the em budget - national governors association high-level description of the steps of the em budget...
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www.em.doe.gov 1
The EM Budget
Intergovernmental Meeting with the US Department of Energy
December 12-14, 2012
Terry Tyborowski
Office of Environmental Management
Deputy Assistant Secretary for Program Planning and Budget
www.em.doe.gov 2
Presentation Outline
1. Update on FY 2013 budget status
2. Overview of EM budget and performance challenges
3. High-level explanation of how EM makes budget decisions
4. Description of planning, communication and consultation
measures that EM will employ in this challenging budget
environment
www.em.doe.gov 3
The EM Budget
Part One: FY 2013 Budget Status
www.em.doe.gov 4
EM Funding Context: Growth in Federal Debt
0
20
40
60
80
100
120
-10
-5
0
5
10
15
20
25
30
35
19
40
19
42
19
44
19
46
19
48
19
50
19
52
19
54
19
56
19
58
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
20
13
est
20
15
est
20
17
est
Net
Deb
t as %
of
GD
P
An
nu
al
Defi
cit
as %
of
GD
P
Federal Deficit and Debt as % of GDP, 1940-2011
Annual Deficit Federal Debt
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Impact of Growing Federal Debt on
Discretionary Spending Levels
0
5
10
15
20
25
30
0
5
10
15
20
25
302
00
0
20
04
20
08
20
12
20
16
20
20
20
24
20
28
20
32
20
36
20
40
20
44
20
48
20
52
20
56
20
60
20
64
20
68
20
72
20
76
20
80
20
84
% o
f G
DP
Discretionary
Interest
Other Mandatory
Medicaid
Medicare
Social Security
Total receipts
Within 20 years, interest on the federal debt
crowds out all discretionary spending
www.em.doe.gov 6
DOE's FY 2013 Budget Request – Funding by
Organization ($B)
Total: $27.155
$7.58 $5.65 $4.99
$2.5 $1.1
$2.3
$.18
$.4
$2.5
www.em.doe.gov 7
Continuing Resolutions: Number of CRs and
Number of Days Covered
Number of Days
171
140
81
85
55
83
133
87
79
52
30
157
83
# of CRs
6
20
7
7
3
2
3
2
3
1
1
5
4
0 20 40 60 80 100 120 140 160 180
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
www.em.doe.gov 8
EM FY 2013 Budget Request - Highlights
*Includes Program Direction, Program Support, TDD, Post Closure
Administration and Community and Regulatory Support
** Includes Safeguards and Security
Hanford Waste Treatment Plant (WTP)
($690M)
Waste Isolation Pilot Plant (WIPP) ($150M)
Oak Ridge K-25 Facility ($80M)
Idaho Waste Exhumation
($90M)
Savannah River Defense Waste
Processing Facility (DWPF) ($154M)
FY 2013 Budget
Request - $5.65B
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FY 2013 Allotment value reflects
reductions based on the lower of the
CR rate or EM historical rates of
obligation as follows:
• Program Direction: 41.87%
• Non-Defense: 45.96%
• All Else: 48.77%
FY 2013 Continuing Resolution: Impact of
Statutory Requirements
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10% Seq. ?
Path Forward for FY 2013 Funding
Cont.
Resolution
House
Senate
$5.73 B
$5.58 B
$5.75 B
Fiscal Year
2013
Request
$5.65 B
www.em.doe.gov safety performance cleanup closure
E M Environmental Management
11
The FY 2013 Budget Request: Looking into the
Crystal Ball
www.em.doe.gov 12
The EM Budget
Part Two: EM Budget and Performance Challenges
www.em.doe.gov 13
Budget Reality: EM Appropriations from
FY 2008 - 2013
2008 2009 2010 2011 2012 2013
Request 5,655 5,528 5,630 6,047 6,130 5,650
Approp/Op Plan 5,757 5,991 6,006 5,665 5,710 5,735
ARRA 5,988
Delta 102 463 376 (382) (420)
5,000
5,200
5,400
5,600
5,800
6,000
6,200
6,400
$ in
Mil
lio
ns
5,580 House
5,735 Senate
(70) House 85 Senate
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A Multi-Billion Dollar Gap Exists between EM
Planned Costs and Available Funding
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
Cu
rre
nt
Do
llars
(M
illio
ns)
TARGETRANGE
Gap between projected cost and target is approximately $14 to $29 billion assuming availability of target as sites close.
Projected Cost to Go: $174 - $209B
– Compliance baselines were built assuming higher funding targets and levels of performance than EM is currently experiencing.
– Anticipated funding levels may be below requirements level at many EM sites.
EM’s projected
costs generally
reflect the cleanup
actions required to
meet regulatory
deadlines and
other key cleanup
goals.
