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Letter to Federal Legislators-Partial Federal Shutdown Effect on Housing / City Departments Copyrighted January 22, 2019 City of Dubuque Action Items # 4. ITEM TITLE: Letter to Federal Legislators-Partial Federal Shutdown effect on Housing Choice Vouchers and Additional Information on What the Government shutdown means for Dubuque. SUMMARY: City Manager providing a letter to Federal Legislators regarding the partial Federal shutdown effect on Housing Choice Vouchers and additional information on what the Government shutdown means for Dubuque. • Staff Report- Departmental Impacts of Federal Government Shutdown • U.S. Department of Housing and Urban Development -Accessing HUD-Held Housing Assistance Payment Reserves • White House - FAQ During a Lapse in Appropriations • Committee for a Responsible Federal Budget-Q&A Everything You Should Know About Government Shutdowns • National League of Cities -What a Partial Government Shutdown Means for City Leaders SUGGESTED DISPOSITION: Suggested Disposition: Receive and File ATTACHMENTS: Description Type Letter to Federal Legislators re Partial Federal Supporting Documentation Government Shutdown and Housing Choice Vouchers Accessing HUD-Held Housing Assistance Payment Supporting Documentation Reserves Departmental I mpacts of Federal Go�rnment Shut Staff Memo Down FAQ During a Lapse in Appropriations Supporting Documentation Q&A Everything You Should KnowAbout Go�rnment Supporting Documentation Shutdowns W hat a Partial Go�rnment Shutdown Means for City Supporting Documentation Leaders �UbUC�Ue City Mana�er's Office THE CITY OF , , City Hall All•AmeMeaCity 50 West 13th Street U� � "'""�L'�` Dubuque,IA 52001-4345 � � � �� Office(563)589-4110 Fax(563)589-4149 2007•2012 TTY(563)690-6678 Masterpiece on the Mississippi 2013•2017 ctyin;r@cityofdubuque.org www.cityofdubuque.org January 17, 2019 The Honorable Abby Finkenauer The Honorable Charles Grassley House of Representatives United States Senate 124 Cannon House Office Building 135 Hart Senate Office Building Washington, DC 20515 Washington, DC 20510-1501 The Honorable Joni Ernst United States Senate 111 Russell Senate Office Building Washington, DC 20510 Dear Ms. Finkenauer, Mr. Grassley and Ms. Ernst: The City of Dubuque is concerned about the partial federal government shutdown. A cataclysmic event is about to occur that is going to affect low-income families, especially the elderly and disabled. In March 2019, the 827 Housing Choice Voucher (Section 8) recipients will receive their last rental subsidy. The landlords who serve this very vulnerable population will stop receiving their rental payment subsidies. When that happens, bad things are going to begin happening to good people, both tenants and landlords. Please help the City of Dubuque and cities across the State of lowa and the country prevent an interruption in Housing Choice Voucher rent subsidies for low-income people and the landlords who are helping them. Sincerely, � � Michael C. Van Milligen City Manager MCVM:jh Cc: Mayor Roy Buol and Dubuque City Council Members ` Crenna Brumwell, City Atforney Teri Goodmann, Assistant City Manager Alexis Steger, Housing & Community Development Director From: HUD Office of Public and Indian Housing<updates@pih.hud.gov> Sent:Tuesday, January 15, 2019 11:28:32 AM To:Alexis Steger Subject:Accessing HUD-held Housing Assistance Payment Reserves During Partial Government Shutdown pt��AE NT pR.y �w4* I��ill� t JJ'- U.S. DEPARTMENT OF HOUSING y (l��f� ^_ AND URBAN DEVELOPMENT x°� i�;4 !R , _ WASH[NGTON,DC 20410-�000 GENERAL DEPUTY ASS[STANT SECRETARY FOR PUBL[C AND[ND[AN HOUSING Dear Executive Director, The Department is providin�additional information about the Department's contin�ency plan so that public housing a�encies (PHAs) administering the Housing Choice Voucher(HCV)program may access their HUD-held Housing Assistance Payment Reserves(HHR)under certain circumstances due to the lapse in appropriations that began on December 22,2018. Housins Assistance Payments(HAP)renewal funds and Administrative Fees were paid to your agency for the month of January and are scheduled to be paid on time for February.These payments should cover your previously contracted HAP needs. However,HUD recognizes that it is possible that these funds might not cover your monthly HAP needs as a result of additional leasin�or costs. In accordance�vith HUD's continQency plan,the Office of Public and Indian Housin�(PIH)will a11ow access to your HHR funds in situations where the failure to act"would result in an imminent threat to the safety of human life or the protection of property."PHAs may request their HAP reserves from HUD under the following circumstances: 1. To protect families that are at imminent risk of termination of assistance; and/or 2. PHAs that�vere eligible to receive a payment for January 2019 and did not receive it(e.g.,first time RAD payments for a project) and need reserves to ensure that the property o�vner(s)receive(s) a HAP payment to continue assistance and protect the residents at the property. Please note that these reserve fiinds may not be used for any other purpose than HAP fundinQ. In order to request an additional payment covered by the HHR,please contact Robert Boepple,Director of the Financial Mana�ement Center(FMC) at Robert.H.Boepple�hud.Qov. The request should include the amount of additional payment, supporting monthly leasing projections, as well as a point of contact email and phone number.The PHA must also detail any cost savinas measures that have been taken to date as outlined in PIH Notice 2011-?8 to decrease the possibility of a shortfall. PHAs should also review PIH Notice 2013-28 Guidance on the Use of Outside Sources of Funds in the HCV Proeram, to ensure proper adherence to the requirements of this Notice. Please be assured that HUD will work with you to the Qreatest eYtent possible durinQ this period to protect the health and safety of families. � � Many thanks, ��A�� Dominique Blom «��w.hud.eo� esoanol.hud.�o� THE CTTY OF Dubuque �" u4leerieociry DUB E 'iI��A, Masterpiece on the Mississippi Z°°' Z°'Z 2013 2017 TO: Michael C. Van Milligen, City Manager FROM: Teri Goodmann, Assistant City Manager SUBJECT: Departmental Impacts of Federal Government Shutdown DATE: January 17, 2019 INTRODUCTION The partial federal government shutdown will begin to have serious impacts on the City of Dubuque and Dubuque residents if left unresolved. DISCUSSION Appropriations bills for nearly two-thirds of the federal government agencies passed by the federal shutdown deadline of December 21 , 2018. As a result, many federal services remain available including Social Security, Medicare and Medicaid (new applicants will have to wait until the end of the shutdown). Veterans' hospitals remain open and operating and the postal service will continue delivering mail. However, local and State governments and their residents receive federal funds from some agencies of the federal government that did not see their federal FY 2019 appropriations bill pass before December 21 , 2018. These remaining federal government offices are closed and programs inaccessible until the shutdown is resolved. These programs include the Supplemental Nutrition Assistance Program (SNAP) better known as food stamps, the Housing Choice Voucher (Section 8) program, the housing rehab program, the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), financial support for parks and recreation projects, USDA federal home loans, TSA staffing at airports and other programs. The City of Dubuque and cities across the country will be negatively impacted. More importantly, Dubuque residents will be negatively impacted, particularly those most vulnerable and at-risk. The following City departments have reported impacts, both realized and anticipated: The Housinq & Communitv Development Department is currently waiting on the US Department of Housing and Urban Development (HUD) to reopen so that the newly awarded Lead & Healthy Homes Grant Agreements can be executed. The timeline for the execution of these grants has been pushed back based on HUDs inability to provide support for negotiating the contracts during the shutdown. Additionally, the City of Dubuque is waiting on HUD to confirm the awards for Family Self-Sufficiency grants. The previous year grants expired December 31 , 2018 and the new grants were to commence January 1 , 2019. Since the shutdown, no awards have been made, so the City of Dubuque is fronting the costs of the Family Self-Sufficiency coordinators to maintain programming at its current levels. The Housing & Community Development Department is also the Public Housing Authority for the City of Dubuque and administers all Housing Choice Voucher (Section 8) programs funded by HUD. Allocations for Rental Assistance Payments for March- December were not made prior to the government shut down. The City of Dubuque received funding from HUD that will cover rental assistance for the 827 families currently on the rental assistance program through February. However, March rents will not be paid by HUD if the government is still shut down at the end of February. Human Riphts Department has submitted the City's required voluntary compliance report to HUD as required on the 1/15 due date, verification of receipt and any feedback are delayed. The Dubuque Repional Airport has approximately 16 local TSA employees, nearly all of whom are part time earning between $12-$15 per hour. The TSA staff handling airport screening have been working in an unpaid capacity since Christmas; many of them are out of savings, food, gas, and patience. Although they will be paid once this shutdown is resolved, it is forcing them to decide whether to work for nothing today or get a job in town that will give them a paycheck. A January 14, 2019 national survey showed the current sick out rate of 6.5°k compared to the normal 2.5°k. Transportation Security Regulation 1540 requires all persons and baggage loaded into the national transportation system go through screening by TSA personnel. If those personnel are not there or if no female screeners are available to process female passengers (or female crew), flights are cancelled. With only 3 daily departures, needless cancelation of any flight is a hardship on the airport and the community. In additional to negative impacts on TSA the Dubuque Regional Airport has concerns about the Air Traffic Control (ATC). Dubuque has lowa's only contract tower, yet iYs the second busiest airport in lowa, and third busiest airport in the three-state region. Dubuque's air traffic consists of a mix of airlines, corporate jets, helicopters, flight training, and military aircraft all maneuvering at different altitudes, speeds, and flight regimes. Any possibility of losing ATC services is unacceptable. Midwest Air Traffic Control Services has stated "We have been given word that our funding has been secured through the end of February 2019." Airport Manager Bob Grierson reports that "safety and common-sense dictates continued funding of the ATC program and the contract tower program or restoration of FAA staffing of these facilities. Funding should not be provided by reducing AIP Discretionary funds to airports." 