September 1997: CRS report: Shutdown of the Federal Government: Effects on the 'Federal Workforce...

8/3/2019 September 1997: CRS report: Shutdown of the Federal Government: Effects on the 'Federal Workforce And Other Sectors

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95-906 GOV

CRS Report for CongressShutdown of the Federal Government:Effects on the 'Federal Workforce

And Other Sectors


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SHUTDOWN OF THE FEDERAL GOVERNMENT:EFFECTS ON THE FEDERAL WORKFORCE

AND OTHER SECTORSSUMMARY

The longest partial shutdown of the federal government began on December16, 1995, furloughed an estimated 260,000 federal employees, and ended onJanuary 6, 1996, after the White House and Congress agreed on a newresolution to fund the government through January 26, 1996. I t was the secondshutdown in 1995-1996. On January 2,1996, the estimate of furloughed federalemployees increased to 284,000. Another 475,000 federal employees, rated"essential," continued to work in a "non-pay" status. The shutdown wastriggered by the expiration of a continuingfunding resolution,H.J .Res. 122 (P.L.104-56), enacted on November 20, which funded the government throughDecember 15, 1995. There were several short-term continuing resolutionsbetween January 6,1996, and April 26, 1996, when P.L. 104-134 was enacted tofund, through fiscal 1996, any agencies or programs not yet funded.

The earlier shutdown (November 14-19, 1995) furloughed an estimated800,000 federal employees. I t was caused by the expiration of a continuingfunding resolution (P.L. 104-31) agreed to on September 30, 1995, and byPresident Clinton's veto of a second continuing resolution (H.J.Res. 115) and adebt limit extension bill (H.R. 2586).

The most immediate and critical shutdown effect is the furloughing offederal employees. Exempted from furloughs are presidential appointees,Members ofCongress, uniformedmilitarypersonnel, and federal employees rated"essential." "Essential" employees are those performing duties vital to nationaldefense, public health and safety, or other crucial operations, who are requiredto work during a shutdown. The Administration reviewed presidential


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CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1THE FIRST SHUTDOWN 4THE SECOND SHUTDOWN . . . . . . . . . . . . . . . . . . . 5FEDERAL SHUTDOWN IMPACT . . . . . . . . . . . . . . . . . . . . . . 6Shutdown Effects on Federal Employees . . . . . . . . . . . . . . . . . . . . . . . 6

Shutdown Effects on Service to the Public 8Shutdown Effects on the District of Columbia 14FEDERAL SHUTDOWN: CAUSE AND PROCESS 16Appropriations Lapse: The Legal and Policy Issues 16Proposals to Avoid Shutdowns: Automatic ContinuingResolutions 20Debt Ceiling Impasse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Shutdown Process 22ESSENTIAL SERVICES AND PERSONNEL . . . . . . . . . . . . . . . . . . . . . . 24FEDERAL FURLOUGHS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25RECENT SHUTDOWN EXPERIENCES 27COSTS OF FEDERAL GOVERNMENT SHUTDOWNS 28APPENDIX 31


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SHUTDOWN OF THE FEDERAL GOVERNMENT:EFFECTS ON THE FEDERAL WORKFORCE

AND OTHER SECTORSINTRODUCTION

On January 6, 1996, President Clinton signed into law H.J.Res. 134 (P.L.104-94; 110 Stat. 25) a continuing funding resolution, which ended the partialfederal government shutdown that began on December 16, 1995. The resolutionfunded the federal government through January 26, 1996, and returned allfederal employees to work as scheduled on Monday morning, January 8, 1996.Ironically, a severe blizzard, which struck on January 6, kept a great manyfederal employees at home in the eastern United States , including theWashington, D.C. area, on January 8. The Office of Personnel Managementordered the government closed in those areas on that date, and on threesubsequent days that week. P.L. 104-94 also guaranteed retroactive paymentfor all furloughed federal employees from December 16, 1995, through January6, 1996. Agreement to end the shutdown met conditions se t by Congress thatthe President would submit a budget proposal that would balance the budgetover seven years, using budget estimates certified by the Congressional BudgetOffice (CBO).

P.L. 104-94 provided full funding for the government through January 26,1996. I t extended the provisions ofP.L. 104-56 (H.J.Res. 122), the prior fundingresolution that ended the firs t federal shutdown, funded the governmentthrough December 15, and retroactively paid federal employees for furloughed


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passed or 1995 level. However, P .L. 104-99 funded many federal programs ata lower level through September 30, 1996. Funding for selected federalprograms ranged from FY1995 levels to 75% of FY1995 levels. In addition, anumber of smaller programs were terminated outright, including:

Child Development Associate Scholarships; Dependent Care Planning an d Development; Law Related Education; Dropout Prevention Demonstrations; Aid for Institutional Development (Endowment Grants); Aid for Institutional Development (Evaluation); Native Hawaiian an d Alaska Native Cultural Arts; Innovative Projects in Community Service; Cooperative Education; and Douglas Teacher Scholarships.2FY1996 was more than half over before final agreement ending th e federalgovernment's funding crisis was reached on April 25, 1996. Earlier, th e impasse

between th e Republican congressional leadership and the Administration ha ddeepened, an d efforts to reach a budget agreement remained stalled. Thesituation was complicated by several factors, including th e expiration ofgovernment funding on March 15, an impending third partial federalgovernment shutdown absent new spending legislation to avert it, a need toraise th e federal debt ceiling to avoid default byMarch 22, a need to prepare forFY1997 budget deliberations, an d pressures to adjourn early for campaigning inan election year.

