dismissal, or

aa
Target | Actual | Target | Actual
70% | 71% | 75% | 49%

Target | Actual | Target | Actual
1

N/A N/A N/A | N/A
Data Source: Case Tracking System

Target: Not Met. The Office of General Counsel (OGC) staff nationwide was reduced by 50
percent from its FY 2004 level, based on an anticipated loss of jurisdiction over the U.S.
Departments of Defense and Homeland Security, which did not occur. In fact, FY 2010 ULP
case intake increased by 23 percent over the FY 2008 level. Caseload per agent has increased
by 35 percent above the FY 2004 level, and is now over 100 cases per year per agent. The
OGC has determined, however, that agents should be expected to process approximately 82
cases each per year. Thus, there was a sharp disparity between expected production norms
and actual caseload per agent in FY 2010. In addition, since the OGC was required to
eliminate a backlog of 342 cases awaiting issuance of complaint due to the absence of a
General Counsel from March 2008 until August 2009, there was a sharp increase in litigation
activity in FY 2010. The combination of these factors made the 120-day goal attainable in
only 49 percent of cases with current staffing levels.

Measure 2. e decisions on appeals within 60 days of receipt of the appeal of the

Regional Direc dismissal of the charge.
2006 | 2007 | _.2009- 2010
Target | Actual | Target | Actual | Target Actual | Target Actual | Target | Actual
N/A_ | N/A | NIA | NWA | N/A | N/A | 0% | 2% | 80% | 31%

Data Source: Case Tracking System

Target: Not Met. Until the appointment of the current General Counsel on August 17, 2009,
appeals filed from a Regional Director’s decision not to issue a complaint on a ULP charge
awaited disposition. After the current General Counsel’s appointment, OGC staff reviewed
800 appeals that were both overage and pending and made recommendations for disposition.
Decisions on those pending appeals started to be issued in August 2009, and the backlog of
appeals was eliminated by February 2010. Thus, the appeals that were not issued in the
targeted time period were the backlogged appeals. On current cases, i.e. those cases that were
filed during FY 2010, the OGC greatly exceeded the target rate for issuing decisions on
appeals, and it is projected that the OGC will be able to continue meeting its target now that
the backlog has been cleared.

17



Amounts Due from Other Federal

Department of Agriculture $2,236 | $3,460 |
Department of Defense 1,451 1,469
[ Department of the Army 0 831
Department of the Navy 0 540
Department of Energy 754 1,023
Department of Homeland Security 850 0
Department of Housing and Urban Development Ol. 712
Department of Justice 632 1 662
Department of Transportation 291 0
Department of Veterans Affairs 2,654 668 |
Environmental Protection Agency _ 0} 1,226
Total $8,868 $10,591

Note 4: General Property and Equipment, Net

| 2010 Net | 2009 Net

Service Acquisition | Accumulated | Book Book

Category | Life Value Depreciation Value Value
| Software | 3 years $258,957 $(258,957) | $0 $46,706
Computer equipment | 5 years 497,617 (397,582) 100,035 156,875
Office equipment iTyears | 541,274 (295,593) | 245,681 108,699
Office furniture 115 years 526,039 | (303,024) 223,015] 254,690
Leasehold improvements | Life of lease} 398,383 _(250,442)| 147,941] 0.
Construction in progress N/A ~ 0 . 0 0 101,555
Total $2,222,270 | ($1,505,598) | $716,672 | $668,525

Note 5: Liabilities Not Covered By Budgetary Resources

Unfunded FECA liabilities consists of workers’ compensation claims payable to the DOL, which
will be funded in a future period, and an unfunded estimated liability for future workers’
compensation claims based on data provided from the DOL. Unfunded FECA liabilities for
2010 and 2009 were $248,274 and $256,355 respectively. The actuarial calculation is based on
benefit payments made over 12 quarters, and calculates the annual average of payments. The
actuarial FECA liabilities for 2010 and 2009 were $1,172,904 and $1,135,860 respectively. For
medical expenses and compensation, this average is then multiplied by the liability-to-benefit
paid ratio for the whole FECA program.

