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Because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. United States Government Accountability Office: 21st Century Challenges: Reexamining the Base of the Federal Government: The Honorable David M. Walker: Comptroller General of the United States: Federal Managers Association: Hilton Crystal City, Arlington, VA: April 12, 2005: GAO's Strategic Plan: [See PDF for image] - graphic text: Serving the Congress and the Nation: GAO's Strategic Plan Framework: Mission: GAO exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and ensure the accountability of the federal government for the benefit of the American people. Themes: * Long-term Fiscal Imbalance; * National Security; * Global interdependence; * Changing Economy; * Demographics; * Science and Technology; * Quality of Life; * Governance; Goals and Objectives: Provide Timely, Quality Service to the Congress and the Federal Government to Address Current and Emerging Challenges to the Well-Being and Financial Security of the American People related to: * Health care needs and financing; * Education and protection of children; * Work opportunities and worker protection; * Retirement income security; * Effective system of justice; * Viable communities; * Natural resources use and environmental protection; * Physical infrastructure; Respond to Changing Security Threats and the Challenges of Global Interdependence involving: * Emerging threats; * Military capabilities and readiness; * Advancement of U.S. interests; * Global market forces; Help Transform the Federal Government's Role and How It Does Business to Meet 21st Century Challenges by assessing: * Roles in achieving federal objectives; * Government transformation; * Key management challenges and program risks; * Fiscal position and financing of the government; Maximize the Value of GAO by Being a Model Federal Agency and a World-Class Professional Services Organization in the areas of: * Client and customer service; * Strategic leadership; * Institutional knowledge and experience; * Process improvement; * Employer of choice; Core Values: * Accountability; * Integrity; * Reliability; Source: GAO. GAO Strategic Plan 2004-2009. March 2004. [End of strategic plan framework] GAO’s High-Risk List: 2005: Addressing Challenges in Broad-based Transformations: High-Risk Areas: Protecting the Federal Government's Information Systems and the Nation's Critical Infrastructures; Year Designated High Risk: 1997. High-Risk Areas: Strategic Human Capital Management[A]; Year Designated High Risk: 2001. High-Risk Areas: U.S. Postal Service Transformation Efforts and Long- Term Outlook[A]; Year Designated High Risk: 2001. High-Risk Areas: Managing Federal Real Property[A]; Year Designated High Risk: 2003. High-Risk Areas: Implementing and Transforming the Department of Homeland Security; Year Designated High Risk: 2003. High-Risk Areas: Establishing Appropriate and Effective Information- Sharing Mechanisms to Improve Homeland Security; Year Designated High Risk: 2005. High-Risk Areas: DOD Approach to Business Transformation[A]; Year Designated High Risk: 2005. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Supply Chain Management (formerly Inventory Management); Year Designated High Risk: 1990. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Weapon Systems Acquisition; Year Designated High Risk: 1990. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Business Systems Modernization; Year Designated High Risk: 1995. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Financial Management; Year Designated High Risk: 1995. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Support Infrastructure Management; Year Designated High Risk: 1997. High-Risk Areas: DOD Approach to Business Transformation[A]: DOD Personnel Security Clearance Program; Year Designated High Risk: 2005. Managing Federal Contracting More Effectively: High-Risk Areas: DOE Contract Management; Year Designated High Risk: 1990. High-Risk Areas: NASA Contract Management; Year Designated High Risk: 1990. High-Risk Areas: DOD Contract Management; Year Designated High Risk: 1992. Management of Interagency Contracting; Year Designated High Risk: 2005. Assessing the Efficiency and Effectiveness of Tax Law Administration: High-Risk Areas: Enforcement of Tax Laws[A, B]; Year Designated High Risk: 1990. High-Risk Areas: IRS Business Systems Modernization[C]; Year Designated High Risk: 1995. Modernizing and Safeguarding Insurance and Benefit Programs: High-Risk Areas: Medicare Program[A]; Year Designated High Risk: 1990. High-Risk Areas: HUD Single-Family Mortgage Insurance and Rental Housing Assistance Programs; Year Designated High Risk: 1994. High-Risk Areas: Medicaid Program[A]; Year Designated High Risk: 2003. High-Risk Areas: Modernizing Federal Disability Programs[A]; Year Designated High Risk: 2003. High-Risk Areas: Pension Benefit Guaranty Corporation Single-Employer Insurance Program[A]; Year Designated High Risk: 2003. Other: High-Risk Areas: FAA Air Traffic Control Modernization; Year Designated High Risk: 1995. [A] Legislation is likely to be necessary, as a supplement to actions by the executive branch, in order to effectively address this high-risk area. [B] Two high-risk areas-Collection of Unpaid Taxes and Earned Income Credit Noncompliance-have been consolidated to make this area. [C] The IRS Financial Management high-risk area has been incorporated into this high-risk area. [End of table] [End of GAO's High-Risk List: 2005] Composition of Federal Spending: [See PDF for image] - graphic text 3 pie charts with 5 items each. 1964: Defense: 46.0%. Social Security: 14.0%. Medicare & Medicaid: 0%. Net interest: 7.0%. All other spending: 33.0%. 1984: Defense: 27.0%. Social Security: 21.0%. Medicare & Medicaid: 9.0%. Net interest: 13.0%. All other spending: 30.0%. 2004: Defense: 20.0%. Social Security: 21.0%. Medicare & Medicaid: 20.0%. Net interest: 7.0%. All other spending: 33.0%. Source: Office of Management and Budget. [End of figure] Federal Spending for Mandatory and Discretionary Programs: [See PDF for image] - graphic text 3 pie charts with 3 items each. 1964: Discretionary: 67%; Mandatory: 26%; Net Interest: 7%. 1984: Discretionary: 45%; Mandatory: 42%; Net Interest: 13%. 2004: Discretionary: 39%; Mandatory: 54%; Net Interest: 7%. Source: Office of Management and Budget. [End of figure] Fiscal Year 2004 Deficit Numbers: On-Budget Deficit; -$567 Billion; -4.9% of GDP. Off-Budget Surplus; $155 Billion; 1.3% of GDP. Unified Deficit; -$412 Billion; -3.6% of GDP. * Includes the $151 billion Social Security surplus and a $4 billion surplus for the Postal Service. March 2005. [End of table] Surplus or Deficit as a Share of GDP: Fiscal Years 1962-2004: [See PDF for image] - graphic text: Line/Stacked Bar combo chart with 1 line (Unified) and 43 bars. Fiscal year: 1962; On-budget: -1%; Off-budget: -0.2%; Unified: -1.3%. Fiscal year: 1963; On-budget: -0.7%; Off-budget: -0.1%; Unified: -0.8%. Fiscal year: 1964; On-budget: -1%; Off-budget: 0.1%; Unified: -0.9%. Fiscal year: 1965; On-budget: -0.2%; Off-budget: No data; Unified: -0.2%. Fiscal year: 1966; On-budget: -0.4%; Off-budget: -0.1%; Unified: -0.5%. Fiscal year: 1967; On-budget: -1.6%; Off-budget: 0.5%; Unified: -1.1%. Fiscal year: 1968; On-budget: -3.2%; Off-budget: 0.3%; Unified: -2.9%. Fiscal year: 1969; On-budget: -0.1%; Off-budget: 0.4%; Unified: 0.3%. Fiscal year: 1970; On-budget: -0.9%; Off-budget: 0.6%; Unified: -0.3%. Fiscal year: 1971; On-budget: -2.4%; Off-budget: 0.3%; Unified: -2.1%. Fiscal year: 1972; On-budget: -2.2%; Off-budget: 0.3%; Unified: -2%. Fiscal year: 1973; On-budget: -1.2%; Off-budget: No data; Unified: -1.1%. Fiscal year: 1974; On-budget: -0.6%; Off-budget: 0.1%; Unified: -0.4%. Fiscal year: 1975; On-budget: -3.5%; Off-budget: 0.1%; Unified: -3.4%. Fiscal year: 1976; On-budget: -4.1%; Off-budget: -0.2%; Unified: -4.2%. Fiscal year: 1977; On-budget: -2.5%; Off-budget: -0.2%; Unified: -2.7%. Fiscal year: 1978; On-budget: -2.5%; Off-budget: -0.2%; Unified: -2.7%. Fiscal year: 1979; On-budget: -1.5%; Off-budget: -0.1%; Unified: -1.6%. Fiscal year: 1980; On-budget: -2.7%; Off-budget: No data; Unified: -2.7%. Fiscal year: 1981; On-budget: -2.4%; Off-budget: -0.2%; Unified: -2.6%. Fiscal year: 1982; On-budget: -3.7%; Off-budget: -0.2%; Unified: -4%. Fiscal year: 1983; On-budget: -6%; Off-budget: No data; Unified: -6%. Fiscal year: 1984; On-budget: -4.8%; Off-budget: No data; Unified: -4.8%. Fiscal year: 1985; On-budget: -5.3%; Off-budget: 0.2%; Unified: -5.1%. Fiscal year: 1986; On-budget: -5.4%; Off-budget: 0.4%; Unified: -5%. Fiscal year: 1987; On-budget: -3.6%; Off-budget: 0.4%; Unified: -3.2%. Fiscal year: 1988; On-budget: -3.9%; Off-budget: 0.8%; Unified: -3.1%. Fiscal year: 1989; On-budget: -3.8%; Off-budget: 1%; Unified: -2.8%. Fiscal year: 1990; On-budget: -4.8%; Off-budget: 1%; Unified: -3.9%. Fiscal year: 1991; On-budget: -5.4%; Off-budget: 0.9%; Unified: -4.5%. Fiscal year: 1992; On-budget: -5.5%; Off-budget: 0.8%; Unified: -4.7%. Fiscal year: 1993; On-budget: -4.6%; Off-budget: 0.7%; Unified: -3.9%. Fiscal year: 1994; On-budget: -3.7%; Off-budget: 0.8%; Unified: -2.9%. Fiscal year: 1995; On-budget: -3.1%; Off-budget: 0.9%; Unified: -2.2%. Fiscal year: 1996; On-budget: -2.3%; Off-budget: 0.9%; Unified: -1.4%. Fiscal year: 1997; On-budget: -1.3%; Off-budget: 1%; Unified: -0.3%. Fiscal year: 1998; On-budget: -0.3%; Off-budget: 1.1%; Unified: 0.8%. Fiscal year: 1999; On-budget: No data; Off-budget: 1.4%; Unified: 1.4%. Fiscal year: 2000; On-budget: 0.9%; Off-budget: 1.5%; Unified: 2.4%. Fiscal year: 2001; On-budget: -0.3%; Off-budget: 1.6%; Unified: 1.3%. Fiscal year: 2002; On-budget: -3.1%; Off-budget: 1.5%; Unified: -1.5%. Fiscal year: 2003; On-budget: -4.9%; Off-budget: 1.5%; Unified: -3.5%. Fiscal year: 2004; On-budget: -4.9%; Off-budget: 1.3%; Unified: -3.6%. Source: Office of Management and Budget and Congressional Budget Office. [End of figure] Selected Fiscal Exposures: Sources and Examples 2005[A]: Type: Explicit liabilities; Example (dollars in billions): Publicly held debt ($4,297). Type: Explicit liabilities; Example (dollars in billions): Military and civilian pension and post- retirement health ($3,059). Type: Explicit liabilities; Example (dollars in billions): Veterans benefits payable ($925). Type: Explicit liabilities; Example (dollars in billions): Environmental and disposal liabilities ($249). Type: Explicit liabilities; Loan guarantees ($43). Type: Explicit financial commitments; Example (dollars in billions): Undelivered orders ($596). Type: Explicit financial commitments; Example (dollars in billions): Long-term leases ($39). Type: Financial contingencies; Example (dollars in billions): Unadjudicated claims ($4). Type: Financial contingencies; Example (dollars in billions): Pension Benefit Guaranty Corporation ($96). Type: Financial contingencies; Example (dollars in billions): Other national insurance programs ($1). Type: Financial contingencies; Example (dollars in billions): Government corporations e.g., Ginnie Mae. Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Debt held by government accounts ($3,071)[B]. Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Future Social Security benefit payments ($4,017)[C]. Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Future Medicare Part A benefit payments ($8,561)[C]. Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Future Medicare Part B benefit payments ($12,384)[C]. Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Future Medicare Part D benefit payments ($8,686)[C]. Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Life cycle cost including deferred and future maintenance and operating costs (amount unknown). Type: Exposures implied by current policies or the public's expectations about the role of government; Example (dollars in billions): Government Sponsored Enterprises e.g., Fannie Mae and Freddie Mac. [A] All figures are for end of fiscal year 2004, except Social Security and Medicare estimates, which are as of January 1, 2005. [B] This amount includes $845 billion held by military and civilian pension and post-retirement health funds that would offset the explicit liabilities reported