Federal Downsizing

Faced with a need to cut its staff by more than 1,300 positions during fiscal year 1997, the Department of Agriculture's Farm Service Agency (FSA) designed its "buyout" program to help it reach its downsizing goals while minimizing the need for reductions-in- force. This report reviews voluntary separation incentives, or buyouts, at FSA. GAO (1) determines if FSA's fiscal year 1997 buyout program was planned in accordance with legal requirements; (2) determines if the decision to grant buyouts was based on a well-supported cost and savings analysis; and (3) describes the results of the fiscal year 1997 buyouts, including the impact of buyouts and downsizing on the agency's operations.

GAO noted that: (1) faced with a need to reduce its staff by 1,339 positions (7.6 percent) during FY 1997, FSA designed its buyout program to help it reach its downsizing goals while minimizing the need for reductions-in-force (RIF); (2) FSA included all required legal provisions in its buyout program; (3) these included a strategic plan for using buyouts that identified the types of positions that were to be eliminated by organizational unit, location, broad occupational groups and grade levels, the number and amounts of buyout payments anticipated, and how the mission areas would be affected by elimination of the positions and functions; (4) although not required to do so by legislation, the Department of Agriculture (USDA) completed a cost and savings comparison of buyouts and RIFs for FSA prior to the FY 1997 buyouts at the request of the Chairman, Senate Committee on Agriculture, Nutrition, and Forestry; (5) although these estimates appeared to be high, they did not invalidate USDA's conclusion that buyouts should generate more net savings than RIFs over a 5-year period; (6) separating retirement-eligible employees who could not be reassigned through RIFs in offices that were closing or scheduled to close may have generated more savings than granting them buyouts; (7) since employees eligible for a retirement annuity cannot receive severance pay under a RIF, a significant cost element would have been avoided by separating an employee under a RIF rather than a buyout; (8) FSA reported that 926 employees have been separated with buyouts in FY 1997, and 329 employees have been separated under RIFs; (9) the total separations of 1,255 compared to a planned separation of 1,339 employees; (10) of the 926 buyout takers, 57 percent were eligible for regular retirement, and an additional 33 percent were eligible for early retirement; (11) FSA officials reported they generally used the buyout authority in those areas of the agency where declining workloads and budgets dictated staffing reductions; (12) officials at headquarters and in the Kansas City Management Office (KCMO) reported that they experienced the loss of expertise in the administrative and information technology areas when employees separated with buyouts; (13) FSA officials indicated the use of buyouts helped them meet downsizing goals while reducing the need for RIFs; and (14) FSA officials expressed some strong concerns about future workforce reductions and told GAO that an additional reduction of 2,850 staff years over the next 2 fiscal years, called for in the President's FY 1998 budget, could seriously affect the agency's ability to meet its mission and maintain high customer service levels.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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