The agency also changed in other ways, with much greater emphasis being placed on the longerterm budget prospects associated with the Social Security and Medicare programs. In particular, a new division, the Long-Term Modeling Group, was created and staffed with six full-time employees and buttressed with additional forecasting, modeling, and data resources as well as highend computer hardware and expert programming skills. The more immediate aspects of those huge entitlement programs also consumed Congressional and agency attention. Starting in January with the President's State of the Union Address to the Congress, Social Security assumed a pivotal role in Congressional deliberations. Because the goal of preserving the Social Security surpluses gained virtually universal acceptance, Social Security considerations extended well beyond the normal programmatic focus of the relevant committees. Even though major reform legislation was not enacted, the Congress passed legislation altering disability insurance, held hearings on major reform proposals, and incorporated Social Security into its fiscal deliberations. Our work in support of the Congress: Analyzed the Social Security framework presented in the State of the Union address and the budget. The Director and Deputy Director testified repeatedly on the President's Social Security framework, clarifying its budgetary, economic, and programmatic implications. Our report on the President's budget also contained a detailed analysis of the framework and its budgetary implications, and we issued a number of other reports analyzing the Administration's framework. Provided both testimony and reports analyzing the President's subsequent reform proposal. Analyzed the President's "USA Accounts" proposal, and a number of Social Security reform proposals and provided cost estimates for various Social Security bills, including the Ticket to Work and Work Incentives Improvement Act. Worked extensively with the leadership and staffs of the House Ways and Means, Senate Finance, and House and Senate Budget Committees on a wide variety of Social Security issues. The Congress also focused on Medicare in 1999, concentrating primarily on long-term reform proposals, the President's proposals, and efforts to refine changes enacted in the Balanced Budget Act of 1997. The Director and other staff testified repeatedly on Medicare before five Congressional committees, issued numerous reports and cost estimates, and worked closely with committee leadership and staff. In particular, we: Analyzed the premium-support model proposed by Senator Breaux and Congressman Analyzed and provided cost estimates of the President's Medicare proposals included in the Analyzed and provided cost estimates of the President's Medicare reform proposals, including estimates of the Medicare prescription drug proposal; analyzed and provided to Congressional staff many other estimates of alternative prescription drug proposals. Provided cost estimates for the Medicare, Medicaid, and SCHIP Balanced Budget Analyzed Medicare spending trends, assessing the reasons for the temporary slowdown in spending, and testified and issued reports on a wide range of Medicare-related topics, including long-range solvency, risk adjustment, partial capitation, and specific legislative changes, such as the President's proposal to permit early "buy-ins." CBO also continued to satisfy its major mandated functions relative to the Congressional budget process, including producing almost 900 bill cost estimates and 1,100 estimates of the impact of unfunded mandates on state and local governments and the private sector. Major legislative initiatives in fiscal year 1999 with a significant budgetary impact that required comprehensive estimates by CBO included the National Defense Authorization Act for Fiscal Year 2000; the Gramm-Leach-Bliley Act (banking reform); the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999; and the Water Resources Development Act of 1999. CBO analyses also supported Congressional consideration of proposals relating to patients' rights, veterans' health care, military pay and benefits, agricultural crop insurance, federal national disaster insurance, and an increase in the federal minimum wage. In its comprehensive annual reports on the budget and the economy, CBO produced accurate estimates of the budget outlays, revenues, and surplus for fiscal year 1999-estimates generally credited as being more accurate than those of most other major economic and budgetary forecasters. For example, in its January Economic and Budget Outlook, CBO projected a fiscal year 1999 surplus of $107 billion, which was very close to the actual result of $124 billion. Of the $17 billion difference, $13 billion resulted from higher-than-expected revenues and the remainder from outlays. The $13 billion underestimate for revenues was about 0.7 percent of total revenues for the fiscal year. The $4 billion overestimate for outlays was about 0.2 percent of outlays. The Congress's view of the quality of our estimates and their relevance to 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 quick-turnaround answers on budget questions in the waning hours of the fiscal year 2000 budget process. During the year, the Director, Deputy Director, and other CBO officials testified 32 times, up from 20 in fiscal year 1998, and they did so for a variety of committees, including several appearances before the House and Senate Budget Committees, House and Senate Appropriations Committees, Senate Finance Committee, House Rules Committee, House In 1999, CBO also resumed the publication of its "budget options" report detailing hundreds of possible methods for reducing spending or raising revenues. The volume was titled Maintaining Budgetary Discipline: Spending and Revenue Options. CHANGES IN THE SPENDING PLAN FOR FISCAL YEARS 1999 AND 2000 When compared with the original estimate, CBO's actual spending in fiscal year 1999 showed a significant variance in two areas. Printing costs were $119,000 below the planned amount, the result of publishing fewer studies than originally anticipated. And spending for equipment was $900,000 over the budgeted amount because of several information resource projects that were undertaken after receiving permission to reprogram excess personnel funds. Those projects included: Purchasing software and hardware to implement the ADSS system. Replacing two mainframe printers. Replacing slower personal computers in order to provide the speed and memory necessary to run an operating system that was completely Year 2000 compliant. Relocating the CBO network servers to House Information Resources (HIR) space to provide better security and reliability. For fiscal year 2000, CBO received an appropriation that was $700,000 less than the amount requested. That reduction was absorbed by reducing most spending areas below the level originally estimated. The largest reduction ($385,000) was taken in personnel spending, where 7 FTEs will not be funded. The other significant reduction was made in spending for equipment, which was reduced by 15 percent, or $122,000, by significantly reducing ADP hardware purchases from what was