Federal Downsizing:

Buyouts at the Farm Service Agency

GGD-97-133: Published: Jul 23, 1997. Publicly Released: Jul 29, 1997.

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Carlotta C. Joyner
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Pursuant to a congressional request, GAO reviewed voluntary separation incentives or "buyouts" at the Farm Service Agency (FSA), focusing on: (1) whether FSA's fiscal year (FY) 1997 buyout program was planned in accordance with legal requirements; (2) whether the decision to grant buyouts was based on a well-supported cost and savings analysis; and (3) the results of the FY 1997 buyouts, including the impact of buyouts and downsizing on the agency's operations. GAO did not independently verify agency officials' statements about the impact of downsizing on service delivery nor about how successful agency efforts such as outsourcing mitigated the loss of expertise created by downsizing.

GAO noted that: (1) faced with a need to reduce its staff by 1,339 positions (7.6 percent) during FY 1997, FSA designed its buyout program to help it reach its downsizing goals while minimizing the need for reductions-in-force (RIF); (2) FSA included all required legal provisions in its buyout program; (3) these included a strategic plan for using buyouts that identified the types of positions that were to be eliminated by organizational unit, location, broad occupational groups and grade levels, the number and amounts of buyout payments anticipated, and how the mission areas would be affected by elimination of the positions and functions; (4) although not required to do so by legislation, the Department of Agriculture (USDA) completed a cost and savings comparison of buyouts and RIFs for FSA prior to the FY 1997 buyouts at the request of the Chairman, Senate Committee on Agriculture, Nutrition, and Forestry; (5) although these estimates appeared to be high, they did not invalidate USDA's conclusion that buyouts should generate more net savings than RIFs over a 5-year period; (6) separating retirement-eligible employees who could not be reassigned through RIFs in offices that were closing or scheduled to close may have generated more savings than granting them buyouts; (7) since employees eligible for a retirement annuity cannot receive severance pay under a RIF, a significant cost element would have been avoided by separating an employee under a RIF rather than a buyout; (8) FSA reported that 926 employees have been separated with buyouts in FY 1997, and 329 employees have been separated under RIFs; (9) the total separations of 1,255 compared to a planned separation of 1,339 employees; (10) of the 926 buyout takers, 57 percent were eligible for regular retirement, and an additional 33 percent were eligible for early retirement; (11) FSA officials reported they generally used the buyout authority in those areas of the agency where declining workloads and budgets dictated staffing reductions; (12) officials at headquarters and in the Kansas City Management Office (KCMO) reported that they experienced the loss of expertise in the administrative and information technology areas when employees separated with buyouts; (13) FSA officials indicated the use of buyouts helped them meet downsizing goals while reducing the need for RIFs; and (14) FSA officials expressed some strong concerns about future workforce reductions and told GAO that an additional reduction of 2,850 staff years over the next 2 fiscal years, called for in the President's FY 1998 budget, could seriously affect the agency's ability to meet its mission and maintain high customer service levels.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: For FY1999, the agency did an examination of costs and savings of buyouts and RIFs and targeted most separations to RIFs because it found eligibility for buyouts was considerably lower (due to years of downsizing) and because RIFs are cheaper than buyouts in the year they are accomplished.

    Recommendation: The Secretary of Agriculture should ensure that a well-supported cost and savings analysis of buyouts and RIFs is part of any future decision to offer buyouts to FSA employees. The analysis should show the economic advantage of either buyouts or RIFs for the agency as a whole and for those situations where employees might be separated in offices that are closing.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Implemented

    Comments: For the FY1998 buyout, FSA specifically excluded headquarters employees in the GS-475 series from buyout consideration. The agency also identified specific occupations from which only a limited number of employees would be considered for buyouts.

    Recommendation: The Secretary of Agriculture should direct the FSA Administrator, in planning any future buyouts, to ensure that positions or occupational series where the loss of experienced personnel may adversely affect the agency's operations be excluded from buyout offers.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: FSA has taken steps to ensure that buyouts are completed in a manner to minimize adverse effects on its ability to conduct its operations. Buyout offers were made to certain employees only after ensuring that agency operations would not be negatively affected.

    Recommendation: The Administrator, FSA, should ensure that buyouts are linked to areas where workloads are anticipated to decline, or to areas where separations will assist the agency in meeting organizational workforce goals, rather than offered broadly across occupational groups.

    Agency Affected: Department of Agriculture: Farm Service Agency


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