REPORTB’Y’ THE Comptroller General OF THE UNITEDSTATES ) “’ r ,)S,, 8f’l! ,’ u Rece”+ Gover”m~~fmWibe j,“<,, 3 INN’ ” *I <1’ ; ., tiring Prove Ineffective In Managing Federal Employment ‘: ‘8, I ‘1’ ‘; , “,: I “‘;r : ‘f[bezes ,“) :. REIE&/yJ The principal stated objective of Governmentwide hiring freezes is to reduce the size and cost of the Federal work force. However, emptoyment reductions during the last four freezes were small and OMB did not determine whether the freezes resulted in a net savings. GAO found cases in some agencies where the hiring freezes increased some operating costs and decreased efficiency and effectiveness. This report was requested by the Chairwoman, Subcommittee on Human Resources, House Committee on Post Office and Civil Service. 118045 II FPCD-82-21 MARCH lo,1982 I 1 Request for copies of GAO reports should be sent to: U.S. General Accounting Office Document Handling and Information Services Facility P.O. Box 6015 Gaithersburg, Md. 20760 Telephone (202) 275-6241 The first five copies of individual reports are free of charge. Additional copies of bound Additional audit reports are $3.25 each. copies of unbound report (i.e., letter reports) and most other publications are $1.00 each. There will be a 25% discount on all orders for 100 or more copies mailed to a single address. Sales orders must be prepaid on a cash, check, or money order basis. Check should be made out to the “Superintendent of Documents”. I I COMPTROLLER GENERAL WABHINOTON OF THE UNII-ED DC. STATES Ihlu(I B-206278 The Honorable Geraldine Chairwoman, Subcommittee Resources Committee on Post Office A. Ferraro on Human and Civil Service House of Representatives Dear Madam Chairwoman% we have In response to your February 19, 19811 letter, reviewed the effects of across-the-board hiring freezes on Federal employment levels and spending and on Federal agenability to carry out their programs. cies' we did not obtain agency As requested by your office, comments on this report. Also, as arranged with your office, unless you publicly announce this report's contents earlier, we plan no further distribution of this report until 30 days We will then send copies to interested from its issue date. parties and make copies available to others upon request. Sincerely yours8 Comptroller General of the United States fl C: 0 n t e n t s i 1 lNTHObUCl10L~ Four hiring jcreezes imposed since March 1977 Objectives, scope, and methodology GOVLZ.RNMENT-~ID~;tlIRING FRJcE;ZL6$fiAVE tibLN INlil?'~ l!#C~lVIi Carter freezes diu not substantially reduce employment Some agencies compensated for freezes by 'hiring other types of employees Some agencies compensated ror freezes by usincj contractors or overtime Some agencies hired more employees than allowed Reagan freeze unnecessary to reduce employment OMI?,exertea little control over hiring rreezes Olr'M issued inaccurate and incomplete information on employment chanyes 3 P'RE6ZES IJlSRUPT AGliNCY OPERATIONS Liiring rreezes decreased oversight of &ederal programs iliring f:reezes resulted in lost revenue and uncollected debts Ldring freezes resulted in hidden IdRING C!OStLS hiring freezes hindered agency missions and programs January 1981 breeze violated public law No evidence that freezes adversely akfected afrrirmative employment or experimental personnel programs A better L$udget/work torte planning: alternative C(JNCLUSION S 3 t> 5 7 8 9 9 10 13 14 14 lb 18 19 21 22 23 25 APPENDIX I II Detailed provisions examined by GAO OPM personnel of hiring 26 programs surveyed ABBREVIATIONS Accounting freezes GAO General Offke OMB Office of Management and Budget OPM Office of Personnel VA Veterans' Management Administration by GAO 29 RECENT GOVERNMENT-WIDEHIRING FREEZES PROVE INEFFECTIVE IN MANAGING FEDERAL EMPLOYMENT REPORT RY THE COt~DTRC)LLEKGENERAL OF THE UNITED STATES DIGEST I_ -- _- - - Government-wide hiring freezes have not been an effective means of controlling Federal While the Government-wide hiring employment. freezes reviewed by the GAO provided an illusion of control on Federal employment. and they had little effect on Federal spending, and it is not known whether employment levels, Because they ignored indithey saved money. vidual agencies' missions, workload, and staffing requirements, these freezes disrupted agency operations, and in some cases, increased costs to the Government. GAO recognizes that circumstances, such as budget constraints, may require individual agencies to slow or stop hiring. GAO believes employment reductions should be targeted where they can best. be absorbed rather than using acrossthe-boar'?. personnel constraints that do not consider individual agencies' needs. Improved work force planning and use of the budget as a control on employment, rather than arbitrary across-the-board hiring freezes, is a more effective way to insure that the level of personnel resources is consistent with program requirements. Since March 1977, four across-the-board hirinq freezes have been imposed on executive branch employment. The freezes were applied to all agencies, regardless of their workload and work force requirements. The principal stated oh:jective of these freezes was to reduce the size and cost of the Federal work force. (See p. 1.) Publicity surrounding the hiring freezes has helped create an impression that they substantiaLLy reduce the size and cost of Government. FPCD-82-21 MARCH lo,1982 TfearSheet i However, the recent Government-wide hiring freezes have been ineffective. (See pp. 5 to 9.) GAO found that --the freezes employment, did not substantially reduce -=-some agencies compensated for the by hiring part-time and temporary --some agencies compensated for using contractors OS overtime, --some agencies allowed. hired freezes employees, freezes and more employees by than The Office of Management and Budget (OMB) responsible for administering each of freezes including granting the hiring exemptions from the hiring restrictions. little control over However, OMB exerted the hiring freezes. (See pp. 10 to 12.) GAO found that OMB was --did not freezes determine resulted not identify the retroactive Reagan's freeze, --did --received about --relied freeze whether or not the hiring in a net savings, the costs associated provision of President limited information hiring freeze effects largely on agencies guidelines, and --allowed some exemptions tions based on arbitrary tion goals. with from agencies on employment, to comply from hiring employment with restricreduc- GAO found that OPM issued inaccurate or incomplete information on employment changes during two of the Carter Administration hirstated reductions As a result, ing freezes. in full-time employment in permanent posi(See p. 13.) tions were exaggerated. ii LSeC?iUSe agencies workload across-the-board freezes appLied to regardless of their mission and GAO found that the freezes --caused decreased oversight of Federal programs by making it. more difficult for the Inspector General offices to do their jobs: --caused lost revenue and uncollected debts: --increased the cost of Government operations by causing inefficient staff utilization and clerical shortages, and by damaging recruiting efforts: and -+isrupted tions. some agency programs (See PP- 14 to 21.) and opera- A practical and effective alternative to hiring freezes exists in the budget process. GAO has issued several reports advocating use of the budget to control the size and cost of the Federal work force, GAO has also recomincLuding contractors. mended that OMB and the Office of Personnel Management take actions to improve agencies' methods for determining work force requirement%. To date, GAO recommendations have not been carried out. (See p. 23.) GAO reviewed the effects of these hiring freezes at the request of the Chairwoman, Subcommittee on Ruman Resources, Xouse Committee on Post Office and Civil Service. WhiLe the scope of the review covered the four across-the-board freezes itnposed since MarcLl L977, GAO concentrated primarily on the last freeze imposed during President Carter's administration because of its Longer 13uration and the availability of records. This freeze was in effect from March 14, 1900, through January 20, 1981. (See p. 3.) At the request of the Chairwoman, GAO did not follow its normal practice of obtaining agency comments on the report. Tear .