June 18, 2020
On Thursday, June 18, the National Academy of Public Administration and Grant Thornton hosted a Working Capital Fund Symposium on WCF implementations in the Department of Commerce (DOC) and the United States Patent and Trademark Office (USPTO).
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.
Holden Hoofnagel, (WCF Chairman) serves as Director of the Office of the Secretary Financial Management, Department of Commerce (DOC). He is responsible for the management of the Office of the Secretary budgetary functions including development and oversight of the budget submissions to the Department, Office of Management and Budget (OMB), and Congress.
Mr. Hoofnagel provided an overview of the DOC assessment and pivot to Pandemic assessment. WCFs in the DOC work as non-appropriated accounts financing on a reimbursable basis Department-wide administrative services that are more efficiently and economically performed centrally. The Department’s WCF was established in 1944 with a mission of providing centralized services to the Bureaus. The WCF components are split into service providers and customers. 12 different Offices provide services through 85 different projects.
A conservative WCF operating model was effectively providing services and recovering the full cost of operation, Mr. Hoofnagel pointed out. DOC runs a well-established, participatory governance approach that provides transparency into decision-making and overall WCF operation. Moreover, a disciplined budget execution process that uses budget as a template for funds controls guarantees excellent budget formulation and execution reports.
In the light of the COVID-19 Crisis, Mr. Hoofnagel briefly evaluated how agencies can protect fee-funded programs. In particular, he favors billing and reimbursements, rate structures, and cost and performance monitoring.
The Symposium featured a keynote presentation by Michelle Picard. She is a Senior Advisor for Financial Management in the Office of the Chief Financial Officer at USPTO. In this role since August 2007, Ms. Picard advises the Chief Financial Officer on a wide array of financial management matters. She explained how USPTO developed and maintains reserves.
The USPTO is a full user fee-funded organization operating in the government environment. It needs to generate revenue and congressional appropriation. Patent and trademark fee collections must recover USPTO operating costs. It runs on a five-year, performance-based budget. Business unit requirements are allocated to a strategic goal and business line using sophisticated activity-based information models. There are fee discounts of 50% and 75% for major patent actions for applicants meeting small entity and micro-entity definitions, respectively.
To mitigate the high risk for cash flow stress typically seen in fully fee-funded operations, the operating reserve is designated as available for use to sustain procedures. Fees in the reserve were appropriated in prior years and remain available until spent. To ensure planning for long-term financial stability, reserves are managed within a range of acceptable balances and minimum targets are set annually for the upcoming two years. Optimal levels are reassessed biannually. When balances vary significantly from the target range for an extended period, the USPTO assesses the causes of the variance and determines an appropriate course of action. The question of how much is an adequate operating reserve is best answered by examining environmental risk factors, mainly spending and fee collection.
Following Ms. Picard’s presentation, Q&A breakout sessions allowed participants to discuss lessons learned.