(1) The regional office allotment pattern for personal services funds under the "Salaries and expenses" appropriation be changed from an activity basis to an organizational basis having a three-way budgeted breakdown: Personnel management division.

Investigations division.

Regional director, staff and RAS.

The need for financial resources to carry out Commission programs has most always been greater than the amount of annual appropriations available. This has resulted in what appears to be an undue amount of pressure on regional offices to (a) strive for maximum utilization of all funds allotted in contrast to (b) don't overobligate any allotment account or quarterly apportionment and control personal services spending by activity within the 10-percent administrative restriction. These somewhat conflicting objectives have contributed to the complexity of financial management and require recordkeeping and cost figures in order to keep a tight control over rates of spending. Some relaxation of central office requirements will contribute greatly to simplifying the funds control process, eliminate some clerical work and provide a better fiscal atmosphere for management of regional office programs. While control over the total amount of funds obligated or spent must be maintained to meet statutory requirements, the utilization of those funds by program, organization, activity, or object class is purely a matter of management policy. It is believed that the establishment and approval by the chairman of annual program goals together with other central office directives and evaluation visits provide sufficient administrative direction over programs and would still permit maximum utilization of funds without building these restrictions into the allotment of funds. Accordingly it is recommended that:

(1) The formal allotments now made to regional directors be redesignated as "allocations." One single allotment be made under each appropriation or fund at the central office level for the total amount for all regional offices. Regional directors would still be administratively accountable for controlling obligations within allocations but would not be legally subject to citation to Congress for minor differences.

(2) The administratively imposed 10-percent leeway restriction on funds control of personal services allocations between divisions or activities be discontinued. Permit regional directors to have full control over the total allocation of personal services funds in the overall administration of all regional office programs toward accomplishment of approved program goals and objectives established by the central office.

(3) Regional directors be authorized to overspend or underspend, in nominal amounts up to $5,000, between salaries, travel, and the miscellaneous 100 account, provided (a) the total of all accounts is not exceeded and (b) no increase is made in the amount allocated for travel.

The time and effort required to prepare the monthly status of funds reports, CSC form 316, appear to be excessive in relation to the original purpose of the report and the benefits realized from it in the central office. The report was designed originally with the simple idea of providing the central office information on actual obligations from the books of account and projected spending plans for the remainder of the year. The need for this information stemmed from the fact that regular monthly fiscal and accounting statements did not provide an insight into how current and proposed spending plans at the regional office level measured up against the budgeted distribution of annual allotments. The report has now grown overly complicated with more detail than is really necessary at the central office level. When considered together with other proposals it now appears that the CSC form 316 can be streamlined and it is recommended that:

(1) The monthly status of funds reports, CSC form 316, from regional offices be revised by

(a) Confining the report to personal services funds only with a separate report on travel and other objects three times a year;

(b) Reporting distribution of funds on a three-way organizational

breakdown consistent with proposed allocation pattern;

(c) Placing the report on a 4-week basis instead of the present calendar month basis;

(d) Eliminating some of the detailed information presently required on the reverse side and requiring comment only on items involving significant amounts of money.

Estimated savings, part B.-Average of 0.2 man-years per region at average salary $5,300-Total 2 positions at $10,000.

Part C-Work reports

Quite separate and apart from the increasing complexity of the work reporting and cost analysis system with respect to the number of separate codes and statistical data to be reported, is the significant amount of time required at the end of each 4-week period to prepare the several summary work reports. With the close tie-in to payrolls and the use of the system as a cost accounting technique there is an increasing tendency to strive for extreme precision in the functional distribution of costs for "control" purposes. This is more sharply contrasted in recent years to the original concept of the system as a tool of management and a means to provide budgetary support for appropriation requests.

The current procedure requiring summary work reports to be prepared at the section as well as the division level, proration of leave and miscellaneous nonoperating time and reconciliation of work report costs to payroll costs appear to be too costly and extends unnecessarily the number of days required to submit summary reports. Further, the procedure is such that it requires the use of calculating machine and employees with a fair amount of skill in handling of figures. Increasing emphasis should be placed on using the work reporting system as a "management" tool rather than as a fiscal control device with other techniques used to control spending rates. The added flexibility proposed in section B of this report with respect to allotments and management of funds will in some measure help to bring this about.