-- Sheet iii CHAPTER 1 --.-INTRODUCTION In response to a request by the Chairwoman, Subcommittee on and Civil Service, I~lrrnan E~csources, House Committee on Post Office we reviewed the effects of four Government-wide hiring freezes Three of the imposed on the Federal work force since March 1977. freezes were imposed by President Carter and the fourth by Presirlent Rcacjan q The stated purposes of the across-the-board hiring or to freezes were to reduce Federal employment and spending, We were requested fnnniigc t.he Government more efficiently or both. objectives and to tlctermi.ne whether the freezes achieved their savings attributable whcthf~?r the Administration could identify to the freezes. F01Jti HIRING FREEZES IMPOSED SINCE ".-l_.l_l"-"-.ll-MARCH 1.977 President Carter‘s first hiring freeze was placed on executive branch departments and agencies on March 3, 1977, and The stated purpose of the freeze Lristed until June 17, 1977. was to increase the Administration's flexibility to meet revised porscnnel ceilings. Appointments to full-time permanent positritrns l/ were restricted to 75 percent of the vacancies in those Thus, agencies positions which occurred after February 28, 1977. could replace three of every four employees who left full-time Although the hiring restriction did not permanent positions. apply to part-time or full-time temporary positions, the Office of Management and Budget (OMB) stated that persons would not be hired on a part-time or temporary basis as a substitute for ful.L-t.i.me permanent employees. OMB guidelines also prohibited contracting outside the Government to alleviate the effect of t-.hc freeze. The second hiring freeze imposed by President Carter lasted October 25 , 1978, through February 1979. 2/ The stated ~ objectives were to manage the Government more efficiently, to from t'h.is report, full-time employment irrcLu(1es onLy those covered by Office personnel ceilings. The fiscal year cei. Lirrg employment was 31,234. Most i.n youth employment programs and in tunity Program. ~ J/Jr-k X~/A:Icncies could dud not exceed in permanent positions of Management and Budget 1981 average for nonof these positions are the Worker Trainee Oppor- lift the freeze in February 1979 provided revised OMB personnel ceilings. 1 they limit growth in the Federal work force, and to reduce total Federal to the level that existed on September 30, 1977, as required by section 311 of the Civil Service Reform Act of 1978. Appointmenta to full-time permanent positions were limited to 50 percent of the vacancies in those positions occurring on or Part-time and temporary employees were after October 25, 1978. OMB guidelines cautioned agencies not excluded from the freeze. to use temporary employees as a substitute for full-time permanent employees or to use contracting to circumvent the limitation. employment President Carter's third hiring freeze lasted from March 14, 1980, until the Reagan administration took office in January 1981. The stated objective of the limitation was to reduce fiscal year 1.981 spending by reducing the number of Federal employees and to Appointments help produce a balanced budget in fiscal year 1981. to full-time permanent positions were limited to 50 percent of the vacancies in those positions which occurred after February 29, and temporary employ1980 v The freeze did not apply to part-time QMB guidelines discouraged contracting to alleviate freeze ees. effects and using temporary employees as a substitute for fulltime permanent employees. President Reagan froze hiring in executive branch departments and agencies from January 20 until mid-March 1981. &/ The stated objective was to reduce the overall size of the Federal Unlike limitations civilian work force as quickly as possible. this freeze applied to all during the previous administration, It allowed hiring seasonal categories of Federal employees. employees consistent with historical hiring patterns and hiring on a limited basis to help ease the transition to a new adminisContracting outside the Government was not to be used tration. to circumvent the freeze. The Reagan freeze was retroactive to November 5, 1980. Applicants who were given employment commitments after that date, but had not actually entered on duty before January 20, 1981, A process and criteria were established to could not be hired. accommodate individuals for whom the retroactive provision caused Most of these cases were not resolved serious economic hardship. Generally, by the time the freeze was lifted in March 1981. agencies were left to resolve these cases after the revised fiscal year 1981 employment ceilings had been established. l./letters _or lift revised sent in March 1981 authorized agencies provided that agencies did the freeze, personnel ceilings. 2 to moderate not exceed All four hiring freezes had standard exemptions such as posiThe freezes also permitted tions involving safety of human life. ?lppeals to OMB for exemptions when the agency head believed circumstances warranted. Appendix I provides details on the scope of t:lnc freezes and the exemptions permitted. C>r.3JECTIVES ""l"_l"-""lll-.---~-* SCOPE, AND METHODOLOGY The Chairwoman, Subcommittee on Human Resources, House Committee on Post Office and Civil Service, asked us to review the three Government-wide hiring freezes imposed by President Carter to determine whether the freezes actually saved money. impact on contracting She also asked us to examine the freezes' for services, delivery of service to the public, use of overtime, use of temporary and part-time employees, and representation of women and minorities in the Federal work force. We were to address the same issues relative to President Reagan's hiring freeze and to determine (1) whether the Administration ccu1.d identify the costs related to making the freeze retroactive to November 5, 1980, (2) the eff ects of hiring freezes on such as the Part-Time Direct Hire Project, personnel programs, and (3) the legality of applying the Reagan hiring freeze to VeteraIlS ' Administration medical care positions in light of the Veterans ' f1ealth Programs Extension and Improvement Act of 1979 (Public Law 96-151). The Chairwoman also asked us to provide information on staffing levels at the Immigration and Naturalization Service, which we did in a separate report. _1/ We interviewed personnel, budget, ;~tl(l reviewed