As a consequence, th e quest for a balanced budget agreement in 1996 ha dto be se t aside in favor of far more limited spending-reduction goals an d


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government through April 24, 1996. On April 24, H.J.Res. 175 (P.L. 104-131;110 Stat. 1213), the thirteenth short-term spending bill since the federalshutdown crisis began, was enacted, which funded the government for anadditional 24-hour period through midnight, April 25. On April 25, Congressand the White House announced agreement on H.R. 3019, the OmnibusAppropriations Act for FY1996, a measure funding the government for theremainder of FY1996, and Congress approved the bill the same day. On April26, the President signed the bill into law (P.L. 104-134; 110 Stat. 1321).

The key ingredient and catalyst for a federal shutdown is violation of aprovision of federal law which holds that agencies are prohibited from spendingmoney, not otherwise authorized by law, during a lapse in appropriations.However, the term "shutdown of the federal government" is a significantmisnomer, since, as the Office of Legal Counsel, Department of Justice, haspointed out "... a majori ty of current expenditures occur under multi-year,permanent or indefinite appropriations that do not lapse on the expiration ofthe current fiscal year."3 This, taken together with the large number of federalemployees rated "essential" in a federal shutdown action, also means that amajority of federal employees continue to work.

The stakes are high in any federal government shutdown situation,considering the size, scope, pay, and benefits of the federal workforce. Thefederal government is by far the largest single employer in the United States.In March 1997 (latest published figure), for instance, there were an estimated2,807,077 federal employees.4 For FY1998, federal pay costs are an estimated$127 billion; federal benefits costs are an estimated $40 billion; totalcompensation (pay and benefits) costs are an estimated $167 billion.5 Thesefigures, of course, do not include the armed forces, which include an additional1,432,445 uniformed military personnel6, whose total compensation is an


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resolution to fund th e government in th e event of an impasse between th e WhiteHouse an d Congress over enactment of agency appropriations bills after th estart of th e fiscal year. (See "Proposals to Avoid Shutdowns: Automat icContinuing Resolutions.")

This report examines th e cause of federal shutdowns in general an d th e tworecent federal shutdowns in particular. Information is provided on theirimplementation, their effects, th e number of federal employees affected, an dsome federal shutdown cost estimates. I t describes th e basic authority forclosing down th e federal government, presents some background on "lapses inappropriations" history, an d discusses past and present Justice Department legalopinions critical to enforcing federal shutdowns. Definitions of "essential" versus"non-essential" federal services an d personnel during a shutdown, crucial indetermining who reports for work an d who does not, ar e included. Th e impacton federal compensation an d th e rules governing shutdown furloughs ar eexplained.

In th e appendix, Table 1 shows, by agency, th e n um be r o f furloughed an dnonfurloughed employees affected in unfunded agencies as of January 4, 1996.Table 2 shows th e periods of funding gaps since 1977.

Until November 20, 1981, th e federal government ha d never experienced apartial shutdown. On that date, for th e first time, federal employees were senthome as a r es ul t o f a budgetary impasse between th e President and Congress.T h e sh ut d ow n lasted half a day. Fo r over two hundred years prior to that date,even during th e Civil War, th e federal government ha d never experienced sucha phenomenon.


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1995. The impasse arose because of disagreements with the congressionalRepublican majority over provisions in the bills. On Monday, November 13, thePresident instructed agencies to begin closedown operations.

Setting the stage for the November 14 shutdown was the large number offederal agencies still unfunded as of October 1, 1995, the beginning of FY1996,which ended on September 30, 1996. Of thirteen federal agency appropriationsbills to fund agencies from October 1, 1995, to September 30, 1996, only fourwere enacted, and the remainder either pending, vetoed, or under threat of vetoby the President. 10On November 19, the White House and Republican congressional leadersannouncedjointly that agreement had been reached to end the partial shutdown

of the federal government. Pursuant to enactment of a continuing fundingresolution (H.J.Res. 122; P.L. 104-56), furloughed federal employees returned towork on Monday, November 20, 1995. Agreement ending the impasse occurredwhen both sides agreed to balance the federal budget on a seven-year timetableor by 2002. P.L. 104-56 extended government funding through December 15,1995, and guaranteed retroactive payment for furloughed days.THE SECOND SHUTDOWN

The second partial shutdown ofthe federal government began at 12:01 a.m.on December 16, 1995, and ended on January 6, 1996. I t lasted 21 days andinitially furloughed an estimated 260,00011 federal employees. I t was by farthe longest federal shutdown action to date (see Table 2) and the second suchaction to take place in 1995. Estimates released by the Office of Managementand Budget (OMB) on January 2, 1996, show that the number of those


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pay as a result of contracts suspended because ofthe partial federal shutdown.Meetings between the White House and congressional leaders to reach acompromise on averting a second partial shutdown ended without resolution ofthe impasse on December 15.