by those funds. [C] Figures for Social Security and Medicare are net of debt held by the trust funds ($1,687 billion for Social Security, $268 billion for Medicare Part A, and $19 billion for Medicare Part B) and represent net present value estimates over a 75-year period. Over an infinite horizon, the estimate for Social Security would be $11.1 trillion, $24.1 trillion for Medicare Part A, $25.8 trillion for Medicare Part B, and $18.2 trillion for Medicare Part D. Source: GAO analysis of data from the Department of the Treasury, the Office of the Chief Actuary, Social Security Administration, and the Office of the Actuary, Centers for Medicare and Medicaid Services. Revised 3/29/05 [End of table] Another Way to Think About These Numbers: Debt held by the public—$4.3T; Trust fund debt—$3.1T; Gross debt—$7.4T; Gross debt per person—about $25,000; If we add everything on the previous slide, the burden is more than $150,000 per person or more than $365,000 per full-time worker. Alternatively, it amounts to a total burden of more than $45 trillion in current dollars, which is about 18 times the current annual federal budget or about 3.7 times the current annual GDP. This compares with an estimated $48.5 trillion in total net worth, including home equity, for all Americans. Composition of Spending as a Share of GDP Under Baseline Extended: [See PDF for image] -graphic text: Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars per group. 2004; Net interest: 1.4%; Social Security: 4.3%; Medicare & Medicaid: 3.8%; All other spending: 10.4%; Revenue: 16.3%. 2015; Net interest: 1.5%; Social Security: 4.6%; Medicare & Medicaid: 5.2%; All other spending: 7.6%; Revenue: 19.6%. 2030; Net interest: 1.9%; Social Security: 6.4%; Medicare & Medicaid: 8%; All other spending: 7.6%; Revenue: 19.6%. 2040; Net interest: 4.3%; Social Security: 6.8%; Medicare & Medicaid: 9.7%; All other spending: 7.6%; Revenue: 19.6%. Notes: In addition to the expiration of tax cuts, revenue as a share of GDP increases through 2015 due to (1) real bracket creep, (2) more taxpayers becoming subject to the AMT, and (3) increased revenue from tax-deferred retirement accounts. After 2015, revenue as a share of GDP is held constant. Source: GAO’s March 2005 analysis. [End of figure] Composition of Spending as a Share of GDP Assuming Discretionary Spending Grows with GDP after 2005 and All Expiring Tax Provisions are Extended: [See PDF for image] -graphic text: Line/Stacked Bar combo chart with 4 groups, 1 line (Revenue) and 4 bars per group. 2004; Net interest: 1.4%; Social Security: 4.3%; Medicare & Medicaid: 3.8%; All other spending: 10.4%; Revenue: 16.3%. 2015; Net interest: 2.8%; Social Security: 4.7%; Medicare & Medicaid: 5.2%; All other spending: 9.7%; Revenue: 17.4. 2030; Net interest: 7.7%; Social Security: 6.7%; Medicare & Medicaid: 8%; All other spending: 9.7%; Revenue: 17.4%. 2040; Net interest: 15.7%; Social Security: 7.9%; Medicare & Medicaid: 9.7%; All other spending: 9.7%; Revenue: 17.4%. Notes: Although expiring tax provisions are extended, revenue as a share of GDP increases through 2015 due to (1) real bracket creep, (2) more taxpayers becoming subject to the AMT, and (3) increased revenue from tax-deferred retirement accounts. After 2015, revenue as a share of GDP is held constant. Source: GAO’s March 2005 analysis. [End of figure] Current Fiscal Policy Is Unsustainable: The "Status Quo" is Not an Option: * We face large and growing structural deficits largely due to known demographic trends and rising health care costs. * GAO's simulations show that balancing the budget in 2040 could require actions as large as: - Cutting total federal spending by about 60 percent or - Raising taxes to about 2.5 times today's level. Faster Economic Growth Can Help, but It Cannot Solve the Problem: * Closing the current long-term fiscal gap based on responsible assumptions would require real average annual economic growth in the double digit range every year for the next 75 years. * During the 1990s, the economy grew at an average 3.2 percent per year. * As a