2 Emerpencv Communications Department reports that depending on how long the shutdown will last, the FCC is closed so when we start applying for our new frequencies for the new radio system, there will be a delay in getting them. Planninp Department reports that the City of Dubuque has been awarded a S175,000 Land and Water Conservation Fund (LWCF) Grant # 19-01320 for the Eagle Point Park Environmental Restoration Project. This is a federal pass-thru grant from the National Park Service (NPS) that is administered by the lowa Department of Natural Resources (IDNR). We are staying on track with the schedule so far— though the current federal shutdown is concerning. 30°k Design plans are complete and were submitted to the City, IDNR and lowa Department of Agriculture and Land Stewardship (IDALS) in early January 2019. A Cultural Resource Assessment Report was sent to the lowa State Historic Preservation Office (SHPO) and NPS in late December 2018 for a Section 106 review. Review process may be slowed due to current federal government shutdown. The NPS is affected by the shutdown, including the Midwest Service Center in Omaha who is administering our LWCF grant. We were able to get the 2019 project assessment review and supplemental Phase I archaeological resources inventory report of the north end of the park to them right before they shutdown. Our consultant has tried to call down there to see if they were open and if they received and processed the materials, we submitted to them, but their voicemail stated they were affected by the shutdown and would not be able to respond until the government was re-opened for business. Our consultant also reached out to SHPO to see if they are providing any guidance to counties or cities regarding Section 106 reviews during this extraordinary circumstance. Their take was that they do not want to be in the position of providing incomplete reviews with the absence of federal agency involvement. Economic Development Department reports that due to the closure of the Department of Interior, federal historic preservation tax credits and state historic tax credit applications will not be processed timely manner. Enpineerinp Department reports that work on three EPA Clean Up grants at the Blum site could be slowed due to the federal government shutdown and its impact related to the terms of the grants. Grant terms require that the City undertake environmental data collection and author technical reports about the nature of the pollutants at the site and the City's plan to remediate them before construction remediation work can begin. At this time, the City is waiting for EPA review and approval of submitted technical documentation before we can initiate the next phase of construction remediation work. The Engineering department also has projects obligated with federal Transportation Alternatives Program (TAP) funds along with federal earmarks for the Chavenelle Hike/Bike Trail project. Additional federal transportation funds are dedicated to the University-Grandview Roundabout project. None of these will be impacted by the shutdown. The City has an application in for an EDA grant for the Bee Branch Gate & Pump Replacement project. The government shutdown is delaying the review and possible 3 award of those grant funds which ultimately delays construction of the improvements and the flood protection they would provide. The City will be taking bids on the $25.5 million (est.) Upper Bee Branch Railroad Culverts Project. Without further clarification from HUD, the bids will reflect a "Heavy River Work - IA3" Wage Decision even though the work is not "pertaining to, or within the flood plain of the Mississippi," or include "heavy work on tributaries ... within the flood plain of the rivers." Therefore, "Heavy & Highway — IA29" has the more appropriate wage rates, which are 20-30°k less than the "Heavy River Work." This will increase the project cost by over $1 million, a cost to be borne by Dubuque citizens. The government shutdown prevents a formal determination by HUD. Due to a lapse in appropriations and federal government shutdown, employees at the US Geological Survey (USGS) and the Office of Surface Mining Reclamation (OSMRE) are on furlough. The City had a large sinkhole develop within the city limits located on private property (2792 Tiffany Court) which is believed to rest on or very near a historically large sub-terrain crevice mining workings of the 1800's. The sinkhole has the potential to impact nearby homes and public infrastructure. The City has worked with the property owner providing technical oversite using tried engineered methods of control since iYs onset in September 2018. Both the City and the property owner (2792 Tiffany Court) have exhausted typical means of controlling the situation and remediation efforts to-date have been unsuccessful and there continues to be on-going funneling and subsidence. In the interest of public safety, the City was working with both the USGS and the OSMRE as valuable technical experts and resources providing assistance to the City. With the federal government shutdown, the City no longer has access to the necessary technical resources and there are strong concerns that the sinkhole will continue to develop and potentially impact nearby homes and public infrastructure. Police Department reports that it has been notified that Department of Justice (DOJ) Justice Assistance Grants (JAG) funding may be unavailable during the shutdown. These funds are used for overtime for officers on special operations and for the purchase of specialty equipment not funded by the department. Public Health Department reports that the Crescent Community Health Center reports no impact. Cities across the country have no experience with a prolonged shutdown. It will be difficult to ascertain what next steps will be required as the federal government crisis disrupts and spills into local governments. RECOMMENDATION I respectfully request that communication be sent to federal elected officials urging an end to the partial government shutdown. 4 www.whitehouse.gov Frequently Asked Questions During a Lapse in Appropriations As agencies update plans for an orderly shutdown in the event of an absence of appropriations, there are a number of cross-cutting issues that apply to all agencies. The informarion below is meant to address the most frequently asked questions by agencies. If you have further questions, please consult your agency counsel or your appropriate points of contact within OMB. Below is an outline of the general principles that govern an agency's operations during a lapse in appropriations. Following this outline is a set of Q&As, based on these principles, for agencies to use in addressing contract and grant situations that arise during a lapse in appropriations. The outline and Q&As are based on the legal opinions issued by the Department of Justice (DO�, and the guidance issued by the Office of Management and Budget(OMB), regarding agency operations during a lapse in appropriations (see, generally, OMB Circular A-11, Section 124). To the ea�tent that agency staff need further guidance regarding the situations addressed below, or on other situations involving contracts and grants,the staff should consult with the agency counsel, which may in turn consult with OMB and DOJ. L Basic Principles of Agency Operations during a Lapse in Appropriations. The Antideficiency Act prohibits agencies from incurring obligations that are in advance of, or that exceed, an appropriation. Thus, with certain limited exceptions, an agency may not incur obligations when the funding source for the obligation is an appropriation that has lapsed. A. E.�epted activities under the Antideficiency Ad (e�press statutory authoriz�ions, emergency circumstances, and the President's constitutional authorities). As DOJ has explained in its opinions, an agency may incur an obligation in the absence of an appropriation in certain "excepted" situations: 1. A statute or other legal requirement expressly authorizes an agency to obligate funds in advance of appropriations. In very rare situations, Congress has granted an agency the statutory authority to incur obligations in advance of appropriations. The best known example, in the contracting realm, is the Civil War-era Feed and Forage Act(41 U.S.C. § 6301), which provides authority to the Defense Department to contract for necessary clothing, subsistence, forage, fuel, quarters, transportation or medical and hospital supplies in advance of appropriations. Other examples are the authorities provided by 25 U.S.C. § 99 (Bureau of Indian Affairs contracts for goods and supplies) and 41 U.S.C. § 6302 (Army contracts for fuel). 2. The function addresses emergency circumstances, such that the suspension of the function would imminently threaten the safety of human life or the protection of property. 1 As DOJ has explained, the emergency exception applies when both of the following exist: (a) a reasonable and articulable connection between the obligation and the safety of life or the protection of property, and (b) some reasonable likelihood that either the safety of life or the protection of property would be compromised in some significant degree by failure to carry out the function in question -- and that the threat to life or property can be reasonably said to be near at hand and demanding of immediate response. As the Antideficiency Act states, the emergency exception does not authorize the continuation of ongoing, regular functions of government, the suspension of which would not imminently threaten the safety of human life or the protection of property. 