Squeeze Play

he appropriation for the Federal Atmospheric Research Service (FARS) was going to be late, as usual. Also, for the third straight year it would be lower than the year before. House Appropriations subcommittee staff already had served notice that FARS could expect "closer surveillance of unnecessarily wide-ranging programs" and further cuts in the future.

Even so, FARS Comptroller Elizabeth Cranford wasn't worried. The agency's senior management could deal with all of this, she believed. They'd already been through a trial by fire during last summer's budgeting exercise, arguing about priorities, yet eventually emerging with consensus. Most management team members felt the priorities they set would enable the agency to absorb the modest cut they expected from Congress.

Then a phone call from House Appropriations subcommittee staff director Mark Abbott shattered Cranford's sanguine outlook. Abbott's mes- sage was phrased as a question-but it amounted to another cut of $50 million in the agency's budget. "How do you propose to offset your $50 million contribution to the international atmospheric research effort the President is announcing today?" asked Abbott. "The White House wants it included in the current appropriation and we want to cooperate. But since we're locked into a total figure for the agency, we need some offsetting cuts. How soon can you give us your input?"

Cranford dimly remembered a brief reference to the international atmospheric negotiations during agency budget sessions. But there hadn't been any suggestion that FARS would have to devote current resources to the global pollution monitoring program. The talks had dragged on inconclusively for well over a year with nobody anticipating any agreement soon.

Still, Cranford didn't betray her astonishment. "I think we'll have it pretty much worked out by morning, Mark," she responded as casually as possible. "Is that timing satisfactory?"

"The sooner the better," urged Abbott. "Other than that, you know, the appropriation's ready to go to the full committee."

Cranford called FARS Director Bill Runnells, only to find he had been unexpectedly summoned to the White House for "some kind of program announcement," according to his secretary.

The secretary didn't know much more. But special assistant Sally Harris offered a little informed speculation. "The President apparently got some heat at last week's economic summit about not living up to his environmental image," Harris told Cranford. "So when he got back, he asked his science adviser if there were any initiatives ready for approval. There weren't, but this task force at least had a draft plan. So the President told them to come to an agreement and put a ballpark dollar estimate on it. It comes to $150 million, and our share is one-third. I guess political necessity is the mother of a lot of program acceleration."

Fifty million equals the cost of several of our most important projects, thought Cranford, not to mention the cost of some of the highly recommended projects we had to leave on the cutting room floor.

"How long have you known about this, Sally?" she asked.

"Nobody knew it was going to be announced until Bill got the call today," Harris replied. "Our people in Pollutant Monitoring had heard about the science adviser's hurry-up order, but I guess they didn't alert you. Anyway, this looks like a command performance with a presidential commitment and international ramifications, so we'll have to come up with the money. Anything I can do to help with the division directors, Elizabeth?"

Cranford shuddered at the prospect of going back to her colleagues for "emergency contributions." The agency's delicate budget balance had been achieved through long hours of debate. Now a costly initiative with more political than scientific merit threatened that balance.

She asked herself why FARS, with 1,100 employees and a budget now well under $1 billion, should have to kick in just as much money as its larger partners on the interagency task force. Couldn't the Office of Management and Budget or the White House spread the burden further? Couldn't FARS supporters in Congress be prevailed upon to deflect a threat to their favored projects by tapping other sources? Or was this just wishful thinking, to be discarded in favor of the real task-finding the cuts to offset the $50 million that seemed on its way out the door of FARS?

Gary Allison:
Spread the Pain
Gary Allison retired in 1993 as acting chief financial officer of NASA after 25 years in resources management with the agency. For the last three years, he has consulted independently with clients in the private sector.

bsorbing an additional $50 million program requirement within the current budget on short notice could be extremely complicated. Because of probable complications, a commitment to a deadline of less than 24 hours should never have been offered, and Cranford should seek an extension so that decisions can be thought out rationally.

She must first decide who should be involved in formulating a recommendation. At a minimum, the comptroller, the comptroller's analyst for Pollutant Monitoring, the director of Pollutant Monitoring, the FARS director and OMB's branch chief responsible for FARS should be included.

The comptroller's analyst and the director of Pollutant Monitoring should review the international program plan to determine how it fits with the current FARS program, identifying common goals and objectives, program funding profiles and any overlap. There is a possibility that, since pollution monitoring is usually a long-term effort, the $50 million may be identified as a multiyear requirement, reducing the annual funding requirement.

In the meantime, the comptroller should contact OMB to determine what latitude she might have in meeting the requirement and whether OMB will help. She should meet with the FARS director immediately on his return from the White House to compare notes and outline a plan.

I would identify programs already in the budget that meet the objectives of the international program and might be counted against the $50 million assessment. This search should not be confined to the FARS program, since several agencies do atmospheric research and the new program is a $150 million national commitment.

This approach might require some modification to current program objectives, but should be undertaken as quickly as possible. OMB could be of great help in this effort by identifying projects in other agencies that would fit within the new international program's objectives.

