Monday, March 11, 2024: Biden “Hits the Brakes” on Non-Defense Discretionary Budgets for Federal Agencies Joining Congress’ Historic Pivot Away from Both Bigger Federal Agencies and Bigger Social Programs
President Proposes a Flat-Line Federal Agencies Budget Even with FY 2023 & FY 2024 Spending
With the Presidential election now less than eight months away, and with 57% of America’s voting public reporting that they feel that reduction of the federal deficit should be a top priority for the President and Congress (up 12% from two years ago), the President “trimmed sail” and tacked hard to the middle in his FY 2025 budget proposal for Non-Defense Discretionary (“NDD”) spending for federal agencies.
Fiscal Year 2025 will begin on October 1, 2024. Specifically, the President’s proposed FY 2025 Budget is for only $770 Billion in Non-Defense Discretionary spending for the federal civilian agencies.
Reversal of Fortunes
President Biden’s FY 2025 NDD spending proposal of $770 Billion is down $44 Billion from the President’s FY 2024 proposal to spend $814 Billion for that same budget category in the current Fiscal Year. Biden’s FY 2025 $770 Billion NDD budget is also slightly below the $772.5 Billion Congress authorized and the President signed into law for FY 2023 for NDD spending which was a $ 83.5 Billion increase from the enacted FY 2022 NDD budget.
Congress has consistently resisted the President’s NDD budget proposals since enactment of the FY 2022 budget and authorized only $772.5 Billion in FY 2023. For the entirety of FY 2024 (still in progress but without a FINAL line-item budget bill, yet), Congress agreed on January 9, 2024, to hold the FY 2024 NDD budgets to the FY 2023 $770 Billion level for FY 2024 as we first reported here. With Congress now “standing on the brakes,” the President has started his FY 2025 budget proposal at the $770 Billion NDD number Congress has twice in the last two years told him he may NOT exceed. This is in stark contrast to the $118 Billion (8.4%) increase in NDD spending President Biden requested for FY 2022 and the $25 Billion increase in the FY 2022 NDD budget Congress passed and President Biden signed into law. It is now clear that “the good old days” of the President “asking for the sun, the moon, and the stars” and accepting the “sun and the moon” are over.
Note: Congressional Budget Office (“CBO”), a neutral arm of the Congress, routinely reports Enacted Budgets higher than what The White House reports and which the popular press uncritically reports to the public. (For example, the popular press reports the NDD ENACTED budget for FY 2023 to be only $770 Billion, but the CBO reports $917 Billion). Also, the CBO does not report spending for Fiscal Years still in progress, as is the case with FY 2024, the current Fiscal Year which has just passed its mid-point, or as to the FY 2025 budget proposed last week.
Remember: There are two types of federal budgets: the “mandatory” federal spending budget (over which the Congress expends no discretion to fund (covering expenses which are automatically paid pursuant to statute, including most notably Social Security, Medicare, SNAP, and the interest paid on the federal debt, among other expenses). The “mandatory” budget spending is about 2/3rds of the annual federal budget. The other 1/3rd is what President Biden was addressing in putting forward a PROPOSED budget for Congressional review and approval to fund the federal agencies in amounts in the discretion of Congress. Congress exercises this discretion by passing 12 different budget bills it then sends to the President to sign into law, or to veto. The “discretionary” budget in turn, as noted above, is broken into a “Defense Discretionary” budget and eleven “Non-Defense Discretionary” (“NDD”) budgets for the federal agencies.
As Congress continues to haggle over the specific line-item apportionments of budget to be awarded to each federal sub-agency within each of the federal departments even after having agreed on January 9, 2024, to a “top-line” number for the NDD budgets (see our latest story here), President Biden announced his $7.3 Trillion (total) budget proposal for fiscal year (FY) 2025. The White House Office of Management and Budget’s (OMB) Appendix to the FY 2025 Budget document contains the specific allocations the President proposes for each agency next year.
Compared to the President’s FY 2024 budget proposal (see our story here), the FY 2025 request generally proposed more modest increases for the agencies relevant to our reporting, and in some cases, zero staffing increases.
The Congressional Budget Justification (“CBJ”) for each agency relevant to our reporting are included in the embedded links as follows:
Two Percent Federal Employee Pay Raise
The proposal includes an average two percent pay raise for federal civilian employees. The U.S. Office of Personnel Management’s Executive Summary provides specifics. For more information, including an overview of raises in recent years, see here and here.
Labor Department’s Overall Budget Request – 2.21% increase sought
The DOL’s 70-page Budget in Brief (“BIB”) document is here.
Because the final FY 2024 Department and sub-agency budgets are still in limbo, the list below details the amounts the DOL requested in its FY 2025 CBJ compared with the numbers the Administration estimates for FY 2024. The estimates assume the agencies are operating under the Continuing Appropriations Act, 2024 and Other Extensions Act (Division A of Public Law 118-15, as amended). That was the Continuing Resolution (“CR”) passed in September 2023, which was the first of four CRs on the FY 2024 budget so far. As of now, the DOL/OFCCP, the EEOC, and the NLRB are funded at current (FY 2023) levels through March 22, 2024 (and each Department will continue to be so funded to the end of FY 2024, even while any particular sub-agency could be awarded more or less budget than it received in FY 2023). The amounts included for the FY 2024 estimate reflect the annualized level provided by the September 2023 CR.
“FTEs” stands for full-time equivalent employees. The percentage increase numbers are rounded up or down to the nearest two decimal points. Page references below are all to the print copy pages (to match up with the Table of Contents) of the BIB.
