential problems arising 
from VA's inability to pay for goods and services are provided below. 

House Staff Disbursements - Affiliated medical schools may not be able to pay 5,000 or more 
medical and dental residoits' salaries. This will impair our abUity to continue providing 
patient care at VA medical centers. 

Utility Service Contracts - Basic utilities such as dectrici^, natural gas and trash may be 
terminated due to non-^yment of utility bills. 

Medical Equipment Service Contracts - Ser\dce maintenance contracts for MRI, CT and other 
major medical equipment in more than 100 medical centers may be terminated by the vendors 
for non-payment of services. 

Pharmaceuticals/Medical Supplies - Drugs and other pharmaceuticals supplies may not be 
replenished by vendors due to non-payment of previous drugs and supplies delivered. Stocks 
of some medical supplies such as sutures, bandages and adult diapers costing more than $20 
million per year may not be replenished by prime vendors. 

Basic Subsistence Supplies - Some local vendors are unwilling or unable to extend credit to 
VA facilities to purchase basic foodstuffs such as produce, meat and dairy products. Already, 
vendors in Beckley, West Virginia and San Juan, Puerto Rico are indicating that they wUl not 
be able to continue to provide food supplies on a credit basis. 

Contract Hospitalization and Fee Basis - Up to one million episodes of emergent care of 
veterans arc provided in non-VA facilities and may not be available on a contract or fee- 
basis. 

Prosthetics Service Contracts - Local and small contracts may refuse VA orders to 
manufacture and repair prosthetic devices for VA patients without payment, leaving patients 
without artificial limbs, wheelchairs and other prosthetic devices. 



348 



QUESTION 2 

2. 

Veterans Health Administration 



• Construction Contracts - Constniction contracts totaling nearly $500 million may Ije halted or 
delayed due to VA's inability to make regular payments. Subcontracts may default on their 
payments for labor and materials. 

• General Contracts - Services such as ambulance and air ambulance may be terminated due to 
non-payment for previous services rendered. 

• State Veterans Homes- As maiqr as 16,000 veterans may be! foiced to relocate to VA medical 
centers or to be discharged due to non-payment for previous services. 

• &neigeacy Pr^Koedness- The Dq>aitmeatofVeteransAfEairs' ability to respond to national 
emetgencies may be conq)ionused by an extended government shutdown. 

• Employee Hardship Issues - Intoiuption of enq)layee payments may result in significant 
hardships to dq)artinent enq)Ioyees. For exanq)Ie many iemployees many not possess 
sufficient resources to make mortgage, housing, transportation or medical care payments. In 
other instances, employee deductions for alimony, thrift savings plan, pensions, diild 
support, or wage garnishment may result in legal difficulties. 



349 



QUESTION 2 



EFFECT OF CONTINUING LAPSE 

OF APPROPRIATION 

VETERANS BENEFITS ADMINISTRATION 



• 3.3 miUion compensation and pensions checks totaling $ U billion for veterans and other 
beneficiaries normally deUvercd December 1, 1995, will be delayed. 

• For every week VA's regional ofBces cannot process daims, 7,000 letroacdve conqwnsation 
and pensions awards worth an average of $13 million will be delayed. 

• The current pending woddoad of conq)ensation and peoaons cases will grow by 1 1,000 cases 
per day. This will reverse FY 1994 and FY 1995 progress in reducing the backlog from 
ahnost 600.000 cases to 380.000 currently. 

• 70,000 pending claims for educational assistance for diis fall's «irollment have not been 
processed. This will increase by 10.000 if the shutdown goes one more week. 

• 200.000 monthly GI Bill enrollment verifications are sdieduled.to be released on November 
24. If these forms are not sent out and returned, vetenuis and bther beneficiaries will not 
receive their monthly education benefit check. 

• Nearly 1.000 seriously disabled veterans in VA's Vocational Rehabilitation program will be 
delayed in seeing a VA counselor each day the shutdown continues. 

• For ev«y week VA's insurance centers are not open, insurance death claim benefits would be 
delayed to 3.500 survivors at a value of $19.2 million. 

• Similarly, insurance dividend payments of $18 milli on to nearly 45,000 veterans would be 
delayed each week a shutdown continues. 

• The funds required for the pay period ending November 25 may not be available in time to 
provide regular paychecks and electronic funds transfer for employees scheduled for 
December 1 (EFT) and December 5. 



40-190 97 - 12 



350 



QUESTION 2 



EFFECT OF CONTINUING LAPSE 

OF APPROPRIATION 
OFFICE OF GENERAL COUNSEL 



Cuneatly, the Office of Geaeral Counsel (OGC) has designated only one legal advisor in 
each state as "essential" exoq)t in a few limited circumstances where the Depaitaaeat was 
involved ia active judicial litigation. In VA Central Office, the OGC has designated only the 
General Counsel, die Deputy General Counsel and one administrative assistant as essential. 
We speculate that if the shutdown continues b^ond this week; -the following adverse 
consequences will oocor. Fiist, various pending litigatioilbisfbrevanoustnbunals such as die 
EEOC, MSPB, FLRA, and OOVA will be adversely affected due to lack of lawyers and legal 
staff to handle the cases. The affect of this will be to prolong decisions affecting the rights of 
management, employees and veterans. We also believe that hi^ volume monetary 
coUecdons in various legal programs administered by die OGC such as Mcxlial Caie Cost 
Recovery and bankiuptcy will stop due to lack of personnel to process die cases. 
Government contracts requiring review by this office may also be deU^cd. Some of these 
contracts involve millions of dollars in Government obligations. Due to the scardty of 
lawyers, all matters in the field requiring legal advice or review at our VA medical centers, 
national cemeteries and regional offices will be delayed- Finally, in VA Central office, 
pending legislative and regulatory matters requiring legal review and die processing and 
rendering of final Departm«ait d«:isions in information lawand EEO matters will be 
adversely afiiected. The ultimate monetary cost to the Dq)artmen<. due to the continued 
shutdown of the OGC is difficult to assess. However, it is clear that a sustained inability of 
this office to provide competent and timely legal advice both here and in the field will 
eventually subject both the Department and its employees to unnecessary legal risks and 
monetary loss. 



351 

QUESTION 2 



EFFECT OF CONTINUING LAPSE 

OF APPROPRIATION 

OFFICE OF MANAGEMENT 



The Department' Financial Managemeot System has been unavailable to all system users 
since implementation of the VA's shut down plan on November 14. 1995. Since this time, 
vendor's have gone unpaid for both FY 95 and FY 96 invoices creating a potential serious 
crisis for VHA's Hospital System. Without payment, the hospitals will begin to have 
problems acquiring additional goods and Gervices from these veadocs. Medical Care unpaid 
obligations total $2.57 billion. This will not address payment problems for obligations 
incurred since Novonber 14 that are already occurring. These include payments for 
subsistence (primarily food) provided by local small bu^ess and benefidaiy travel for 
veterans. 



352 

QUESTION 3 

MAJOR CONTRACTS THAT WILL BE SUSPENDED 
DUE TO SHUTDOWN 

Phannaceutical Prime Vendors provide most of our pharmaceutical requirements 
(approximately $3 million each day). These prime vendors wo± on a cash flow basis and as 
such, delays in payment have extreme consequences on their business environment. ' We are 
currently discussing the "shutdown" situation with them in hopes of averting an interruption 
of services, which would be extremely costly and, unless alternate sources of supply are 
found, life threatening. 

Nursing Home Care contracts. These health care providers require pronyjt payment If the 
shutdown persists, these contractors could conceivably refiise further patients or require 
current patients be displaced. 

8a/small businesses. We have been advised of a least one instance in which 8a firm, 
concerned that tiie payment intoniptioa will mean an inabihty to meet payroll, will be 
required to suspend work. This will affect many things that the medical centers need to 
operate including many perishable food items. 

We are conconed that Pronqrt Payment Act p^ialties will accrue. For instance, with regard 
to phannaceutical prime vendors, orders placed on November 14 would begin accruing 
interest penalties on Novembw 30. By December 30, if we are still unable to pay our 
vendors, we will begin incurring interest payments against a principal of approximately $90 
million. ($3 million per day in orders X 30 days). 

Contracts funded from the NCS operating appropriation that are suspended include those for 
maintenance of equipment of cemetery grounds; opiating support contracts such as trash 
collection, pest control, and custodial services; and those for AD? services. Additionally, 
contracts for maintenance and repair projects at the national cemeteries will not be awarded 
during this period. Only contracts related to interments at closed or inactive national 
cemeteries, as well as any emergency contracts that may be required to protect life and 
property, will be funded during this period. 

There are also two types of contracts in NCS which are funded from the Compensation and 
Pensions (C&P) appropriation: Graveliners are needed to continue the essential interment 
function; therefore, contracts for the purchase of graveliners will continue. Processing of 
implications for headstones and markers had been discontinued during the shutdown; 
therefore, those contracts arc currently suspended. 

Most all VBA contracts are suspended during the shutdown. This includes one time 
contracts for special studies, OIT contracts for systems design and development.maintenance, 
or installation; property management; non-ADP equipment maintenance; 
telecommunications, and administrative services. 



353 



Shutdown Plan December 14, 1995 
Implemented During December 1995 - January 1996 Shutdown 




354 



THE DEPUTY SECRETARY OF VETERANS AFFAIRS 
WASHINGTON 



DEC 1 4 1^^ 



Mr. John A. Koskinen 
Deputy Director for Management 
Office of Management and Budget 
Executive Office of the President 
Room 260 Old Executive Office Bldg 
Washington, DC 20503 

Dear Mr. Koskinen: 

Enclosed is an updated shutdown plan for the Department of Veterans 
AflEEurs. 

As requested, the updated plan reflects experience gained in the November 
shutdown, and indicates what adjustments would be necessary should a shutdown 
last more than one week. 



Sincerely yours, 




Hershe! W. Gober 
Enclosure 



355 



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357 



Plans for Implementing a Shutdown 
Department of Veterans Affairs 
Veterans Health Administration 

Impact of Absence of Appropriations 



The Veterans Health Administration will discontinue all nonexcepted activities in its 
headquarters oflBces, medical centers, outpatient clinics, and other health care support 
facilities. Employees will be notified of their status; those who perform nonexcepted 
activities will be given fiuiough notices in accordance with shutdown guidance and be 
advised to listen to news broadcasts to learn if the fimding situation has changed. 
Excepted activities to provide health care, research, and protection of life and property 
will be fully maintained. 



Medical Care 

No veteran will have his or her care delayed, deferred, canceled, or otherwise adversely 
impacted as a result of shutdown activities. In the field, excepted activities have been 
identified to include all direct patient care activities and those support activities necessary 
to assist direct patient care providers and maintain service to patients. All excepted 
activities will be fully maintained during any furlough period. All employees engaged in 
nonexcepted activities will be furioughed. 



Canteen Service 

The VA Canteen Service is funded by a revolving fiand; therefore, all VCS activities will 
be fully maintained during any furlough period to support employees engaged in excepted 
activities. 



Protection of Life and Property 

Police and Security services will be provided in order to ensure the safety of veterans and 
their families and employees while in a VA facility. Continuation of these services is also 
necessary to protect and secure government property, buildings, and grounds. These 
services will be fully maintained during any furlough period. 



358 



Prosthetic and Medical Research 

Many research projects in VA are fionded by grants from outside sources, therefore, they 
will be fully maintained during any furlough period. Additionally, a number of projects are 
at critical stages where their shutdown could endanger the lives of patients who are 
participating in them as test subjects. These activities will be fiiUy maintained during any 
furlough period. All employees not identified with these excepted activities or not 
otherwise funded will be flirloughed. 



VHA Headquarters Staff 

Medical Administration and Miscellaneous Operating Expenses is a personnel intensive 
activity. A limited number of employees have been identified to perform excepted 
activities such as managing VHA's overall operations, organ transplantation issues, 
operational and policy issues for VA medical centers, allocation of resources to excepted 
activities, and oversight of construction contractual obligations. These activities will be 
fiiUy maintained during any fiiriough period. Employees not identified with these limited 
excepted activities will be furloughed. 



Shutdown Over One Week 

In the event a shutdown were to last over one week, VHA estimates that an additional 
900-1,000 employees would need to be recalled at any given time to respond to weather- 
related or other emergencies (estimate based on typical winter weather experience). Also, 
a small number of technical and clinical employees (approximately 10) would be recalled 
in Central Office to provide support and guidance fo excepted health care activities in the 
field. 



Updated 12/12/95 



i 



359 



Plans for Implementing a Shutdown 

Department ot Veterans AfTairs 

Veterans Benefits Administration 

Impact of Absence of Appropriations 



The Veterans Benefits Administration will discontinue all nonexcepted activities in its 
headquarters offices. Area Offices, Benefits Centers, and Regional Offices. Employees 
who perform nonexcepted activities will be advised of their status, given furlough notices 
in accordance wth shutdown guidance, and advised to listen to news broadcasts to learn if 
there is a change in the fiinding situation Employees performing excepted services will be 
available to serve veterans and their families. 

VBA employees identified as performing excepted activities in Central Office will oversee 
management of VBA excepted operations. Excepted employees at field stations will 
determine eligibility for benefits associated with other excepted VA activities (claims for 
burial, terminal illness, medical care), receive and process payments, receive and date 
benefits claims, assist applicants in filing claims, respond to telephone inquiries about VA 
benefits, manage issues involving government property, and maintain VBA automated 
records systems. These activities will be fiilly maintained during any furlough period. 



Shutdown Over One Week 

No significant change in the shutdown plan is anticipated. If necessary, a limited number 
of employees would be recalled in order to deal with emergency situations related to 
excepted activities. 



Updated 12/12/95 



360 



Plans for Implementing a Shutdown 

Department of Veterans Affairs 

National Cemetery System 

Impact of Absence of Appropriations 



The National Cemeteiy System will discontinue all nonexcepted activities in the absence of 
appropriations. Employees will be advised of their status, provided furlough notices in 
accordance with shutdown guidance, and advised to listen to news broadcasts to leam if 
there is a change in the funding situation. 

Veterans and their families have placed reliance on the National Cemetery System to 
provide gravesites at their time of need. Denial of burial to these applicants would impose 
financial hardship, and in many cases, mental anguish. Delay of interment may also result 
in health hazards for employees or others. Therefore, the National Cemeteiy System will 
continue to bury elig^le veterans during the period covered by the absence of 
appropriations. Central Office employees performing excepted activities will provide 
management direction and control, and operational support to the field, ^nployees in the 
field performing excepted activities determine eligibility for burial, supervise interment 
operations, recdve applications for headstones and gravemarkers, and provide for 
property protection. 



Shutdown Over One Week 

No significant change in the shutdown plan is anticipated. If necessary, a limited number 
of employees would be recalled in order to deal with emergencies related to excepted 
activities. 



Updated 12/12/95 



361 



Plans for Implementing a Shutdown 

Department of Veterans Affairs 
Headquarters Support Organizations 
Impact of Absence of Appropriations 



In the absence of appropriations, headquarters support organizations and their 
outstationed activities which provide technical assistance to other headquarters elements 
and to field operations will stmtdown all nonexcepted activities. Employees will be 
advised of their status, provided fiulough notices in accordance with shutdown guidance, 
and advised to listen to news broadcasts to learn if the fijnding situation has changed. 

Employees retained to perform shutdown activities wll secure all files and government 
property, notify customers of our reduced activity level, turn oflF computer operations, and 
leave their offices and enter fiulough status. 

Excepted activities performed during the shutdown period will include management of the 
department; information resources management and financial support to excepted 
activities through outstationed components in Austin, Texas; excepted activities of the 
General Counsel throughout the United States; and continuation of fimded activities such 
as the Offices of Acquisition and Materiel Management and Small and Disadvantaged 
Business Utilization, which are fimded through a revolving flmd. 

Acquisition and Materiel Management personnel will continue to secure and arrange for 
delivery of medical supplies and other essential goods to facilities where excepted 
activities are taking place. They will maintain contacts with vendors and ensure on time 
delivery of requested items. 

The information resources and financial management employees in Austin will operate on- 
line systems and run situation-dependent required batch processing operations as needed 
in support of excepted activities. They will also process payroll for the periods prior to 
funding interruption, process payroll for funded activities, and, as part of shutdown 
activities, will process vendor payments for obligations incurred with prior year or 
otherwise available funds. 

The General Counsel employees will continue with ongoing court appearances, process 
Court of Veterans Appeals cases, and provide guidance and advice to excepted activities 
as needed. 

Employees performing excepted activities in headquarters will provide technical support 
to excepted activities in the field as well as to other headquarters organizations Protection 
oflife and property activities will continue Included in these activities are protection of 
the Secretary, ongoing undercover work associated with criminal investigations, and 
investigations of incidents related to excepted activities. 



362 



Note: In the event of a shutdown December 15, 1995, estimates of fiuloughed employees 
include five employees of the VA Law Enforcement Training Center who would be 
required to Work through December 22 in order to complete the baac class currently in 
session, and would then be placed on a fiirlough status. 



Shutdown Over One Week 

No significant change in the shutdown plan is antidpated. If necessary, a limited number 
of employees would be recalled to deal with emergendes related to excepted activities, or 
in order to implement administrative requirements for extending fiirioughs or similar 
fiinctions. 



Updated 12/12/95 



363 

VA Plan for Implementation of Furloughs in Event of Lapsed Appropriations 

Responsible Organization 

The OflSce of Human Resources and Administration (OH&RA) will be the responsible VA 
office for coordinating activities necessary to implement lapsed appropriation and similar 
furloughs including the following: 

1) Be the point of contact with 0MB and 0PM on all matters related to potential 
fiirloughs; 

2) Provide infonnation regarding plans for furiough to the VA National Partnership 
Council; 

3) Prepare instructions and guidance to all VA facilities regarding furlough issues, and 

4) Conduce briefings/conferences to field and central office officials regarding furlough 
information and procedures. 

Furlough Process 

OHR&A will provide in advance written procedures and master furlough notices to all VA 
organizations and ensure complete pre-flirlough distribution to all facilities through a 
variety of electronic media. 

OHR&A will initiate conference calls to ensure that each facility's lapsed appropriation 
contact official has complete understanding of procedures and the budget situation as it 
develops. 

OHR&A will plan with all VA facilities that in the event that 0MB advdses that there will 
be no VA appropriations as of a given date, furlough notices will be delivered to affected 
employees consistent with available government-wide guidance. 

Facilities will keep employees and unions informed as to the status of possible furlough, 
including exclusions fi-om furlough. 

Facilities will individually deliver all furlough notices to affected employees. 

Each facility will inform all employees of the means by which employees will be notified to 
return to work after the furlough. 



364 



Shutdown Plan January 23, 1996 
Developed on Basis of PL 104-92; Not Implemented As No Shutdown Occurred 



365 




THE DEPUTY SECRETARY OF VETERANS AFFAIRS 
WASHINGTON 



JAN 23 1996 



Mr. John A. Koskinen 
Deputy Director for Management 
Office of Management and Budget 
Executive Office of the President 
Room 260 Old Executive Office Bldg. 
Washington, DC 20503 

Dear Mr. Koskinen: 

Enclosed are an updated shutdown plan for the Department of Veterans Affairs, 
and a copy of the data on fuiloughed versus excepted employees which was previously 
provided to your staff. 

As requested, the updated plan is based on provisions of P.L. 104-92. 



Sincerely yours, 




Enclosures 



366 




367 





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368 



Plans for Implementing a Shutdown 
Department of Veterans Afiairs 
Veterans Health Administration 

Impact of Absence of Appropriations 



The Veterans Health Administration will discontinue all nonexcepted activities in its 
headquarters offices, medical centers, outpatient clinics, and other health care support 
facilities. &nployees will be notified of their status; those who perform nonexcepted 
activities will be given fiiriough notices in accordance with shutdown guidance and be 
advised to listen to news broadcasts to learn if the funding situation has changed. 
Excepted activities to provide health care, research, and protection of life and property 
will be fiilly maintained. 



Medical Care 

No veteran will have his or her care delayed, deferred, canceled, or otherwise adversely 
impacted as a result of shutdown activities. In the field, excepted activities have been 
identified to include all direct patient care activities and those support activities necessary 
to assist direct patient care providers and maintain service to patients. All excepted 
activities vdll be fiiUy maintained during any furlough period. All employees engaged in 
nonexcepted activities will be fiirloughed. Payments to contractors for services directly 
related to patient health and safety will be made as provided in P.L. 104-92. 



Canteen Service 

The VA Canteen Service is funded by a revolving fimd; therefore, all VCS aaivities will 
be fully maintained during any furlough period to support employees engaged in excepted 
activities. 



Protection of Life and Property 

Police and Security services will be provided in order to ensure the safety of veterans and 
their families and employees while in a VA facility. Continuation of these services is also 
necessary to protect and secure government property, buildings, and grounds These 
services will be fully maintained during any fiiriough period. 



369 



Prosthetic and Medical Research 

VA research projects are funded from a two-year appropriation; consequently, it was 
possible to continue funding during the first two FY 1996 shutdowns. However, because 
the two-year appropriation is now exhausted, any further shutdowns will result in a 
cessation of funding. Projects funded from non-VA sources, e.g., pharmaceutical 
companies, may be fiilly maintained during any future shutdown period. Additionally, 
projects will be maintained which are at critical stages where shutdown could endanger the 
lives of patients \\^o are participating as test subjects. Excepted activities may also 
involve protection of the scientific viability of a project or the care of animal subjects. 
Employees not identified with excepted activities or not otherwise frinded will be 
furloughed. 



VHA Headquarters Staflf 

Medical Administration and Miscellaneous Operating Expenses is a personnel intensive 
activdty. A limited mmiberofemployees have been identified to perform excepted 
activities such as managing VHA's overall operations, organ transplantation issues, 
operational and policy issues for VA medical centers, allocation of resources to excepted 
activities, and oversight of construction contractual obligations. These activities will be 
fully maintained during any fiuiough period. Employees not identified with these limited 
excepted activities will be fiirloughed. 



Shutdown Over One Week 

In the event a shutdown were to last over one week, VHA estimates that an additional 
900-1,000 employees would need to be recalled at any given time to respond to weather- 
related or other emergencies (estimate based on typical winter weather experience). Also, 
a small number of technical and clinical employees (approximately 10) would be recalled 
in Central OflBce to provide support and guidance to excepted health care activities in the 
field. 



Updated 1/23/96 
P.L. 104-92 



370 



Plans for Implementing a Shutdown 

Department of Veterans Affairs 

Veterans Benefits Administration 

Impact of Absence of Appropriations 



All veterans benefits programs vnll be administered at VBA field offices. Excepted 
employees will manage and deliver compensation, pension, education, loan guaranty, 
insurance, and vocational rehabilitation and counseling benefits, and vnll provide support 
operations such as information technology, finance, administrative services and 
management directioa VBA employees identified as performing excepted activities in 
Central Office will oversee management of VBA excepted operations. 

Employees v^o perform nonexcepted activities will be advised of their status, given 
fiirlough notices in accordance with shutdown guidance, and advised to listen to news 
broadcasts to learn if there is a change in the fimding situation. 



Shutdown Over One Week 

No significant change in the shutdown plan is antidpated. If necessary, a limited number 
of employees would be recalled in order to deal with emergency situations related to 
excepted activities. 



Updated 1/22/96 
P.L. 104-92 



371 



Plans Tor Implementing a Shutdown 

Department of Veterans Aflairs 

National Cemetery System 

Impact of Absence of Appropriations 



The National Cemetery System will discontinue all nonexcepted activities in the absence of 
appropriations. Employees will be advised of their status, provided fiirlough notices in 
accordance with shutdown guidance, and advised to listen to news broadcasts to learn if 
there is a change in the funding situation. 

Veterans and their families have placed reliance on the National Cemetery System to 
provide gravesites at their time of need. Denial of burial to these applicants would impose 
financial hardship, and in many cases, mental anguish. Delay of interment may also result 
in health hazards for employees or others. Therefore, the National Cemetery System will 
continue to bury eligible veterans during the period covered by the absence of 
appropriations. Central Office employees performing excepted activities will provide 
management direction and control, and operational support to the field. Employees in the 
field performing excepted activities determine eli^ility for burial, supervise and conduct 
interment operations, process applications for headstones and gravemarkers, and provide 
for property protectioa 



Shutdown Over One Week 

No significant change in the shutdown plan is anticipated. If necessary, a limited number 
of employees would be recalled in order to deal with emergencies related to excepted 
activities. 



Updated 1/22/96 
P.L. 104-92 



372 



Plans for Implementing a Shutdown 

Department of Veterans Affairs 
Headquarters Support Organizations 
Impact of Absence of Appropriations 



In the absence of appropriations, headquarters support organizations and their 
outstationed acti\dties which pro\dde technical assistance to other headquarters elements 
and to field operations 'mil shutdown all nonexcepted activities. Employees will be 
advised of their status, provided fiirlough notices in accordance with shutdown guidance, 
and advised to listen to news broadcasts to learn if the fiinding situation has changed. 

Employees retained to perform shutdown activities will secure all files and government 
property, notify customers of our reduced activity level, turn ofif computer operations, and 
leave their ofiSces and enter fiuiough status. 

Excepted activities performed during the shutdown period will include management of the 
department; information resources management and financial support to excepted 
activities through outstationed components in Austin, Texas; excepted activities of the 
General Counsel throughout the United States; and continuation of fimded activities such 
as the OfiSces of Acquisition and Materiel Management and Small and Disadvantaged 
Business Utilization, which are funded through a revolving fiind. As authorized under 
P.L.94-102, adjudication of veterans benefits appeals and medical contracts appeals will 
continue. 

Acquisition and Materiel Management personnel will continue to secure and arrange for 
delivery of medical supplies and other essential goods to facilities where excepted 
activities are taking place. They will maintain contacts with vendors and ensure on time 
delivery of requested items. 

The information resources and financial management employees in Austin will operate on- 
line systems and run situation-dependent required batch processing operations as needed 
in support of excepted activities, including those associated with PL 104-92 They will 
also process payroll for the periods prior to fiinding interruption, process payroll for 
funded activities, and process vendor payments for obligations incurred with prior year or 
otherwise available funds. 

The General Counsel employees will continue with ongoing court appearances, process 
Court of Veterans Appeals cases, protect property interests in the loan guaranty program, 
and provide guidance and advice to excepted activities as needed. 



373 



Employees performing excepted activities in headquarters will provide technical support 
to excepted activities in the field as well as to other headquarters organizations and will 
protect the government's interests in managing contracts which are fully funded and time 
sensitive (e.g., VACO renovation). Protection of life and property activities will continue. 
Included in these activities are protection of the Secretary, ongoing undercover work 
associated Tmth criminal investigations, and investigations of incidents related to excepted 
activities. 



Shutdown Over One Week 

No significant change in the shutdown plan is anticipated. If necessary, a limited number 
of employees would be recalled to deal with emergencies related to excepted activities, or 
in order to inclement administrative requirements for extending fiirloughs or similar 
fimctions. 



Updated 1/22/96 
P.L. 104-92 



374 



VA Plan for Implementation of Furloughs in Event of Lapsed Appropriations 



Responsible Organization 

The Office of Human Resources and Administration (OH&RA) will be the responsible VA 
office for coordinating activities necessary to implement lapsed appropriation and similar 
furloughs including the following: 

1) Be the point of contact with 0MB and 0PM on all matters related to potential 
fiirioughs; 

2) Provide information regarding plans for furlough to the VA National Partnership 
Council; 

3) Prepare instructions and guidance to all VA fecilities regarding furlough issues, and 

4) Conduce briefings/conferences to field and central office officials regarding furiough 
information and procedures. . 



Furlough Process 

OHR&A will provide in advance written procedures and master flirlough notices to all VA 
organizations and ensure complete pre-flirlough distribution to all facilities through a 
variety of electronic media. 

OHR&A will initiate conference calls to ensure that each facility's lapsed appropriation 
contact official has complete understanding of procedures and the budget situation as it 
develops. 

OHR&A will plan with all VA facilities that in the event that 0MB advises that there will 
be no VA appropriations as of a given date, furlough notices will be delivered to affected 
employees consistent with available government-wide guidance. 

Facilities will keep employees and unions informed as to the status of possible flirlough, 
including exclusions from furlough. 

Facilities will individually deliver all furlough notices to affected employees. 

Each facility will inform all employees of the means by which employees will be notified to 
return to work after the furlough. 



a and c^anplan.doc 



375 




U. S. Department of Justice 
Office of Legal Counsel 



Office of Ihe Washinglon. DC. 20S30 

Assisuni Attorney General 



August 16, 1995 



MEMORA>fDUM FOR ALICE RIVLIN 

DIRECTOR, OmCE OF MANAGEMENT AND BUDGET 

From: Walter Dellinger 

Assistant Attorney General 

Re; Government Operations in the Event of a Lapse in Appropriations 



This memorandum responds to your request to the Attorney General for advice 
regarding the permissible scope of government operations during a lapse in appropriations.' 

The Constitution provides that "no money shall be drawn from the treasury, but in - 
consequence of appropriations made by law." U.S. Const, art. I, § 9, cl. 7. The treasury is 
further protected through the Antideficiency Act, which among other things prohibits all 
officers and employees of the federal government from entering into obligations in advance 
of appropriations and prohibits employing federal personnel except in emergencies, unless 
otherwise authorized by law. See 31 U.S.C. § 1341 et seq. ' 

In the early 1980s, Attorney General Civiletti issued two opinions with respect to the 
implications of the Antideficiency Act. See "Applicability of the Antideficiency Act Upon A 
Lapse in an Agency's Appropriations," 4A Op. O.L.C. 16 (1980); "Authority for the 
Continuance of Government Functions During a Temporary Lapse in Appropriations," 5 Op. 
O.L.C. 1 (1981) (1981 Opinion). The 1981 Opinion has frequently been cited in the ensuing 
years. Since that opinion was written, the Antideficiency Act has been amended in one 



' We do not in this memorandum address the different set of issues that anse when the limit on the public 
debt has been reached and Congress has failed lo raise the debt ceiling. 

• For the purposes of this inquiry, there are two relevant provisions of the Antideficiency Act. The first 
provides that "[a]n officer or employee of the United Stales Government or the Distnct of Columbia government 
may not . . . involve either government in a contract or obligation for the payment of money before an 
appropriation is made unless authorized by law." 31 U.S.C. § 1341(a)(1)(B). The second provides that "(a)n 
officer or employee of the United Stales Government . . . may not accept voluntary services ... or employ 
personal services exceeding that authorized by law e.xcept for emergencies involving the safety of human life or 
the protection of property." 31 U.S.C. § 1342. 



376 



respect, and we analyze the effect of that amendment below. The amendment amplified on 
the emergencies exception for employing federal personnel by providing that "[a]s used in 
this section, the term 'emergencies involving the safety of human life or the protection of 
property' does not include ongoing, regular functions of government the suspension of which 
would not imminently threaten the safety of human life or the protection of property." 31 
U.S.C. § 1342. 

With respect to the effects of this amendment, we continue to adhere to the view 
expressed to General Counsel Robert Damus of the Office of Management and Budget that 
"the 1990 amendment to 31 U.S.C. § 1342 does not detract from the Attorney General's 
earlier analyses; if anything, the amendment clarified that the Antideficiency Act's exception 
for emergencies is narrow and must be applied only when a threat to life or property is 
imminent." Letter from Walter Dellinger to Robert G. Damus, October 19, 1993. In order 
to ensure that the clarification of the 1990 amendment is not overlooked, we believe that one 
aspect of the 1981 Opinion's description of emergency governmental functions should be 
modified. Otherwise, the 1981 Opinion continues to be a sound analysis of the legal 
authorities respecting government operations when Congress has failed to enact regular 
appropriations bills or a continuing resolution to cover a hiatus between regular 
appropriations. 



I. 

Since the issuance of the extensive 1981 Opinion, the prospect of a general 
appropriations lapse has arisen frequently. In .1981, 1982, 1983, 1984, 1986, 1987 and 
1990, lapses of funding ranging from several hours to three days actually did occur. While 
several of these occurred entirely over weekends, others required the implementation of plans 
to bring government operations into compliance with the requirements of the Antideficiency 
Act. These prior responses to the threat of or actual lapsed appropriations have been so 
commonly referred to as cases of "shutting down the government" that this has become a 
nearly universal shorthand to describe the effect of a lapse in appropriations. It will assist in 
understanding the true extent of the Act's requirements to realize that this is an entirely 
inaccurate description. Were the federal government actually to shut down, air traffic 
controllers would not staff FAA air control facilities, with the consequence that the nation's 
airports would be closed and commercial air travel and transport would be brought to a 
standstill. Were the federal government to shut down, the FBI, DEA, ATP and Customs 
Service would stop interdicting and investigating criminal activities of great varieties, 
including drug smuggling, fraud, machine gun and explosives sales, and kidnapping. The 
country's borders would not be patrolled by the border patrol, with an extraordinary increase 
in illegal immigratiqp as a predictable result. In the absence of government supervision, the 
stock markets, commodities and futures exchanges would be unable to operate. Meat and 
poultry would go uninspected by federal meat inspectors, and therefore could not be 
marketed. Were the federal government to shut down, medicare payments for vital 
operations and medical services would cease. VA hospitals would abandon patients and close 

-2- 



377 



their doors. These are simply a few of the significant impacts of a federal government shut 
down. Cumulatively, these actions and the others required as part of a true shut down of the 
federal government would impose significant health and safety risks on millions of 
Americans, some of which would undoubtedly result in the loss of human life, and they 
would immediately result in massive dislocations of and losses to the private economy, as 
well as disruptions of many aspects of society and of private activity generally, producing 
incalculable amounts of suffering and loss. 

The Antideficiency Act imposes substantial restrictions on obligating funds or 
contracting for services in advance of appropriations or beyond appropriated levels, 
restrictions that will cause significant hardship should any lapse in appropriations extend 
much beyond those we have historically experienced. To be sure, even the short lapses that 
have occurred have caused serious dislocations in the provision of services, generated 
wasteful expenditures as agencies have closed down certain operations and then restarted 
them, and disrupted federal activities. Nevertheless, for any short-term lapse in 
appropriations, at least, the federal government will not be truly "shut down" to the degree 
just described, simply because Congress has itself provided that some activities of 
government should continue even when annual appropriations have not yet been enacted to 
fund current activities. 

The most significant provisions of the Antideficiency Act codify three basic 
restrictions on the operation of government activities. First, the Act implements the 
constitutional requirement that "No Money shall be drawn from the Treasury, but in 
Consequence of Appropriations made by Law." U.S. Const, art. I, § 9, cl. 7. Second, 
when no current appropriations measure has been passed to fund contracts or obligations, it 
restricts entering into contracts or incurring obligations (except as to situations authorized by 
other law). Third, it restricts employing the services of employees to perform government 
functions beyond authorized levels to emergency situations, where the failure to perform 
those functions would result in an imminent threat to the safety of human life or the 
protection of property.' The 1981 Opinion elaborated on the various exceptions in the 
Antideficiency Act that permit some continuing government functions, and we will only 
summarize the major categories here: 

• Multi-year appropriations and indefinite appropriations. 

Not all government functions are funded with annual appropriations. Some operate 
under multi-year appropriations and others operate under indefinite appropriations provisions 
that do not require passage of annual appropriations legislation. Social security is a 
prominent example of a program that operates under an indefinite appropriation. In such 



' These restrictions are enforced by criminal penalties. An officer or employee of the United States who 
knowingly and willfully violates the restrictions shall be fined not more than $5,000, imprisoned for not more 
than 2 years, or both. 31 U.S.C. §1350. 

-3- 



378 



cases, benefit checks continue to be honored by the treasury, because there is no lapse in the 
relevant appropriation. 

• Express authorizations: contracting authority and borrowing authority. 

Congress provides express authority for agencies to enter into contracts or to borrow 
funds to accomplish some of their functions. An example is the "food and forage" authority 
given to the Department of Defense, which authorizes contracting for necessary clothing, 
subsistence, forage, supplies, etc. without an appropriation. In such cases, obligating funds 
or contracting can continue, because the Antideficiency Act does not bar such activities when 
they are authorized by law. As the 1981 Opinion emphasized, the simple authorization or 
even direction to perform a certain action that standardly can be found in agencies' enabling 
or organic legislation is insufficient to support a finding of express authorization or necessary 
implication (the exception addressed next in the text), standing alone. There must be some 
additional indication of an evident intention to have the activity continue despite an 
appropriations lapse. 

• Necessary implications: authority to obligate that is necessarily implied by statute. 

The 1981 Opinion concluded that the Antideficiency Act contemplates that a limited 
number of government functions funded through annual appropriations must otherwise 
continue despite a lapse in their appropriations because the lawful continuation of other 
activities necessarily implies that these functions will continue as well. Examples include the 
check writing and distributing functions necessary to disburse the social security benefits thai 
operate under indefinite appropriations. Further.examples include contracting for the 
materials essential to the performance of the emergency services that continue under that 
separate exception. In addition, in a 1980 opinion, Atomey General Civiletti opined that 
agencies are by necessary implication authorized "to incur those minimal obligations 
necessary to closing [the] agency." The 1981 opinion reiterated this conclusion and 
consistent practice since that time has provided for the orderly termination of those functions 
that may not continue during a period of lapsed appropriations. 

• Obligations necessary to the discharge of the President's constitutional duties and 
powers. 

Efforts should be made to interpret a general statute such as the Antideficiency Act to 
avoid the significant constitutional questions that would arise were the Act read to critically 
impair the exercise of constitutional functions assigned to the executive. In this regard, the 
1981 Opinion noted that when dealing with functions instrumental in the discharge of the 
President's constituti9nal powers, the "President's obligational authority . . . will be further 
buttressed in connection with any initiative that is consistent with statutes - and thus with the 
exercise of legislative power in an area of concurrent authority -- that are more narrowly 
drawn than the Antideficiency Act and that would otherwise authorize the President to carry 



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379 



out his constitutionally assigned tasks in the manner he contemplates." 1981 Opinion, at 6- 

7." 

• Personal or voluntary services "for emergencies involving the safety of human life or 

the protection of property." 