3. The function is necessary to the discharge of the President's constitutional duties and powers (e.g., Commander-in-Chief or conducting foreign relations). B. Activities that an agency must continue, in the absence of appropriations, because their continuation is "necessarily implied"from the authorized continuation of other activities. In addition, as DOJ has explained, there are a limited number of government activities which an agency must otherwise continue despite a lapse in their appropriations because the lawful continuation of other funded or excepted activities "necessarily implies"that these additional activities will continue as well. A "necessary implication" can arise when an agency needs to incur obligations, even though there has been a lapse in the appropriation against which those obligations would be charged, in order to implement: 1. An "orderly shutdown"when there has been a lapse in appropriations (as DOJ has explained, "authority may be inferred from the Antideficiency Act itself for federal officers to incur those minimal obligations necessary to closing their agencies'�, 2. One ofthe "excepted" activities in LA. above, or 3. A congressionally authorized or appropriated function for which Congress has provided funding that remains available during the lapse (including funds already obligated from the current fiscal year), where the suspension of the related activity (during the funding lapse)would prevent or significantly damage the execution of the terms of the statutory authorization or appropriation. The touchstone of the analysis is determining whether execution of the terms of the statutory provision—not,for example, the terms of the funded contract or grant pursuant to that statute—would be significantly damaged in the absence of immediate performance of the unfunded, related activity. As DOJ has explained, an example of a"necessarily implied" activity for which obligations can continue to be incurred despite a funding lapse are the administrative 2 activities (funded out of annual appropriations)that are necessary to disburse benefit payments under entitlement programs for which an indefinite appropriation provides the funding for the benefits (and for which there is a congressional authorization to make regular payments to beneficiaries). However, as DOJ has also explained, a"necessary implication"may not ordinarily be inferred from the kind of broad, categorical authority that often appears in the organic statutes of government agencies. Moreover, the fact that an agency has unobligated balances (appropriated in a prior fiscal year on a multi-year or no-year basis)that continue to remain available for funding a program does not, in itself, demonstrate that the incurring of obligations for related activities (for which there has been a lapse in appropriations) is necessarily implied. In this regard, it is often the case that agencies possess discretion with respect to when, during the period of availability,the agency engages in activities for which Congress has provided funding. Furthermore, in those cases when Congress has provided funding on a multi-year or no-year basis, the agency may often possess substantial discretion with respect to the timing of when the agency carries out these funded activities. In such situations, where an agency is not otherwise compelled by the terms of a statute to engage in a funded activity during a period in which there is a lapse in appropriations, there is not a"necessary implication"that the agency must incur obligations for related activities for which the appropriation has lapsed. II. Contracts and Grants. The following Q&As address principally the impact on contract and grant activity of a lapse of appropriations, with respect to an agency incurring obligations for the contract or grant itself as well as far the administrative activities in support thereof. Normally, routine, ongoing operational and administrative activities relating to contract or grant administration (including payment processing) cannot continue when there is a lapse in funding. Therefore, agency employees who are paid with annual appropriations and who perform an activity associated with contract or grant administration (including oversight, inspection, payment, or accounting) should generally not continue work during a lapse in appropriations. Of course, in the situation in which performance under an already-issued contract or grant is not impacted by such a lapse, the contractor or grantee may continue to proceed with its wark during the lapse period. An example is the situation where an agency has already obligated funds representing the entire price under a contract or task order before the funding lapse began, or where the agency may use multi-year or no-year funds to incur new obligations far the contract or grant. This assumes there is no problem with funding for any necessary related activities, for example, by federal employees overseeing the contract or grant. The question of what to do if necessary activities related to the contract or grant are funded out of lapsed appropriations is addressed in Question 5 below. A. Incurring New Obligations for Contrads or Grants. 3 Ql. When an appropriation has lapsed,may an agency incur a new obligation—by signing a new contract or grant, or by extending a contract or a grant, or by exercising a renewal option—when the funding source for that obligation would be the lapsed appropriation? Al: No—except in very limited circumstances. The Antideficiency Act prohibits agencies from incurring obligations that are in advance of, or that exceed, an appropriation. Thus, except in certain limited circumstances, an agency may not incur obligations when the funding source for the obligation would be an appropriation that has lapsed. As outlined above in LA.-B.,these limited circumstances are when: 1. A statute expressly authorizes an agency to obligate funds in advance of appropriations. 2. The function addresses emergency circumstances, such that the suspension of the function would imminently threaten the safety of human life ar the protection of property. 3. The function is necessary to the discharge of the PresidenYs constitutional duties and powers. 4. The agency must continue the function, in the absence of appropriations, because its continuation is "necessarily implied"from the continuation of other authorized activities. In these limited circumstances, an agency may incur the obligation (e.g., by awarding a contract to support an emergency activity, such as the minimal necessary guard services to protect a facility), but the agency cannot pay the contractor until appropriations are enacted. Agency staff should work with agency counsel to establish if such an exception may be appropriately invoked. Q2. May an agency incur a new contractual or grant obligation in order to address emergency circumstances, even though the annual appropriation, against which the obligation would be charged,has lapsed? A2: Yes, if the new obligation is necessary to address emergency circumstances that imminently threaten the safety of human life or the protection of property. See LA.2., above, and the DOJ opinions that address the emergency exception. Q3. May an agency incur a new contractual or grant obligation, even though the appropriation for this obligation has lapsed, as part of the agency carrying out a program that is separately funded through an appropriation that remains available? A3: That depends on whether the authority to incur the obligation during the lapse is a "necessary implication" of the program (see LB. above). Q4: May an agency incur a new contractual or grant obligation that would be charged against an appropriation that remains available for obligation if the agency would not 4 incur any related obligations (such as for administrative activities by agency employees) for which the appropriation has lapsed? A4: Yes. In this situation,the agency may incur the new contractual or grant obligation, since both the contract or grant obligation itself, as well as the obligations for necessary related activities (e.g.,the administrative actions that are needed in order for the agency to incur the contract or grant obligation), may be charged against an available appropriation. B. ContinuedPerformance ofAdministrative, Supervisory, orSupportActivities, During a Funding Lapse, In Connection With a Previously-Awarded Contract or Grant Q5: The agency has previously awarded a contract or grant, and the contractor or grantee is in the midst of performance. If there has been a lapse in the appropriation that funds the Federal employees who supervise or support the perFormance of the contract or grant, can the Federal employees continue these activities during the funding lapse? A5: In most cases,the absence of appropriations would prevent the continuation of such supervision or support. Routine ongoing activities related to the agency's contract and grant administration would not usually be authorized to continue when there has been a lapse in the appropriation that funds the contract and grant administration activities. In other words, during a funding lapse, the performance—by contracting officers, contracting officer technical representatives, contract administration personnel, and grants management specialists—of routine oversight, inspection, accounting, administration, payment processing, and other contracting or grant management activity would generally not continue. There are very limited circumstances under which such work may continue, notwithstanding the lapse in appropriations. As is further explained in LB. above, these limited circumstances are when the continued performance of the contract or grants administration is "necessarily implied" for carrying out: 1. An "orderly shutdown"when there has been a lapse in appropriations, 2. One ofthe "excepted" activities in LA. above (i.e., express statutory authorizations, emergency circumstances, and the PresidenYs constitutional authorities), or 3. A congressionally authorized or appropriated function for which Congress has provided funding that remains available during the lapse, where the suspension of the related activity(during the funding lapse) would prevent or significantly damage the execution of the terms of the statutory authorization or appropriation. For example, in the situation where an agency has awarded a contract to provide services that are necessary to address emergency circumstances that pose an imminent threat to life or property, some contract administration might well be necessary in order to enable this "excepted" activity to accomplish its objective (e.g., where a contractor cannot perform an emergency service unless the contractor receives direction from the contracting officer regarding how and where to proceed). In that situation, that direction by the contracting officer would be a"necessarily 5 