result, we cannot simply grow our way out of this problem. Tough choices will be required. The Sooner We Get Started, the Better: * Less change would be needed, and there would be more time to make adjustments. * The miracle of compounding would work with us rather than against us. * Our demographic changes will serve to make reform more difficult over time. The Way Forward: * Implement new accounting and reporting approaches and new budget control mechanisms for considering the impact of spending and tax policies and decisions over the long term. * Develop new metrics for measuring the impact of policies and decisions over the long term (e.g., key national indicators to measure our Nation’s position and progress over time and in relation to other countries). * Reexamine the base—question existing programs, policies and activities. 21st Century Challenges Report: * Report was issued February 16. * Based on GAO’s work for the Congress. * Provides framework and questions to assist in reexamining the base. * Covers entitlements & other mandatory spending, discretionary spending, and tax policy and programs. Generic Reexamination Criteria and Sample Questions: Relevance of purpose and the federal role: - Why did the federal government initiate this program and what was the government trying to accomplish? - Have there been significant changes in the country or the world that relate to the reason for initiating it? Measuring success: Are there outcome-based measures? If not, why? If there are outcome-based measures, how successful is it based on these measures? Targeting benefits: Is it well targeted to those with the greatest needs and the least capacity to meet those needs? Affordability and cost effectiveness: Is it using the most cost-effective or net beneficial approaches when compared to other tools and program designs? Best practices: Is the responsible entity employing prevailing best practices to discharge its responsibilities and achieve its mission? Twelve Reexamination Areas: Mission Areas: * Defense; * Education & Employment; * Financial Regulation &Housing; * Health Care; * Homeland Security; * International Affairs; * Natural Resources, Energy & Environment; * Retirement & Disability; * Science & Technology; * Transportation. Crosscutting Areas: * Improving Governance; * Reexamining the Tax System. Themes: * Changing Security Threats; * Increasing Global Interdependence; * Demographic Shifts – Aging Population; * Promoting Growth in a Knowledge-Based Economy; * Governance. Illustrative 21st Century Questions: How should the historical allocation of resources across services and programs be changed to reflect the results of a forward-looking comprehensive threat/risk assessment as part of DOD’s capabilities- based approach to determining defense needs? Should federally funded training programs operated across multiple federal agencies—9 federal agencies administer 44 such programs—be better integrated and restructured in order to increase their cost effectiveness? To what extent do the tools and incentives increase spending on housing rather than promote affordable housing? Can the tools and incentives provided to homeownership be better targeted toward increasing home ownership among selected groups with less capacity to access credit markets? How can industry standards for acceptable care be established and payment reforms be designed to bring about reductions in unwarranted medical practice variation? For example, what can or should the federal government do to promote uniform standards of practice for selected procedures and illnesses? What criteria should be used to target federal funding for homeland security in order to maximize results and mitigate risk within available resource levels? Do we need to reexamine the U.S. force structure used for nation building and peacekeeping activities by the United Nations, NATO, and other international institutions? Should the United States have a separate force devoted to such functions? What role should the United Nations, NATO, and other international institutions perform in