CBO Statement of Appropriations Request for Fiscal Year 2002 before the Subcommittee on Legislative June 26, 2001 NOTICE This statement is not available for public release until it is CONGRESSIONAL BUDGET OFFICE Mr. Chairman and Members of the Subcommittee, I am pleased to present the fiscal year 2002 budget request for the Congressional Budget Office. The mission of CBO is to provide the Congress with the objective, timely, nonpartisan analysis it needs about the economy and the budget and to furnish the information and cost estimates required for the Congressional budget process. CBO does not make policy recommendations; instead, it presents the Congress with options and alternatives in a wide range of subject areas having economic and budgetary impacts. The Congressional Budget Office is requesting $30,680,000 for its operations in fiscal year 2002, a 7.9 percent increase over the agency's fiscal year 2001 appropriation. The funding increase is largely explained by external forces, including a workload that continues to grow and a competitive labor market in which we must compete for highly skilled employees, and the internal need to replace our most mission-critical computer system. Overall, 94 percent of the increase would go to pay and benefits, while all other costs would be tightly controlled. Specifically, we are asking for an 8.7 percent increase in pay and benefits, which would fund mandatory pay and benefit increases and add four full-time positions; a modest increase in information technology spending; and level funding for all other goods and services by continuing to reduce administrative costs. Our 2002 budget request would: Support an increasing workload, which is expected to include more than 2,800 legislative cost estimates and mandate cost statements (a 30 percent increase from fiscal year 1999); 37 studies and other publications; and a heavy schedule of Congressional testimony. Fund our authorized level of 232 full-time-equivalent positions, four more than we could support in fiscal year 2001, to accommodate the growing workload. Provide an annual pay adjustment of 4.6 percent for nonmanagers. This adjustment was requested in anticipation of the expected executive branch proposal, but it is also what we believe is needed to remain competitive in the labor market (and it is consistent with the call for continued parity between civilian and military pay increases). The last two years' cost-of-living adjustments have been important in restoring our competitiveness as a recruiter, and we hope to maintain that competitiveness. Fund promotions and merit increases for nonmanagement staff, as well as performance-based pay for our managers and senior-level employees, who do not receive automatic annual wage adjustments. Allow a modest increase ($115,000) in technology spending to replace BADS, a 20-year-old legacy system now operating on the HIR mainframe (which HIR plans to eliminate at the end of this year). This system, which allows us to track the progress of pending legislation and make 10-year budget projections, is absolutely critical to our mission. We plan to replace this system with a client server application compatible with our current hardware and software environment. The redevelopment is estimated to cost over half a million dollars, but we will offset much of the cost by savings elsewhere within ADP and delays of some software upgrades. We are also asking for certain changes in our legislative authority to allow us to (1) create a CBO Education Fund using nonappropriated funds; (2) pay off some portion of employees' student loans, using authority similar to that granted other legislative and executive branch agencies; and (3) clarify provisions governing our training programs and disposal of surplus property. The legislative language for these provisions is included as an appendix. Cost Savings Price inflation for certain goods and services has been quite high in recent years, particularly for subscriptions, communications technology, software, and computer support services. To help offset that inflation, we have identified a number of operating cost savings. In fiscal year 2000, we identified (or realized) nearly $400,000 in such annual operating cost reductions. Some examples are: Eliminating software licenses (~$100,000) and canceling unnecessary journal subscriptions (=$36,000); Consolidating local phone lines and reducing long distance and data communications costs (~$42,000); Reducing printing, mailing, and document storage costs (~$20,000); Canceling equipment maintenance contracts that were no longer cost-effective (~$10,000); and Cutting the cost of mainframe time-sharing by shifting certain operations to the Library of Congress (~$100,000). We are now working on additional operational changes that will save at least another $250,000 annually beginning in fiscal year 2002. Accomplishments in Fiscal Year 2000 Fiscal year 2000 saw an increased workload at the Congressional Budget Office, as the second session of the 106th Congress produced almost 900 legislative proposals that required a CBO federal cost estimate. Almost 80 percent of those proposals also required state and local, and private-sector mandate estimates-for a total of 1,400 mandated estimates. Overall, the number of cost estimates and unfunded mandate estimates increased by 30 percent over the fiscal year 1999 level. In particular, we prepared estimates for a large number of proposals related to major health care initiatives, including the establishment of a new prescription drug benefit in Medicare, improving the long-term financial status of Medicare, and modifying provider payment rules established by the Balanced Budget Act of 1997. These proposals are large and complex, and analysis of them strained the capacity of our health units and reinforced our efforts to add resources in this area. Other major legislative initiatives in fiscal year 2000 that required analysis by CBO included the Agriculture Risk Protection Act of 2000 (crop insurance); the Conservation and Reinvestment Act; the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001; the Water Resources Development Act of 2000; and major education initiatives. Education legislation reviewed by CBO during 2000 included the Education Opportunities to Protect and Invest in Our Nation's Students Act, the Educational Opportunities Act, the Students Results Act, the Educational Partnership Act of 1999, and the IDEA Full Funding Act of 2000. In addition, the agency continued to provide timely responses to requests from the Congressional leadership and the budget committees. We also devoted resources to the task of analyzing the long-term budget outlook and the longer-term budget prospects associated with the Social Security and Medicare programs. Our relatively new Long-Term Modeling Group (established in 1999) developed the first versions of models designed to generate 75-year cost estimates of proposed changes to the Social Security program. To strengthen this area, we recently convened an advisory group to help us with our modeling efforts. We began to examine the concept of the "New Economy," convening a conference of experts to examine trends in productivity, the effects of new technology on certain industries, and the implications of relatively strong productivity growth in 1995 through 1999 for monetary and fiscal policies. And we provided analyses in support of Congressional consideration of proposals relating to patients' rights, increasing the number of people covered by health insurance, military health care, national missile defense, federal national disaster insurance, and increasing the federal minimum wage. The Congress's view of the quality of the agency's assistance in the budget process is made clear by the numerous times CBO was asked to testify and the many occasions on which it was asked by the Congress to provide answers on budget questions in the waning hours of the fiscal year 2001 budget process. During the year, CBO officials testified 14 times for a variety of committees, including several appearances before the House and Senate Budget Committees, House and Senate Appropriations Committees, House Ways and Means Committee, and other House and Senate legislative committees. In 2000, we continued to publish our Budget Options report detailing hundreds of possible methods for reducing spending or raising revenues. The report also included a discussion of major proposals to increase spending or cut taxes that have been prompted by the emergence of large budget surpluses. Work Priorities for Fiscal Years 2001 and 2002 As always, our emphasis must be on producing the budget projections, cost estimates, and other information that the Congress relies on to do its work. In particular, issues related to the projected budget surpluses have been prominent this year, and Social Security and Medicare reforms are expected to continue as priorities during this Congress. Tax issues will also likely require significant effort as the 2002 budget process unfolds. In fiscal year 2001, CBO will produce long-range cost estimates and impact analyses of Social Security for both current law and what is expected to be a large number of reform proposals. As part of the agencywide effort to analyze Social Security reform options, we will expand and enhance our actuarial and microsimulation models for estimating Social Security over the long term (75 years). Our analytic agenda includes integrating analysis of the long-term macroeconomic effects and fiscal (budgeting) implications into our long-range models. And we will begin development |