originally anticipated. PRIORITIES FOR FISCAL YEARS 2000 AND 2001 Reforming Social Security and Medicare is expected to continue to be a priority for the Congress. As part of CBO-wide activities in fiscal year 2001 to analyze Social Security reform options, we will complete the development and documentation of actuarial and microsimulation models for estimating Social Security over the long term (75 years), including a benchmark-estimate comparison with the estimates of the Social Security Administration's Office of the Chief Actuary. We will also begin producing long-range cost estimates and impact analyses of Social Security for both current law and reform proposals. In fiscal year 2001, we will continue to develop long-range Medicare models. We will also continue to devote a substantial amount of time to analyzing the effects of privatizing Social Security on capital formation and growth. Staff will also focus on aspects of both retirement Supplemental Security Income program, and interactions between Social Security and private pensions. CBO also expects significant interest by the Congress in analyses and estimates of legislative proposals relating to commercial, environmental, and trade regulation; the effect of technical progress on the national economy; expanded Medicare benefits; improved federal student-aid programs; the adequacy of funding for defense plans; and federal debt management. In addition, CBO will continue to focus resources on improving its economic forecasts and integrating its economic and budget forecasts. In addition to focusing on its mission-related work, CBO, like any effective and highly successful organization, must devote some resources to attracting talented people, developing their skills, and properly equipping them with the needed technology. It must then organize its key work processes to be as efficient as possible. A major thrust for CBO over the next two years will be to address those important issues. The paragraphs below outline our goals for strengthening the internal operations of CBO. Human Resources Priorities: Enhance Recruitment and Retention During the next two years, CBO will expand on the initiatives undertaken in 1999 to identify, hire, and retain a highly talented and diverse workforce by strengthening our recruitment strategies, investing more in training and staff development, and reconfiguring our space so that it better meets the needs of our staff. As noted earlier, our efforts in 1999 are expected to result in our filling needed vacancies in fiscal year 2000. Future efforts will continue such progress in 2001, while enhancing our ability to develop, retain, and diversify our workforce. Strengthen Recruitment Strategy - Our goal is to focus our efforts and resources on quickly filling key vacancies, particularly in hard-to-attract disciplines, while building a more diverse workforce. In 1998 and 1999, CBO experienced an unusual number of vacancies; yet we were unable to quickly replace the individuals who left. By the end of 1999, we were therefore far short of our staffing needs. Although we were able to meet our mandates and actually increase the level of effort in some areas, that shortfall undoubtedly created a hardship for many of our staff, and it meant that our ability to produce major studies suffered somewhat. We also believe we can do a better job of reaching out to minority candidates in order to build a more diverse workforce. These efforts have already begun, and we have a task force working to present recommendations early in January on how to build a better recruitment system. Those recommendations will most likely include diversifying the schools we target in recruiting, developing better recruitment materials that emphasize the advantages of working for CBO, capitalizing more on our internship program, and devoting somewhat more staff and travel resources to this purpose. We will also consider a more formal orientation and mentoring program for new employees. Improve CBO's Training Programs - Our goals are to improve management and job skills by investing in our people through training, education, and professional development and to take greater advantage of the existing technology in our operations. CBO has always invested in the job skills of its employees, but the amount we spend on job training and professional development is far less than world-class firms and other highimpact organizations and much less than recommended by most management and training experts. CBO spent less than 0.5 percent of its personnel costs on training in 1999, compared with the 2 percent to 4 percent typical in high-performing private firms. During the next two years, we will increase the percentage of payroll spent on training, education, and professional development, and we are now working on a new training policy to carefully target those resources and ensure that all of our employees receive the training needed to improve their management, technological, and job skills. Modernize and Revitalize the Working Environment - Our goal is to reconfigure and, where necessary, renovate offices to better use our space and to provide a quality work environment for new employees and those currently in inadequate space. Most of CBO's space was configured in the first few years after its creation 25 years ago. At that time, there were few desktop computers, a much larger number of support staff, less specialization among employees, and an employment marketplace that was not nearly as competitive. Consequently, a significant percentage of the space is configured for clerical staff, while many analysts have work space that is inadequate and much less desirable than that of our competition. Many workstations adapt poorly to the important role that computers and technology now play in our work, and the conference space critical to the collaborative nature of our work is in short supply. Finally, some of our work space may not comply with fire code requirements and good occupational safety and health practices, and some of our nonpublic space is not accessible. If we are to be competitive in the employment marketplace and attract and retain employees who are highly sought after, our facilities-related problems must be addressed. In cooperation with staff of the Architect of the Capitol, we have developed a range of strategies to address those problems, and we believe that with modest investments during the next three years, we can make significant progress. Specifically, we plan to reconfigure our office space to use what we have more efficiently, rationalize our storage, and provide more suitable and functional workstations for both support and analytical staff. Communications Priorities The value of CBO's work to the Congress and the public is directly related to the quality, readability, and easy availability of our written products. Over time, the electronic versions and electronic delivery of our analyses have increased in importance, and the demand for our electronic products continues to grow. At the same time, however, the demand for printed copies of our reports remains strong, and the less formal products such as memorandums, testimony, and quick |