Disagreements about health care issues, especiallyMedicare and Medicaid,reportedly played a key role in the budget dispute leading to both partialshutdowns. The second shutdown ended when on January 6, 1996, PresidentClinton signed into law H.J.Res. 134 (P.L. 104-94; 110 Stat. 25), a continuingfunding resolution, which ended the partial federal government shutdown thatbegan on December 16, 1995. The resolution funded the federal governmentthrough January 26, 1996, and returned all furloughed federal employees towork.

FEDERAL SHUTDOWN IMPACTFederal shutdown effects vary greatly in direct proportion to length of time

and numbers of federal personnel involved. Federal shutdowns prior to thosein 1995-1996 were generally of short duration, some lasting less than a day, andwere seen as having relativelymodest effects, especiallywhen they occurred overa weekend period. The 1995-1996 shutdowns, however, genera ted far moreserious effects in terms of economic hardship and other disruptions in theworkplace, both federal and private-sector. In addition, because of its uniquejurisdictional relationship with the federal government, the shutdowns had asignificant impact on the District of Columbia. In the wake of the shutdowns,adverse consequences to federal employees insofar as paying bills and rent,providing adequate food, and meeting other financial obligations were widelyreported. Many others experienced significant hardships, including Native


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On September 19, 1995, Ms. Rivlin testified before a joint hearing ofCongress about the implications of an impending federal governmentshutdown. 14 On that occasion, she described a series of possible seriousconsequences to federal employees and the public at large should a shutdownoccur. Insofar as federal employees were concerned, Ms. Rivlin predicted seriousdisruptive effects to them and their families, including losses in productivity,tasks left undone during the shutdown, and work piled up after the shutdownends. All of these predicted effects took place as a result of the 1995-1996federal shutdowns.

Because ofthe unprecedented length of the shutdowns and their occurrenceat the height of the end-of-year holiday season, many furloughed federalemployees experienced the twin stress of heightened expenditures and reducedpaychecks. Federal employee assistance funds were soon overwhelmed. Theonly remedies available were some federal credit unions that offered low-interestor no-interest loans, no-penalty CD withdrawals, and assurances by OMB thatagencies would be encouraged to speed back-payment for furlough days onceretroactive pay was guaranteed by Congress.Federal employee morale reportedly suffered considerably as a resul t ofbeing designated "non-essential" and placed on furlough. In testimony beforeHouse Civil Service Subcommittee hearings on "What's Essential in aGovernment Shutdown," held on December 6, 1995, Treasury's AssistantSecretary for Management, George Munoz, spoke to the misconceptions created

by the use of the term "non-essential":One of the concerns that we identified in planning for theshutdown was the unfortunate misuse of the terms "essential" and"non-essential." This terminology was no t used in any of our


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Another serious concern faced by federal employees was that P.L. 104-99,the funding resolution that ended the second partial federal shutdown,permitted agencies operating on reduced funding to implement uncompensatedfurloughs, if necessary, for up to one day per pay period through March 15.

Reduced agency funding and significant federal program cutbacksmandatedby P.L. 104-99 appear to foreshadow additional federal job cuts and adverseimpact on private sector employment as well. Predictions of additionalthousands of federal job losses, many in the Washington area, above and beyondthose mandated by the Administration's Federal Workforce Restructuring Act(P.L. 103-226), have dramatically altered the once stable image of federalemployment and increased morale problems among federal employees.Coincidingwith the cutbacks in federal contracting nationwide and the financialhardship experienced by federal contract employees (see below),16 theemployment outlook in both federal and private sectors has deteriorated.

Federal and private sector employees alike have expressed concern aboutthe adverse long-term impact of federal shutdowns on their jobs. A poll takenby the Greater Washington Consumer Survey found:

4 of every 10 federal employees fear losing their jobs because of budgetreductions; 4 of every 5 federal employees believe their agency will be hit bycutbacks; one-third of private sector employees believe their firms would be hurtby federal budget reductions; and one-fifth of private sector employees believe their own jobs may be injeopardy as a result of federal budget reductions. 17


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briefly by the Deputy Director for Management, Office of Management andBudget (OMB), Mr. John A. Koskinen: "Ifyou didn't have any reason to do anybusiness with the federal government, you probably didn't notice much. But i fyou were one of the 7 million people who would have gone to the parks or the2 million that would have gone to the museums, you've missed thatopportunity."19

The figures cited by Mr. Koskinen comprise merely the tip of the iceberginsofar as the scope of federal services impeded by the federal shutdowns.Services curtailed ranged from Head Start program grants for pre-schoolchildren to placement of headstones in national cemeteries.