records related to hiring ilgcncies in Washington, D.C.: --11epartment of Agriculture --Department of Energy ---Department of Labor --Department of the Treasury --Veterans' l/“INS "._ Administration --T)epartment of the --Department of Transportation Staffing and/or program freezes at the Levels" Interior (FPCD-81-67, 3 Aug. 20, 1981). officials, following --Small --National --Nuclear BueLnesa Administration Credit Regulatory Union Administration Commission We reviewed and analyzed OMB instructions and processes for carrying cut end monitoring the four across-the-board freezes and OMB records related to the freezes. We also interviewed OMB officials concerning management of, and costs and savings associated with the freezes. At the Office of Personnel Management (OPM), we reviewed and analyzed Federal employment statistics and interviewed officials to determine the changes in Federal employment during the hiring We also examined records and interviewed OPM officials freezes. concerning the Part-Time Direct Hire Project and 11 other personnel programs. of these projects.) (See app. II for a listing We reviewed prior GAO and Congressional Research Service reports dealing with personnel ceilings, contracting out, and work force planning. While the scope of our work covered the four across-theboard freezes since March 1977, we concentrated primarily on the freeze from March 14, 1980, through January 20, 1981, because of its longer duration and the availability of records. We performed this review in accordance with GAO's current "Standards for Audit of Governmental Organizations, Programs, Activities, and Functions." 12ublici.ty tiuurrounuiny 'hiring treezes has helped create an iirljiressi.cri that they substantially reduce the size and cost of Lr>VCr:1:IImC!tAt a Iiowever, OPM data shows t'hat employment reductions t~r:~,~c~rt:~~:d during the freezes were small because the freezes were (,1i t. ht.?1: siLort-lived or allowed 'hiring to fill some vacancies. The Carter administration freezes applied only to full-time ~,jt~~t~a~ie~~templU:yment A/ and some agencies used temporary and jcrrt..-time employees to compensate for the loss. Some agencies liltic v:i,oI.ated the last Carter hiring freeze by 'hiring more em;ti Lo y t2i.!s than they were allowed. The Reagan hiring freeze lasted c~~r.1~7 weeks alid applied to all. categories of Federal empl.oyees m 'I'/it~ resulting employment reduction would have occurred anyway k~r:cause of subsequent personnel ceiling reauctions. We found f.I~iit. (.iMU has riot attempted to determine (1) whether the freezes ;LC~.~,II ly s;;lved money or (2) the cost associated with the retract ive lirovi.u,ic:,n of t%le Reagan freeze. l’he freezes also increased :.i(,imt: oi~(:!r'ii t,i ~19 costs . We also found instances where 0PM issued I t~~i~:~:uricit.eor i.ncomplete information on hiring freeze effects. As il 1esu.It,, tame decreases in k'ederal employment were overstated. 'I'Iie Carter niring freezes were designed to reduce the numI.)(:r 0 f fr.u.11 -time permanent employees . As the following OPM data employment reductions for these positions were k;hows, ~IoweveK, !:;tllci.~1.. Mr~r.euver, t?rtlpL'oyr~~entreductions for the first freeze After the freeze was Lifted in June 1977, iririrlg i.rlr:rt?ased so that by November, full-time employment in ~)c!rmar~c~lt positions was only 2,965 less than when the freeze I ir.!(.JEi II IV Lvtxti UIA 1 y t emj”mrary l employment are I J ‘l’h1rcJuL)hout” Lhi. s report, statistics on Federal k,ilut"!ci orl (iI'M c.l.3c.a. 0PM included appointments of any full-time wmpensate for the loss of more than 50 full-time permanent employ4:~s r1urj.ng the March 1980 hiring freeze. Agriculture estimated t".llat the cost of the increased overtime use was about $15,000 clnrj stilted that the increase was directly attributable to the freeze. We also found examples where the Veterans' Administration (VA) used overtime to maintain operations during the March 1980 VA could not identify what nntl January 1981 hiring limitations. I,)orti.on of the overtime used was attributable to the hiring limi.tations. VA medical centers in New Jersey, Wisconsin, and Indiana were unable to fill police officer, telephone operator, and boiler plant operator vacancies during the January 1981 hiring freeze. VA officials said that overtime was being used to Apparmirintain operations in place of filling the vacancies. ent Ly , some of these positions would be exempt under standard freeze exemptions because they involve human safety. However, on ll'ebruary 13, 1981, OMB stated that a blanket hiring exemption (;ou1.d not be applied to VA administrative support positions and that exemption requests would be considered on a hospital-byhospi ta1 basis. AGE:NCIES HIRED MORE EMPLOYEES -.SOME __ -.-._--.-‘I‘I:lAN AI.,LOWED Even though the third Carter freeze limited agencies to filli rig only 50 percent of their vacancies, officials in two agencies Ilrcknowlc;rlged that they had violated the limitation and hired arid i. ti.onnl employees. From September through December 1980--the 1;rt;t. months of the Carter hiring freeze--total full-time employment in permanent positions increased by about 15,000. OMB offici(-ils acknowledged that some of the increase occurred because severa 1. agencies violated guidelines in the latter months of the Ertrlezc * ~ "" I21MJAN l-_ll_l_ll -. .._1~'REF:%E: .."------ UNNECESSARY 'I'0 tilKI)IJCE EMPLOYMENT I)uring President Reagan's hiring freeze, full-time employrnc:!nt in permanent positions decreased 2,358, or 0.1 percent. ~)t:her employment subject to personnel ceilings decreased 4,613, 4x- 1... G percent. l/ While the stated intent of the freeze was to l/'l'hese statistics were derived from OPM data as of January 31, .-. 138 1 * and March 31, 1981. The hiring freeze lasted from January 20, 1981, until allowance letters were mailed to agenData is not available for the precise cies in mid-March. freeze period. 9 quickly (about reduce the number of ,F'ederal employees, it was too short 7 weeks) to have a major effect on Federal employment. Even If a freeze had not been imposed, an employment reduction would have occurred anyway because of fiscal year 1981 personnel ceiling reductions announced in March 1981. According to OPM data, total Federal employment decreased by 43,454 between January and September 1981. System Branch stated the Reagan The Chief of OMB's Resources freeze was implemented, in part, to minimize the number of reductions-in-force which subsequently resulted from reduced perthe extent sonnel ceilings. However, they could not demonstrate to which reductions-in-force were avoided because of the hiring freeze. OMB EXERTED LITTLE HIRING FREEZES CONTROL OVER OMB was responsible for administering each of the hiring including granting exemptions from the freezes we examined, We found that OMB hiring restrictions. --did not resulted determine whether in a net savings, --did not identify tive provision limited information effects on employment, --relied lines, largely and did savinqs on agencies the hiring associated Reagan's --received freeze --allowed arbitrary OMB the costs of President or not with the freeze, from agencies to comply freezes with about freeze exemptions from hiring restrictions employment reduction goals. some not determine of freezes retroachiring guidebased on cost OMB did not attempt