38



(h) FECA Liabilities — An accrued FECA liability is recorded for actual and estimated future
payments to be made for workers’ compensation pursuant to the FECA. The actual costs
incurred are reflected as a liability because agencies will reimburse the U.S. Department of
Labor (DOL) two years after the actual payment of expenses. Future revenues will be used
for their reimbursement to DOL. The liability consists of: (1) the net present value of
estimated future payments calculated by the DOL; and (2) the un-reimbursed cost paid by
DOL for compensation to recipients under the FECA.

An estimated actuarial liability for future workers’ compensation benefits is included. The
liability estimate is based on the DOL’s FECA actuarial model that takes the amount of
benefit payments over the last twelve quarters and calculates the annual average of payments
for medical expenses and compensation. This average is then multiplied by the liabilities-to-
benefits paid ratios for the whole FECA program for FY 2010. The ratios may vary from
year to year as a result of economic assumptions and other factors, but the model calculates a
liability approximately eleven times the annual payments.

(i) Annual, Sick and Other Leave — Amounts associated with the payment of annual leave are
accrued while leave is being eared by employees, and this accrual is reduced as leave is
taken. Each year the balance in the accrued annual leave account is adjusted to reflect
current pay rates. To the extent that current or prior year appropriations are not available to
finance annual leave, future financing sources will be used. Sick leave and other types of
non-vested leave are expensed as taken. Any liability for sick leave that is accrued but not
taken by a Civil Service Retirement System-covered employee is transferred to the Office of
Personnel Management (OPM) upon the retirement of that individual. No credit is given for
sick leave balances upon the retirement of Federal Employees Retirement System-covered
employees.

@) Accounts Payable and Other Accrued Liabilities - Accounts payable and accrued liabilities
represent a probable future outflow or other sacrifices of resources as a result of past
transactions or events. Liabilities are recognized when they are incurred, regardless of
whether they are covered by available budgetary resources. FLRA liabilities cannot be
liquidated without legislation that provides resources to do so.

(k) Net Position — The components of net position are unexpended appropriations and
cumulative results of operations. Unexpended appropriations include undelivered orders and
unobligated balances. Unobligated balances are the amount of appropriations or other
authority remaining after deducting the cumulative obligations from the amount available for
obligation.

The cumulative results of operations represent the net results of operations since inception,
the cumulative amount of prior period adjustments, the remaining book value of capitalized
assets, and future funding requirements. The cumulative results of operations beginning
balance on the Statement of Changes in Net Position has been adjusted due to immaterial,
prior-period adjustments on the current statement.

34



our audit. Accordingly, we do not express an opinion on FLRA’s internal control over financial
reporting and compliance or on management’s assertion on internal control included in
Managements’ Discussion and Analysis. However, for the controls we tested, we found no
material weaknesses in internal control over financial reporting (including safeguarding assets)
and compliance.

A control deficiency exists when the design or operation of a contro] does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. Our consideration of the internal control over financial reporting
would not necessarily disclose all deficiencies that might be a significant deficiency. A
significant deficiency is a deficiency in intemal control, or a combination of deficiencies, that
adversely affects the entity's ability to initiate, authorize, record, process, or report financial data
reliably in accordance with generally accepted accounting principles such that there is more than
a remote likelihood that a misstatement of the entity's financial statements that is more than
inconsequential will not be prevented or detected. Our consideration of the internal control over
financial reporting would not necessarily disclose all significant deficiencies that might be a
material weakness. A material weakness is a significant deficiency, or combination of significant
deficiencies, that result in a more than remote likelihood that a material misstatement of the
financial statements will not be prevented or detected. Because of inherent limitations in internal
controls, misstatements, losses, or non-compliance may nevertheless occur and not be detected.