Examples of federal services adversely affected by the shutdowns includethose related to health, welfare, lawenforcement/public safety, financial services,parks-museums-monuments, visas-passports, services to American Indians, andservices to veterans, among many others, as listed below.Health

New pat ients not accepted into clinical research at NIH Clinical Center; Centers for Disease Control ceased disease surveillance (informationabout spread of diseases such as AIDS and flu unavailable); Hot line calls to NIH concerning diseases not answered20; and Toxic waste clean-up work at 609 sites stopped--2,400 "Superfund"workers sent home.21Welfare 10,000 newMedicare applications, 212,000 Social Security card requests,


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federal receipts of$1.3 trillion and 13% of federal outlays of $1.5 trillion. Ofthe$18 billion in Washington area contracts, $3.7 billion or over 20% were let byfederal departments and agencies closed during the shutdowns because of lackof appropriations, according to the Federal Procurement Data Center.39

The billions of dollars received from federal contracting are a boon to thelocal and national economy and the billions in contract losses from the last twofederal shutdowns are a serious blow to both. The range of federal contractorsaffectedwas unusually diverse, including companies, universities, hospitals, andthink tanks, among many others. The nexus between federal contractors andjust one agency--the National Institute of Standards (NIST)--illustrates thepoint. The scientific contributions ofNIST are especially noteworthy, since thatagency provides over 20,000 measurement samples and hundreds of thousandsof calibration tests each year to over 3000 companies, large and small.40 As aconsequence, the impact of the NIST shutdown was immediate and serious,especially in the areas of health and safety.

NIST had to delay verification of radiation dose standards throughmeasurement quality assurance programs, which are used annually onover 600,000 cancer patients and 26 million women who receivediagnostic mammograms.41

NIST was unable to issue a new standard for lights and lamps thatwas supposed to go into effect on January 1, 1996. The standardaffects the U.S. lighting industry--a multi-billion dollar a yearbusiness, which includes Sylvania, General Electric, Phillips, etc. Theshutdown therefore resulted in delayed product delivery and lostsales.42


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home without pay. Typical of such action, DYN Corporation of Reston,Virginia, a technical services contractor, was forced to furloughed 2,200employees after th e IRS suspended its contract.46

Hearings held by th e Subcommittee on Civil Service, House Committee onGovernment Reform an d Oversight on December 6 an d 14, 1995, identified manyof these private-sector hardships as well as many other serious adverseconsequences generated by th e partial shutdowns of t he federal government. Inth e private sector, th e scope of economic injury an d workforce disruption,sustained by a wide spectrum of companies, was described by corporateexecutives themselves. Fo r example, th e shutdown-caused closure of theMinerals Management Service (MMS), Department of Interior , was a case inpoint, especially insofar as th e critical area of domestic energy production isconcerned. The CEO ofHercules Offshore Corporation, Houston, Texas told th eSubcommittee:

The closure of MMS is having a devastating effect on Hercules an dpresumably on many other offshore contractors as well. Th e situation willonly escalate in a compounding manner as MMS remains shut down....Allof this means that carefully orchestrated marketing an d operations effortsby Hercules management are in turmoil because of the irresponsibleshutdown of a government agency because of a political squabble.47The agency perspective i n t his instance is particularly significant, as th eMinerals Management Service confirmed th e dire effects of federal shutdownaction on its own operations.Because of the inability of MMS to issue approvals for other thanemergency flaring (48 hours), several oil an d gas companies ha d to shut in


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A large number of Washington metropolitan area federal employees andD.C. government employees were affected by federal shutdown action. Of theestimated 800,000 federal employees furloughed in the first shutdown, anestimated 150,000 from the Washington metropolitan area were furloughed, 52or almost half of a regional federal workforce of approximately 350,000.53 Anestimated one-third of the city's workforce of 34,000 were also furloughed. 54

The District government's partial shutdown occurred at a time when thecity was already experiencing the hardship of curtailed services and reducedpayroll because of a severe budget crisis. Articulating these dual concerns, theDistr ic t's Delegate to Congress, Eleanor Holmes Norton, said, "Forcing ashutdown of the District while the city is experiencing a financial crisis wouldbe extremely costly and wasteful at a time whenmany D.C. services are alreadyunder the most severe strain."55 Attempting to forestall a recurrence of thissituation, Delegate Norton introduced H.R. 2661:

To amend the District of Columbia Self-Government andGovernmental Reorganization Act to permit the District of Columbiato expend its own funds during any portion of a fiscal year for whichCongress has not enacted the budget of the District of Columbia forthe fiscal year, and to provide for the appropriation of a monthly prorated portion of the annual federal payment to the District ofColumbia for such fiscal year during such portion of the year.In a statement following her introduction of H.R. 2661, Delegate Nortonsaid:

In the midst of a serious financial crisis, the District has beenparticularly damaged by the shutdown and would continue to be


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were mitigated somewhat by the enactment ofP.L. 104-90 (H.J.Res. 153), whichallowed the District government to operate using locally-generated funds.Shutdown costs to the District were considerable. Incomplete cost datashow $7 million in estimated uncollected revenue and lost productivity.57Tourism and related losses to the city and region were estimated at $50 million

in cancellations and lost business.58

FEDERAL SHUTDOWN: CAUSE AND PROCESSThe shutdowns of the federal government occurred because there was