to identify either gross savings in salaries and benefits or offsetting costs, such as hiring other than full-time permanent employees or using contractors or overfreezes time. Thus, it is unknown whether or not the hiring Additionally, OMB has not actually reduced FederaL spendinq. determined the cost associlxtcd with the retroactive provision of the Reagan hiring freeze. OMB budget examiners for individual agencies were not responsible for specific freeze monitoring activities. They received preliminary employment statistics from OPM 4 to 6 weeks Revised statisafter t'he monthly employment changes occurred. ti.cs arrived 8 to 10 weeks after the end of the reporting period. These statistics were sent to the budget examiners to do with as they he.Lieved appropriate. the data was inadeFurthermore, quate for the budget examiners to determine whether agencies complied with the Carter freezes because they only showed acThe cessions and separations for total Federal employment. statistics di.d not show separate data for full-time permanent employees, The budget exami.ners itori.ng activitieer du.ring ministered the freeze did were being carried ou't by were not responsible for specific monhiring freezes. OMB officials who adnot know what monitoring activities budget examiners. CMB relied on ~ a=cies to comply -.-..-~""~---~----.l with hlrlng frecze'F&?rines "-___"---.---,- ~.-."--C"_I.--"-- -l_"l_ OMI'S's approach in all four freezes good faith to abide by freeze provisions. it was not their rale to enforce freeze was to rely on agencies' OMB officials said guidelines. As noted previously, we found instances where agencies compensated for t'he hiring freezes by hiring personnel no,t subject to the frc?eze, using contractors and overtime, and in some cases, hiring more employees than they were allowed. These were all v.io'lat..ions of the basic intent of the freezes. OMB officials do rktzt know to what extent these actions occurred. While CM15records concerning exemption decisions were not camp .Iet: e , we found that OMB made some exemption decisions on the birsiw of ark~itrary employment reduction goals, rather than consistent assessments of need. on systematic:, For example, the Secretary OF Ile;rlth, Education, and Welfare (now Health and iluman Services) asked OMB for an exemption from the March 1977 hiring freeze to fi.l.1. 75 percent of certain vacancies which cxistcd before the effective date of the freeze (February 28, 1 (37 7 ) ) a s we 1 1. CTf3 filling vacancies as allowed by the freeze. The Secret.ary would have applied the 3 out of 4 rule to about 1. r 401) vacanci.es existing before the freeze in 1.1 1 --activities which ficiaries, e.g., Health Service: pertained directly the patient care to the health of beneactivities of the Public --positions related to the management and operation grams designed to prevent, detect, and prosecute and abuse; of profraud --programs where the Department was under court or congressional mandate to process workloads, for example, civil rights and litigation positions in the Office of the General Counsel; and --positions related to activities of presidential such as of welfare reform development, health insurance proposals. ment, and health priority, cost contain- In a letter to the Secretary, the OMR Director denied the request stating only that the exemption II* * * would jeopardize reaching frame." the President's goals within his time In another case, OPM requested emption from the March 1980 hiring --Veterans' veterans, Readjustment Appointments --appointment of severely tally retarded persons, --appointment --the temporary of a blanket limitation physically 30 percent assignment executive for for pool for senior ex- Vietnam-era handicapped or more disabled branch and men- veterans, and executives. OMB denied the exemption request. Regarding the first three prostated, in part, that while he shared grams, the OMB Director OPM's concern for veterans, the handicapped, and mentally retarded granting a blanket exemption would 'I* * * severely hamper persons, our efforts to achieve the President's target of 20,000 fewer employees by the end of this fiscal year * * *." In another case, OMB granted an exemption from the third Carter hiring freeze to a Department of the Treasury program whose employment costs, according to the Treasury, were financed thus having no effect on the U.S. budget. by a foreign government, as discussed on page 20 of this report, OMB made no Conversely, attempt to exclude other agencies whose personnel costs were not financed by appropriated funds. In other requiring the year personnel freeze exemptions while cases, OMB granted hiring agencies to make reductions in agencies' end-ofceilings in order to insure employment decreases. 12 OPM ISSUED INACCURATE AND INCOMPLETE INFORMATION ON EMPLOYMENTCHANGES OPM issued inaccurate or incomplete information on employment changes during two of the Carter Administration hiring limitations. Stated reductions in full-time employment in permanent positions were exaggerated. a summary of the effects of the In January 1981, OPM released three Carter freezes. The summary showed a reduction of 16,800 full-time employees in permanent positions during the first freeze. However, data provided by the Department of Defense shows that 7,099 of that reduction was caused by the annual summer furlough of overseas teachers in Defense's Office of Dependent Schools. (OPM deleted furloughed teachers from the reduction which occurred during the third Carter freeze.) At the outset of the third hiring freeze, President Carter's goal was to reduce full-time permanent employment by 20,000 between February and October 1980. OPM publicly issued monthly freeze status reports covering the period from April through August 1980. It reported that full-time employment in permanent positions had been reduced by 23,775 as of August 31, 1980, reaching the President's goal 1 month early. OPM stopped these status reports after issuing the report for August 1980. Had OPM issued a report for September, it would have shown that full-time employment in permanent positions had increased by 7,901 since August, missing the President's goal by 4,126. Full-time increase through of this increase time permanent show 1,873,773 December L980-earlier. employment December occurred employees full-time only 8,874 in permanent positions continued to 1980. OMB officials stated that some because some agencies hired more fullthan they were allowed. OPM statistics employees in permanent positions as of less than when the freeze began 10 months 13 , CHAPTER..