“We have 10 health care services that have about 88,000 employees and we expect to see as much as a 15 percent to 20 percent cut in our budget next year,” said Denise Wells, the deputy assistant secretary for human resources and chief human capital officer at the Department of Health and Human Services. “We are telling our operating divisions we can’t save 15 percent or 20 percent based on cuts to training and other short term things. We need to look program-by-program and figure it out. We just can’t trim around the edges.”
Wells, speaking during a panel discussion at the Senior Executive Association’s 2011 conference in Washington Thursday, said the agency will have to look at all its options to deal with such a potentially large decrease.
“HHS along with all federal agencies will consider a myriad of human capital planning options should significant budget cuts be realized in the out years,” Wells said. “While no decisions have been made to date some options may include hiring controls, voluntary early retirements and part-time employment opportunities.”
And HHS is not alone in considering its options. The Justice Department’s Bureau of Alcohol, Tobacco, Firearms and Explosives also will have to figure out how to make ends meet in light of a reduced budget. He said ATF could see as much as a $50 million shortfall in 2012.
Rick Holgate, ATF’s chief information officer, said ATF may have to shed 500 to 700 employees over the next few years because of a smaller budget. ATF already has a hiring freeze in place and Holgate said attrition alone will not reduce its workforce enough to match its budget.
“We may have to move non-core functions to other service providers,” he said. “We also will have to look at our real estate portfolio and other areas where there may be potential for efficiencies.”
ATF spends about $100 million a year on office space. Holgate said with the changing workforce, which is becoming more mobile, office space is a prime candidate for savings.
Holgate said buyouts or furloughs also are among the options his agency will have to consider.
“We may have to get back to the size of ATF in 2003 or 2005 so we will have to decide what areas we gained as an organization that we no longer will be able to do,” he said.
Audience members who work in federal agencies echoed Wells’ and Holgate’s comments during the panel. One audience member said their agency is in a similar situation as ATF with a reduced budget and rising personnel costs. The federal worker, who didn’t identify themself, said eventually something has to give. The audience member said it just makes sense that reducing personnel is the way many agencies will go to address insufficient budgets.
Wells said, for example, if HHS furloughed everyone in her office for one day, the agency could save $182,000. She said expanding that across HHS could mean greater savings.
“If your agency may need a furlough or reduction in force in 2013, you have to start planning now,” Wells said. “We are meeting with all 10 of our agencies to find a customized solution that works for them.”
She said during a recent meeting with the Centers for Disease Control and Prevention the idea of furloughs was a potential option if the agency felt it could cut programs no further.
Wells said agencies really should look for cuts today that will come to fruition in 2015 because many times at this stage that is how long it will take for the change to occur.
She said agencies should put programs in one of four categories:
High priority, high performing
High priority, low performing
Low priority, high performing
Low priority, low performing
She said by doing this, the agency starts thinking about where it can make cuts, or at least suggested cuts, to Congress.
Wells and others say they realize cutting certain programs may face push back on Capitol Hill but it’s a way of better controlling the process instead of waiting for Congress to tell the agency where to cut.
Holgate said ATF is looking at different areas around IT, including reducing even further the amount of paper it uses by making processes electronic.
He said the IT budget as a percentage of ATF’s total budget dropped by 1.5 percent over the last five years, but there are some areas still ripe to become more efficient.
“When we start to look at voluntary early retirements or separation incentives, we have to look at the functions that are critical to our mission and we can’t stand to lose to attrition,” he said.
One way HHS is finding more savings is by asking employees what they think.
Wells said through a new smart initiative, managers are asking employees for ideas and one office came back with suggestions that would equal $11 million in savings.
“Employees have to be part of the discussion,” she said. “They get upset if they feel like the cuts don’t make sense or the analysis doesn’t support the decisions.”