Issue Briefs

Following are excerpts from a recent Congressional Research Service report examining the impact of the partial government shutdown a year ago on federal employees and the services they provide to the public.

A funding gap began on October 1, 2013, the first day of FY2014, afterfunding from the previous fiscal year expired at the end of the day on September 30. At that time,none of the 12 regular appropriations bills for FY2014 had been enacted. On September 30, OMBsaid in a memorandum that it did not expect a resumption of funding from annual appropriationsby the end of the day on October 1. Consequently, OMB instructed the affected agencies tobegin the process of ceasing operations and furloughing personnel on October 1.

On September 30, however, an automatic continuing resolution (ACR) was enacted to providefunding for a narrow category of activities at the Departments of Defense (DOD) and HomelandSecurity (DHS). This narrow CR provided funds for FY2014 pay and allowances for certainmembers of the armed forces and supporting contractors and civilian personnel. Fullimplementation of the law was delayed several days while agencies determined how to interpretand implement its provisions.

Ultimately, the FY2014 shutdown lasted 16 full days, through the end of October 16. The fundinggap terminated when the President signed an interim CR in the early morning of Thursday,October 17, 2013 (P.L. 113-46).

During the first week of October, information about furloughs occasionally was reported by thenews media. Initial reports suggested that 800,000 or more executive branch employees had beenfurloughed, based on the contents of agency shutdown plans. Three weeks after the shutdownterminated, OMB released a retrospective report. According to OMB, the shutdown resulted inthe furlough “roughly 850,000 employees per day” at its peak in the first few days of October, orapproximately 40% of the federal civilian workforce. The number decreased during the courseof the shutdown due to the implementation of P.L. 113-39. In addition, the totalnumber of furloughs varied over time, due to the net effect of ongoing redeterminations regardingwhether an employee’s status as excepted or non-excepted should change in response to a changein an agency’s circumstances.

For the shutdowns of FY1996 and FY2014, OMB did not issue an overall estimate of the numberof furloughs across all three branches of the federal government. A look at furlough and paypractices across the three branches, however, may provide further insights into the potentialeffects of a shutdown on federal officials and employees.

Selected Furlough and Pay Practices, by Branch of Government

Executive BranchAmong the three branches of the federal government, the executive branch is the largest innumber of personnel and size of budgets. Several types of executive branch officials andemployees are not subject to furlough. These include the President, certain presidentialappointees, and federal employees deemed “excepted.” OPM has described “excepted”employees, who are required to work during a shutdown, as “employees who are funded throughannual appropriations who are nonetheless excepted from the furlough because they areperforming work that, by law, may continue to be performed during a lapse in appropriations.”Nevertheless, excepted employees who are normally paid from annual appropriations would notreceive pay for time worked during the shutdown period until funding resumes.

With regard to the President’s pay, Article II, Section 1 of the Constitution forbids the salary ofthe President to be reduced while he or she is in office, thus effectively guaranteeing the Presidentof compensation regardless of any shutdown action.

Judicial BranchDuring a funding gap, the judiciary would likely be able to continue to operate for a limited timeusing funds derived from court filings and other fees and from no-year appropriations. Forexample, in preparation for the FY2014 shutdown, the judiciary estimated that these funds, ifused cautiously, could have sustained judiciary activities for approximately 10 working days afteran appropriations lapse.

If a lapse in appropriations were to exist after various fee balances like these were exhausted, thejudiciary would continue to operate under the terms of the Antideficiency Act, which the judiciarysaid allows “essential work” to continue during a lapse in appropriations. Such “essential work”includes powers exercised by the judiciary under the Constitution, including activities thatsupport the exercise of Article III judicial powers (i.e., the resolution of cases). Consequently, inthe judicial branch, judges would not be subject to furlough, nor would core court staff andprobation and pretrial services officers whose service is considered essential to the continuedresolution of cases. Each court would be responsible for determining the number of court staffand officers needed to support the exercise of its Article III judicial powers. Such staffperforming “essential work” functions would report to work in a non-pay status, while other staffwould be furloughed.

Protected by a constitutional prohibition against a diminution in their pay, Supreme Court Justicesand other Article III judges would continue to be paid during a lapse in appropriations. Also, inthe judiciary’s view, other judicial officers, such as U.S. magistrate judges and U.S. bankruptcyjudges, may continue to be paid as well. According to the Administrative Office of the U.S.