Fai lure to pass regular appropriations bills by the October 1, 1995deadline; Lack of an agreement on stop-gap funding for federal governmentoperations through a continuing appropriation act/resolution; and No agreement to lift the federal debt ceiling.Appropriations Lapse: The Legal and Policy Issues

The basic authority for closing down the government because of a lapse inappropriations stems from an April 25, 1980 opinion of Attorney GeneralBenjamin R. Civiletti prepared for President Jimmy Carter which states:I t is my opinion that, during periods of "lapsed appropriations," nofunds may be expended except as necessary to bring about the orderlytermination of an agency's functions, and that the obligation orexpenditure of funds for any purpose no t otherwise authorized by law


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operations during a lapse in appropriations."60 The Dellinger opinion updatesthe 1981 Civiletti opinion. I t again enumerates the basic prohibitions set forthin the Antideficiency Act (31 USC 665) against government spending duringlapsedappropriations, entering into contracts or other obligations, and providinggovernment services and employees beyond those essential "to emergencysituations, where the failure to perform those functions would result in animminent threat to the safety of human life or the protection of property."61

The Dellinger opinion points out that, since the 1981 Civiletti ruling, theAntideficiency Act has been amended in one key area. In 1990, language wasadded that modified the "emergency" definition for employing federal personnelin a shutdown action.62 The 1990 amendment states in relevant part: "as usedin this section, the term 'emergencies involving the safety of human life or theprotection of property' does not include ongoing, regular functions ofgovernment the suspension of which would not imminently threaten the safetyof human life or the protection of property."63

The 1990 amendment to the Act was intended to preclude an overly broaddefinition and interpretation of the term "emergency" to ensure that threats tothe "safety of human life or the protection of property" are compelling andimmediate and no t slight, distant, or perfunctory. The example cited in theDellinger memorandum to illustrate the point is: "The brief delay of routinemaintenance on government vehicles ought not to constitute an 'emergency,' forexample, and yet it is quite possible to conclude that the failure to maintainvehicles properly may 'compromise, to some degree' the safety ofthe human lifeof the occupants or the protection of the vehicles, which are governmentproperty. ,,64

Lapses in appropriations to fund the government are not uncommon (see


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require passage of annual appropriations legislation. Social Security isa prominent example of a program that operates under an indefiniteappropriation. In such cases, benefit checks continue to be honored bythe treasury, because there is no lapse in the relevantappropriations.70The prelude to the ongoing funding impasse was the threatened or actualveto by President Clinton of at least six of the appropriations bills pending inCongress. At the outset, a major issue of disagreement between the Republicanpassed budget proposal to balance the federal budget in seven years and the

Administration's ten-year counter-proposal, with each side presentingdramatically different blueprints, in terms of spending, federal cut-backproposals, and long-term funding priorities. When the first continuingresolution was vetoed, President Clinton told Congress that he would sign aclean bill that dealt onlywith interim funding of the government. Since then,although agreement appears to have been reached on the timetable for reachinga balanced budget, the other hurdles cited remain.Insofar as Congress and the legislative branch are concerned, mostpresidents have routinely signed the legislative branch appropriations act, and

they have not had to face shutdown action because of a lapse in appropriations.This year, however, President Clinton at first vetoed it,71 thereby relegatingCongress and the legislative branch agencies to a shutdown status similar to theexecutive branch. The President subsequently signed the legislative branchappropriations act on November 19, 1995.The Constitution (Article II, Section 1) forbids the salary of the Presidentor of Article III judges (Article III, Section 1) to be reduced while they are inoffice, a provision that effectively guarantees their compensation regardless of


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Supporters of the shutdown amendment counter that the negative impactof the 1995-1996 federal shutdowns on both the public and private sectors wasso great that future shutdowns should not be permitted. Proponents also arguethat key entitlement programs, such as social security, would be protected, andbecause the provision applies only to FY1998, any long-term affect on budgetarynegotiations and deflationary impact on agency funding would be minimal.

I t should be noted that the shutdown provision is similar to an option toforestall possible federal shutdown action which had been proposed by theGeneral Accounting Office (GAO) as far back as 1981. Among other suggestionsproffered on this subject, the 1981 GAO proposal would, "Provide a permanentcontinuing resolution to provide authority to continue all operations at somespecified level, such as the average expenditures for the preceding fiscal year."77

H.R. 1469 was passed by the House on May 15,1997, and by the Senate onJune 5, 1997. Because it contained the government shutdown provision, therewas strong opposition to it by both the Democratic leadership and by PresidentClinton, who vetoed it on June 9, 1997. On June 12, 1997, Republican leadersin the House and Senate agreed on a compromise plan to remove the shutdownprovision from H.R. 1469, and to vote on it as a separate bill. Stripped of theshutdown and other amendments, President Clinton signed H.R. 1469 into lawthe same day.On June 17, 1997, both Representatives Thomas M. Davis (R-Va.) andGeorge W. Gekas (R-Pa) introduced bills, H.R. 1912 and H.R. 1916, to preventgovernment shutdowns. Both measures would provide for continuing

appropriations (at 100% ofthe rate of operations provided for in FY1997) in theabsence of regular appropriations for FY1998. The bills were referred to theHouse Committee on Appropriations. Neither bill has been ordered to be


