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Sequester hit public services, employee pocketbooks, report says

(Kim Hong-Ji/Reuters) (Kim Hong-Ji/Reuters)

The impact of sequestration budgetary limits imposed last year may never be fully known, a new study says, but one effect on federal employees is clear: it cost nearly 800,000 of them upward of $1.4 billion total in lost salary.

A Government Accountability Office report released Thursday examined the impact both inside and outside the government of the more than $80 billion in reductions imposed last spring to meet budgetary targets.

Agencies were able to soften the impact by moving money within or between certain accounts and by spending funds carried forward from prior years, but sequestration still “reduced or delayed some public services and disrupted some operations,” GAO said. “For example, sequestration reduced the size and number of grants, vouchers, and other forms of assistance provided to states and localities, nonprofits, and other partner entities that assist in carrying out federal missions.”

For the public, sequestration affected beneficiaries of emergency unemployment compensation benefits, children’s nutrition programs, low-income housing vouchers, Head Start school readiness programs, as well as biomedical, emerging technology and cybersecurity research, GAO said.

Sequestration also worsened problems with backlogs of Social Security disability and federal retirement applications and hampered oversight of numerous programs, leaving them more vulnerable to fraud and waste, it said. The Treasury Department told GAO that the reductions to the IRS budget “will likely result in billions of dollars in lost revenue due to fewer tax return reviews and diminished fraud detection.”

“However, many of the effects of sequestration could not be quantified or will not be known until future years, if at all, for a number of reasons including the timing of when funds are disbursed (such as grant cycles that start late in the fiscal year), challenges in isolating the effects from other factors, and the lack of currently available performance data for some programs,” the report said.

Regarding the impact inside the government, GAO focused on 23 departments and large agencies, finding that most of them reduced spending on support contracts for program management and facilities, as well as for information technology, equipment and other purchases. All but a few canceled or limited employee monetary awards, reduced employee travel and training, and cut external hiring. Most also reduced overtime and internal hiring.

Seven of the agencies put a total of 770,000 employees on unpaid furloughs from one to seven days. The largest furlough, at the Defense Department, affected 640,500 employees over six days at a cost to them of $1.2 billion, while the cumulative cost to furloughed employees at the other six agencies was put at $169 million. Some smaller agencies not examined in the report also imposed furloughs.

Some agencies did not impose furloughs for various reasons, and even within some that did, certain functions were not affected.

Benefits such as health insurance coverage and accumulation of retirement benefits generally were not affected by furloughs, although loans and withdrawals from the federal employee retirement savings program increased.

The report noted that sequestration was partly blamed for a drop in federal employee job satisfaction in a survey taken last year. “Agency officials also raised concerns about the longer-term implications of sequestration reductions on the federal workforce and on agencies’ ability to retain, recruit, and train personnel with the necessary skill sets,” it said.

The sequestration furloughs were separate from the furloughs caused by the partial government shutdown in October, for which employees later received back pay whether or not they were required to continue working during that time.

A White House budget document released Monday cited those two sets of furloughs as among recent events that “have made it increasingly difficult to deliver on agency missions.”

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