July 14, 2016
On Thursday, July 14, the National Academy of Public Administration and Grant Thornton hosted a Symposium on the topic “Building from the Ground Up – Establishing a Working Capital Fund” using the example of Architect of the Capitol (AOC).
The quarterly WCF Symposium aims to develop discussions to adopt a more streamlined WCF approach. Through this collaborative effort, government executives and managers can discuss WCF issues, share lessons learned, and gather best practices. Agency leaders share their insights to implement and sustain Working Capital Funds.
Joe Mitchell, Director of Academy Programs at the National Academy of Public Administration, and Carlos Otal, National Managing Partner of Public Sector Services and Solutions, Grant Thornton, welcomed the group and spoke to the partnership between the National Academy of Public Administration and Grant Thornton in sponsoring the Working Capital Fund Symposium.
Jennifer Ayers, Director in the Office of the Secretary, Financial Management at the Department of Commerce and Chairperson of the Working Capital Fund Symposium, highlighted the symposium’s past year’s activities and introduced this quarter’s speaker, Tom Carroll. He serves as Chief Financial Officer of the Architect of the Capitol (AOC). Founded in 1876, the AOC is a
nonpartisan, professional services office with responsibility for more than 17.4 million square feet of facilities and more than 587 acres of grounds. It is responsible for the maintenance, renovation, and new construction of the buildings and grounds on Capitol Hill. Mr. Carroll discussed how the AOC has been working to establish a Working Capital Fund over the past year. Their $661.8 million budget is currently funneled into ten separate appropriations that feed into nine separate division accounts and one central account. The WCF will streamline the allocation of expenses for AOC’s Construction Division from across these 10 appropriations. This will replace the current allocation process, which is manual, cumbersome, and non-transparent.
Three takeaways from Mr. Carroll’s presentations are to be highlighted. Firstly, the benefits of the working capital model for AOC’s Construction Division were discussed. This model is particularly useful because it acts as the single source for all indirect and direct expenses, specifically regarding employee and contractor leave. Furthermore, the working capital model enhances flexibility, reinforces the customer-supplier relationship, and simplifies financial reporting and the pricing process. Secondly, Mr. Carroll reflected on AOC’s time preparing to disseminate and present their WCF plan. It was expected that the most resistance would come
from Department heads. Surprisingly, however, Congressional staffers turned out to be the biggest headache due to an acute lack of knowledge regarding the intersection of appropriation law and Working Capital Funds. Carroll suggested that the Academy could prepare a primer for Congressional staffers to dispel common myths about WCFs. Thirdly, there are Mr. Carroll’s “Newbie” observations on revolving funds: pretty much everyone has at least one revolving fund, which means they are not new to government and have been used successfully in virtually every
department. However, there is not a lot of recent knowledge on how to start one, including amongst current Congressional staff and leadership.
Following Mr. Carroll’s presentation, Renee Miller, Director of the Working Capital Fund Staff, Office of the Controller in the U.S. Environmental Protection Agency (EPA), presented the first WCF Strategic Interest Group (SIG) White Paper. The “Rate Setting – A Benchmarking Study” white paper documents common issues that WCFs face around rate-setting and provides a summary of best practices identified by a survey of a core group. This survey of six agencies and departments included 22 questions. Responses were compiled, analyzed, and presented to the Rate Setting SIG. In summary, it was observed that the six agencies and departments have varying levels of maturity in terms of WCFs and rate setting.
The SIG found numerous enhancements that can be conducted to make these WCFs more mature. It suggests a complete planning and budget formulation as well as rate setting in the budget year and for the subsequent or possibly two fiscal years. Furthermore, reviewing rates every quarter and revising them in the budget year as appropriate or annually is recommended. Also worthwhile would be to assess current cost accounting support capabilities and develop formal cost accounting processes to identify different cost pools and their individual components to help
calculate rates appropriate for full cost recovery of operations.
As the next step, Jennifer Ayers announced the formation of a Governance Strategic Interest Group, which will be led by Chris Richey from the Department of the Interior. Ms. Ayers also discussed the OMB MAX community that will be used by the WCF Group to manage communication and share documents. All members of the group will be invited to participate.