The Office of Management and Budget (OMB) Circular Number A-136 Revised dated June 10, 2009, was used as guidance for the preparation of the accompanying financial statements. EEOC prepares four financial statements: Consolidated Balance Sheets, Consolidated Statements of Net Cost, Consolidated Statement of Changes in Net Position, and Combined Statements of Budgetary Resources.
The Consolidated Balance Sheets present amounts that are owned or managed by EEOC (assets); amounts owed (liabilities); and the net position of the agency divided between the cumulative results of operations and unexpended appropriations.
EEOCís balance sheets show total assets of $78 million at the end of FY 2009. This is an increase of $1 million, or approximately 1 percent, over EEOCís total assets of $77 million for FY 2008. This increase is due primarily to an increase in Property, Plant, and Equipment, including leasehold improvements, of $10 million offset by a decrease in EEOCís Fund Balance with Treasury of $9 million.
The Net Position is the sum of Unexpended Appropriations and the Cumulative Results of Operations. At the end of FY 2009, EEOCís Net Position on its Balance Sheets and the Statement of Changes in Net Position is $17 million, an increase of $3 million, or 21 percent, over the FY 2008 ending Net Position of $14 million. This increase is due primarily to a decrease in EEOCís Cumulative Results of Operations for Fiscal Year 2009 and an offsetting increase in its Appropriations Used the same year.
The Consolidated Statements of Net Cost presents the gross cost incurred by major programs less any revenue earned. Overall, in FY 2009, EEOCís Consolidated Statements of Net Cost increased by $11 million or 3 percent. The allocation of costs for FY 2009 shows that Private Sector resources used for Enforcement and Litigation increased $11 million, or 3 percent, while the Federal Sector Programs was the same as for the past fiscal year.
The Consolidated Statement of Changes in Net Position represent the change in the net position for FY 2009 and FY 2008 from the cost of operations, appropriations received and used, net of rescissions, and the financing of some costs by other government agencies. The Consolidated Statement of Changes in Net Position increased over last year by $3 million, or 19 percent. EEOCís total assets exceeded total liabilities (funded and unfunded) by $17 million, or 27 percent.
The Combined Statements of Budgetary Resources shows how budgetary resources were made available and the status of those resources at the end of the fiscal year. In FY 2009, EEOC received a $343.9 million appropriation, with no rescission.
EEOC ended FY 2009 with an increase in total budgetary resources of $14 million, or 4 percent, over last year. Resources not available for new obligations at the end of the year totaled $10 million and $9 million in FY 2009 and FY 2008, respectively. The unobligated balance not available represents expired budget authority from prior years that are no longer available for new obligations.
The pie chart displays EEOCís FY 2009 use of resources by major object class. The chart shows that Pay and Benefits, State & Local, Rent to GSA and Other Contractual Services consumed 94 percent of EEOCís resources, and other expenses (e.g., travel & transportation, equipment, supplies & materials, etc.) consumed less than 6 percent of EEOCís resources for FY 2009.
The dual axis chart below depicts EEOCís compensation and benefits versus full-time equivalents (FTE) over the past six years. EEOC ended FY 2009 with 2,192 FTEs, a net increase of 16, or less than 1 percent, above FY 2008.
Note: A Full Time Equivalent (FTE) is an employee who works a full-time schedule for the entire fiscal year. The number of FTEs in the above chart may not equal the actual number of employees because, for example, if an employee were hired in the middle of the fiscal year, that position would be counted as half of an FTE.
I am pleased to present the U.S. Equal Employment Opportunity Commissionís financial statements for FY 2009. Our financial statements are an integral component of our Performance and Accountability Report. The Accountability of Tax Dollars Act of 2002 extends to the agency a requirement to prepare and submit audited financial statements. The Presidentís Management Agenda, Improved Financial Performance component among other standards, requires us to obtain and sustain clean audit opinions on our financial statements. The Office of Management and Budget (OMB) issued an updated Circular A-136, Financial Reporting Requirements, on June 10, 2009, which further refined reporting requirements for the PAR submission.
