Federal Agency Sequestration - 4.16.13


April 16, 2013

Mr. Chairman and members of the committee, I appreciate the invitation to appear before you today to discuss the planning process and implementation of automatic across-the-board budget cuts, known as sequestration, within the National Park Service (NPS).

On March 1, 2013, the sequestration order required by law, set into motion $85 billion in across-the-board cuts. Under this order, the NPS was required to reduce five percent of discretionary and 5.1 percent of mandatory budgetary resources, or approximately $153.4 million. The law requires that sequestration cuts be taken proportionately from each account, so $113 million of the $153 million cut was taken from the NPS operational account (ONPS).For NPS, this involves cuts for each park and organization as presented in our annual budget justification.

To give you a deeper understanding of how these cuts are being implemented, I would like to first explain our approach to internal budget planning over the past few years, and then describe how we furthered our cost savings as sequestration appeared more likely. Finally, I will explain how we calculated the impacts that will result from sequestration, and how we accrued the necessary savings while making our best effort to uphold our mission and to protect park visitors and resources.

Over the past three fiscal years, park base budgets (i.e. the portion of park operations funding allocated directly to parks managers) have been in a slight but steady state of decline. The data indicate roughly a four percent reduction from FY 2010 to FY 2012 in appropriated park base budgets. This reduction, coupled with rising inflation, increasing fixed costs, and the constant uncertainty of the budget cycle over the past few years, has forced park managers to make reactive financial decisions that are unsustainable in the long term. In an effort to help parks anticipate and plan for a continued decline in their base budgets, I issued a budget planning memo in June 2012, before sequestration appeared to be inevitable. This memo instructed NPS leadership to work with every park, program, and organization to develop a financial model that would prepare their operations to succeed within a reduced budget scenario over the following three years, through FY 2015.

This exercise, which all parks began in the summer of 2012, was critical for positioning the NPS to deal with sequestration as it came to pass one month ago. Finding long-term efficiencies within park base budgets is challenging, because parks have very little spending flexibility given the long-term investments in infrastructure and staffing to maintain and operate park units. Approximately 85 percent of park base budgets are spent on costs that involve long-term commitments and in some cases are externally driven, such as the salaries of permanent employees, rent, utilities, and communications. That leaves on average only 15 percent of their base budgets with some flexibility to cover seasonal employees, travel, equipment, and short-term contracts.

During this exercise, we asked parks and programs to identify priorities and appropriate levels of services under the forecasted and constrained planning targets, and to think about how they could restructure their workforces to most efficiently meet identified needs. As a result, parks and programs have approached spending over the past nine months in a very conservative manner – leaving vacant positions unfilled, planning for fewer seasonal hires, and reducing short-term spending.

Before we were able to conclude this planning effort, it became more evident that sequestration might come to pass, and in January 2013, our Department began to accelerate our planning efforts and determine how we would reduce spending by five percent over the remainder of FY 2013.The NPS was able to use the planning effort we began in the summer of 2012 as a starting point for implementing these more sudden and significant cuts to our operation.

While we developed our service-wide strategy for implementing sequestration cuts with the intent that above all, the NPS mission, particularly ensuring that visitors, employees, and resources would be protected, the five percent cut had to be absorbed at each individual park and program. The NPS laid out a series of carefully structured steps for parks to follow, and we asked parks to prioritize cuts that would affect the fewest numbers of visitors during our upcoming period of peak summer visitation.

First, I implemented a hiring freeze on all permanent positions. Leaving funded positions unfilled provides a cost savings which requires no further action. As a part of our budget planning effort last summer, we asked parks to be extremely cautious in deciding to commit to permanent salaries. Park and program managers acted prudently and as a result we accrued approximately 1,300 funded vacancies by the time the freeze took effect. To help meet the five percent sequestration cut, parks and programs plan to leave approximately 900 of these positions unfilled. The vacancies that are filled will be approved at the highest level of our organization, and managers will have to explain how they have, where appropriate, consolidated functions to ensure the most efficient organization possible. The continued salary lapse will save the NPS $43.5 million overall through the end of the fiscal year.