implied" activity, and thus could occur even though there has been a lapse in the appropriation that funds contract administration. Another example might be a grant program that cannot proceed to the neat milestone under the previously-awarded grant unless the grant administrator provides approval to the grantee for its continued performance. If the grant program is one that is mandated by Congress, and if failing to proceed to that neat milestone during the period of the funding lapse would violate a statutory timetable, then in that case the review and approval by the grant administrator would be a "necessarily implied" activity, and thus could occur even though there has been a lapse in the appropriation that funds grant administration. Again, the touchstone of the analysis is determining whether execution of the terms of the statutory authorization or appropriation for which funding remains available—not the terms of the funded contract or grant pursuant to that statute—would be significantly damaged in the absence of performance of the unfunded activity. Q6: The agency has previously awarded a contract or grant, and the contractor or grantee is in the midst of performance. In addition,the agency has detei•mined that, due to a lapse in the appropriation that funds the Federal employees who supervise or support the performance of the contract or grant, those Federal employees cannot continue these activities during the funding lapse. In the absence of such supervision or support, may the contractor or grantee nevertheless continue performance? A6: If the continued supervision or support during the lapse period is not critical to the contractor's or grantee's continued performance during that period, then the contractor or grantee may continue to proceed with its wark. This is the case, for example, if an agency had obligated funds representing the entire price for a good or service under a contract ar task order before the funding lapse began. In that example,the agency would not have to issue an affirmative direction to the contractor or grantee to continue performance, such as a notice to proceed. Instead, the contractor or grantee could continue to engage in performance. (It is always prudent to be in communication with the contractor or grantee to avoid a misunderstanding.) However, depending on the duration of a funding lapse,the absence of available Federal employee oversight may lead an agency to reconsider whether the contract or grant activity should continue to be performed. In particular, if the continued supervision or support during the lapse period is critical to the contractor's or grantee's continued performance during that period, then—where consistent with law and the terms of the contract or grant—the agency should instruct the contractor or grantee to suspend performance. The same would be true if continued performance depends on the participation of other Federal agencies or the availability of other Federal facilities that would be precluded by the lapse of appropriations. Q7: The agency has previously awarded a contract or grant, and the contractor or grantee is in the midst of performance. In addition,the agency has detei•mined that the continued performance of the contract or grant during a lapse in appropriations does not require the supervision or support of Federal employees who may not continue to perForm these 6 activities during the funding lapse. In that case, should performance of the contract or grant always continue during the funding lapse? A7: The first consideration is whether continued performance of the contract or grant is required in order far the agency to comply with its authorization or appropriations statute. If it is the case that continued performance is statutorily required, then performance should proceed. If continued performance is not statutorily required, then the agency should consider whether having the contract move forward is a sensible use of taxpayer funds in light of the lapse of appropriations. In this regard, there might be situations in which the continued performance of a contract would be wasteful due to the impact that the funding lapse is having on other agency activities. For example, if a Federal building is closed due to the funding lapse, it might be wasteful to have a contractor perform its normal duties of emptying trash cans every day in the building's offices. In that situation,the agency should consider whether to have the contractor suspend performance. If an agency decides that continued performance would be wasteful and thus should be suspended during the funding lapse,the agency should take appropriate contractual action (which would be part of the agency's orderly-shutdown activities). Contracting staff will need to work closely with agency counsel in making and implementing these decisions to minimize costs to the government. Q8: Is the duration of a funding lapse a factor in the analysis in Q&As 5-7? A8: Yes. In evaluating whether, and to what eatent, Federal employee activities and contractor or grant performance should continue during a lapse in appropriations, agencies should consider whether these activities or the performance can be postponed until after appropriations are enacted. In some cases, activities and performance would not qualify for continuation during a very brief funding lapse (under the analysis in Q&As 5-7), but they would qualify if the duration of the funding lapse became longer. In other cases, the opposite conclusion should be reached, namely, that activities or performance which would qualify for continuation at the outset of a funding lapse, or at some point during a funding lapse, become unnecessary—having been discharged— and thus should be discontinued (e.g. in the case of an agency's initial shutdown activities, or in the case of the one-time, grant- administrator approval that is discussed in the answer to Question 5). Another situation in which the duration of a funding lapse can have a significant impact on the analysis is where the agency had previously awarded a contract or grant, and—under the analysis in Q&As 5-7—the contractor or grantee could continue to perform during the initial period of the funding lapse. However, if the funding lapse eatended for a sufficiently long period, a situation might arise in which continued performance could occur only if the agency obligated additional 7 funds to the contract or grant. Whether the agency could obligate such additional funds would depend on whether the lapse of appropriations includes the funding for the contract or grant payments, and/or far the contract or grants administration, and whether the continued performance would be wasteful because of the impact of the funding lapse on other agency activities. The agency would therefore need to undertake the analysis under Q&As 2-8 to determine how to proceed in that situation. If the agency determines that the contract or grant performance should discontinue due to the funding lapse,then the agency would not obligate additional funds to the contract or grant, and the contactor or grant would cease work when the previously-obligated funds run out. (Agencies would be well advised to communicate with contractors to avoid any misunderstanding.) C. Making Payments to Contractors and Grantees during a Lapse in Appropriations Q9: In the case of a contract or grant that has been previously awarded (and thus for which available funds were obligated), can Federal employees be excepted from furlough in order to make timely payments to the contractor or grantee in accordance with the contract or grant? A9: During a lapse in appropriations, the activity of making contract and grant payments on a timely basis does not, by itself, qualify as one of the limited circumstances for which obligations can be incurred under the Antideficiency Act(as outlined in LA.-B., above). In this regard, the fact that the government would incur interest penalties under the Prompt Payment Act or other law due to the delay in payment caused by a funding lapse does not provide a legal justification under the Antideficiency Act for an agency to continue to make payments during a funding lapse. An exception would exist in the very limited situation in which making the payment to a contractor or grant during the funding lapse is "necessarily implied"under the analysis outlined in LB., above. There may be circumstances in which making a payment, during the funding lapse, is necessary because the agency's failure to make the payment during the funding lapse itself would result in an imminent threat to life or property, or would critically impair the PresidenYs constitutional functions, or would prevent or significantly damage the execution of a congressionally authorized and funded function. In that latter situation (applying the analysis in LB.3., above), the agency must determine that (1)the continuation of the program during the funding lapse has been contemplated by Congress in authorizing or appropriations legislation, (2)the agency's failure to make the payment during the funding lapse would delay contract or grant performance, and (3)this delay in payment would significantly damage the execution of the terms of the authorizing or appropriations legislative provision. Q10: Can an agency pay a contractor or grantee during a funding lapse for perFormance under a contract or grant that the agency awarded during the funding lapse under one of the exceptions to the Antideficiency Act(see Q&As 1-2)? A10: No. As is the case with federal employees who are excepted from furlough to perform authorized activities during a funding lapse, the agency will incur obligations far the excepted work that a contractor or grantee is authorized to perform during a funding lapse. However, as 8 with the pay of the excepted federal employees, the agency cannot liquidate those contract and grant obligations until an appropriation is enacted. Qll: The agency has excepted from furlough employees who are performing necessary contract or grant support functions for an "excepted" activity or under the"necessarily implied" standard. Can these employees also continue to perform other work(that is not for an excepted activity and is not"necessarily implied") during the remaining hours of the workday? All: If the non-furlough ("excepted') support function can be performed in less than an entire day,the employee is required to resume furlough status after completing the function. However, there may be cases in which an employee is required to perform this "excepted" support function intermittently throughout the course