The Antideficiency Act prohibits contracting or obligating in advance of 
appropriations generally, except for circumstances just summarized above. The Act also 
contains a separate exception applicable to personal or voluntary services that deal with 
emergencies. 31 U.S.C. § 1342. This section was amended in 1990. We will analyze the 
effects of that amendment in Part 11 of this memorandum. 

Finally, one issue not explicitly addressed by the 1981 Opinion seems to us to have 
been settled by consistent administrative practice. That issue concerns whether the 
emergency status of government functions should be determined on the assumption that the 
private economy will continue operating during a lapse in appropriations, or whether the 
proper assumption is that the private economy will be interrupted. As an example of the 
difference this might make, consider that air traffic controllers perform emergency functions 
if aircraft continue to take off and land, but would not do so if aircraft were grounded. The 
correct assumption in the context of an anticipated long period of lapsed appropriations, 
where it might be possible to phase in some alternatives to the government activity in 
question, and thus over time to suspend the government function without thereby imminently 
threatening human life or property, is not entirely clear. However, with respect to any short 
lapse in appropriations, the practice of past administrations has been to assume the continued 
operation of the private economy, and so air traffic controllers, meat inspectors, and other 
similarly situated personnel have been considered to be within the emergency exception of 
§ 1342. 



* The Attorneys General and this office have declined to catalog what actions might be undertaken this 
heading. In 1981, for example, .\ttomey General Civiletti quoted Attorney General (later Justice) Frank 
Murphy. "These constitutional powers have never been specifically defmed, and in fact cannot be, since their 
extent and limitations are largely dependent upon conditions and circumstances. . . . The right to take specific 
action might not exist under one state of facts, while under another it might be the absolute duty of the 
Executive to take such action. " 5 Op. O.L.C. at 7 n.9 (quoting 39 Op. Atfy Gen. 343, 347-48 (1939)). This 
power should be called upon cautiously, as the courts have received such executive branch assertions 
skeptically. See, e.g. . Youneslown Sheet & Tube Co. v. Sawver . 343 U.S. 579 (1952); George v. Ishimaru . 
849 F. Supp. 68 (D.D.C.). vacated as moot . No. 94-5111, 1994 WL 517746 (D.C. Cir.. Aug. 25. 1994). But 
see Haig v. Agee . 453 U.S. 280 (1981); In re Neagle . 135 U.S. I (1890). 



380 

II. 

The text of 31 U.S.C. §1342, as amended in 1990, now reads: 

An officer or employee of the United States Government or of the District of 
Columbia government may not accept voluntary services for either government 
or employ personal services exceeding that authorized by law except for 
emergencies involving the safety of human life or the protection of property. 
This section does not apply to a corporation getting amounts to make loans 
(except paid in capital amounts) without legal liability of the United States 
Government. As used in this section, the term "emergencies involving the 
safety of human life or the protection of property" does not include ongoing, 
regular functions of government the suspension of which would not imminently 
threaten the safety of human life or the protection of property. 

31 U.S.C. § 1342. Because of the § 1342 bar on employing personal services, officers and 
employees may employ personal services in excess of other authorizations by law only in 
emergency situations.' This section does not by itself authorize paying employees in 
emergency situations, but it does authorize entering into obligations to pay for such labor. 

The central interpretive task under § 1342 is and has always been to construe the 
scope of the emergencies exception of that section. When the 1981 Opinion undertook this 
task, the predecessor to § 1342 did not contain the final sentence of the current statute, 
which was added in 1990. Examining that earlier veVsion, the Attorney General concluded" 
that the general language of the provision and the sparse legislative history of it did not 
reveal its precise meaning. However, the opinion was able to glean some additional 
understanding of the statute from that legislative history. 

The Attorney General noted that as originally enacted in 1884, the provision forbade 
unauthorized employment "except in cases of sudden emergency involving the loss of human 
life or the destruction of property." 23 Stat. 17. He then observed that in 1950, Congress 
enacted the modem version of the Antideficiency Act and accepted revised language for 



The 1981 Opinion concluded ihai: 

(djespiie the use of the term 'voluntary service,' the evident concern underlying this 
provision is noi government agencies' acceptance of the benefit of services rendered 
without compensation. Rather, the original version of § |1342J was enacted as part of an 
urgent deficiency appropriation act in 1884, Act of May 1, 1994, ch. 37, 23 Stat. 15, 17, in 
order to avoid elaims for compensation arising from the unauthorized provision of services 
to the government by non-employees, and claims for additional compensation asserted by 
government employees performing extra services after hours. This is, under |§ 1342], 
government officers and employees may not involve government in contract for 
employment , i.e., for compensated labor, except in emergency situations. 30 Op. Att'y 
Gen. 129, 131 (1913). 

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381 



§ 1342 that originally had been suggested by the Director of the Bureau of the Budget and 
the Comptroller General in 1947. In analyzing these different formulations, the Attorney 
General stated that 

[wjithout elaboration, these officials proposed that cases of sudden 
emergency' be amended to 'cases of emergency,' 'loss of human life' to 
'safety of human life,' and 'destruction of property' to 'protection of property. 
These changes were not qualified or explained by the report accompanying the 
1947 recommendation or by any aspect of the legislative history of the general 
appropriations act for fiscal year 1951, which included the modem §[1341]. 
Act of September 6, 1950, Pub. L. No. 81-759, §1211, 64 Stat. 765. 
Consequently, we infer from the plain import of the language of their 
amendments that the drafters intended to broaden the authority for emergency 
employment. 

5 Op. O.L.C. at 9. 

The 1981 Opinion also sought guidance from the consistent administrative practice of 
the Office of Management and Budget in applying identical "emergencies" language found in 
another provision. That other provision prohibits 0MB from apportioning appropriated 
funds in a manner that would indicate the need for a deficiency or supplemental 
appropriation, except in cases of "emergencies involving the safety of human life, [or] the 
protection of property" -- phraseology identical to the pre- 1990 version of § 1342.* 
Combining these two sources with the statutory text, the Attorney General articulated two 
rules for identifying functions for which government officers may enter into obligations to 
pay for personal services in excess of legal authority other than § 1342 itself: 



' 31 U.S.C. § 1515 (recodified rrom § 665(e) at ihe lime of the Civiletli opinion). Analyzing past 
adminisiraiive practice under this statute. Attorney General Civiletli found that: 

Directors of the Bureau of the Budget and of the OfHce of Management and Budget have 
granted dozens of deflciency reapportionments under this subsection in the last 30 years, 
and have apparently imposed no test more stringent than the articulation of a reasonable 
relationship between the funded activity and the safety of human life or the protection of 
property. Activities for which deficiency apportionments have been granted on this basis 
include [FBI] criminal investigations, legal services rendered by the Department of 
Agriculture in connection with state meat inspection programs and enforcement of the 
Wholesome Meat Aa Of 1967, 21 U.S.C.§§ 601-695, the protection and management of 
commodity inventories by the Commodity Credit Corporation, and the investigation of 
aircraft accidents by the National Transportation Safety Board. These few illustrations 
demonstrate th^ common sense approach that has guided the interpretation of § 665(e). 
Most important, under § 665(e)(2), each apportionment or reapportionment indicating the 
need for a deficiency or supplemental appropriation has been reported contemporaneously 
to both Houses of Congress, and, in ihe face of these reports. Congress has not acted in 
any way to alter the relevant 1950 wording of § 665(e)(1)(B), which is, in this respect, 
identical to § 665(b). 

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382 



First, there must be some reasonable and articulable connection between the 
function to be performed and the safety of human life or the protection of 
property. Second, there must be some reasonable likelihood that the safety of 
human life or the protection of property would be compromised, in some 
degree, by delay in the performance of the function in question. 

While we continue to believe that the 1981 articulation is a fair reading of the 
Antideficiency Act even after the 1990 amendment, see Letter from Walter Bellinger to 
Robert G. Damus, October 19, 1993, we are aware of the possibility the second of these two 
rules might be read more expansively than was intended, and thus might be applied to 
functions that are not emergencies within the meaning of the statute. To forestall possible 
misinterpretations, the second criteria's use of the phrase "in some degree" should be 
replaced with the phrase, "in some significant degree." 

The reasons for this change rest on our understanding of the function of the 1990 
amendment, which comes from considering the content of the amendment, its structure and 
its sparse legislative history. That history consists of a solitary reference in the conference 
report to the Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, 104 Stat. 
1388: 

The conference report also makes conforming changes to title 31 of the United States 
Code to make clear that . . . ongoing, regular operations of the Government cannot 
be sustained in the absence of appropriations, except in limited circumstances. These 
changes guard against what the conferees believe might be an overly broad 
interpretation of an opinion of the Attorney General issued on January 16, 1981, 
regarding the authority for the continuance of Government functions during the 
temporary lapse of appropriations, and affirm that the constitutional power of the 
purse resides with Congress. 

H.R. Rep. No. 964, 101st Cong., 2d Sess. 1170 (1990). While hardly articulating the 
intended scope of the exception, the conference report does tend to support what would 
otherwise be the most natural reading of the amendment standing alone: because it is phrased 
as identifying the functions that should be excluded from the scope of the term "emergency," 
it seems intended to limit the coverage of that term, narrowing the circumstances that might 
otherwise be taken to constitute an emergency within the meaning of the statute. 

Beyond this, however, we do not believe that the amendment adds any significant new 
substantive meaning to the pre-existing portion of § 1342, simply because the most prominent 
feature of the addition - its emphasis on there being a threat that is imminent, or "ready to 
take place, near at h^nd," see Webster's Third New International Dictionary 1130 (1986) - 
is an idea that is already present in the term "emergency" itself, which means "an unforeseen 
combination of circumstances or the resulting state that calls for immediate action" to 



383 



respond to the occurrence or situation. Id. at 741.^ The addition of the concept of 
"imminent" to the pre-existing concept of "emergency" is thus largely redundant. This 
redundancy does, however, serve to emphasize and reinforce the requirement that there be a 
threat to human life or property of such a nature that immediate action is a necessary 
response to the situation. The structure of the amendment offers further support for this 
approach. Congress did not alter the operative language of the statute; instead, Congress 
chose to enact an interpretive provision that simply prohibits overly expansive interpretations 
of the "emergency" exception. 

Under the formulation of the 1981 Opinion, government functions satisfy § 1342 if, 
inter alia, the safety of human life or the protection of property would be "compromised, in 
some degree. " It is conceivable that some would interpret this phrase to be satisfied even if 
the threat were de minimis, in the sense that the increased risk to life or property were 
insignificant, so long as it were possible to say that safety of life or protection of property 
bore a reasonable likelihood of being compromised at all. This would be too expansive an 
application of the emergency provision. The brief delay of routine maintenance on 
government vehicles ought not to constitute an "emergency," for example, and yet it is quite 
possible to conclude that the failure to maintain vehicles properly may "compromise, to some 
degree" the safety of the human life of the occupants or the protection of the vehicles, which 
are government property. We believe that the revised articulation clarifies that the 
emergencies exception applies only to cases of threat to human life or property where the 
threat can be reasonably said to the near at hand and demanding of immediate response. 



See also Random House Dictionary of the English Language Unabridged 636 (2d ed. 1987) 
("emergency" means "a sudden, urgent, usually unexpected occurrence or occasion requiring immediate 
action"); Webster's II New Riverside University Dictionary 427 (1988) ("an unexpected, serious occurrence 
or situation urgently requiring prompt action"). 



384 



TESTIMONY OF 

WALTER DELLINGER 

ASSISTA>rr ATTORNEY GENERAL 

OFFICE OF LEGAL COUNSEL 

BEFORE A JOE^ HEARING OF THE 
SENATE BUDGET COMMITTEE 

and the 
HOUSE BUDGET COMMITTEE 

September 19, 1995 

Chainnan Domenici and Chairman Kasich, Members of the Committees: 

I appreciate the invitation to appear today before the Budget Committees from both 
Houses to discuss with you the executive branch's interpretation of the laws providing for 
government operations in the event of a lapse in appropriations. The Department of Justice 
welcomes this opportunity to have a full public discussion of the conclusions we have 
reached so far. In addition to answering your questions, we would very much like to have 
the benefit of your thinking, either this morning or after you have had an opportunity to 
consider further the submissions we have made. Any thoughts you have about the proper 
resolution of these often difficult legal questions will be most welcome by the Department-of 
Justice and will be given careful attention as we continue the process of elaborating the 
applicable legal standards. 

In recent weeks, the Office of Legal Counsel has been concentrating on the legal 
issues associated with a lapse of appropriations, and this is the focus of ray remarks today. 
In the course of our analysis, we have reviewed and been guided by the 1981 opinion by 
Attorney General Civiletti interpreting the Antideficiency Act, which has formed the basis for 
contingency planning by the administrations of President Reagan and President Bush 'and by 
this administration. On August 16, 1995, 1 issued an Office of Legal Counsel memorandum 
reaffirming the conclusions of the 1981 Civiletti opinion and assessing the consequences of a 
1990 amendment to the Antideficiency. Let me briefly sketch our inteipretation of the law. 

INTRODUCTION 

Our starting point in addressing these questions is the Constitution itself. One of the 
Constitution's least heralded, but most fundamentally important, provisions is found in 
Article I, § 9. It reads: 

"No Money shall be drawn from the Treasury, but in Consequence of 
Appropriations made by Law." 

This provision expresses what is commonly known as Congress's "power of the 
purse." It is no exaggeration to say that it is a principle for which patriots fought and died, 



385 



and it means what it says: without authorization by the vote of the people's representatives 
in Congress, not one dime can be spent from the United States Treasury. 

Therefore, one consequence of a lapse in appropriations is mandated by the 
Constitution - no one can be paid any money from the Treasury when the necessary 
appropriations bill has not been enacted. Should we reach October 1 without all 
appropriations bills having been signed into law, and no continuing resolution in place, 
employees cannot be paid, contract payments cannot be made, government rents cannot be 
paid, in all cases where the necessary appropriations bill is lacking. 

If the government operated exclusively on a daily pay-as-you-go basis, a lapse in 
appropriations would necessarily mean that any and all activities of the government that 
required disbursements from the Treasury would just come to a halt. The government is not 
a daily pay-as-you-go operation, however. Consistent with Article I, § 9, it would be 
possible for the government to make contracts with individuals and firms for goods and 
services even when it currently lacked the funds to pay off those contracts. So long as 
suppliers, contractors and employees were willing to contract with the federal government on 
the basis of a promise to pay in the future, activities of government could continue on that 
basis ~ but for the limitations embodied in the Antideficiency Act. 

The Antideficiency Act provides that no federal official is permitted to contract or 
obligate funds before an appropriations measure has been enacted. By preventing the federal 
government from even obligating itself to pay for goods or services before Congress has 
made an appropriation, the Antideficiency Act reinforces the constitutional principle that the 
Congress must decide how much money to spend and how to spend it. 

If the Antideficiency Act were an absolute bar on obligating funds in advance of 
appropriations, then the results would be just as I have described ~ the entire portion of the 
federal government that requires annual appropriations would come to a halt. Congress, 
however, has not made the Antideficiency Act an absolute bar on obligating funds in advance 
of appropriations. It has instead provided for certain exceptions. For the functions covered 
by these exceptions the goveinment may continue to obligate funds even though 
appropriations bills have not been enacted. 

The exceptions to the Antideficiency Act do not necessarily reflect any considered 
judgment by the Congress as^ to which activities are crucial or essential and which are not. 
Instead, for reasons I will elaborate, there are a variety of different excq>tions that permit 
some very discretionary and perhaps even insignificant functions of government to continue 
operating, while other, critically important activities must be curtailed. 



386 



A. EXCEPTIONS TO THE ANTmEFICIENCY ACT 

1. Multi-year, Permanent, and Indennite Appropriations 

One initial explanation for a great deal of continuing functions of the federal 
government is that the Antideficiency Act does not by its own tenns apply to a substantial 
portion of those functions at all. The Act only prohibits incurring obligations in advance of 
appropriations, and a majority of current government expenditures "occur under multi-year, 
permanent or indefinite appropriations that do not lapse on the expiration of the current fiscal 
year. Some examples include social security payments, medicare payments and interest 
payments on the national debt. 

Some salaries are paid out of permanent appropriations, too. Sometimes this occurs 
because salaries are paid out of a fiind that collects fees from users. An example would be 
the lawyers in the Justice Department's antitrust division whose salaries are allocated to the 
account that collects merger pre-clearance fees under the Hart-Scott-Rodino law. Sometimes 
it occurs because Congress has simply enacted an appropriations measure that continues for a 
period of years or even indefinitely. An example would be the salaries of members of 
Congress. 

In all these cases, obligations may be made and money may be withdrawn from the 
treasury to pay the recipients of these obligations. The Constitution is not violated because 
the sums in question are drawn from the Treasury '^in Consequence of Appropriations ma3e 
by Law." Congress has in fact enacted an appropriation, and the Antideficiency Act is not 
implicated because the expenditures or obligations are not taking place or being incurred in 
advance of an appropriation. 



2. Employees Whose Continuing Work Does Not Incur Any Obligation 

Some employees of the federal government operate under terms that obligate the 
federal government to pay them so long as they occupy a certain post or position, whether or 
not they are performing services. Examples include certain foreign nationals who are 
employed by the State Department in various localities where local labor laws create such 
terms. Certain high-ranking members of the executive branch who have been confirmed by 
the Senate, such as cabinet secretaries, provide other examples. In addition, the Constitution 
forbids the salary of the President or of Article EI judges to be reduced while they are in 
office. The obligation to pay the salaries of these officeholders is created by the Constitution 
without regard to \14hether they actually perform services. 

In these cases, the authority to incur the obligation to pay such individuals is 
contained in the Constitution or in- the legislation that creates or authorizes such arrangements 
to be entered into in the first place. Furthermore, having such individuals actually perform 



387 



services during a lapse in appropriations does not incur any additional obligation — the 
obligation already exists as a result of the original hiring, appointing, or electing of the 
individual. As a result, the Antideficiency Act is not violated if those individuals continue to 
work. Bear in mind always that the fact that monies are not appropriated to pay them 
means, of course, that they do not actually receive pay until funds are appropriated. 



3. The Emergency ExceptloD 

The excq)tion that probably explains the greatest number of employees who will not 
be furloughed during a lapse in appropriations is expressly stated in the statute. The 
Antideficiency Act, in § 1342, authorizes federal officials to "employ personal services" in 
"emergencies involving the safety of human life or the protection of property." In 1990 this 
provision was amended to clarify its scope, so that the statute now expressly states that the 
emergencies it refers to "doQ not include ongoing, regular functions of govenmient the 
suspension of which would not imminently threaten the safety of human life or the protection 
of property." 

This articulation is consistent with the advice that the Dq)artment of Justice had been 
giving since Attorney General Civiletti's 1981 opinion. The interpretations of the 
Department of Justice and the settled practice of the executive branch indicate that a function 
may be continued under the emergency exception if two conditions are met. First, there 
must bear some reasonable and articulable connection between the function to be performed 
and the safety of human life or the protection of property. Second, there must be some ~ 
reasonable likelihood that the safety of human. life or the protection of property would be 
compromised, in some significant degree, by delay in the performance of the function in 
question. 

In applying the exception relating to property and life, it is necessary to make certain 
assumptions. For example, the continued functioning of FAA air traffic controllers is 
necessary only if the nation's airports remained open and air transportation were to continue. 
In this area, as in others, we have looked to past practice as an interpretive guide. With 
respect to any short lapse in ^)propriations, the consistent practice of past administrations has 
been to assume the continued operation of the private economy. Consequently, air traffic 
controllers, meat inspectors, and other similarly situated personnel have been considered to 
be within the emergency excq>tion of § 1342. We have not determined whether this 
assumption would continue to be justified if a lapse in appropriations extended beyond a 
short period. 

Because the,^tideficiency Act authorizes federal officials to "employ personal 
services" to continije functions encompassed within the emergency exertion, obligations to 
pay compensation may be given to those federal employees who perform emergency 
functions during an appropriations lapse. It is important to note, however, that these 
employees may not receive an actual payment of money from the Treasury unless and until 



388 



an appropriation is enacted. During an extended lapse in appropriations, the nation would be 
depending upon ability and willingness of prison guards, border officials, law enforcement 
agents, air traffic controllers and others to continue working even though they would not be 
receiving pay checks. 



4. Obligations Expressly Authorized by Law 

In some cases. Congress has passed other legislation that authorizes the government to 
enter into obligations in advance of appropriations. Attorney General Civiletti's opinion 
concluded that such authorization cannot be derived from the sort of general authorizing 
statute Congress necessarily enacts when creating a government program. Rather, to be 
considered "expressly authorized," a statute must clearly authorize the incursion of 
obligations regardless of a lapse in appropriations. An example of such authority is the 
statute that permits the military to incur obligations on behalf of the United States in the 
absence of appropriations "for clothing, subsistence, forage, fuel, quarters, transportation, or 
medical and hospital supplies." 41 U.S.C. § 11(a). 



5. Obligations Necessarily Implied by Law 

Attorney General Civiletti's opinion also recognized instances where the speciflc 
terms of a statute imposing duties upon or vesting authority in federal officers and employees 
lead necessarily to an inference that such officers or employees are authorized to incur 
obligations in advance of appropriations. It is on this basis, for example, that Attorney 
General Civiletti concluded that agencies may incur obligations in order to conduct an 
orderly termination of the unautliorized activities of the agency. The Attorney General 
interpreted the Antideficiency Act to require nonexcepted functions to terminate. He then 
reasoned that because it would in fact be impossible to terminate functions without incurring 
any obligations at all and because a statute that imposes a duty impliedly confers the 
authority to fulfill that duty, the Antideficiency Act itself requires, by necessary implication, 
federal ofTicers to incur obligations associated with an orderly shutdown. 

A second kind of necessarily implied authorization arises in situations where the 
government has a duty to continue an activity, but the administrative personnel necessary to 
carry forward that activity or function are funded through appropriations that have lapsed. 
The Civiletti opinion concluded that in such a case. Congress haid impliedly authorized the 
staffing necessary to maintain the activity. The example he used was of the personnel in the 
Social Security Adyiinistration necessary to maintain the activity of disbursing social security 
t)enerits to eligible individuals. 



389 



6. The President's Core Constitutional Duties 

The Constitution itself vests certain duties and powers in each of the three branches. 
As to the executive branch, the President's constitutional powers include the pardon power, 
the commander in chief power, the foreign affairs powers, the power to make 
recommendations to Congress, and the power to demand opinions in writing of the heads of 
departments. Attorney General Civiletti did not take an unduly broad view of this power. 
For example, he did not reason that, because the Constitution vests "the executive Power" in 
the President and charges him to "take Care that the Laws be faithfully executed," the 
President is "authorized by law" to carry out all statutorily vested executive power. Attorney 
General Civiletti did, however, read the Antideficiency Act as leaving with the President the 
authority to make 'those obligations necessarily incident to presidential initiatives undertaken 
within his constitutional powers. " Obligations incurred in undertaking these functions are 
"authorized by law"; va^, the Constitution. 

For all three branches, but especially for the executive branch, the specific functions 
that they are constitutionally entitled to undertake will depend on the facts and circumstances 
surrounding the proposed activity. Whether a particular function is necessarily incident to 
the exercise of the President's foreign affairs power, for example, will depend upon the 
factual setting. Attorney General Civiletti recognized that where the President seeks to take 
action that is grounded in his constitutional authority, his assertion of authority is buttressed 
in those cases in which there are acts of Congress authorizing the activity asserted. He also 
observed that valid assertions of the President's constitutional authority are typically marked 
by both urgency and necessity. 



B. NONEXCEPTED FUNCTIONS 

It bears emphasizing that the Antideficiency Act mandates the termination of all 
functions other than the excepted functions set out above. As I have indicated, the functions 
that the Antideficiency Act allows to continue during an appropriations lapse are not r 
determined by whether a particular activity is important or "essential" in some general sense. 
As a result, a number of fiinaions that are, by any conception, important and essential must 
nevertheless terminate during a lapse in appropriations. In contrast, other functions that, if 
assessed in order of importance, would be unlikely to rank higher than many nonexcepted 
functions would nevertheless continue. 



C. THE DEBT CEILING 

Finally, as Director Rivlin outlined, the situation in which neither an appropriations 
bill nor a continuing resolution has been enacted is entirely different from the situation in 
which the failure to raise the debt ceiling deprives the Treasury of authority to issue more 
debt as defined in the statutory debt ceiling, 31 U.S.C. § 3101(b). Among those differences 



390 



is this: In the case of a lapse of appropriations, Art I, § 9 of the Constitution prevents the 
Treasury from honoring any unauthorized claim for payment against the United States and 
the Antideficiency Act prohibits affected agencies from entering into many contracts or 
obligations to pay. By contrast, reaching the debt ceiling does not deprive the departments 
of the government of the authority to employ workers and otherwise enter into obligations. 
Nor does it deprive the Treasury of statutory authority to honor claims for payment. The 
problem would be, rather, that the Treasury may on any given day lack the funds to honor 
all the authorized claims that are submitted to it. In an extreme case, the government might 
face a calamity unknown in its two-hundred year history, namely a default by the United 
States on its debt obligations. 



CONCLUSION 

The Antideficiency Act protects that central constitutional provision committing the 
power of the purse to Congress. It was drawn, however, with a specific context in mind. 
Unfortunately for present purposes, that context is not a general appropriations lapse. In 
1820, when the first version of the Antideficiency Act was enacted, and through its formative 
revisions. Congress had in mind the practice, apparently common at the time, of executive 
branch agencies obligating more funds than had been appropriated for authorized activities in 
an attempt to force Congress after the fact to appropriate more funds than Congress had 
wished or chosen to appropriate. 

Although the Antideficiency Act was not written with a general lapse in 
appropriations in mind, the act applies to that situation. Because its drafters did not consider 
the contingency of a general appropriations lapse, it is often difficult to apply to the many 
specific and often very complicated questions that attend a general appropriations lapse. For 
that reason, we rely heavily on the precedents of administrative construction and practice in 
issuing guidance on the application of the Antideficiency Act to a general appropriations 
lapse. Since the scope and contours of the Antideficiency Act are very often difficult to 
define, we are grateful for these hearings and welcome the opportunity to receive any 
thoughts or suggestions that members of the Committees might have. 



391 



RESPONSE TO QUESTIONS OF THE SUBCOMMITTEE ON CIVIL SERVICE 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 

U.S. HOUSE OF REPRESENTATIVES 

DECEMBER 6. 1995 



Please summarize for the sxibcommlttee the functions 
performed by Justice Department employees who have continued 
to work during the shutdown, and explain the Department's 
rationale for continuing that work \inder the applicable 
standards and guidelines? 

The core mission of the U.S. Department of Justice is the 
enforcement of the nation's laws and, consequently, the 
protection of life and property throughout the country and 
around the world. Additionally, about 10 percent of the 
Department's employees are funded through reimbursements, 
fee accounts, no-year funds, or carry-over funding which did 
not expire with the lapse in appropriations. In all, 
approximately 75 percent of the Department's employees were 
exempt from the recent furlough. 

By appropriation, the workers who continued their functions 
were engaged in the following kinds of activities: 

General Administration (GA) . In addition to providing 
executive direction to the Department, employees provided 
mission-critical law enforcement applications for various 
components nationwide on a 24 hours-a-day, 7 days-a-week 
basis at the Justice Data Center, provided services relating 
to communications for senior managers and law enforcement 
personnel, and also relevant financial management services 
required for employees deemed "exempt" during the furlough 
period. 

The Executive Office for Immigration Review (EOIR) exempted 
a number of its Immigration Judges so that hearings for 
incarcerated aliens could continue. 

Office of the Inspector General (OIG) . Employees continued 
criminal investigations and provided support services for 
exempt employees . 

U.S. Parole Commission (USPC) . Employees answered calls, 
responded to requests for emergency warrants and processed 
parole certificates. 

General Legal Activities. Employees ensured that criminal 
litigation continued uninterrupted; sought continuances for 
all civil and appellate litigation; proceeded with civil and 
appellate litigation if attempts to secure continuances 
failed; provided legal advice to the White House and the 
National Security Counsel on national security matters; were 



392 



available to provide administrative advice and resource 
allocation guidance to Civil Rights Prosecution personnel 
and the Assistant Attorney General, Civil Rights Division, 
in the event of civil disorder; were available to respond to 
and investigate complaints of alleged criminal civil rights 
violations involving endangerment of life or property and to 
handle voting rights issues and complaints from 
institutionalized persons concerning life threatening 
situations. Also, employees provided uninterrupted 
communication among Federal, State, local, and international 
law enforcement entities. 

U.S. Attorneys. These employees addressed criminal matters 
and civil matters of urgency, and to provided support to 
exempt employees . 

U.S. Marshals Service. Employees carried out duties 
associated with judicial security, prisoner security and 
prisoner transportation. A limited number of employees 
provided overall direction and support to essential 
activities. 

Commvmity Relations Service (CRS) . Employees provided 
resettlement, education, and conflict resolution services to 
over 14,000 Cubans at Guantanamo. 

United States Trustees Program. These employees protected 
the United States Government from liability in bankruptcy 
matters and coordinated criminal matters with the U.S. 
Attorneys and the Federal Bureau of Investigation. 

Federal Bureau of Investigation. All operations of the FBI 
are directed toward national security and the investigation 
of violations of law involving protection of life and 
property. Accordingly, all FBI agents and 70 percent of 
support personnel in the field were exempt. At FBI 
headquarters, all agents and approximately 85 percent of the 
support personnel are considered excepted. These staff 
members provided direction and investigative support to 
field operations. This includes the entire Criminal Justice 
Information Services Division which provides fingerprint 
identification services to criminal and national security 
investigations . 

Drug Enforcement Administration. Employees provided 
oversight and direction to or carried out narcotics 
investigations around the world. 

Immigration and Naturalization Service (INS) . These 
employees provided overall direction to the agency; 
controlled the U.S. border and protected property; continued 
working on active criminal cases; detained in-cvfstody 



393 



aliens; and conducted inspections of applicants for 
admission to the United States. 

Bureau of Prisons (BOP) . Staff at Federal correctional 
institutions maintained the custody of Federal inmates. At 
several institutions under construction, a small number of 
staff protected property and ensured security against 
compromise. Employees also continued inmate custody 
responsibilities over some 10,000 inmates in contract 
facilities. 

No previous shutdown lasted more than 3 days. Did the 
Department of Justice make any assun^tions with respect to 
the length of the shutdown? If so, what time frame was 
assvimed, eind how did it affect the Department's decisions 
with respect to the functions amd positions that were 
continued after the lapse of appropriations? 

The contingency plan which the Department submitted to the 
Office of Management and Budget was based on a 2 -week lapse 
in appropriations. The plan and internal Department 
guidance recognized, however, that operational necessities 
could well -- and did -- dictate changes. For example, the 
initial plan did not provide a sufficient number of 
employees in United States Trustees' Offices to adequately 
represent the interests of the United States in the 
Bankruptcy Courts; as a result, additional employees were 
called back to duty. Similarly, the initial plan did not 
provide for a significant number of Immigration Courts to 
remain open, given the detention requirements of the 
Immigration and Naturalization Service. 

Thus, the Department of Justice implemented its contingency 
plan with the assumption that flexibility would be required 
in its administration. 

How would your determination with respect to what fxinctions 
or positions to continue cheuige if the shutdown were to 
last: 

a. 10 days 

b. 30 days 

c. 90 days 

As noted above, the Department exercised flexibility in 
administering its contingency plan over the 6 days of the 
November 1995 lapse in appropriations. Similar flexibility 
would be required in the event of a longer lapse. As 
operational needs dictated, some employees who were 
initially furloughed would have been returned to duty (and, 

- 3 - 



394 



perhaps, subsequently furloughed again) ; others who had 
remained on duty would have been furloughed. 

The core principle would remain unchanged. The Department 
would retain on duty only those employees 1) who are paid 
from funds which have not lapsed or 2) whose work relates to 
emergencies involving the safety of human life or the 
protection of property. 

Please provide a description of your agency's £\inctions and 
activities that were continued during this interruption o£ 
routine operations . Please indicate any special funding 
mecheuiisms (e.g., carry forward, trust funds, fee accounts, 
reimburscible agreements) used to support these continuing 
activities. 

Our response to 4th question above addresses the first part 
of this question. 

The attached chart provides the special funding mechanisms 
available to the Department to continue certain operations 
during a furlough. The chart includes carryover funds for 
those accounts that had multi-year authority and for the fee 
accounts (largely for immigration activities) , which do not 
require congressional action. The Federal Prison Industries 
and Commissary Fund are the Department ' s two trust funds 
that receive their funding from non-appropriated sources. 
The Troops to Cops funding from the Department of Defense is 
the major reimbursable agreement that provided resources 
during the funding hiatus. 

Please estimate the total costs to your agency associated 
with the interruption of operations between November 14 and 
November 20, 1995. Please provide descriptions of any 
unusual costs imposed on the agency or other unanticipated 
consequences of this interruption of operations. Please 
provide, too, an estimate of any savings associated with 
this interruption of activities. 

The attached table provides the cost estimate associated 
with the funding hiatus for Department of Justice 
components. These costs are associated mainly with the 
salaries and benefits of furloughed Department employees 
(24.5 percent of total Department staffing). The personnel 
cost estimate for the furlough period was derived by 
multiplying the number of employees furloughed in each 
organization by the average salary and benefit cost. That 
total was prorated (as 3.5 furlough days of the 260 day 
workyear) to arrive at the cost for each organization. 

Other unusual costs are noted on the second table. No 
savings have been identified. 

- 4 - 



395 



Copies of relevant documents internal to the U.S. Department 
of Justice are attached. 



- 5 



396 



04-Oec-95 

04:18 PM 

FURLOUGH 



DEPARTMENT OF JUSTICE 
TOTAL PERSONNEL COSTS 
DURING FURLOUGH PERK30 





NUMBER OF 




AVGSAL 


TOTAL 




EMPLOYEES 


AVERAGE 


a BENEFITS 


COST 




FURLOOGHED 


SALARY 


(1.31%) 


P.5 DAYS) 


APPROPRIATTON 


mSCRETlQWAKY 

FWCnOfW. COPE; 750 


590 


49,690 


65.004 


516 996 




433 


47 192 


61.822 

71.504 


360.348 




249 


54 583 




560 


49,690 


65.004 


490.706 




U.S. PAROLE COMMISSION 


6S 


46.471 


60.877 


53.267 












OFFICE OF THE SOUCITOR GENERAI 


29 


60,318 


79,017 


30.847 


TAX DMSON. _ 


434 


55,631 


72,877 


425.768 


CRMNAL OMSION __ __ 


509 


62.796 


82.263 


563,658 


CML tXVISION 


724 


64,470 


84.456 


823,118 


ENVIR. « NAT RESOURCE OMSION 


508 


53.033 


69.473 


475,090 


OFFICE OF LEGAL COUNSEL 


21 


49.831 


65.279 


18,454 


CIVIL RIGHTS OMSION 


394 


57,975 


75.947 


402.813 


INTERPOL _ -... 


49 


43,625 


57.149 


37,696 




386 


52,204 


68.387 


355,351 




5,128 


80,050 


104.866 


7,238,946 




337 


44,558 


58,371 


264,802 


COMMUNITY RRATIONSSFRVICF 


107 


63,299 


82,922 


119,439 




904 


40,632 


53,228 


647.743 


ORGANIZED CRIME DRUG ENFORCEMENT 


9 


48,545 


63,594 


7.706 


cpriFRAt pf IRFA" "F iN\/P?Tirt»Tin*( 


5,099 


44.633 


58.469 


4.013.350 




1,5S2 


53.541 


70.139 


1.493.685 


IMMIGRATION AND NATURALIZATION SERVICE 


4,240 


30.635 


40.132 


2.290.603 


FEDERAL PRISON SYSTEM: 










SALARIES AND EXPENSES 


1,385 


33.224 


43.523 


811.461 


NATL INSTTTUTE OF CORRECTK3NS 










BUILDINGS AND FACaJTIES 










FEDERAL PRISON INOUSTRES 










CO»*flSSARY FUND _ 










rmmu pristim xv.«mi 


1,385 


33,224 


43.523 


811.461 




376 


59,421 


77.842 


393,998 


SinTOTAL, OOMFSTK DISCRETIONARY 


24.118 






22,075.520 


FUNCTIONAL CODE! ISO 

FORBGN CLAIMS SETTLEMENT COMMISSION 


4 


57.095 


74.794 


4,027 


SUBT, DISCRETIONARY AUTK _ 


24.122 






22,079.547 


M4MDAT0RY 










FEES AND EXPENSES OF WITNESSES 








... 




... 










SUBT. MANDATORY AUTHORnY. „ 


















... 


us TniKTPFS 


mvFRVinN rnuTRnt pFF 


iMuinRiTirwi ii<:pb rpF 


FNFORCFMFNT FINFS 


IMMIGRATION 1 FOAI I7ATION 










IMMIGRATION EXAMINATIONS FEE. 










LAND BORDER INSPECTION FEE. 








... 


BREACHED BOND DET. FUND 








... 


SUBT, FEE-FUNDED ACCOUNTS 












TOTAL, DEPARTMENT OF JUSTICE 


24.122 






22.079.547 



397 



DEPARTMENT OF JUSTICE 
UNUSUAL COSTS AS A CONSEQUENCE OF THE FURLOUGH 



FEDERAL BUREAU 
OF INVESTIGATION 


S1S,750 Costs assodatad wHh sanding people home from training. 
$221 ,974 Overtime costs associated with personnel having to catch up on woric for days lost 


Total 


Not available A contract to refurt>ish the firearms range at Quanlico was sent out for bids. The three 
■ttNslime top bidders backed out dwing the furiough, so the FBI wfl have to use the fourth 

bidder which wl possibly cost mSons more in the futu-e. The bid amount coUd not 

be furnished because they are procurement sensitive. 
J237.724 


UNITED STATES 
MARSHALS SERVICE 


$23,000 Headquarters employees at the training academy in Georgia were recaled home, 
leaving 20 district personnel without Instructors for a Fnandal Management 
Information System (FMIS) training dass. This is the cost to cancel the dass. 




Unknown Couthouse design meetings in San Juan. Pittsburgh, Brooklyn, Greensboro, and 
Riverside were canceled and must be rescheduled. The delay adversely impacts 
ttw courthouse renovation and constivKtion schedules in these cities. 




