Data Agencies Concerned About Prospect of More Cuts

As a result of Congress funding most of the federal government through a continuing resolution that sets spending levels through March 6, 2009, the major data agencies are in a holding pattern that prolongs program cuts announced early this year.  But when the new Congress convenes in January, officials of the three major data agencies say there is a good chance they will have to make more cuts in economic statistics if the agencies remain flat-funded for the entire fiscal year of 2009.

Top officials of the Bureau of Labor Statistics, Bureau of Economic Analysis, and the Census Bureau outlined their concerns and plans during a Nov. 20 meeting of the NABE Statistics Committee.  The panel, chaired by former NABE President Maurine Haver, president of Haver Analytics, Inc., meets three times a year to hear from agency officials and discuss ways that NABE can support adequate funding and improvement initiatives.

As Haver pointed out in a column published in the April issue of NABE News, in fiscal 2008, data users were concerned about lack of funding for planned data improvements. In FY 2009, “we are facing the loss of indicators themselves,” she wrote.

Potential reductions in key economic data series come at a time when economists are looking with great interest at all economic data as they track national and industry trends during the recession, and as they watch for signs of a turnaround.  Both employment and inflation statistics are among those at risk for substantial budget cuts, agency officials said.

Officials of all three data agencies said they are concerned about possibly having to rework their spending if the funding levels don’t increase from amounts specified in the continuing resolution (CR) for the current fiscal year, which runs through Sept. 30, 2009. The continuing resolution funds the agencies at last year’s levels and has already resulted in cutting some programs and putting other initiatives on hold, including updates for the consumer price index. All three agencies made across-the-board cuts in fiscal 2008, and those reductions remain in place under the CR.

Agency heads emphasized that if they are required to hold budgets at current levels for the rest of the fiscal year, they would be forced to take more drastic and sometimes permanent cuts in programs.

BLS Seeks Key CPI Sample Updates

In the case of the BLS funding level, Commissioner Keith Hall told the NABE committee that he is particularly concerned about the current BLS budget level, which, if allowed to continue, would put a number of programs in jeopardy.  One impact of recent budget levels has been a delay in critical updating of components of the CPI. Appropriations for the last two years have resulted in spending levels far below what was requested by the Bush administration and have meant a hiring freeze and putting spending on hold for equipment, training, and travel, he said.

One the most important items that has not been funded so far, officials said, is a proposed increase of $10.4 million for updating two samples used to construct the CPI: the geographic sample used to ensure that the areas in which prices are collected are representative of the United States; and the housing sample used for tracking price change in that component.  Both samples are currently based on the 1990 decennial census and BLS wants to start a process of continuously updating these key parts of the CPI’s infrastructure, using funds from this initiative.

“This is a big item and, left unaddressed, at some point, we might have to admit that the CPI has become a substandard measure.  We need the money to have the continuous updating,” Hall told the NABE committee.

In general, if the BLS doesn’t receive additional funding by April l, 2009, Hall said the agency “will have to start shifting money around” to accommodate the shortfall.

There is also a proposal, not yet funded, “to ensure the continued accuracy of the national unemployment rate, labor force participation, women’s-to-men’s earnings ratio, and other key indicators obtained from the current population survey,” BLS said in a statement posted on its website about the 2009 budget request.  If this funding of $8.7 million is not approved, the agency would have to reduce the household survey sample by at least 25 percent or eliminate other, lower priority programs to shift funding to the household survey. Reducing the survey sample, officials concede, would make some of the key employment measures less reliable.  The nation’s unemployment rate and other key measures are derived from the household survey.

The continuing resolution has resulted in BLS extending what officials considered temporary reductions put into place as a result of the fiscal 2008 Consolidated Appropriations Act, including the elimination of the publication of all metropolitan area hours and earnings data and the publication of all employment data for the 65 smallest metropolitan areas in the current employment statistics program.  BLS also plans, as part of the 2009 budget proposed by the White House, to eliminate the American time use survey, costing an estimated $4.4 million a year, to partially offset the lack of funding for the current population survey.

If BLS funding for the current year is held to the fiscal 2008 levels for the full year, which is below the 2007 levels, then BLS would be forced to permanently cut about $50 million in critical statistical programs in addition to those reductions already included in the fiscal 2009 budget request, officials said.

For more details of the fiscal 2009 budget request for the BLS, see the agency’s summary.

BEA Spending Cuts Continue, Await Final Action

BEA Director J. Steven Landefeld told the NABE committee that while the agency received approval for full funding in both the House and Senate Appropriations Subcommittees for fiscal 2009, it remains unclear what the final funding levels will be once Congress returns.

 “As always, we will make due with what funding the Congress provides us,” Landefeld said, “but the reality for a data production agency like BEA is that a cut in funding leaves us with no option but to cut products.  We’re a very lean operation.”

Some lawmakers and private sector data users have expressed concerns about BEA’s decision, announced earlier this year, to eliminate the survey of new foreign direct investment in U.S. companies and to reduce the level of detail published for regional estimates, Landefeld said.

These program cuts and others announced earlier this year followed a fiscal 2008 final budget that excluded some funding requests, such as a proposed data improvement plan for research and development measurement and a health care measurement initiative.  Both the R&D and health care proposals are among those approved at the subcommittee level, but it is unclear whether it will make it into the final funding measure, Landefeld said.

As a basis for the latest BEA programs cuts, the agency provides details of its fiscal 2008 appropriations on its website.

Census Preparing for 2010 Decennial Count

The flat-funding of the Census Bureau under the continuing resolution also has resulted in putting some programs on hold, even as the agency moves ahead on plans to conduct the 2010 decennial census, according to Thomas Mesenbourg, Census deputy director and chief operating officer.

Plans for the 2010 population count are progressing on schedule, he said.  According to the timeline posted on the agency’s website beginning next spring Census employees will gather and update address lists.  Hiring of census takers will begin in the third quarter of 2009, and the questionnaires will be mailed and delivered in February and March of 2010.  By law, the Census Bureau must deliver the official estimates to the president in December.

Expansion and improvements in service sector data are among the programs that will remain on hold unless a higher funding level is approved next year.  In fiscal 2008, Congress directed Census to continue producing the Survey on Income and Program Participation (SIPP), and, in order to do so, the agency redirected funds initially planned for the service sector initiative.

Mesenbourg told the NABE committee that Census has been pleased with response rates in the 2007 Economic Censuses, adding that the agency “is closing out the processing of the responses three months ahead of schedule.”   The Economic Censuses are conducted every five years, from the national to the local level, and they are used to construct many other surveys and data series produced by federal agencies.