of the day, and the intervals in between are too short to enable the employee to be furloughed and then recalled in time to perform the function. In such cases,the employee may remain at work, and may perform non-"excepted" functions during these intervals. In such situations, agencies must minimize the number of employees who are performing"excepted"functions on an intermittent basis, by consolidating the "excepted"functions, to the eatent possible, for performance by a smaller number of employees (e.g., agencies should not except, from furlough, multiple employees in order to perform intermittent"excepted"work, when instead the agency could have fewer employees perform the "excepted"work on more of a full-time basis). In this way, the agency properly minimizes its reliance on the Antideficiency Act to incur obligations for which the appropriation has lapsed. IIL Information and Information Technology Q12: What is the controlling consideration for the continuity or suspension of IT operations for an agency during a lapse in appropriations? Al2: The consideration governing all determinations concerning continuity or suspension of Federal activities funded through lapsed appropriations is that such activities, including IT operations, may continue only if they are excepted activities under the Antideficiency Act, or where their continuation is necessarily implied from a congressional authorization or appropriation of other continued functions. In making the necessary determinations far the continuity or suspension of information technology operations, agencies must take into consideration the agency's cybersecurity risk posture and avoid making determinations that would result in any imminent threat to Federal property, including: • any permanent disruption to agency information systems or loss of agency information; • any potential threats to the security, confidentiality and integrity of agency information and information systems. 9 Generally, agency cybersecurity functions are excepted as these functions are necessary to avoid imminent threat to Federal property. Agencies must also ensure the preservation of agency information, including electronic records, and maintain the security, integrity and confidentiality of such information. Q13: Should agencies suspend information technology operations if doing so would introduce cybersecurity risk? A13: No, agencies should avoid making any determinations that would result in imminent threat to Federal property. As noted above, cybersecurity functions are excepted as these functions are necessary to avoid imminent threat to Federal property. In making the determination to suspend information technology operations, including websites, agencies must take into consideration cybersecurity risk. At a minimum, agencies must avoid any threat to the security, confidentiality, and integrity of the agency information and information systems maintained by or on behalf of the Government. Agencies should maintain appropriate cybersecurity functions across all agency information technology systems, including patch management and security operations center(SOC) and incident response capabilities. Q14: How should agencies determine what systems,including linked interoperable systems, are to be maintained and operated during an appropriations lapse? A14: If a single system must operate to avoid significant damage to the execution of authorized or excepted activities, including activity necessary to avoid imminent threat to Federal property, as discussed above, this system should maintain operations. Support for the continued operation of the single system (whether by agency IT staff or by a contractor) should be the minimum necessary to maintain functionality and ensure the security and integrity of the system and any other necessary agency information technology resources during the period of the lapse. If the integration of that single system with other systems makes it infeasible to maintain operation of the single system without maintaining others with which it is integrated, an agency must manage its information technology resources consistent with avoiding any imminent threat to Federal property (including avoiding any permanent disruption to agency information systems, avoiding any threat to the security, confidentiality and integrity of agency information and information systems, and ensuring preservation of agency electronic records). Q15: What is the guidance on keeping Government websites up during a lapse in appropriations if the costs of maintaining the website are funded by a lapsed appropriations source? A15: The same standards described above would apply. The mere benefit of continued access by the public to information about the agency's activities would not warrant the retention of personnel ar the obligation of funds to maintain (or update)the agency's website during such a lapse. However, if maintenance and updating of the website is necessary to avoid significant 10 damage to the execution of authorized or excepted activities (e.g., maintenance of the IRS website may be necessary to allow for tax filings and tax collection, which are activities that continue during an appropriations lapse),then the website should remain operational even if its costs are funded through appropriations that have lapsed. If it becomes necessary to incur obligations to ensure that a website remains available in support of excepted activities, it should be maintained atthe level offunctionality necessary to support those excepted activities. For example, in the IRS case above, the IRS website would remain active, but the entire Treasury Department website would not, absent a separate justification or a determination that the two sites cannot not feasibly be operated separately. As discussed specifically in Q13 above, in making the necessary determinations for the continuity or suspension of a website, agencies must also take into account whether suspending the website or functionality would introduce risk into its cybersecurity risk posture. Agency determinations must avoid any imminent threat to Federal property, including: • any permanent disruption to agency information systems or loss of agency information; • any potential threats to the security, confidentiality, and integrity of agency information and information systems. If shutting down or suspending a website would increase cybersecurity risk, an agency may elect to keep the website operational but suspend non-cybersecurity related updates for websites that are not necessary to avoid significant damage to the execution of authorized or excepted activities. Q16: What notice should agencies provide to the public regarding the status of their websites during a lapse of appropriations? A16: If an agency's website is shut down or is operating at a reduced functionality, users should be directed to a standard notice that the website or service is unavailable during the period of government shutdown. If any part of an agency's website is available, agencies should include a standard notice on their landing pages that notifies the public of the following: (a) information on the website may not be up to date, (b)transactions submitted via the website might not be processed until appropriations are enacted, and (c)the agency may not be able to respond to inquiries until appropriations are enacted. Q17: What if the cost of shutting down a website exceeds the cost of maintaining services? A17: The determination of which services continue during an appropriations lapse is not affected by whether the costs of shutdown exceed the costs of maintaining services. Nevertheless, agencies should ensure the shutting down of a website or other functionality does not introduce or invite potential threats to the security, confidentiality, or integrity of the agency information resources as described in the preceding questions. Q18: If websites are down,will agencies be able to extend deadlines for applications that would otherwise have been due during the lapse in appropriations? 11 A18: To the eatent permitted by law, agencies may eatend deadlines for activities, as necessary to compensate far the period of the lapse in appropriations and the unavailability of the website. Q19: What is the guidance regarding the use of mobile devices such as government-issued cell phones or Blackberries, or home access to work email through Secure ID? A19: Furloughed employees should be given clear guidance that the prohibitions of the Antideficiency Act eatend to work performed from outside of the office, including via mobile devices or remote computer connections. Orderly shutdown procedures should not rely on mobile devices or home access to work email for providing notices of when to return to work. Agencies have discretion to enforce these access restrictions in light of their own particular needs. Some may choose, for example, to include in orderly shutdown activities a requirement that furloughed employees turn in their government-issued cell phones or Blackberries until they return to the office; others may determine that circumstances warrant a different approach. IV. Orderly Shutdown Q20: When does an agency begin "orderly shutdown?" A20: While agencies should be prepared to implement their contingency plans, they must wait to execute an orderly shutdown until the Director of OMB directs agencies to operate in accordance with the contingency plans that agencies have prepared under OMB Circular A-11, section 124, and apportions the amounts necessary for obligations required to carry out agencies' contingency plans. Agencies should not begin orderly shutdown priar to such direction and apportionment by OMB. (Note: Individual employees may be allowed to engage in some orderly shutdown preparatory activities in anticipation of a possible lapse, as provided in Q21.) Q21: How long should "orderly shutdown" take? A21: Ordinarily, furloughed employees should take no more than three or four hours to provide necessary notices and contact information, secure their files, complete time and attendance records, and otherwise make preparations to preserve their work. Agencies should use this time to provide written notices of the decision to furlough if notice has not already been provided to employees. OMB Circular A-11 requires agencies to provide OMB with written justification for the conduct of orderly shutdown activities in excess of a half-day. While it may be appropriate in limited circumstances for some employees to take longer to assist in shutdown activities (e.g., seeking court continuances or stop-work orders on pending contracts), these may not be necessary in the event that a very short period of a lapse in appropriations is anticipated. Agencies should make every effort to prepare for these needs in advance of a lapse so that orderly shutdown activities are minimized. Q22: In the event of a lapse on a Friday,when would employees whose schedule is a normal Monday-Friday work week and who are funded by annual appropriations be expected to conduct orderly shutdown activities? 