Unknown The security assessment and project spedficatlan meeting for ttie high threat Mai 
in Lawton, OK for the Oklahoma City bombing trial was canceled and must be 
rescheduled. 




$5,000 Headquarteis spent $5,000 to recal a merit promotion work group on travel. The 
implementation schedule for the merit promotion plan has been set back several 
weeks. 




$1 ,750 Prisoner Operations Division spent $1 ,750 to recaO three Headquarters employees on 
travel. The canceled trips included an environmerrtal impact statement at BOP's 
metropoital detention center in Hawai, a meeting to negotiate prisoner beds in 
San Diego, and an annual advisory board meeting sponsored by tt<e National 
Institute of Corrections. 




Not available Inmate designatiorts to BOP facSties have been backed up about one week. The 
at this time average cost per day, per inmate, to remain in a kxal jail for this extended period 
is $55.50. (The expedient nature of tt«s drU precluded the data gathering for exact 
number of inmates involved). 


Total 


$29,750 


IMMIGRATION AND 
NATURALIZATION SERVICE 


$4,300 Several attorneys were required to return from detais. 

Unknown Work that would have been done during the period of the furlough was delayed and 
added to backlogs. In most cases, overtime could be used to address the work 
affected, such as: personnel processing, routine accounting, and vouchor processing. 


Total 


$4,300 




398 



U.S. Department of Justice 




Washinpon, D.C. 20S30 

August 21, 1995 

MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS 

FROM: STEPHEN R. COLGATE 

Assistant Attorney General 
for Administration 

SUBJECT: Contingency Planning for a Lapse in Appropriations 

The purpose of this memorandum is to share with you guidance the 
Attorney General has provided with respect to the contingency 
plans you are preparing in the event it is necessary to furlough 
non-essential employees as a result of a lapse in appropriations. 
Your staff are preparing plans to be submitted no later than this 
Friday, August 25, 1995. 

Generally, the Attorney General wants component heads to be 
conservative in designating employees as "essential," especially 
those in headquarters or other "overhead" functions and 
occupations. In drafting your plans, you should recognize that, 
in the event of a prolonged furlough, it will be possible to 
bring some employees back to work if the need for their services 
becomes essential -- and to furlough others — as conditions 
change. 

Specifically with respect to litigation, the Attorney General has 
given the following guidance, based on an assumption that the 
Judicial Branch will continue to operate through the furlough: 

• Criminal litigation will continue without interruption 
as an activity essential to the safety of human life 
and the protection of property. 

• Civil litigation will be curtailed or postponed, to the 
extent that the Courts will permit such an approach 
without harm to the interests of the United States. In 
the event that such an approach is not possible, civil 
litigation will continue without interruption as an 
activiity essential to the protection of property. 

Your staff may address any questions concerning this approach to 
their counterparts on the Budget Staff. 




399 



U.S. Department of Justice 



ifaihmpon, D.C. 20S30 



August 23, 1995 

MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS /^ U'Ulv' 

FROM: STEPHEN R. COLGATE / \ (y{/'^ \j 

Assistant Attorney General y~j\y \ 
for Administration / 

SUBJECT: Contingency Planning for a Lapse in Appropriations 

The purpose of this memorandum is to share with you additional 
guidance the Attorney General has provided with respect to 
contingency planning for a lapse in appropriations. 

Several questions have arisen with respect to training activities 
which might otherwise be carried out in early October. In making 
your plans, you should follow these principles: 

• Basic training of new employees in occupations which 
are generally designated as essential will continue. 
For example, new agent training for the Federal Bureau 
of Investigation and the Drug Enforcement 
Administration at Quantico and basic training of U.S. 
Marshals Service, Bureau of Prisons, and Immigration 
and Naturalization Service employees at the Federal Law 
Enforcement Training Center will not be interrupted. 

• In-service training of current employees, even those in 
essential occupations, will be cancelled. 

• Training of State and local officers (for example, in 
the National Academy Program) will be discontinued for 
the duration of the lapse in appropriations. 

As indicated in my earlier correspondence on this subject, the 
Attorney General wants component heads to be conservative in 
undertaking any activities which could be viewed as "ongoing, 
regular functions of government, the suspension of which would 
not imminently threaten the safety of human life or the 
protection of property." 31 U.S.C. § 1342. 

Please contact me if you have any questions about this guidance. 



400 




U. S. Department of Justice 



Wathintum. D.C 20530 

SEP 14 1995 



MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS 




FROM: STEPHEN R. COLGATE 

Assistant Attorney General 
for Administration 

SUBJECT : Furlough Update and Informational Materials 

Events of the last several days seen to have lessened the 
prospect of furloughs of federal employees, including many in the 
Department, on or about October 1, 1995. Nonetheless, we believe 
it is prudent to proceed with preliminary notifications to 
employees in the event that furloughs are necessary. 

In the event of a shutdown, you will be recjuired to issue 
official furlough decision notices to nonexcepted employees. 
Only those employees who, as identified in your recently approved 
contingency plan, perform "emergency" functions (i.e., whose 
duties involve the safety of human life or the protection of 
property) or whose salaries are paid from other than Fiscal Year 
1996 appropriations will be permitted to work. 

Certain materials are attached for your information and use. We 
will issue updates and additions to this information as 
conditions change — which we fully expect will be the case. You 
should take several steps to alert employees to the events which 
may occur: 

• The Attorney General has signed a memorandum to all 
employees (copy attached) about the prospect of a 
furlough; you should ensure that it is distributed to 
all employees of your component. 

• Consistent with any labor relations obligations you may 
have, you should provide your own notice to employees 
with more specific information about their benefits and 
entitlements and the meaning of the furlough. A draft 
memorandum which you may use for this purpose is 
attached, along with supplemental benefits information 
to provide to employees. We will update this informa- 
tion as it is revised and provide you with an amended 
paper to be attached to the furlough decision notice. 



401 



Heads of Department Components 2 

• Again, consistent with labor relations obligations, you 
should notify employees, by appropriate means, whether 
they are expected to report to duty in the event of a 
furlough (i.e., they are "excepted") or whether they 
will not be expected to report. 

If furloughs do take place, the Department will activate a 
Furlough Information Hotline to provide employees current 
information. The hotline numbers will be (202) 514-1087 for 
Washington, D.C. Metropolitan Area callers and 1-800-521-6079 for 
long distance callers. 

you should also begin your internal planning for the issuance of 
furlough notices to nonexcepted employees. To assist in that 
process, we have attached the following information: 

• A delegation from the Deputy Attorney General giving 
you the authority to issue furlough decision notices to 
attorneys, members of the Senior Executive Service, and 
incumbents of senior-level (SL) and scientific or 
professional (ST) positions. 

• A draft furlough decision notice for issuance to 
employees. You must also ensure that furlough decision 
notices are to be issued to employees on detail. These 
employees are subject to furlough in the same manner as 
employees who are not on detail. 

• Merit Systems Protection Board (MSPB) form and MSPB 
regulations, which include the addresses of MSPB 
regional offices, where employees may file appeals. 
The appeal form may be given to employees with the 
furlough decision letter or when they return to work. 
Employees will also be able to obtain a copy of the 
appeal form from the Furlough Information Hotline. 

• A Department Security Officer memorandum concerning the 
securing of sensitive and classified information during 
furlough. 

• A time line of the Department's activities through 
October 2, 1995. 

The draft materials will be provided electronically to components 
on the EAGLE and AMICUS networks. Three and 1/2" diskettes 
containing copies of the materials in WordPerfect 5.1 format will 
be provided for components which are not connected to the EAGLE/ 
AMICUS network. Please have your staff contact Robert F. Seymour 
of the Justice Management Division Personnel Staff's Policy Group 
by September 15 to identify the contact person who should receive 
the diskette or the e-mail and to indicate your requirements for 



402 



Heads of Department Components 3 

diskette size and WordPerfect format if they differ from those 
described above. 

To ensure employees are paid for pay period 19 (September 17-30, 
1995), the last pay period in Fiscal Year 1995, the National 
Finance Center (NFC) will begin accepting Time and Atten- 
dance Reports (TiAs) for pay period 19 as early as Monday, 
September 25, 1995. The NFC will continue to accept and process 
TiAs through Saturday, October 7, 1995. However, since its own 
employees could be furloughed, NFC wants to receive TiA reports 
no later than close of business on Tuesday, October 3, 1995. 

The Department of Labor is considering the establishment of a 
"special" unemployment compensation claims process to make it 
possible for Federal employees to file claims without having to 
visit State agency local offices, and for Federal agencies not to 
have to process wage and separation information on Form ES-931. 
Labor will issue information on and instructions for this 
"special" claims process by September 15, 1995. 

The Department of Justice Federal Credit Union is offering 
generous loan terms to members, as described in the attached 
information. 

We will continue to apprise you of developments concerning the 
shutdown of government operations, and provide updated guidance 
as it becomes available. Questions concerning this matter may be 
referred to Vivian Jarcho, Assistant Director for Policy, on 
(202) 514-6397. 

Attachments 





403 



O^fto nf tl|p Attnntpy Olenpral 
9a9i{tngton,9. (0. 20530 

Septenfcer 12, 1995 



MEMORANDOM FOR ALI' DEPARTMENT OF JUSTICE EMPLOYEES 

FROM: THE ATTORN, 

SUBJECT: Notice o£/ Possible Furlough Due to a 
Lapse in Appropriations 

I am sure that most of you have heard news and other reports 
about the prospect of furloughs if the Department of Justice 
appropriations bill for fiscal year 1996 or a continuing 
resolution is not passed by the Congress and signed by the 
President by October 1, 1995. The last few days have brought 
indications that such furloughs may be avoided. That is welcome 
news. However, I want to be sure that you have as much 
information as possible so that you can take the personal steps 
which would be necessary in the event furloughs occur. 

During a "lapse in appropriations," agencies may not 
obligate funds except to maintain the minimum level of emergency 
activity and to effect an orderly shutdown of Government 
operations. Accordingly, furloughs would be required for all 
Department employees except for those who are performing excepted 
activities or shutdown activities, as defined by the Office of 
Management and Budget. 

In a furlough, workers are placed temporarily in a nonwork 
and nonpay status. If fiscal year 1996 funds are not appropri- 
ated for the Department by October 1, 1995 and if you are not 
identified as an "emergency" (or "exempt") worker, you will be 
provided specific information as to the starting date and 
projected duration of the furlough and of any appeal rights you 
may have. Even those employees who are designated to report for 
duty may not receive paychecks during the appropriations lapse. 

You and your' colleagues across the country provide services 
vital to the well-being of our Nation and I fervently hope that 
we will avoid having to furlough any employees. However, in 
consideration of your own and your family's well-being, I must 
encourage you to consider and plan for the financial hardship 
that a furlough would bring. 

I will make every effort to ensure that you are kept 
informed of developments in this situation. 



404 



U. S. Department of Justice 



Washinfiofi.D.C. 20SJ0 



MEMORANDtnt FOR ALL (COMPONENT'S NAME) EMPLOYEES 

FROM: Head of Component 

SUBJECT: POSSIBLE FORLODGH DDE TO A LAPSE IN APPROPRIATIONS 

As we approach the beginning of fiscal year (FY) 1996, there have 
been indications that budgetary and policy differences between 
the Administration and the Congress may delay the passage of FY 
96 appropriations. In years past, we have faced a lapse in 
appropriations and even gone through agency shutdown procedures. 
Such shutdowns have never exceeded a day or two, and the 
appropriations bill which finally passed allowed us to restore 
employee pay retroactively. 

In the last few days, there have been positive signs that ws will 

avoid a lapse in appropriations this year. However, prudence 

dictates that the Department — and you as individuals — make 

certain plans in the event that furloughs do occur. If furloughs 

occur and you are affected, you will begin to feel the impact on 

your personal finances on the pay day that falls on October 26, 
1995. 

We will make it a priority to keep you apprised of significant 
developments. However, quickly communicating any actual shutdown 
and return-to-work situations may be difficult since they may 
occur while you are not in a duty status. At such times, it will 
be your responsibility to stay informed of the situation through 
public news media and to return to work when funding has been 
restored. 

In the event of a shutdown, official furlough decision notices 
will be issued to non-excepted employees. Only employees who 
perform "excepted" functions (i.e., whose duties involve the 
safety of human life or the protection of property) or whose 
salaries are paid from other than FY 96 appropriations will be 
permitted to work. You will be informed by your supervisor if 
your position falls in either of these categories. 

The Department has established a Furlough Information Hotline to 
provide employees with furlough information. If furloughs become 



405 



All Employees of f Component Namel 

a reality, the hotline will be activated on October 1, 1995. The 
numbers will be (202) 514-1087 for metropolitan area callers and 
1-800-521-6079 for long distance callers. 

Attached are several pages of information which should answer 
many of the questions you may have on how furlough would affect 
your benefits, pay, leave, and other important matters. We will 
update this material as more information becomes available. 

Questions concerning this matter may be referred to the (indicate 
Executive Office. Administrative Office. Human Resources Office, 
or other office as appropriate) . 

Attachment 



406 




BTFECTS or rUIlLOUGH ON EMPLOYEE BENETITS 
AMD OTHER IMFORTAKT MATTERS 



EMPLOYEE BEMEFITS 

Health Banaflts - Enrollments In tha Federal Employees' Health Benefits 
Program (FEHB) will continue for no more than 365 days in a nonpay status. 
The government's contribution will continue while employees are in a nonpay 
status. Employees premiums will accumulate during the furlough and 
contributions will be withheld from their pay upon return to duty. 

Cancelling PEBB Coverage While on Furlough - Employees are cautioned not to 
cancel FEHB coverage to avoid payment of premiums while in a nonpay status or 
reduced-pay status. If cancelled, employees must wait for a FEHB open season 
to re-enroll. Further, cancellation of FEHB coverage may affect an employee's 
right to carry such coverage into retirement or while in receipt of workers* 
compensat ion . 

Life Insurance - Enrollments in the Federal Employees' Group Life Insurance 
Program will continue for 12 consecutive months in a nonpay status without 
cost to the employee or the agency. 

Retirement - Retirement coverage continues at no cost to employees while in a 
nonpay status. When employees are in a nonpay status for only a portion of a 
pay period, their contributions are adjusted In proportion to their basic pay. 
The exception would be an employee who had substantial time in a nonpay status 
earlier in the year if the furlough causes him or her to have mors than six 
months time in a nonpay status during the calendar year. 

Thrift Savings Plan - When an employee is in a nonpay status for an entire pay 
period. Thrift Savings Plan (TSP) employee and agency contributions a^e not 
made for that pay period. This is true even if the employee is receiving 
benefits from the Office of Workers' Compensation Programs. TSP 
contributions, including the agency automatic (1%) contributions made to the 
accounts of employees covered by the Federal Employees' Retirement System are 
based upon the basic pay the employee earned for the pay period. Because the 
employee's basic pay is zero, TSP contributions are zero. Employees cannot 
make up the missed TSP contributions when he or she returns to pay status. 

If an employee receives some basic pay for working a portion of a pay period, 
the agency automatic (1%) contribution for the pay period is determined using 
the basic pay the employee earned for the pay period. The employee's 
contribution, based on a percentage of pay, is also determined by using the 
basic pay earned for the pay period. For contributions based on a whole 
dollar amount, the employee contribution is reduced to 10 percent of the 
employee's basic pay (if FERS) or 5 percent (if CSRS) if the elected amount 
exceeds the 10 or 5 percent limit. If the elected whole dollar amount exceeds 
the employee's net pay for the pay period, no employee contribution is made 
for the pay period. 

Thrift Savings Plan Loans - Because under the TSP loan program, loan payments 
may only be made through payroll allotments, employees in nonpay status are 
not eligible to receive TSP loans until they return to pay status. If an 
employee who has a TSP loan misses payments for less than 90 days, the loan 
payment schedule will be extended. However, the loan must be repaid in full 
by the fifth anniversary of the loan issuance date for education, medical, or 
financial hardship loans and by the eighteenth anniversary of the loan 
issuance date for residential loans. 

If an employee misses payment for 90 or more days and (a) the employee is in 
an approved nonpay status, e.g., furlough; and (b) the TSP has been so 
informed; and (c) the employee returns to pay status so that loan payments 



407 



resune within one year, the employee must reamortize the loan when he or she 
returns to pay status. If the employee fails to reamortize the loan, the loan 
must be prepaid in full. If the loan is not reamortized or prepaid in full, a 
taxable distribution will be declared. 

In situations similar to that described above, except the TSP is not informed 
of the nonpay status and the employee does not return to pay status, the 
employee must prepay the loan in full at the end of the first ye<u: of the 
nonpay status or be subject to a taxable distribution of the unpaid loan 
principal and any accrued interest. The Department has notified TSP of those 
employees who have loans and are furloughed effective October 1, 1995. 

PAY IS8PEB 

Pay Check for Pay Period ending September 30, 1995 - Time and attendance (TGA) 
reports for Pay Period 19 (September 17-30, 1995) will processed by 
the National Finance Center (NFC). NFC will begin accepting T&A's for pay 
period 19 as early as Monday, September 25, 1995, and will continue to accept 
and process T&A's through Saturday, October 7, 1995. Employees will receive 
their pay checks by the October 12, 1995 pay day. 

Holiday Pay During a Furlough - Employees are entitled to be paid for a 
holiday, if they eure furloughed on the last workday before a holiday o£ the 
first workday after a holiday. This is based on the presumption that, but for 
the holiday, the employee would have worked. However, employees are not 
entitled to be paid for a holiday if a furlough includes both the last workday 
before the holiday and the first workday after the holiday. In this 
situation, there is no longer a presumption that, but for the holiday, the 
employee would have worked on that day. 

Contlnttatlon of Pay - Employees who are receiving continuation of pay (COP) 
due to job-related injuries are maintained on COP status during periods of 
furlough. 

Senior Executive Service Performance Awards - The payment of performance 
awards to Senior Executive Service employees may be delayed until after the 
furlough when funds are available. 

Payment for Court Services - Employees who serve as witnesses or jurors on 
furlough days will retain all monies received from the court. 

Workers' Compensation - Workers' compensation benefits will continue through 
the furlough period. 

Deductions from Pay - When an employee's gross pay is insufficient to permit 
all deductions to be made, deductions are made in accordance with the order 
of withholding precedence established by the General Accounting Office. The 
order of precedence is as follows: (1) civil service retirement and Medicare, 
FERS (basic and Old Age Survivors and Disability Insurance (OASDI), or OASDI 
for those employees not covered by a Federal retirement system; (2) Federal 
income taxes; (3) health insurance premiums; (4) basic life Insurance; 
(5) State income taxes; (6) city income or employment taxes; (7) indebtedness 
to the United States; (8) garnishment for alimony and child support payments; 
(9) court ordered bankruptcy payments under Chapter 13 of Title 11, United 
States Code; (10) optional life Insurance — additional first, standard 
second, and family third; (11) other voluntary repayments of indebtedness to 
the United States in the order specified by the employee; and (12) all other 
voluntary deductions, starting with the Thrift Savings Plan or repayment of 
loans from that plan for any employee (FERS or not) contributing to the thrift 
plan, and then allotments and assignments, which shall be made in the order 
determined by the paying agency. 

Wlthln-Orade Step Increases - Wlthin-grade step increases sure awarded on the 
basis of length of service and individual performance. Such increases may not 
be denied or delayed solely because of lack of funds. However, extended 
periods of nonpay status due to furlough for lack of funds, may affect the 
timing of such increases. The amount of workweeks in a nonpay status that is 



408 



creditable towarde completion of the required waiting period for within-grade 
■tep increases is as follows: two workweeks for advancement to steps 2, 3, and 
4 of the General Schedule; four workweeks for advancement to steps 5, 6, and 
7; and six workweeks for advancement to steps 8, 9, and 10. For prevailing 
rate employees (WG, WL, and WS schedules), an aggregate of one workweek in a 
nonpay status is creditable service for advancement to step 2; three weeks for 
advancement to step 3; and four weeks for advancement to steps 4 and 5. Thus, 
if a General Schedule employee in steps 1, 2, or 3 of the grade is furloughed 
for more than two workweeks during the waiting period, his or her within-grade 
Increase would be delayed by at least a full pay period. 

Oaeaploymen't Coapensation - Federal employees are covered for unemployment 
insurance (01) purposes under the Onemployment Compensation for Federal 
Employees (OCFE) program. The UCFE program is administered by the individual 
States, and UCFE benefits are generally determined and paid under the 01 law 
of the State which the Federal employee worked. 

State 01 laws provide for the payment of partial weekly amounts when 
individuals are employed less than full-time during a week. State 01 laws 
vary as to the number of hours and/or days the individual must be in non- 
employment status during a week in order to be eligible for a partial weekly 
payment, but in most cases, an individual in furlough status for 1 or 2 days 
during a week would not be eligible for a partial OCFE payment for that week. 
Individuals at grade levels of grade 9, step S, and higher would need to be on 
furlough status for at least 4 days per week in order to be eligible to 
receive a partial OCFE payment for the week. In addition, most State 01 laws 
provide that the first week of 01 and (OCFE) eligibility is a non-paid 
"waiting week" and therefore, OCFE payments vrould not actually begin until the 
second week of eligibility in States with a 'waiting week." 

Individuals normally file OCFE claiiss at the State agency local office nearest 
to where they live or work. The address and telephone number of these local 
offices are listed under the State government sector in the local telephone 
directory. However, given the present furlough situation and the massive 
number of Federal employees who will be affected, the O.S. Department of Lalsor 
(DOL) will be implementing a "special" OCFE claims process for this shutdown 
only. DOL will issue guidance on this process by September 15, 1995. 

LEAVE ISBDBS 

Leave Requests During Furlough - The necessity to furlough employees due to 
lack of work or funds supersedes leave rights. Thus, all annual, sick, court 
leave, or leave for bone marrow or organ donation is cancelled during the 
furlough period. However, military leave must be charged on a nonwor)cday when 
the nonworkday occurs wholly within the period of military leave for military 
duty. 

Leave Without Pay During Furlough - Employees who are on approved leave 
without pay (LWOP) during the furlough period may be continued in a LHOP 
status if there is no expectation that the employees may return to duty on the 
proposed furlough days. The LHOP may be terminated and employees placed in a 
furlough status. However, such action is unnecessary since there is no work 
or funds involved. 

Use or Lose Annual Leave - Employees who have properly scheduled "use or lose" 
annual leave and are unable to use some or all of the scheduled leave because 
of a furlough should make every effort to reschedule the "use or lose" annual 
leave for use before the end of the current leave year. However, if this is 
not possible, authority may be granted to restore the leave after the 
beginning of the new leave due to an exigency of public business, i.e., the 
need to furlough employees because of lack of work or funds. 

Family and Medical Leave - Furlough days cannot be counted towards the 12-week 
entitlement to leave under the Family and Medical Leave Act (FMLA). Employees 
cannot take leave under the FMLA on days that coincide with the dates of 
furlough. 



409 



EMPLOYMEMT AWO INJURY WHILE ON FURLOUGH 

Bmployaent during Furlough - The standards of conduct for executive brauich 
employees state in the definition of an employee that status as an employee is 
unaffected by pay or leave status. This means that Federal employees will 
still be considered to be employees when on furlough and thus subject to all 
of the rules on conduct. 

The standards prohibit an employee from having outside employment that 
conflicts with his or her official duties. Employees remain subject to this 
requirement during furlough. Thus, an employee may not, now or during a 
furlough, work for an entity he can affect in carrying out his official 
responsibilities. Further, employees subject to any approval requirement for 
engaging in outside employment will remain subject to that requirement during 
furlough. 

The only Department-wide requirement for seeking approval for outside 
employment goes to the practice of law. If an employee would like to practice 
law for compensation, now or during a furlough, he must obtain approval frotn 
the Deputy Attorney General. To engage in unpaid practice of law, he needs 
only to obtain approval from his component head. Employees of Bureaus may be 
required to seek approval before engaging in other employment in addition to 
the practice of law. Such employees should consult their Deputy Designated 
Agency Ethics Official for specific requirements. Generally, employees of the 
Offices, B02u:ds and Divisions have no other approval requirement. For 
example, an OBO employee may, now and during a furlough, work for a fast food 
restaurant or a supermarket, as long as there is no conflict with his 
government duties, without obtaining approval. All employees remain subject 
to other restrictions on outside activities including restrictions on partisan 
political activities. 

Volunteering to Perform Tour Job vniile on Furlough - Agencies are not 
permitted to accept voluntary services of an individual unless authorized by 
law. Thus, an employee may not volunteer to do his or her job on a nonpay 
basis during a furlough period. 

Work on a Furlough Day in Exchange for Time Off for Religious Observances - 
Employees may not work on a furlough day in exchange for taking a day off at 
another time for religious observances. The statute that permits employees to 
take compensatory time off for religious observances does not authorize an 
agency to accept the voluntary services of any individual on a furlough day. 
Periods of time worked in exchange for taking time off for religious 
observances must be scheduled on non-furlough days. 

Injury While on Furlough - Employees are not eligible for workers' 
compensation while on furlough. Workers' compensation is paid to employees 
only if they are injured while performing their duties. Employees on furlough 
are not in a duty status for this purpose. 

SERVICE CREDIT 

Tlae-ln-Orade - Time, in a nonpay status is creditable service for meeting 
time-in-grade requirements. 

Completion of Probation - An aggregate of 22 workdays in a nonpay status is 
creditaCble service towards completing a probationary period. 

Retirement - An aggregate nonpay status of six months in any calendar year is 

creditable service. Thus, there is no effect on an employee's high-3 average 

unless the furlough causes the employee to be in a nonpay status for more than 

six months during the calendar year. 

Career Tenure - The first 30 calendar days of each nonpay period is creditable 
service towards meeting the service requirements for career tenure. 

Severance Pay - Nonpay status time is fully creditable for the 12-month 
continuous employment period required by 5 U.S.C. 5S95(b)(l) and 5 CFR 



410 



550. 70S. However, for purposes of determining service creditable towards the 
computation of an employee's severance pay fund under 5 U.S.C. 5595(c)(1) and 
5 cm 550.707-708, no more than six months of nonpay status time per calendar 
year is creditable service. 

Military Duty or Workers' Compensation - Nonpay status for employees who are 
performing military duty or being paid workers ' compensation counts as a 
continuation of Federal employment for all purposes upon the employee's return 
to duty. 

Annual and Sick Leave - When an employee accumulates 60 hours of nonpay 
status, his or her annual and sick leave credits are reduced by an amount 
equal to the amount of leave the employee earns during that pay period. For 
purposes of computing annual leave accrual rates, creditable service is 
limited to an aggregate of six months nonpay status in a calendar year. 

gMPLOYEB SERVICES 

Department of Justice Recreation Association - The Department of Justice 
Recreation Association facility located in the Main Justice building will be 
closed during the furlough period. 

DOJ Cafeteria - The cafeteria in the Main Justice Building will be open 
during the furlough period. 

DOJ Federal Credit Union - The DOJ Federal Credit Union (DOJFCU), located in 
the Main Justice Building, will be open during the furlough period. The 
DOJFCU has informed the Department that they are developing a series of plans 
to help ease the financial burden on employees being placed In a nonpay status 
The plans include special loan programs to its members, the elimination of 
certain fees and penalties on savings and loan progrtuns will eliminated; and 
extended service hours to provide financial counseling. Additional 
Information may be obtained directly from DOJFCU by calling (202) 842-3200 
(local calls) or 1-800-842-3200 (long distance callers). 

Health Units - To be determined. 

Justice Occupational Health Organization - To be determined. 

Travel Management Center - Beginning October 1, 1995, Omega World Travel (OHT) 
will replace Carlson-Wagonllt Travel as the Department's nationwide Travel 
Management Center. Omega's main reservation/ticketing location will be on the 
first floor of the Bicentennial Building at 600 E Street, N.W. A small branch 
office for tlclcet pick up will be located in the Main Justice Building, at the 
same location used by Carlson. These two sites are for employees of the 
Offices, Boards, and Divisions, and the Immigration and Naturalization 
Service. A reservation center will be located at 320 First Street, N.W. for 
employees of the Bureau of Prisons. A reservation center for employees of the 
Drug Enforcement Administration and United States Marshals Service will be 
located at 700 Army Navy Drive, Arlington, Virginia. Omega will be open 
during the furlough period. 




411 



(i^fficc of tl|e Seputg Attorneg (General 

IBaslitngtDu. D.C. 20330 



September 11, 1995 



MEMORAHDUM FOR HEADS OF DEPARTMENT COMPONEMTS 

FROM: THE DEPUTY ATTORNEY GENER^L^Sx.^ . 

SUBJECT: Delegation of Authority to Issue Furlough Decision 
Notices to Attorneys, Members of the Senior 
Executive Service, and Incumbents of Senior-Level 
and Scientific or Professional Positions 

To date, the Department of Justice's appropriations bill for 
fiscal yeetr (FY) 1996 has not been passed by the Congress or 
signed by the President. As a result, non-excepted Department 
employees may be furloughed effective October 1, 1995, due to a 
lapse in appropriations. If furloughs are required, heads of 
Department of Justice components are hereby delegated authority 
to issue furlough decision notices to attorneys, members of the 
Senior Executive Service, and incumbents of senior-level (SL) and 
scientific or professional (ST) positions. This delegation of 
authority expires when the lapse in appropriations ceases. 



412 




U. S. Department of Justice 



Wtahmpon,aC 20S30 



KEMORAMDUM FOR NOH-EZCEPTEO EMPLOYEES 

FROM: (Head of Component) 

SUBJECT t FDRLOUGH DECISION NOTICE 

This is to inform you that fcite the specific reason for 
furlough, e.g.. the Preside nt has not signed the Department's 
appropriations bill for fis cal year (TY) 1996. and that Congress 
has not enacted a continuin g resolution to cover the hiatus 
between appropriations ) . Consequently, the Department of Justice 
will be without funds on October 1, 1995. 

Under the Antideficiency Act, no obligations may be incurred in 
the absence of appropriations except for the protection of human 
life or property, the orderly suspension of operations, or as 
otherwise authorized by law. Because your services are no longer 
needed for orderly suspension of operations and you are not 
engaged in excepted or emergency activities, you are being placed 
in a furlough status. The furlough status is effective 
October 1, 1995, or upon completion of shutdown activities which 
will occur no later than October 2, 1995. The furlough is not 
expected to exceed 22 workdays. You should listen to public 
broadcasts zmd when you hear that a continuing resolution or a FY 
1996 appropriation for the Department of Justice has been 
approved, you will be expected to report to work on your next 
regular duty day. 

This action is being taken because of a sudden emergency 
requiring curtailment of the Department's activities; therefore, 
no advance notification is possible. The customary 30-day 
advance notice period and opportunity to answer are suspended 
under the provisions of 5 CFR S 752.404 (d) (2) . 

If employees are being retained in your competitive level, they 
are required for orderly suspension of Department operations or 
they are performing excepted activities or shutdown activities as 
defined by the Office of Management and Budget. 

During the furlough period, you will be in a nonpay, nonduty 
status. Also during the furlough, you will not be permitted to 



413 



serve as an unpaid volunteer, but must remain away from your 
workplace unless or until recalled. Since leave cannot be 
granted on a nonworkday, all annual, sick, court leave, or leave 
for bone marrow or organ donation is cancelled effective October 
1, 1995, through the duration of the furlough period. However, 
military leave must be charged on a nonworkday when the 
nonworkday occurs wholly within the period of military leave for 
military duty. ESnployees who serve as witnesses or jurors on 
furlough days will retain all monies received from the court. 

Employees who have completed a probationary or trial period or 
one year of current continuous employment in the competitive 
service under other than a temporary appointment may appeal this 
action to the Merit Systems Protection Board (MSPB) . Employees 
in the excepted service who have veterans preference may appeal 
to the MSPB if they have completed one year of current continuous 
service in the same or similar positions as the one they now 
hold. Employees in the excepted service who do not have veterans 
preference and who are not serving a probationary or trial period 
under an initial appointment pending conversion to the 
competitive service may appeal to the MSPB if they have completed 
two years of current continuous service in the same or similar 
positions in an Executive agency under other than a temporary 
appointment limited to two years or less. Senior Executive 
Service career appointees adversely affected may also appeal. 
Employees have a right to representation in this matter and may 
be represented by an attorney or other person of their choosing. 

If you have the right of appeal to MSPB and wish to appeal this 
action to the MSPB, you must file the appeal within 30 calendar 
days after the effective date of your furlough. A copy of the 
MSPB regulations and appeal form and the addresses of the MSPB 
Regional Offices having jurisdiction over appeals will be 
available in your servicing personnel office once the furlough 
ceases. You may also obtain the material from the Department's 
Furlough Information Hotline. 

The Department has established a Hotline to provide employees 
with furlough information. Callers from the metropolitan area 
should dial (202) 514-1087. For long distance callers, the 
number is 1-800-521-6079. Information which describes the 
effects of a nonpay status (due to furlough) on employee benefits 
and other matters is attached. 

Bargaining unit employees may grieve this action in accordance 
with the applicable negotiated agreement or may appeal to the 
MSPB in accordance with the procedures outlined above, but not 
both. To obtain information on filing a grievance under the 
negotiated grievance procedure, contact your union 
representative . 

Attachment 



An.ion Q7 - 14 



414 



MERIT SYSTEMS PROTECTION BOARD 

APPEAL FORM AND 

REGULATIONS 

INTENTIONALLY OMITTED FROM FAX TRANSMISSION 



415 



Memorandum 



Securing of All Sensitive and Classified 
Information Ouring Any Furlough Pen'od 



AUG 31 1995 



Security Proflrsms Manaaers 
Senior Managsment Staff 
Justice MaragwnwTt OMsion 



D^errv/Rubino 



Oepartment Security Officer 



In Bccordanea with 28 CFR. Pan 17, entitled 'National Security Information.* Department 
of Justice Security Programs Managers must ensure that all National Security Information 
in the possession of their respective organizations is appropriately stored/secured during 
any furlough period. At a minimum, sensitive information, systems and media should be 
stored in lockisd filing cabinets, locked desks, or locked rooms. Lastly, please property 
secure all other valuable office equipment to avoid possible theft. 

Sf you have any information or equipment which cannot be secured In an appropriate 
manner or If there is any security releted situation requiring special attention, pleeae 
contact me or the Special Security Center on 514-3738. 



416 



FURLOUGH CONTINQEKCY FLAKMING 
COMMUKICATIONS PLAN 



SEPTEMBER 

WEEK OF SEPTEMBER 4 



Issue memorandum from the Attorney General to all 
employees regarding the possibility of a furlough due 
to a lapse in appropriations for FY96. 

Attend 0PM Interagency Advisory Group meeting to 
receive updated information and guidance on preparing 
for a furlough due to a lapse in FY96 appropriations or 
a failure to raise the debt ceiling. 

Prepare memorandum from Steve Colgate to the Heads of 
Components providing guidance on procedural issues, LMR 
responsibilities, delegations of authority for issuing 
furlough notices, effects of furlough on employee 
benefits and other important matters, and sample 
communications to employees 

Coordinate Personnel Staff efforts with Budget Staff 
Evaluate updates on the nusibers of employees declared 
essential by building to provide information on the 
following: 

1. number of available staff in health units 

2. extent of delivery of cafeteria services in 

Main Building and other Federal buildings 

Coordinate with security staff on access to Department 
buildings (we will be following a holiday schedule) and 
shut down procedures for sensitive or classified 
information. 

Publicize that Travel Services will remain available 
for those employees deemed excepted. The Travel 
Management Center (TMC) Contract is paid for by the 
commissions the contractor receives for ticket sales, 
so no government funds actually support it. TMC 
operations will continue, although they will reduce 
staff in accordance with government reductions 

Attempt to receive answers on outstanding questions, 
i.e. new process for furloughed federal employees 
filing unemployment compensation that is being 
explored by the Department of Labor and expected to be 
decided by September 12. 

Write script for AG Hotline and discuss with Lam Hong, 
of TSS. 



417 



NFC is working on a contingency plan in the event of a 
furlough. They don't have the specifics yet, but will 
be keeping us posted. 

Coordinate Credit Union proposal, DJRA closing, JOHO 
status . 

Issue memorandun!, from Steve Colgate to the Heads of 
Components providing updated guidance on the probable 
furloughs, including reminder that all employees should 
be notified as to their status, i.e. excepted or 
non-excepted to avoid confusion on October 1-2. 
(Assumes Department received approval of designations 
from 0MB) 



WEEK OF SEPTEMBER 11 



Advise components that an 800 telephone number has been 
established to provide recorded answers to employee 
questions. There will be a fax capability so employees 
can obtain written information on employee benefits, 
i.e. health and life insurance coverage, retirement 
benefits, TSP, workers compensation, leave and pay 
matters . 

Email draft furlough notices and draft decision letters 
to designees identified by the components. Save 
letters to diskette as requested by components without 
access to the eagle network and distribute per their 
specifications . 

Incorporate the Department's guidance on outside 
employment during the furlough into the paper on 
employee benefits and other important matters. 



WEEK OF SEPTEMBER 18 



Prepare memorandum from Steve Colgate to the Heads of 
Components with any updates that are available from 0MB 
or 0PM regarding a furlough due to a lapse in 
appropriations . 

Monitor situation and disseminate additional department 
guidance as it becomes available. 



WEEK OF SEPTEMBER 25 



Finalize arrangements in the event a furlough must 
commence on October 1 and employee shutdowns are 
completed on Monday, October 2. 



418 



Disseminate any last minute instructions that are 
needed. 

Ensure that components have clearly identified excepted 
and nonexcepted employee and communicated these 
designations to all employees in the organization. 



SEPTEMBER 29TH (FRIDAY) 

Notify all employees that they should report to work on 
Monday, October 2nd (or October 1st, for employees 
scheduled for weekend duty) , even in the event of 
lapsed appropriations, to allow for the orderly 
shutdown of the agency. 

OCTOBER iSt 

- Activate AG furlough information hotline. 

OCTOBER 1st or 2nd 

Suspend Departmental operations and give employees 
(other than those excepted from furlough) decision 
notices on furlough. Inform employees to listen to 
public broadcasts and report to work as instructed. 