connection with such functions? To what extent are federal energy policies and incentive structures adequately preparing the nation to satisfy its energy needs over the long term? What is the appropriate balance between efforts to promote enhanced production of fossil fuels, alternative renewable energy sources, and energy conservation? How can federal disability programs, and their eligibility criteria, be brought into line with the current state of science, medicine, technology, and labor market conditions? How can the United States better develop a world-class technical and scientific domestic workforce that is not as dependent on large inflows of international students and researchers? Can intermodal solutions to the needs of modes such as freight, air, and passenger rail service be effectively carried out within the framework of the existing trust funds and other transportation programs or is another model needed? Which tax incentives need to be reconsidered because they fail to achieve the objectives intended by the Congress, their costs outweigh their benefits, they duplicate other programs, or other more cost- effective means exist for achieving their objectives? How should the federal government update its compensations systems to be more market-based and performance—oriented? * People are critical to successful transformation; * However, the existing federal personnel system is outmoded and a barrier to transformation needed to address 21st Century challenges; * GAO placed strategic human capital management on the high risk list in 2001 to focus attention on needed reforms; * More progress on reform has been achieved in the last 5 years than in the previous 20: - Legislative reforms; - President’s Management Agenda; - Individual agencies’ efforts. Federal Human Capital Reform: * Tailored flexibilities have been granted to a number of agencies: DHS, DOD, NASA, GAO, etc. * GAO is sharing its knowledge and experience to help inform other agencies in their efforts and to avoid pitfalls. GAO Elements of Reform: Modern, Effective, Credible, and Validated Performance Management System: * Focuses on core competencies; * Helps to communicate employee performance expectations; * Creates a “line of site” linking institutional team/unit and individual performance; * Makes meaningful distinctions in employee performance; * Provides for competency-based results automatically and relative peer group standing on request. Modern Classification and Compensation System: * Uses pay bands; * Is market-based; * Is performance-oriented. Safeguards, transparency, and accountability built in: * Provisions for employee participation; * Pre- and post-implementation consultation and communications strategy incorporated; * Avenues for adverse action appeals, both internally and externally. Other Agencies' Elements of Reform: DHS and DOD reforms: Intend to include many of these same elements of a flexible and contemporary human capital management system: * Performance management system; * Pay bands and performance and market-based pay; But many details still to be defined, and the agencies face multiple challenges: * Revisions to labor-management relations have been controversial; * Need to provide sustained and committed leadership, dedicated resources, training, and program evaluation strategy; * Need to assure that the necessary support infrastructure is in place before allowing agencies to implement certain authorities (e.g., performance-based pay); * Need to conduct certain studies over time (e.g., market-based compensation ranges). Going Forward: * Reforms to date recognize that one-size-fits-all approach is not appropriate to each agency’s demands, challenges, and missions. However, a reasonable degree of consistency across the government is still desirable (e.g., principles, values, and safeguards); * Need to move forward with reform, but how it is done, when it is done, and on what basis it is done can make all the difference; * Future reforms should incorporate a phased approach, where agencies are authorized to implement reform only