Courts, staff performing “essential functions and working in non-pay status should expect to bepaid once” Congress enacts an appropriation, while furloughed judicial staff would not receivecompensation unless and until Congress expressly authorized it.

Legislative BranchDuring the first FY1996 shutdown and the FY2014 shutdown, the House and Senate continuedto engage in many aspects of the legislative process. For example, new legislation wasintroduced, committees held hearings and markups, reports were filed, legislative business on avariety of policy topics was conducted, and nominations were considered in the Senate. TheHouse and Senate Rules, which govern procedure in each chamber, did not formally address alapse in appropriations or provide alternative procedures that would be specifically applicableduring such periods.

Due to their constitutional responsibilities and a permanent appropriation for congressional pay,Members of Congress are not subject to furlough. Additionally, Article I, Section 6, of theConstitution states that Members of Congress “shall receive a Compensation for their Services, tobe ascertained by Law, and paid out of the Treasury of the United States,” and the 27thAmendment states, “No law, varying the compensation for the services of the Senators andRepresentatives, shall take effect, until an election of Representatives shall have intervened.”During a funding gap, pay for congressional employees would not be disbursed if there is noappropriation to fund legislative branch activities. Any decision regarding requirements that acongressional employee continue to work during a government shutdown would appear to fall tohis or her employing authority. Activities of legislative branch agencies would likely also berestricted, in consultation with Congress, to activities required to support Congress with itsconstitutional responsibilities or those necessary to protect life and property.

The FY2014 funding gap and corresponding shutdown occurred for all 12 regular appropriationsbills. Consequently, the shutdown’s effects were extensive for federal governmentoperations.

News media reported extensively on how the 16-full-day shutdown affected operations ofprograms and agencies in the executive branch. At first, many media accounts drew primarilyfrom the shutdown plans that agencies and OMB posted online. As the shutdown continued,national and local outlets typically focused on specific agencies, programs, or experiences ofcitizens or stakeholders who said they were affected. Agencies themselves often did not reportinformation about the ongoing impact of the shutdown during the 16-day period, however, due tothe furlough of relevant staff and non-updating of their websites.

After the FY2014 shutdown, some Members of Congress requested assessments of its effects.

Three weeks after the shutdown concluded, OMB posted on its website a 27-page reportcompiling the “impacts and costs” of the FY2014 shutdown. The publication’s level of detailstood in marked contrast with the document that OMB produced after the two shutdowns ofFY1996, when, as described earlier, OMB generated a three-page paper compiling “illustrations”of the impacts of the two shutdowns. OMB’s FY2014 report discussed the impact of theshutdown through five sometimes-overlapping perspectives, in separate sections. The bulletsbelow provide an illustrative sampling of the contents in each section.

• Costs to the Economy. According to OMB, these costs included overallmacroeconomic effects (the subject of another CRS report) and several kindsof “economic disruption” due to cessation of “government activities the privatesector relies on.” In the latter category, OMB cited among other things a halt toseveral kinds of permitting, reviews, and licensing (e.g., 200 applications for apermit to drill for energy resources); suspension of Internal Revenue Service(IRS) income verification used by financial institutions to help determine creditworthinessof prospective borrowers; a halt to hundreds of federal loans to smallbusinesses; and disrupted tourism and travel by closing national parks.

• Federal Employee Furloughs. OMB cited payroll costs for “work notperformed” by furloughed federal employees as the “largest direct cost” of theFY2014 shutdown. As one way to quantify the furloughs, OMB said thatexecutive branch employees were furloughed for a total of “roughly 6.6 million”employee work days, with “furloughs affecting workers at the vast majority ofagencies.” An accompanying table broke out this total by executive branchagency, listing 1,600,000 employee furlough days at DOD, 985,000 days at theTreasury Department, and a further 4,055,000 days at 33 additional agencies. Ifthese day-based figures were translated into an annual, work-year equivalent, itcould be said that the furloughs amounted to over 25,000 employee workyears.OMB characterized the impact of the furloughs qualitatively, saying”[e]mployees not on the job could not conduct food, product, and workplace safetyinspections; prepare for flu season or monitor other public health issues; process taxrefunds or respond to taxpayer questions; or provide numerous other services importantto the general public and the economy.”