- Upon completion of orderly shutdown dismiss non- 
excepted employees. 



f 



419 



Department of Justice Federal Credit Union 

A FuU Service Hnandal Institution 



DATE: August 31, 1995 

TO: Vivian Jarcho 

FROM: Jeff Moore 

RE: Credit Union Furlough Assistance 



/ 



DOJFCU is most interested in providing whatever assistance we can to DOJ employees who are 
affected by a possible furlough. The assistance we anticipate providing includes: 

1. Allowing existing members with loans to skip their required monthly loan payments 
during October. 

2. Waiving late payment charges on loans in which payments could not be skipped (such 
as mortgage loans). 

3. Allowing members with certificates of deposit to redeem their cenificates of deposits 
without normally required penalties. 

4. Provide loans to members, secured by their savings account, at a deeply discounted rate 
of 4.5%. 

5. Provide loans to members, without collateral, up to the amount of their net deposit to 
the credit union at a rate of 6.0% (realizing the people who need the funds the most 
might be the ones whose credit are the worst, we are still prepared to extend this to 
every DOJFCU member who has their net deposit coming to DOJFCU). 

6. Offer discounted rates on unsecured loans and home equity loans which can be used to 
consolidate debts and ease the financial burden of the fiirlough. 

7. Provide extended hours in our facilities and with our phone operations between 
September 18 and September 28 so DOJ employees can discuss their needs. 



While not all of the details have been worked out on all the above, these are the concepts with 
which we are working. I am sincere when I say I am open to any reasonable suggestion which 
you and John might have. 



FO. Box 782 ■ VAshington. D.C. 20044-0782 ■ (202) 842-3200 



420 



4^^^ ^- ^- Department of Justice 



Wrtlwiglon. DC 20S30 



November 17, 1995 

MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS 




FROM: Stephen R. Colgate 

Assistant Attorney Gener 
for Administration 

SUBJECT: Furlough Update #1 

This is an update on several issues concerning the furlough of 
Department employees. 

PAY CHECKS 

Pay Period 22 Salary Payments - Official Payday, November 22, 
1995 Salary payments for this pay period (October 29 - November 
11) are not affected by the furlough. Salary payments will be 
disbursed through normal distribution channels (Direct Deposit, 
Home Mail or Designated Agent delivery) during the week of 
November 19. 

For those employees who have Direct Deposit, payments should be 
received by financial institutions no later than Tuesday, 
November 21, 1995. Please note that special arrangements may 
need to be made for employees who receive their pay checks via 
in-office. Designated Agent (DA) delivery. In the event that the 
DA office is unstaffed, a centralized point of contact should be 
designated and the employees notified as to where they can pick 
up their checks. For employees in the Offices, Boards, and 
Divisions, the centralized location is Room 1116, Main Justice 
Building. 

Pay Period 23 Salary Payments - Official Payday, December 7, 1995 

At the present time, salary payments for this pay period 
(November 12 - November 25) are impacted by the current lack of 
funding which has resulted in the furlough of many employees. 
All employees will be paid for any approved leave and/or work 
performed on November 12 and November 13. However, as the 
required funding for the salaries of most Department employees 
lapsed at midnight on November 13, payment of salary for work 



421 



Heads of Department Components 2 

performed after November 13 is generally not authorized at this 
time. Those employees whose sources of funding are unaffected by 
the general budgetary crisis will be paid based on the complete 
Time & Attendance (T&A) record submitted for Pay Period 23. 
Specific guidance will be provided regarding the completion and 
transmission of Pay Period 23 T&As to address any unusual funding 
scenarios or other issues which may arise. 

We intend to work closely with Component Finance and Personnel 
Officers to develop comprehensive instructions and guidance 
relating to salary expenses for Pay Period 23. 

LEAVE 

The attached guidance from the Office of Personnel Management 
(0PM) advises agencies that, after completion of shutdown 
activities on November 14, paid leave may not be charged during 
the furlough period. If an emergency employee requests and is 
approved to be absent from duty — e.g., for medical treatment--he 
or she should be furloughed for the approved time period. 



UNEMPLOYMENT COMPENSATION 

The attached guidance from the Department of Labor notes that 
furloughed employees will be eligible, after the waiting period 
established by the state in which the employee's duty station is 
located, for unemployment compensation. Please note that under 
the special filing procedures established for furloughed 
employees in the Washington, DC metropolitan area (see JMD 
Personnel Staff memorandum to Bureau Personnel Officers of 
November 9, 1995), the Department will electronically transmit 
the wages of all employees paid through the National Finance 
Center. The local jurisdictions have advised us that this 
electronic transmission eliminates the need for the agency to 
complete or sign the claim form. (All claims forms should 
indicate that the employee works for the Department of Justice. 
Claim forms for employees working in Maryland should be annotated 
with this claim number: 0065643006.) The Justice Management 
Division is mailing the necessary forms to the home address of 
each Washington, D.C. metropolitan area employee of the Offices, 
Boards, and Divisions and other components that have requested 
this service. 

Please advise employees outside of the metropolitan Washington, 
D.C, area to contact their local state unemployment office to 
obtain the necessary form(s) to claim their benefits. 



422 



Heads of Department Components 




Attachments 

cc: Bureau Personnel Officers 



423 



INTERAGENCY ADVISORY GROUP 

imrrco STATZs 
OFTICE OF PERSONNEL MANAGEMENT 

WASHINGTON. OC ZMIS 

'^S;;^s..vw NOV I 7 1995 

MEMOBANDUM FOK DIRECTOBS OF PERSONNEL 



FROM: 



x^ 



ASSOCIATE DXRECrOR 

FOR HUMAN BESOIJRCES SYSTEMS 



SUBJECT: Svppkmental Q*i and A't on P ui ton g fa Isnies 



received by the Office of Persoxmei Maaageoiettt and the Office ofMaiBganent and Budget on 
fiidough issues sfficting botb excepted and nonexcepted eoipbyeei mce the lapse in 
appropriations that be^ on November 14. 199S. . 

As used below, the tenn "TXCEPTED EMPLOYEES" refers to employees who are excepted 
fimn a fiiilough because they axe paluiuiiu g fimntions rdated to naTirmnl secority, protection of 
ute or property, or the ordetly mtpeiwion of ageocy opentioos. (Employees m organiattuns not 
afEectedbif the lapse in appiupiiat ionsaic go vc au ed by the regular leave lulea.) OPM will provide 
additional Q*s and A's as the need i 



QL NONEXCEFTED EMPLOYEES reported fin- woiic at di£Ecrcat times on Tueaday, 
November U, and worked vaiyingpedods of time befhre departing on furlough after 
OMBiaRTOOed agencies to implement their phase-down plana. Mqr oonscoepted 
employees who limited for work on November 14 be cooaidered to have been 
fhriougbed fiv a unifbnn period of time on that day, or should agenrifg determine the 
number of fiiriough houis on a case-by-case basis for each noncxcepted employee? 

AL OFM recommends that a gfpf<«^ make an efibit to detenmne, on a case4iy-case basis, the 
amount of timfe each nonexcepted employeg woriced on Tuesday, November 14. The 
lemaimng period of time in the employee's regulaity scheduled tour of duty (after taking 
into account part-time woilc schedules, imcommon tours of duty, or previously approved 
flexible or compressed woric schedules) would then be considered finlaugh time, even if 
the em;doyee had previously been scheduled to take paid or unpaid leave later in the day. 

Q2. How should agencies treat EXCEIFTEI) or NONEXCEFTED EMPLOYEES who were 
on qiproved leave on November 14 when the fiiriough took eSect and cfid not repoit for 
work fi» the rest of the day? 



424 



A2. Both EXCEPTED aodNONEXCEFTED EMPLOYEES should be charged tlie 

appropriate kind of leave for the approxiiu atc period of time &om the begsmiiig of each 
indhridiul employee's Qoimal workday until the time other smolsly ««t»itw^ employees 
diluted from woric t&a reoetving fislough tiotic e a. The mnutnimg period of time in the 
coiployee's regnlaity scheduled tour of duty would be considered flnloug^ time. 
However, an agency tnay subsequently temmiate the fiulough if the cmidoyee's services 
axe requred fiir excepted activities folbtviog the absence and the employee is able to 
report for work. 

Q3. Afier Tuesday, November 14, may EXCEFTED EMPLOYEES take previously 

approved anaial leave, sick leave, or other paid leave during the lapse in app ropiigtions? 

A3. No. W^imn ■!> ifirplnyii^ i* nnt at ■ainrlr anH ^ ■■■f fi imi i ng thf Miitj^f H^wmmw^ \^ ttlT 

employing agcDcy to be allowable activities in onin i Hanrr with the Antidefidency Act, he 
or she cannot be in a paid leave statui. Thoefixre, Agencies must take one of the foOowing 
actions: 

(1) caned ai^ ^tproved leave and require the. employee to report fbr work; or 

(2) Bslough the enqiloyeefbr the period of the employee's absence fiom duty. An agency 
m^ subsequently tcnninate the fiulou^iftbeenqiloyee's services are still required for . 
excepted activities following the absence. 

Q4. Miv EXCEPTED EMPLOYEES be granted new leqoesti to annual leave, sick leive, 
or other paid leave duting the lapse in appropiiatians? 

A4. No. Ifan EXCEPTED EMPLOYEE requests paid leave or is unavailable to be at work 
and perform tbe duties determined by the anploying agency to be allowable activities in 
co mplhinne with the AntidcBdmc y Act, the agency oaist take one -of the foPownig 
actions: 

(1) deny the request for leave and require the employee to report for work; or 

(2) fiulou^ the employee during the period of unsvailabiEty. Anagcncymay 
subsequently terminate the foriou^ if the enq)loycc's services arc still required fbr 
excepted activities following the abseoceL 

Questions may be directed to the Office of Compensation Policy, Compensation Administtation 
Divisioo, on (202) 606-285S, or the OfBce of Labor Relations and Workforce Petfonnaoce on 
(202) 606-2920. 



425 



Rac»ived from the V. S. Department of Labor 
Daemployment Insurance Systems 

11/17/96 

tmSHPLOXNEHT TJ/BUJtXKCE IMFOXUATION FOR FEOSSJU;, EXSLOYEES 
DURXVG A SaUTDOWW OF VEDESAL AOEBOIBS 

The duration of ttie current shutdown of the federal government, 
and the furlough of 800,000 federal employees has lasted longer 
than any previous shutdovms, and longer than anyone anticipated. 

While Congressionail leaders have pledged to pass legislation to 

ensure that Federal employees are compensated for this period of 

furlough, employees are understandably concerned zQjout the work 

interruption and the possible loss of income due to the furlough. 

Many questions have arisen about eligibility and application i 

procedures for unemployment insurance (UI) available to Federal II 

employees. ^ 

The following Q's and A's provide basic information about this 
process to Federal employees. Federal employees are reminded 
that if they are paid retroactively for the furlough period, they 
will be required to pay back any unemployment insurance benefits 
received. 

Are Federal eoployess eligible for Ol during a shutdown of 
Federal agency operations? 

Federal employees are eligible to collect UI during periods that 

they are out of work under a special program called Unemployment 

Compensation for Federal Employees (UCFE) . This' program is 

operated by individual states, and eligibility and benefit i 

amounts are determined under the law of the State in which the fl 

individual works, (last official duty station). • 

If a furlough as is lengthy and uncompensated, the conditions for 
UI eligibility exist. Should the period of the furlough be 
compensated, most State laws would disqualify individuals from UI 
eligibility, since they would in effect receive income for the 
time they were furloughed. In addition, many States require a 
week of uncompensated unemployment before benefits become 
payable. These two factors may mitigate against the receipt of 
UCFE benefits by furloughed Federal employees. 

Again, if there were any receipt of UI benefits, and the furlough 
is compensated, the UI benefit emoimt would have to be paid back. 

Bow do Federal employees file a claim diirlag a shutdown? 

o In the Washington. D.C. Metropolitap Area 



426 



- The S'tatee of Maryland and Virginia, and the District 
of Columbia have developed special nail-in claims 
filing packages specifically designed for ftxrloughed 
Federal employees. Some Federal agencies provided these 
nail- in claims forms to employees prior to their 
furlough. 

. Other Federal agencies are mailing the appropriate 
nail-in claims forms to eaployees, and these forms 
should be received by employees by Monday, November 20. 
If Federal eaployees have not received nail-in aiains 
torma, they nay visit a VZ local office ia the District 
of Coluobiay Maryland or Virginia to obtain a aail-ln 
dain foxn. Employees should obtain the mail-in claim 
form for the State in which their last official duty 
station is located. 

Copies of the mail-in claims forms for D.c, Maryland, 
amd Virginia are in all Washington, D.C. metropolitan 
local offices. 

oataide the waahincton D.C. Metropolitan Area 

- Outside the D.C. area, many states have also developed 
special nail-in claims forms specifically designed for 
furlough situations. 

Zf Federal employees have not received claims filing 
instmctions, they should contact the Employment 
Security Department in the State in which their last 
official duty station is located. 

Tbe telephone number of this agency is in the State 
Government section of the local telephone book, and 
employees can locate the telephone number under the 
term "Unemployment Insurance". 

Many state Employment Security Department's will 
provide information in the local media about special 
claims filing instructions for federal employees who 
work in their state. 

What document/information should Z provide when filing a elaia? 

o State Employment Security Agency claims filing instructions 
contain that information. 

o Federal employees may be asked to provide copies of any wage 
and separation information concerning their Federal 
employment, such as a W-2, SF-8, SF-50, or their last 
earnings and leave statement. 



427 



U.S. Department of Justice 




IMuftm^an, ac 20S30 

November 9, 1995 

MQIORANDUM FOR HEADS OF DEPARTME3IT COKPOMENTS 



from: 



SUBJECT: 



'{)f-^^ 



STEPHEN R. COLGATE 
Assistant Attorney General 
for Adsinistratlon' 

Potential Furlouaa Due to Lapse In Approp riations 



We have juat received the attached guidance from the Director of 
the Office of Kanagemenr and Budget (0MB) concerning the 
potential for a lapse in appropriations effective at midnight on 
Monday, NovenbBr 13, 1995. 

Consistent with that guidance, you should, to the extent that 
tine is available today, review your shutdown plans and advise 
employees to report to work on Monday. The OMB guidance 
indicates the steps that will be taken on Monday and, in the 
event of m appropriations lapse, on Tuesday. 

I have scheduled a meeting with your Executive Officers for 
Monday, NoveBber 13, at 11 a.m. in the Andretta Room in the Main 
Justice Building. Thev should note that the time for the meeting 
hag been advanced. 

We will discuss this information in more detail at Monday's 
meeting. 

cc: .Executive Officers 






428 




EXECUTIVE OFRCE OF THE PRESIDENT 

OFPtCE OF MANASeMCNT AND BUDGET 

WASHINSTeN. ac 20609 

November 9, 1995 



KEHOSAMDnM FOR HEADS OF EZEOmVE OBPARTMENTS 
AND AGEBCIES 



r 



TKMi Alice M. Rivlin 

Director 

SOBJECT: Planning For Agency Operations 

T*n«i laeBtorandum is designsd to help you plan your agezicy's 
activities for next week, in light of recent developments on 
fiscal 199S appropriations. 

TSxe current Continnlng Resolution (OE.) expires at midnight 
oo Monday, November 13, 199S. Ar this point, only two 
appropriations bills have been enacted for fiscal 1996. W6 do 
not know if Congress will pass a second acceptable CS. by Monday 
*-y y^f will continue funding for activities that lack 
appropriations. Because there is a real chanrp that this may not 
occur, yoa should begin planning nav, as a contingency matter, as 
follows : 

Ttt^av. Th TirffllftYi i T«'«y*" >^'^ ^ You should review your 
afautdown plans and ensure that your an^oyees are properly 
iBfozntBd. Afi noted above, the C3t ascpires at midnight, Monday. 
Dierefore, Monday, Bovendser 13th will be a normal workday for the 
Federal Goverosent. 70U should advise employees to report for 
work on Monday. 

^timA»^^ M to v ei n beg 13 ; All employees should .L u p oi t Cor work. 
Ife will advise you of further developments, including whether a 
OL wdLli lUcely be enacted, if not, you should prepare to 
iaplement your shutdown plan on Tuesday. 

yp^«.>«aY, MorvMber 14 ; Regardless of whether a CR has been 
eaaeeed, all employees should report to work on Tuesday, we will 
advise you on whether your shutdown plan is to be implemented, as 
foUows. 

Shutdown . If no CR has been enacted or will lUcely be 
enacted Tuesday, we will issue instructions initiating 
a phase-down o£ activities for non-exceptod en?>loyees. 
You should complete such phase-down activities Cor non- 
excepted personnel, if called for, during the first 
t;|^T«»«» hours of the workday. 



429 



Mormal Operaticms : If a CR will lUcely be enacted on 
Tttssday, we will advise agencies i.o operatie in a nozrmal 
msnnex. 

Afctachad is a eunsnary o£ otir general guidance on agency 
operat:icsis in the absence of appropriations. 

Tbaz:k you for your cooperaclon in these difficult 
cxxcumatances . We will keep in dose touch with you as 
davalopments unfold. 



Atrarhwiwnt 



430 



QfBxeral Soidasce an. Agency 
Op«xmt:iaas in the Absaaee o£ Ajiprapriatlans 

CMB Bulletin SO-14, dated August: 28, 1980 (and anifeixded. by 
ths OMB Director's ousorafidiss of November 17, 1981}, requires all 
agencies ce naJTitain plans to daal vd.th. an appropriacions hiacos. 
If a ahucdown occors, we aBiannw a«ch agency wtH be operating 
undez* its shutdown plan as approved by OMB in Septeober. As a 
xemindex-, the Attorney Qenaxal'a opinion dared January IE, 198X, 
updated by the opinion of the Office of Zisgal Counsel dated 
August 16, 1595, reoains in effect. Z& general; 

o Btoployees of affected agencies performing non-excepted 

activities (as discussed in the Department of Justice 
opinions) nay oat perform any services other than those 
involved in tha ozdarly suspension of non-excepted 
activities.- excepted activities that nay be continued, 
axe generally those that are authorized by lav or that 
pKotect life and property. 

e Jtgencies may not permit voluntary performance of nosi- 
excepted services: and 

o Agency hearts make the dater rni na tion s that axe necessary 
to operate their agencies diiri ng an appropriations 
hiatus (%dthin the guidance established hy the 
Department of Justice opinions and this osmorandum, and 
pursuant to nozmal agency processes for the resolution 
o£ issues of law and policy) . 

Please addrewn any questions to your OMB budget examiner (a) , 
or to OMB General Counsel Robert Damus (395-5044) , or Associate 
Oenaral Counsel for Budget Rosalyn aettnsn (395-4778) . 



431 




U. S. Department of Justice 



WoMjigion. D.C. 20530 

NOV I 3 1995 

HEMORANDUM FOR HEADS OP DEPARTMENT COMPONENTS 



Ai^"^ 



FROM: STEPHEN R. COLGATt / 

Assistant Attorney fceneral 
for Administration 

SUBJECT: Possibility of Furlough 

As you are probably aware, the continuing resolution to fund 
government operations expires at midnight on November 13, 1995. 
It is possible that another continuing resolution will be 
approved to cover Department of Justice operations until a FY 96 
appropriation can be approved. Based on recent media accounts, 
it is also possible that the budgetary and policy differences 
between the Congress and the President may not be promptly 
resolved and could result in a lapse in appropriations. 

All employees will be expected to report to work as usual on 
Tuesday, November 14, 1995, to engage in orderly shutdown 
activities. We will keep you informed of the status of the 
Department's funding during this period. 

In the event of a shutdown, you will be required to issue 
official furlough decision notices to non-exceptad employees and 
to release them after 3 hours of shutdown activity on Tuesday. 
Only those employees who, as identified in your approved 
Contingency Plan, perform "emergency" functions (i.e., whose 
duties involve the safety of human life or the protection of 
property) or whose salaries are paid from other than FY 96 
appropriations will be permitted to work. 

The Department of Labor recently issued new guidelines for 
unemployment insurance filing procedures in the Washington, D.C. 
metropolitan area. They are being forwarded to Bureau Personnel 
Officers under separate cover and should be followed in the event 
of a shutdown of Federal agencies due to either a lack of an 
appropriation/continuing resolution or in the event of a failure 
to increase the debt ceiling. 

Late in FY 95, materials were provided for your information and I 

use in planning and implementing a furlough. You should use this 
material to notify non-excepted employees of the possibility of 



432 



Heads of Department Components 2 

furlough. We will issue updates and additions to this 
information as conditions change. 

You should also begin your internal planning for the issuance of 
furlough notices to non-excepted employees. To assist in that 
process, you were previously provided with the following 
information: 

• A delegation from the Deputy Attorney General giving 
you the authority to issue furlough decision notices to 
attorneys, members of the Senior Executive Service, and 
incumbents of senior-level and scientific or 
professional positions. 

• A draft furlough decision notice for issuance to 
employees. You must also ensure that furlough decision 
notices are issued to employees on detail. These 
employees are subject to furlough in the same manner as 
employees who are not on detail. Employees should be 
instructed to listen to the news media for instructions 
about their return. 

• Merit Systems Protection Board (MSPB) form and MSPB 
regulations, which include the addresses of MSPB 
regional offices, where employees may file appeals. 
The appeal form may be given to employees with the 
furlough decision letter or when they return to work. 
Employees will also be able to obtain a copy of the 
appeal form from the Furlough Information Hotline. 

• A Department Security Officer memorandum concerning the 
securing of sensitive and classified information during 
furlough. 

The draft materials were provided electronically to components on 
the EAGLE and AMICUS networks. Three and 1/2" diskettes 
containing copies of the materials in WordPerfect 5.1 format were 
also provided for components who are not on network. 

If furloughs do take place, the Department will activate on 
November 14, 1995 a Furlough Information Hotline to provide 
employees current information. The hotline numbers will be 
(202) 514-1087 for Washington, D.C. Metropolitan Area callers and 
1-800-521-6079 for long distance callers. 

We will continue to apprise you of developments concerning the 
shutdown of government operations, and provide updated guidance 
as it becomes available. Questions concerning this matter may be 
referred to Vivian Jarcho, the Personnel Staff's Assistant 
Director for Policy, on (202) 514-6397, or in the event of 
furlough, John Cahill of the Personnel Staff's Policy Group on 
(202) 514-6778. 



433 




U. S. Departmeiil of Justice 



Washiiiglon.D C 20SS0 



MEMORANDUM FOR NON-EXCEPTED EMPLOYEES 



FROM: (Head of Component) 

SUBJECT: FURLOUGH DECISION NOTICE 



This is to inform you that neither an annual appropriation nor a 
continuing resolution has been enacted to provide funds for the 
regular operation of the Department of Justice. Consequently, 
the Department of Justice is without funds as of midnight, 
November 13, 1995. 

Under the Antidef iciency Act, no obligations may be incurred in 
the absence of appropriations except for the protection of human 
life or property, the orderly suspension of operations, or as 
otherwise authorized by law. Because your services are no longer 
needed for orderly suspension of operations and you are not 
engaged in excepted or emergency activities, you are being placed 
in a furlough status. The furlough status is effective 
November 14, 1995, or upon completion of shutdown activities 
which will occur no later than November 14, 1995. The furlough 
is not expected to exceed 22 workdays. You should listen to 
public broadcasts and when you hear that a continuing resolution 
or a FY 1996 appropriation for the Department of Justice has been 
approved, you will be expected to report to work on your next 
regular duty day. 

This action is being taken because of a sudden emergency. . 
requiring curtailment of the Department's activities; therefore, 
no advance notification is possible. The customary 30-day 
advance notice period and opportunity to answer are suspended 
under the provisions of 5 CFR § 752.404 (d)(2). 

If employees are being retained in your competitive level, they 
are required for orderly suspension of Department operations or 
they are performing excepted activities or shutdown activities as 
defined by the Office of Management and Budget. 

During the furlough period, you will be in a nonpay, nonduty 
status. Also during the furlough, you will not be permitted to 



434 



serve as an unpaid volunteer, but must remain away from your 
workplace unless or until recalled. Since leave cannot be 
granted on a nonworkday, all annual, sick, court leave, or leave 
for bone marrow or organ donation is cancelled effective 
Kovember 14, 1995, through the duration of the furlough period. 
However, military leave must be charged on a nonworkday when the 
nonworkday occurs wholly within the period of military leave for 
military duty. Employees who serve as witnesses or jurors on 
furlough days will retain all monies received from the court. 

Employees who have completed a probationary or trial period or 
one year of current continuous employment in the competitive 
service under other than a temporary appointment may appeal this 
action to the Merit Systems Protection Board (MSPB) . Employees 
in the excepted service who have veterans preference may appeal 
to the MSPB if they have completed one year of current continuous 
service in the same or similar positions as the one they now 
hold. Employees in the excepted service who do not have veterans 
preference and who are not serving a probationary or trial period 
under an initial appointment pending conversion to the 
competitive service may appeal to the MSPB if they have completed 
two years of current continuous service in the same or similar 
positions in an Executive agency under other than a temporary 
appointment limited to two years or less. Senior Executive 
Service career appointees adversely affected may also appeal. 
Employees have a right to representation in this matter and may 
be represented by an attorney or other person of their choosing. 

If you have the right of appeal to MSPB and wish to appeal this 
action to the MSPB, you must file the appeal within 30 calendar 
days after the effective date of your furlough. A copy of the 
MSPB regulations and appeal form and the addresses of the MSPB 
Regional Offices having jurisdiction over appeals will be 
available in your servicing personnel office once the furlough 
ceases. 

The Department has established a Hotline to provide employees 
with furlough information. Callers from the metropolitan area 
should dial (202) 514-1087. For long distance callers, the 
number is 1-800-521-6079. Information which describes _the 
effects of a nonpay status (due to furlough) on employee benefits 
and other matters is attached. 

Bargaining unit employees may grieve this action in accordance 
with the applicable negotiated agreement or may appeal to the 
MSPB in accordance with the procedures outlined above, but not 
both. To obtain information on filing a grievance under the 
negotiated grievance procedure, contact your union 
representative. 

Attachment 



.435 




EFFECTS OF FURLOUGH ON EMPLOYEE BENEFITS 
AMD OTHER IMPORTANT MATTERS 



EMPLOYEE BENEFITS 

Health Benefits - EnroiZ-mencs in Che Feaeral Employees' Health rsnefics 
Program (FEHB) will continue for no mors than 365 days in a nonpay status. 
The government's contribution will continue while employees are in a nonpay 
status. Employees premiums will accumulate during the furlough and 
contributions will be withheld from their pay upon return to duty. 

Cancelling FEHB Coverage While on Furlough - Employees are cautioned not to 
cancel FEHB coverage tc avoid payment cf premiums while in a nonpay status or 
reduced-pay status. If cancelled, empi:yees must 'vait for a FEHB open season 
to re-enroll. Further, cancellation of FEHB coverage may affect an employee's 
right to carry such coverage into retirament or while in receipt of workers' 
compensation. 

Life Insurance - Enrollrents in the Federal Employees' Group Life Insurance 
Program will continue irr 12 consecutive months in a nonpay status without 
cost to Che employee or the agency. 

Retirement - Retirement coverage continues at no cost to employees while in a 
nonpay status. When employees are in a nonpay status for only a portion of a 
pay period, their contributions are adjusted in proportion to cheir basic pay. 
The exception would be an employee who had substantial time in a nonpay status 
earlier in the year if the furlough causes him or her to have more than six 
months time in a nonpay status during the calendar year. 

Thrift Savings Plan - '.Then an employee is in a nonpay status for an entire pay 
period. Thrift Savings Plan (TSP) employee and agency contributions are not 
made for that pay pericd. This is true even if the employee is receiving 
benefits from the Office of Workers' Compensation Programs. TSP 
contributions, including the agency automatic (IV) contributions made to the 
accounts of employees covered by the Federal Employees' Retirement System are 
based upon the basic pay the employee earned for the pay period. Because the 
employee's basic pay is zero, TSP contributions are zero. Employees cannot 
make up the missed TSP contributions when he or she returns to pay scacus. 

If an employee receives some basic pay for working a corcion of a pay period, 
Che agency automatic (1%) contribution for the pay period is determined using 
the basic pay the employee earned for the pay period. The employee's 
contribution, based on a percentage of pay, is also determined by using the 
basic pay earned for the pay period. For contributions based on a whole 
dollar amount, the employee contribution is reduced to 10 percent of the 
employee's basic pay (if FERS) or 5 percent (if CSRS) if the elected amount 
exceeds the 10 or 5 percent limit. If the elecced whole dollar amounc exceeds 
Che employee's net pay for the pay period, no employee contribution is made 
for the pay period.' 

Thrift Savings Plan Loans - Because under the TSP lean program, loan payments 
may only be made through payroll allot:r.ents, employees in nonpay status are 
not eligible to receive TSP loans until they return to pay status. If an 
employee who has a TSP loan misses payr.ents for less than 90 days, the loan 
payment schedule will be extended. However, the loan must be repaid in full 
by the fifth anniversary of the loan issuance date for education, medical, or 
financial hardship loans and by the eighteenth anniversary of t'r.e loan 
issuance date for residential loans. 

If an employee misses payment for 90 cr more days and (a) the employee is in 
an approved nonpay status, e.g., furlcugh; and (b) the TSP has been so 
Informed; and (c) the employee returns to pay status so that loan payments 



436 



resume within one year. -r.B employee tt-js: reanorcize the laan when he or she 
returns to pay status. :f the employee :aiis to reamortize the loan, the l;an 
must be prepaid in full. Zi the loan is not reamortized or prepaid in full, a 
taxable distribution will cs declared. 

In situations similar to -.-.at described above, except the TS? is not infor-ad 

of the ncnpay status and i.-.e employee d:es not return to pay status, the 

employee must prepay the l:an m full at the end of the first year of the 

nonpay status or be subjert to a taxable distribution of the unpaid loan 

principal and any accrued i.nterest. The Department has notified TSP of those 

employees who have loans sr.d are furlcughed effective October 1, 1995. 

PAY ISSUES 

Holiday Pay During a Furlough - Employees are entitled to be paid for a 
holiday, if they are furlcughed on the last workday before a holiday qx. the 
first workday after a holiday. This is based on the presumption that, but for 
the holiday, the employee would have worked. However, employees are not 
entitled to be paid for a holiday if a furlough includes both the last workday 
before the holiday and the first workday after the holiday. "n this 
situation, there is no longer a presumption that, but for the holiday, the 
employee would have worked on that day. 

Continuation of Pay - Empliyees who are receiving continuation of pay (COP) 
due to job-related injuries are maintained on COP status during periods of 
furlough. 

Senior Executive Service Perfomance Awards - The payment of performance 
awards to Senior Executive Service employees may be delayed until after the 
furlough when funds are available. 

Payment for Court Services - Employees who serve as witnesses or jurors on 
furlough days will retain all monies received from the court. 

Workers' Condensation - '.•.'orkers ' compensation benefits will continue through 
Che furlough period. 

Deductions from Pay - When an employee's gross pay is insufficient to permit 
all deductions to be made, deductions are made in accordance with the order 
of withholding precedence established oy the General Accounti.ng Office. The 
order of precedence is as follows: (1) civil service retirement and Medicare, 
FERS (basic and Old Age Survivors and "isability Insurance 'OASDD , or OASDI 
for those employees not r;vered by a Federal retirement system,- (2) Federal 
income taxes; i3) health insurance premiums; (4) basic life insurance; 
(5) State income taxes; '6) city income or employment taxes; (7) indebtedness 
CO the United States; (8) garnishment for alimony and child support payments; 
(9) court ordered bankruptcy payments under Chapter 13 of Title 11, United 
States Code; (10) optional life insurance -- additional first, standard 
second, and family third; (11) other voluntary repayments of indebtedness to 
Che United States in the order specified by the employee; and (12) all other 
voluntary deductions, starting with the Thrift Savings Plan or repayment of 
loans from that plan for any employee FERS or not) contributing to the thrift 
plan, and then allotments and assignments, which shall be made in the order 
determined by the paying agency. 

Hithin-Grade Step Increases - Within-grade step increases are awarded on the 
basis of length of service and individual performance. Such increases may not 
be denied or delayed solely because cf lack of funds. .However, extended 
periods of nonpay status due to furlough for lack of funds, Tiay affect the 
timing cf such increases. The amount ;f workweeks in a nonpay status that is 



437 



creii:2cl= cowards ::mplecicn of -r.i required waicir.g period for v.-il-in-grade 
scecincreases is as follows: cvc workweeks for advancemenc zo scsps 2, 5 , and 
4 cf rhe"E-eneral Schedule; four -.virkweeks for advancemenc to steps 5. 6, and 
7- ir.d s^x workweeks for advancement to steps 8, 9. and 10. For prevailing 
rate 'emoicyees (WG, '.IL, and WS s:r.=dules) , an aggregate of one wor.^week in a 
noncsy status is creditable servire for advancement to step 2; three weeks for 
advancement to step 3; and four weeks for advancemenc Co seeps 4 and 5. Thus, 
if i General Schedule emoloyee in steps 1, 2, or 3 of the grade is furloughed 
foi-'-ore than two workweeks during the waiting period, his or her •.-.ithin-grade 
increase would be delayed by at '.east a full pay period. 

nnemployment Coaqjensatlon - Feders: employees are covered for unemployment 
insurance (UI) purposes under the Vnemploymenc Compensacion for Federal 
Emplcyees (UCFE) program. The UC"E program is adrainiscered by the individual 
States, and UCFE benefits are generally determined and paid under the UI law 
of the' State which the Federal er.cioyee worked. 

Sta'-'" UI laws provide for the pay-enc of parcial weekly araouncs when 
individuals are employed less than full-time during a week. State "I laws 
var- as to the number of hours and/or days the individual must be i- non- 
erapioyment status during a week m order to be eligible for a partial weekly 
pavT.enc, but in most cases, an individual in furlough status for : cr 2 days 
duir-ng a week would not be eligicle for a parcial 'JCFE payment for tnat week. 
Individuals at grade levels of grade 9, step 5. and higher would need to be on 
fur'iugh status for at least 4 days per week in order co be eligible to 
rec've a parcial UCFE paymenc ftr the week. In addition, most State UI laws 
provide that the first week of u: and (UCFE) eligibilicy is a non-caid 
"waiting week" and therefore, UCFZ payments would noc actually begin until Che 
seccnd week of eligibilicy in States wich a "waicing week." 

Individuals normally file UCFE claims ac the Scace agency local office nearesc 
to where they live or work. The sddress and telephone number of these local 
offices are listed under the Scats government sector in che local telephone 
direccory- 

LEAVE ISSUES 

Leave Requests During Furlough - The necessity to furlough employees due to 
lack of work or funds supersedes leave rights. Thus, all annual, sick, court 
leave, or leave for bone marrow cr organ donacion is cancelled during che 
furlough period. However, milicar/ leave muse be charged on a nonworkday when 
che nonworkday occurs wholly within the period of military leave f:r military 
duty . 

Leave Without Pay During Furlough - Employees who are on approved leave 
without cay (LWOP) during the furlough period may be continued in a LWOP 
status if there is no expectation that che employees may return cc ducy on che 
prccosed furlough days. The LWOF -nay be cerminated and employees placed in a 
furlough status. However, such action is unnecessary since there is no work 
or funds involved. 

Use or Lose Annual Leave - Employees who have properly scheduled "use or lose" 
annual leave and are unable to use some or all of the scheduled leave because 
of a furlough should make every effort co reschedule che "use or l:se" annual 
leave for use before che end of tne current leave year. However, if this is 
noc possible, author icy may be granted to restore che leave afcer the 
beainnina of Che new leave due ct an exigency of public business, i.e., the 
need to furlough employees because of lack of work or funds. 

Family and Medical Leave - Furlcuah days cannot be counted towards the 12 -week 
entitlement to leave under the Family and Medical Leave Act (FMLA, . Employees 
cannot take leave under the FMLA Dn days that coincide with che daces of 
furlough. 



438 



EMPLOYMENT AND INJURY WHILE ON FURLOUGH 

Eaploynent during Furlough - The standards of conduce frr executive brsr.ch 
employees state in the definition of an employee that status as an empl:yee is 
unaffected by pay or leave status. This means that Federal employees ■.<:ll 
still be considered to be employees when on furlough and thus subject •:: all 
of the r-^les on conduct . 

The standards prohibit an employee from having outside employment that 
conflicts with his or her official duties. Employees remain subject to this 
requirerr.ent during furlough. Thus, an employee may not, now or during = 
furlough, work for an entity he can affect in carrying cut his official 
responsibilities. Further, employees subject to any approval requirement for 
engaging in outside employment xill remain subject to that requirement iuring 
furlough. 

The only Department -wide requirement for seeking approval for outside 
employment goes to the practice of law. If an employee would like to practice 
law for coapensation, now or during a furlough, he must obtain approval from 
the Deputy Attorney General. To engage in unpaid practice of law, he needs 
only to obtain approval from his component head. Employees of Bureaus -ay be 
required to seek approval before e.ngaging in other employment in addition tc 
the practice of law. Such employees should consult their Deputy Designated 
Agency Zthics Official for specific requirements. Generally, employees of the 
Offices. Boards and Divisions have no other approval requirement. For 
example, an OBD employee may, now and during a furlough, work for a fast food 
restaurant or a supermarket, as long as there is no conflict with his 
government duties,' without obtaining approval. All employees remain sucject 
to other restrictions on outside activities including restrictions on partisan 
political activities. 

Volunteering to Perform Your Job While on Furlough - Agencies are not 
permitted to accept voluntary services of an individual unless authorized by 
law. Thus, an employee may not volunteer to do his or her job on a nonpay 
basis during a furlough period. 

Work on a Furlough Day in Exchange for Time Off for Religious Observances - 

Employees may not work on a furlough day in exchange for taking a day off at 
another time for religious observances. The statute that permits employees to 
take compensatory time off for religious observances does not authorize an 
agency to accept the voluntary services of any individual on a furlougn day. 
Periods of time worked in exchange for taking time off for religious 
observances must be scheduled on non- furlough days. 

Injury While on Furlough - Employees are not eligible for workers' 
compensation while on furlough. Workers' compensation is paid to employees 
only if they are injured while performing their duties. Employees on furlough 
are not in a duty status for this purpose. 

