Picking Your Poison: Flexibility to Find Least Painful Sequestration Implementation

Now that H.R. 933 has confirmed the federal sequester’s funding cuts at least through the rest of Fiscal Year 2013 (ends September 30, 2013), the impacts of how the required reduction amounts will be garnered are still the subject of much speculation. Even though the foundation behind sequestration lay in its across-the-board model for exacting funding cuts (so all agencies and their programs equally shared the burden of deficit reduction), H.R. 933 did include some special provisions for certain federal agencies.

For example, the bill offered to military and veterans programs some flexibility in how they distribute the cuts instead of being forced to abide by the across-the-board model of uniform reductions across activities. Regardless, the Departments of Labor, Health & Human Services, and Education must abide by the across-the-board model of exacting funding reductions. Even so, the uniformity is only mandated down to a certain level – 5.1% is not cut from every single expense and employee’s salary. Subsequently, there is a degree of flexibility in how federal agencies reduce their budgets, because the 5.1% is only dictated at the program/activity level.

One common, and much publicized, way of cutting the appropriate amount of spending is to enact furlough days for employees. In other words, the cuts are impacting those who are responsible with administering and managing programs at the federal level. Some larger programs have even more flexibility and are able to avoid even issuing furlough notices and instead are relying on reducing less essential expenses (travel, event, etc. budgets).

Disappointingly, there has been some talk about some grant programs cutting funding from the actual pot from which the grants are doled out. While prioritizing what is spared from funding reductions is inescapably contentious, some methods do sound better than others. While furloughs (reducing staff/salaries is not ideal) it does seem preferable than reducing the funds via federal grant programs. Cutting funds dispersed to states and local areas has a more directly negative effect on the program itself because it targets the services that can be provided.

Sequestration in itself is tough to swallow, but are there best practices in how to cut the required amounts from programmatic budgets? Do certain methods simply exacerbate the problem?