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Government Watchdog Closes NLRB Budget Investigation

Sept. 20, 2018, 12:03 PM

The Government Accountability Office wrapped up an investigation into possible budget improprieties at the National Labor Relations Board without issuing a formal, public report of its findings, sources familiar with the inquiry tell Bloomberg Law.

The investigation followed reports that the Trump administration had instructed the board’s chairman and general counsel to restrict their spending of money allocated to the NLRB for this fiscal year. Agencies are generally required to spend allotted funds unless the president pauses the process by sending a “special message” to Congress, and then a revised budget.

The directive was said to be part of a White House plan to claw back about $15 billion that had been appropriated by Congress to federal agencies.

The GAO deals with that sort of underspending allegation on a “no harm, no foul” basis, sources familiar with the process told Bloomberg Law. The primary objective is making sure improperly withheld funds are released. Investigators may drop a probe and decline to make findings public if there isn’t proof of impropriety, or if the agency corrects course.

It’s unclear whether the GAO found merit to allegations that the board unlawfully withheld funds or if the probe was ended because funds were subsequently released.

The GAO “did not detect any impoundment of funds, so there are no further steps to take at this point,” a Democratic congressional aide told Bloomberg Law.

The NLRB declined to comment on the investigation. The GAO’s general counsel’s office told Bloomberg Law Sept. 13 that the agency doesn’t “have any information to share at this time” when asked about the investigation.

The development comes as the agency is apparently rushing to spend its remaining funds before the fiscal year ends Sept. 30, according to a senior career official and four other current employees.

Congress Rejected Trump Rescission

The reports of alleged spending restrictions at the agency raised a red flag for the GAO because they came before the White House formally notified Congress that it wanted to try to take back money allotted to various agencies and federal programs.

“They told us they’re going to have to withhold funds through the month of April,” Burt Pearlstone, president of the NLRB field office employees’ union, told Bloomberg Law, referring to board officials. “Ultimately that didn’t happen.”

Pearlstone said NLRB leadership later told the union, “OK, we’re spending all of it.”

Congress rejected a White House proposal to cut NLRB spending by 9 percent in fiscal year 2018. The administration later sent lawmakers a plan to claw back substantial portions of the budget lawmakers approved, but Congress also shot down that rescission package.

The Impoundment Control Act was enacted in 1974 in part because of suspicions that President Richard Nixon was starving certain agencies’ coffers because he opposed their mission or programs. The law requires the president to get approval from Congress to rescind money allotted to an agency. The U.S. Supreme Court has also ruled that the president is barred from using the impoundment power to frustrate Congress’ will.

“We remind you that Congress, not the Administration, has the ultimate authority to set funding levels for executive branch agencies,” Sen. Patty Murray (D-Wash.) and Rep. Rosa DeLauro (D-Conn.) wrote in a letter to NLRB General Counsel Peter Robb shortly after the allegations of budget impropriety became public.

Democrats on Congress’ labor committees have pushed to fund the labor board at higher levels than the Republican majorities have agreed to over the past several fiscal years. The board’s spending level has stayed flat—which amounts to an effective cut because of dynamics such as employee raises and inflation—over the last five years.

“For years, the deficits caused by flat funding of the Agency have been primarily addressed by voluntary personnel attrition,” the board said in an Aug. 7 announcement that it would be offering buyouts to employees. The board said the buyouts were necessary to address staffing “imbalances” and “ensure that the Agency is able to carry out its critical mission.”

NLRB Requests Less Money

The Trump NLRB’s leadership has been embroiled in a continuing dispute with the two unions that represent board staff over how the agency spends money and related reorganization plans.

Robb, who President Donald Trump last year nominated for the general counsel role, has explained some of his more controversial moves to revamp the agency by citing both current budget limitations and anticipated cuts in coming fiscal years.

Some career staffers and the heads of the board’s two unions say the explanations given by Robb and NLRB Chairman John Ring (R) are disingenuous because they’ve relied on the White House’s budget requests instead of the funding levels appropriated by Congress. The agency’s 2019 budget justification requests about $249 million. The board has received about $274 million in discretionary appropriations in each of the last five years.

Robb floated buyouts as a way to reduce headcount and spending this year. The agency budgeted for more than 100 buyouts, but only 38 employees ultimately accepted the offer.

The agency has roughly $6 million left over from the funds allocated for the buyouts, and the general counsel is working to spend the money before the month ends, staffers and congressional aides who spoke on the condition of anonymity told Bloomberg Law.

It’s not uncommon for agencies to go on a spending binge as the Sept. 30 fiscal year end approaches. In some cases, that’s because Congress may see spending shortfalls as a signal that they appropriated too much money for a particular agency or program.

The continuing resolutions passed by Congress to piece together agency funding in recent years can also create hiccups. Patchwork funding allotments, instead of a clear appropriation for an entire year, mean an agency may receive a flood of cash at once, with little time to use it.

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@bloomberglaw.com

To contact the editors responsible for this story: Chris Opfer at copfer@bloomberglaw.com

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