SERVICE CREDIT 

Time-in-Grade - Time in a nonpay status is creditable service for meeting 
time-in-grade requirements. 

Completion of Probation - An aggregate of 22 workdays in a nonpay status is 
creditable service towards completing a probationary period. 

Retirement - An aggregate nonpay status of six months in any calendar year is 

creditable service. Thus, there is no effect on an employee's high-3 average 

unless the furlough causes the employee to be in a nonpay status for irore than 

six months during the calendar year. 

Career Tenure - The first 30 calendar days of each nonpay period is creditable 
service towards meeting the service requirements for career tenure. 

Severance Pay - Nonpay status time is fully creditable for the 12-mont.-. 
continuous employment period required by 5 U.S.C. 5595(b)(1) and 5 CFR 



439 



550. 7:s. However. :or purposes of determining service credicabis towards the 
romp'jTStion of an empicyee's severance pay fund under S U.3.C. : = 9S!c)(l) and 
5 CFR 350.707-708, no more Chan six months of nonpay status time per calendar 
year is creditable service. 

Military Duty or Workers' Compensation - Nonpay status for ampicyees who are 
perfcrming military duty or being paid workers' compensatisn counts as a 
continuation of Federal employment for all purposes upon the employee's return 
to duty. 

Annual and Sick Leave - When an employee accumulates 80 hours of nonpay 
status, his or her annual and sick leave credits are reduced by an amount 
equal to the amount of leave the employee earns during that pay period. For 
purposes of computing annual leave accrual rates, creditable service is 
limited to an aggregate of six months nonpay status in a calendar year. 

EMPLOYEE SERVICES 

Department of Justice Recreation Association - The Department of Justice 
Recreation Association facility located in the Main Justice building will be 
open during Che furlough period. 

DOJ Cafeteria - The cafeteria in the Main Justice Building will be open 
during the furlough period. 

DOJ Federal Credit Onion - The DOJ Federal Credic Union (DOJFCU) , located in 
the Main Justice Building, will be open during the furlough period. The 
DOJFCU has informed the Department chat chey are developing a series of plans 
to help ease the financial burden on employees being placed in a nonpay status 
The plans include special loan programs to its members, the elimination of 
certain fees and penalties on savings and loan programs will eliminated; and 
extended service hours to provide financial counseling. Additional 
information may be obtained directly from DOJFCU by calling (202) 842-3200 
(local calls) or 1-800-842-3200 (long distance callers). 

Health Units - The Health Unit will be open in the Main Justice Building if 
the building is open. 

Justice Occupational Health Orgemizatlon - If employees are furloughed che 
Justice Fitness Center will be closed. 

Travel Management Center - Beginning October 1, 1995, Omega World Travel (OWT) 
will replace Carlson-Wagonlit Travel as the Department's nationwide Travel 
Management Center. Omega's main reservation/ticketing location will be on che 
first floor of the Bicentennial Building at 600 E Street. N.W. A small branch 
office for ticket pick up will be Located in the Main Justice Building, at che 
same location used by Carlson. These two sites are for employees of the 
Offices, Boards, and Divisions, and the Immigration and Naturalization 
Service. A resei-'/ation center will be located at 320 First Street, N.W. for 
employees of the Bureau of Prisons. A reservation center for employees of the 
Drug Enforcement Administration and United States Marshals Service will be 
located at 700 Army Navy Drive, Arlington, Virginia. Omega will be open 
during the furlough' period. 

Employees may call the following telephone numbers for services: 

Offices. Boards, and Divisions/'Immioration Service 

Regular hours (7:30 a.m. - 5:30 p.m.) (202) 393-8240 
Regular hours - Toll Free 1-800-366-3493 
After hours - Toll Free 1-800 685-6342 

Bureau of Prisons 

Regular hours (202) 393-8266 

Druo Enforcement .i.-dministration/U S. Marsha ls Service 

Regular hours (703) 412-2714 



440 



U.S. Department of Justice 



Waslwigioii, OC 20S}n 



November 14, 1995 

MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS 



STEPHEN R. COLGATE 
Assistant Attorney General 
for Administration 




SUBJECT: 



Employees on Detail During the Furlough 



The Office of Legal Counsel has advised that the determination 
whether an employee who is detailed to another agency (including 
an agency in another branch of the government) should be made by 
the receiving agency. That is, if a Department of Justice 
employee is detailed to the Treasury Department, it is the 
Treasury Department which determines whether the duties being 
performed by the detailee exempt him or her from the furlough. 

cc: Executive Officers 



1 



441 



U.S. Department (if Justice 



lyasJuiigioii, DC. 205 JO 

November 14, 1995 

MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS 



^2^ 



FROM: STEPHEN R. COLGATE 0^ 

Assistant Attorney General 
for Administration 

SUBJECT: Implementation of Continqency Plans 

In view of the fact that neither a continuing resolution nor an 
annual appropriation for the Department of Justice was enacted as 
of midnight, November 13, 1995, you should proceed with the 
implementation of your contingency plan and the release of all 
"non-exempt" employees after three hours of work today. 



442 






U.S. Department of Justice 



Washiiision, D.C. 20S30 



November 17, 1995 

MEMORANDUM FOR HEADS OF DEPARTMENT COMPONENTS 



STEPHEN R. COLGATE 
Assistant Attorney General 
for Administration 



Guidance for Presidential Appointees 




We have received the attached memorandum from the Deputy Director 
of the Office of Management and Budget (OMB) which provides 
guidance concerning the activities in which Presidential ("PAS") 
appointees may engage during the furlough period. You should 
review the guidance and ensure that you and appropriate members 
of your staffs are complying with OMB's direction. 

There is also attached a list of examples of the effects of the 
furlough which OMB has assembled. 

Attachments 

cc: Executive and Administrative Officers 




443 



EXECUTIVE OFFrCE OF THE PRESIDENT 

OFFICE OF MANAGEMENT AND BUDGET 

WASHINGTON. D.C. 20S03 



DEPUTY DIRECTOR 

rOR MANACEMCNT 



November 16. 1995 
MEMORANDUM FOR THE PRESIDENTS MANAGEMENT COUNCIL 



iooymK 



FROM: John A Koskini 

1/ ■ 

RE: Guidance for Activities of Polmcal Appointees and Other Official^ 



Enclosed is guidance to political appointees on activities during periods of shutdown. 
Also included is a discusaon regarding appearances by political appointees. 

These raaterials were distributed at the cabinet meeting this evening and I would 
appreciate your ensuring that all appropriate ofiEdals receive copies. 

Also enclosed is a set of examples of the impaa of reduced govemmeni services. We are 
continuing to expand this document. 

I will be organizing a conference call for tomorrow at 2:00 p.m. to discuss emerging issues 
surrounding the shutdown. 



Alice M. Rivlin 
LanyHaas 
Kitty Higgins 
CFO CouncU 

Pcm/Ecm 

Agency Chie& of Staff 
Agency Shutdown Contacts 



444 



Gmdance to PAS and Other Oflidals 
on Actmties During Period of Shutdown 



General Guidance 



A PAS official needs to be able to cany out his or her "chain of command* 
constitutional responsibilities with respect to those activities of the agency that 
continue during a shutdown . An agency's "shutdown activities" consist of — 

— those activities for which there exist an appropriation (e.g., a 
permanent appropriation), 

-- ceitaia constitutiooal activities, 

~ "excepted" protection of life and property activities, and 

— activities that fall within exceptions e;q)rcssly authorized by law or that 
are necessarily implied by other authorities. 

Because the obligation to pay PAS officials arises from their status, and 
without regard to whether they perfonn any services, a PAS official is not 
limited to performing 'shutdown activities," but may also perfonn 
non-' shutdown actndties." 

A PAS official needs to receive that level of staff suppon which is necessary 
for the PAS official to cany out his or her constitutional "chaia of command' 
responsibilities with respect to the agency's "shutdown activities" (i.e., the 
PAJS official's "shutdown responsibilities'). 

Thus, a PAS official needs to identify wiiich staff are necessary for the PAS 
official to cany out his or her "shutdown responsibilities" (i.e., the PAS 
official's "shutdown stafT). 

— An employee may not be included in the PAS official's "shutdown 
StafT unless it is reasonably anticipated thai the vast majority of the 
employee's workday will be devoted to supporting the PAS official 
widi regard to "shutdown activities." This is the same principle that 
applies, for example, to those employees who are on-board in order for 
the agency to perform constimiional or "excepted" functions ~ it must 
be reasonably andcipated that the vast majority of each employee's 
workday will be devoted to performing those fiinctions. 



445 



— Tbus. when a employee needs to be on-boaid because the vast majority 
of his or her workday will be devoted to "shutdown activities'' 
(including supporting a PAS official in performing the official's 
"shutdown responsibilities"), the employee may devote incidental 
periods of the woricday to non-"shutdown activities" (i.e.. assuming no 
marginal obligations are incurred). Otherwise, the government would 
be paying for a fiill woricday, but getting oidy pan of a workday. 
However, alth^.ugh incidental non-"shutdown activities" may be 
performed, the employee's first priority must be the performance of 
"shutdown activities." 

PAS Officials and Travel 

o Outof Towq . 

o A PAS official mav travel out-of-town to carry out that official's "shutdown 

responsibilities." 

o To the extent that additional employees are needed to assist the PAS official in 

carrying out his or her "shutdown responsibilities," the PAS official may bring 
along employees who would otherwise be on-board because the vast majority 
of their workday will be devoted to "shutdown activities." While out-of-town, 
the vast majority of the employees' workday must be devoted to "shutdown 
activities" (if not, then those employees should be back in the office or on 
furlough). 

o Because out-of-town travel involves an agency incurring marginal obligations, 
a PAS official may ngt travel out-of-town to cany out non-"shutdown 
activities" (just as an "excepted" employee may not travel out-of-town to carry 
out non-"shutdown activities"). 

o In Town . 

o A PAS official mav travel in-town to carry out that official's "shutdown 
responsibilities." 

o To the extent that additional employees are needed to assist the PAS official in 
carrying out his or her "shutdown responsibilities," the PAS official may bring 
along employees who would otherwise be on-board because the vast majority 
of their workday will be devoted to "shutdown activities." 

o PAS official mav travel in-town to carry out non-" shutdown activities" so long 

as no marginal obligations are incurred (e.g., no cab fares). 



40-190 97 - 15 



446 



o To the extent that additional employees are needed to assist the PAS official in 
carrying out a non-"shutdown activity, ' the PAS official may bring along 
employees who would otherwise be on-board because the vast majority of their 
workday will be devoted to 'shutdown activities. " Thus, the duration of the 
non-"shutdown activity" must be limited to an incidental portion of those 
en^)loyces' time (if not, then those employees should be back in the office or 
on furlough). In addition, although incidental non-'shutdown activities" may 
be perfoimed, the employee's first prioritv must be the performance of 
'shutdown activities.' 

m. Testimony by PAS and Other &npIoyees 

o PAS may testify whether or not the testimony would otherwise fall within their 
responsibilities during shutdown. 

o Support persons may not assist the PAS unless: 

— the PAS is testifying under subpoena, 

— activity is independently justified as an excepted activity (i.e. assisting 
the PAS in this regard is not an independent "excepted activity" by 
itselO, or 

— the assistance is undertaken during any brief, incidental and unplanned 
periods during the 

workday when excepted activities do not need to be performed. 



Qft^er Fjnplnyftes 



Non PAS employees who are otherwise excepted may not testify (absent 
subpoena) unless the testimony is covered under one of the standard excepted 
activity categories — that is, such testimony by itself is not an independent 
basis for a shutdown exception. 

Employees otherwise on furlough may not be called back to duty simply to 
testify (absent subpoena) since testimony is not an independent basis for a 
shutdown exception. 



447 



*iPP'^"1"y« of Political ApDointws 
As 4i«^»««p<< in the guidance provided on travel and attendance at Congiessional 
hearings, PAS officials should ensure that ottier activities undeitakea aie consistent widi the 
&ct that much of the government has been shutdown. Public appearances diat address the 
iffipaa of the shutdown on govenunent enq>loyees or on other afifectrd publics aze deaily 
appropriate. Similariy, activities that are integral to the management of the agency or the 
protecti(m of employee morale during this period are encouraged. However, managers 
should examine carefully other appearances and activities that under normal circumstances 
would be a p p ropri ate but under current ciraimstances might be questionable. For example, 
some managers may determine that particqiation in some types of routine, narrowly focused 
public events or f<Kums would be inappropriate under cunent circumstances. 



448 



EXAMPLES OF REDUCED GOVERNMENT SERVICES 



A. No new OASDI and SSI benefit ^>plications are being processed. 

1. On an average day, SSA receives 28,000 a|^lications for retirement, 
survivors, or disability benefits for OASDI and SSI. In addition, it handles 
200,000 calls through itt 800 telqihonc service, which is dosed during the 
shutdown. 

2. On an average day, SSA receives 60,000 requests for new or rq>laceme&t 
Social Security cards and receives 75,000 visits to local field offices. 

B. No new applications for Veterans benefits are being processed. 

1. On an average day, VA processes 1,613 new claims for con^>ensation and 
pension benefits and 8,074 claims actions from existing beneficiaries for 
adjustments to their benefit amount 

2. On an average day, VA processes 883 original claims for Montgomery GI Bill 
and other veterans education benefits and 4,570 claims for adjustments firom 
current beneficiaries. 

3. If an ^propriation is not enacted by November 21, over 3.3 million vetexans 
and survivors will not receive their benefit checks. 

C. No new ^iplications for Medicare are being processed. 

1. On an average day, HHS imcesses 10,000 new Medicare beneficiaiies. 

D. Head Start services are doeatened. 

1. >^thin several days, 60,000 Head Start children willlose services and 11,000 
Head Stan staff will be without funding. 

E. "Deadbeat Dads' are getting a holiday through the shutdown. 

1. The Federal Parent Locator Service to which on average, 20,000 cases per day 
are referred is closed. 



449 



F. Vital legal and law enforcement functions are shutdown or delayed. 

1. FBI training of agents and state and local law enforcement officers has ceased. 

2. The FBI's liaison function with state, local, and international law enforcement 
has been canceled. 

3. Federal law provides that only the Attorney General may authorize a Federal 
Prosecutor to seek the imposidon of the death penalty. Processing of these 
requests — in violent crime and narcotics cases — will be substantially delayed. 

4. All dvil litigation has been postponed to the extent possible. This exposes the 
United States to significant liability and means that lawsuits which could be 
filed on behalf of the government against, for example, elderly fraud 
<^)etators, will not be filed. The effects will be fdt by the taxpayer in general 
and by victims in pardcular. 

5. Investigations of enq>loyment discrimination on the basis of race, sex, religion, 
or national origin are suspended. 

6. Processing of prison grant applications is slowed down. Appropriated funds to 
assist states in constrticting and bringing on line new prison fecilities is 
delayed. 

7. Collocticm activities by Justice's Qvil Division have ceased. Tlie cessatim of 
ctdlectitti activities means that the Treasury receives less income and thus the 
deficit actually grows. In addition, individuals who owe the government 
moaey can withhold payment without any particular penalty. 

G. FHA mortgages are halted. 

1. On an average day, the Federal Housing Administration processes 2500 home 
purchase loans and refinancings totaling $200 million worth of mortgage loans 
for modeiate-and low-income woridng families nationwide. The shutdown has 
halted these activities delaying home ownership for those who have played by 
tbeT\iles. 

H. Reduced funding to poblk housing authorities. 

1. On an average day, EDUD provides S25 million in operating subsidies and 
modemizatioo funds to the 3400 local housing agencies who in turn provide 
public housing and services to 1.4 million low-income households. Shutoff of 
this funding will potentially prevent public housing authorities from paying 
utilities, providing basic maintenance needs, or paying staff. 



450 



I. Reduced funding for homdess services. 

1. A ooe-day shutdown of HUD's Line of Credit G>ntr(d System could pieveit 
the ddiveiy of essential housing and emeigency services provided to at least 
32,000 homdess persons. 

J. Many protectjons for American workers aie su^)ended due to the shutdown of 
mudi of the Labor DqartnienL For each day of the shutdown: 

1. 95 percent of workplace safety oMnplainis are going unanswered. 

2. 170 wotkpiacc safety and health inflections are not being performed. 

3. 190 wodcer complaints of minimum wage and overtime violations would 
remain imtesolved. 

4. 500 requests for information and assistance from pensioners participating in 
plans with S3 trillion in assets are going unanswered. 

EL National Park Senrices facilities are closed. 

L On an average dof, 726,000 people visit National Park Services facilities. 

2. On an average day, 55,000 people visit National Paric Services facilities in the 
National Capital R^on, sudi as the Washington M(Miument, Ford's Theater, 
die White House, and Great Falls Park. 

L. The Smidisoniaa museums, Kmnedy Cento', National Zoo, and National Gallery 
(^ Alt are closed. 

1. On an average day. 80,000 people viat the Smiihsooian Museums on the Mall 
and the National Zoo. 

2. On an average day, 12,400 pec^le visit the Natunal Gallery of Art. 

3. On an average day, 6,900 people visit die JFK Center for Performing Arts. 
(This does not include individuals who pay to attend p erformances, for which 
die Kennedy Center will continue to be opea.) 

M. Applications for passports are not being processed and new pas^rts are not being 
issued. 



451 



1. On an average day, die State Dqiaitmeat receives 23,000 applications for 
passpoits. 

2. On an average day, the State Dqartment issues 22,000 passports. 
N. No recruits to join the anned forces are being processed or inducted. 

1. On an average day, over 700 memben of the aimed forces are enlisted. 

O. The Federal Employment Information System i!s closed. 

1. On an average day, 24,000 Amedcaas will be denied access to job 

information including veterans transidcniog from active duty to civilian life, 
disahlftri veterans vriring information about special hiring pr o gra ms, college 
students seeking careers in public service, and displarrd federal employees 
seeking outplacement. 

P. Tfiring for Law Eiiforcement Positioits has been interrupted. 

1. Hiring of \q> to 400 new Border Patrol Agents has already been delayed by the 
cancellation of two recruitment cycles. 

Q. Assistance to Small Basintsscs has been interrupted. 

1. On an average day, ova 260 small business will not receive SBA guaranteed 
financing totaling over S40 million of loans. 

2. On an average day, over 90 small business will be prevented from bidding on 
government contracts because tb^ will be imable to receive SBA guaranteed 
bid bonds which allow them to bid on those contracts. 

i. On an average day, 1200 small business owners will not receive SBA- 
sponsored traimog and counseling normally available to them. 

R, American esq;>orting boanesses are being disadvantaged during a shutdown. 

1. On an average day, over 30 expoit licenses with a value or $30.5 million that 
would otherwise have been ai^roved by the Bureau of Export Administration 
are not being acted upon. 

2. On an average day, over 2S0O telq>hone calls and £axes from U.S. businesses 
srfVing export advice, infonnatioa and counseling are not being responded to 
by the Bureau of Export Administration or the International Trade 
Administration due to the shutdown. 



452 




U. S. Departmeat of Justice 
Office of Legal Counsel 



Office of lh> Waikuiitan, D. C. 20530 

Alliiunl AtloriMy OcnanJ 



November 16, 1995 



MEMORANDUM FOR JANET RENO 
ATTORNEY GENERAL': 

Vi 
From: Walter Dellinger \/\J 

Re: Participation in Congressional Hearings during an Appropriations Lapse 

The Department of Justice has been informed that various congressional committees 
intend to hold hearings at which Department of Justice officials have been requested to 
testify, during the period in which the Department lacks appropriations to pay for the 
services of those officials. You have asked under what circumstances Department officials 
may participate in these hearings. 

The Antideficiency Act ("Act") provides that "[a]n officer or employee of the United 
States Government or the District of Columbia government may not . . . involve either 
govertunent in a contract or obligation for the payment of money before an appropriation is 
made unless authorized by law." 31 U.S.C. § 1341(a)(1)(B). In addition, the Act 
establishes that "[a]n officer or employee of the United States Government . . . may not 
accept voluntary services ... or employ personal services exceeding that authorized by law 
except for emergencies involving the safety of human life or the protection of property." 31 
U.S.C. § 1342. These provisions are enforceable by criminal sanctions and their 
requirements must be observed. All federal officers and employees must comply with the 
law, whether they serve in the executive, legislative, or judicial branch. Where the Act 
applies, it restricts the functions that federal officers and employees may perform during an 
appropriations lapse to only those functions that are encompassed by one of the exceptions to 
the Act's general prohibitions. The question thus becomes under what conditions, if any, 
does participation in congressional hearings constitute an excepted function for employees 
subject to the Act's restrictions. 

Before addressing those exceptions, we note that the Act is not implicated at all by 
the activities of federal employees for whom no obligation in advance of an appropriation is 
incurred by employing a particular individual, even when appropriations are currently lacking 
for that individual. A prominent example is provided by those officers who are appointed by 
the President with the advice and consent of the Senate. These officers are entitled to their 
salaries by virtue of the office that they hold and without regard to whether they perform any 



453 



services during the period of appropriations lapse. SfiS United Stetes v. Grant . 237 F.2d 511 
(7th Cir. 1956). Therefore, no federal officer or employee incurs an obligation in advance 
of appropriations when these officers perform services; instead, this obligation arises by 
virtue of their status and caimot be obviated by placing them on furlough status.' 

Where the Act does not apply, as in cases like these, officers and employees may 
participate in congressional hearings, although the participation of Senate-confirmed officers 
is subject to the significant limitation that support persons to whom the Act does apply may 
not assist those officers unless these activities are independentiy justified under the Act's 
exceptions. You have indicated that you do not intend to make available Senate-confirmed 
officials of the Dqiartment to participate in congressional hearings unless they have adequate 
and thorough support to ensure fiiU preparation. This effectively means that the exceptions 
of tiie Act define the limits of the Dq)aitment's ability to comply witii requests for 
testimony. We turn, therefore, to address the scope of those excqitions. 

There are two major excq)tions to the Act. First, there is an excq)tion for functions 
that relate to "emergencies involving the safety of human life or the protection of property." 
31 U.S.C. § 1342. The Act states that this phrase "does not include ongoing, regular 
functions of government the suspension of which would not imminentiy threaten the safety of 
human life or the protection of property." LL In the highly unusual event that suspension of 
the Department's participation in a congressional hearing would imminentiy threaten the 
safety of human life or the protection of property, the Department may legally participate in 
the hearing. 



' Similarly, the Act would not forbid a fiirlougbed oflicer or employee from paiticipiting in i coogressional 
bearing if that officer or employee participated in his or her individual capacity. So, for instance, an officer or 
employee who is nominated for a position that is subject to Senate confirmation may, while on furlough status, 
participate in his or her own confirmation hearing. 

Another analogous situation may arise when a non-Senate confirmed officer or employee reports for 
work because his or her dutie* fall within an exception to the Act, but there are intervals during the day when 
the officer or employee is not engaged in an excepted function. If these intervals are anticipated to be brief, 
such that the officer or employee could not be dismissed from work and then recalled in lime to perform the 
n:xt excepted function activity, then the employee may remain at work throughout the intervals. During these 
intervals, officers and employees may perform non-excepted functions, because the need for the officer or 
employee's availability would justify the Department in keeping the officer or employee in the close vicinity of 
his or her duty station to await the onset of the excepted function. Consequently, the Department would be 
obligated to compensate such employees while they are awaiting the excepted function work whether they spend 
this interval performing the non-excepted function or simply sit idle. During these intervals, then, such officers 
and employees are akin to Senate-confirmed presidential appointees in that they must be paid for these intervals 
regardless of whether they perform a oon-excepted fiinction, and thus the government incurs no additional 
obligation by virtue of that work being performed. The non-excepted fiinctions that such officen or employees 
may perform during these brief intervals between excepted functions include services relating to participation in 
congressional hearings where participation is not otherwise authorized. 



454 



The Act also states that governmental functions that are otherwise authorized to be 
undertaken despite a lack of appropriations may continue during an appropriations lapse. S^ 
31 U.S.C. § 1341(a)(1)(B); nL § 1342. In the context of the Dqiartment's participation in 
congressional hearings, there are two types of authority that satisfy this "otherwise 
authorized* exception: express authorization and necessarily implied authorization. See 
Authority for the Continuance of Government Functions during a Temporary Lapse in 
A ppropriations . 5 Op. O.L.C. 1, 3-5 (1981). 

Officers and employees of the Justice Department may participate in congressional 
hearings that take place during a lapse in appropriations if there is express legal authority to 
participate despite a lack of appropriations, or an express requirement to do so. We are not 
aware of any statute that grants the officers and employees of this Department such authority 
in the case of general requests for congressional testimony. Express authority would exist, 
however, if Congress or a committee were to issue a subpoena requiring the Department or 
specific officials to participate in a hearing during an appropriations lapse. Departmental 
policies with respect to responsibilities to the judicial system provide a precedent: it has long 
been the Department's position that, during an appropriations lapse, attorneys representing 
the govenunent are to comply with a court order that they continue with litigation even 
though the litigation does not fall within an exception to the Act. Ss& Memorandum for 
William Tyson, Director, Executive Office for United States Attorneys, from Robert Shanks, 
Deputy Assistant Attorney General, Office of Legal Counsel, addendum, at 2 (Mar. 24, 
1982); see also Rojas v. United States . 55 F.3d 61 (2d Cir. 1995) (scheduling order imposes 
a duty on attorney, nonperformance of which can subject attorney to contempt sanctions 
under 18 U.S.C. § 401(3)). We would follow the same principles with respect to a 
congressional order that imposes a legal duty. SaJ 2 U.S.C. §§ 192, 194 (imposing legal 
duty to comply with a duly issued legislative summons or subpoena). 

The Department's officers and employees may also participate in a hearing despite an 
appropriations lapse if authority for such participation arises by necessary implication from 
another specific statutory duty or duties. SfiS 5 Op. O.L.C. at 3-5. In the context of 
congressional hearings, this exception permits the Department to participate where there is 
express authority or an express and specific appropriation for the hearing itself, and the 
Department's participation is necessary for the hearing to be effective, even though there is 
no specific authority or <^7propriation available for the Department to participate. This 
exception also operates where there is express authority for a si)ecific Department official to 
participate - such as might arise from a subpoena - but no express authority for support or 
assistance of the witness. The Department would regard support and assistance to the 
otherwise authorized participation as being justified by necessary implication. This approach 
follows from the well-settled practice with respect to Social Security. S^ 5 Op O.L.C. at 5 
n.7. 

We are not aware of any other exceptions to the Act that would permit the 
Department to participate in congressional hearings during an appropriations lapse. It has 
from time to time been suggested that the "authorized by law" exception to the Act includes 

-3- 



455 



all activities that derive from or relate to a constitutional power, such as the "legislative 
power." Such a construction would authorize Congress to continue holding hearings during 
an appropriations lapse and would allow the Department to participate. Such a construction, 
however, is impermissible because it would necessarily nullify the Antideficiency Act. The 
federal government is a government of limited and expressly enumerated powers. Those 
powers are denominated in the Constitution, and the federal govenunent may only undertake 
those activities that are constitutionally authorized. SSfi United States v. Lopez . 1 15 S. Ct. 
1624 (1995). Consequently, if all constitutionally authorized functions - legislative, 
executive, and judicial — were excepted, the Act would not apply to any activity of the 
federal government. 

We have also considered whether a decision by Congress to go forward with hearings 
in which DcpaitmtM officers caimot participate would result in a congressional encroachment 
upon the President's constitutional authority.' We conclude that no encroachment would 
occur. The Supreme Court has repeatedly pronounced that statutes are to be construed to 
avoid serious constitutional questions, where such a construction is permissible. See, e.g. . 
Crowell v. Benson . 285 U.S. 22, 62 (1932). Attorney General Civiletti recognized in his 
1981 opinion that it would "raise grave constitutional questions" if the Act were to be read to 
prohibit the President from exercising his constitutional powers. 5 Op. O.L.C. at 6. 
Construing the Act as covering executive branch participation in congressional hearings 
generally, however, does not raise grave concerns over impermissible congressional 
encroachment on the executive's constitutional role.^ The Constitution grants the President 
authority to "recommend to [Congress's] consideration such measures as he shall judge 
necessary and expedient." U.S. Const, art. II, § 2, cl. 2. Congress does not encroach upon 
this power by revising to include the participation of the President or his subordinates in a 
regular congressional hearing, however unwise and counterproductive such a decision might 



' We have applied this same analysis in examioing the application of the Act to the judicial branch. See 
Memorandum for William Tyson, Director, Executive Office for United States Attorneys, fh>m Robert Shanks, 
Deputy Assistant Attorney General, Office of Legal Counsel, at 2 (Mar. 24, 1982); cf. Plant v. Spendthrift 
Farm. Inc. . IIS S. Ct. 1447 (1995) (striking down congressional encroachment on the judicial branch). 

' This assertion is made with the exceptions to the Act in mind. We believe that any instances where grave 
conceras might otherwise be raised would fall within the emergency exception or one of the other exccptioos to 
the Act. We also note that the Act does not raise corresponding encroachment concerns when applied to 
Congress. Whereas the Attorneys General and the courts appropriately remain vigilant against congressional 
encroachment, there is no 'grave constitutional' obstacle that prevents Congress, through the Act, from 
deciding to curtail - or to postpone until appropriations are available - regular legislative, investigative, or 
oversight hearings. Moreover, the Act does not prohibit members of Congress by themselves from conducting 
hearings, because their salaries are paid from permanent appropriations. It is extremely difficult to see how 
interpreting the Act to preclude Department of Justice officers or employees from participating in those hearings 
would raise a grave question as to whether Congress has encroached on its own constitutionally-based authority 
to conduct hearings. 

-4- 



456 



be. So long as the President retains a means of making legislative recommendations, 
Congress generally is not obligated to grant the executive a platfonn at its hearings/ 

The Antideficiency Act places a substantial limit on the functioning of federal officers 
and employees generally, including officers and employees of the Dq>artment of Justice. 
These limits extend to participation in congressional hearings conducted during a period of 
lapsed appropriations. During such a period, an officer or employee of the Dq)aitment of 
Justice may participate in congressional hearings if he or she is a Senate-confirmed officer, if 
appropriated funds are available for his or her participation, if he or she is subpoenaed, or if 
the hearing falls within one of the categories set forth above. 



* Thai said, the decision to exclude the Presideol from the deliberalioiu at crucial momenU in the 
legislative process would be relevant in a presidential decision to veto such a bill. 

-5- 




457 



Department of Veterans Affairs 

Assistant Secrctary for Human Resources And Administration 
Washington DC 20420 



APR H W96 



The Honorable John L Mica 

Chairman, Subcommittee on Civil Service 

House of Representatives 

2157 Raybum House Office Building 

Washington, DC 20515-6143 

Dear Mr. Chairman: 

This is in further response to your letter of January 18, 1996, with follow-up 
questions from the Subcommittee's December 6, 1995 hearing, "The Government 
Shutdown: What's Essential?" 

In my letter of February 12, 1996, we provided responses to questions 1, 2, 4, 7, S 
and 10 of your inquiry Enclosed are responses to questions 5, 6, 11 and 12. Responses 
to the remaining questions (3 and 9) will be forwarded in approximately 30 days 

Sincerely yours, 



Enclosure 




458 



Follow-up Questions 

Subcommittee on Civil Service 

Hearing December 6, 1995 

'The Government Shutdown: What's Essential?'' 



Question 5: Please estimate the total costs to your agency associated with the 
interruption of operations during November and December-January. Please 
provide descriptions of any unusual costs imposed on the agency or other 
unanticipated consequences of these interruptions of operations. Please provide, 
too, an estimate of any savings associated with these interruptions. 

The following tables provide the estimated payroll and non-payroll costs the Department 
incurred with the interruption of operations during November and December- January. 
The payroll costs are salaries paid to employees who were flirloughed and the overtime 
associated with backlog caused by the interruption of operations. The non-payroll costs 
include lost interest penalties under the auspices of the Cash Management Improvement 
Act; lost discounts; and postponed travel. 

Estimated Payroll Costs of Furloughed Employees 
Includes Overtime Used to Reduce Resulting Backlogs 

Veterans Health Administration (VHA): 

Medical Care/ Research $68,908,630 

MAMOE $3,800,000 

Subtotal VHA $72,708,630 

General Operating Expenses (GOE): 

Veteraris Benefits Administration (VBA) $43,037,000 

Includes overtime to reduce backlog ($1,386,000) 
General Administration $9,065,178 

Includes overtime at Austin Finance Ctr ($62,000) 

Subtotal GOE $52,102,178 

National Cemetery System: $2,119,000 

Includes overtime due to backlog of headstones 
and markers ($70,000) 

Inspector General: $1,957,000 



Total Payroll Costs $128,886,808 



459 



Estimated Non-Payroll Costs 



Veterans Health Administration (VHA): 

Pre-paid tuition costs for furloughed employees $13,000 

Cancellation penalty of field advisory group $500 

Subtotal VHA $13,500 



Veterans Benefits Administration (VBA): 
Overhead fixed costs incurred during shutdown 



$11,613,000 



Board of Veterans' Appeals: 

Travel for recalled Board members 



$2,000 



Human Resources and Administration (HRA): 

Pre-paid tuition costs for furloughed employees 
Recall EEO investigators in field 



$2,065 
$7,000 







Subtotal HRA 


$9,065 


Office of Management: 








Interest Penalties * 






$170,000 


Lost Discounts* 






$122,000 


Contract Cost - Recall 






$8,300 


Contract Deliverable Delay 






$6,000 


Travel for recalled staff 






$2,000 


Subtc 


>tal Office of Management 
Total Non-Payroll Costs 


$308,300 




$11,945,865 



* These costs are borne by various appropriations and are only identified by the 
Office of Management. 



6. Please indicate the shutdowns' impact on programs funded through trust funds, 
fees, carry over funds, or other revenues not tied to annual appropriations. Please 
describe any changes made in implementing these programs during the December- 
January shutdown. 



Medical Care Cost Recovery Program. The Medical Care Cost Recovery Program 
(MCCR) is a revolving fund with all associated program operation costs provided from 
funds collected. As such, all MCCR funded employees were determined to be excepted 
fi-om furlough. Because of this the shutdowns had little impact on the MCCR program 



460 



Veterans Canteen Service. The Veterans Canteen Service (VCS) was created by 
Congress in 1946 to provide articles of merchandise and services essential to the comfort 
and well being of veterans who receive care and treatment at Department facilities. All 
expenses associated with the operation of VCS activities (such as salaries, equipment cost, 
utilities, etc.) are paid for fi-om revenues generated by the sale of goods and services. 
VCS operates retail stores, food courts, vending programs and service department 
activities (dry cleaning, photo developing, barber shops, etc.) in every VA medical center 
in the system. All of the income generated by VCS activities in excess of operating 
expenses is returned to the VA medical centers with the goal of improving patient care. 

The shutdowns had a significant impact on VCS activities. Faced with the prospect of a 
payless payday, employees in VA medical centers curtailed buying to only essential 
purchases. Coming as it did, just ten days before Christmas, the second shutdown had an 
especially negative impact on what is normally a busy selling period in the retail industry. 
By comparing average daily sales figures for the shutdown period with similar sales 
information for the three month period preceding the shutdown, it is possible to produce a 
reasonably accurate estimate of the impact on sales. The average daily sales decline has 
been calculated to be $46,500 or a total sales loss of $697,000 for the fifteen day 
shutdown. 

In response to the shutdown, the VCS implemented a program designed to assist VA 
employees. When VA employees did not receive a full paycheck in early January, VCS 
initiated "OPERATION PANTRY." This program was developed to ensure that 
employees would be able to buy basic grocery items. Canteens were authorized to stock 
basic grocery items (which are not normally carried), and sell those items to employees in 
exchange for postdated checks. 

Research and Development. The Research and Development program in the Veterans 
Health Administration receives no support from trust funds or fees. Carry over funds 
from a two-year appropriation were used to maintain medical center research operations 
for two of the three weeks in the December- January shutdown. After these funds were 
depleted, medical centers had to furlough research employees exclusive of those 
designated as "excepted." Excepted employees continued to perform such functions as 
the protection of government property, care of laboratory animals, and maintenance of cell 
cultures. The interruption of routine research will extend completion dates for the 
affected projects in most cases. Research programs fijnded from extra- VA sources (both 
federal appropriations and non-federal funds) were not affected by the shutdown. 

Office of Acquisition and Materiel Management (Supply Fund) The Supply Fund is 
a revolving fund which VA health care facilities may use to procure medical supplies and 
equipment on a reimbursable basis. Although Supply Fund employees were not 
furloughed themselves, the furlough of other staff who were not available to participate in 
various activities resulted in the following: 

• There was a reduction in the number of purchase orders issued electronically. 



461 



• The testing and implementation of various automated systems designed to improve the 
efficiency of procurement activities was delayed. 

• There were delays in vendor payments. 

• Standardization actions on selected medical products were delayed. 

• National blanket purchase agreements impacting Nuclear Medicine, Dental and 
possibly Bio-Medical Engineering services at VA medical centers may be delayed 

• Supply Fund revenues were reduced due to reduced shipments of x-ray film and fewer 
requests for computer upgrades, x-ray inspections, etc. 

Insurance and Loan Guaranty Programs. Initially, employees who process claims for 
accounts administered by the Veterans Benefits Administration were fiirioughed regardless 
of the fijnding source. Subsequent clarification of shutdown guidance, however, permitted 
VA to except employees needed to obligate funds in programs with existing obligation 
authority. Based on this guidance, VA's General Counsel determined that because VA's 
life insurance programs are funded through either trust funds, trust revolving funds or 
public enterprise revolving fund accounts, the processing of insurance claims and the 
payment of insurance awards could resume. In addition, because VA has permanent 
indefinite authority to pay obligations of the Liquidating and Financing Accounts of the 
Loan Guaranty Revolving Fund and the Guaranteed and Indemnity Fund, VA could also 
resume administering those functions. Accordingly, 200 insurance employees were 
recalled January 3, 1996 and 400 loan guaranty employees were recalled January 5, 1996, 
in order to process appropriate activities of those programs. 

