Taxpayer's Tab: $35 Billion in Federal Workforce Cuts

Cutting the Federal Workforce
Vol. 6 Issue 7, February 19, 2015
NTU Foundation recently scored legislation concerning federal education funding, the latest developments in the ongoing Puerto Rican debt crisis, and the ever-expanding federal civilian workforce. In this week’s edition of The Taxpayer’s Tab, we’ll take a look at each of these bills and how they might impact federal spending. A complete list of the bills to date with cost estimates is available in this spreadsheet.
Most Expensive

The Bill:
H.R. 736, a bill to authorize the appropriation of funds to be used to recruit, hire, and train 100,000 new classroom paraprofessionals in order to improve educational achievement for children.

Cost Per Year: $1 billion ($5 billion over five years)

When evaluating a school’s academic performance and discussing ways to improve students’ experiences, education experts often consider how they can lower student-teacher ratios. Their reasoning is that with fewer students in each classroom, teachers can devote more one-on-one time to each pupil, thus improving academic achievement. The Department of Education estimated that in 2014, the nationwide ratio was about 14.6 students for every teacher. Reducing classroom size (and thus lowering the student-teacher ratio) is a popular goal for policymakers. However, the Brookings Institution’s recent review of the most credible studies suggests that its impact on academic achievement is mixed, and given how expensive it is, it may not actually be the most efficient use of tax dollars.

Congressman Jose Serrano (D-NY) has reintroduced a bill to provide teachers with additional classroom support. H.R. 736 would provide new funding to states and localities to hire up to 100,000 “paraprofessionals” in order to allow teachers to devote more individual attention to their students.

Often referred to as classroom aides or teaching assistants, paraprofessionals are workers who do not provide “direct, planned instruction” or “[introduce] new skills, concepts, or academic content”, but can offer one-on-one tutoring outside of normal class routines. They can also organize a teacher’s materials and lesson plans, act as a translator, or handle concerns from parents on a teacher’s behalf.

Paraprofessionals are broadly required by the Department of Education to be “highly qualified,” but each state’s education agencies are given discretion over the specific qualifications they must meet. According to the most recent data from the Bureau of Labor Statistics, there were over 1.1 million teaching assistants in the U.S. as of May 2013, nearly 947,000 of whom were employed in elementary and secondary schools.

If enacted, Rep. Serrano’s proposal would authorize $1 billion for each of the next five years to hire a total of 100,000 new paraprofessionals, with the ultimate goal of reducing the student-to-faculty ratio in schools across the country. The funding would be distributed to each state based on population; all of those amounts would be required to go directly to local school districts to hire new personnel, with 80 percent to be used in districts serving predominately low-income families. This funding would be in addition to current programs for teachers including: the Improving Teacher Quality State Grant ($2.35 billion), the Teacher Incentive Fund ($235 million), the Teacher Quality Partnership ($41 million), and teacher loan forgiveness ($134 million).

The Congressman’s website notes that “[b]ecause of his work in [education], Congressman Serrano has a particular interest in improving education by providing teachers with the support staff they need. [H.R. 736] would help provide teaching assistants, language assistants, librarians and other vital educational staff to schools to help ensure that students have the guidance they need.”
The Bottom Line: H.R. 736 would authorize $5 billion to directly fund the hiring of 100,000 new teaching assistants, primarily in low-income school districts. The text of the legislation does not include any offsets for the new spending.


Least Expensive

The Bill:
H.R. 417, the Federal Workforce Reduction Through Attrition Act

Savings Per Year: $6.9 billion ($34.6 billion over five years)

Early last year, the Government Accountability Office (GAO) released an in-depth report on the rapid growth of the federal workforce and the associated costs. GAO found that from 2004 to 2012, the non-postal civilian workforce grew by 258,882 employees, with just three agencies – the Departments of Defense (DoD), Homeland Security (DHS), and Veterans Affairs (VA) – accounting for 94 percent of that increase. The DoD cited new requirements for cybersecurity and acquisition initiatives; DHS pointed to growing demands on border security; and VA justified its hiring by mentioning high demand for medical services among aging veterans and those returning from ongoing wars. The GAO’s report notes for context that while DoD, DHS, and VA workforces grew significantly, ten other agencies had cut their total number of civilian employees below 2004 levels.

At the same time, as the federal workforce is increasingly made up of professional roles requiring advanced degrees, spending on compensation has increased by about 1.2 percent per year. That means compensation and benefit costs for full-time federal civilian employees stood at an average of $116,828 per year in 2012. The President’s latest budget projects that civilian personnel compensation and benefits will cost about $328.9 billion in 2015, which is $14 billion more than in 2014. That total will grow by another $10 billion in 2016 as the civilian would grow by 1.6 percent to over 2.1 million.

