The EM Budget. Intergovernmental Meeting with the US Department of Energy December 12-14, Terry Tyborowski

Transcription

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 1

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 2

3 The EM Budget Part One: FY 2013 Budget Status 3

4 Annual Deficit as % of GDP est 2015 est 2017 est Net Debt as % of GDP EM Funding Context: Growth in Federal Debt Federal Deficit and Debt as % of GDP, Annual Deficit Federal Debt

5 Impact of Growing Federal Debt on Discretionary Spending Levels % of GDP Within 20 years, interest on the federal debt crowds out all discretionary spending Discretionary Interest Other Mandatory Medicaid Medicare Social Security Total receipts

6 DOE's FY 2013 Budget Request Funding by Organization ($B) Total: $ $7.58 $5.65 $4.99 $.18 $2.5 $1.1 $.4 $2.3 $

7 Continuing Resolutions: Number of CRs and Number of Days Covered # of CRs Number of Days 7

8 EM FY 2013 Budget Request - Highlights FY 2013 Budget Request - $5.65B Oak Ridge K-25 Facility ($80M) Savannah River Defense Waste Processing Facility (DWPF) ($154M) Idaho Waste Exhumation ($90M) Hanford Waste Treatment Plant (WTP) ($690M) Waste Isolation Pilot Plant (WIPP) ($150M) *Includes Program Direction, Program Support, TDD, Post Closure Administration and Community and Regulatory Support ** Includes Safeguards and Security 8

9 FY 2013 Continuing Resolution: Impact of Statutory Requirements 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% 9

10 Path Forward for FY 2013 Funding $5.75 B $5.73 B Cont. Resolution Senate $5.58 B House? 10% Seq. Fiscal Year 2013 Request $5.65 B 10

11 The FY 2013 Budget Request: Looking into the Crystal Ball E M Environmental Management safety performance cleanup closure 11

12 The EM Budget Part Two: EM Budget and Performance Challenges 12

13 Budget Reality: EM Appropriations from FY $ in Millions 6,400 6,200 6,000 5,800 5,600 5,400 5,200 5, 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 5,580 House 5,735 5,735 Senate ARRA 5,988 Delta (382) (420) (70) House 85 Senate 13

14 A Multi-Billion Dollar Gap Exists between EM Planned Costs and Available Funding Current Dollars (Millions) EM s projected costs generally reflect the cleanup actions required to meet regulatory deadlines and other key cleanup goals. $10,000 $9,000 $8,000 $7,000 $6,000 $5,000 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 A significant gap exists between EM s projected costs and the available funding expected over the next decade $4,000 $3,000 $2,000 $1,000 $0 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. 14

15 Regulatory and Readiness Requirements Constrain Flexibility in Scaling Down Cleanup 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. Other: Cost of completing cleanup not directly tied to regulatory deadlines (Approximately 3%) 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%) 15

16 Budget Reductions Disproportionately Reduce EM s Purchasing Power EM Budget Authority 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. Making Progress Making Progress Making Progress Ops Ready Ops Ready Ops Ready Standard Funding Scenario Impact of Reduced Funding Impact of Potential Management Efficiencies 16

17 Reconciling Cleanup Plans with Lower Funding and Performance Levels WA SC ID Richland Savannah River Idaho Baseline Planned Completion Date Schedule Delay +25 years +8 years +10 years Baseline Life- Cycle Cost to Go $44 billion $30 billion $13 billion Cost Increase +$7 billion +$10 billion +$2.5 billion 17

18 The EM Budget Part Three: How EM Makes Budget Decisions 18

19 Stakeholders are Key Partners in EM s Budget Formulation Process 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 E M Issuance of official EM guidance to field sites Schedule meetings with EM SSAB, stakeholders and regulators EM SSAB, stakeholders and regulators submit advice to sites Environmental Management safety performance cleanup closure EM budget deliberations among the sites, DOE management, CFO and the Office of Management and Budget (OMB) EM prepares budget submission to CFO Sites submit budget request to EM HQ, along with EM SSAB stakeholder and regulator advice and sites recommended course of action EM BUDGET REQUEST BECOMES EMBARGOED CFO/EM prepares budget submission to OMB EM budget event EMBA, stakeholder, regulator budget event 1 ST 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 19

20 A High-Level Description of the Steps of the EM Budget Formulation Process 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 E M Site Requests Environmental Management safety performance cleanup closure KEY Purple= Priority #3 Green: Priority #2 Blue= Priority #1 20

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 E M Environmental Management safety performance cleanup closure 21

22 The EM Budget Part Four: Addressing Budget Challenges through Planning, Communication and Consultation 22

23 Complex at a Crossroads: Identifying Innovative Solutions to Budget Problems Leverage DOE resources to maximize value for taxpayer Develop and apply cost-saving technologies E M Environmental Management safety performance cleanup closure Maximize contractor performance through innovative incentive structures and accountability Apply risk-informed remedies (e.g. monitored natural attenuation where appropriate) 23

24 How EM Will Use Communication and Consultation to Address Budget Challenges 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 24