As you are all likely aware, the Administration and Congress are continuing to work to resolve a series of economic or fiscal events, collectively referred to as the “fiscal cliff,” that are scheduled to occur around the beginning of the new year. One of the key issues involves potential across-the-board reductions in Federal spending— also known as “sequestration”—which were put in place by the Budget Control Act of 2011. Under current law, these reductions are scheduled to take effect on January 2, 2013. Many of you have raised questions regarding the impact of a potential sequestration for the Smithsonian, and I would like to take a moment to clarify what we know at this point.
First and foremost, we are hopeful that the Administration and Congress will reach agreement on a balanced deficit reduction plan that avoids such cuts.
Nevertheless, with only a couple of weeks left before sequestration could occur should a deal not be reached, it is important to clarify the potential implications. Sequestration is an across-the-board reduction in Federal budgetary resources for all accounts within the Smithsonian. If it occurs, sequestration will reduce our Federal budgetary resources for the remainder of the fiscal year (which runs through September 30, 2013). These cuts, while significant and harmful to our collective mission, would not necessarily require immediate reductions in spending. Under sequestration, we would still have Federal funds available after January 2, but our overall funding for the remainder of the year would be reduced. Accordingly, this situation is different from other scenarios we have encountered in recent years, such as threats of government shutdown due to a lapse in appropriations. Please note that sequestration only impacts our Federal appropriation. It is unclear how a sequester of Federal funds may affect our Trust activities, but like our Federal activities no reduction in spending will immediately be necessary.
For these reasons, I do not expect our day-to-day operations to change dramatically on or immediately after January 2, should sequestration occur. This means that we will not be executing any immediate personnel actions, such as furloughs, on that date. Should we have to operate under reduced funding levels for an extended period of time, we may have to consider furloughs or other actions in the future. But let me assure you that we will carefully examine all options to reduce costs at the Smithsonian before taking such action, taking into consideration our obligation to execute our core mission. Moreover, if such action proves to be necessary, we would provide affected employees the requisite advance notice before a furlough or other personnel action would occur. We would also immediately cancel any sequestration-caused personnel actions should a deficit reduction agreement be reached that restores our Federal funding.
If you have unanswered questions or wish to discuss issues surrounding the potential sequestration, I encourage you to contact Albert Horvath, Under Secretary for Finance & Administration/Chief Financial Officer at email@example.com. We will do our best to provide clear information about the status of events as they unfold.
Posted: 21 December 2012