October 2007

 

Cost Containment and the Federal Judiciary

In April 2004, it was estimated that within five years the federal Judiciary’s operating requirements—the money needed to pay staff, juror’s fees, courthouse rent, phone bills and all the other expenditures that keep the courts running—would exceed the funding provided by Congress by close to $850 million.

In fact, such a deficit would threaten thousands of court jobs.

Instead, the federal Judiciary regards its future with cautious optimism, largely because of an aggressive cost-containment program begun three years ago, along with an equally aggressive outreach program to Congress. Thanks to the Judiciary wide cost-containment initiative, it is estimated that hundreds of millions of dollars in costs will be saved or avoided over the next decade.

It was a much different story in 2004. All of government faced a stringent budget environment. For the Judiciary, funding increases from Congress had shrunk below the level needed to continue the courts’ business as usual. Meanwhile, the Judiciary’s costs were rising for rent, personnel, and drug-testing and treatment programs, as the court system absorbed record numbers of criminal defendants, appeals, civil, and probation and pretrial services caseloads, and a near-record caseload in the bankruptcy system.

“You couldn’t look at those trends without realizing they were very adverse,” says Judge Carolyn Dineen King, who chaired the Judicial Conference Executive Committee from 2002 to 2005. “The federal budget deficit was soaring. It seemed that we were in a position that was just untenable. We had to get a grip on our costs so that we could have a better shot at living within our appropriation.”

In 2004, the Judicial Conference did just that. It approved a comprehensive strategy for controlling costs in the Judiciary. The Cost-Containment Strategy for the Federal Judiciary: 2005 and Beyond was developed by the Executive Committee with input from other Conference committees and from judges and managers across the Judiciary.

“Cost containment is about restraining our costs, restraining our growth, so that our requirements and our appropriations will more closely approximate each other,” explained Budget Committee Chair Judge Julia Gibbons. “Each of the Judicial Conference committees with spending authority scrutinized various policies, practices and customs within their jurisdiction,” she said. “They developed a working list of areas in which savings might be possible.”

Here’s how the Judiciary refocused its future.

Space and Facilities Cost Control
At the time, the Judiciary annually paid the General Services Administration (GSA) about $900 million in rent for court facilities, which represented 22 percent of the Judiciary’s budget. GSA rent charges increased each year for existing facilities. Between rising rent bills and new space, it was anticipated that rent would increase about 6 to 8 percent a year.

To help reduce the rate of growth in rental expenses, in September 2004, the Judicial Conference agreed to delay 42 courthouse projects on the Conference’s five-year courthouse project plan for 24 months, giving the Judiciary time to re-evaluate whether courts could satisfy their additional space needs at lower costs.

“It was a drastic measure,” said Chief Judge Joseph F. Bataillon (D. Neb.), chair of the Committee on Space and Facilities. “We had to make a choice between having enough people to do the work and having facilities. The consensus was it was more important to maintain our staff. The moratorium effectively contained costs and slowed down the rate of growth for future years. It also helped us renegotiate a number of issues with GSA that have been financially beneficial for us.”

Rent validation was one of those issues. Rent bills across the country were re-evaluated following the discovery of serious rent overcharges to the Judiciary in the Northern and Southern Districts of New York. “The courts in New York deserve a lot of credit for getting the ball rolling in this regard,” said Bataillon. Under the initiative, space assignment drawings were compared to court occupied space in all federal buildings and rental rates were examined to ensure that the Judiciary was charged for space the courts legitimately occupied. In total, these initiatives resulted in almost $52.5 million in credit and cost avoidance savings for the Judiciary.

The Conference also acted to control rent growth. In September 2006, it set an annual cap for all future rent requirements at an average annual growth rate of 4.9 percent for fiscal years 2009 through 2016. At its September 2007 session, the Judicial Conference endorsed the circuit-level rent budget allotment program in order to stay within the 4.9 percent cap on rent. Under this program, circuit judicial councils will receive an annual rent budget that will cover current space, project-specific funding for new courthouses, and a discretionary allotment to pay for their expansion space actions and space alteration projects, which enable more efficient use of space. All new courthouses or annexes, build-to-suit lease projects, requests for GSA feasibility studies, and prospectus-level repair and alterations projects must still be approved by the Committee on Space and Facilities and the Judicial Conference.

“This is a sea change from how we’ve done business in the past,” said Bataillon. “We’re giving the circuit judicial councils more fiscal responsibility for the rent in their circuits. Now it will be incumbent upon the circuit councils to make sure they spend their dollars as wisely as possible.”

In addition, a major overhaul of the U.S. Courts Design Guide was recently completed with reductions in space requirements for judges’ chambers and staff. A courtroom utilization study is underway. The need for additional courtrooms is a primary factor in determining a need for additional facilities.

Thanks to these initiatives, the rate of growth in the Judiciary’s rental payments has slowed in comparison to pre-cost-containment projects. In 2004, the total cost of rent was estimated to rise 37 percent to $1.2 billion by 2009. Because of cost control actions, in January 2007 the projected rent expense for 2009 fell by 13 percent from the original estimate to $1.09 billion.