Report on Compliance with Applicable Laws and Regulations

The management of FLRA is responsible for complying with laws and regulations applicable to
FLRA. As part of obtaining reasonable assurance about whether FLRA’s financial statements are
free of material misstatement, we performed tests of its compliance with selected provisions of
laws and regulations including laws governing the use of budgetary authority and government-
wide policies identified in OMB Bulletin No. 07-04, as amended, non-compliance with which
could have a direct and material effect on the determination of consolidated and combined
financial statements. Our tests disclosed no instances of noncompliance with laws and
regulations which would be reportable under U.S. generally accepted government auditing
standards or OMB audit guidance.

We limited our tests of compliance to the provisions of laws and regulations referred to in the
preceding paragraph. Providing an opinion on compliance with those provisions was not an
objective of our audit. Accordingly, we do not express such an opinion.

Other Information

Management’s Discussion and Analysis (MD&A) is not a required part of the financial
statements but is supplementary information required by the Federal Accounting Standards
Advisory Board and OMB Circular A-136, Financial Reporting Requirements. We have applied
certain limited procedures, which consisted principally of inquiries of management regarding the
methods of measurement and presentation of the MD&A. However, we did not audit the
information and accordingly, we express no opinion on it.

43



FY BY

2010 2010

Performance Outcome Measures Target | Actual Result
Performance Goal 7: Develop, manage and utilize FLRA’s human resources to meet
program needs.

Measure 7.1: Percentage of number of required internal
workgroups established to address technology issues,

strategic planning and other agency and workforce SU 50% Met
issues.

Measure 7.2: Percentage by which reported employee

job satisfaction is increased to approach the agency’s 50% 250% Exceeded
objective.

Measure 7.3: Percentage of internal FLRA policy

)0, ‘0,
instructions updated and issued. = 15% Not Met

Measure 7.4: Percentage by which agency staffing
meets funded FTE levels. 100% 100% Met

FINANCIAL ANALYSIS

The FLRA’s principal financial statements have been prepared to report the financial position
and results of operations of the agency, pursuant to the requirements of 31 U.S.C. 3515(b).
While the statements have been prepared from the books and records of the FLRA in accordance
with U.S. Generally-Accepted Accounting Principles for Federal entities and the formats
prescribed by the OMB, the statements are in addition to the financial reports used to monitor
and control budgetary resources, which are prepared from the same books and records. The
statements should be read with the realization that they are for a component of the U.S.
government, a sovereign entity.

Balance Sheet

The Balance Sheet presents the FLRA’s financial position through the identification of agency
assets, liabilities, and net position. Total assets decreased from $10.9 million in FY 2009 to $9.1
million in FY 2010. The decrease in assets is largely attributable to the cancellation of the
FLRA’s FY 2004 expired account, which held $1.6 million in unobligated funds. The agency’s
fund balance with the U.S. Treasury Department is its largest asset, accounting for over 90
percent of total assets in both FY 2009 and FY 2010. The FLRA does not maintain any cash in
commercial bank accounts or foreign currency balances, nor does it have any revolving or trust
funds. The agency’s second largest asset is its furniture, fixtures, equipment, and information
technology hardware and software, which is recorded at original acquisition cost and then
depreciated or amortized using the straight-line method over the estimated useful life of the
asset.

11



FEDERAL LABOR RELATIONS AUTHORITY
1400 K Street, N.W.
Washington, DC 20424
www.flra.gov



MANAGEMENT’S RESPONSE

Since February 19, 2009 — when Carol Waller Pope assumed the FLRA Chairmanship pursuant
to President Obama’s designation — the FLRA has engaged in an aggressive and thorough review
of its programs and performance, focusing on budget-related matters and the development of
management initiatives to improve the FLRA’s performance of its statutory mission. As part of
this process, the FLRA reviewed its information technology (IT) investments, human resources
(HR), case processing, budget planning and financial management, as well as its program
performance, and — as described more fully in various sections of the PAR — developed plans and
initiatives to address all deficiencies and challenges. As described by the Inspector General, the
FLRA has made substantial progress in addressing and resolving those deficiencies and
challenges, and the FLRA is committed to continuing its efforts.