Concurrently, Cranford should get in touch with the staff of the full Appropriations Committee to appeal for additional funding. The subcommittee at this stage undoubtedly has fully distributed its allocation, but the full committee probably has some level of reserves and the staff and Members might be willing to add to the subcommittee's allocation.

After these efforts are complete, the unfunded requirement, if any, should be determined. There is very little choice from this point but to go back to the senior managers with a proposed distribution of the funding requirement.

The FARS director will have to agree and participate in the discussion, which is apt to be quite emotional, although the managers' resentment should be moderated by the evidence of advance analytical work to minimize the financial burden. One of the most useful tools at this point would be an agreed-to FARS program priority list. If a list doesn't exist, it would be a worthwhile initiative to undertake in the formulation of future budgets.

No matter how FARS absorbs the $50 million cut, the agency will need OMB's agreement and support. The solution should be followed with a formal transmission to Congress amending the President's budget. While this type of problem is not unusual, it is one of the most frustrating situations faced by an agency, its comptroller and senior managers of resources.

Albert J. Kliman:
It Pays To Communicate
Albert J. Kliman was budget officer for the Department of Housing and Urban Development for 15 years. He has worked for the last five years as a consultant in government management, organization and budgeting, and is a former president of the American Association for Budget and Program Analysis.

$50 million hit could be a minor irritating flea bite or a very serious problem, depending on the makeup of the budget. The availability of significant amounts of research grant money would help to absorb the blow.

In any event, I'd begin with some basic questions for OMB and agency legal counsel. Is there a budget amendment going up to Capitol Hill? Is the offset really necessary in our appropriation? Aren't there other lower priority places around government to take an offset? Can the $50 million really be charged to our accounts? Can it even be appropriated without special legislation or point-of-order language?

Then, of course, I'd get the guys from Pollutant Monitoring, who knew about this in advance, into my office ASAP to find out every possible detail. If I did not have the internal political clout to haul them in, I would get the director's special assistant, Sally Harris, to pull them together for me. I also would notify my immediate political superior of what was going on. If the answer to this problem would be likely to involve hard decisions in my superior's area, then that person, or a representative, would be in on the discussions.

A big part of what I need to know is what is the budget for the Pollutant Monitoring group and how does this special initiative complement or conflict with what they are doing? One immediate possibility for handling this matter is an instant revision in the budget for that particular component but that would depend on the answers to these questions as well as the predilections of the director.

Once I had all the facts in hand and whatever internal support I needed, I could go to the director with some options. The ideas could range from a recommendation to ask the President to direct an offset elsewhere to a series of specific offsets in the FARS budget.

Quite frankly, unless the director insisted, I would want to stay away from going back to the senior managers for contributions. They would probably be very angry and insist that someone be hung out to dry. My inclination-if the internal politics and the facts at hand allowed it-would be to make the head of Pollutant Monitoring suffer the most. There is nothing better to aid in facilitating future communications on serious budget issues, than to hold up for all to see the unfavorable results of a lack of proper communication.

I would certainly make use of any White House connections to work quietly for the reduction or complete elimination of this sudden new requirement.

Emerson Markham:
Have Options Ready
Emerson Markham is Financial Management Project director with the National Academy of Public Administration. A former budget director for both the Veterans Affairs Department and ACTION/Peace Corps, he holds national and local professional society offices and teaches a graduate course at George Washington University.

ranford probably has in mind some reductions that could be made to meet a portion of the deficit. However, the budget cut is probably too large to accommodate without actions which will be drastic for some in the agency.

I would review with my key staff the previous summer's budget sessions updated by the intervening events-there are likely to be several important ones in a one-year period. Then I would go to the director with a tentative list of alternative reductions in my hip pocket and then incorporate the director's advice into my options. The point of this interchange would be to decide how many of the agency senior managers would have to be involved in deciding what to cut from the budget.

In helping agency management reach a decision some of my major considerations would be:

• Can we keep long-range disruption to a minimum, using temporary hiring freezes rather than reductions in force, for example?
• Which reductions could be most easily restored via a subsequent supplemental appropriation (particularly if program postponements are possible)?
• Are there one or two fairly big programs which could take the brunt or will everyone have to be nibbled around the edges?
• Is this the time to get rid of a few "sacred cows?"
• Is there any portion of the present program which could logically be shifted into the new $150 million effort? Considering the larger program instead of the agency's $50 million share may make it easier to find logical contributions.
• Can we identify reductions for the Appropriations subcommittee in order to preserve maximum flexibility for the agency by minimizing the specific language they would have to use?

This kind of action is going to occur from time to time in any budget director's career. The best preparation is to have a budget staff that stays up-to-date on its programs and can help the director quickly put together options for agency management.

Of course early warning helps. In this case, the Pollutant Monitoring organization and the front office should be reminded in a nice way that early warning would have been helpful to give officials more time to think through and assemble options.

There are other options that I suspect would be less effective.

The agency could protest their share of the cut. Not only is this unlikely to work, but it will engender longer range resentment from the other actors, one of whom, at least, is probably connected with the White House.

The agency could propose to eliminate some favorites of individual Congress Members. That is also not likely to work. It's too obvious and has the big disadvantage of engendering Congressional opposition to the President's initiative.