Next, parks and programs were asked to eliminate spending on travel, overtime, supplies and equipment, and contracted services that could be deferred with minimal short-term repercussions and without irreversibly compromising the long-term mission of the parks and programs. Though we have been scaling back spending in many of these areas in the recent past, or closely controlled our activities, this was the next logical cost driver to examine. Strict travel controls have been in place across NPS since 2003 and spending on travel has remained consistent with 2003 spending levels when adjusted for inflation. Under sequestration, travel will be controlled even more tightly and NPS participation in many conferences has been cancelled. Employees will travel only when it is deemed mission critical and when the meeting or training cannot be conducted through alternative methods such as video or teleconference. We estimate the we will reduce travel by $5.1 million for the remainder of FY13. Although not a sustainable source of long-term savings, purchasing supplies and equipment will be deferred to future years, savings $7.9 million in FY 2013.

In cases where parks were still unable to meet their reduction amount after taking these first two actions, they were instructed to eliminate temporary seasonal positions and extend furloughs of subject-to-furlough employees, who are permanent employees whose regular work schedule includes a period of furlough for at least two pay periods per year, to the maximum length allowed in accordance with the individual's specific employment agreement. We excluded positions that are required to ensure the health and safety of visitors and employees or protect resources and assets .In keeping with our intention to minimize impacts to visitors, we asked managers to prioritize seasonal hiring in the most frequently visited seasonal areas within their parks, in some cases shifting the duties of permanent and seasonal employees to maintain coverage at some of our most popular park facilities. We estimate we will derive approximately $11.6 million of savings from hiring 1,000 fewer seasonal employees, and $1.3 million from increasing furlough time for subject-to-furlough employees.

Lastly, if the total savings could not be met by all previous actions, parks were instructed to furlough all permanent employees for the length of time needed to achieve their five percent savings, ensuring that all employees were furloughed for an equal number of days. Due to the many cost saving measures parks have taken over the past few years, and the careful planning we began last summer, the only NPS furloughs required will be for the U.S. Park Police. The U.S. Park Police budget is mostly salary and other nondiscretionary costs, so after taking the steps identified above, furloughing employees was the only viable method to accrue the required savings. As noted above; ensuring that visitors, employees, and resources would be protected will be the Service's highest priority.

Each park and program submitted a sequestration plan outlining how they intended to cut five percent from their base budgets and a list of impacts that would result from the cuts. The NPS Budget Office reviewed each submission, ensuring that each plan was consistent and reasonable, and that, to the best of a park's ability, the plans prioritized spending to protect activities to support visitors, resources, and mission. Care was taken to avoid potential negative effects of sequestration on visitors. However, a reduction of this magnitude, implemented in a compressed timeframe of seven months, is challenging, and impacts are not avoidable in all cases. The impacts are the result of having fewer seasonal employees and keeping permanent positions vacant. The effects include delayed road openings, reduced hours of operation for programs and services and fewer programs and patrols. Impacts reflect the simple reality that the NPS will not have the resources to fill positions or the flexibility to absorb the cuts in other areas. Every park activity will be affected and impacts will continue to accumulate over time. In addition, there will be negative impacts to park entrance fee revenue, concession revenue, and economic effects in gateway communities as parks adjust operating seasons and facility staffing schedules.

The impacts of not filling permanent positions will be felt throughout every area of park operations. In their reports of expected impacts, parks reported vacant natural and cultural resource management positions. Unfilled natural resource management positions will reduce park capacity to collect water quality data, monitor the condition of federally listed threatened and endangered species, perform compliance consultations, manage mineral extraction and monitor mine drainage, and combat invasive plants and animals. Similarly, lapsing cultural resource positions that preserve and maintain fragile museum objects and exhibits, cultural and tribal sites, and historic objects and buildings will impact museum collections, delay National Historic Preservation Act consultations, delay National Environmental Policy Act and historic preservation clearances, reduce outreach to tribal communities and schools, decrease protection of ethnographic resources and historic properties listed on the National Register of Historic Places.