To address these escalating costs, Congresswoman Cynthia Lummis (R-WY) and Congressman Mick Mulvaney (R-SC) introduced the Federal Workforce Reduction Through Attrition Act. H.R. 417 would reduce the total number of non-postal federal employees in the Executive Branch by 10 percent by the end of September 2016, while restricting hiring to one new employee for every three that retire or leave public service. The bill also places the restrictions on service contract procurements, with exceptions during times of war or national emergencies.

Rep. Lummis said the bill “is a solution that requires the federal government to do what any business, state, or local government would do to cut costs – limit new hires.  Instead of blindly filling empty desks, this bill forces agencies to take a step back, consider which positions are crucial, and make decisions based on necessity rather than luxury.”

NTUF scored the bill based on Congressional Budget Office information for an earlier version introduced in the 112th Congress. The bill would result in annual average savings of $6.9 billion per year, including about $5 million in new costs required for additional reporting.

The Bottom Line: H.R. 417 would reduce the total federal civilian workforce by 10 percent by September 2016 and place restrictions on the rate of new hires. It would reduce federal outlays by $34.6 billion. The bill currently has 9 sponsors and cosponsors.


Wild Card

The Bill:
H.R. 727, the Puerto Rico Statehood Admission Process Act

Cost Per Year: “No Cost” – Procedure

Yesterday, NTUF Research & Outreach Manager Dan Barrett posted a detailed primer on Puerto Rico’s (PR) debt crisis. The U.S. territory is on the brink of default as it is saddled with over $70 billion in debts – only New York and California face larger burdens. The parth forward is unclear after a federal judge ruled that the island’s debt restructuring plan is unconstitutional. There are many reasons why Puerto Rico’s debt has exploded, including high regulatory and tax code compliance costs, an inefficient tax collection system, slow recovery from a protracted recession, and over-spending. While most states have legal requirements to balance their budgets, PR ran budget deficits for a decade, averaging 2.5 percent of GDP from 2009 through 2012.

Just today, Moody’s further downgraded Puerto Rico’s debt rating by 2 notches because of the risk of default. If territorial leaders are unable to pay its bills, investors, taxpayers, and business owners would face an uncertain future. This stems from the undefined legal actions that the federal government would be able to take. PR is not a state and so is not able to take advantage of certain protections and possible bailouts that Washington, D.C. could provide.

A default would also affect vulnerable citizens who rely on benefits and services, such as welfare and unemployment assistance. Though the federal government does provide over $4 billion in aid and grants to PR, programs often carry state-matching funding requirements that PR may not be able to meet. A default would also enable creditors to levy higher interest rates on any money that the local government borrows to meet its obligations.

Resident Commissioner Pedro Pierluisi (D-PR), who is Puerto Rico’s non-voting Representative in Congress, has introduced H.R. 727 to put the territory on the path to statehood and, by effect, clear up some of the legal grey areas regarding a possible default. The bill would require the territory to vote on a ballot measure asking, “Shall Puerto Rico be admitted as a State of the United States?” If a majority is reached, and Congress and the President approve, Puerto Rico would be granted at least three electoral votes for Presidential elections and local citizens would be represented by at least one House Member and two Senators. There would also be a transition process where a new commission would define any legal inconsistencies that exist between PR and other states and how to amend those laws.

Because the measure would implement a multi-step procedure which is of a conditional nature, the passage of H.R. 727 in and of itself would not significantly increase federal spending. In 2014, $2.5 million in federal funds were authorized to be spent in PR for a statehood ballot measure but this money is already obligated and would not be counted as new spending under the BillTally methodology.

In the event that the ballot measure passes and Puerto Rico is admitted as the 51st state, the bill’s provisions do call for new spending for the creation of federal legislators’ offices and benefits. Similar to Delegate Eleanor Holmes Norton’s (D-DC) H.R. 317, the New Columbia Admission Act, the creation of at least three new offices – one for a new Representative and two for new Senators – would increase federal spending by $9 million annually.

Cosponsors currently include 107 Democratic House Members.

The Bottom Line: H.R. 727 would begin the process for Puerto Rico to become a state but is procedural in nature and would not necessarily increase expenditures if enacted.

National Taxpayers Union Foundation is a nonpartisan research and educational organization dedicated to helping Americans of all ages understand how taxes, government spending, and regulations affect them. Through our timely information, analysis, and commentary, we’re empowering citizens to engage in important policy debates and hold officials accountable.

Our findings are provided for educational purposes only and are not intended to aid or hinder the passage of legislation or as a comment on any Member’s or Candidate's fitness to serve. Photo Credits: Wiki Commons