Other steps can also be taken with little or no serious loss to management or weakening of financial control but with resulting savings in cost. For example, work reports are fairly meaningless for the regional director, medical officer, veterans Federal employment representative, and for administrative services functions. Payroll costs for these items when considered together with workload statistics and management comments should be adequate. Further, it is not absolutely essential that actual payroll amounts appear on summary work reports provided the total work report costs are reasonably close to payroll costs in order to insure validity of the S. & E. versus RF factor used to distribute investigations division payroll costs.

It is questionable whether summary work reports need to be prepared at 4-week intervals. With the emphasis on management use of "cumulative" work report data, experience indicates there is usually not much value obtained from work reports until about September after summer vacations are over and regions have had an opportunity to get geared to new fiscal year program goals. Also, it seems that there is not too much variation in the code by code spending rates from one 4-week period to the next.

The costly and time consuming process of rotating 9.—codes can be eliminated if employees were required to report all leave and miscellaneous nonoperating time to operating codes. A simple approach could be taken to this by asking employees, for example, to report leave time to the operating codes they normally would have used had they been present. This is the equivalent of having each employee prorate his own 9.-codes instead of accumulating them and mechanically prorating the total.

Accordingly it is recommended that:

(1) Work reports be summarized and costed less frequently-six or seven times per year, with reporting dates coordinated with management comments and central office Budget and Finance Division management report to the Chairman and quarterly progress report to regional directors. Workload statistics

would continue to be submitted at 4-week intervals for management information in the central office.

(2) Work reports be eliminated entirely for regional director, medical officer, VFER and RAS and substitute payroll costs for those items.

(3) Use of actual payroll costs be discontinued on summary work reports and eliminate Form MB-729: Reconciliation and Adjustment Statement. Prescribe an outside limitation on the amount of deviation permitted and require regions to maintain a running record of both payroll and work report costs, including distribution between revolving fund and S. & E., for control purposes. Cumulative work reports will be brought into agreement with payroll records at the close of each fiscal year for budget purposes.

(4) Work report codes be eliminated for paid leave and miscellaneous nonoperating time (codes 9.01.10 and 9.01.20) and require each employee to distribute and report this time directly to operating functions according to standards and guidelines issued by the central office.

89028-62-pt. 43

NOTE. This will make it possible to completely eliminate prorating of the time and cost for these codes in the preparation of summary work reports and permit summarization to be done in the operating divisions. Estimated savings, part C.-Average of 0.4 man-year per region at average salary of $5,300 total, four positions at $21,000. Total estimated savings, parts A, B, and C, 12 positions, $63,000.

NOTE.-Adoption of these recommendations will require approval of the

Bureau of the Budget for revisions to CSC regulations governing the administrative control of funds.

General Accounting Office for recentralization of general ledger and revisions to accounting system, including the work reporting and cost analysis system.

Proposed staffing guides for regional office, budget and fiscal operations

1 Boston, Dallas, Denver, and Seattle, range 100 to 140 employees. Philadelphia, Atlanta, and St. Louis, range 180 to 230 employees. New York, Chicago, and San Francisco, range 250 to 300 employees. NOTE. These staffing guides were developed by relating the estimated savings resulting from adoption of the recommendations to the experience data obtained in the Boston, St. Louis, and New York regions. They cannot be applied with absolute precision due to the variances of individual regions with respect to size and workload in the budget and fiscal offices.

.8

5134822

0.6

0.7

1

.4

.6

.8

1.0

1.2

.3

224

2

4

6

8

2.9

3.8

4.8

Proposed staffing pattern for regional budget and fiscal offices

A. Small regions (Boston, Dallas, Denver, and Seattle):
Budget and fiscal officer, GS-12-

Budget and fiscal clerk, GS-5..

Voucher examiner and payroll clerk, GS-5___

Total positions..

B. Medium-size regions (Philadelphia, Atlanta, and St. Louis):

Budget and fiscal officer, GS–12.

Budget and fiscal clerk, GS-5

C. Large regions (New York, Chicago, and San Francisco):
Budget and fiscal officer, GS-12..

NOTE. The job titles, grades, and combination of duties are purely exploratory. Regional directors would have discretion as to combination of functions to make up a full-time job for any employee. Grade allocations will be based on actual duties assigned and regular classification review,

Comparison of present and proposed number of employees in regional budget and fiscal offices

1 These positions are as shown on Jan. 15, 1962, organization charts and do not necessarily reflect full-time employees or actual charges to budget and fiscal work.