Effective management of the FLRA’s human capital, IT, and financial resources is a priority. By
doing so, the agency will be poised to successfully meet all external and internal challenges. In
that regard, annual staffing plans are reviewed on an on-going basis and revised as needed to
address mission requirements, providing for the recruitment, selection and placement of a highly
skilled workforce. In addition to rebuilding agency case processing staffing levels, staffing
needs in critical support areas including IT, HR and administrative services are reviewed
monthly to ensure that the agency’s staffing is strategically aligned to meet performance targets
and all regulatory requirements. Increasing capacity in HR has resulted in steady progress in
revising outdated FLRA policies, procedures, and instructions. Skilled budget and finance staff
ensures that external controls are in place and provide fiscal accountability, transparency and
visibility. Newly designed positions descriptions in the IT division will enhance compliance
with IT security requirements. In sum, with collaborative career and political leadership and
effective strategic planning, the FLRA has defined a roadmap for continued steady
improvements addressing its HR needs and in performance of our mission.

With respect to security challenges, actions are currently underway to fully implement a
mandatory set of processes and system controls in order to ensure the confidentiality, integrity,
and availability of system-related information and information resources, as well as to ensure the
security of agency records. To ensure compliance with Federal Information Security
Management Act of 2002 requirements, the FLRA’s Information Resources Management
Division (RMD), in collaboration with the U.S. Treasury Department’s Bureau of Public Debt
(BPD), established a program for information security management in late FY 2009 that is on-
going. Part of this collaborative effort was the successful certification and accreditation of the
FLRA general support system. A derivative of the certification and accreditation effort was a
Plan of Action and Milestones. The results of this Plan of Action and Milestones indicate that
there were a limited number — 16 — of low to moderate impact findings. Immediate and definite
steps are being taken to resolve these findings no later than July 2011. The IRMD will continue
the partnership with the BPD to begin a formal continuous monitoring program, continue
development and enforcement of agency information assurance policy, and ensure that all
security issues and threats are mitigated on an on-going basis. In addition, the FLRA will
continue its efforts to ensure that policies, processes and procedures provide staff with clear
instruction for handling all types of records, and ensuring compliance with agency policies
concerning the appropriate handling and safeguarding of agency documents and records.

49



GOAL 4: PROVIDE TIMELY REVIEW AND DISPOSITION OF
ARBITRATION CASES.

Either party to grievance arbitration may file with the Authority an exception (or appeal) to an
arbitrator’s award issued after the arbitration. The Authority will review an arbitrator’s award to
which an exception has been filed to determine if the award is deficient because it is contrary to
any law, rule, or regulation or on the grounds similar to those applied by Federal courts in
private-sector, labor-management relations.

FY 2006 | FY 2007 | FY2008 | FY 2009 | FY 2010
247

Cases pending, start of year

Case intake 134
Total caseload 381

Cases closed:
Procedurally 31
Based on merits 177
Total cases closed 208
173

Cases pending, end of year

Measure
arbitration Ss 3 Sd 10 ¢ Team and be assigned to professional case

productior - Ived. h work days.

Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
NIA | N/A | N/A | N/A | NIA | N/A | 75% | 63% | 100% 100%

Data Source: Case Tracking System
Target: Met.

"2006 | 2007 | 2008 | | io
Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
N/A N/A N/A N/A N/A N/A | 15% 22% 20% 30%
Data Source: Case Tracking System

Target: Exceeded.

21



Unfunded leave represents a liability for eared leave and is reduced when leave is taken. At
year end, the balance in the unfunded leave account is adjusted to reflect the liability at current
pay rates and leave balances. Unfunded leave is paid from future funding sources and,
accordingly, is reflected as a liability not covered by budgetary resources. Sick and other leave
is expensed as taken. All other liabilities are considered to be covered by budgetary resources.

i ed Se | 2009"

Intragovernmental - Unfunded FECA liabilities $248,274 $256,355
Federal employee benefits - FECA actuarial liability 1,172,904 1,135,860
Unfunded leave 1,437,695 1,286,960
Total $2,858,873 | $2,679,175

Note 6: Leases

The FLRA has operating leases for rental of office space and office equipment. As a Federal
agency, the FLRA is not liable for any lease terms beyond one year. The agency anticipates that
space levels consistent with FY 2010 will be required for the next five years.