Federal Supply Schedule Contract Audits. The Office of Inspector General (OIG) 
conducts Federal Supply Schedule (FSS) contract audit and advisory services and reviews 
of contractor compliance with drug pricing provisions of PL. 100-585 These activities 
are funded through a reimbursable arrangement with the VA's Supply Fund The Supply 
Fund is a revolving fiind and is not funded by direct appropriations. During the 
shutdowns, OIG staflF(17 FTE) engaged in these audit and review activities continued to 
work. Operational changes were not required. 

Office of Financial Management. VA's Office of Financial Management noted that in 
general, operations of trust and revolving funds and excepted activities suffered from the 
lack of support typically provided by fiirioughed employees. For example, the 
establishment of new accounting codes to support field fiscal activities was completely 
shut down, preventing the timely and accurate recording of fiscal information; payroll 
operations did not receive adequate guidance, resulting in reprocessing of payroll data; 
and meetings between fiirioughed and excepted or funded employees were canceled, 
resulting in delays in needed site visits, system enhancements, and other improvements. 



462 



11. The President decided to call 1700 VA field stafT back to work to process new 
VA claims—even though the agency was not going to pay benefits because veterans' 
benefits are in an annual appropriations stream, rather than indefinite or multi- 
year appropriations. Why should you recall intake workers to sign up new 
beneficiaries that you recognize you can't pay? 

Based on the below legal rationale, the Department of Justice opined that VA could call in 
employees to date applications for benefits and appeals, since a VA claimant may have a 
property right in the underlying benefit from the time an application 
is received. VA's failure to preserve the effective date of receiving a claim might result in 
a partial loss of a benefit, resulting in the deprivation of a property right. 

In opinions of April 25, 1980, and October 16, 1995, which analyzed the provisions of the 
Antideficiency Act (31 U.S.C. §§1341 and 1342), the Attorney General of the United 
States elaborated on the various exceptions in the Antideficiency Act that permit some 
continuing government functions. One example is the "necessary implication" exception 
which allows agencies to incur obligations in advance of appropriations for the 
administration of benefit payments under entitlement programs to the extent that funds are 
available. We agree with the statement in question 1 1 that funds to pay VA benefits were 
not available, and therefore, VA was not authorized to bring in additional employees to 
actually pay benefits. 

However, the basis for recalling these employees was the result of an oral opinion given by 
the Department of Justice in a conference call with VA officials during the lapse of 
funding in November of 1995. The opinion was based on the Department 
of Justice's interpretation of the language in section 1342, in which the Federal 
government is precluded from employing personal services "except for emergencies 
involving the safety of human life or the protection of property." Relying on the principles 
of due process and an old decision of the Comptroller of the Treasury, Comptroller 
Tracewell to the Postmaster . 9 Comp. Dec. 182 (1902), the Department of Justice 
concluded that the "protection of property" contemplated by section 1 342 extends beyond 
property owned by the Federal government and includes property in which the 
government has an immediate interest or has some duty to perform in connection with the 
property. 

VA requested a written confirmation of the oral opinion. Please find enclosed a copy of 
the March 15, 1996, Department of Justice opinion. 



12. During testimony the Subcommittee heard several examples of backlogs that 
would accumulate for each day of a potential shutdown. Please provide the 
Subcommittee with an inventory of any backlogs that your Department associates 
with the shutdowns. In light of OPM's January 17, 1996, guidance to restore 
annual leave, please provide your management plan to reconcile the accumulated 
leave and the workload backlogs attributable to furloughs. 



463 



Veterans Health Administration (VHA). Although direct health care services to 
veterans were continued during the shutdowns, most employees in VHA headquarters 
were furloughed. As a result, the following delays and backlogs were experienced 

• CD-ROM Equipment Purchase and Installation Project: 4 weeks delay. This project 
allows for the elimination of paper directives and forms throughout VHA via use of 
CD-ROM. 

• DHCP Software Development for 10-1 OT: 4 week delay. This project wall allow for 
a computerized Form 10-lOT, Application for Medical Care. 

• Resource Based Relative Value Scale Software Development: 3 weeks delay. This 
project allows VA to utilize the Health Care Financing Administration (HCFA) 
payment schedule for private outpatient care under VA auspices 

• Centralization of Fee Basis Payment Process: 4 weeks delay This project will allow 
for all VA Fee Basis care payments to be processed centrally at the CHAMPVA 
center. 

• 1996 "Means Test" Level Implementation: 2 weeks delay Provides necessary 
financial information necessary to determine a nonservice connected veteran's 
category of care. 

• HCFA Price Implementation: 4 weeks delay. Provides computerized financial 
information for determining billing rates for private inpatient care under VA auspices. 

• rVC Equipment Purchase (National Buy RFP): 4 weeks delay. Provides new VA 
Patient Identification with demographic and photographic information. 

During the November 1995 shutdown, activities of the Health Administration Center, 
which processes claims and requests to authorize or reimburse for health care services, 
were also impacted. This included processing applications for CHAMPVA and Foreign 
Medical Care benefits, processing of beneficiary and vendor reimbursement claims, 
development of appeal cases associated with those benefit programs, and other initiatives 
to promote efficiency and contain administrative costs of providing health care. During 
the course of the fijrlough, approximately 240 applications for benefits, 12,000 claims for 
reimbursement, and 540 appeal cases were received and added to the processing inventory 
that was pending at the onset of the furiough. In addition, 905 written inquiries were 
received and added to pending inventory and 3, 160 telephonic inquiries were attempted 
but unanswered. Although most HAC operations were continued during the second 
shutdown, the absence of appropriations caused suspension of disbursements for an 
estimated 38,000 claims totaling over S5.8 million. The situation created an additional 
burden on beneficiaries, and generated an increase of over 120 calls per day. 



464 



Veterans Benefits Administration (VBA). The following is a summary of the impact of 
the furloughs on workload in the Veterans Benefits Administration. 

About 1.3 million pieces of mail were received in VA regional offices during the 
shutdowns. Prior to the November shutdown, the total compensation and pension claims 
pending were 397,000. That total peaked at approximately 420,000 af^er the second 
shutdown. 

Before the first shutdown, VBA had reduced the time for decisions on original claims for 
compensation to about 146 days. As of January 31, 1996, this number had increased to 
152 days. Processing time is expected to continue increasing for the next several months 
and then begin to decline again to about 140 days for the month of September. However, 
the cumulative impact of these trends will increase the cumulative days pending to around 
150 days for FY 1996, an increase of 10 days over the original estimate. 

In mid-November, there were 90,000 education claims pending. As of the end of January, 
there were 136,000 claims pending. WTiile the shutdovms certainly contributed to the 
increase, they were not its exclusive cause. The volume of education claims fluctuates in 
correlation to the schedule of school semesters. Consequently, January is typically a large 
volume month for school registrations. Payments to beneficiaries with an education claim 
pending are currently being processed within 35 days for an original claim and 25 days for 
a reopened claim. 

The increased workload in home loan guarantees and appraisals, caused by the shutdown, 
has been processed and the pending is back to a normal level. 

The 8,000 Vocational Rehabilitation Counseling appointments that were canceled because 
of the shutdown are being rescheduled. We do not have an estimate for completing all 
vocational rehabilitation counseling rescheduling at this time. 

National Cemetery System (NCS). The following is a summary of backlogs experienced 
in National Cemetery System activities due to the shutdowns. As resources permit, NCS 
will approve overtime to remedy backlogs created by the shutdowns. 

• Approximately 27,000 headstone and marker orders were not processed during the 
furloughs. 

• Approximately 16,000 hours normally devoted to the installation of headstones and 
markers were lost during the furloughs. 

• Approximately 26,000 hours per month are devoted to preventive maintenance of 
equipment and buildings, grounds and graves maintenance, seeding and fertilizing, 
establishing turf areas, and renovation and repair caused by seasonal storms and other 
factors; it is unlikely that many of these lost hours can be made up during this fiscal 
year. 



465 



Prior to the shutdowns, adequate contract provisions were in place to provide accurate 
and timely delivery of headstones and markers. The shutdowns prevented processing of 
orders and the payment of contractors for delivery of headstones and markers. This left 
many contractors with no alternative but to terminate employees and close down major 
production lines. Now that the shutdowns are over, many manufacturers are struggling to 
recruit new employees skilled enough to meet the demands of the orders now being 
placed. The shutdowns also prevented the development of necessary specifications to 
post bids on the new upright granite headstones. This contract should have been awarded 
by now, but due to the shutdowns is long overdue for distribution to potential bidders, 
thus delaying manufacture, delivery and installation of these headstones. 

NCS reports that families are concerned that graves have had only temporary markers for 
a very long time; they are further disillusioned when they learn that the delivery of the 
permanent headstone or marker is still months away. The volume of telephone calls to the 
Office of Memorial Programs "800" number are at an all-time high and little satisfaction 
can be offered to callers at this time. Dissatisfaction with service delivery has resulted in 
increased correspondence, including Congressional correspondence, and the need to 
devote many more hours than is normal to addressing concerns caused by the shutdowns. 

Board of Veterans' Appeals (BVA). The following is a summary of the impact of the 
fijrloughs on workload in the Board of Veterans' Appeals. 

The most notable effect of the shutdowns on the operations of the BVA is the loss of 
decisions that otherwise would have been made during the period of the furloughs. BVA 
estimates that approximately 2,400 VA appellate decisions were not made that would have 
been made during the two shutdown periods. This loss incrementally adds to VA's 
current appellate backlog and to the time all VA appellants must wait for decisions on 
currently pending appeals. BVA originally estimated that it would be able to produce a 
total of 35,200 appellate decisions during FY 1996, which would enable the Board to 
achieve an end-of-year response time of around 640 days. Decision-making performance 
losses associated with the shutdown reduced expected FY 1996 BVA production by 
approximately 2,400 decisions. 

Eighteen appellate hearings scheduled to be conducted in the BVA's Washington, DC, 
offices during the period of the shutdowns had to be canceled. These hearings must be 
rescheduled for some future date, at the option of the appellants, thus delaying final 
decisions on the related appeals. Two VBA Board members were conducting field 
hearings in Chicago at the time of the first shutdown announcement. They were recalled 
to their Washington, DC, duty station, and 52 appellate hearings scheduled for that week 
were canceled. In addition, 86 hearings scheduled to be conducted in Huntington, W^ 
and Roanoke, VA during the week of January 8-12 were canceled. 

Office of the Inspector General (OIG). The major backlog in OIG workload that 
accumulated during the shutdowns resulted from the Hotline staff not being available to 



466 



respond to calls and letters reporting fraud, waste and abuse in VA programs and 
operations. During a normal 4-week period, the OIG Hotline would receive about 1 ,400 
contacts. In addition, important OIG services provided to veterans and the general public, 
the Department, and Congress were delayed. For example: 

• Work was suspended on responding to 86 Freedom of Information Act (FOIA) 
requests from the media, veterans and the general public for information in OIG 
reports and files. 

• All work was stopped on about 50 audits, 60 healthcare inspections, and 20 special 
inquiries that were in process at the time of the fiirlough. Delays in completing this 
work could increase the Department's vulnerability to fraud, waste and abuse in its 
programs and operations. 

• Work continued on only a few of the 350 active criminal investigations currently being 
conducted, including drug trafficking. The collection of information needed to 
successfully prosecute the subjects of these investigations was delayed. OIG reports 
that while it may be possible to "catch up" and continue with these investigations, 
some time sensitive information has been lost. 

• Work was stopped on responding to 40 priority inquiries from members of Congress 

Other Headquarters Activities. The following impacts were reported for other VA 
headquarters activities as a result of the government shutdowns. 

• With furlough of virtually the entire Office of Public Affairs, the Department's ability 
to respond to national and local media and public inquiries and to disseminate 
materials and information regarding the impact of the shutdowns and veterans' benefits 
in general was severely restricted. 

• Archival and news media monitoring operations were suspended, causing the loss of 
materials used for historical and reference purposes. 

• Development of products and events such as the Veterans' Benefits handbook and the 
upcoming National Disabled Veterans Winter Sports Clinic were temporarily halted 

• Responses to priority correspondence, including Congressional inquiries, and 
development of critical management, budgetary and legislative reports, were delayed. 

• The backlog of EEO investigations increased by approximately 175 cases. 

• The Office of Security and Law Enforcement reported a backlog of 14 inspections as a 
result of the shutdowns and a delay in one investigation. Two Basic Police Training 
classes were canceled, resulting in a backlog of new police officers requiring training. 



467 



• Master contract negotiations with the American Federation of Government Employees 
for a collective bargaining agreement covering 120,000 of the Department's 
employees were delayed from January until March 

• Advisory services were not available to VHA field stations as they conducted wage 
surveys and analyzed data for new wage schedules for nurses as required under the 
Nurse Pay Act. Through extraordinary staff efforts, virtually all schedules were 
validated after return fi-om furlough in time for automated processing January 23, 
1996. 

• Delays were experienced in processing physician special pay actions and other pay 
matters affecting employees. 

• Development of new policy was delayed for critical matters such as staffing 
adjustments for medical personnel. 

• Backlogs were experienced in headquarters finance operations, including payroll 
processing functions, vendor payments, processing of travel vouchers, and payments 
to other Federal agencies. (Most backlogs have been or will be reduced to pre- 
furlough levels through use of overtime, compensatory time, or planned process 
improvements.) 

• Delays in developing or enhancing major automated systems, such as the Financial 
Management System and PAY-VA, as well as resolution of production and other 
problems, were experienced. 

• Other information resources management backlogs or delays were reported in such 
areas as Freedom of Information Act/Privacy Act; Release of Names and Addresses; 
Federal Register publications; telecommunications activities; and delegations of 
authority. 

Management Plan. VA offices reported that the Office of Personnel Management 
guidance on restoration of annual leave to furloughed employees is not likely to present a 
significant problem in resolving backlogs. Individual leave requests will be approved 
judiciously, and consistent with operational requirements. Employees will have until the 
end of 1998 to use the restored leave, which should provide sufficient opportunity to 
schedule time off appropriately. 



10 



468 



. '•;,. ^ U. S. Department of Justice 

'^■' Office of Legal Counsel 



Office of the Washmglnn. D C 20530 

Depiily Assitttant Attorney General 

March 15, 1996 

Mary Lou Keener 
General Counsel 
Department of Veterans Affairs 
Washington DC 20420 

Dear Ms. Keener: 

By letter of December 14, 1995 to Christopher H. Schroeder, then a Deputy Assistant 
Attorney General in this office, you requested written confirmation of oral advice supplied 
during the lapse of funding for the Department of Veterans Affairs that occurred in 
November of 1995. 

Specifically, the advice related to whether there was a legal basis to find that some 
1700 employees of the Veterans Benefits Administration could continue working despite the 
lapse in funding, because these employees were needed in order to accept benefits claims on 
behalf of veterans. On the basis of the facts presented to us that the time of the oral advice, 
and repeated subsequently in your letter, we concluded that there was. That continues to be 
our conclusion. 

The Antideficiency Act, 31 U.S.C. §§ 1341,1342, ("ADA") prohibits any officer or 
employee of the United States from incurring obligations of any kind, including for personal 
services, when an appropriation is lacking for those obligations, unless authorized by law. 
31 U.S.C. 11341(a)(1)(B). One such exception to the general rule of the ADA that is 
authorized by law permits an officer or employee of the United States to "employ personal 
services" "for emergencies involving the safety of human life or the protection of property." 
31 U.S.C. §1342. Pursuant to this emergency exception, departments such as the 
Department of Veterans Affairs may lawfully obligate the United States to pay for the 
services of employees whose work activities "involv[e] ... the protection of property." Id. 
The general construction of the emergency exception was set forth in a 1981 opinion by 
Attorney General Civiletti, and followed by all subsequent administrations. See "Authority 
for the Continuance of Government Functions During a temporary Lapse in Appropriations," 
5 Op. O.L.C. 1, 7-11 (1981) 

In determining the scope of the term "property" for purposes of the emergency 
exception, both the executive branch and the Comptroller General have concluded that it 
encompasses at least property owned by the United States itself, as well as private property 
in which the United States "has an immediate interest or in connection with which it has 



469 



some duty to perfonn ' 9 Comp. Dec. 182. IS.*) (1902) (decision of the Comptroller of the 
Tf«asury). In the cited decision, the Comptroller of the Treasury detennined that paying for 
the services of an individual who gathered up mail scattered in a train wreck came within the 
emergency exception. As the Comptroller General has put it, the emergency exception 
extends to the protection of private property "for which the government has some • 
responsibility." Principles of Federal Appropriations Law . 2d Edition. Vol. II, at 6-70 
(1992). 

Under the laws governing awards of certain veterans benefits, the date on which a 
veteran files an application for such benefits establishes the date on which benefits begin to 
accnie. See. e.g. . 38 U.S. C. §5 1 10(b)(3)(A) ("the effective date of an award of disability 
pension to a veteran ... shall be the date of application or the date on which the veteran 
became pennanently and totally disabled, if the veteran applies for a retroactive award within 
one year from such date ..."). To the extent that Veterans Affairs offices are unable to 
receive applications to establish the effective date of such benefits, veterans may not be able 
to establish their eligibility and, as a result, may lose benefits to which they would otherwise 
be entitled. On these facts, we concluded that the statutory scheme had charged the 
Department of Veterans Affairs with the responsibility to receive applications for benefits in 
a timely manner in order to protect such benefits as might otherwise be lost. Consequently, 
employees who accept benefits claims in order to secure benefits for veterans are performing 
functions "involving the protection of property" within the meaning of the emergency 
exception to the ADA, and therefore employing their personal services is permissible under 
the ADA. 



Very truly yours, 

H. Jefferson Powell 
Deputy Assistant Attorney General 



470 



U.S. DEPARTMENT OF LABOR 

DEPUTY SECRETARY OF LABOR 

WASHINGTON, DC. 

20210 



December 29, 1995 

The Honorable John L. Mica 

Qiairman 

Subcomniittee on Civil Service 

House Government Reform and Oversi^t Committee 

2157 Raybum House Office Building 

Washingon D.C. 20515-6143 

Dear Mr. Chairman: 

This is a foUow-iq) to my letter of December 22, 1995, which acknowledged receipt of your 
letter of Decemba 20, 1995, in which you requested information on attendance and leave 
practices for the Depatment. As promised in my letter, today 1 am providing information 
requested in items 2B, 3A, 3B, and 3D. I recognize that the enclosed information does not 
completely respond to all the questions raised in your letto; however, I wanted to provide 
the information which is now available. As 1 indicated in my prior letter, we are gathering 
the remainder of the information. 

Item2B 

Enclosure I provides information, by agency, on the number of DOL staff that woriced during 
the 1995 shutdown periods. The difference between the number of employees working 
during the November 14 shutdown and the shutdown during the week of December 25 is 
attributable to the historically reduced workload of the Department including the fact that 
approximately 17 percent of employers are closed during this week. 

Hems 3A, 3B, and 3D 

During the November 1995 l^se in appropriations, annual leave was cancelled for DOL 
employees. To the best of my knowledge, the circumstances and timing of prior lapses in 
appropriations for the Department did not necessitate cancelling leave. At this time, no 
determination has been niade about annual leave policies during the current shutdown. 

Item 3A Pursuant to guidance provided by the Office of Personnel Management (Enclosure 
n) regarding the November Iqjse in ^propriations, annual leave was cancelled for employees 
who were furloughed due to lack of funds and for employees who were required to work 
during the fiirlough. 



471 



Page 2 



llemJB Each agency of the Department prepared a shutdown plan which specified activities 
that could legally continue during the shutdown, thereby enabling agencies to identify which 
employees would be placed in furlough status as well as those who would be working during 
a lapse in appropriation. Based on these plans and the above noted 0PM guidance, 
employees were advised by their supervisors that they were either flirloughed or required to 
work during the shutdown period, and, accordingly, their leave was cancelled 

Item 3D Leave that was cancelled can be rescheduled in accordance with applicable 
personnel rules. 

Remaining Information 

We should be able to provide you with the information you requested in Item 1 in 
approximately one week, but the information responses for Items 2A, 3C and 3E will take 
substantially longer. Because of the decentralizal location of the records for the information 
you requested, responding completely is a very time intensive efiFort and we project that 
gathering the information will take at least three to four weeks. This effort is further 
complicated by the current suspension of operations. 

We will endeavor to provide the remaining information to the Subcommittee by the end of 
January, 19%, and will work with Garry Ewing of the Subcommittee staff should we 
encounter any difficulties in responding. I want to assure you that we are making every 
efiFort to respwnd to your request. 




Thomas P. Glynn 



Enclosures 



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473 



U.S. DEPARTMENT OF LABOR 

DEPUTY SECRETARY OF LABOR 

WASHINGTON, DC. 

20210 



AUG 21956 



The Honorable John L. Mica 

Qiairman 

Subcommittee on Civil Service 

House Government Reform and Oversigjit Committee 

2157 Raybum House Office Building 

Washington, D.C. 20515-6143 

Dear Mr. Chairman: 

This is a follow-up to my letter of May 3, 1996, which provided you an interim 
response of your letter dated January 18, 1996 in which you requested information on the 
shutdown practices of the Department of Labor. As promised in my letter, today 1 am 
providing responses to all the remaining questions that we were unable to provide earlier. 

Inquiiy 3: Please provide a report, by agency and by category, of all amounts and 
forms of premium pay (overtime, ni^t differential, weekend differential, etc.) that was paid 
to agency employees who were fiirlougjied during each shutdown. 

Response 3: Guidance from the Office of Personnel Management, see attachment 1. 
allowed furlou^ed employees to receive premium pay, provided these employees were 
regularly scheduled to perform work that would entitle them to such pay. Attachments II and 
in display the estimated amount of premium pay that was paid to agency employees wtio 
were also flirlou^ed at any time during the shutdowns. These amounts are estimated because 
the Department's payroll system allows for the information to be retrieved only by pay period, 
a 2 week time period, and not for the actual dates of the shutdown. The information received 
from the payroll system was then estimated in order to provide the estimated amounts of 
premium pay. 

Inquiiy 4: Please provide a report, by agency, of the numbers of furlou^ed 
employees who filed for unemployment compensation during the shutdowns and the amounts 
paid to agency employees. Please describe any costs that will be incurred by your 
Depjartment as a result of efforts to collect reimbursement of these payments after routine pay 
is restored. 

Response 4: The Department estimates that over 100,000 initial claims were filed by 
furlou^ed employees during the shutdowns, with 34 States paying over 12,000 of these 
claims for an estimated total of $2.2 million in benefits; howevo-, the States' reports do not 
include the initial claims data by Federal agency, nor do they separately report benefit 
payment data for furlou^ed enployees. Therefore, the initial claims and amounts paid 
figures are aggregates for all Federal agencies. 



474 



The States act as agents for the Federal government in operating the Unemployment 
Compensation for ex-Federal Employees (UCFE) program. Federal law provides that UCFE 
benefits will be paid to Federal employees by the State in the same amount, on the same 
terms, and subject to the same conditions that apply to individuals filing unemployment 
compensation claims under provisions of the applicable State unemployment compensation 
law. Each State that paid UCFE benefits to fiirlou^ed Federal employees determined that 
these payments were overpayments under the provisions of its State law, since the fiirloughed 
employees were retroactively paid their salaries for the furlough jjeriod. States receive annual 
federal grants under Title III of the Social Security Act to administer the program. The 
additional cost to collect overpayments will have to be absorbed under those grants. 

The Department's roles are primarily restricted to oversi^t of the State programs and 
managing the Federal Employees Compensation (FEC) Account. The Department collects 
information quarterly fi-om the States on the amount of UCFE benefits paid, by Federal 
agency. The Department then bills the Federal agencies for the amounts they owe the FEC 
Account, fixjm \vbich the States draw money to pay the UCFE benefits. 

Inquiiy 5: Please estimate the total costs to your agency associated with the 
interruption of operations during November and December- January. Please provide 
descriptions of any unusual costs imposed on the agency or other unanticipated consequences 
of these interruptions of operations. Please provide, too, an estimate of any savings 
associated with these interruptions. 

Response 5: The cost associated with the November shutdown and the December- 
January shutdown was approximately $7.3 million and $29.4 million, respectively, paid to 
DOL employees who did not work during those periods. If there were any unusual costs or 
any savings from these shutdowns they were incidental. 

Inquiiy 9: Please provide estimates of the numbers of employees and the amount of 
accrued annual leave that will be restored by your Department as a result of employees 
required to work during the second shutdown. Please describe any other effects that the 
second shutdown will have on the administration of employees' leave programs. 

Response 9: A review of the Department's time and attendance records indicate that 
over 6,000 employees forfeited some amount of annual leave. Over 284,000 hours of 
forfeited annual leave, valued at $7.8 million, was restored to eligible employees consistent 
with the guidance issued by the Office of Personnel Management (0PM). 

Once a Continuing Resolution was passed by the Congress and signed by the President 
on January 6, 1996, we submitted an estimated payroll to Treasury so that we could 
immediately pay our employees to help minimi2e the financial hardship they may have 
experienced as a result of the shutdown. Since this estimated payroll run did not originally 
cqjture leave taken on the first day of the shutdown, we developed and implemented a 
timekeeping mechanism to ensure that those individuals on leave status on the first day of the 
shutdown were so charged. 



475 



I appreciate the opportunity to submit my final response to your inquiry. Should you 
have any questions about this letter, please contact Mary Ann Richardson, Deputy Assistant 
Secretary for Congressional and Intergovernmental Affairs, at (202) 219-6141. 



Enclosures 




476 

ATTACHMENT I ^ 

Nove»±>er 21, 1995 
MEMORANDUM FOR DIRECTORS OF PBRflONMBL (CPM-95-8) 



FROM: AliLAN D. HEUBRMAH 
ASSOCIATE DIRECTOR 

FOR HTJMAM RESOURCES SYSTEMS 

SUBJECT: Pay and Leav« Treatment of Employees Affected by the 
Lapse in Appropriations; EHDcumentation of Personnel 
Actions 



Congress has passed and the President has signed legislation 
providing as follows: 

Any Federal employees furloughed as a result of a lapse 
in appropriations, if any, after midnight November 13, 
1995, until the enactment of this Act shall be 
compensated at their standard rate of compensation for 
the period during which there was a lapse in 
appropriations . 

The purpose of this legislation is to make Federal employees 
whole by ensuring that they receive their Jlstandard rate of 
compensations for the entire period of the lapse in 
appropriations. With regard to persons who wouid have been in a 
previously approved paid leave status if the lapse in 
appropriations had not occurred, the policy set forth below is 
consistent with the instructions provided to agencies on -November 
17, 1995. These instructions were based on the premise that, 
during the lapse in appropriations, employees must be (1) at work 
performing excepted activities, or (2) furloughed, and that they 
cannot therefore be in a paid leave status during tha't period. 
Such employees must receive the same pay they would have received 
for an equivalent period of work performed for the agency, 
without regard to any previously approved paid leave. 

The following guidance has been prepared by the Office of 
Personnel Management in consultation with the Office of 
Management and Budget. As used below, the term ^excepted 
employees* refers to employees who were excepted from a furlough 
because they were performing functions related to national 
security, protection of life or property, or the orderly 
suspension of agency operations. 



477 



For periods of time during which employees were furloughed, they 
must receive the same pay they would have received for an 
equivalent amount of work performed for the agency. Therefore — 

o Employees are entitled to receive their rate of basic pay 

for all periods of time during which they would have been in 
a pay status but for the furlough; 

o Employees who were regularly scheduled to perform overtime 
work or to perform work at night or during a period for 
which any other form of premium pay would otherwise be 
payable are entitled to receive overtime pay, night pay, or 
otlieir premium pay as if the work had actually been 
performed; 

o The hours of duty during which employees were furloughed 
(including regularly scheduled overtime hours and standby 
duty) must be considered Shours of work* for pay 
administration purposes under the Fair Labor Standards Act; 
and 

o Allowances, differentials, and other payments must be paid 
as if the employee actually continued to work. 

Excused Absences and Charges to Leave 

o Except as provided below, absences resulting from the 

furlough of employees during the lapse in appropriations 
must be recorded as excused absences and may not be charged 
to any form of paid leave (i.e., annual leave, sick leave, 
or other paid leave), compensatory time off, or credit hours 
under a flexible work schedule. 

o In the case of employees who were on approved leave without 
pay during the lapse in appropriations, absences during the 
lapse in appropriations must continue to be charged to leave 
without pay for the duration of the period of approved leave 
without pay . 

o In the case of employees who were on approved paid leave (or 
compensatory time off or credit hours) on November 14, leave 
(or compensatory time off or credit hours) should be charged 
only for the approximate period of time from the beginning 
of each individual employee's normal workday until the time 
other similarly situated employees departed from work after 
receiving furlough notices. The remaining period of time in 
the employee's regularly scheduled tour of duty must be 
recorded as an excused absence. 



40-190 97 - 16 



478 



fOae or LOSel Annual T.«»«-ga 

o Employees and agencies should make every effort to schedule, 
within the time limits specified by regulation, any 
additional iluse or losei annual leave now made available to 
a furloughed employee because previously approved annual 
leave was canceled during the lapse in appropriations. If, 
however, the employee is unable to reschedule such annual 
leave and it is forfeited at the end of the leave year, the 
amount of annual leave that was canceled during the lapse in 
appropriations may be considered for restoration under 
5 CFR 630.308. 

Alternative Work Schedules (AWS) 

o Each agency should have a policy specifying when flexible 
work schedules must be established and may be changed. 
Normally, such schedules are established in advance of the 
pay period involved. Under such a policy, an AWS nonworkday 
scheduled to occur during a lapse in appropriations should 
not be changed after the pay period begins. 

Documentation of Personnel Actions 

o Agencies should not process SF 50 's to docmnent a furlough 
resulting from the lapse in appropriations on November 14 , 
and SF 50 's that were processed must be canceled using 
Nature of Action Code SOOl.i Do not record the furlough 
with any document designated for long-term filing in the 
Official Personnel Folder. 

o Agencies need not provide a furlough notice to an employee 
who did not receive a notice during the lapse in 
appropriations. 

pg« Cp ntag.ts ■,. 

o Questions on pay and leave entitlements may be directed to 
the Office of Compensation Policy on (202) 606-2858. 

o Questions on furlough procedures may be directed to the 

Office of Labor Relations and Workforce Performance on (202) 
606-2920. 

o Questions on the documentation of personnel actions may be 
directed to the Office of Workforce Information (202) 606- 
4415. 



479 



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481 




DEPARTMENT OF THE TREASURY 

WASHINGTON, D.C. 



ASSISTANT SECRETARY 



M 4 m 



The Honorable John L. Mica 

Chairman 

Subcommittee on Civil Service 

Committee on Government Reform and Oversight 

U.S. House of Representatives 

Washington DC 20515 



Dear Mr. Chairman: 



This responds to your letter of January 18, 1996 requesting additional information related to 
Treasury's shutdown process and procedures. I have enclosed our responses to your 
questions. 

Thank you for your inquiry and the opportunity to testify before your subcommittee. I hope 
the enclosed helps to explain further the complexities associated with the unfortunate situation 
of a government shutdown. 



Sincerely, 




jeorge Mufioz / 
Assistant Secretary (Management) and CFO 



482 



ADDITIONAL QUESTIONS AND ANSWERS 

From December 6, 1995 Hearing "The Government Shutdown: What's Essential" 

(Subcommittee on Civil Service) 

Ql. Please describe any changes in planning, procedures, and operations that your 
Department made between the November and the December-January shutdowns. Please 
submit any revisions and/or supplements to your Department's shutdown plans. In light of 
the substantial change between shutdown numbers reported in the second shutdown, what 
changes are contemplated regarding the Department's definition of emergency functions? 
Please provide the new legal reasoning that supports this change from previous shutdown 
plans. 

Al. The Department of the Treasury's Appropriation Act (P.L. 104-52) was signed 
November 19, 1995 and provided funds through September 30, 1996. As a result, the 
Treasury did not shutdown operations during December-January. However, the Department 
would have reviewed and revised bureau shutdown plans in the event that its appropriation 
had not been signed; based on additional bureau information, consistent with the Attorney 
General's exceptions. In most cases, it's assumed that plan adjustments would have been as 
a result of an additional review of functions necessary for a short period (a day or two) 
versus a longer shutdown period. 

The bureaus were notified that the shutdown plans were flexible documents, and that fine 
tuning their plans to fit the particular circumstances of the shutdown, including length was 
normal. The Department emphasized the importance of a phased plan that addressed both 
short-term versus long-term shutdowns. Some bureaus, particularly IRS, set forth their 
intent to review operations and provide adjustments if a shutdown lasted longer than a week. 

Q2. Please submit the numbers of persons furloughed in each agency during the 
two shutdowns. For each function which was subject to furlough during the first shutdown, 
but exempted from furlough during the second shutdown, please provide policy and legal 
reasons supporting the decision to change the status of the functions. 

A2. The Treasury Department was not required to shutdown operations during 
December-January. During the November 14 - 19 shutdown the Treasury furioughed 
approximately 108,500 out of 153,700 employees. 

Q3. Please provide a report, by agency and by category, of all amounts and forms 
of premium pay (overtime, night differential, weekend differential, etc.) that was paid to 
agency employees who were furioughed during each shutdown. 



483 



A3. 



Amounts paid by Treasury Bureaus to furloughed employees for the 
November 14 - 19 shutdown follow: 



Bureau 


Overtime 


Sunday 
Differential 


Night 
Differential 


Law Enforcement 
Availability Pay 


Internal Revenue 
Service 


$0 


$3,321 


$164,728 


$0 


Alcohol, Tobacco, 
and Firearms 











29,213 


Inspector General 











6,000 


Secret Service 


307 





20 


1,092 



Q4. Please provide a report, by agency, of the numbers of furloughed employees 
who filed for unemployment compensation during the shutdowns and the amounts paid to 
agency employees. Please describe any costs that will be incurred by your Department as a 
result of efforts to collect reimbursement of these payments after routine pay is restored. 

A4. The November 15th - 19th furlough was not long enough for employees to 
qualify for unemployment compensation. With the exception of IRS, Treasury's bureaus 
have reported that there is no record of anyone tiling for unemployment compensation. 

Because of the nature of the IRS workforce (seasonal employees), IRS will not be provided 
unemployment information until the Department of Labor's report is available. The first 
quarter report for 1995 becomes available in May 1996. This report provides a cumulative 
amount of compensation paid from October 1, 1995 through December 31, 1995 and is not 
broken down by pay period. The report provides names and SSNs but does not differentiate 
between individuals who received unemployment because of the government shutdown from 
those who were seasonal employees released on furlough. 

Q5. Please estimate the total costs to your agency associated with the interruption 
of operations during November and December-January. Please provide descriptions of any 
unusual costs imposed on the agency or other unanticipated consequences of these 
interruptions of operations. Please provide, too, an estimate of any savings associated with 
these interruptions. 



A5. Estimated costs associated with the Department's shutdown of operations for 
the period November 15th - 19th are as follows: 

• $1,633,700 - Costs of Developing Contingency/Shutdown Plans and 
Designating and Notifying Employees. 



484 



Amount includes the extraordinary costs associated with planning for and 
implementing the shutdown, such as shutdown-related planning meetings and 
briefings, costs of shutdown plan development, review and approval, providing 
information and guidance to employees related to shutdown, and any 
operational costs which would not have occurred but for shutdown. 

• $66,839,100 - Salary & Benefits for those employees furloughed for 
scheduled work hours and not worked. 

• $3,600 -- Lost Discounts/Payment Penalties. 

• $300,000,000 - 400,000,000 -- Lost Revenue. 

Using a conservative methodology, we estimate that furloughs resulted in a 
daily loss of between $75M and SIOOM through lack of enforcement actions 
by the IRS, or between $300M and $400M during the four-day furlough 
period. The IRS collects approximately $286 billion in taxes through direct 
enforcement efforts. These taxes are not collected by voluntary compliance of 
the tax laws by taxpayers; IRS staff is needed to enforce and ensure collection. 

Q6. Please indicate the shutdowns' impact on programs funded through trust funds, 
fees, carry over funds, or other revenues not tied to annual appropriations. Please describe 
any changes made in implementing these programs during the December-January shutdown. 

A6. Several bureaus were exempted from shutdown based on alternate funding 
sources other than annual appropriations. These include the Office of the Comptroller of the 
Currency; the Office of Thrift Supervision, the Bureau of Engraving and Printing, and the 
Bureau of the Public Debt. The Federal Law Enforcement Training Center has been 
appropriated some funds for FY 1996 that were available to be used to continue operations. 



485 



Q7. Please provide staffing levels for all public affairs offices in the Department 
during the shutdown. 

A7. See chart below: 



DEPARTMENT OF THE TREASURY 

PUBLIC AFFAIRS STAFFING 

During Furlough Period 

Fiscal Year 1996 



g anization N ame 



Departmental Offices 

Treasury Forfeiture Fund 

Offrce of Inspector General 

Federal Law Enforcement Training Center.. 

Financial Management Service 

Alcotiol, Tobacco & Firearms 

U.S. Customs Service 

Financial Crimes Enforcement Network 

United States Mint 

Bureau of the Public Debt 

Bureau of Engraving and Printing 

Internal Revenue Service 

U.S. Secret Service 

Comptroller of the Currency 

Office of Thrift Supervision 



NUMBER OF EMPLOYEES 



Furloughed 



■■| 



15 


3 
3 
7 

19 
7 
3 
3 

12 
300 

14 
6 
6 



TOTAL, PUBLIC AFFAIRS. 



398 



11 



1 
6 
19 
4 
2 


298 






341 



Numbers are approximate. Treasury bureaus/organizations do not necessarily have separate 
Public Affairs offices The Public Affairs function is often combined with Legislative/Congress- 
ional/Media and correspondence functions 



486 



Q8. Please provide a report of the number and furlough status of Presidential 
Appointees, noncareer Senior Executive Service personnel, and Schedule C appointees, by 
agency, during each shutdown. 

A8. The following reflects the number and furlough status, for those employees 
within Treasury operations, that were subject to a shutdown during the November 15th - 19th 
time frame. 





Political 
Appointees 


SES 


Schedule C 


Total Number 


17 


38 


42 


Total Furloughed 





16 


28 



Q9. Please provide estimates of the numbers of employees and the amount of 
accrued annual leave that will be restored by your Department as a result of employees 
required to work during the second shutdown. Please describe any other effects that the 
second shutdown will have on the administration of employees' leave programs. 