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billion held in the federal employees' thrift savings plan known as the G-fundand $39.8 billion of the $350 billion reportedly held in the Civil ServiceRetirement Fund.79 Although federal employee unions have expressed alarmover this allocation of federal retirement investments, SecretaryRubin has givenassurances that not only will the funds be fully restored, but that he is legallybound to do SO.80

On March 29, P.L. 104-121 (H.R. 3136; 110 Stat. 847) was enacted, raisingthe debt ceiling to $5.5 trillion.Shutdown Process

The Office of Management and Budget (OMB) is responsible for issuinginstructions to agencies on implementing a federal shutdown, including thefurloughing of "non-essential" federal employees. Throughout the shutdownperiod, agencies are apprised of the latest developments in resolving thebudgetary impasse. The Office of Personnel Management (OPM), on the otherhand, provides guidance and technical assistance to the agencies regardingpersonnelmanagement issues, especiallypay and benefits administration, duringa federal furlough.

On July 26, 1995, OMB Director Alice Rivlin directed agencies to deferaction on furloughs or other cutback actions pending completion of agovernment-wide plan.81 Concurrently, White House Chief of Staff Leon E.Panetta requested that agencies submit contingency plans for shutting down thegovernment for possibly as long as two months.82 On August 22, 1995, Ms.Rivlin issued a new directive to federal agencies, which effectively rescinded herearliermemorandum, and instructed them to review their contingencyshutdownplans, conform them to the Dellinger ruling, and submit them to OMB no later


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On December 6, 1995, a hearingwas held by the House Government Reformand Oversight's Subcommittee on Civil Service on the implementation of thefirst federal government shutdown and problems stemming therefrom. Thechairman of the committee, Representative William F. Clinger, Jr. (R-Pa.) andthe chairman of the subcommittee, Representative John L. Mica (D-Fla.) bothraised questions about shutdown implementation policy and the adequacy ofagency shutdown contingency plans submitted to OMB prior to beginningshutdown operations.

Representative Clinger noted disparities in the composition and scope ofagency contingency plans that ranged from 2 to 174 pages in length and wereinconsistent in re ta ining and furloughing employees who performed similarfunctions.85 Questions raised included why large agencies such as theDepartment ofVeterans Affairs and the Social Security Administration (SSA),which dispense massive social welfare services, greatly reduced those servicesbelow authorized levels. SSA, for instance, went to skeletal staffing, which ledto immense backlogs and the need to summon many employees back fromfurlough.86 The differential t reatment of certain public safety functions wasalso questioned. The Mine Safety and Health Administration had more than1,400 safety inspectors on duty, whereas the Occupational Safety and HealthAdministration retained only 250, and no child labor inspectors were retainedat all.87

Representative Mica questioned the release of all but 136 ofthe DepartmentofHousing and Urban Development's 12,000 staff, even though funds appearedavailable to retain many more and stated, "Despite the advanced planning, theexecution of the shutdown was disorganized and illogical at best and chaotic inother instances.88


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and they informed their employees in a proper time. Clearly, this timearound, everyone who was a non-emergency employee the last time willhave fair notice of that. As I say, it is not my goal in life to say "The trainsran on time," but the shutdown, we think ran efficiently and effectively. Weare prepared to do it again if necessary.Mr. Koskinen also took note of the role of Congress in the events leading

up to the partial federal shutdowns and testified:We think [another federal shutdown] would be a major unfortunate andhopefully avoidable event, and we would hope that the Congress, if itcannot complete the work on the appropriations bills by the middle ofDecember, would pass a continuing resolution to allow the government tocontinue to function.89

ESSENTIAL SERVICES AND PERSONNEL

A memorandum issued by OMB in 1980 defines "essential" governmentservices and "essential" employees as those Providing for the national security, including the conduct of foreignrelations essential to the national security or the safety of life andproperty; Providing for benefit payments and the performance of contractobligations under no-year or multi-year or other funds remaining

available for those purposes; Conducting essential activities to the extent that they protect life andproperty, including:


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-- Activities necessary to maintain protection of research property.90Th e Dellinger opinion basically reaff irms th e definition of "essential"government services an d employees se t forth in th e 1980 OMB directive an dserves as a guideline to Administration shutdown plans. Pursuant to it an dWhite House directions to agencies through OMB, agencies a re r eq ui re d todetermine which jobs fit these definitions, enumerate t hem i n their individual

shutdown plans, a nd i ns tr uc t t he ir employees accordingly. Since th e definitionof"emergency"ha s been more narrowly drawn, pursuant to th e 1990 amendmentto th e Antideficiency Act, th e likelihood is that in th e future fewer federalemployees ma y be rated "essential." Those rated "essential," althoughg ua ra nte ed to be paid retroactively, will no t receive compensation until th eappropriations bill for their agency is enacted an d signed.