Future mum Lease Payments

= Building

2011 $10,433 $2,231,936 $2,242,369
2012 10,433 2,014,578 2,025,011
2013 10,433 1,068,620 1,079,053
2014 10,433 330,363 340,796
2015 6,086 250,954 257,040
Thereafter 0 138,023 138,023
Total $47,818 $6,034,474 $6,082,292

Note 7: Commitments and Contingencies

FLRA is a party in various administrative proceedings, legal actions, and claims brought by or
against the agency. In the opinion of FLRA management, the ultimate resolution of proceedings,
actions, and claims, will not materially affect financial position or results of operations of the
FLRA. The agency has examined its obligations related to cancelled FY 2004 authority and
believes that it will not have outstanding commitments that will require future resources.

39



Order to bargain over matters set forth in section 7106(b)(1) of the Statute. In addition, in the
information technology arena, the FLRA substantially completed the development and
implementation of a new Case Management System as well as electronic case filing.

As in any organization, many challenges remain for the FLRA. I look forward to working with
the agency’s talented and committed staff, fellow Authority Members, the General Counsel, the
FSIP Chairman and Members, and FLRA stakeholders to face these challenges while continuing
to provide high-quality labor-management dispute resolution services to our customers and the
American public. We will report our progress and subsequent actions in future Performance and
Accountability Reports.

Ca Spal

Carol Waller Pope

Chairman

Federal Labor Relations Authority
November 15, 2010



NOTES TO THE FINANCIAL STATEMENTS

Note 1: Significant Accounting Policies

(a) Reporting Entity —- The FLRA is an independent administrative Federal agency created by
Title VII of the Civil Service Reform Act of 1978, with a mission to carry out five statutory
responsibilities: (1) determining the appropriateness of units for labor organization
representation; (2) resolving complaints of unfair labor practices; (3) adjudicating exceptions
to arbitrators’ awards; (4) adjudicating legal issues relating to duty to bargain; and (5)
resolving impasses during negotiations. The agency consists of three components: the
Authority, the Office of the General Counsel, and the Federal Service Impasses Panel.

(6) Basis of Accounting and Presentation — The financial statements have been prepared to
report the financial position, net cost of operations, changes in net position, and budgetary
resources of the FLRA in accordance with the Chief Financial Officers Act of 1990 and the
Government Management Reform Act of 1994. The statements have been prepared from
agency financial records in accordance with U.S. Generally Accepted Accounting Principles
(GAAP), in accordance with guidance issued by the Federal Accounting Standards Advisory
Board (FASAB) and Office of Management and Budget (OMB), as prescribed in OMB
Circular A-136, Financial Reporting Requirements, and pursuant to the requirements of 31
U.S.C. 3515(b). These financial statements include all funds and accounts under the control
of FLRA.

The accounting structure of Federal agencies is designed to reflect both accrual and
budgetary accounting transactions. Under the accrual method of accounting, revenues are
recognized when earned and expenses are recognized when incurred, without regard to the
receipt or payment of cash. The budgetary accounting principles, on the other hand, are
designed to recognize the obligation of funds according to legal requirements, which in many
cases occurs before an accrual-based transaction takes place. The recognition of budgetary
accounting transactions is essential for compliance with legal constraints and controls over
the use of Federal funds. The accompanying financial statements are prepared on the accrual
basis of accounting.

(c) Budget Authority — The Congress passes appropriations annually that provide the FLRA
with authority to obligate funds for necessary expenses to carry out mandated program
activities. These funds are available until expended, subject to OMB apportionment and to
congressional restrictions on the expenditure of funds. Also, the FLRA places internal
restrictions on fund expenditures to ensure the efficient and proper use of all funds.

(d) Fund Balance with Treasury — FLRA receipts and disbursements are processed by the U.S.
Treasury Department. Fund balances with Treasury consist of appropriated funds that are
available to pay current liabilities and to finance authorized purchase commitments. No cash
is held in commercial bank accounts.