A significant gap
exists between
EM’s projected
costs and the
available funding
expected over the
next decade
www.em.doe.gov 15
Regulatory and Readiness Requirements
Constrain Flexibility in Scaling Down Cleanup
Ops Ready: Cost of maintaining the EM
complex in a safe, “operations ready” state
(Approximately 58%)
Outyear Compliance:
Cost of completing
cleanup necessary to
meet future year
regulatory deadlines
(Approximately 33%)
Current Year
Compliance: Cost of
completing cleanup
necessary to meet
regulatory deadlines in
the current fiscal year
(Approximately 6%)
Other: Cost of
completing cleanup
not directly tied to
regulatory
deadlines
(Approximately 3%)
Reduced funding targets require EM to scale down its cleanup efforts accordingly. This is
challenging because, for each dollar of EM funding, over half goes to maintaining a safe,
operations ready posture. Almost all remaining funding is applied to meeting regulatory goals.
www.em.doe.gov 16
Budget Reductions Disproportionately Reduce
EM’s “Purchasing Power”
Ops Ready
Making Progress
EM
Budget A
uth
ority
Ops Ready
Making Progress
Making Progress
Ops Ready
Standard Funding Scenario Impact of Reduced Funding Impact of Potential
Management Efficiencies
EM’s funding is divided between two main categories: The costs of maintaining a safe, secure and operations
ready posture (“Ops Ready”) and the costs of performing active cleanup work (“Making Progress”). Funding
reductions disproportionately impact “Making Progress” funds, since “Ops Ready” costs are largely fixed.
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Reconciling Cleanup Plans with Lower Funding
and Performance Levels
WA SC ID
Richland Savannah River Idaho
Baseline Planned
Completion Date
Baseline Life-
Cycle Cost to Go
Schedule Delay
Cost Increase
2042
+10 years
$13 billion
+$2.5 billion
2066
+25 years
$44 billion
+$7 billion
2034
+8 years
$30 billion
+$10 billion
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The EM Budget
Part Three: How EM Makes Budget Decisions
www.em.doe.gov safety performance cleanup closure
E M Environmental Management
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JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR
Issuance of preliminary EM
guidance to sites to engage the
SSABs, stakeholders and
regulators
Issuance of official EM
guidance to field sites
EM budget deliberations among the sites, DOE management, CFO and the Office of
Management and Budget (OMB)
EM SSAB, stakeholders and
regulators submit advice to
sites
EM prepares budget
submission to CFO
CFO/EM prepares
budget submission to
OMB
EM budget event
EMBA, stakeholder, regulator budget event
EM BUDGET
REQUEST BECOMES
EMBARGOED
1ST Monday in February,
DOE submits President ‘s
budget to Congress (Budget
Rollout)
Within 30 days of
budget rollout, field
sites provide briefing
to EM SSAB,
stakeholders &
regulators
Within 30 days
of appropriation,
field sites brief
EM SSAB,
stakeholders
and regulators
Stakeholders are Key Partners in EM’s Budget
Formulation Process
Sites submit budget request to
EM HQ, along with EM SSAB
stakeholder and regulator advice
and sites’ recommended course
of action
Schedule
meetings with EM
SSAB,
stakeholders and
regulators
www.em.doe.gov safety performance cleanup closure
E M Environmental Management
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A High-Level Description of the Steps of the EM
Budget Formulation Process
1 2 3
Field sites submit budget requests to HQ,
with each proposed activity tagged with a
priority description (e.g. necessary work to
maintain ops ready status, compliance
driven activities, other activities)
HQ compiles site requests into a single
table organized from lowest to highest
priority.
EM receives a total annual funding
target from the CFO. Starting with the
highest priority activities and moving in
order towards the lowest, EM HQ
proposes funding for as many activities
as can be accommodated within the
total funding target
Site Requests
KEY Purple= Priority #3
Green: Priority #2
Blue= Priority #1
www.em.doe.gov safety performance cleanup closure
E M Environmental Management
21
The Impact of Life-Cycle Cost Considerations
on Budget Decisions
EM’s discretion over its budget is limited by the need to fund activities
necessary for operational readiness and activities driven by regulatory
requirements.
“Ops ready” and compliance-driven funding consume the vast majority of the
EM budget.
Given these constraints, EM’s ability to pursue life-cycle cost reductions through
the annual budget is extremely limited.
However, EM does seize opportunities to fund cost-saving initiatives where
possible.
o Recovery Act funding allowed for a multi-billion dollar reduction in EM’s
overall life-cycle cost
o Technology Development and Deployment funding supports multi-year
initiatives that are expected to yield multi-billion dollar cost reductions
www.em.doe.gov 22
The EM Budget
Part Four: Addressing Budget Challenges through Planning, Communication and
Consultation
www.em.doe.gov safety performance cleanup closure
E M Environmental Management
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Complex at a Crossroads: Identifying
Innovative Solutions to Budget Problems
Leverage DOE resources to
maximize value for taxpayer
Apply risk-informed remedies (e.g.
monitored natural attenuation where
appropriate)
Maximize
contractor
performance
through
innovative
incentive
structures
and
accountability
Develop and apply cost-saving
technologies
www.em.doe.gov 24
Develop multiple alternatives for each element of the program to meet lower performance and funding targets
Develop a communication tool to allow those alternatives to be combined in many various ways into complex-wide scenarios
Use communication tool to solicit stakeholder feedback on budget and planning challenges
Make communication tool available to regulators to understand impacts of funding allocations that might impact their site, as well as others
Work cooperatively with regulators to resolve regulatory issues
How EM Will Use Communication and
Consultation to Address Budget Challenges