Imagine the surprise of Interior Secretary Bruce Babbitt, who a few
months after taking office discovered that he was under orders from Congress
to maintain 23 positions in the Wilkes-Barre, Pennsylvania, field office
of his departments anthracite reclamation program. Or that his department
was required to spend $100,000 to train beagles in Hawaii to sniff out brown
tree snakes. Edward Derwinski, former secretary of Veteran Affairs, was once
summoned before the Texas congressional delegation to explain his plan to
eliminate 38 jobs in that state.
Action: Allow agencies to roll over 50 percent of what they do not spend
on internal operations during a fiscal year. As part of its 13 fiscal year
1995 appropriations bills, Congress should permanently allow agencies to
roll over 50 percent of unobligated year-end balances in all appropriations for
operations. It should allow agencies to use up to 2 percent of rolled-over
funds to finance bonuses for employees involved. This approach, which the
Defense Department and Forest Service have use successfully, would reward
employees for finding more productive ways to work. Moreover, it would
create incentives to save the taxpayers’ money
Shared savings incentives work. In 1989, the General Accounting Office
(GAO) discovered that the Veterans Administration had not recovered $223
million in health payments from third parties, such as insurers. Congress then
changed the rules, allowing the VA to hire more staff to keep up with the paperwork
and also to keep a portion of recovered third-patty payments for administrative
costs. VA recoveries soared from $24 million to $530 million.
If incentives to save are to be real, Congress and OMB will have to refrain
from automatically cutting agencies’ budgets by the amount they have saved
when the next budget is prepared. Policy decisions to cut spending are one
thing; automatic cuts to take back savings are quite another. They simply
confirm managers’ fears that they will be penalized for saving money. Agencies
chief financial officers should intervene in the budget process to ensure
that this does not happen.