(e) Accounts Receivable — Accounts Receivable consists of amounts due from other federal
entities and from current and former employees and vendors. Amounts due from the public

32



within 90 days or

Al] ULP complaints will receive a heari

_ 2006

Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual

N/A N/A N/A N/A N/A | N/A 90% | N/A | 100% | 89%

Data Source: Case Tracking System

Target: Substantially Met.

2006 7 | 2008 | 2009 2010

Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual

N/A N/A | N/A | N/A | N/A | N/A | 50% | N/A | 100% | 60%

Data Source: Case Tracking System

Target: Not Met. Due to case complexity and requests for extensions from the parties to file
post-hearing briefs, the 90 day target was narrowly missed by two days or less in three cases. |
In addition, this goal is based upon a percentage drawn from a small subset of the cases that

the ALJs actually process, i.e. those that result in a formal decision. When all of the

complaints that were referred to the ALJs are considered, 93 percent were resolved within 90
days of the complaint. As stated, the performance goal only measures the small subset of |
complex cases that require a formal written decision for resolution. |

Measure Upon completion of filing requirements pursuant to FLRA regulations. all ULP
cases will t igned toun Authority Member stall within 3 working days or be otherwise

disposed of

2010

Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual

N/A N/A N/A N/A N/A N/A 75% | 100% | 100% | 100%

Data Source: Case Tracking System

Target: Met.

18



Measure 6.2: Cases which the Panel declines to assert jurisdiction or which the parties

request to withdraw. prior to a jurisdictional determination, will close within 20 days of such

determination/request to withdraw
2006 2007 2008 | 2009. 2010
Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
NWA | N/A | N/A | N/A | N/A | N/A | 100% | 100% | 100% | 100% |
Data Source: Case Tracking System

Target: Met. This measure was unaffected by the fact that there were no Panel Members
during the 7-month period between March 2009 and October 2009. All cases during FY 2010 i
where jurisdiction was declined, or the filing party withdrew its request for assistance, were
closed within 20 days of the FSIP’s determination to decline or the filing party’s request to
withdraw.

Measure 6.3: The stibstantis‘e ¢ ecard will close 120 days once the Panel asserts

jurisdiction over the parties’ requé ‘or tanec

Ll. 2007, || 2008 2010

Target Actual Target | Actual | Target | Actual | Target | Actual | Target | Actual
N/A__| N/A _| N/A_| N/A | N/A | N/A | 100% | 100% | 100% | 93%

| Data Source: Case Tracking System

Target: Substantially Met. This measure was also unaffected by the absence of the Panel

Members. The substantive record closed within 120 days of the FSIP’s determination to

assert jurisdiction in 14 out of 15 cases during FY 2010. In the one case where the goal was

not met, the substantive record closed after 126 days as a result of the Panel’s unsuccessful
additional attempts to mediate a voluntary settlement.

Cases vshieh the Panel resolves through a Decision and Order. or otherwise,

within 30: dans of the Panc ! one

2007 2008 2009 2010
Target | Actual | Target | Actual | Target | Actual | Target | Actual |
N/A N/A N/A_| N/A | 100% } 85% | 100% | 100%

Data Source: Case Tracking System

Target: Met. Also unaffected by the absence of the Panel Members, all cases during FY
2010 that were resolved through a Decision and Order were closed within 30 days of the
| FSIP’s decision.

24



FY 2006 | PY 2007 FY 2009 | FY 2010

Authority FY2008 |

Cases pending, start of year
Case intake
Total caseload
Cases closed:
Procedurally
Based on merits
Total cases closed
Cases pending, end of year

hdl

Actual | Target | Actual
NIA N/A | N/A | N/A | N/A | N/A
Data Source: Case Tracking System

Target | Actual | Target

Target: Substantially Met.

1 2007 jxme | E 100

Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target ; Actual
| N/A N/A | N/A | N/A | N/A | N/A | 55% | 61% | 100% | 100%
Data Source: Case Tracking System

Target: Met.