after they have shown they have the capacity to do so (i.e., show-me approach); * As part of this capacity, agencies must be able to make effective use of new authorities and have critical infrastructure in place: - Strategic human capital planning process linked to the agency’s overall strategic plan; - Capabilities to design and implement a new human capital system effectively; - Modern, effective, credible and validated performance management system; - Adequate internal and external safeguards (e.g., reviews, appeal processes); In the short term, reforms could include select and targeted new authorities; * Allowing agency heads to make a limited number of term appointments awarded noncompetitively; * No guaranteed pay increases for persons who do not perform at an acceptable level; * Rightsizing and restructuring authorities that can place additional emphasis on factors such as knowledge, skills, and performance; Broader reforms should be guided by a framework consisting of a common set of: - Principles (e.g., merit principles); - Criteria (e.g., demonstrated business case); - Processes (e.g., preconditions, including adequate infrastructure in place); GAO continues to work with key clients and stakeholders on future of reform: * Forum on government-wide framework; * Testimony on DHS and DOD human capital designs; * Symposium on modern compensation systems; * Sharing our experience in implementing our reforms How GAO Has Addressed Its Human Capital Challenges: Administrative: * HQ realignment & field office restructuring; * Self-assessment checklist; * Human capital profile; * Workforce & succession planning; * Employee feedback survey & suggestion program; * Employee Advisory Council; * Enhanced employee communications & participation; * Skills & knowledge inventory; * Employee preference survey; * Frequent flyer miles; * Student loan repayment; * Recruitment & college relations; * Phased retirement initiative; * Training/development; * Recognition & rewards; * Business casual dress & business cards; * Enabling technologies; * Opportunity/inclusiveness; * Mentor/buddy programs; * Commuting subsidy ; * Competency-based employee appraisal system ; * Human Capital Officer; * Office of Opportunity & Inclusiveness; * Flextime and telework; * Total compensation communications; * Classification and compensation review; * Human Capital Strategic Plan. Legislation Addressing GAO's Human Capital Challenges: Past: * Broad-banding system for mission staff; * Expedited hiring authority (e.g., internship program); * Special pay rates; * Senior level for technical staff; * Targeted early out and buyout authority (3 years); * Revised RIF rules; Recent: * Targeted early out and buyout authority (permanent); * Annual pay adjustment rates; * Pay retention provisions; * Relocation benefits; * Increased annual leave for upper level employees; * Executive exchange program; * Re-designation of “General Accounting Office” to “Government Accountability Office” Competency-Based Performance Appraisal: Objective of new system are to provide a: * Clear link to our strategic plan, professional standards, protocols and core values; * Fair, honest, accurate and non-discriminatory assessment of performance based on standards that are valid, properly applied, and transparent to employees; * A sound basis for enhancing the performance capacity of all staff, rewarding high-performing staff, and dealing with “below expected” performers; Competency Model: Fields: * Succession Planning; * Promotions; * Recruitment; * Work Assignments; * Performance Management; * Pay Decisions; * Career Planning; * Training. Concepts: Achieving Results; * Maintaining Client and Customer Focus; * Developing People; * Thinking Critically; * Collaborating with Others; * Presenting Information Orally; * Presenting Information in Writing; * Leading Others. Analyst/Specialist Appraisal Scores (1984-2003): [See PDF for image]-graphic text: Line/Bar combo chart with 1 line (Unified) and 40 bars (2 for each year). Year: '84; Ratings = 4.7 and above: 7; Average Rating (5-point scale): 