A9. None. The Department of the Treasury did not shutdown operations during 
December - January. 

QIO. Please explain the "partially excepted" category used in the Treasury 
Department's plan. 

AlO. The category "partially excepted" referred to functional components of 
Treasury as opposed to the status of individual employees. A number of employees working 
in a "partially excepted" organization were classified as "excepted," while a majority in the 
same organization were in fact furloughed. For example, organizational components such as 
Personnel, General Counsel, Information Systems, were classified in the "partially excepted" 
category, and certain employees would be "excepted" based on their actual workload 
requirements. 

Qll. What revisions or modifications did you require in plans submitted to your 
office by the Treasury Department's component agencies? 

All . The Department continually fme tuned the bureau shutdown plans before the 
shutdown based on additional bureau information, but did so consistent with the Attorney 
General (AG) exceptions. After the shutdown occurred there was some minor adjustments 
made, primarily for Departmental Offices (DO), that were consistent with the AG opinion. 
In all cases, these adjustments were due to an additional review of functions necessary for a 
short period (a day or two) versus a longer shutdown period. 



487 



Each bureau monitored their requirements and when a change was necessary brought 
employees back to work. Justifications to do so were sent to the Department for review and 
approval. 

Q12. The plans of the IRS and Departmental offices contained notes that they either 
couldn't get down to 5% or retained employees would be around 5%. Did you establish a 
standard to shutdown in the vicinity of 95% of non-law enforcement or extraordinarily 
funded functions? What targets did you establish for component agencies? 

A12. The Department did not establish standards or targets for Treasury bureaus to 
follow as to the number of "excepted" or "nonexcepted" employees that a bureau may or 
may not have. The Department's previous shutdown guidance had been issued in 1991 and 
contained a requirement to justify both legally and programmatically those positions to be 
retained whenever the number (not otherwise exempt because funding was available) retained 
exceeded 5% the number of employees on board at the beginning of the shutdown. 
The requirement was to ensure sufficient justification was provided to the Department for 
review and approval of the shutdown plans. Thorough documentation on all "excepted" 
functions was stressed. The Department wanted to ensure that plans clearly documented each 
"excepted" function. 

Treasury's "excepted" activities were justified based on one or more of the following: 

► those activities that have a continuing source of funding; 

►• those activities that are expressly authorized to continue even without funding; 

► those activities that are authorized by necessary implication of, e.g., the need to 
support, activities that continue under another authority, such as the FMS's 
disbursement of benefit payments for the Social Security program, which has 
continuing funding; 

*■ those activities covered by limited authority to employ (although not pay for) 

personal services for activities to the extent necessary to avoid "emergencies 
involving the safety of human life or the protection of property;" 

► those activities that are necessary to the discharge of the President's constitutional 
duties (although this category must be construed narrowly); and 

► functions necessary for a short period in order to ensure an orderly shutdown of 
operations. 

"Excepted" activities were based on actual workload requirements. It was anticipated that with the 
passage of time, performance of activities that were "excepted" initially would no longer be 
required. Also, activities initially shut down may become "excepted" because of changed 
circumstances. In either case, only staff necessary to perform activities determined to be 
"excepted" at that time were to report to duty. 

Q13. During testimony the Subcommittee heard several examples of backlogs that would 
accumulate for each day of a potential shutdown. Please provide the Subcommittee with an 
inventory of the workload backlogs that your Department associates with the shutdowns. In light 
of OPM's January 17, 1996 guidance to restore all annual leave, please provide your management 
plan for reconciling the accumulated leave and the workload backlogs that resulted from the 



488 



7 
furlough periods. 

A13. Examples of workload backlogs and impacts of the November 15th - 19th shutdown 
follow: 

Alcohol. Tobacco and Firearms: 

* 8,000 special occupational tax returns not processed 

* 720 excise tax returns not processed 

* 200 letter responses not processed 

* 85 original alcohol/tobacco applications and amended application not processed 

* 85 alcohol/tobacco tax claims not processed 

* 20 variance requests not processed 

* 296 firearms/explosives license applications not processed 

* 1,000 alcohol label/formula approvals not processed 

* 171 Firearms import permits applications not processed 

* 249 Firearms import documents not processed 

* 900 National Firearms Act registrations went unprocessed 

* Delays in regulatory field inspections of alcohol and tobacco excise taxpayers and 
firearms and explosives dealers. 

Internal Revenue Service: 

* 48,000 taxpayer telephone calls to Area Distribution Centers went unanswered, 
delaying transmission of tax-related items; tax practitioners received their bulletins 
at least one week late; printing contractor schedules were disrupted. 

* 79,000 fewer 1040s were processed, of which 46,000 involved refunds; each center 
reported an increase in the number and age of adjustments inventories; about 25,000 
TeleTin calls requesting taxpayer identification numbers were not answered. 

* 864 appeals cases were not resolved, prolonging the period of uncertainty for 
taxpayers who filed appeals and possibly increased their tax bills as interest 
continued to accumulate during the shutdown period. 

* Delays in responding to taxpayer inquiries contributed to a backlog in other work 
such as issuing private letter rulings, technical advice memoranda and other 
correspondence. Delays were also experienced in responding to Congressional 
requests for information; providing legal opinions affecting legislative proposals; 
responding to FOIA requests and pending investigations; tax and general litigation 
cases not closed; and in providing counsel to other areas and activities of the 
Internal Revenue Service (e.g. Tax System Modernization). Taxpayers did not 
receive advice requested through formal conferences or by phone; one regulatory 
hearing was postponed; and approvals were delayed in about three Criminal 
Investigator undercover investigations. 

* Approximately 66,000 Automated Collected System (ACS) incoming calls went 
unanswered; taxpayers and third parties were unable to reach ACS employee 
assistors. Additionally, 42,000 outgoing ACS calls were not made, resulting in 
additional interest due. 

•' Walk-in Assistance: 60,000 walk-ins were unable to obtain assistance; 17,000 were 



489 



unable to get forms/publications at walk-in locations. Requests for assistance during 
this period are traditionally more account-related, and it may be concluded that 
some taxpayers could incur interest/penalty costs due to this occurrence. 



Treasury-wide : 



• Vendors performing services under contract were affected. In one instant, an 
equipment vendor called several times, angered and confused about whether 
payments would be made. The vendor was not reassured when the payment 
procedure was explained, expressing lack of trust in the Government. 

• Payments were delayed for many contracts across Treasury because contract 
technical representatives and contract specialists were on furlough. 

U.S. Customs: 

• An aircraft maintenance contractor expressed concern about delays affecting his 
ability to perform work. The issue of non-payment placed a strain on the Customs 
Service's relationship with their contractors and placed a large administrative burden 
on procurement personnel in processing equitable adjustments for these contracts. 

• The shutdown created a large backlog of correspondence with Congress on 
constituent related issues and in communicating with the trade community and 
Customs field employees. 

• In Saudi Arabia, the shutdown caused an interruption in training courses for 21 
Saudi Arabian Customs Officers and resulted in sizable extra per diem them costs 
for the Saudi Arabian government. The shutdown also caused the cancellation of a 
TDY to Saudi Arabia funded by that government. 

• Customs was scheduled to give a presentation at a trade association annual meeting, 
and had to cancel, as did other Government speakers. This left the customer with 
no Government speakers, and they had to scramble to fill the time slots. 

• The Customs Service was unable to respond to overseas cables requesting 
information to pass through the State Department on to other countries. 

• Phone calls from the public and foreign customs administrations were not answered. 
E.g., Since our import specialists in the field were not working, customers were 
not able to obtain answers on technical and policy questions in a wide variety of 
areas, including entry operations, drawback, value, AD/CVD, etc. E.g., the trade 
community was not able to obtain information from furloughed staff Many 
first-time importers' calls went unanswered. Importers and attorneys calling for 
status updates of projects were not able to receive information. 

• Drawback claims were not input to provide requests for accelerated payments to 
claimants 

Financial Management Service: 

• Due to furloughs of physicians at some of the federal clinics, some required 
employee physical exams and applicant exams were cancelled or rescheduled. 
Phone calls related to the Report on Receivables Due from the Public, Report on 
Guaranteed Loans, and Civil Monetary Penalties Report were received each day 



490 



during the furlough. Credit agencies considered year-end reporting an essential 
function and were upset to find that the Financial Management Service, the lead 
agency for collecting and consolidating the year-end debt collection reports for 
OMB, did not have essential staff to answer questions and provide assistance. 

U.S. Mint: 

* Processing of mutilated and uncurrent coin at the Philadelphia, Mint was suspended. 

Because of the shutdown, the mutilated uncurrent Department, who redeems all 
condemned coins for the Treasury Department was unable to process returns, from 
banks and other institutions. All major redemption customers were notified not to 
return any coins. Many calls were received expressing dissatisfaction. 
Approximately forty jobs (or customers) went unprocessed creating a one week 
backlog processing customer orders. The only possible way to catch-up and avoid 
customer complaints is to work overtime at an estimated cost of $4,000.00 (25 
Mondays of overtime). 

Where possible workload backlogs are/will be addressed through overtime, work 
prioritization and other means. 



GOVERNMENT SHUTDOWN II 



THURSDAY, DECEMBER 14, 1995 

House of Representatives, 
Subcommittee on Civil Service, 
Committee on Government Reform and Oversight, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:10 p.m., in room 
2154, Rayburn House Office Building, Hon. John L. Mica (chair- 
man of the subcommittee) presiding. 

Present: Representatives Mica, Bass, Burton, Morella, and 
Moran. 

Ex officio present: Representative CUnger. 

Staff present: George Nesterczuk, staff director; Ned Lynch, pro- 
fessional staff member; Caroline Fiel, clerk; Cedric Hendricks, mi- 
nority professional staff; and Elisabeth Campbell, minority staff. 

Mr. Mica. I would like to call this meeting of the House Civil 
Service Subcommittee to order. 

Toda/s hearing deals with the government shutdown, and we're 
going to hear some of our colleagues. Members of Congress, on a 
vast array of proposals, dealing with their various suggestions and 
approaches to handling the shutdown. I have an opening state- 
ment, and I believe our ranking member does. We will start with 
that and welcome our witnesses. 

This afternoon we will really continue the subcommittee's over- 
sight hearings on the administration shutdown of government oper- 
ations during a lapse of appropriations. Last week the subcommit- 
tee heard nine administration witnesses describe their plans and 
their oversight of agencies' operations for the past shutdown and 
their preparation. 

On Tuesday, four participants in that hearing wrote a letter to 
the President. We informed him, in part, of our conclusion, which 
is that the implementation of the shutdown was unnecessarily se- 
vere and some of the closings we found unjustified, even within the 
strictest requirements of existing law. 

The testimony presented by senior officials of the largest govern- 
ment agencies demonstrated, in fact, that interruption of benefits 
and services could have continued, and that discrepancies occurred 
in the continuity of operations essential to human lives and safety. 

We are pleased, however, that the administration has responded 
to many of the concerns we raised last week. The Office of Manage- 
ment and Budget has directed agencies to submit revised shutdown 
plans by December 10, we were told. On Tuesday, the administra- 
tion announced that the Social Security Administration and the 
Department of Veterans Affairs would retain many employees who 

(491) 



492 

had been furloughed on November 14. This is a welcome step to- 
ward a more cooperative approach to meet the needs of the Amer- 
ican people and some of the Americans who most need the services 
of the Federal Government. 

However, I am somewhat dismayed that several agencies have 
failed to provide 0MB with an update of their plans for more or- 
derly action, should another shutdown occur, and that could hap- 
pen within the next 24 or 48 hours. Also, I am discouraged to find 
that 0MB has failed to provide this subcommittee with revised 
shutdown plans, as we requested. 

Tomorrow, as we all know, another continuing resolution will ex- 
pire. If no progress is made on the budget issues, we could once 
again see a disruption of some of our Federal Government services. 
I wish that I could be more optimistic about the prospects for the 
next few days, but the threatening tone of a letter from which I 
will quote, entitled, "Open Letter to Federal Employees," of Novem- 
ber 22, signed by the President and the Vice President, does cause 
me some serious concern. 

This letter was brought to my attention by my fellow Florida col- 
league. Representative Dave Weldon. When he first saw the letter, 
he thought it was a hoax and called the White House to verify its 
authenticity. Let me read a few sentences that reflect the 
confrontational approach the administration has taken. 

The President and Vice President wrote, "We can't promise you 
that your jobs and your lives won't be interrupted again. Too much 
is at stake for America. If you are held hostage again, we know 
that you would not want us to forfeit the nation's future as ran- 
som." 

[The letter referred to follows:] 



493 



Open Letter to Federal Kmployees 

tVoin 

Previdenl Clinlon und Vkx Prwidenl Guns 

Wc are proud of the people who work for the federal gcvemmenL Aii>' Fortune 100 
compam' would be lucky to have such a work torce. Your work makes on AmerH;uiis 
more safe, free, and prosperous. We arc >dad >-ou are all back on the job. 

Wc kacnv it h«w't been easy for you, Nvoudering whrt» «nr( if you would get your nexl 
pay check. And many of you had to bear the indignity uf beii^ called "aon-esieotial," 
— some by j^ovcnuucnt critics, some even by yuui own nupurvuors. Colling 
furlijuglied \vorkers uou-essential is deeply offensive and just plain wroag. The law 
lurveJ uk lu furlough 800,000 wurkert wbusc jobs were not of an emergoicy naiuic. 
Th« law says nothing about "essential." 

Nil mie could My that medioal res«ui«b is non'Mcential. Or helping Americans go to 
college. Or rehabilitating a million disabled Americans. Or supporting the widows 
and orphans of vrtcrann. Or Weeping our drinking water .laTc. Or recruiting new 
volimlccrs for the aimed forces. Or any ofthe long list of essential govenunenl 
activities that had to be tetnporsrily suspended. In the short term, they were not 
ciii«r9«nci«t, to th^ Iflw prohibited them. But thev remain clearly essential. 

ViMi kll kuvu (hill ihc law under whivh muvt uf ihr yuv^frnnenl is uperulini; expiree 
on December 15th. and the debate (bat led to the November shut down is sot cfver. 
Wc can't promise you that your jobs and your lives won't be iutcmipted ogoin. Too 
much is or stake for America. If you ore held hostage again, we know you would not 
want us to forfeit the r.ation's funire as ransom. 

So unT:I this issuc is settled the way we settle great issues in a democracy — through 
peacrlul debtftc and compronuse you muoin good people mnght in wliai Churchill 
called 'the worst system of government devised by rite wit of mao. except for all the 
otiieiS. ' And when it is settled, t it you federal wi)tkeis wLo will imuc agoin cany 
iiui ihe will uf ihe (icuplc. who will unce u^uin make it puisible Ibr America lo be the 
winrer Wc salute \ou. and we ihatik >ou. 

(signed) (signed) 

Bill Clinton Altera 

November 22, 199.^ 



494 

Mr. Mica. This message implies a threat of a shutdown of the 
government once again, and I confess to growing a bit weary of the 
rhetoric of this excess. The administration has consistently and 
needlessly exaggerated the potential adverse effects of a shutdown. 
Our last hearing demonstrated that they have actually more discre- 
tion in keeping truly essential functions open than they, in fact, 
used the last time. Their challenge is to use this discretion wisely 
at this time. 

Last week, we heard administration witnesses describe their im- 
plementation of the most recent shutdown. Today, we will hear, as 
I said. Members of Congress address their assessments of these 
events and discuss their various legislative proposals to remedy 
some of the problems associated with the shutdowns. 

I am pleased, also, that I have heard from leadership that they 
are willing to proceed and try to adopt some remedies, if there can 
be some consensus gained in making certain that we do have a rea- 
soned and a unified approach, at least from the Congress, in trying 
to ensure that some of these essential services continue and, in 
fact, the spirit and the intent of the law is carried out. 

[The prepared statement of Hon. John L. Mica follows:] 



495 



ONE HUNOBED FOURTH CONGflESS 

Congresfsf of tte ©nitcb ^tateg 

Jl^ouit of i^epresientatibnf 

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT 
.ITSiX™ 2' 57 Rayburn House Office Building 

Washington, DC 20515-6143 



Opening Statement of the Honorable John L. Mica 
Chairman, Civil Service Subcommittee 

Government Shutdown II 
December 14, 199S 

Good afternoon, and welcome to this continuation of the Subcommittee's oversight 
hearings into the Administration's shutdown of government operations during a lapse of 
appropriations. Last weelc, the Subcommittee heard nine Administration witnesses describe their 
plans and oversight of agencies' operations. 

On Tuesday, four participants in that hearing wrote a letter to the President. We informed 
him ~ in part ~ "Our conclusion ... is that your implementation of this shutdown was 
unnecessarily severe, and some of the closings were unjustified, even witliin the strictest 
requirements of the law. The testimony presented by senior officials of the largest government 
agencies, . . . demonstrated interruptions of benefits and services that could have continued and 
discrepancies in the continuity of operations essential to human lives and safety." 

We are pleased that the Administration responded to many of the concerns we raised last 
week. The Office of Management and Budget directed agencies to submit revised shutdown 
plans by December 10. On Tuesday the Administration announced that the Social Security 
Administration and Department of Veterans Affairs would retain many employees who were 
fiiTloughed on November 14. This is a welcome step toward a more cooperative approach to 
meet the needs of the American people. 

We are concerned, however, that the Administration has not yet provided copies of the 
revised shutdown plans to the Congress as we requested last week. Tomorrow, another 
continuing resolution will expire. If no progress is made on the budget issues, we could again 
see i disruption of government services. I wish that I could be more optimistic about the 
prospects for the next few days, but the threatening tone of the "Open Letter to Federal 
Employees" of November 22 that was signed by the President and the Vice President causes me 
concern. 

This letter was brought to my attention by my Florida colleague, Dave Weldon. When he 
first saw the letter, he thought it was a hoax and called the White House to verify its authenticity. 
Let me read a few sentences that reflect the confitintational approach the Administration has 
taken. 



496 



The President and Vice President wrote, "We can't promise you that your jobs and your 
lives won't be interrupted again. Too much is at stake for America. If you are held hostage 
again, we know that you would not want us to forfeit the nation's future as ransom." 

This message implies a threat to shut down the government again, and 1 confess to 
growing a bit weary of the rhetorical excesses. The Administration has consistently and 
needlessly exaggerated the potential adverse effects of a shutdown. Oiu- last hearing 
demonstrated that they have more discretion in keeping trully essential functions open than they 
used last time. Their challenge is to use this discretion wisely. 

Last week, we heard Administration witnesses describe their implementation of the most 
recent shutdown. Today, we will hear Members of Congress address their assessments of these 
events and discuss legislative proposals to remedy some of the problems associated with these 
shutdowns. 



497 

Mr. Mica. Our first panel this afternoon includes Members re- 
flecting concerns of other jurisdictions in Congress. We will hear 
from Spencer Bachus of Alabama, of the Banking Committee; Mr. 
Peter Hoekstra of Michigan, who chairs the Oversight and Inves- 
tigations Subcommittee of the Committee on Economic and Edu- 
cational Opportunities; Mr. Ken Calvert of California, who chairs 
the Resources Committee Subcommittee on Energy and Mineral 
Resources; and Mr. J.D. Hayworth of Arizona, one of our distin- 
guished first-term members. 

We will also hear from other Members. This issue has attracted 
a great deal of attention. I believe the second panel will include 
some of the other Members who want to comment on the impact 
of the shutdown on Federal employees. Our witnesses include Mr. 
Joe Barton of Texas; Mr. Glen Browder of Alabama; Mr. George 
Gekas of Pennsylvania; Mr. Steny Hoyer of Maryland; Mrs. Karen 
McCarthy of Missouri. And we also have a request to testify from 
Mr. Sonny Bono, the honorable gentleman from California, and Mr. 
Dan Burton, from Indiana. 

Now, I am pleased to recognize the ranking member of our sub- 
committee, who has provided tremendous leadership on this issue 
and other issues before the Civil Service Subcommittee, and has 
also requested that we take some action. In fact, some of the action 
we've done together has resulted, I believe, in some positive 
changes in the way the shutdown will occur, if it does, in fact, 
occur. And I thank him for his cooperation and leadership. 

Mr. Moran, you are recognized for an opening statement. 

Mr. MORAN. Thank you, Mr. Chairman. 

I think the government shutdown was grossly irresponsible. It 
was short-sighted. At best; it was politically motivated and kind of 
a nutty thing to do. Now, we may not all agree with that conclu- 
sion, but what we're going to try to do is to see where we can reach 
some agreement to avert what was a real crisis that I think the 
Congress has to assume the greatest amount of responsibility for, 
because the fact is, we didn't get the appropriations bills even to 
the President in a timely manner. 

And that's what it's all about. It's the appropriations process get- 
ting concluded in a timely manner, so that the agencies have their 
money by October 1. The fact that they did not meet that, in mid- 
November, we had to tell 800,000 Federal employees, after they 
had already come to work, to go back home, and to delineate them 
between those who were considered essential and nonessential, 
which was a fairly arbitrary distinction, in many cases. 

We can't let a recurrence of that happen this time, if there is to 
be a shutdown. I don't think there should be a shutdown, but it 
would behoove us to go on that assumption, because stranger 
things have certainly happened this year. 

So what we ought to be able to agree on is. No. 1, it was a ter- 
rible use of taxpayers' money to pay Federal employees for not 
working. For 4 days. Federal employees had to stay at home, were 
told to stay at home, when they wanted to be at work, and then 
we reimbursed them. I'm glad we reimbursed them. I have no prob- 
lem, obviously, with the Speaker's commitment to reimburse them, 
which he made good on at the first legislative opportunity. But 



498 

those Federal employees should have been earning their pay. They 
wanted to, and I think the American people needed them to. 

So the first thing we ought to do is to figure out a way to keep 
Federal employees on the job, and earning their pay. Then the sec- 
ond thing that we ought to do is to come up with a more reasonable 
distinction, if there is to be some criteria, in terms of who should 
get reimbursed. 

Now, my legislation would simply keep people on the job and 
then reimburse them as soon as funds became available. In other 
words, it would do what we did the last time, except that the tax- 
payers would not be paying out $750 million for work not per- 
formed. We have brought out in these hearings how unfair it was, 
as well, for some people to be on the job doing the work that they 
were charged to do but also the work of their colleagues who were 
not on the job, and then getting paid exactly the same. 

Now, my legislation to do that, H.R. 2184, has been referred to 
the Government Reform and Oversight Committee. There is almost 
identical legislation that Congressman Gekas from Pennsylvania 
has introduced in previous sessions that has been referred to the 
Appropriations Committee. 

I would hope that we could move in an expeditious way so that 
we could get some legislation on the books, particularly given the 
fact that this is Christmas time, so that we would not be punishing 
Federal employees for the inability of the Congress to get its job 
done. And I don't care if we blame the entire government, the exec- 
utive branch, the judicial branch, whomever, but the point is that 
we ought not use Federal employees as pawns in what is essen- 
tially a political problem. 

So, with that, I'm going to suggest that we find a way to bring 
this corrective legislation to the floor under the legislation we 
passed yesterday, which is called a martial law situation, where 
you can bring legislation to the floor without the normal procedural 
obstacles. And I think we ought to discuss that at the conclusion 
of this hearing. But, at this point, Mr. Chairman, I would be anx- 
ious to hear from other Members, many of whom, in looking at 
their testimony, agree that this is a situation that needs correcting 
and needs correcting very quickly. 

Thank you. 

Mr. Mica. I thank the ranking member. 

Mr. Clinger, who is the chairman of our full committee, has 
joined us. 

Did you have an opening statement? 

Mr. Clinger. I don't, Mr. Chairman. I want to commend you for 
holding these hearings and giving our Members an opportunity to 
tell us, from their experience, what the impact has been on their 
districts and on the Federal employees in their districts, and what 
sort of inconveniences and/or dislocations occurred as a result of 
the shutdown. 

Clearly, there's a lot of blame that can be spread around here. 
I think our objective in these hearings is to get a clear idea of what 
we can do to ensure that we don't have a repetition of this and that 
there be some clearly understood parameters for how we handle 
this type of situation. 



499 

So I am supportive of your efforts. I think it needs to be a bipar- 
tisan effort, frankly, and I hope that it can continue to be that way. 
I commend you for holding the hearing. 

Mr. Mica. I thank the chairman and would now like to recognize 
another distinguished member of our subcommittee and panel, Mr. 
Burton from Indiana. 

Mr. Burton. Thank you for the "distinguished," Mr. Chairman. 

I think that almost everybody in the House and the Senate 
agrees that, if we do have another shutdown of government, the 
Federal employees should not pay the penalty for that. I have 
talked to the Speaker about that, and I think he is agreeable to 
legislation which would specify that any Federal employee who 
chooses to work during a government shutdown would be com- 
pensated. Those who choose not to work would not be compensated. 

I have drafted legislation. I have talked to Mr. Moran and you, 
Mr. Chairman, and others about this. I think this legislation would 
be very helpful, would clarify the situation, and I think it would 
receive wide bipartisan support. And I hope that we can move that 
kind of a bill expeditiously through the committee and to the floor 
for passage, so that Federal employees won't have to worry at 
Christmas time and holiday times that, if there is a government 
shutdown, they might have to pay a severe penalty. 

So I think it will ease a lot of minds and ease of lot of tension, 
and I hope we can move expeditiously on it. 

Thank you, Mr. Chairman. 

Mr. Mica. I thank the gentleman. 

We have also received statements with requests to submit them 
for the record from Mr. Lazio, who chairs the Banking Committee's 
Subcommittee on Housing and Community Development; and Mr. 
Bennie Thompson of Mississippi; and others. Without objection, 
these statements and others will be made a part of the record. 

[The prepared statements of Hon. Rick A. Lazio, Hon. Bennie G. 
Thompson, Hon. John A. Boehner, and Hon. John Ensign follow:] 



500 



Rick A. Lazio 

Chairman, Subcommittee on Housing and Community 

Opportunity 

Statement submitted for the record to the Subcommittee on 

Civil Service Hearing on 

"Government Shutdown IF 

December 14, 1995 



Thank you Mr. Chainnan. As Chairman of the Subcommittee on 
Housing and Community Opportunity and the primary authorizing committee 
for the Department of Housing and Urban Development, I am especially 
grateful to the Civil Service Subcommittee for holding hearings on the 
imphcations of govenmient shutdowns. 

Over the last several weeks, a number of critical questions have arisen 
regarding contingency plans implemented by various Executive departments 
during the recent govenmient shutdown. Among the more serious, are 
questions of whether staff levels at HUD may have been set with poUtical 
concerns in mind. 

During the shutdown, the Department declared that 97 percent of its 
12,000 employees were non-essential, leaving only 400 employees to perform 
essential and legally mandated functions under HUD's responsibiUty. 
According to HUD's shutdown plan, contingencies were in place to address 
critical HUD functions "involving the safety of human Ufe or the protection of 
property or activities essential to preserve the elements of the money and 
banking system in the United States." In addition, according to a November 
17, 1995 HUD memo from General Counsel Nelson Diaz to the Secretary, 
HUD had prepared well and plaimed for staff levels needed to address critical 
HUD functions during a shutdown. 



501 



Page 2 

Nevertheless, Secretary Cisneros issued a statement on the first full day 
of government shutdown November 14, warning that the shutdown would 
condemn the homeless and people with AIDS to the streets. In fact, 
according to their own shutdown plan, the Department had in place 
contingency plans that specifically addressed the homeless and AIDS 
programs because '^failure to do so would imminently threaten the safety 
of human life." 

Even more significant, is that while the General Counsel of the 
Department had determined that staffing levels were well prepared for prior 
to the shutdown, 3 days into the shutdown Counsel Diaz foimd that the 400 
people deemed essential were "clearly not enough to perform the legally 
mandated functions under HUD responsibility." This begs the question: If 
HUD's own General Counsel determined that the Department had 
sufficiently prepared for the shutdown, why were staff levels reduced to 
critically inadequate levels? 

Two weeks ago I wrote a letter to the Secretary raising these concerns 
and requesting a full and timely accounting of the plans that were 
implemented during the shutdown. In the letter I communicated my strong 
belief that staff levels should not be manipulated to foment political 
opposition or engage in dangerous political games. 

Mr. Chairman, I commend you for holding these hearings. Although 
no member of this body is desirous of any type of government shutdown, 
today's hearing is especially important to me as I continue to review HUD's 
mission and its ability to serve the needs of the American people into the 
twenty-first century. 

I look forward to today's testimony and a review of the subcommittee 
transcript. 



WASHINGTON OFFtCE 

H HouM Oftia Bm 
I. DC 3OS1S-3403 
120?) 22S-MT< 
. 17021 22S-&898 



502 



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COMMITTCE ON AGRICULTURE 



AMD FOHEfCN AGMtCULTUNC 

COMMinCE ON SMALL BUSINESS 

SuKOMMITTtC: 

GO>«nNMENT PnOCRAMS 



Mr. Chairman and members of the Subcommittee on Reform and 
Oversight. 

I am pleased to participate in this hearing today regarding the Federal 
Government shut down. As you may know, I represent the Second 
Congressional District of Mississippi. 

I appear before you today on behalf of over nine-hundred Mississippi 
State employees as well employees from other states and U.S. territories, who 
were furloughed from November 14-19, 1995 due to the inability of the 
Congress to take care of the nation's business. As you know. Congress 
passed on November 20 1995, HJ Resolution 122, which included language 
to cover federal employees furloughed as a result of the lapse in 
appropriations. However, this resolution did not include similar language to 
cover state employees who carry out Federal programs. Most federal 
agencies provide funds to States through grants which finance either an 
entire project or program costs for a defined period of time. This resulted in 



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503 



these employees not getting paid for the time they missed work and many 
much needed services were interrupted. 

In Mississippi, Rehabilitation Counselors were unable to authorize services 
and the needs of their clients went unmet. Blind residents at the Addie 
McBryde Center and mentally retarded residents at the Ellisville Center for 
the Mult-Handicapped Blind were sent home. Applications for Social 
Security Disability and Supplemental Security Income were not processed, 
thus delaying benefits for those who qualify. As you can see, this shut down 
had a major impact on my state of Mississippi as well as the nation. 
Therefore, I introduced H.R. 2733, which is designed to provide clarification 
in the reimbursement to States, such as Mississippi, for federally funded 
employees carrying out Federal programs during the lapse in appropriations 
between November 14, 1995, through November 19, 1995. I urge you, my 
colleagues, to support this legislation to reimburse the states for the money 
they use to compensate state employees during the government shutdown. 
These men and women are honest hardworking Americans caught in the 
cross-fire of this unfortunate budget battle. Let us make amends and provide 
the leadership that we were sent here to provide. 

Thank you, Mr. Chairman and members of the committee for this 



504 



opportunity to testify before the Committee on Government Reform and 
Oversight. 



505 




J^onit Republican Conference 

?B.^. l^ovat of i^epre«entattbn( 
Matfijtngton, SC 20515 

Testimony of the Honorable John Boehner 

on Government Shutdowns Before 

the Civil Service Subcommittee 

Thursday, December 14, 1995 



Mr. Chairman and colleagues, as a member of the House Republican 
Leadership, I appreciate having the opportunity to appear before this subcommittee. 

Not since 1969 -- the year Neil Armstrong walked on the moon -- has Congress 
balanced the federal budget. Since that time, every mechanism and Washington 
gimmick devised to slow the growth of the federal bureaucracy has either been 
resisted or failed. During the 1980s, the Democrat-controlled Congress appropriated 
beyond the Reagan budgets and resisted at every turn controlling the size of 
government. In other words. Congress talked a good game but lacked both the will 
and the courage to make the decisions necessary to balance the budget. 
Consequently, we have mortgaged our children's future. 

There is no excuse for the failure on the part of previous Congresses to 
balance the budget. If this great country of ours has the ability to put a man on the 
moon, it certainly can muster the type of leadership needed to balance its books. As 
the November 1994 elections demonstrated, the American people agreed it was time 
to replace the old team that had occupied the field for 40 years and bring in a new 
starting lineup. 

The new team in Congress shares the American people's commitment to a 
seven-year balanced budget -- as promised in the Contract with America. Although 
past Congresses promised a balanced budget, it will take the Republican-led 104th 
Congress to keep that promise. 

As the prospect of another partial government shutdown looms at 1 2 o'clock 
midnight tomorrow, it is imperative that everyone have a realistic understanding of 
what this is all about. It's about our desire to balance the budget, make government 
smaller, and provide a brighter and more prosperous future for our nation's children. 
Despite what others have said, it is not about anyone's desire to close the government 
and create anxiety among federal employees. Far from it. 



506 



It is also about what would happen if we don't balance the budget. Interest 
rates have steadily declined since last November because the mar1<ets believe we are 
serious about a balanced budget. They will almost certainly rise again if we fail. 

We now face the possibility of another partial government shutdown because 
President Clinton doesn't share this Congress' commitment to an honest and 
believable balanced budget in 7 years. Of course, President Clinton has promised to 
balance the budget on numerous occasions. 

While campaigning for president, Bill Clinton promised to balance the budget in 
5 years. This June he said he could do it in 10 years. And then 9 years. And, finally 
3 weeks ago he signed Public Law 104-53 that clearly and unmistakably states that 
the White House and Congress shall enact a seven-year balanced budget using 
CBO's honest numbers by the end of this session of the 104th Congress. 

But the President's actions speak louder than his words, confimiing what many 
Americans already know: it's much easier to make promises than to keep them. To 
date, the President has submitted three budgets to Congress. Not one of them ever 
balances. When presented with a fair, credible balanced budget plan, he chose the 
"veto pen" over the "balancing pen." And he chose demagoguery over honest debate. 

The President has had more than ample time to produce a balanced budget 
plan that does not rely on rosy economic scenarios. But he hasn't done that. Instead, 
his third budget not only won't balance in 7 years, but it never wipes away the red ink. 
A $365 billion shortfall and a $1 15 billion deficit in 2002 do not balance the budget in 7 
years. 

By leaving a trail of red ink as far as the eye can see, the President is wilfully 
choosing to saddle our children with higher debt and, inevitably, higher taxes and a 
lower standard of living. For the sake of our children and their futures. Congress can 
no longer tolerate this fiscal child abuse. 

So if parts of the government shut down at midnight tomorrow, it will be due to 
the President's refusal to put big government on a diet. The balanced budget plan 
that President Clinton vetoed last week would have spent $2.5 trillion more during the 
next 7 years compared to the previous 7 years. The President, however, doesn't 
believe $2.5 trillion more is enough. He wants to spend more. 

Let's face it. This administration wants more Washington spending. We want 
to move power and money t)ack to families and communities. That's really what the 
last government shutdown was all about. But rather than focus the det>ate on this 
moral imperative, the administration instead chose to score political points with 
constituencies that would be adversely affected by a shutdown. What else could 
possibly explain why govemment services that actually help people were dismpted, 
while the Washington bureaucracy was insulated as much as possible from the 
shutdown's impact? We cannot dismiss this as simply a mere coincidence. 



507 



There should be no doubt in anyone's mind that the previous shutdown didn't 
have to be as severe as the Clinton Administration made it. Social Security, civil 
service, and veterans benefits shouldn't have been treated differently. But they were. 
The Education Department's forward-funded programs should have continued. But 
they didn't. OSHA workplace safety and mine safety should have been treated the 
same. But they werenl. 

I am pleased to hear that the Administration now recognizes that it 
unnecessarily worsened the effects of the shutdown, and will now alter its contingency 
plans for any future shutdowns. But rather than plan for future shutdowns, the Clinton 
Administration can help avoid them altogether by joining this Congress in reaching a 
an honest seven-year balanced budget agreement. The future of our children ought to 
take precedence over the special interests' insatiable appetite for bigger govemment 
and higher taxes. That's what this balanced budget battle is all about. 

I have said it many times before and ill say it again: No more excuses, Mr. 
President. No more Washington gimmicks. It's time to do the right thing for our 
children's future. It's time to balance the budget. 



508 




JOHN E. ENSIGN 



SuSCOMMrTTte ON H£*ITM Kjqq g SaMAR* AvE . SuiT( D 

UMAN RtSOURCES L^S VECaS, NV 89104 

Congress of tlje WinittH States ;;°™; 

l^ousie of i^epredentatibes 
aaasljington, 1B€ 20515-2801 

December 14, 1995 

TESTIMONY OF REPRESENTATIVE JOHN ENSIGN 

Government Reform and Oversight Subcommittee on Civil Service 



Thank you, Mr Chairman, for scheduling this hearing so that this and other testimony can be 
heard to help address the question of what federal government services and positions are essential 
during periods of shutdown I strongly believe that there were many aspects of the shutdown in mid- 
November for which previous Congresses had failed to develop a strategy or appropriately consider 

My Resolution, H Con Res 1 13, is quite clear and very simple The Resolution states that 
the President, Vice-President, and all Members of Congress should not except pay from the 
government during periods of shutdown Shutdowns have happened in the past and will likely 
happen in the future, causing disruption and financial pressure on federal employees across the 
country In order to lead by example, both Executive and Congressional leaders must be willing to 
make the same sacrifices as other federal employees 

Some of my colleagues have joined me in offering legislation that aims to remove the special 
pay protection for the President and Congressional Members during periods such as shutdowns 
Language in both Article I, Section I and the 27th Amendment to the U S Constitution stipulating 
that pay for the President and Members, respectively, cannot be varied during the period of the 
individual's present term in office Because of the legal and legislative questions regarding changing 
compensation rules, I considered it important to let my constituents know, both federal employees 
and others, that I was voluntarily holding myself to the same standards to which other federal 
employees were being held in matters of pay 

I support legislation that endeavors to remove these protections in the future, but believe my 
bill addresses the immediate question of Presidential and Member pay in the 104th Congress I 
believe voluntary compliance is necessary until such a time when the constitutional questions can be 
properly addressed 

Thank you, Mr Chairman 



509 

Mr. Mica. I would now like to proceed. It is the practice of our 
subcommittee to ask our witnesses to summarize their remarks, if 
they could, in 5 minutes, to be fair to everyone, also to allow for 
questions. If you have a lengthy statement, it will be made a part 
of our full record. 