-3 HIRING FREEZES DISRUPT AGENCY OPERATIONS Hiring freezes are directed primarily toward reducing employProgram and mission requirements are considered ment levels. only in the exemption process. Because across-the-board freezes applied to agencies regardless of their mission and workload, we found instances where the freezes --caused decreased --produced costs: lost --impeded agency --in one instance, oversight; revenue, uncollected missions debts, and programs; violated and hidden and law. We found no evidence that the freezes affected affirmative employment or experimental personnel programs. We have issued reports l/ advocating use of the budget process instead of arbitrary personnel constraints to control the size and cost of the including contractors. Federal work force, An agency can neither hire workers nor contract out unless it has the funds. We have also recommended OMB and OPM to take actions to improve agencies' methods for determining work force requirements. This would be a better means for managing the Federal work force than using arbitrary personnel constraints, such as hiring freezes. To have not been carried out. date, our recommendations HIRING FREEZES DECREASED OVERSIGHT OF FEDERAL PROGRAMS Government-wide hiring freezes have helped reduce oversight of Federal programs and expenditures by making it more difficult for Inspector General offices to do their jobs. Inspectors General lead and coordinate efforts to (1) promote economy and efficiency in managing agency programs and operations, (2) prevent and detect fraud and abuse, and (3) keep the agency head and Congress fully informed of problems in program management and the necessity for and progress of corrective actions. L/"Personnel Ceilings --A Barrier to Effective Manpower Management" (FPCD-76-88, June 2, 1977). "Federal Work Force Planning: Time For Renewed Emphasis" (FPCD-81-4, Dec. 30, 1980). "Improving the Credibility and Management of the Federal Work Force Through Better Planning and Budgetary Controls" (FPCD-8154, July 17, 1981). 14 have previously repcrted :l/ that. hiring ~~e~~~~ helped Inspector General offices fr"$m reaching authorized staEfing 1@3VEtlS” For example, a s clf s e p 'km emk>0 r 3 u , .1980, the Environmental Protection Agency was authorized 1.07 auditors and had 87, the Small Business Administration was authorized 62 auditors and had 53, and the Department of Commerce was authorized 89 auditors and had 81. We ksep Further evidence shows that hiring freezes maks it difficult for Inspector General offices to carry out their responsibilities. The Community Services Administration Inspector General's September 1980 report to the Congress stated that, partly because of the hiring freeze then in effect, few resources were devoted to SC3that: requirements for investhe systemic causes of problems, tigations and mand'ated audits could be met. The third Carter hiring freeze held fiscal year 1980 staffing in the Department of Labor's Office of Inspector General to 80 percent of the authorized level. The Actinq Inspector General reported to the Congress that the freeze restricted both audit and investigative activities. According to the Acting Inspector and 'Prevention could not General, the Office of Loss Analysis be adequately staffed. This Office was established to identify fundamental weaknesses in program operations, po"Licies, and management which are conducive to waste, fraudr and abuse, and then to work with Department managers to overcome those weaknesses. The Department of Transportation 1980 report to the Congress identified limitation and travel fund limitations inhibiting full implementation of the of 1978. Specifically, --the scope of audit duced, --the quality --reports --professional l/"Examination of ,specter General" and investigative and timeliness were delayed, staff Inspector General's September the last Carter hiring as the principal factors .Inspector General Act of activities investigations was resuffered, and performed clerical functions. the Effectiveness of Statutory (AYMD-81-94, Aug. 2,l., l.981). 15 Offices of In- 1 hxecutive branch departments and agencies which produce rt;zvetiue or collect debts were subject to all four Governmentwide kliring freezes. ?his worked to offset any possible savings prociucsd by the freezes. The examples Lre found illustrate how iirbitrary across-the-board hiring freezes can work against the objective of saving money. Flillions -----m-p in tax revenue not collected An Internal Revenue Service estimate shows that both the tilird Carter hiring freeze and the Reagan freeze caused a loss ot 445 revenue agent and tax auditor staff-years. On the basis of fiscal Lear 1981 revenue yields, the Service indicates that $234 million in additional tax due the Government would have been identified. lhe Service indicated that about 95 percent ($222 million) of this amount would have eventually been collected if the agents and auditors had been hired. This ricjure sic.nificantly exceeds t'he estimated salary and benefit savings of $10.9 million. The estimated loss represents the effect of hiring restrictions on the Service from October 1980 through lviarch 1981, and is based on the difference between revised fiscal year 1981 personnel ot;ilings established by the Reagan Administration and the staffThe ;Service told us that sufficient money years actually used. was available to fund the 445 staff-years and that the staff-years would have been used had there been no hiring freezes. Ylhe estimate does not include revenue loss w'hich may have occurred between March and September 1980 as a result of the third Carter freeze. Debt collection ---_ activities hampered Understaffing in debt collection activities, which is a prevalent problem throughout the Government, has been compounded by hiring freezes. The Debt Collection Project, sponsored by the President's Management Improvement Council, concluded in January 113Ul that most debt collection activities in the Federal Government lack the staff and other resources to adequately service and collect debts owed the Government. In some cases, the Project ~1ote~i that the executive "branch denied agency requests for additional collection resources, in part, because of efforts to reduce Federal employment levels. tire Iliring Farmers freezes have exacerbated debt collection problems home Administration, Small business Administration, 16 in and VA. Agency officials stated that hiring freezes an8 other f&CtOrS, particularly economic conditions, contributed to subprtmtinl increases in laan delinquencieel However, they were unable ta determine how much of the increaee wan attributable to ‘the hiring freezes. Lam delinquencies affected Farmers Home Administration The March 1980 hiring limitation exacerbated longstanding internal control problems in the Department of Agriculture's Farmers Home Administration. According to agency officials, the March 1.9t30 limitation aggravated existing staff shortages and further reduced the agency's ability to service loans. Between February and September 1980, the Farmers Home Administration was authorized 8,364 full-time permanent positions and averaged 158 vacancies. Administration officials stated that other factors, such as increased loanmaking and depressed economic conditions, as well as the hiring limitation, contributed to a significant increase in loan delinquencies between March and December 1980. Officials said they could not determine how much of the increase was attributable to the hiring freeze. Loan collections ?