BLS Commissioner Keith Hall Concerned About Data Funding

A few weeks after he was sworn in last January, Bureau of Labor Statistics Commissioner Keith Hall found himself in the thick of the fiscal 2009 appropriations process as the Bush administration sent its proposed budget to Congress.  The debate continues on Capitol Hill and next year’s funding level for the Bureau of Labor Statistics remains uncertain as the start of FY 2009, on Oct. 1, draws near.

In a late-July interview with NABE News, Hall expressed concern that if BLS appropriations levels are not increased for fiscal 2009, “it may not be possible to retain all of our programs should we not get budget relief for a third year.”  He added that “if it becomes necessary, we are prepared to look at eliminating lower priority programs” in order to fully fund certain initiatives that are considered crucial to principal economic indicators compiled by the agency.

For the past two years, appropriations approved by Congress for BLS have fallen short of the requested amounts and the agency has made cuts in data programs and postponed long-delayed upgrades to key programs, including the consumer price index. [link to Feb. NN story http://nabe.com/publib/news/08/02/06.html]

Before his nomination to head the BLS, Hall was “an intense user of BLS data” from the perspective of different top posts in the executive branch.   Most recently he served for two years as chief economist for the President’s Council of Economic Advisers, analyzing what he described as broad range of fiscal, regulatory, and macroeconomic policies; he also directed the CEA’s team that monitored the U.S. economy and developed forecasts.

Earlier, Hall served as the Commerce Department’s chief economist, where he worked closely with the Census Bureau and the Bureau of Economic Analysis.  He spent 10 years at the U.S. International Trade Commission and has taught full-time on the faculties of the University of Arkansas and the University of Missouri. Hall earned his B.A. from the University of Virginia and his M.S. and Ph.D. in economics from Purdue University.

Hall serves on NABE’s Statistics Committee, as do the heads of the Census Bureau and the Bureau of Economic Analysis.

Here is the exchange, primarily via e-mail, with Hall as he responded to questions about the agency’s budget and priorities for key data programs produced by the BLS:

What are your top priorities for the BLS?

Our top priority at the moment is to protect the quality of our core programs.  After two consecutive years of surprising and disappointing appropriations, we have worked hard to keep all of our programs.  However, we had to take a number of broad, temporary reductions across virtually all programs.  Although I believe that we have been quite successful so far at maintaining a high standard for all of our programs, I am concerned that it will not be possible to retain all of our programs should we not get budget relief for a third year.

We hope that FY09 will allow us to ease our current restrictions on discretionary spending, end some temporary program reductions, and begin important initiatives designed to maintain the quality of two important core programs:  the consumer price index (CPI) and the current population survey (CPS).  However, if it becomes necessary, we are prepared to look at eliminating lower priority programs to achieve these goals.

Another priority that I hope we can focus on after we have protected our core programs is customer service.  As a former, intensive user of BLS data, I have a great appreciation for the importance of economic data to not only economic policymakers, but to virtually everyone as they need to make informed economic decisions—personal or professional.
 
High quality economic data are required for the efficient operation of the federal government. BLS data help guide billions of dollars of federal spending:  To name just a few examples:

• More than half a trillion dollars of Social Security benefits are indexed to our CPI.  
• Billions of federal education and job training dollars help prepare our citizens for the jobs of tomorrow.  The employment forecasts on which these decisions are based come from the BLS.  
• Hundreds of billions of dollars in federal grants to states and localities across a broad range of programs are distributed on the basis of BLS data.
• Billions of dollars in federal contracts have escalation clauses tied to our measures of prices and wages.
• An informed debate over the extension of unemployment insurance benefits depends on our labor force data.

 
In fact, it is my opinion that the federal government could not spend its three trillion dollar per year at all effectively if timely and accurate BLS data were not available.

It is not, however, enough that BLS simply produces economic data.  We need to work hard to ensure that people understand the value and use of our data—especially to the private sector in guiding personal and business decisions.

What are the biggest challenges facing BLS, particularly in terms of funding for its core programs?