Judiciary Personnel Costs
Current workload projections, staffing formulas, and compensation policies call for a growth of almost $1.4 billion in court support staff costs above current levels by fiscal year 2017. Long-range budget projections will not support this level of funding. Reducing the rate of growth in the number of staff is one way to reduce those costs, but another option is to reduce the growth in compensation.

At its September 2007 meeting, the Judicial Conference approved recommendations for a major court job classification and compensation study, which will affect staff positions nationwide. The Conference also voted to give local courts greater autonomy in managing and paying their personnel, to limit the number of career law clerks—who are typically paid more than term law clerks—and to modernize its Court Personnel System benchmarks, which will affect the classification and grading of staff positions nationwide. The approved measures may save up to $300 million from FY 2009 through FY 2017.

“What we’re doing,” said Judge W. Royal Furgeson (W.D. Tex.), who chaired the Judicial Resources Committee until October 1, 2007, “will not necessarily take one employee off the rolls. What it will do is constrain the growth of salaries in our system and arrest some of the trends that have had us spending more money toward the top range of our salary structure.”

The Judicial Resources Committee has endorsed a comprehensive and rigorous work-measurement process to update court unit staffing formulas. The resulting formulas will help define future staffing requirements. In addition, the Criminal Law Committee proposed and the Conference approved modifications to work requirements of probation and pretrial services offices. These changes reduced staffing needs.

Effective Use of Technology
“We are not spending money on gadgets,” said Judge Thomas I. Vanaskie (M.D. Pa.), chair of the Judicial Conference Information Technology Committee, “we’re spending money on technology that makes us more productive.”

Containing information technology costs while still pursuing useful advancements is the challenge. The key is to invest funds for infrastructure, applications and devices that will deliver these benefits.

The Judicial Conference has linked investments in information technology to service improvements and efficiency savings. For example, the Conference endorsed the rapid implementation of the Case Management/Electronic Case Files system, which has made staffing efficiencies possible and even affected the size of clerk intake areas and records storage.

Although IT is only about 6 percent of the total Salaries and Expenses account, cost pressures are substantial due to constant demands for more advanced technologies. In 2004, a key cost driver was the delivery of many national applications by installing them on servers in every court location. Improvements in the national data communications network have allowed the consolidation of servers, which is already saving money. Running the Jury Management System (JMS) on the same server with CM/ECF has produced a savings of $2 million in the first year.

“Servers are expensive pieces of equipment,” said Vanaskie. “In the case of JMS, you were eliminating 94 servers and their cyclical replacement. And we’ve also seen that with PACTS, the case management systems used in probation and pretrial services offices. All of the probation and pretrial services offices in the nation now are running their PACTS systems on consolidated servers, with a projected savings in the same magnitude as JMS.”

A significant savings also is expected from the consolidation of the servers for the Judiciary’s accounting system, FAS₄T.

“I think we have to recognize that we’re investing when we spend on technology,” Vanaskie said. “It’s intended to have a positive impact on how work is processed.”

Program Modifications Produce Savings
Probation and pretrial services:
Less costly drug-testing methodologies and treatment services are being pursued, along with ways to improve program evaluation data. Co-payments may be required from defendants and offenders who have the ability to pay for services.

Prior to the cost-containment effort, law enforcement-related costs were projected to increase 10 percent per year, reaching $130 million by 2009. With these cost-containment measures, in January 2007 it was estimated that law enforcement-related requirements will be $94 million in 2009.

Law Book Expenditures: Computer assisted legal research is expanding and law book collections are being limited. In 2004, it was estimated that law books requirements would increase 19 percent to $45.6 million by 2009. With cost containment, law books requirements are now estimated to be $38.4 million in 2009.

Defender Services: Among the cost containment initiatives underway is a pilot project to assess the extent to which case budgeting advice may help reduce appointed counsel costs in capital and non-capital high-cost cases. Economies in defense representation are being promoted by the adoption of policies in capital cases—one to reduce the compensation rate when a case ceases to be death-eligible and another to encourage more timely Justice Department decisions about whether to seek the death penalty.

Estimates in 2004 indicated that defender services budget requirements would rise 72 percent by 2009, reaching $1.1 billion. The January 2007 long-range budget estimate is $970 million in 2009, $130 million less than initially estimated.

Magistrate Judges System: The recommended number of new magistrate judges has been sharply reduced by the Judicial Conference Committee on the Administration of the Magistrate Judges System, and courts with lower workloads are urged not to fill vacant positions.

Court Security: Cost-containment efforts in the area of court security have saved approximately $20 million with a district-wide review of Federal Protective Service charges.

Long-Term Vigilance
Judge Gibbons lauds the Judicial Conference committees, court staff, and the AO for their efforts. “With cost containment we can take a look at what is important in terms of our function and our mission,” she said, “and make reasonable policy decisions that make sense for the Judiciary. Cost containment is a strategy that helps us plan for our future.”

And what does the future look like?

“Thanks to these efforts, the anticipated gap between estimated budget requirements and funding levels has shrunk,” said Administrative Office Director Jim Duff, “but continued vigilance will be necessary for the long term.”

“I think we’re going to be living in a very challenging budget environment,” Gibbons adds. “Without cost containment, we’re not going to be able to get enough money from Congress to meet our needs. Cost containment happens to be the right strategy—and the right thing to do. We have an obligation to be good stewards of the taxpayers’ money.”