%a11 Business slowed at Administration Officials from the Small Business Administration's Office of Portfolio Management told us that insufficient allocation of resources has contributed to Loan servicing and collection problems. We were told that hiring freezes perpetuated and aggravated existing resource deficiencies. According to Small Business Administration data, the Office lost 59 of 865 authorized full-time permanent employees in its field offices during the third Carter freeze from February through December 1980. Officials stated that this hiring freeze hit clerical staff the hardest, slowing loan servicing and collection actions and causing these actions to be undocumented. However, they were unable to determine the effect of the freeze on loan delinquencies and liquidations, Debt collection activities delayed at VA The VA's debt collection efforts were also hampered by hiring limitations. funds to In December 1980, the Congress authorized support approximately 300 positions for a new VA debt collection project. According OMB reduced the number to 150 positions. to VA, the freezes delayed hiring and slowed the initial debt about $44,000 in January collection. For example, the VA collected total 1981. As added staff came on board, the monthly collection rose to $110,000 in March and continued to rise thereafter. 17 e IIJRING FREEZES RESULTED _f-l"-l------mp IN HIDDEN COSTS m",,mm"*-l""--I-_*--___Arbitrary freezes can also increase the cost of Government by producing imbalances between clerical staff and prufessionals, impeding recruiting efforts, and wasting recruiting resources. operations Niring freezes caused ZZf!iZ~e~taff utiLization ---------7and clerical shortages --1-1 - Several agency officials told us that hiring freezes had produced shortages of clerical personnel and imbalances between secretarial/clerical staff and professionals. The imbalances occur because attrition rates are usually higher among clerical staff and/or because managers hire a greater proportion of high-graded staff during partial hiring freezes. We have previously reported - I/ that staffing imbalances can result in --higher --backlogs costs for in both accomplishing clerical work, and professional --reduced quality of work, --reduced morale. mission and program duties, and performance and decreased State Directors in the Department of Agriculture's Farmers Administration reported that numerous clerical shortages For example, the resulted from the March 1980 hiring limitation. Georgia State Director said that a shortage of about 40 clerical workers caused untimely processing of loans and applications and backlogs of filing, reports, and other administrative matters. Other State Directors reported clerical shortages which caused similar problems. Home In one VA medical center, according to the Center Director, the loss of clerical positions during the second Carter freeze seriously affected the logistical support for direct patient care. More specifically, the loss of clerical positions resulted in --clinical professional tine adminis'trative employees functions: J./"Better Use Can Be Made of Federal " (~;'I"c:D-81-14, ~ec. 31, 1980). 18 becoming involved Professional Staff" in rou- --delays and --increased patient in moving medical waiting needs. time information, for scheduling testlj, inpatient and supplies: and out- As previously mentioned, the Department of Transportation Inspector General reported that the Carter Administration's last hiring freeze caused professional staff to perform clerical duties. Hiring freezes damaged recruiting efforts The retroactive provision of President Reagan's hiring freeze cost the Government money when it was not able to honor employment commitments. Revenue Service does not For example, the Internal have precise figures on costs-per-hire, but it estimates that recruiting costs could be as high as $3,500 for each person hired. According to the Service, the retroactive provision of the Reagan hiring freeze prevented it from honoring 460 employment commitments to candidates. Many of these candidates were hired after the freeze was lifted, but recruiting officials believe at least one-third of the candidates were never hired, resulting in a financial loss to the Government. I One agency official we talked to also believed that the integrity of his recruiting efforts was upset by the retroactive provision. Other agency officials believe that any hiring freeze makes it difficult to recruit. Officials in the Farmers Home Administration and the Nuclear Regulatory Commission, for example, said it was difficult to hold candidates' interest without having vacancies to offer or without at least knowing when a hiring freeze would be lifted. HIRING FREEZES HINDERED AGENCY MISSIONS AND PROGRAMS --- We found that the last Carter hiring freeze and the Reagan freeze disrupted agency programs and operations at the Department of the Interior, National Credit Union Administration, and Nuclear Regulatory Commission. Monitoring of Alaskan pipeline hampered The Interior Department's Bureau of Land Management, Office Special Projects insures that the owners of the Trans-Alaska Oil Pipeline System comply with the agreement that gives them right-of-way across Federal land. During the March 1980 freeze, four vacancies in the Special Projects Office could not be filled; two cf the most important vacancies were for pipeline and soils engineers. 19 of 1n i-i previous t he two vacancies, --reached ceptahle provide report 1/ we found .that, the Office had not largely because of agreement with the pipeline operator on an acapproach to detect pipeline settlement and thus an early warning leak prevention system, --reached agreement with the operator on what constitutes optimal usage of the device to monitor corrosion inside the pipeline, or ---dt?termi.ned the effectiveness quake monitoring system. and reliability of the earth- We reported that the ability to monitor these facets of Aleyeska's operation was hampered by key staff vacancies, notably those of Since the Office's costs for monil)i.peline and soils engineers. toring Aleyeska's activities are charged to Aleyeska, the Government saved no money from imposing the hiring restriction which J~revented filling the Office of Special Project's positions. i!.z?P?l_.-?f -,!iz,c.d it uni*n (examinations reduced I. . __. _.. "...-__ -II_ ..- l'he National Credit [Jnion Administration lost about 53 full-time permanent staff years (7 percent of its authorized strength) a8 a result of the two most recent hiring limitations. T"he National Credit Union Administration charters, insures, It reduced the supervises, and examines Federal credit unions. attempting to cover more problem oredit scope of examinations, Still, according to the agency, the unions with fewer staff. freezes hindered it from adequately performing its mission at a financial condition was deteriotime when some credit unions' rating. The National Credit Union Administration receives no appropriated funds for personnel because its expenses are financed Applying hiring freezes through assessments to the credit unions. to this agency and similar agencies that do not receive appropriated funds for personnel does not result in a Federal budget savings. OMR freeze guidelines do not exclude these types of agencies from "hiring freezes. l/"Trnns-Alaska Oil PipeLine Operations: N~wled" (EMI)-81-11, ,Jan. 6, 1981) . 20 More Federal Monitoring Some programs affected at Nuclear Regulatory Commission The Nuclear Regulatory Commission lost about 52 full-time permanent staff-years (one and seven tenths percent of its authorized strength) as a result of the March 1980 freeze. In June 1980, OMB granted the Commission a partial exception from the freeze which mitigated the impact on the agency's accomplishThe Commission also shifted hiring authorment of its mission. ity to high priority programs, but this caused delays in lower priority areas, The Office of Nuclear Materials Safety and Safeguards deLayed issuing regulations and other guidelines for nuclear materials licensees for several months, to support its highest priority --managing high level radioactive wastes. LIANIJARY .