FEDERAL FURLOUGHSTh e immediate an d critical effect of an impending government-wide

shutdown is th e need to place all non-essential federal employees on furlough.Furloughs ar e th e "placing of a n employee in a temporary non-duty, non-paystatus because of a lack of work or funds, or other nondisciplinary reasons."91

T he re a re two different kinds of furloughs: adverse action furloughs an dreduction-in-force (RIF) furloughs. Furloughs occurring during a federalshutdown period ar e essentially adverse action furloughs, a lt ho ug h t he y ar ecommonly referred to as "emergency" furloughs as well. T he y a re administeredu nd er t he same authority (5 CF R 752) as th e adverse action furlough, exceptthat th e 30-day notice on furloughs does no t apply in shutdown or "emergency"situations. Under adverse action/shutdown/emergency furloughs, federal


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While in furlough status, federal employees may seek other jobs in theprivate sector (except those that would violate conflict-of-interest or Hatch Actstatutes) and elsewhere in the federal government as well, provided they receiveagency approval. They remain eligible for unemployment insurance, althoughthe length of any furlough and differences in eligibility rules among states andlocalities may preclude any significantbenefits. Repayment of any such benefitsmust be made by a federal employee i f the employee is later retroactively paidin full for furloughed time. Federal employees may not volunteer to work fortheir agency in an unpaid status.93

Employees subject to adverse action furloughs (includesshutdown/emergency furloughs) have clearly defined legal rights, as follows: 30 days' advance written notice by agency (may be waived inshutdown/emergency furlough actions); 7 calendar days for employee to answer orally and in writing to theproposed notice; Right of representation by attorney; A timely written decision by the agency; and An appeal right to the Merit Systems Protection Board (See 5 CFR1201, Subpart B.)Shutdown furloughs are not considered a break in service and are generallycreditable, for retaining benefits, seniority, and for


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brief. One, which took place on November 23, 1981, lasted one day; another, onOctober 17, 1986, lasted half a day. Prior to 1995, th e most recent took placeover th e Columbus Day Holiday weekend in October 1990, an d its effects weremitigated by th e holiday. Federal facilities no t otherwise closed over th eweekend period, notably national p ar ks a nd museums, were shut down, butagreementwas reached between th e President an d Congress on th e day after th eholiday an d a longer furlough was averted.98 In 1995, however, partial federalshutdowns successively se t new records for duration. The first, which took placefrom November 13 to November 19, lasted six days. The second, which beganon December 16, 1995, less than one month later, continued until January 6,1996, an d lasted 21 days. Appendix Table 2 provides a summary ofappropriations funding gaps, fiscal years 1977-1996.

In th e wake of federal government partial shutdowns, questions havecontinually arisen about whether federal employees furloughed because ofgovernment shutdowns would receive retroactive pay for furlough days oncethey are returned to on-duty status. There is no assurance of suchreimbursement. However, in both recent shutdowns, as well as in all priorshutdowns, federal employees placed on furlough were paid retroactively whenCongress passed an d th e President signed subsequent legislation authorizingsuch payment. Federal government contract employees, on t he o th er hand, areno t covered under an y federal employee retroactive pay provisions.

COSTS OF FEDERAL GOVERNMENT SHUTDOWNS

The estimated costs ofshutting down th e federal government during a lapsein appropriations are incomplete and sketchy at best. That is especially true int he brief shutdown periods that occurred prior to 1995. In those federal


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million. Th e difficulties of compiling such cost data were summarized by GAOas follows:Th e data provided by th e agencies were prepared in a very shorttime frame (generally in less than 2 days). Thus, they can no t beconsidered a complete story o f t he effects that delays in th e enactment

of funding legislation would have on agencies' operations an d deliveryof program services to th e public. When actual data were no t available,we asked th e agencies to estimate. Thus, th e data, particularlyconcerning costs an d savings, should often be viewed as preliminaryestimates by th e agencies.100 In addition, certain intangible costssuch as lost productivity an d adverse affects on federal employee moralewere widespread th ro u gh o ut th e agencies, according to th e GAO.lOlCost assessment data for th e 1995-1996 partial federal government

shutdowns is also incomplete. In th e December 16, 1995 to January 6, 1996shutdown, however, one major cost--daily payroll--has been est imated atapproximately $44 million pe r day, assuming 284,000 furloughed federalemployees. 102 In addition, partial costs o f t he November 13-19 shutdown wereestimated by Mr. John Koskinen, DeputyDirector for Management, OMB, beforeth e Subcommittee on Civil Service, House Government Reform an d OversightCommittee at federal shutdown hearings held on December 6 an d 14, 1995.Preliminary estimates range from $700 to $750 million, with approximately $400to $450 million being payroll costs for furloughed employees. 103 On January11, 1996, unofficial cost estimates obtained from OMB show an aggregate costfor federal employees furloughed i n b ot h shutdowns (payroll cost only) at $1.1billion.104 On February 6, 1996, OMB released revised shutdown costestimates. "The overall cost of the ...shutdowns is estimated to be over $1.4billion an d created numerous backlogs in government services that will, in m a ny