Overall, the President requested $13.9 Billion for the DOL (see page 1 of the BIB). This request is $0.3 Billion over the FY 2024 estimate of $13.6 Billion, marking a 2.21 percent budget increase request. The request includes 15,762 FTEs, which is an increase of 342 over the FY 2024 estimate of 15,420, marking a 2.2 percent increase.
The above numbers do not include additional mandatory funding and supplemental FTEs.
Labor Department’s Agency-Specific Budget Requests
OFCCP (page 37) – 4.65% increase sought:
OFCCP’s FY 2025 request is $116,132,000 and 492 FTEs. The FY 2024 estimates are $110,976,000 and 492 FTEs. That is a 4.65 percent budget increase and a 0 FTE increase.
OFCCP states it will use this requested allocation to build on its Mega Construction Project Program and focus on the development of strong systemic cases, with an emphasis on hiring and a strategic approach to pursuing compensation indicators.
Editor’s Note: So, OFCCP is hoping to build software to assist contractor selection for audit and enforcement analyses. Whether OFCCP gets this budget increase or not, expect fewer audits in the coming 18 months.
Bureau of Labor Statistics (page 46) – 2.13% increase sought:
The BLS FY 2025 request is $712,786,000 and 2,023 FTEs. The FY 2024 estimates are $697,952,000 and 2,023 FTEs. That is a 2.13 percent budget increase and a 0 FTE increase.
Employment and Training Administration (page 10) – 5.08% DECREASE sought:
ETA’s FY 2025 request is $3,930,587,000. The FY 2024 estimate is $4,140,911,000. That is a 5.08 percent budget DECREASE.
Office of Disability Employment Policy (page 52) – 4.36% increase sought:
ODEP’s FY 2025 request is $44,876,000 and 63 FTEs. The FY 2024 estimates are $43,000,000 and 63 FTEs. That is a 4.36 percent budget increase and a 0 FTE increase.
Office of Labor-Management Standards (page 40) – 4.80% increase sought:
The OLMS FY 2025 request is $50,845,000 and 208 FTEs. The FY 2024 estimates are $48,515,000 and 208 FTEs. That is a 4.80 percent budget increase and a 0 FTE increase.
Occupational Safety and Health Administration (page 42) – 3.66% increase sought:
OSHA’s FY 2025 request is $655,463,000 and 1,980 FTEs. The FY 2024 estimates are $632,309,000 and 1,962 FTEs. That is a 3.66 percent budget increase and a 0.92 percent FTE increase.
Veterans’ Employment and Training Service (page 26) – 0.58% increase sought:
The VETS FY 2025 request is $337,301,000 and 237 FTEs. The FY 2024 estimates are $335,341,000 and 237 FTEs. That is a 0.58 percent budget increase and a 0 FTE increase.
Wage and Hour Division (page 34) – 11.08% increase sought:
WHD’s FY 2025 request is $349,901,000 and 1,588 FTEs. The FY 2024 estimates are $315,000,000 and 1,401 FTEs. That is an 11.08 percent budget increase and a 13.35 percent FTE increase.
IT Modernization (page 56) – 2.97% increase sought:
The FY 2025 request contains a separate line item for DOL IT Modernization. The overall DOL IT Modernization FY 2025 request is $35,286,000 and 24 FTEs The FY 2024 estimates are $34,269,000 and 18 FTEs. That is a 2.97 percent budget increase and a 33.33 percent FTE increase.
Agencies Outside DOL
EEOC – 7.30% increase & NLRB – 6.94% increase sought
The President proposed increasing the FY 2025 EEOC budget to $488,221,000. Unlike the DOL CBJ, the EEOC CBJ does not contain FY 2024 estimates, rather it makes comparisons to its FY 2024 Budget request and the actual FY 2023 appropriations. In light of the fact that the applicable CR funds the agency at the FY 2023 enacted levels, our calculations reflect the difference between the FY 2025 request and the FY 2023 enacted levels. The FY 2023 enacted level was $455,000,000. That is a budget increase request of 7.30 percent.
The President requested $320,002,000 and 1,308 FTEs for the NLRB in FY 2025. Like the DOL, the NLRB CBJ contains FY 2024 estimates. The FY 2024 estimate is $299,224,000 and 1,258 FTEs. That is a 6.94 percent budget increase and a proposal to increase FTE by 3.97 percent.
Editor’s Note: The cumulative effect of flat-line budgets for the last two Fiscal Years, combined with 9.8% in wage increases (4.6% in FY 2023 and (an historic) 5.2% increase in FY 2024) and the 2% the President has granted federal employees for FY 2025 is significant. Those two actions, alone, mean that most federal agencies must cut either “heads or programs”) to keep up with these rising costs of “doing business,” AMONG THEIR SEVERAL OTHER RISING COSTS. Many agencies devote 80% or more of their budget to payroll/benefits costs. An increase in wage costs alone of 11.8% (4.6% + 5.2% + 2.0%) x 80% means the agencies have to divert almost 9½% of their budgeted monies just to cover wage increases.
Companies signatory to “Federal Financial Assistance” (aka “grants”) contracts (as opposed to federal contracts for supplies, services, and construction) will be the first to feel the downshift in spending in Washington. Historically, most federal agencies have tried to balance their books when available budget gets tight by first canceling outstanding “grant” awards and non-renewing them upon expiration. Federal agencies also have the discretion and legal right not to renew multi-year contracts, perhaps for five years renewable in one-year increments.
Epilogue: Congress will more likely than not finalize the FY 2024 budgets in this month of March and will then turn to see how much it wants to cut from President Biden’s FY 2025 proposed budget.