A Message From the Chief Financial Officer
I am pleased to present the U.S. Equal Employment Opportunity Commission’s financial statements for FY 2007. Our financial statements are an integral component of our Performance and Accountability Report. The Accountability of Tax Dollars Act of 2002 extends to the agency a requirement to prepare and submit audited financial statements. The President’s Management Agenda, Improved Financial Performance component among other standards, requires us to obtain and sustain clean audit opinions on our financial statements. The Office of Management and Budget (OMB) issued Circular A-136, Financial Reporting Requirements, on June 29, 2007, which further consolidated and refined reporting requirements for the PAR submission. In addition, the OMB Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, on September 4, 2007, establishes updated minimum requirements for audits of federal financial statements.
Our FY 2007 financial statements received an unqualified opinion. This is the fourth consecutive year that the EEOC has received an unqualified opinion and represents our continuing successful efforts to improve the financial management of the agency. The Department of the Interior’s National Business Center won a competition to replace the existing financial software with CGI’s Momentum® software package. The conversion and implementation was completed on October 9, 2007 for FY 2008 operations. In addition, we finalized a decision on a GSA approved e-Travel processing vendor in October 2007.
In support of the Budget and Performance Integration component of the President’s Management Agenda, we completed for the first time the Program Assessment Rating Tool (PART) assessment process working with the Office of Management and Budget. The program was rated “Results Not Demonstrated.” The agency is working to improve those areas that need management attention. The agency undertook a review and made adjustments to the 6-year Strategic Plan covering FYs 2007 through 2012.
In support of the Competitive Sourcing component of the President’s Management Agenda, we have just completed an OMB Circular A-76 study for the file disclosure function including back room processing of Freedom of Information Act (FOIA) and Section 83 Compliance Manual requests. This study used the standard competition methodology. The winning vendor was announced in October 2007.
For FY 2007, the agency received a $328.7 million budget. We completed the fiscal year within budget with improved financial management and some additional focus on cost controls and cost accounting. Compensation and benefit costs continue to consume a substantial portion of the budget. Some additional progress has been made to bring rising office space rent costs under control by leasing less office space consistent with the number of employees onboard and approved vacancies. However, rent costs remain about 9% of our total budget. With 9% of the budget dedicated to the state and local program, only 13% of the budget is available for technology, programs, travel, and other general expenses.
As reported in the past, I have identified several critical issues for the agency to focus on to continue to improve its long-term financial health. An update on each item is provided below.
- Execute a disciplined analysis of future workforce and infrastructure requirements.
Unfortunately, the agency has been unable to slow the growth of the current and future cost of compensation and benefits for current employees, which are on a path to increase to over 72% of the EEOC’s budget. These costs include salary, health and life insurance, agency contributions for retirement plans, social security, Medicare, worker’s compensation, unemployment insurance, reasonable accommodations, and transit subsidies. The inability of the agency to implement any form of position management over the past several years suggests that it will be difficult to substantially change the cost of the compensation and benefits in future years.
Working with the General Services Administration, the agency has agreed to relocate the Headquarters office to 131 M Street, NE in Washington, D.C. in the first quarter of FY 2008. A 10-year office lease was signed May 23, 2007. The current lease is about 25% of the rent budget. The lease at the new location ensures the agency will not pay more than the current annual lease cost over the lease period.
The agency contracted for a second independent top-down study of the information technology infrastructure and staffing, with a report listing recommendations and implementation which began in FY 2007. The report calls for substantial changes in the governance, organization, use of contracts, server and network operations, desktop management, and the skill mix of staff in order to more effectively spend the $23 million annual budget for the information technology function. Substantial work is underway to change how IT services are acquired, managed and delivered.
- Recognize and manage competing budget priorities. We have kept spending controls in place for discretionary travel, awards, and training. Non-payroll costs also increased for homeland security, rent, facility services, and unfunded Government-wide programs such as a uniform federal Government employees’ identification card project.
- Formulate a long-term performance budget strategy. The agency continues to look into alternative approaches for annual budget justifications because of the variations in workload and the inventory of cases. An adjusted Strategic Plan is in effect and may help focus how the agency will support future requests for budget resources.
In FY 2008 guided by our modified Strategic Plan, we will continue its focus on accountability, financial transparency, and results through improved performance metrics, budget planning and financial management.
Jeffrey A. Smith, CPA, CGFM
Chief Financial Officer
U.S. Equal Employment Opportunity Commission
November 8, 2007