Big Budget Opponents Again Stop a Final Federal FY 2024 Budget While Congress Keeps to Agreement to Limit Agency Spending to FY 2023 Levels

US DOL Budget Will Remain at its Present Level Through March 22, 2024

It has now become clear that neither Republicans nor Democrats have the stomach to shut the federal government agencies down, but neither does either side have the political power to either increase or decrease the existing federal agency budgets left for Congress to fund each year in its discretion. Accordingly, Congress sent President Biden another “Continuing Resolution” (H.R. 7463) that he promptly signed into law just hours before about half of the federal government was about to run out of money.  It is yet another so-called “two-tiered” budget bill that provides fiscal year (“FY”) 2024 appropriations to federal agencies at current levels. It is “two-tiered” because it funds the federal agencies through either March 8, 2024, or March 22, 2024, depending on the federal agency in question.

The delay to agree upon final budgets for the remaining seven-months of Fiscal Year 2024 (ending September 30, 2024), continues to be how to divide up budget monies within each federal Department Congress is funding. The January 7, 2024, bi-partisan agreement to a so-called “top line” budget number for all “mandatory” and “discretionary” budget items left the “discretionary budget” (decided upon each year for the federal agencies via 12 budget bills), with virtually the same amount of money to award to federal Departments as they received in the prior Fiscal Year 2023. (The “mandatory” budget items, by the way, are those with statutory entitlements (like Medicare, Social Security, SNAP, etc.) not subject to the Congress’ annual exercise causing it to use its discretion to determine how much budget to award to any given federal agency).

The measure, entitled the “Extension of Continuing Appropriations and Other Matters Act, 2024” is a Continuing Resolution (“CR”). This CR, like the three other FY 2024 CRs before it pertaining to this Fiscal Year, is intended to allow both chambers more time to resolve contentious details to arrive at a broader FY 2024 budget deal. The effect of a CR is that it authorizes budget to the federal agencies to continue operating but only at the same level of budget that Congress gave each agency for the just concluded FY (in this case FY 2023) and not at the usually higher level of the proposed budget for the new FY now in progress (FY 2024).

Fourth Continuing Resolution for FY 2024; Third Two-Tiered CR

President Biden signed a previous FY 2024 CR – H.R. 5860 – into law on September 30, 2023 (the last day of FY 2023), funding the federal government through November 17, 2023. Then on November 16, 2023, the President signed into law H.R. 6363, the first of what are now three “two-tiered” CR bills. President Biden signed his second two-tiered CR into law – H.R. 2872 –on January 19, 2024 (see our story here).

Like the November 2023 and January 2024 CRs, the latest CR law signed on Friday divides federal agency funding into two batches. The first batch funds the Departments of Transportation, Housing and Urban Development, Energy, Veterans Affairs, and Agriculture at current levels through March 8, 2024. The previous CR had funded those agencies at current levels through only March 1, 2024. The second batch funds the rest of the government – including the usually contentious budgets for the Department of Labor/OFCCP, the Equal Employment Opportunity Commission, and the National Labor Relations Board – at current levels through March 22, 2024. The previous CR had funded those agencies at current levels through March 8, 2024. See our story on the November 2023 CR for an explanation of what this means for OFCCP.

Note: CRs are usually met with groans of anguish from federal agency heads since their agencies go “financially backwards” on news of a “flat line” budget. This is because the federal agency’s “cost of doing business” rises each year nonetheless, just like our household budgets, in the new fiscal year even if an agency’s budget for that new year remains the same as the prior year’s budget. Federal agency heads then have to “make up” for the added new operating costs (for pensions, salaries, leases, materials and supplies, travel, etc.) by either cutting programs or heads. (OFCCP’s typical year-over-year cost increases usually amount to about 2-3% of its prior year’s budget. This was, however, before recent successive average pay and retirement payment increases of an average 4.6% (2023) and an average 5.2% (2024: the largest in over 40 years), and inflation increases to costs between 9% and currently running at slightly over 3% per year).