Parks reported that they will also leave vacant critical positions in interpretation and education, outreach, and volunteer coordination. These vacancies will limit visitor opportunities for face-to-face contact with a professional park ranger, reduce distribution of orientation information, and require parks to curtail guided programs. Parks will experience significant reductions in school programs, community outreach, visitor center hours, and volunteer programs. Under sequestration, parks will be unable to fill vacant commissioned and noncommissioned ranger positions, as well as support positions such as dispatchers. Holding these positions open will impact backcountry patrols, front country law enforcement activities, dispatch operations, and resource protection capabilities.

In the information parks provided to NPS, they reported expected decreases in daily janitorial activities, such as cleaning comfort stations and other facilities. The loss of specialized positions that are required to operate unique systems like water treatment plants and electrical systems will impact visitor amenities. In addition, many parks reported that they would be reducing maintenance and repairs, resulting in increases in the inventory of deferred maintenance. Service-wide, the estimate of deferred maintenance needs is $11.5 billion. Sequestration will accelerate the growth of these costs because of reductions to park operations and reductions to facility project accounts.

In addition to lapsing permanent positions, the reduction of approximately 1,000 seasonal positions Service-wide will have major impacts on visitor services, resource management, maintenance, and other areas of park operations. Since FY 2010, spending on seasonal and short-term employees has decreased by eight percent Service-wide. Seasonal employees are critical to every aspect of NPS operations, from visitor services to fire fighting. Funding for seasonal employees is often the only substantial area of flexibility that parks have available. When faced with declining budgets, many parks have no other option but to reduce their seasonal employees.

As a result of scaling back seasonal employment, parks reported reductions in visitor access, including closures of entire areas or facilities, such as campgrounds and visitor centers. Other impacts include delayed openings of visitor service areas and recreational facilities such as campgrounds, visitor centers, comfort stations, and trail access points, and delayed road openings. Snow plowing and other cleanup efforts will be delayed by staffing shortages. The capacity of parks to provide visitor information, including safety information, historical and interpretive content, directional information, and other communication useful to visitors will be reduced. All interpretive programs, including youth and education, will be negatively impacted. Reduced seasonal employees will impact the Volunteers-in-Parks program and diminish volunteer support, which is heavily relied upon by many national parks.

National parks are valuable economic drivers for nearby communities and have a 10 to 1 return on investment for the nation as a whole. In 2011, in addition to the employment and economic benefits of the $3 billion annual budget, 279 million national park visitors spent $13 billion in communities within 60 miles of a national park. That spending supported 252,000 jobs – more than 170,000 of those jobs exist in park gateway communities. The net benefit to our nation's economy was $30 billion. With fewer employees on staff to keep parks open and operational, local businesses may feel the impacts of sequestration.

Through careful planning and conservative spending over the past few years, and in particular the last twelve months, the NPS has positioned itself to implement these budget reductions while preserving our mission to the maximum extent possible. Because each park has a slightly different budget and staffing structure, we have given parks the ability to make the choices best suited to their individual circumstances. All park and program sequestration plans have been vetted through the regional and headquarters offices. We are maintaining high levels of communication throughout NPS, with local communities and with our constituents. Most of these reductions are not sustainable in the long-term, and even now, the NPS leadership is working to create a financial model that will allow us to fulfill our mission should we be faced with continued budgetary constraints in the long-term. This is not a satisfactory way to operate the government and we remain hopeful that Congress will take action to address the sequester and its damaging impacts.

Mr. Chairman, this concludes my statement. I would be pleased to respond to any questions you or the other members of the committee may have.

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