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Labor CFO: Challenge is making best use of scarce resources

Jan. 23, 2013 - 11:27AM   |  
By SEAN REILLY   |   Comments
Jim Taylor, chief financial officer at the Labor Department, helped lead a working group of chief financial officers and inspectors general that in 2011 produced a congressionally mandated report on possible changes to the 1990 Chief Financial Officers Act.
Jim Taylor, chief financial officer at the Labor Department, helped lead a working group of chief financial officers and inspectors general that in 2011 produced a congressionally mandated report on possible changes to the 1990 Chief Financial Officers Act. ()

Jim Taylor once planned to be a city manager. But after taking a Federal Emergency Management Agency internship in 1980, Taylor went on to hold senior management jobs at FEMA, the Commerce Department and the Department of Homeland Security’s Office of Inspector General. Since June 2010, he’s been the Senate-confirmed chief financial officer at the Labor Department. He also helped lead a working group of chief financial officers and inspectors general that in 2011 produced a congressionally mandated report on possible changes to the 1990 Chief Financial Officers Act.

This month, Taylor sat down with Federal Times to discuss the role of the CFO, financial management in tough times and the increasing importance of information technology to financial management. The only off-limits topic was the potential impact of budget sequestration; like officials at other agencies, Taylor referred questions on that score to the White House. Edited excerpts follow.

Q. What would you say is the biggest challenge you face nowadays?

A. In our community, obviously, we’re going to have a constrained budget environment. Every CFO will start the conversation with that. The biggest challenge, other than the general fact that we have less money going forward, is going to be how do we help program managers and our leadership make the right decisions on how to make the best possible use of those resources?

Q. The 2011 report recommended that Congress consider enhancing the role of the CFO by standardizing the CFO’s portfolio to include budget formulation and execution, planning and performance, and other areas. To what extent are CFOs taking on those

A. It does exist. What we found when we did the report is there is a wide variety of implementation of the CFO Act. The intent of the act was to mimic the private sector in many respects, and it did in terms of reporting. But we already had a long history of oversight and internal controls.

As we move forward, the question then is how can we make the best use of this information? When CFOs have a skill set already in place, the CFOs have a set of tools in place, you want to make the best use of that capability.

What we found was that … on the actual structure of the CFO office, agencies were essentially allowed to evolve differently. There are places where the CFO is chief performance officer, is the chief human capital officer. We think there ought to be a consistency so you know what to expect and the Congress knows what to expect and the Office of Management and Budget can know what to expect from a CFO.

Q. Labor, like other departments, is operating under a six-month continuing resolution. How is that affecting your operations?

A. CRs are by definition disruptive, and long-term CRs somewhat more so. If you have a short-term CR, you can hold back and see how things shake out. If you have a long-term CR, it really interferes with planning because you also have the Impoundment Act, which says you’re supposed to spend the money you’re appropriated and not hold it back. So you’re essentially caught between a rock and a hard place on how you proceed.

However, at Labor, the last time we had a full-year appropriation [approved before the Oct. 1 beginning of the fiscal year] was, I believe, 1998. We’ve had CRs at some level or multiple CRs every year since then.

Q: Do you get used to it?

A: Sure. The budget staff here does an outstanding job of making things happen quickly, and it helps that we have a new financial system. The exercise has gotten a lot more efficient, unfortunately, and we’ve gotten really good at dealing with the CRs and planning for them.

Q: Any specific steps that you generally take in terms of dealing with CRs?

A: You have to look at what the length of the CR is, and then you look at what your overall operating plan is to determine whether or not it makes sense to move forward on some activities.

Say you have a short-term CR and it’s for two weeks and you have a contract you’re supposed to get out within that two-week period. The question is, “Am I really going to have the money?” and you can kind of wait it out. With a six-month CR, and you have a lot of contracts and grants you’re supposed to get out, there are people who are counting on that, so you have to really think hard about how you’re going to fund these things going forward and try to move that as best you can. It’s difficult, but it’s not unique to the Department of Labor.

Q: One constant throughout your career is that you seem to have a lot of involvement with information technology. Is that personal on your part, or is a basic knowledge of IT fundamental to a CFO or financial management job at this point?

A: I think definitely the latter is the case. Understanding systems and the tools that you have at your disposal or need — and what your requirements are — is essential.

Q: Where do you see the CFO’s role going from here?

A: I think it’s already evolved from essentially one of a bean counter to someone who’s actually contributing to the decision-making process by contributing information, by contributing tools. We’re past eliminating the fat; we’re eliminating meat and bone now. There are hard decisions, there are programs that everybody finds a real value for that are going to have to be cut. What CFOs can do is contribute to the decision-making process in a value-added way.

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