NOTE. Further examples of management analysis and reports subsequently supplied by the agency and placed in the subcommittee's files for reference are: 1. Civil Service Commission operations letter No. 176-23, dated May 10, 1962.

2. Civil Service Commission memorandum to Mr. Warren B. Irons, Executive Director, dated Apr. 17, 1959, from Committee on Review of Reimbursable Investigations Program, subject: "Final report."

NEW POST OF CIVIL SERVICE REPRESENTATIVE

Concurrently with this consolidation, the Commission created the position of civil service representative. This is a position which has been assigned at 50 different locations throughout the country to permit the Commission to administer its programs in a closer proximity to the Department and agency installations that need to be served from a personnel point of view.

The representative is concerned with the review of examining activities; with the conduct of recruiting in the colleges, universities, and schools in the area; with representing the Federal Government on personnel matters in the community, and generally in raising the level of performance of personnel management.

During the past year, Mr. Chairman, the Commission assumed some additional workload, the most important being that of additional appeals authority authorized by the President in Executive Order 10988 on January 17 of this year, which extended to nonveteran employees the same rights of appeal from adverse actions that have previously been available to veteran employees. This program went into effect on July 1, of this year. It is still too early to determine just how much additional workload will be forthcoming, but the Commission intends to absorb the financing of that workload through the economies that have already been achieved.

A third area of Commission emphasis internally is in improved operations. This is where the Commission system of work reporting and cost analysis comes into particularly effective use because the Commission, through its system, has been able to identify unit costs of operations that are repetitive and are of a mass production nature.

One program, and the largest, is that of personnel security investigations where the Commission is performing a service for the Federal departments and agencies and in some instances for contractors operating under contract with Federal agencies.

As an example, in this program, through continued refinement and improvement of procedures, the Commission has been able to reduce the cost per unit of work over a period of time when the salary level of the personnel involved has been going up.

To illustrate this, Mr. Chairman, in the administration of national agency checks and inquiries, which is the basic investigative process undertaken by the Commission for all employees entering the Federal service, the Commission in 1949 had a unit cost of $4.79. Today, after salary increases over the 13 intervening years of 40 percent, the Commission is performing this operation at $4.82.

In my memorandum there are other examples, and if you would like to develop this further, I will be happy to do so.

Mr. BROOKS. I wish you would. I would like to have a dollar savings on what you have accomplished in each of these areas where such a savings can be ascertained.

Mr. MACY. We will endeavor to provide that after a bit.

A new area for the Commission involves the use of computers, automatic data processing equipment for certain of the Commission's operations. We are in the developmental stage on this. We are anticipating that we can not only extend our capacity through use of computers, but that we will be able to reduce the cost of actual operations in such things as our examining work, in the computation of retirement claims, and other operations of the Commission.

Those, Mr. Chairman, are a few quick highlights. I would be happy to develop any of these items, or others, to a greater extent if that is your desire.

Mr. BROOKS. I think you have covered the highlights.

Were there any particular areas you wanted to have him elaborate on at this point, Mr. Moss?

I would like for you to itemize the backup on these remarks in figures.

Mr. MACY. We will have to provide that at a later date if we may. Mr. BROOKS. Why do we not get Mr. Irons on that right now, his best estimate.

Mr. MACY. I have some of them in my letter.

Mr. BROOKS. I would like an estimate on them now rather than at a later date, if we can get them.

Mr. MACY. I believe we would be able to give you something tomorrow morning on this. I am afraid our computer just started working on this one this morning, and any estimate that we would give you would hardly be valid enough to justify it. If we may, we will try to provide you with an estimate on it tomorrow.

Mr. BROOKS. I talked with Mr. Irons this morning about it. Mr. MACY. Mr. Irons, do you want to supplement what I have said?

Mr. BROOKS. Apparently then you cannot get it today.

Mr. MACY. It was not possible for us to develop it in the form you desired in the time available.

Mr. BROOKS. Would you give us a total of those itemized in the letter submitted this morning? Could you add that up for us?