3.84; Ratings = 5.0: 2. Year: '85; Ratings = 4.7 and above: 7; Average Rating (5-point scale): 3.9; Ratings = 5.0: 1. Year: '86; Ratings = 4.7 and above: 9; Average Rating (5-point scale): 3.98; Ratings = 5.0: 1. Year: '87; Ratings = 4.7 and above: 10; Average Rating (5-point scale): 4.02; Ratings = 5.0: 1. Year: '88; Ratings = 4.7 and above: 11; Average Rating (5-point scale): 4.07; Ratings = 5.0: 2. Year: '89; Ratings = 4.7 and above: 19; Average Rating (5-point scale): 4.14; Ratings = 5.0: 3. Year: '90; Ratings = 4.7 and above: 19; Average Rating (5-point scale): 4.26; Ratings = 5.0: 3. Year: '91; Ratings = 4.7 and above: 24; Average Rating (5-point scale): 4.33; Ratings = 5.0: 4. Year: '92; Ratings = 4.7 and above: 31; Average Rating (5-point scale): 4.39; Ratings = 5.0: 6. Year: '93; Ratings = 4.7 and above: 36; Average Rating (5-point scale): 4.46; Ratings = 5.0: 7. Year: '94; Ratings = 4.7 and above: 41; Average Rating (5-point scale): 4.54; Ratings = 5.0: 10. Year: '95; Ratings = 4.7 and above: 43; Average Rating (5-point scale): 4.59; Ratings = 5.0: 12. Year: '96; Ratings = 4.7 and above: 50; Average Rating (5-point scale): 4.61; Ratings = 5.0: 16. Year: '97; Ratings = 4.7 and above: 51; Average Rating (5-point scale): 4.63; Ratings = 5.0: 16. Year: '98; Ratings = 4.7 and above: 50; Average Rating (5-point scale): 4.62; Ratings = 5.0: 18. Year: '99; Ratings = 4.7 and above: 11; Average Rating (5-point scale): 4.16; Ratings = 5.0: 2. Year: '00; Ratings = 4.7 and above: 12; Average Rating (5-point scale): 4.18; Ratings = 5.0: 2. Year: '01; Ratings = 4.7 and above: 17; Average Rating (5-point scale): 4.26; Ratings = 5.0: 2. Year: '02; Average Rating (5-point scale): 2.19. Year: '03; Average Rating (5-point scale): 2.3. Note: GAO’s new competency-based performance management system was implemented in January 2002. There were no individual appraisal averages as high as 4.7 in FY02 or FY03. [End of figure] Classification and Compensation System: Key Guiding Principles: * Enable GAO to attract and retain top talent; * Result in equal pay for work of equal value over time; * Be reasonable, reflective of the roles and responsibilities that we expect GAO staff to perform; * Be reasonable, competitive and skills, knowledge, role, and performance-oriented; * Be affordable and sustainable based on current and expected resources levels; * Be in conformity with applicable statutory limits. Pay Philosophy: Performance-Oriented and Market-Based: Historically: * Pay ranges followed the GS schedule; * Everyone could advance to the pay cap irrespective of their performance—not a matter of if, but when; New Approach: * Pay ranges set to be competitive with the labor markets in which GAO competes for talent; * Everyone can advance to the pay cap—but they must have performance in excess of a certain level to advance beyond a certain point of the pay range (e.g., 75th percentile); * Pay ranges may overlap in upper part of band pay range to adequately reward expertise, leadership, and performance; CCR Approach—Best Practices: * Hired an experienced and top quality firm—Watson Wyatt; * Followed an industry best practices process and methodology; * Early involvement of Career Stream Focal Points (including Employee Advisory Council representatives) to provide: - Knowledge and expertise on job content; - Insight regarding attraction and retention issues including turnover, recruitment sources, and mid-career hiring; - Hands-on review and confirmation of GAO job matches and 18 selected published survey sources; * Multiple authoritative surveys used for determining competitive compensation data; * Widely recognized local labor market data index used for local market categories; * Extensive involvement throughout the study by the Executive Committee to: - Provide strategic guidance and input; - Confirm and approve job matches from selected published survey sources after consideration of recommendations from Career Stream Focal Points and Watson Wyatt. Key Leadership Attributes For Success: * Courage; * Integrity; * Innovation [End of slide presentation]