Besides ensuring that all of our core programs have enough money to function effectively, one of our biggest challenges continues to be the completion of our modernization initiative for the CPI.  The CPI is the most widely used measure of consumer price change and has a significant impact on the finances of the federal government.

In the past, the CPI was updated once every decade as decennial census data become available.  This meant that components like the expenditure weights, the population weights and samples for the geographic areas, and housing samples were only updated every 10 years.  The modernization is designed to continuously update the CPI, supplementing decennial census data with information from the American community survey and other sources.

All but two components of the modernization have been completed since FY2006.  However, we have been unable, so far, to get the funding necessary to finish the initiative.   Specifically, the geographic and housing area samples are still based on the 1990 census.  This means, that these critical components are now 18 years out of date.

Another challenge to our core programs is dealing with the rising cost of conducting the current population survey (CPS), which provides the official unemployment rate and a wealth of economic and demographic information.  These costs relate to the changing collection environment, particularly with respect to safeguarding respondent confidentiality and maintaining survey response rates.  Without additional funding, beginning in FY09 we will have to reduce the CPS sample size by about 25 percent.

Sometimes the appropriations process leaves data users puzzled about how funding levels are set each year.  This seems especially the case in recent years, when Congress has rolled several funding bills into a consolidated or omnibus measure, which has left BLS and other data agencies with reduced spending levels.  Can you comment on how the process has changed in recent years and how it has affected BLS funding?

The appropriations processes in each of the past two years did result in lower funding levels than we expected.

In FY07, both the House and Senate Appropriation Committees fully funded the president’s budget request for BLS.  Although we then had high hopes for full funding during the conference process whereby differences in the House and Senate budgets are reconciled, our appropriation became part of what was essentially a full year continuing resolution based on our FY06 appropriation level.  The end result was that our final budget came in $15 million below the president’s request.

In FY08, the same conference process resulted in a Congressional appropriation level for BLS that was somewhere between our two Appropriation Committee budgets, which was about $8 million below the president’s request.  We were preparing to deal with this second shortfall when the appropriation bill was vetoed and the Omnibus measure lowered our final budget significantly further—leaving us about $30 million below the president’s request.  This was even below our FY07 appropriation level (in nominal terms).
The small consolation for us, I suppose, was that in both years when we made our “budget case” to the President and our two Appropriation Committees, we got the support for good, solid budgets for BLS.  In the end, competing budget demands didn’t translate that support into adequate funding levels.

How does the fiscal 2009 appropriations situation look for BLS at this point?  Please describe priorities, especially for the updates of the CPI samples and the proposed elimination of the American time use survey.

So far, so good.  The president’s budget request for BLS met our most important priority of allowing us to protect the quality of our core programs.  There was sufficient funding to cover our expected inflationary cost increases, resume discretionary spending on such things as training, equipment, and new hiring, and restore the temporary programmatic reductions that we’ve had in place.  Plus, funding is sufficient to complete the CPI modernization and to continue the CPS survey at its current sample size.

The budget request did require us to make the hard decision to eliminate the American time use survey and to make partial cuts in our locality pay and international price programs.  Although those programs are valued by many of our data users, recent appropriations levels forced us to focus on our core programs as I just described—particularly on the CPI and CPS initiatives.

Our funding levels have now come out of the House and Senate Appropriation Committees and both exceeded the presidents’ request.

However, we still do not know what our final appropriation level will be and we will have a very difficult time maintaining our current programs if we have a continuing resolution that freezes our budget at its FY08 level during the first several months of FY09.

What is the status of the proposed reorganization of the BLS advisory committee, which will replace the Business Research Advisory Council and the Labor Research Advisory Council?

The new advisory committee will be a user-based committee, including business, labor and other groups, and the charter has been completed.  We are now ready to begin the process of putting the membership in place and will try to have this completed as soon as possible.

How can NABE members best be informed and supportive of BLS programs?

Keeping NABE members and others informed about BLS programs is a real priority for us.  We really value the chance to participate in an organization like NABE and interact with members about our programs.  I think a really valuable way to be supportive of BLS is for NABE members to keep informed of issues related to our data and give us your views on what we are doing and proposing to do.