Legislation Reintroduced to Combat Year End Agency Spending Sprees

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By on September 21, 2017 in Agency News with 0 Comments
Senator Rand Paul (R-KY)

Senator Rand Paul (R-KY)

Senator Rand Paul (R-KY) has reintroduced legislation that he hopes would help reduce what he calls “wasteful spending at the end of the fiscal year.”

When the government’s fiscal year is winding down, it is common for federal agencies to ramp up their spending to make sure they utilize their allocated budgets for the fiscal year. This is known as the “use it or lose it” concept; if the money fails to all get spent, Congress might not appropriate as many funds for the agency the following year.

Senate Hearing on Year End Spending

Paul is reintroducing the bill in conjunction with a Senate hearing that was held yesterday called “Prudent Planning or Wasteful Binge? Another Look at End-of-the-Year Spending.”

The hearing was conducted by the Senate Homeland Security and Governmental Affairs Committee. Paul said at the hearing, “Another study showed, on average, spending jumps nearly 500% in the last week of the fiscal year as compared to the preceding 51 week average.”

One of the studies Paul was citing was Do Expiring Budgets Lead to Wasteful Year-End Spending? Evidence from Federal Procurement; Liebman, Jeffrey, & Mahoney, Neale; National Bureau of Economic Research; September 2013. The graph below, taken from the study, shows the spending spike in the last week of the fiscal year to which Paul was referring.

Bar chart showing aggregate data from 2004 to 2009 on agency spending highlighting a significant spike in the last week of the fiscal year

 

Paul also said in the hearing:

We have seen data indicating that on the last day of the fiscal year, money actually moves to the west as the sun sets and they continue to spend it as five o’clock approaches on the west coast.

The stories we have heard may be even more telling. We have been told of the military hovering aircrafts at the end of runways just to burn off fuel, and soldiers sent to the shooting range sometimes for an entire day just to expend ammunition.

Of course I cannot forget when we took over this subcommittee, we found toner cartridges for an obsolete printer stacked to the ceiling in the subcommittee’s office space because the chairman preceding had said, “We’ve got to spend it; we have this money; we’ve got to get rid of it.” I don’t know what happened to those cartridges, but they obviously were a waste of money.

Bonuses for Cost Cutters Act

The bill Paul just reintroduced, known as the Bonuses for Cost Cutters Act (S. 1830), would expand current law to allow an agency’s Inspector General to pay bonuses to federal employees that identify unneeded or surplus funds. Current law allows an agency’s Inspector General to pay bonuses up to $10,000 of savings realized when a federal employee identifies waste, fraud, or mismanagement of funds.

The bill would also ensure that 90% of the savings are automatically directed toward deficit reduction and allow agencies to apply any remainder toward other agency priorities (subject to current law).

The bill has been introduced in the past but ultimately failed to be passed into law.

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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