-I_ ---"1-- 1981 FREEZE VIOLATED PUBLIC LAW The Reagan hiring freeze violated the Veterans' Health I'rograms T:xtension and Improvement Act of 1979 (Public Law 96-151). The act requires the OMB Director to make available to VA the funds appropriated by the Congress for personnel and to authorize VA to empLoy at least the number of employees for which funds were appropriated in three specified accounts. Contrary to this mandate, the January 1981 freeze did not exempt all personnel in those three VA health care accounts--medical care, medical and prosthetic research, and medical administration and miscelLaneous operating expenses. Hiring all employees under t'hese accounts was delayed for 24 days, until February 13, 1981, when OM13exempted certain categories of personnel under the medical care account. CM13freeze guidelines specifically provided exemptions necessary "to assure that * * * applicable provisions of law carried out * * *.'I Despite this fact, OMB denied a blanket emption for administrative and other positions funded under three specified accounts. where are exthe In February 1981, we reported l/ that the freeze could not be legally applied to these accounts. We also reported that the funds needed to fil.1 these positions could not be deferred or otherwise withheld during fiscal year 1981. Nevertheless, OMI3 Later proposed deferring a total of $31.6 million (1,368 staff-years) for the three accounts. The largest portion of $29.4 million (1,280 staff-years), was the proposed deferral, in the medical care account. The Supplemental Appropriation i/Letter to Senator Alan K. Simpson, Chairman, on Veterans' Affairs, United States Senate, February 19, 1981. 21 Committee B-198103, anti fecission Act of 1981 (Public Law 97-12) restored $5.8 million (408 staff-years) to the three accounts--$3.6 million (1320 staff-years) for medical care-- for the last quarter of ‘the fiscal year. NC_l.._l EVIDENCE THAT FREEZES ADVERSELY "I_ II"l--PAFFECTED AFFIRMATIVE EMPLOYMENT .mII.----".""OR EXPERIMENTAL PERSONNEL PROGRAMS "_.l--"--We also attempted to determine whether the across-the-hoard hiring limitations adversely affected affirmative employment rind experimental personnel programs, such as the Part-Time Direct EIire Project. We did not identify instances where affirmative employment programs were unfairly affected, or where OPM personnel programs were adversely affected by the hiring freezes. Female and minority representation ~~~~%~sed durinq hiring freezes -.I(--Total Federal statistics provided by OPM show that during the four hiring freezes, the percentage of minorities and women in the work force continued to increase and the percentage of white males decreased. OMB, OPM, and Equal Employment Opportunity Commission officials could not show why improvement in representation generally continued during the four hiring freezes. freeze, a joint letter However, during the last Carter dated May 10, 1980, from the heads of OMB, OPM, and the Equal Employment Opportunity Commission, directed agencies to convert their numerical affirmative hiring goals to percentages and This could to continue emphasizing affirmative action programs. help explain why, while fewer people were hired during the third Carter freeze, the percentages of women and minorities in the work force increased. While some agency officials stated that the freezes affected their ability to meet affirmative action goals, they were unable They to show that freezes unfairly affected women and minorities. noted other factors which may have also affected achieving these goals, such as high attrition rates in the positions occupied 'by minorities and a lack of minority candidates in technical fields. .Personnel 1.,111-..- programs not affected We reviewed the effect of hiring freezes on the Part-Time Direct Hire Project and found no evidence that Government-wide hiring limitations have adversely affected this program. OPM s~>c:,nsors the project to fulfill a provision of the Federal Ih~rI.oyee' s Part-Time Career Employment Act of 1978 (Public Law (.)5-d 3 7 ) I The law, in part, charged the Civil Service Commission (rlow (.)1'1\4)with conducting a research and demonstration program 22 to determine how much part-time career employment in filling positions which have not traditionally It;uch employment. may be used been open for Through the part-time project, agencies are cjiven direct hire authority to fill certain positions. however, few agencies have used this authority. As of September 1981, only 41 hires had OPM program managers agreed this been macie through the grogram. number was disappointing and cited bureaucratic inertia in the for poor program performance. agencies as a major realjon Cve also contacted CPM officials concerning 11 other personnel procjrams . The&e programs are listed in appendix 11. In every case, officials stated that hiring freezes had not adversely afrected the programs. Government-wide hiring freezes are not yses of workload and work rorce requirements. trols are part of a fragmented approach for limitations costs through personnel ceilings, travel restrictions. based on sound analThese arbitrary concontrolling work force on consultants, and We llave previously reported that using funding or program .Limitat.ions to control the size and cost of the total Federal work iorce tiould eliminate the need for using arbitrary employment since agencies can neither 'hire nor contract out unless controls, We have also recommended that OMB and OPM they have the iunds. methods for determining work take actions to improve agencies' have not been However, our recommendations force requirements. carried out. Our report 1/ to the Chairwoman, Subcommittee on Human Rekiouse C&mittee on Post Ofrice and Civil Service, summarized previous reports on using the budget to control Federal work rorce costs and the need ror improved work force planning. The report pointed out that personnel decisions and justifications made without credible work force planning data encourage the use of arbitrary employment controls, such as hiring freezes. hiring freezes reduce the incentive for managers At the same time, As a result, rational to improve work force planning capabilities. control over employment is lost. sources, We report also noted that arbitrary obscure the reality that the Government personnel incurs the constraints cost of all k/"Improving the Credibility and Management of the Federal Force Through Better Planning and Buagetary Controls." 