I would like to take a moment to recognize Mrs. Bachus who has 
joined us. Good to see you. You haven't been before our subcommit- 
tee. 

The second order would be to recognize her husband, the Hon. 
Spencer Bachus, who is on the Banking Committee and has re- 
quested testimony today. 

Mr. Bachus, you are recognized for 5 minutes. 

STATEMENTS OF HON. SPENCER BACHUS, A REPRESENTA- 
TIVE IN CONGRESS FROM THE STATE OF ALABAMA; HON. 
PETER HOEKSTRA, A REPRESENTATIVE IN CONGRESS FROM 
THE STATE OF MICHIGAN; HON. KEN CALVERT, A REP- 
RESENTATIVE IN CONGRESS FROM THE STATE OF CALIFOR- 
NIA; AND HON. J.D. HAYWORTH, A REPRESENTATIVE IN CON- 
GRESS FROM THE STATE OF ARIZONA 

Mr. Bachus. Thank you, Mr. Chairman. It's a pleasure to come 
before the committee. 

First of all, I want to stress that I think that the government 
shutdown, the debt ceiling crisis, the balanced budget debate, all 
of these may appear to be distinct items, and sometimes we say, 
"We're dealing with the debt ceiling; we're not dealing with the bal- 
anced budget," or "We're dealing with the government shutdown." 
But they are all interwoven. 

Had we had a balanced budget, we would not have had a debt 
ceiling crisis. In fact, this Congress has sent two opportunities to 
the President to raise the debt ceiling, but they were linked with 
a balanced budget. As long as we continue to not balance the budg- 
et, as long as we continue, we're going to bump up against a debt 
ceiling, and we're going to have government shutdowns. Now, they 
may be the week before Christmas, or they may be when this coun- 
try has an economic calamity and we simply run out of money. 

I want to tie that with something that several people on the floor 
of the House today said this is nothing to concern us about; this 
is not anything to get all excited about — in fact, they said that the 
bill that just passed the House — and I don't have the vote count, 
but as I left I think there were less than 100 no votes; when it fi- 
nally came up for a vote, there were 60-some-odd or 70 people vot- 
ing present — was to say that these trust funds are off limits. 

What I would like to say, if nothing else, is that this is serious, 
what's happening to the civil service trust fund and the voluntary 
pension fund of Federal employees. This is not something that we 
should look the other way on. This is not something that we ought 
to say they will be paid back with interest. Because, quite frankly, 
we can't make that promise. We can't look into the future and say 
that money will be paid back. 

What we do know is that the Secretary of the Treasury has 
taken an unprecedented step in this Congress and during our 
watch. And what he has done is, he has reached in — he's done two 
things, initially. The first thing he did was, he reached into the 



40-190 97 - 17 



510 

Civil Service Retirement Fund and he took from it almost $40 bil- 
lion in interest-bearing Treasury securities. 

And he substituted — and he was before the Banking Committee 
yesterday, and I characterized it as substituted an lOU for those 
interest-bearing Treasury securities that he took out of the Civil 
Service Retirement Fund. And he said, "That's correct." He did not 
disagree with that analogy. 

Now, as I said, some have said, "Well, that's got to go back, at 
some point, with interest. Got to be paid back." But he took it out, 
$40 billion, and then he did something else. Every day the vol- 
untary pension plan, the so-called "Thrift Savings," or G fund, 
every day that is reinvested at the best available rates, only during 
this crisis it has not been reinvested. It is not invested; it is not 
drawing interest. 

The entire pension plan that many of us in this room have volun- 
tarily put money into, Federal employees, 100 percent Federal em- 
ployees, that's not drawing interest. For people to continue to say, 
1 day, someday it will be paid back, maybe it will, but what inter- 
est rate will we get? Are we guaranteed, the people that put money 
in there for their retirement, hoping to get it when they retired, 
with interest as it grew, have we been guaranteed that they will 
get the best available rates? No. 

Can we, can any of us guarantee that some Congress in the fu- 
ture won't say, to balance the budget or under some austerity pro- 
gram, "We're going to give it back, but we're going to give it back 
at 4 percent." If you look over the last 200 years of this country, 
when you start looking for things to do, one of the first things you 
do is, when you say, "I owe you this; let's compromise at that." 

We have a stock market at an all-time high, but we don't know 
that 2 months from now it may not be 2,000 points lower and inter- 
est rates a point or two higher, and our ability to finance all this 
basically shot. 

Now, the Secretary of the Treasury did something else, he said, 
"There's going to be a 12-month debt crisis." And he took from the 
Civil Service account 12 months of benefits for Federal retirees. 
What did he do with that? Did he pay benefits to those retirees? 
No. He used it to fund the day-to-day operation of this government. 

Those of us, you know, who are alarmed by this are simply 
shocked that people are saying, "No big deal. You took interest- 
bearing Treasury securities out of the retirement funds; you totally 
drained one of the accounts. That's no big deal." 

My gosh, isn't a retirement fund, as then Senator Al Gore said 
on August 1, 1986, almost 10 years ago, "This is a dedicated trust 
fund, and it ought to be used for one thing and one thing only, and 
the Federal employees ought to have that expectation and trust, 
and that's that it be paid 1 day for their retirement, not to address 
a debt ceiling crisis, not to pay government." 

We used it for the day-to-day operation of government, and peo- 
ple are continuing to say, "No big deal." I say it is a big deal. It 
just shows us, if nothing else, can we not all agree this is no way 
to run a government. When we have seen private pension plans 
dipped into, we have been excited about that. Aren't our Federal 
employees entitled to the same respect? Is not their retirement 
fund entitled to the same respect? 



511 

The best statement I've seen on this is the statement of then 
Senator Al Gore, and I would submit his entire statement for the 
record, and simply say, a trust fund where there is no trust and 
there are no funds, is no trust fund. 

Thank you, Mr. Chairman. 

[The prepared statement of Hon. Spencer Bachus follows:] 



512 



STATEMENT OF THE HONORABLE SPENCER BACHUS 

BEFORE THE SUBCOMMITTEE ON CIVIL SERVICE 

OF THE GOVERNMENT REFORM AND OVERSIGHT COMMITTEE 

December 14, 1995 

Chairman Mica: 

I appreciate the opportunity to come before the Subcommittee 
to discuss the recent government shutdown and the related raid by 
the Clinton Administration upon the Civil Service Retirement & 
Disability Fund and the G-Fund. 

These actions, although seemingly distinct, are in my mind 
intricately related. The budget dispute, the shutdown, and the 
so-called debt ceiling "crisis" are all part and parcel of the 
historic struggle to curtail deficit spending. There should be 
no confusion. The government shutdown and the recent debt 
ceiling incident occurred solely because we do not have a 
balanced budget. 

I would like to speak to how the recent actions by Treasury 
fit within the budget debate. 

PRESIDENT CLINTON IS NOT SERIOUS ABOUT A BALANCED BUDGET 

On November 15, Secretary Rubin made the following 
determination : 

"Based on the information that is available to me today, and 
pursuant to my authority under 5 USC sec. 8348 (j)(5)(B), I 
hereby determine, for purposes of 5 USC sec. 8348 (k)(2), 
that there exists a debt issuance suspension period from 
today until 12 months from today." 

By doing so, Rubin borrowed funds equal to the pension 
payments for federal retirees for 12 months — one whole year — 
and is now spending that year's worth of retiree benefits on the 
general obligations of the U.S. government. 

While there have been two dozen debt ceiling "incidents" in 
the last 15 years that have resulted from struggles between the 
Executive and Legislative branch, this raiding of the retirement 
trust fund and the G-Fund was not simply business as usual. In 
the past. Treasury has redeemed trust fund assets simply to pay 
beneficiaries or to bridge a short term debt ceiling crisis; in 
this instance, the Treasury has taken the unprecedented step of 
redeeming a full year's worth of retirement benefits in order to 
fund its own political objectives. I am among those who strongly 
que&tion the legality of using these funds for the payment of 
general government obligations. 

What does this 12 month debt suspension determination tell 
us about the Administration's views of a balanced budget? Could 
it be that 12 months would get Secretary Rubin and the Clinton 



513 



Administration just past the November 5, 1996 presidential 
elections? Could it be that Bill Clinton has no intention of 
negotiating in good faith on a 7 year balanced budget, despite 
the fact that he has publicly committed to a balanced budget many 
times over the past few years? At a minimum, Rubin's 
determination of a 12 month debt issuance suspension period was a 
transparent move to raise funds with which to maintain government 
spending so that President Clinton could avoid coming to the 
table and negotiating a balanced budget. 

Did President Clinton have to do this? The answer is a very 
clear NO. First, the President never considered deferring or 
rescinding spending in order to avoid hitting the debt ceiling. 
Rather, it was pedal-to-the-metal spending as usual. 

Second and more tellingly, the Congress sent President 
Clinton two debt ceiling increases. The President vetoed both 
increases because they require a concrete, no "smoke and 
mirrors", balanced budget. Let me say again: if we have a 
balanced budget, we would not be here today. 

THE NEED FOR CONGRESSIONAL CONTROL OVER THE DEBT 

It is time that we take a quick look at the United States 
Constitution. Article I, Section 8 provides: "The Congress shall 
have power ... To borrow Money on the credit of the United 
States ..." 

That's right — it is Congress — not President Bill 
Clinton, not Secretary Robert Rubin — that determines when we 
spend today the money our children will earn tomorrow. Although 
some would argue the debt ceiling statute is obsolete, the 
statute, if nothing else, is useful as a reminder of the 
profligate deficit spending that has been the sorry legacy of our 
government. But beyond its symbolic significance, I think the 
debt ceiling statute is fundamental to Congress's constitutional 
authority over public debt — i£ we close the loopholes like the 
one used by the Treasury Department. 

President Clinton's unprecedented use of the trust funds 
stands this authority on its head. As Secretary Rubin admitted 
in testimony yesterday before the House Banking Committee, when 
the Treasury dipped into the trust funds it simply used creative 
accounting to find a way to continue deficit spending. 

For the past 29 days, the loophole used by Secretary Rubin 
has resulted in the obligation of over $60 billion of our money 
without Congressional approval. That is eqiial to $244 for every 
man, woman and child in the United States. If he used all the 
$1.26 trillion in federal trust funds. Secretary Rubin could 
deficit spend until the year 2001. This would cost each of us 
over $5,000 over the current $4.9 trillion national debt. 

President Clinton may be happy about piling this debt on 



514 



each of us but the American people should not be subjected to 
this burden without Congressional approval. 

ITS TIME TO CLOSE THE LOOPHOLES 

Remember the ESF fund. The Exchange Stabilization Fund 
exists for the limited purpose of meeting our goals to the 
International Monetary Fund but had been used over the years to 
make small, short term loans in emergency situations. It was 
probably a very useful tool for the Treasury Department. This 
obscure fund was tapped by President Clinton, however, in an 
unprecedented fashion to loan $20 billion to Mexico for up to 10 
years, without obtaining Congressional approval. 

Just as Congress took steps to curb this abuse of the ESF 
fund, we now need to take steps to curb the recent abuse of 
federal trust funds. Although some flexibility in regard to the 
trust funds may very well be a good thing, the precedent set by 
President Clinton in abusing his authority over the trust funds 
necessitates that we act to restore confidence in the sanctity of 
all trust funds and to restore Congressional control over the 
federal debt. 

H.R. 2621 that is scheduled for floor action today is a 
necessary step in restoring confidence in the sanctity of our 
trust funds. I would like to read excerpts from a floor 
statement made by a Senator during debate in 1986 on an amendment 
to the Civil Service Retirement and Disability Fund statute that 
was designed to do exactly what H.R. 2621 does — prevent the 
Treasury from raiding the fund to pay general government 
obligations. 

Like the Social Security Trust fund, the civil service 
retirement and disability fund is a dedicated trust fund and 
as such its assets may only be used to provide benefits to 
civil service retirees . . . That fund stands as a strong 
symbol of assurance that federal employee retirement 
benefits will be paid when they become due. While employees 
may not fully understand the arcane interactions of Federal 
financing that results in the ultimate dispersal of their 
annuity checks, they do recognize when money that they have 
contributed toward the financing of their benefits have been 
used in ways other than those intended or promised under the 
statute establishing that fund. ... It was right for them 
to take offense last year when the civil service fund was 
the first tapped — even before Social Security 
disinvestment — to keep the Nation solvent during the 
1986 debt ceiling crisis. . . The amendment that Senator 
Eagleton and I propose would acknowledge, indeed would 
preserve, the sanctity of those contributions that these 
employees have made toward their retirement. (132 Cong. Rec. 
at 18,732-3.) 

Who made that statement? Then-Senator Al Gore. Ten years 



515 



later Senator Gore's statement remains the best explanation of 
why «; need this bill -- to ensure that trust fund assets are 
used only for the purpose of the trust fund, not for general 
government obligations. 

As senator Gore stated, it is right for federal employees to 
take offense when the civil service retirement fund is used for 
pol it ica! purposes. It is time that we protect the trust funds 
?nd restore Congressional control over the federal debt. 

Thank you, Mr. Chairman. 



516 




UNITED STATES \#v^^^^/ OF AMERICA 



Congressional llecorfl 



PROCEEDINGS AND DEBATES OF THE 99** CONGRESS 
SECOND SESSION 



VOLUME 132— PART 13 

JULY 29, )9«6'f oliUGbST 5. 19« 
/V (J *<y \ 
(PAGES 17869 TO 193H) 



UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON, 19M 



517 



18732 



CONGRESSIONAL RECORD-SENATE 



August 1, 1986 



AMCFTMU*! bo. IJ 



"(B) tiie lervn 'd«bt Usuasc* luapenslcm Donnal procedure In hADdling tbe 

(FMrpove: To limit the authority to loT«t period' mmu taj p«rod fof whkh the Soc- fund's investment In two wayr Plrat. It 

and d^.«t «^.ie..">i ^.T" S^'^ !l'!f!^^'r'^>.^!:tfli^«V^::^.*LL^ <l«l*i^ investment of fond r^lpU 



Itetircmcst aod DU&bUltT Fund] 

Mr. EAGLirrON. Mr. President, t 

haTc &o aoieiidment which I send to 

Uiedetk. 
The FRBSIDINO OFFICER. The 

ameiKlment will be gtated. 



iniiinrr of oblUuiocii ol the Unit«<i Stats .^ ...^.nrj i> „„_.r^_i. ...i,^J.,^ 

=im«dn,t to ort«-lT ocmdart tile ttoiad.! "»• •«f.?*- i' Pfematorelj redeemed 

some 01 the funds aecuntiee. GAO cs- 



luffVilciit to orderly conduct Uie ttnandal 
opervtloiij of tbt Omted Sutee rau not be 
Da»de witnout «xoe«<Jmt toe public debt tun»tcs u 

(b) Sa1e> and Rcdcraptlooa br the Fund.- 
S<^:UoCl U48 of btl« i. cmlted Stata Code. 



direct result of that 
action, the fund loet trcinendous tnter- 
cst eftmincK- 
Mr. President. I ask un&nimoiu con- 



The assistaiit le(^£latfve clerk re»d m amended by lubeectioo {»). la farther j^jj ^ j^^^ printed In the Rrooiu a 



ISfSljl^aj;^^^^ »t the «i>d the lollowto. ^^j^ Ciomnt the fleurei. 

"'" "' " There bclrte no objection, the table 



as f olloi 

The SaaUn from MiEsauri CMr. Emux- ^^^ ^^^ oc^,;,^ » «.. , ,.,,_, ._, 
T0»). for hinuelL Mr. Ooaa, Mr. Lavw, and ^'^j' ^l^jJ^'^lJ^iJuiueo, oWi«aiaon»."OT "»» ordered to be printed In the 

"" ■" ._™»-.-« .<™.- ^^^^ inreaed aaaeta of the Fund only for RCCOKD, u f oUows: 

thf parpoB* of enabUnc the Fund to oiake mttnrt amcMmt lou 

D«yment4 authoriaed by the prvriaioiv ox nocal year 



Mr. GLOir. proposes aa amendiDent anm- 
beredtaca. 
Mr. EAGLETON, Mr. Presidenl, I 



aik unanimous consent that reading of thl« subchapter or chapter M of this UtJe or 



the azneodxncnt be dispensed wlth- 

Tbe PRESTDENG OFFICER. With- 
out objection, it is so ordered. 
Tlie saiendment is as foUows: 



related proriaioxu of Lav. If the Fund holds 
any amoonta vhich. by reason of the public 
debt limit, are not inrosted. tlie Secretary 
tnay nevrrthdczs ma^e such saio aod r^ 
demptlons U. aiid onJy to the extent, neces- 



*61,S1J13 

TtJSl.lM 

6.0SC 



At the end of the amendment, insert liie ^^jy to easure thiit saeii payments are made 
foJIovrtof ae« section: In a ttmely manner. 

sec . CIVIL fizjtvicf Ksmstnoct Aire disabu^ 
rrrruKU 



itt*.. 
19«S.. 
)»8«- 



Total m 1S9.007 

Mr. EAGLETON. Mr. President. 
Treasury has restored tT7.714— a mere 



(c) Reporte Regarding the Operation and drop to the bucket, $141,381,233 in in- 
Suius of the ruT>d.— Section SMS of tiUe i. tercel belonging to dvU service relir- 
<a) Investment and Restoration of the United Stales Code, as amended by suBsec- ees is lost. The Treasury is not entire- 
Fund-— Section 8»4I of tttJe S. United Staiee tions (»l and (b). ia lurtber amended by j, (^ blame The laws instructing the 
Code, b amende d by » ddlD« at the end the adding at the end the roDowlng new aubace- secretary of the Treasury resarding 

'°°"lflSJtil^^^Si suhKcUon (c) of ""^IXD The Secretary of the Treasury ?^1}?? »^"^ '*"^ ^"^ '**'"; "5?" 

this section, the Secretary of the Treasury jhaU report to Conn^ss on tae operation "**■ With our amendment, we claruy 

may suspend additional Investment of mj statua of the Fund durini cath debt Is- our intent — the money put away In 

amounts m the Fund if necessary to ensure suancc suspension period for vhich the See- good faith by retirees must be there in 

that the public debt of the United States retary ii required to laXe action under para- full 

does not exceed the public debt limit, oaph c3) or (4) of subsection <j) of this sec- The parpose of this amendment i£ to 

-<.2> Any amounu In the Fund which, tion. The report shall be submitted as soon ^^ modify and clarify the authority 

solely by reason of the pubUc debt limit, aje ,j possible after the expuatlon of such , ^. g^-t^^— „, ,1, Trpamrv in 

not invested shall be InvMted by the secre- pctiod. but not later than the date that is »0 01 ine i>€creiary oi tne ITcamry m 

tary of the Treasury as soon aa such Invest- da.,^ alter the "rat normal mwrest oarmcnl connection with ha r«ponslbiliti«for 

menta an be made without exceeding the dau oocorring after the eipiiauon of such Investtng the assets of the avil service 

public debt limii Doiod. The Secretair shall concurrvntlj retirement and disahUlty fund. Speeifi- 

"(J) Upon expiration of trie debit issuance transmit a copy of such report to the Comp- rally the amendment would allow the 

suapensloD period, the Secretary of the troller Oeneral of the United States, Secretary to lemporartly suspend addl- 

Trea»vir> shall Immediaiely issue to the "(j) Whenever the Secretary of the Trea> tlonal investment of the fund's assets 

Fund oblitauons, under cnapt«3L of title ury determines tnat by ra«on of th. pobUe ^ ^ investments wouJd other- 

»1 that crwtwithslandlng subsection id) of aebt limit, the Secretary win be unable to *?™,!i,tS w. ThT^ihiu Ivhf ii™it 

thia sceUoB) bear toch intcrat rates and fully comply with the re^ulremenu of sub- »i?« ^^^^^ ">« P""''"' °*°' "°"' 

maturity dales a<r are necessary to ensure section (e) of this section, the Oeaetary being exceeded. 

that, after such obligations are issued, the ,haU Immediately notcy Congress of the de- Furthermore, after such a SUSpen- 

hoWin^s of the Fund will repUcaic to the termination. The notification thai) be made slon, the Secretary would 1>C required; 

maximum extent practicable the obllgationa i^ writing.". First, to reimburse the fund for any 

that -Tjuld oe held i;y the Fund U the debt ^^ EAOLHTTON. Mr President, ear- investment lost as a result of the su»- 

t»^oc« suspension period had not oc- j^^^ ^ Senate passed a Finanoe Com- pension- and. second, to invest unln- 

"^On the first normal tnterrrt p^Tnent mlttee amendment prot^wUng the vested assets of the fimd in a manner 

dau after th« expiration of any debt issu- Social Security Trust Fund from dteln- which, to the extent practicable, 

anee sispenslan period, the Secretary of the vestment during panicky moments would make the fimd whole, as though 

Tieasurr shall pay to the Fund, from ac- juch as this, when the Ooverrunent Is, such suspcnsioa never occurred, 

coonu tn the eeneral fund of the Treasury ^ ^ speak, on the brink Of bankrupt- Moreover, the amendment would 

of the Dntted States not otherwise appropri- Senators Gobs. LBvru, OlSIK. and allow the Secretary to disinvest assets 

^^J^!!S\/S:r^^^' ^^ 1 •« oHertog an identical amend- of the fui«5 when the fund is holding 

^^^h« SS aS^^TTf toter.« that ment^proteetlng the chrfl service re- uninvested assets due to the publk 

would have been earned by the Fund during ttrement and disability ftmd— frtwi debt limit, but only when necessary to 

such debt Issuance suspension period U— haety qulck-HxeB which undermine ensure timely payment of amotmts »u- 

"(i) amoonti in the Fund that were not In- the financial Integrity and public oon- thorized to be made from the ftind. 

ve««d during such debt Issoanoe suspension fidence in Federal trust tUDdg Mr. GORE, Mr President, Federal 

period solely by teaion of the pubUc debt -j^^ ^^.jj jej-rice retUemtnt and di»- employees earn, u part of their com- 

UBititaaytajDva^ and ability fund, the fund which contains pensaUon package, retirement benefits 

-^'!?SS^SSU*^^^c;lSS!2 duTfS Fed««l employees' retliement eontrt- payable through the clvU service re- 

^^«^J^s,SSi^rX>1^ i;S^^tr2«.4bmJonlnv»tedln tlrement and dtobili^ trust fund. 

STreaSn M^pawicd^ltaith.d nc\ Treasury securities. According to the Like the Social Security tiMft lund. 

oeeurred. ovw General Accounting Office, on three the dvO service retirement and dlsabil- 

•tB) the net amount of interest actually occaaiODS itnce 19M. the Treasury has Ity fund Is a dedicated trust fund and 

e«n>eo by the Fund aumg such debt Issu- manipulated \tii dvU servloe retire- as such, its assets mar only be used to 

anoc sospeoslon pnlod. __.( ,^ disabmty fund by taking provide benefits to dvil servtoe retir- 

•TijFor purposes Of thta sotarrtion and ..unu^^ actions In an attempt to eei. 

"^^TfS? 't^JTtSL^ ^"^"meaM ^^ U»e Oovemment's fUianooi." That fund stands u a strong symbol 
th.'iiLSL.^'SpSSbyl^J^^'foi'a'?^ SSSTftoe^ yeax. »»*. l^f »^ t! "'^TS^J^^'^^V^'^ 

une JL and 19M the Treasury departed from tlremect bttneflts wfU be paid when . 



518 



August I, 1986 



CONGRESSIONAL RECORD— SENATE 



18733 



they become due. While employee* meat expecCalloos remaJn ihreateaed Ai me approprau plict in me conuniticc 

may not luUj undenrtacd the &nane when they «ee their cost-of-llvliij »d- «men«menu u imtnded. add the [ouowlne 

loterscttons of Pederel fUmncln^ that Ju«tment« reduced because of budget- nrwwcOoa- 

result in the ultimate dispersal of ary ooDoems and their retirement ^^"^ ""' with»t»ndin» any other proti- 

their annuity checks, they do recs>v- funds used to pay obligations other •'o"""*"' 

nire when money* that they h«»e oon- than those Intended. **^ "" Secrtiarr ol Agrlcmiure ibill re- 
tributed toward the financing of their I» it any wonder, then, thot our !?Si?*.'y™f; "l ~«=^*" '»■■ "« «>* *■ 
benefiu have been u»«d In way, other country's present and former employ- S^;^ iS", SlS^.h!-' ^,2'^i,"f 
than those Intended or promised t«, fear the w,.nrt. This amendiieit ^^T^^TlttS^K^^THl^ 
mder the statute etrtablishing that places the Federal employees' truet toaster c.u««i' br Jl«xi. cr^LiA moitoT 
nmo. fund on the same footing as the Soda] or anugnt: 

It wax riKht for them to take offense Security trust fundu, as a backstop for fl» The Secretirr shall reimburie »och 

last year when the dvil service fund the benefits of the rtst of the Kattoa't rumen or ranchers in an amount which 

WW the flrrt tapped— even before employees. It is the least we can do. It ""o*" '*>' exceed 80 Dtreent of the cost of 

Social Security disinvestment— to ke«p Is the right thing to do. Our Federal ""^ TaMponatlon <but not to uceed KD 

the Nation solvent during the 1986 workers deserve It. ^Y^' . 

debt oeOiM eriala Mr. HEINZ. Mr. President, I am ad- y^l^\?'^S^y,^J^. T '•'l??- 

GAO determined that such raids by vised that th«« is no objertion to the SSf CoJpomioL * Comnwdit, 

the Department of Treasury has Uwt amendment on this side. sac Section Jjcbxi) of PubUc Law »- 

the dvil service retirement and disabil- The PRESIDING OFFICER. Is W Is amended by i%irlin% -^0 percent of 

ity IrUDt fund interest earnings \k- there further debate on the amend- the projected payment rate ' ud iDsertlnc 

cause "TreaKury did not follow its e«- ment? If not, the question is on agree- 
ing to the ampndment 

The amendment (No. 2263) was 
agreed to. 



tabUshed fuixl management proce 
dures." GAG'S investigation deter- 
mined that Treasury delayed invest 
ment of fund receipts, prematurely re- 
devraed some fund securities, and 



In Ueu thereof "lOO oerceot of the orojccted 
payment rate~. 

Sec . It is the sense of Congress that 
with rwpect to farm and ranch borrowpm 



move to reconsider the vote by which 



"took other unusual actions in an at- the amendment was agreed to. 



tempt to manage the government's fi' 
nances.^ 

The lo«ses total %U\Mi,wyi. 
Rscal yean 

1»S4 I6U21.813 

1»S5 

1»S« 



Mr. HEINZ. I move to lay that 
motion on the table. 

The motion to lay on the table was 
agr««d to. 
Mr. HEINZ. Mr. President, I suggest menu and foreo foreclosures In cases "here 
TV.231.1U the absence of a quorum. '"**' '"™ *""' ^^nch bortowen ait unable 

S.OM The PRESIDING OFFICER. The ^ "'**' '°*^ payments in lull due to no 



1M«- 

<1) the Secretary of Aj^rlculture 9hould ex- 
ercine the authority pr\>Tided under wcHon 
33LA of the Corsu^Udaxed Farm and Rural 
Development Act and Instruct Che rarmers 
Home Ad/ntnlstr^don tn defer loan repay- 



faull of their own: aitd 

(3) the lending Instirutiona of the Farm 
Credit System and cotnmerrUl lending insti- 
tutioDs are encouraged, insolar ai pracCica 
ble. to adopt lenient Icndina. forbearance. 
and foreclosure pollciec. and to the maxi 
mom extent povfble porttcipfttc and cooper- 
ote with Pcderal and State lenders In aadat- 
ance programs, Mih respect to such borrow- 
er? who are under flnan<dal atrem due to no 
fault of their own. 

Mr. ABDNOR. Mr. Precldenl. I 
think both managers here on the floor 
are well aware of this amendment. I 



The amendment that Senator Eaols- clerk wO] call the roU. 

Toil and I pn>pose would acknowledge. The assistant legislative derk pro- 

iz2de«d would preserve, the sanctity of ceeded tcca ll the roll- 

those contributions that these employ- Mr. HETNZ. Mr. President, I ask 

•es have made toward their retire- unanimous consent that the order for 

ment. the quorum caU be rescinded. 

By treating these contributions and The PREHIDING OFFICER. Wlth- 

the Govemmenfj share of retirement out objection, it is so ordered, 

pension costs as usable only for the Mr. HEINZ. Mr. president, I ask 

payment of dvU service retirement unanimous consent that Senator Hol- 

and disability b^efits. the Congress taxis and Senator GitasstfT be added 

win be restoring the confidence *>^^* as cosponsor« to the pending amend- 

has tindergone severe strain over the ment No. 3362. 

past few years. The PRESIDING OFFICER. With- discussed It earlier as a possible 

CoDgresa has been active In Federal out obi eetioa. it is so ordered. amendment to the Sasser amendment, 

employee retirement. There have been ^'If- HEINZ. Me. President, I ask It was determined at that time to 

a never-ending stream of proposals unanimous consent that we temporart- propose my amendment as a standing 

from the administration to cut Federal ^ ^^ aside the pending amendment to amendment. 

employee beneflta. particularly dvil consider an amendment to be offered I ask immediate consideration of the 

service retirement In (act. Congress ^ ^^^ Senator from South Dakota. 

baa fcnmd It neoeeearT to suspend or "^^^ PRESIDING OFFICES. With- 

modUy ccst-of-Urlng adjustmentc in out objection, it is so ordered, 

response to serious Hscal ococems. **r- ABDNOR. Mr. President, 1 ^ 

New Federal employees have been thank the Senator from Pennsylvania, and the flooding during 1986. In terms 

oovertd by Social Security, an event uomcon iro. tic-i of dollars it is quite minor. 

that Federal retlrets and employees Mr. ABDNOR. Mr. President. I send Mr. PRYOR. Mr. President, reserv- 

had long feared would merely be a pre- an amendment t« the desk and ask for Ing the right to object, it is my under- 

text (or seizing the assets of the dvU Its Immediate consideration. standing that the Senator from South 

•etvfce retirement toiut fund to rein- The PRESIDING OFFICER. The Dakota Is offering an amendment that 

foroe the (iuaodng of Sodal Security, amendment win be stated. he discussed earlier in this day relative 

Although it ivas not Congress' The legislative derk read as follows: to drought spedfloUy related lo 

Intent, the Social Security ameDd- Tbe Senator from South Dakota (Mr. South Dakota. 

ments did require Congress to develop AscnoiO proposes an amendment nimibered Mr. ABDNOR. Tes, and the flood as 

• complete new retirement plan for 23*^ weU. It may seem unusual but It is poc- 

Pederal employees, while that work la Mr. ABDNOR. Mr. President. I ask sible in South Dakote to have a flood 

completed, and those of u« who par- unanimous consent that the reading oI In the East and a drought in the West 

tjclpated in that development arc the amendment be dispensed with. Mr. prtOR. Let me say to my dis- 

proud ot that achievement Federal The PRESIDING OFFICER. With- tlngulshed friend from South I>akoU 

employees and rcOreet are under- out objection, it is so ordered. It Is my nnderstancttng at this point 

■tf a nrtahly anxious that tbetr retire- The ameodmest is as follows: there are Members on this side, or at 



ajnendment. 

L«t me tM.7 this for those who were 
not here: This amendment coven the 
drought in South Dakota diirtng 1986 



519 

Mr. Mica. Thank you, Mr. Bachus. 

Mr. MORAN. Mr. Chairman, could I just make a quick comment 
on that? 

Mr. Mica. Yes, you may. 

Mr. MORAN. Thank you. I just wanted to mention and emphasize 
the fact that this poUcy was requested by President Reagan's Sec- 
retary of the Treasury and enacted by President Reagan. In that 
legislation that he enacted, it guarantees that those funds will be 
fully reimbursed, and this is exactly what was envisioned by that 
legislation. So I just wanted to add that. 

Mr. Bachus. If I could respond to the gentleman from Virginia. 

Mr. Mica. To be fair to the other panelists, and rather than get 
into debate at this time, it is the custom of the subcommittee to 
go through the panel and then come back. 

Mr. Bachus. But I would love an opportunity to discuss that 
with you. There are several misconceptions about that, and that's 
one of them. I would be glad to go through the record with the gen- 
tleman and tell you that we could debate that. We might come to 
different disagreements, but I think we all agree the money 
shouldn't be used as it's being used. It's a retirement fund. 

Mr. Mica. Well, I allowed the ranking member to comment and 
you to respond. 

Mr. Bachus. And I'm not sure Federal employees care how it 
happened. 

Mr. Mica. We will come back to this later. It is a bone of conten- 
tion and it needs to be discussed, but at this point I am going to 
yield. We have all afternoon. There are no votes into dinner. 

We will now recognize Mr. Hoekstra, who chairs the Oversight 
and Investigations — wait a second. I apologize. It's alphabetical, 
and it's Mr. Calvert. 

Were you sworn in beforehand? 

Mr. Calvert. No problem. 

Mr. Mica. OK. Well, I want to be perfectly fair. 

Mr. Calvert, alphabetically, who chairs the Resources Commit- 
tee's Subcommittee on Energy and Mineral Resources, you are rec- 
ognized for 5 minutes. 

Mr. Calvert. Thank you, Mr. Chairman. Before I read my testi- 
mony, I have some additional documents I would like to submit for 
the record. 

Mr. Chairman, distinguished members of the subcommittee, 
thank you for the opportunity to testify today on the issue of which 
government services employees should be considered essential dur- 
ing a Federal Government shutdown. Like every Member of Con- 
gress, I have heard the gamut from my constituents, from the no- 
tion that all or nearly all Federal employees are not essential in 
their day-to-day lives to the view that most everyone is necessary 
to the Federal Government's operation. I think it's obvious the an- 
swer probably lies somewhere in between, but just where? 

Your hearings on this matter are useful to those who are truly 
interested in streamlining the government to a workable size, when 
it is up and running, let alone when a limitation on appropriated 
funds causes a so-called "shutdown." 

Let me add, Mr. Chairman, that this is not hollow rhetoric for 
me, for, in a sense, I've given at the office. By this I mean, as chair- 



520 

man of the Subcommittee on Energy and Mineral Resources of the 
Committee on Resources, I chair the authorizing panel for no less 
than six Federal bureaus or parts thereof: the U.S. Geological Sur- 
vey, the Bureau of Mines, the Bureau of Land Management, the 
Minerals Management Service, the Office of Surface Mining, and 
Geology and Minerals program areas of the U.S. Forest Service. 

However, as of January 8, 1996, the U.S. Bureau of Mines will 
cease to exist, albeit a small fraction of its former budget authority 
to transfer to the USGS and DOE. Mr. Chairman, I'm not crowing 
about this accomplishment. In reality, it's a manifestation of the 
appropriation process, but I'm realistic about prioritizing budget 
needs and understand the pressures of the Secretary of the Interior 
to choose not to defend this agency when faced with cuts of the 
magnitude required this fiscal year and for many years to come. So 
my subcommittee's turf has been impacted, as will many others as 
our reforms prevail. 

As to the issue of essential services during shutdown periods, I 
would like to simply highlight a few instances which I'm familiar 
with, from the perspective of the Energy and Mineral Resources 
Subcommittee jurisdiction. One of the agencies I mentioned earlier, 
the Minerals Management Service, or MMS, trails only the Inter- 
nal Revenue Service and possibly the U.S. Customs Service as a 
net revenue source for the Federal treasury. 

Why? Because the MMS is the collector of some $4 billion annu- 
ally in mineral royalties for Federal and Indian lands and the outer 
continental shelf, the OCS. It is my understanding the shutdown 
last month did not prevent the MMS from collecting royalties, 
much of which is done by electronic funds transfer today. 

But another job of MMS is to permit OCS drilling operations, 
and, of course, if such permitting is stalled, then so is the potential 
for discovery and production of oil and gas that is the source of 
those billions of annual revenues, not to mention the hundreds of 
thousands of dollars per day of idle rig costs for lessees awaiting 
a permit. 

I am aware of one instance involving a small independent pro- 
ducer who was delayed startup production for several days. While 
this may not be a significant loss to the Federal Government, be- 
cause the royalty interest will eventually be recovered, for a small 
businessman the cash-flow impact is a significant interruption of 
his ability to conduct business. 

I have asked Secretary Babbitt to provide me with copies of Inte- 
rior Department guidance for bureaus engaged in energy and min- 
eral resource activities so the subcommittee might review the ade- 
quacy of shutdown plans, especially from the health and safety 
viewpoint, but also from the environmental and Federal revenue 
generation angles. 

Let me add, Mr. Chairman, that I'm actively pursuing royalty 
fairness legislation to amend Federal mineral leasing laws to allow 
States to enter into agreements with the Secretary of the Interior 
to take on additional royalty collection duties with their borders 
and some "upstream" activities that the Bureau of Land Manage- 
ment, or BLM, currently does with respect to lease inspection and 
enforcement. 



521 

During the recent shutdown, an onshore oil and gas lessee in 
New Mexico encountered a situation concerning loss of drilling 
fluids downhole and possible contamination of freshwater aquifers 
while awaiting necessary approval of emergency measures. But no 
one was at home at the BLM office, no one. Ultimately, the lessee 
took the responsible action to prevent contamination but was left 
in a position of begging forgiveness rather than asking permission. 

In support of my bill as part of the Balanced Budget Act, a bipar- 
tisan coalition of 10 western Governors has written to President 
Clinton strongly urging that royalty fairness provisions, which 
would allow but not require broader participation by these States, 
should remain in a negotiated balanced budget. In other words, the 
agenda of the 104th Congress to empower the States is alive and 
well in Chairman Don Young's Committee on Resources, including 
within my subcommittee. 

Mr. Chairman, let me provide another example of the November 
shutdown effect upon issues in my subcommittee's purview. A min- 
ing company attempting to permit a proposed expansion of an ex- 
isting mining operation on public lands through the local BML of- 
fice in Battle Mountain, NV, has basically been told that the 4y2- 
day furlough of nonessential employees will mean a delay of an ad- 
ditional month or more for the review and sign-off on a third-party- 
prepared EIS. 

The plan of operations has been pending since October 1992, 
which a construction work force of 175 people and an increase of 
permanent mine employees of 75 to 100 wait and wait. But the 
shu