12 A22: Unless the employee's agency specifically directs otherwise, employees should generally report to work to conduct necessary orderly shutdown activities (if any) on the neat day on which the employee would have been scheduled to wark. Agencies should take into consideration an employee's previously scheduled leave, alternative work schedule (AW S) day off, or holiday(s) that take place during the furlough period and generally allow the employee to complete orderly shutdown activities on the workday on which the employee had been scheduled to return to work. For example, if the employee was scheduled to be on paid leave and out of the office on the neat workday after the commencement of a lapse in appropriations, the employee would not report to work to complete orderly shutdown activities until the warkday on which the employee had been scheduled to return to duty. Even though an employee's scheduled paid leave is cancelled during a lapse in appropriations, agencies should generally allow the employee to continue planned periods of absence. Agencies should provide clear instructions to employees who have planned periods of absence regarding when they are expected to report to wark to perform orderly shutdown activities. If an agency directs an employee to perform orderly shutdown activities on a weekend off day, a holiday, or an AW S day off, any hours performing orderly shutdown activities would count as hours in applying applicable premium pay rules (e.g., for holiday premium pay or overtime pay). (Whether the agency will be obligated to provide pay at an overtime rate for those hours after the lapse has ended will depend on whether Congress, in conjunction with the legislation restoring appropriations, provides retroactive pay for hours during which employees were furloughed. If pay is provided for furlough hours, those hours would count as hours of work in applying overtime rules.) Q23: Does this mean that an employee can continue to work remotely until he or she reports to duty to perForm orderly shutdown activities? A23: No. Following a lapse in appropriations, the Antideficiency Act bars non-excepted work by such employees other than to perform orderly shutdown activities. Q24: In the event of a lapse on a Friday,when would employees whose regular schedule includes weekend (i.e., Saturday and/or Sunday)work and who are funded by annual appropriations be expected to conduct orderly shutdown activities? A24: A non-excepted weekend employee generally should report to wark on the neat day on which the employee would have been scheduled to work far the sole purpose of engaging in orderly shutdown activities. Agencies should take into consideration an employee's previously scheduled leave, AW S day off, or holiday(s)that takes place during the furlough period and generally allow the employee to complete orderly shutdown activities on the neat workday on which the employee had been scheduled to return to wark. For example,the employee described in this question would report to perform orderly shutdown activities on Saturday, if the employee had been scheduled to wark on that day. If the employee was scheduled to be on paid leave on the days right after the lapse commenced,the employee would report to perform orderly shutdown activities on the first workday after the planned period of leave even though the leave was cancelled by the lapse. 13 Q25: In the event of a lapse on a Friday,when should excepted employees report for duty? A25: Unless the employee's agency specifically directs otherwise, excepted employees should generally report for duty on the neat day on which they are scheduled to work. Agencies should take into consideration an employee's previously scheduled leave, AW S day off, or holiday(s) that takes place during the furlough period and generally allow the employee to be excused from duty through a furlough action on the days the employee had planned to be absent unless the agency determines there is a need for the employee to report to wark. An excepted employee must be furloughed if excused from duty on a holiday or regular workday. If an agency directs an excepted employee to work on a holiday or the employee's AW S or other regular day off, any hours performing wark would count as hours in applying applicable premium pay rules (e.g., for holiday premium pay or overtime pay). Excepted employees will be paid for any earned overtime pay or holiday premium pay when Congress restores appropriations. V. Travel Q26: If employees funded through appropriations that have lapsed are on temporary duty assignments away from their normal duty stations at the time of an appropriations lapse, can they make arrangements to return home sooner than planned? A26: They are encouraged to do so wherever reasonable and practicable. However, agencies should make a determination of reasonableness and practicality based on the length of the assignment and the time required for return travel, compared to the anticipated length of the lapse, so as to minimize the burdens of doing so. VL Entitlement to Payment for Egcepted Work Q27: How will excepted employees be paid for excepted work required during the lapse in appropriations? A27: Without further specific direction or enactment by Congress, all excepted employees are entitled to receive payment for obligations incurred by their agencies for their performance of excepted wark during the period of the appropriations lapse. After appropriations are enacted, payroll centers will pay all excepted employees for time worked. VIL Carryover Funds Q28: What happens to apportioned unobligated amounts provided under a continuing resolution (CR) during a lapse? A28: Unobligated amounts provided under a CR and apportioned by OMB do not carry over during a lapse unless those amounts have a clear period of availability ea�tending beyond the last day ofthe CR(e.g., afull-year appropriation). 14 COMMITTEE FOR A RESPONSIBLE FEDERAL BUDGET �,i��u� Q&A: Everything You Should Know About Government Shutdowns CxaiRMEN Updated: January 7, 2019 MITCH DANIELS LEON pANET.rA The fiscal year began on Oct. 1, 2018, and Congress has passed just five out of 12 T�M pENNv appropriations bills setting discretionary spending levels. Lawmakers had until midnight on Dec. 21, 2018, to enact legislation to fund the programs covered by the PREsroENT remaining seven appropriations bills, but they allowed that funding to lapse. The ivtava ivtacGmNEas federal government has now partially shut down. For more about how a partial shutdown differs, see What Ha�pens in a Partial Government Shutdown?. DIRECTORS sAaaYaNDEa�oN What is a government shutdown? ERSKINE BOWLES cHaa�EssowsHEa Many federal government agencies and programs rely on annual funding KENTCONRAD DaN ca��EN appropriations made by Congress.Every year,Congress must pass and the President v�c Faz�o must sign budget legislation for the next fiscal year (F1�, consisting of 12 w��usGaaD�soN appropriations bills, one for each Appropriations subcommittee. When the federal 1"NEH"aM"N government's fiscal year began October 1, Congress had enacted five of the 12 WILLIAM HOAGLAND JIM JONES appropriations bills for FY 2019. Lawmakers have not yet passed full-year i.ou xEaa appropriations for the departments and agencies covered by the other seven J�M xo�sE appropriations bills. These programs had been running on continuing resolutions cvNTH�a i.uMM�s (CRs)that extend current funding levels.A partial government shutdown began after ivtaa�oa�Eivtaaco��Es midnight on December 21, the deadline specified in the most recent CR. In a DaveMcCuaDv JaMEsiviciNrvaE,1a. "shutdown," federal agencies must discontinue all non-essential discretionary Dav�D ivt�NCE functions until new funding legislation is passed and signed into law. Essential ivtaaNE osEaNauEa,1a. services continue to function, as do mandatory spending programs. JUNE O�NEILL PA"�o�NE�� What services are affected in a shutdown and how? BOBPACKWOOD RUDOLPH PENNER itosEaTitE�scHauEa Each federal agency develops its own shutdown plan, following guidance released nucE it�v��N in previous shutdowns and coordinated by the Office of Management and Budget cHaa�Es itoss (OMB). The plan identifies which government activities may not continue until ALAN K.SIMPSON JoHN s�aaT-r appropriations are restored, requiring furloughs and the halting of many agency cHaa��E s�NHo�M activities. However, "essential services" —many of which are related to public safety GENE s�uEa�E — continue to operate, with payments covering any obligations incurred only when Dav�D sTocKMaN appropriations are enacted. In prior shutdowns, border protection, in-hospital JoHN TaNNEa medical care, air traffic control, law enforcement, and power grid maintenance have TOM TAUKE Pau�vo�cKEa been among the services classified as essential, while some legislative and judicial caao�cox wa�T staff have also been largely protected. Mandatory spending not subject to annual JosE�H wa�cHT,1a. appropriations, such as for Social Security, Medicare, and Medicaid, also continues. 1"NETYE��EN Other examples of activities that continue are those funded by permanent user fees not subject to appropriations, such as immigration services funded by visa fees. 1900 M Street N��' • Suite ��0 • �Nashi�igton, DC ?003G • Pl�one: 202-596-3597 . Fax: ?0?