23 Work staffing resources devoted to Federal programs. Many of the people that perform the Government's work are contract or indirect employees whose costs are not controlled by arbitrary personnel constraints on the Federal work force. Our report concluded that: a clearer picture of Federal agencies total work force costs could be provided to the Congress through the budget process by revising the present object breakout of indirect classes to show a more detailed work force costs. This improved visibility would give the Congress a better means to evaluate past performance, assess current mix decisions (in-house or contract), and establish dollar limitations on total work force costs, rather than the piecemeal approach used now * * * [such as] hiring freezes * * *." “Y * * 24 Government-wide hiri,n(j tree8es, regardless of, how well they are nIiilla(jbld, are tlot an efiective means of controlling E'edesal freezes we reviewed errq~.loyment: 1 While the cl;c.,ve~~~rnent~t-wide hi.ri.ny Ljrovicxttd an i.Llusic,,n of contrc L on Feoeral employment and syendefrect cn Lt'ecXeral employment levels and it i. rrcj ‘ tlkey Lr?hd Little they iynored is not known wnether they saved money . Because inaividua 1. agencies' missions, wo.rkl,oad, ant staffing reyuirebreezes crisrupted acjency operations, and in some ment , these costs to the Government. cases * increinsec 3ince these hiring Freezes aisreyarded agency workload requirements and did not. cover all. personnel resources used by the Covexnment , they created an irlcentive tar managers to use alternative sources of Labor. Any potentiall savings produced by these freezes would be partial%y or complete1.y oizjcset by increasing overtime, with private firms, or using other than contracting full-time LJerrrl;lnent ertq.Lo~ees . Decreased aebt and revenue collection ills0 occur.red as a result or hiring rreezes. (;overrlrrlerrt--wiide hiring Lreelzes bear no relationship to the We recthat ayenci.es are responsible for carrying out. ognize, hcJweve K , that tnere may be unique circumstances, such whi.ch may be beyond an individual agency's as bucige't reductions, control L IIncxctr such circut11stances, individual agency managers cietermine whether or not it is prudent to slow or stop hiriny. workload slrould be targeted where he kJCb.LieVc eIILL,~.oynE!Ilt. redUctiOrLS Improved work force planning and use they earl best be absorbeti. rather than arbitrary of tk~e buclyct as a contra; L on errlp3.0yment, is a more effective way to inacrott;s-t~lE?-~~Oil.Itl hiring freezes, sure t-hat 1..Lie J.cvbl of 1~ersorh1le1. resources is consistent with ~“royKi”ul 1 k!C.~Ui” ernc!r”1ts . ' APPENDIX I APPENDIX I DETAILED PROVISIONS -- OF HIRING -FREEZES EXAMINED BY GAO CARTER ADMINISTRATION The Carter Administration's hiring freezes limited the number of appointments to full-time permanent positions. The first hiring freeze allowed agencies to replace 75 percent of their losses from these positions. The second two freezes allowed them to fill 50 percent of their losses. Other employment categories were not restricted. OMB guidelines stated that contracting with firms and institutions outside the Government should not be used to evade the hiring limitations. The first hiring freeze prohibited hiring part-time and temporary employees as a substitute for full-time The second two freezes narrowed this propermanent employees. hibition to temporary employees only. the OMB guidelines provided three Carter administration the following standard hiring freezes: exemptions --Niring necessitated by emergency situations involving the safety of human life and protection of property, at the discretion of the agency head. i/ --Filling sonnel positions ceilings. --Filling positions under programs required exempt by law. from OMB per- 2-/ --Hiring in accordance with firm written commitments by agency personnel officers, before the effective of the limitation. z/ --Hiring by the --Reassigning U.S. Postal of personnel made date Service. within an agency. L/The second two freezes added standard exemptions for situations where staffing was essential for maintaining operations directly protecting human safety. Z/This exemption freezes. was not provided for the last two hiring z/The third hiring freeze was made retroactive to February 29, Commitments made after that date were to be honored 1983. and balanced by two losses after that date. 26 ‘, from APPENDIX I --Appointing personnel --Filling positions character. L/ to executive level of a confidential positions. or policymaking --Shifting employees from one agency to another because of a transfer of functions resulting from presidential reorganization action. --Hiring employees who receive permitted in law). 2/ The ON13Director by-case basis. could grant no compensation additional (if exemptions otherwise on a case- REAGAN ADMINlSTRATLON f---..#.-ls----w The Reagan administration's hiring freeze prevented agencies Several from hiring all types of direct Federal employees. standard exemptions from the freeze were provided: --Hiring necessitated by emergency situations directly involving the safety of human life or the protection of property. z/ --Filling positions ment ceilings. under programs --Hiring in accordance with firm on o,r before November 5, 1980, --Hiring by the 1J.S. Postal --Reassigning personnel from OMB employ- written commitments by agency personnel made officers. Service. within --Appointing individuals to filling noncareer positions I exempt an agency. executive level in the Senior positions Executive and Service. In filling --Appointing individuals to Schedule C positions. the number of such appointments could these positions, not exceed the number of Schedule C positions existing in each agency as of November 5, 1980. l/The last two freezes allowed .but not for positions tions, z/This exemption z/Such hiring was deleted was subject hiring for executive level of a confidential nature. from the last to OMB approval. 27 two hiring posi- freezes. APPENDIX I APPENDIX I --Shifting employees from one agency to another because of a transfer of functions resulting from preaidentfal reorganization or legislative action. --Hiring by executive branch agencies whose onboard total employment as of December 31, 1980, was less than 100. Hiring could not exceed the number of vacancies that occurred after December 31, 1980. --Hiring temporary employees consistent with past seasonal hiring patterns, provided that the agency informed OMB in writing in advance of its hiring plans. Such hiring could not be used as means to circumvent the freeze. --Hiring a limited 120 days to help tration. --Hiring for the orderly tion. number of noncareer ease the transition positions transition in the Executive and operation personnel for up to to a new adminisOffice of the necessary for new administra- The OMB Director could grant additional exemptions on a caseAgencies were not to use contracting to alleviate by-case basis. or circumvent the effects of the hiring freeze. 28 APPENDIX II APPENDIX II OPM PERSONNEL PROGRAMSSURVEYED BY GAO --Effect Job Groupings of on Selection --Development of Benchmarks in Unassembled Examining. --Applicant Self-Reports for Procedure Rating Unpaid in Personnel of Claims --Alternative Navy. Representative Examination --Executive Manager's Procedures and Validation --Methodologies for Selection --An Integrated Approach to and Position Classification of Government Organizations Project,) --Turnover for for Analysis in OPM. (966003) 29 of Supervisory of the Unassembled Examination. and Managerial Competitiveness: Job and Role Survey. --Development Experience Selection. --Development and Adaptation of Manual Examining for Entry - Level Selection. --Evaluation Validity. the Department of The Federal Problems Test. Handicapped. Pay, Performance Appraisal, for More Effective Operation (Title VI Navy Demonstration All EQUAL OPPORTUNITY uurrw mama (3th1.. mammals arms ?summon. act. 2054: arm mam mm?! m: ?nun mm um In!? a. IL I. WIRE CLASS