Congress Had Already Eliminated (on January 7, 2024) Hopes of the Federal Agencies for Increases in their FY 2024 Budgets by Agreeing to Hold Those Budgets to Approximately the Prior Fiscal Year 2023 Levels

The Federal agency heads on January 7, 2024, had already let out a collective “groan” good for the rest of this Fiscal Year 2024 (ending September 30, 2024). In a major “win” for the Republican Freedom Caucus, which has aggressively sought to reduce the federal government’s rising debt, Congress agreed to cap the 12 budgets which collectively comprise the federal government’s “discretionary” spending budget at the prior year’s spending levels. (This was the agreement on the $1.6 trillion dollar so-called “top line” federal spending agreement discussed above and codified as H.R. 2872 that President Biden signed into law on January 19, 2024.) Here is the best explanation we could find for the complex agreements underlying the passage of the second C.R. pertaining to FY 2024’s federal discretionary spending budget.

Capping federal agency budgets (the discretionary budgets) at the prior year’s level is the first step for Congress to eventually reduce the budget and then eventually “balance the budget,” if it can, with tax increases and increased tax collections from more IRS agents and from a hopefully expanding and vigorous economy as the GAO has recently recommended. See our story last week on that blunt and worrisome GAO Report.

The issue to watch is which program initiatives and how many employee FTEs (Full Time Equivalent) positions each federal government agency gives up without new and higher budget spending authorizations now that FY 2024 spending has been “locked” at the prior year’s level.

OFCCP: The agency’s credibility-challenged “pie-in-the-sky” March 2023 Budget Request for FY 2024 to increase its approximately $105 Million budget by over $40M (+ 36%+) and to increase employee headcount by 125 (from 495 to 620) (+25%), was naïve and at best ill-conceived at the time. In the rear-view mirror, that request now shows OFCCP to be badly out-of-step with the direction of Congress and its adoption of a “hold-the-line” approach to federal agency spending. OFCCP’s ever-bigger budget requests will find themselves even further out-of-step in coming years as Congress now hunkers down to determine how to actually reduce federal agency spending going forward. We discussed OFCCP’s Budget Justification for FY 2024 here.

Here is what OFCCP did not obtain that its hoped-for FY 2024 Budget would have purchased, in its own words (from pages 10 to 11 of its FY 2024 Budget Justification to Congress):

“Additional resources will build OFCCP’s capacity to effectively oversee the growing number of contractors, projects, and workers under its purview. In order to meet these demands, in FY 2024, OFCCP will build its workforce and modernize its technology to strengthen enforcement and launch robust hiring initiatives to help workers access good jobs and employers to fully utilize the talent across their communities. As a result, the requested funding will enable OFCCP to grow its presence in communities across America, to serve workers and contractors most in need of assistance. In the area of technology, these investments will fund specialized expertise and technology upgrades to help OFCCP respond and adapt to the increasingly sophisticated systems that employers use to track, analyze, and produce data on hiring, pay, promotion, termination, and other key equal opportunity issues. OFCCP will also leverage technology and data analytics to more expeditiously and effectively evaluate contractors’ employment practices across multiple establishments to remove barriers to opportunity and improve its risk-based methodology to schedule contractors for review.”

What Does This Mean for OFCCP?

A “flat line” budget for FY 2024 means that OFCCP will most likely finish its Fiscal Year 2024 by not filling empty Compliance Officer and District Director positions to pay for increased operating costs and to allow spending on its computer network and will likely fall about 20 FTEs before the start of the FY 2025 budget round.

BTW, while it seems incongruous, the President usually puts forward his annual Budget request to Congress for the next’s year’s funding of the federal government (FY 2025 in this case which starts in 7 months on October 1, 2024) in March of each year. Absent a Final FY 2024 Budget by the end of March, President Biden may well have to submit his FY 2025 Budget proposal even while the FY 2024 Budget remains unsettled.

Happy News for Federal Contractors

Look for:

• fewer OFCCP audits in FY 2024
• more “shallow” audits in which OFCCP does (only) a “drive-by” when the agency finds tidy and complete AAPs await its review

Unhappy News for Federal Contractors

Look for:

• longer response times from OFCCP in audits, even despite fewer audits
• less well trained OFCCP Compliance Officers and managers
• fewer OFCCP managers in the field to push OFCCP audits forward
  • more OFCCP managers in the field will be cross-assigned to manage Area Offices, and District Offices will continue to be downgraded to Area Offices

Note: OFCCP has a controversial long-term tradition (neither of Republican nor Democrat design) of tending to protect jobs rather than to invest in more agency systems, training, and support programs to efficiently support a smaller employee population operating at an elite level of excellence.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.