-�7�-0GS1 • ��-w�v.aYb.org � Page 2 ��.0 Although many programs are exempt, the public is still likely to feel the impact of a shutdown in a number of ways. For example, in a full shutdown: • Social Securitv and Medicare: Checks are sent out, but benefit verification as well as the issuance of cards would cease. While unlikely to happen again, in 1996 more than 10,000 Medicare a�licants were tem�orarilv turned awa�every day of the shutdown. • Environmental and Food Ins�ection: In 2013, the Environmental Protection Agency halted site inspections to 1,200 different sites that included hazardous waste, drinking water, and chemical facilities. The Food and Drug Administration delayed almost 900 inspections. • National Parks: During the 2013 shutdown, the National Park Service turned away millions of visitors to more than 400 parks, national monuments, and other sites. The National Park Service estimated that the shutdown led to more than half a billion dollars in lost visitor spending nationwide. Many parks remained open during the one-day shutdown in 2018. • Health and Human Services: The National Institutes of Health would be prevented from admitting new patients or processing grant applications. In 2013, states were forced to front the money for formula grant programs such as Temporary Assistance for Needy Families (cash welfare). • Internal Revenue Service (IRS�: In the event of a shutdown, the IRS, which verifies income and Social Security numbers, would again not be able to perform this service. In 2013, a backlog of 1.2 million such requests potentially delayed mortgage and other loan approvals. Billions of dollars of tax refunds were also delayed. Is the government preparing for a shutdown? OMB has com�iled a list of the various contingency plans federal agencies will follow during a shutdown. Most have been updated within the past year,but some have not been updated since a previous shutdown threat in late 2015. How would federal employees be affected? An estimated 380,000 em�lo,��have been furloughed during the late 2018-early 2019 shutdown, a smaller number than usual as large federal employers such as the VA and the Department of Defense have already been funded. Another 420,000 employees will report to work during the current shutdown but not receive pay until the shutdown ends. If any future full shutdowns are handled similarly to recent ones in 2013 and 2018, which covered the entire federal government, approximately 850,000 of 2.1 million non-postal federal employees would be furloughed.In 2013, most of the 350,000 civilian employees of the Department of Defense were summoned back to work within a week.Furloughed employees would not be allowed to work and would not receive paychecks. While Congress has historically granted back pay, it is not guaranteed. 1900 M Street N�ti' • Suite 850 • `ti<ishington, DC 20036 • Phone: ?0?-596-3;9; • Fax: ?0?-4�8-06b1 • w�ti�ti�.crYb.org � Page 3 ��.0 How and why do mandatory programs continue during a shutdown? Whereas discretionary spending must be appropriated every year, mandatory spending is authorized either for multi-year periods or permanently. Thus, mandatory spending generally continues during a shutdown. However, some services associated with mandatory programs may be diminished if there is a discretionary component to their funding. For instance, during the 1996 shutdowns and the 2013 shutdown,Social Security checks continued to go out.However, staff who handled new enrollments and other services, such as changing addresses or handling requests for a new Social Security card,were initially furloughed in 1996.In 2013�certain activities were discontinued, including verifying benefits and providing new and replacement cards, but processing of benefit applications or address changes continued. How many times has the government shut down? Since Congress introduced the modern budget process in 1976, there have been 20 "funding gaps," including the current shutdown and the one in January 2018, when funds were not appropriated for at least one day. (An hours-long lapse in appropriations in February 2018, though sometimes characterized as a shutdown, did not result in federal employee furloughs.) However, before 1980, the government did not shut down but rather continued normal operations through six funding gaps. Since 1981, 10 funding gaps of three days or less have occurred, mostly over a weekend when government operations were only minimally affected. There have now been four "true" shutdowns where operations were affected for more than one business day.The first two happened in the winter of 1995-1996,when President Bill Clinton and the Republican Congress were unable to agree on spending levels and shut down the government twice,for a total of 26 days.The third was in 2013 when the House and Senate standoff on funding the Affordable Care Act resulted in a 16-day shutdown. The fourth shutdown, starting in December 2018 and continuing into early 2019, centered on a dispute over border wall funding. Does a government shutdown save money? While estimates vary widely, evidence suggests that shutdowns tend to cost, not save, money. For one, putting contingency plans in place has a real cost. In addition, many user fees and other charges are not collected during a shutdown. Contractors sometimes include premiums in their bids to account for uncertainty in being paid. And although many federal employees are forced to be idle during a shutdown, they have historically received back pay, negating much of those potential savings. OMB official estimates of the 2013 government shutdown found that $2.5 billion in pay and benefits was paid to furloughed employees for hours not worked during the shutdown, as well as roughly$10 million in penalty interest payments and lost fee collections. 1900 M Street N�ti' • Suite 850 • `ti<ishington, DC 20036 • Phone: ?0?-596-3;9; • Fax: ?0?-4�8-06b1 • w�ti�ti�.crYb.org � Page 4 ��.0 How can Congress avoid a shutdown? There are essentially two ways to avoid a government shutdown—by passing appropriations or a continuing resolution (see below question on "What is a Continuing Resolution?"). Theoretically,the House and Senate Appropriations committees are supposed to pass 12 different appropriations bills,broken up by subject area and based on funding levels allocated in a budget resolution. Often, these bills are combined into a larger "omnibus" or "minibus' set of appropriations. Five of the 12 appropriations bills for FY 2019 have passed both chambers and been signed by the President in the form of two minibuses, accounting for three-quarters of discretionary funding and ensuring those functions will not be at risk for shutting down until the start of FY 2020 (Oct. 1, 2019). The House and Senate have both voted on competing continuing resolutions, but none of the versions have been voted on by both chambers. For more about the status of specific appropriations bills, see Appropriations Watch: FY 2019. What is a Continuing Resolution (CR)? A continuing resolution temporarily funds the government in the absence of full appropriations bills, often by continuing funding levels from the prior year. Traditionally, CRs have been used to give lawmakers a short period of time to complete their work on remaining appropriations bills while keeping the government operating. CRs sometimes apply to only a few categories of spending, but they can also be used to fund all discretionary functions and can be used for an entire year. CRs differ from normal appropriations bills in that they often"continue" the funding allocations from previous bills at the prior year's rate or through a formula based on the prior year's rate. Even when overall funding levels have differed, lawmakers have often simply scaled up all accounts by a percent change in spending rather than making individual decisions on spending accounts.However,CRs often do include certain"anomalies," where specific items are increased or decreased to work around some problems that would occur from continuing the previous year's policies, or "policy riders," specifying certain statements of policy. Colloquially, a "clean CR" does not contain policy riders or politically-motivated changes to funding levels. How often does Congress pass CRs? Congress frequently passes CRs when it is unable to agree on appropriations before a deadline, and occasionally multiple CRs are necessary to fund the government for an entire fiscal year. They have also sometimes been relied on during presidential transition years. In FY 2001, for instance, a series of intense congressional negotiations leading up to the 2000 elections led to a series of 10 one-day CRs. In total, Congress funded the first three months of that fiscal year with 21 continuing resolutions. 1900 M Street N�ti' • Suite 850 • `ti<ishington, DC 20036 • Phone: ?0?-596-3;9; • Fax: ?0?-4�8-06b1 • w�ti�ti�.crYb.org � Page 5 ��.0 Not surprisingly, CRs have been quite prevalent recently and were used to fund the government entirely in FY 2011, when eight CRs were passed, and in FY 2013, when two CRs were passed. In FYs 2012, 2014, 2015, 2016, CRs were used to fund the government for roughly a quarter of the year each. FY 2017 funding negotiations necessitated three CRs before passage of an omnibus appropriations bill in May, and FY 2018 negotiations required five CRs before passage of an omnibus in March. The most recent year when a full-year appropriations bill passed before the fiscal year began and no CRs were necessary was FY 1997. What are the disadvantages of using CRs? Continuing resolutions have several negative implications for the budget's overall efficiency. CRs usually continue funding at the past year's level without any regard for changing policy needs or the value of each program within an agency. Using a continuing resolution wastes hundreds of hours of careful consideration and program evaluation incorporated into each agency's budget submission. For instance, the president's budget annually proposes a list of eliminations and reductions of programs that are duplicative or ineffective; a continuing resolution will continue to fund these unwanted programs. Finally, the use of continuing resolutions disrupts activities within agencies, makes it difficult to plan or start future projects, and costs staff time to revise work plans every time the budget changes. How is Congress addressing funding? So far, Congress has enacted five appropriations bills covering three-quarters of discretionary funding. Specifically, a "minibus' of three bills addressing Energy & Water, the Legislative Branch, and Military Construction & VA was signed into law on September 21, and a second minibus addressing funding for the Department of Defense and the Labor, Health and Human Services, and Education Departments was signed into law on September 28. This minibus included CRs to extend current funding for other federal agencies until December 21, after which the government faced a partial shutdown in the absence of appropriations or another CR. How does a shutdown differ from a default? In a shutdown, the government temporarily stops paying employees and contractors who perform government services,whereas in a default the list of parties not paid is much broader. In a default, the government exceeds the statutory debt limit and is unable to pay some of its creditors(or other obligations).Without enough money to pay its bills, any of its payments are at risk—including all government spending, mandatory payments, interest on our debts, and payments to U.S. bondholders. While a government shutdown would be disruptive, a government default could be disastrous. (See our Q&A:Ever,��g You Should Know About the Debt Ceilin�for more on a default.) 