Our FY 2009 financial statements received an unqualified opinion through the hard work of the dedicated financial and administrative staff in the agency. This is the sixth consecutive year that the EEOC has received an unqualified opinion and represents our continuing successful efforts to improve the financial management of the agency. The Department of the Interiorís National Business Center won a competition to replace the existing financial software with CGIís Momentum® software package. The conversion and implementation were completed for operations beginning in FY 2008. However, hosting and application support costs at the National Business Center have risen faster than current appropriation levels can sustain. As we look ahead, we will re-compete the requirements for the Agencyís financial line of business software and accounting operations support in FY 2011 for implementation effective October 1, 2012, FY 2013.
For FY 2009, the agency received a $343.9 million budget. We completed the fiscal year within budget with improved financial management. Compensation and benefit costs continue to consume a substantial portion of the budget. Some additional progress has been made to bring rising office space rent costs under control by leasing less office space consistent with the number of employees onboard. Additional rent costs are expected based on the number of approved vacancies. Rent costs are about 8% of our total budget. With 8% of the budget dedicated to the State and local program, only 14% of the budget is available for technology, programs, travel, and other general expenses.
The agency has made some progress on attacking program workload backlogs by embarking on a hiring program to rebuild staffing levels that were at a historically low level. Beginning at mid-year of FY 2009, we began the process to hire investigators, trial attorneys, and other staff to support our systemic enforcement and litigation programs. We anticipate additional hiring in 2010, including the hiring of additional investigators, trial attorneys and support staff. We dedicated $2.5 million to address gaps in training for our investigators, attorneys, program analysts, and other employees.
Working with the General Services Administration, the agency relocated the Headquarters office and the Washington Field Office to 131 M Street, NE in Washington, D.C. in the first quarter of FY 2009. A ten-year occupancy agreement took effect in January 2009. The rent at this new location ensures the agency will not pay more than the annual lease cost at our previous location. The area where the new office is located is called NoMa (North of Massachusetts Avenue). Our agency, along with the Department of Justice, is pleased to be part of an area for economic re-development within the District of Columbia.
Working with our Office of Information Technology, the agency competed and awarded two important orders in the fourth quarter. The first order is for Managed Services for End-User Computing through the GSA Alliant Government-wide Acquisition Contract (GWAC). The potential contract value is $21.4 million dollars for 84 months, if the option period and all optional contract line items are funded. The scope of the contract provides for the replacement and servicing of all desktop computers throughout the agency and related hardware, software and services. The second order was for network engineering services to evaluate future requirements for data and video bandwidth and related services.
As reported in the past, I have identified several critical issues for the agency to focus on to continue to improve its long-term financial health. An update on each item is provided below.
Execute a disciplined analysis of future workforce and infrastructure requirements. Unfortunately for several years, the government as well as the agency have been unable to slow the growth of the current and future cost of compensation and benefits for current employees. Costs are on a path to increase to over 70% of the EEOCís budget. These costs include salary, health and life insurance, agency contributions for retirement plans, social security, medicare, workerís compensation, unemployment insurance, and transit subsidies. The continuing inability of the agency to implement any form of position management means that it will be very difficult to substantially change the cost of the compensation and benefits in future years.
The agency contracted for an independent top-down study of the information technology infrastructure and staffing. The report called for substantial changes in the organization, use of contracts, operations, and the skill mix of staff in order to more effectively spend the $23 million annual budget for the information technology function. The agency is pursuing competitive IT services to consolidate contracts for additional managed hosting and managed operations and maintenance. This is an effort to better focus current government IT employees on strategic, budget, and acquisition planning, contract oversight, system security and end user needs.
Recognize and manage competing budget priorities. We have kept spending controls in place for discretionary line items. Non-payroll costs continue to increase for homeland security, rent, facility services, and government-wide programs such as financial management services with a shared service provider. The agency continues discussions to determine the underlying causes for cost increases in its hosting and software services. There remains a clear need for improved strategic sourcing for software licensing, upgrades, and warranties on commercial off-the-shelf software by leveraging the consolidated requirements and resources under the management control of our shared services provider.
Formulate a long-term performance budget strategy. The agency continues to look into improved communication approaches for annual budget justifications. There is a need for more transparency of workload metrics and the methodologies for supporting the metrics. The backlog of casework and workload by activity makes this an important task as we move forward. Also, substantial work is required to re-engineer and update a Strategic Plan.
In FY 2010, we will continue our focus on accountability, financial transparency, and results through improved budget planning, performance metrics and financial management.
Jeffrey A. Smith, CPA, CGFM
Chief Financial Officer
U.S. Equal Employment Opportunity Commission
November 15, 2009