Report | Jan. 5, 2017

Requirements for the Air Force Civilian Pay Budget Still Need Improvement DODIG-2017-039

Objective

We determined whether the civilian full-time equivalent (FTE)1  and pay requirements contained in the Air Force FY 2016 Budget Estimate Submission were adequately supported and justified.  This audit is the first in a series addressing whether the Military Services have effective budget processes for civilian pay.

Finding

The Air Force did not adequately support and justify the civilian pay requirements in its FY 2016 Budget Estimate Submission to Congress.  Specifically, Air Force budget officials did not follow Office of Management and Budget guidance when calculating the FTEs for the civilian work-year cost2 calculations used to determine civilian pay requirements.

When calculating civilian work-year cost, Air Force budget officials did not use FTEs based on hours worked, as required by Office of Management and Budget Circular No. A-11.  Officials incorrectly calculated FTEs based on a count of civilian positions filled (end-strength).  These FTEs did not correspond to the civilian personnel compensation and benefit costs used in the civilian work-year cost calculation.

In addition, the Air Force did not follow Office of Management and Budget guidance when reporting the prior year FTEs in its FY 2016 Budget Estimate Submission.  Air Force budget officials incorrectly used end-strength data to represent prior year FTEs instead of using actual hours worked.

During the budget process, Air Force officials did not document or support their rationale for deriving the FY 2016 civilian pay requirements.  Air Force senior officials evaluated proposed program changes at the organizational unit level and established an overall funding level for the civilian pay program.  Budget officials then proportionately adjusted the civilian pay requirements for the individual programs to meet the overall funding level.  However, senior officials did not document the rationale for adjusting the overall civilian pay requirements.

These conditions occurred because the Air Force did not have written procedures that described the process and source data to use for developing its civilian pay requirements. Several Air Force Instructions provide guidance regarding the overall budget process and define budget responsibilities; however, the Instructions do not provide detailed procedures for developing the civilian pay budget.  The Air Force is developing written operating procedures to standardize the civilian pay budget process, but the procedures do not outline the methodology or factors that budget officials should use to calculate FTEs and develop civilian pay requirements. Furthermore, the procedures do not require documenting key budget decisions to ensure that calculations and decisions are supported.  A consistent and clear methodology and documented decisions would allow the Air Force to better support its budget requests.

As a result of inadequate procedures, the Budget Estimate Submission of $7.7 billion for the FY 2016 Air Force civilian pay requirements in the Operations and Maintenance appropriation did not capture the funding needed to pay Air Force civilian personnel.  The Air Force requested an additional $212 million from Congress to correct its budget shortfall.  In addition, the information used for Air Force programming decisions was based on flawed civilian work-year cost data.

The Air Force is working to improve the civilian pay budget process; however, additional steps are needed. Without clear and definitive written procedures that explain the Air Force civilian pay budget process and require the use of appropriate data sources for FTE and work-year cost calculations, the Air Force will continue to develop and submit budget estimates that do not accurately reflect its civilian pay requirements.

Recommendations

We recommend that the Assistant Secretary of the Air Force (Financial Management and Comptroller) develop written procedures for the civilian pay budget process.  The procedures should require Air Force budget officials to determine civilian FTEs in accordance with Office of Management and Budget guidance, use payroll data sources, and document all budget calculations and decisions.

Management Comments and Our Response

The Deputy for Budget, responding for the Assistant Secretary of the Air Force (Financial Management and Comptroller), agreed with the recommendations but did not identify a plan for updating applicable policy and procedures related to developing civilian pay requirements.  We request that the Assistant Secretary of the Air Force (Financial Management and Comptroller) provide additional comments in response to this report.


1    A full-time equivalent is a unit of measure that quantifies the workload of an employee for a year.

2    The civilian work-year cost is determined by dividing the obligations for total personnel compensation and benefits by civilian FTEs.

This report is a result of Project No. D2016-D000AG-0040.000.