1900 �I Street N�ti • Suite 850 • `ti<ishington, DC 20036 • Phoiie: ?0?-596-3;9; • Fax: ?U?-4�8-06b1 • �v�ti�v.crtb.org � Page 6 ��.0 How does a shutdown differ from "sequestration" or "sequester"? A government shutdown closes down non-essential government operations due to lack of funding, whereas sequester or sequestration is shorthand for the reductions in discretionary spending caps in place that constrain the total amount of funding for annually-appropriated programs. The first example of sequestration was included in the Gramm—Rudman—Hollings Balanced Budget and Emergency Deficit Control Act of 1985. The current version of sequestration is a product of the Budget Control Act (BCA) that resolved the 2011 debt ceiling negotiations. The BCA called on a Joint Select Committee on Deficit Reduction(the "Super Committee")to identify at least $1.5 trillion in deficit reduction over 10 years, and it set in motion the sequester if it did not identify at least $1.2 trillion. The failure of the Super Committee triggered sequestration, causing discretionary spending caps to be automatically lowered for both defense and non- defense. Congress has never allowed the full sequester to take effect, passing partial sequester relief in 2013 and 2015 and more than fullv reversing the sec�uester in 2018. However, sequestration-level spending caps are set to return in FY 2020.If appropriations bills violate those caps, then across-the-board cuts will be triggered. For more information, see the following: • Congressional Research Service —Shutdown of the Federal Government: Causes, Processes, and Effects • Office of Management and Budget—Im�acts and Costs of the October 2013 Federal Government Shutdown • Committee for a Responsible Federal Budget—What Ha�ens in a Partial Government Shutdown? • Roy T. Meyers—Late A�ropriations and Government Shutdowns: Frec�uencies, Causes, Consec�uences, and Remedies • Office of Management and Budget—A�encv Contingencv Plans • Office of Management and Budget—Planning for Agenc,��erations During a Potential La�se in A�ro�riation • Congressional Research Service —The FY2014 Government Shutdown: Economic Effects • Congressional Research Service — Federal Funding Ga�s: A Brief Overview • Government Accountability Office—Uncertaintp Limited Management Options and Increased Workload in Selected Agencies • Committee for a Responsible Federal Budget—Appropriations Watch: FY 2019 1900 �I Street N�ti • Suite 850 • `ti<ishington, DC 20036 • Phoiie: ?0?-596-3;9; • Fax: ?0?-4�8-06b1 • �v�ti�v.crtb.org 1/17/2019 What a PaRiel Govemment Shutdown Means Por City Leaders—CitiesSpeak EQUITY POLICY HOUSING ENVIRONMENT FINANCE HEALTH YOUTH ��,� ��,j � �• �'+ �' '��. , '+'��'- �"'�'Y:�" . , // !1 � ��y \ \ � ` ' � /. . .\r � •'�I �i'�� ` .. � � ' w� 'S'��•� r� � . _ � � � � � � - . � ��C 1n l,� �/ti'• ., r'. .. �1�1' ,N i i��,', �7 r��`-'-�^�� - . �� . a - .�+. ,. �� `�r �.��.� -�-4 <f .� }f � ��( �� : �S y(�x �III �. �' ! . �� Y � ( ��" ...-s .� � � � �� '-' ' � �� ' � �i��+-":, ��'� ' �--- ` f iJ� �' a � ; y; ..�--��`` ,�` �P�11��'��P��.�� '�� 4"'�r�, �`�� , � � �. � ,/ ;y, s � , � �.�.�-�..."""",-,�,�q 4 �-- -� '/ `P� �� ,��Y� . � � ��r"'I�� - - --+..� a �'k'`''�"= �V i � - i�,, ��_ �� t1�4 r�� . . �� ^ ,- r ,.�r �- !I I I �' 11 � I � � �� ;��` �+�1►�,�,p. ^ . - ., i _ ,. i � + . ,,,,, . - � � , , ..a ,:L,a , ;� 1 � { �-� i.�."1n16S.NE�oC.�'/��.h��M�e�d� ,F �� A r I t...�•�..z.-..-��.^. _ ••v�„" � � ,,� . � _ '"�.�,M+� 'tiiz'.: sg�- J� L � ��- t� �,�?t5:. �3. z ''^ `�.a .��,'�� - r j, � r �:- What a Partial Government Shutdown Means for City Leaders A�� ? • %��', By Michael Wallace on December 2i,2oi8 .:::. Y ��Y The White House and Congress have failed to reach an agreement on the seven remaining Fiscal Year (FI') 2oi9 appropriations spending bills. Effective midnight, Friday, December 2ist, there is a partial federal government shutdown in effect. https://citiesspeak.org/2018/12/21lwhata-pertial�ovemmentshutdown-meansforvcity-leaders/ 1/5 1/17/2019 What a Partial Government Shutdown Means for City Leaders—CitlesSpeak Earlier this week, the National League of Cities (NLC) called on federal leaders to do their jobs and find a bipartisan solution to avoid a shutdown and keep every federal agency open. "Cities expect our leaders in Washington to meet their most basic obligation and keep the federal gouernment open,"said NLC President Karen Freeman-Wilson, mayor of Gary, Indiana. "A federal shutdown would impact programs that grow local economies and build more resilient communities.Instead of wasting $6.5 billion a week on a shutdown, let's put that money to good use— by inuesting in America's cities." This would be a "partial" shutdown because Congress met the deadline to approve five of the twelve total appropriations bills. In addition to all "mandatory�' spending programs, federal discretionary grant programs administered through the following agencies will not be impacted by the partial shutdown: � U.S. Department of Labor � U.S. Department of Health and Human Services � U.S. Department of Education � U.S. Department of Veterans Affairs � U.S. Department of Defense � U.S. Department of Energy For city leaders, this means residents can expect uninterrupted operations and payments from Social Security, Medicare and Medicaid. VA Hospitals and other service providers for veterans should remain open. Before and after school programs funded by the Department of Education's 2ist Century Community Learning Center grants should not be interrupted. Unfortunately for city leaders, the federal agencies that will be shutting down to various degrees are those that administer most federal grants allocated directly to municipal governments, including: � U.S. Department of Commerce � U.S. Department of Justice (DOJ) � U.S. Department of Interior https://citlesspeak.org/2018/12/21/whata-pertial-govemmentshutdown-meansforvcity-leaders/ 2/5 1/17/2019 What a Partial Government Shutdown Means for City Leaders—CitlesSpeak � U.S. Environmental Protection Agency � U.S. Department of Agriculture (USDA) � U.S. Department of Homeland Security � U.S. Department of Transportation (DOT) � U.S. Department of Housing and Urban Development (HUD) � U.S. Economic Development Administration (EDA) � U.S. Small Business Administration (SBA) According to this detailed Q&A from the Committee for a Responsible Federal Budget, when a funding lapse results in the shutdown of a federal agency, the government must discontinue all non-essential discretionary functions until new funding legislation is passed and signed into law. And according to this White House Shutdown FAQ, all normally, routine, ongoing operational and administrative activities relating to contract or grant administration (including payment processing) cannot continue when there is a lapse in funding. Moreover, federal agency employees who are paid with annual appropriations and who perform an activity associated with contract or grant administration (including oversight, inspection, payment or accounting) should generally not continue work during a lapse in appropriations. In other words, federal discretionary grants that are administered to local governments from unfunded federal agencies, including HUD's CDBG and HOME grants, DOJ's COPS grants, DOT's TIGER grants, EDA's economic development grants, SBA's small business loans, and USDA's rural loans and grants,will be unavailable for reimbursement to local governments, and agency staff will generally be unavailable to answer questions or offer technical assistance throughout the duration of the partial government shutdown.Any local employees funded by federal grants may also be required to stop work. The White House Office of Management and Budget maintains a list of each agency�s plans here. Additional contingency information may be posted on individual agency websites as well. A short shutdown of a week or less will have little to no impact on cities (although it will cost the federal government plenty to furlough employees, mothball offices, and reopen even a short time later). The effects of a longer shutdown would multiply quickly, including inaccessible federal https://citlesspeak.org/2018/12/21/whata-pertial-govemmentshutdown-meansforvcity-leaders/ 3/5 v»rm�a w��e raud cww�.�wnsnumwm nrma ro.ab�eea.n-auwsw� funding,project delays and potential]ayoffs.As federal funding for services dry up,residents usually espect local governments to step in with supplemental funding. Eventually it will fall on cities and states to bear the cost of the shutdown on the broader economy,which will result in less tax revenue for all levels of government. The federal law that prohibita agencies from incurring obligations in advance of appropriations, the AntideficiencyAct,also requires an"orderly shutdown"when there has bcen a lapse in appropriations. Of course,actual government shutdowns are anything but orderly,and there will be erzceptions and inconsistencies across the board,lmown and unlmown. Among the lmown exceptions and inconsistencies,if there is a partial government shutdown: � Air 4affic con4ollers and many'hansportation Security Agency employees will be required to workwithout pay; � FBI, DEA agents and correction officers will be required to workwithout pay; � Mail will be delivered as the Postal Service dces not rely on discretionary appropriations; � National parks and museums maybe opened or closed. � The EPA has announced it will maintain operations neact wcek even if President Donald'hvmp and Congress fail to agree on a stop-gap spending bill by Frida}�s deadline. � And Members of Congress will still get paid. About theAuthor:Michael Wallace is the Progrmn Director for , Community and Economic Deuelnpment at the Narional League of ', �_ ,� Ciries.Follow him on liuitter @MikeWallacell. u � � � ShareChis Mme://dliwyeekoyl0l&1221M1v1elayate4gouemrwnlsluWomHnemsfasityJeetleN NS 1/1]/2019 What a PaRial GovernmeM Shutdown Means Por City Leaders—CitiesSpeak CJ � ��I�� , , n i �. �yl�1.�I ,.r.,�,i��R�T' � `:� il�: ��i - FOrCi[ie5, 5hUtdoWnlSAboul Wh�toL.�pseln /�pproprlolions Ilowlhcl�iolonya�iShuldown People, Not Poliiics Could Mean for Cltles WIII Affec[Vour Local Economy NLC �. EmailPddress NLC'S HIS ABOU hl�s://dtiesspeakorg201&1221Avhatapartlal�ovemmeMahutrlowrtmear�sJorcity-leaders� 5/5