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Affairs Director EdwinDale stated, "There has never been an accurate figure forthe costs of these things [shutdowns] and there never will be."107 Althoughcongressional hearings were held in the wake of the 1986 federal governmentshutdown, and payroll costs for the 556,000 federal workers sent home were setat $28 million, Mr. Dale questioned whether this was a legitimate cost. "Thisestimate is misleading, because they are trying to pu t a value on the price ofwork lost. It's not a cash cost," Dale said. lOS

Ten years later, on December 6, 1995 at a congressional hearing on theNovember 1995 federal shutdown, the Deputy Secretary of the Department ofHealth and Human Services, Dr. Walter Broadnax, using similar language,testified that when you factor in "employee morale" and "non-personnel costs,"the overall cost of a shutdown is "extremely difficult to determine."109

Other cost assessment difficulties were described by Mr. Koskinen, at theDecember 6, 1995 House hearing:Significant additional costs that cannot be determined at this time includeinterest payments to third parties required under the Prompt Payment Actand the Cash Management Improvement Act when the Federal governmentdoes not pay its bills on time and additional personnel costs necessary todeal with the backlog of work,uoMr. Koskinen also made reference to the intangible costs of federalshutdowns to the public at large:As significant as the monetary costs are the denial of basic and importantservices to theAmerican public. Millions ofAmericans were inconveniencedor will be delayed in the receipt of payments and benefits to which they are


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APPENDIX

Table 1. Furloughed and Excepted-From-Furlough Federal Employees as ofJanuary 4, 1996

Table 2. Appropriations Funding Gaps: Fiscal Years 1977-1996


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Table 1. Furloughed a n d Excepted-From-Furlough Fed eralEmployees as o f J an u ary 4, 1996

Employees EmployeesAgency o n exceptedfromfurlough furlough

Agriculture (Forest Service Only) 31,000 8,850Commerce 22,501 15,314Education 4,510 550HH S 25,700 34,360HUD 9,839 1,888Interior 48,000 22,600Justice 12,613 85,956Labor 14,227 3,763State 8,086 18,540Veterans Affairs 32,962 203,203Environmental Protection Agency 18,159 720NASA 19,980 1,290Small Business Administration 2,522 2,650


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Employees EmployeesexceptedAgency on fromfurlough furloughFederal Mediation and Conciliation 287 2Federal Trade Commission -- 979FEMA 1,909 482International Trade Commission 421 9National Credit Union Administration -- 905National Labor Relations Board 2,012 5National Science Foundation 1,233 24NEA 142 6NEH 166 6Office of US Trade Representative 116 50OPIC -- 175OSTP 9 27Peace Corps 851 382Railroad Retirement Board 1,003 529RTC (all other) -- 3,921


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Table 2. Appropriations Funding Gaps:Fiscal Years 1977-1996

Fiscalyear Date gap commenced1 Full day(s) of gaps Date gap terminated2

1977 Thursday 09-30-76 10 - Friday through Monday 10-11-76second Sunday1978 Friday 09-30-77 12 - Saturday through Thursday 10-13-77second WednesdayMonday 10-31-77 8 - Tuesday through Wednesday. 11-09-77second TuesdayWednesday 11-30-77 8 - Thursday through Friday 12-09-77

second Thursday1979 Saturday 09-30-78 17 - Sunday through Wednesday 10-18-78

third Tuesday1980 Sunday 09-30-79 11 - Monday through Friday 10-12-79second Thursday1981 [none]1982 Friday 11-20-81 2 - Saturday, Sunday Monday 11-23-811983 Thursday 9-30-82 1- Friday Saturday 10-2-82

Friday 12-17-82 3 - Saturday, Sunday, Monday Tuesday 12-21-821984 Thursday 11-10-83 3 - Friday, Sa turday, Sunday Monday 11-14-831985 Sunday 9-30-84 2 - Monday, Tuesday Wednesday 10-3-84Wednesday 10-3-84 1- Thursday Friday 10-5-841986 [none]


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Fiscalyear Date gap commenced1

1987 Thursday 10-16-861988 Friday 12-18-871989 [none]1990 [none]1991 Friday 10-5-901992 [none]1993 [none]1994 [none]1995 [none]1996 Tuesday 11-13-95

Saturday 12-15-95

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Full day(s) of gaps1- Friday1- Saturday

3 - Saturday, Sunday, Monday

6 - Tuesday through Sunday21 - Three weeks

Date gap terminated2Saturday 10-18-86Sunday 12-20-87

Tuesday 10-9-90

Sunday 11-19-95Saturday 1-6-96

Source: For years prior to 1996, data are from Continuing Resolutions and Funding Gaps: Selected Data for Fiscal Years 1977-1995. eRSReport 95-995 GOV by Robert Keith and Edward Davis. September 25, 1995.1. Gap commenced at midnight of the date indicated.2. Gap terminated during the date indicated because of th e enactment of a full-year continuingresolution or another short-term continuingresolution.

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September 1997: CRS report: Shutdown of the Federal Government: Effects on the 'Federal Workforce...

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