• Impacts on Programs and Services. In another section of the report, OMBidentified shutdown impacts on multiple government programs and services.

OMB described the impacts of the shutdown, often in quantitative terms, with 29bullets that focused on separate policy and programmatic areas. The bullets weregrouped in six categories: (1) direct services for veterans, seniors, and other”vulnerable” groups; (2) public health and research; (3) product safety andenvironmental protection; (4) worker rights and safety; (5) international trade andrelations; and (6) other government services. In the sixth category, for example,one bullet said the shutdown suspended the issuance of Social Security cards and,in addition, closed down the E-Verify system for employers to check prospectiveemployees’ immigration status.

• Other Direct Budgetary Costs. Apart from the costs of employee furloughs(discussed in the next section of this CRS report), OMB identified “other directbudgetary costs” that executive branch agencies incurred. These costs included avariety of topics, such as lower revenues (e.g., $7 million in user fees and otherrevenue not being collected for the National Park Service); a halt to “programintegrity” activities (e.g., activities intended to identify noncompliance with taxlaws, collect unpaid taxes, and thereby help incentivize voluntary compliance,which OMB characterized as collecting $1 billion per week); interest due on latefederal payments; increased costs on federal contracts due to over 10,000 stopwork orders; and shutdown-related costs, such as the cost of employee andcontractor time that was used to undertake pervasive shutdown-relatedactivities—such as planning, implementation, and re-start activities—thatdiverted from mission-related work that otherwise would have been performed inthe absence of a shutdown.

Impacts on the Federal Workforce.In a final section of the report, OMBdiscussed impacts of the shutdown on the federal workforce apart from thosediscussed elsewhere. These included federal employees not receiving their fullpay during the shutdown (including many employees who legally were requiredto work) and potential adverse impacts on recruitment and retention of federalemployees and contractor personnel.

The FY2014 shutdown also affected many federal grant programs that provide funding for stateand local governments. State and local governments rely upon federal aid to fund projects andprovide services that benefit communities and individuals. During the shutdown, agencycontingency plans stated that several grant-related activities would be disrupted. These activitiesincluded executing grant agreements, processing payments to grantees, and investigating waste,fraud, and abuse.

In the judicial branch, as during the FY1996 government shutdowns, courts generally operatedwith limited disruption to their personnel. According to internal guidance, the judiciary wasprepared to keep the federal courts operating for about two weeks by using non-annuallyappropriated funds (as it did during the 1995-1996 government shutdowns). In practice, thejudicial branch was able to operate on non-annually appropriated funds for the entirety of theFY2014 shutdown. Had that funding been exhausted, the judiciary would have continuedoperating under the terms of the AntideficiencyAct.

The funding lapse, however, did affect some court functions. Some civil cases were postponed, inpart due to continuance requests from the Department of Justice. Many courts also operated oncondensed criminal calendars and reduced building maintenance. The judiciary also advisedjudges and court unit executives, in the event of a funding lapse, to post information on theirindividual court websites about what operations would continue during and after the initial twoweekperiod.

Across the legislative branch, the impact of the FY2014 shutdown varied.At the outset, theHouse of Representatives and some legislative branch agencies publicly released officialguidance or operational plans. Guidance or plans may vary for any future shutdown, however.

The report characterized all of its contents as focusing on “costs,” broken downinto five categories: (1) effects on the economy, (2) federal employee furloughs, (3) impacts onprograms and services, (4) other budgetary costs, and (5) impacts on the federal workforce.

OMB did not attempt to quantify in monetary terms the items that it included in the third and fifthcategories, as well as some program-specific items that it included in the first category. For thefirst category, however, OMB attributed $2 billion to $6 billion in lost domestic economic outputto the shutdown. With regard to the second category, OMB estimated that the total cost ofretroactive pay due to employees furloughed during the shutdown was “roughly” $2.0 billion,with another $500 million in costs added if “total compensation costs” were calculated (i.e.,including benefits). OMB said the $2.0 billion total for the FY2014 shutdown exceeded thetotal payroll costs corresponding to the two FY1996 shutdowns, which OMB said were $1.65billion in inflation-adjusted terms. Finally, in the fourth category, OMB estimated budgetaryeffects of some program- and policy-specific impacts, but OMB did not aggregate them.