Target «| Actual | Target | Actual | Target | Actual Target | Actual | Target | Actual
N/A N/A | N/A _| N/A | N/A | N/A | 25% | 10% | 90% | 100%
Data Source: Case Tracking System
Target: Exceeded.

20



are stated net of an allowance for uncollectible accounts that is based on an analysis of
outstanding receivables balances and past collection experience. No allowance is established
for intragovernmental receivables, as they are considered fully collectible from other Federal
agencies.

() General Property and Equipment (P&E) — This category consists of equipment and internal
use software. The basis for recording purchased P&E is full cost, including all costs incurred
to bring FLRA P&E to and from a location suitable for its intended use. P&E is depreciated
using the straight-line method over the estimated useful life of the asset. SFFAS No. 10,
Accounting for Internal Use Software, provides accounting standards for internal use
software used by each agency. The standards provide for capitalized property to continue to
be reported on the Balance Sheet. P&E that are not capitalized because they are under the
capitalization threshold are expensed in the year of acquisition.

Major alterations and renovations are capitalized, while maintenance and repair costs are
charged to expense as incurred. Capitalization threshold levels were changed during the
current fiscal year. FLRA’s capitalization threshold was $3,500 for individual purchases.
Bulk purchases of similar items, which individually were worth less than $3,500, but
collectively were worth more than $30,000, were also capitalized using the same general
P&E categories and useful lives as capital acquisitions. Effective FY 2010, the capitalization
threshold for individual items changed to $25,000. Bulk purchase of similar items which
individually are worth less than $25,000, but collectively are worth more than $100,000, are
now also capitalized using the same general P&E categories and useful lives as capital
acquisitions. Also, building/leasehold improvements of $25,000 are now capitalized.

Computer equipment

Office equipment | 7 years |
Office furniture | 15 years |
Leasehold improvements | Life of lease |

(g) Liabilities — Liabilities represent the amount of monies or other resources likely to be paid by
FLRA as a result of transactions or events that have already occurred. No liability can be
paid, however, absent an appropriation. Liabilities for which an appropriation has not been
enacted are, therefore, classified as not covered by budgetary resources, and there is no
certainty that the appropriation will be enacted. Also, the Federal government, acting in its
sovereign capacity, can abrogate liabilities other than contracts. Liabilities that are covered
by budgetary resources consist of intragovernmental and public accounts payable and
accrued funded payroll. Liabilities not covered by budgetary resources in FY 2009 and FY
2010 consist of accrued and actuarial Federal Employees Compensation Act (FECA)
compensation and unfunded employee leave.

33



PERFORMANCE GOALS AND RESULTS

GOAL 1: PROVIDE TIMELY ADJUDICATION OF CASES THROUGH
ELECTRONIC FILING AND CASE-TRACKING.

In FY 2010, the FLRA began designing new case management system (CMS) and electronic
case-filing (e-filing) solutions, with the intent that these solutions be ready for use beginning in
FY 2011. All three agency components are now utilizing the new CMS in lieu of the former,
aging system. The CMS is used to track performance statistics in support of case-processing
activities throughout the agency, to provide performance outcomes, and to generate data based
on reports. In FY 2011, the FLRA will increase utilization of e-filing for FLRA customers and
will continue working on the implementation of the electronic case file.

2007 20 i
Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
NWA | N/A} N/A | N/A | NIA N/A N/A N/A 10% | 75%
Data Source: Case Tracking System

Target: Exceeded. The FLRA met this goal. The Chief Information Officer made timely
delivery of the CMS and e-filing a priority and managed it as such. The FLRA conducted
and delivered requirements analyses for each component, identified a design solution,
procured the services, developed test plans and a project plan, and rolled out the CMS for
use by each component in September 2010. E-filing forms have been developed and
customers were able begin filing their forms on-line at the start of FY 2011.

GOAL 2: PROVIDE TIMELY REVIEW AND DISPOSITION OF UNFAIR
LABOR PRACTICE CASES.

The General Counsel has responsibility for the investigation, settlement, and prosecution of
Unfair Labor Practice (ULP) charges. All ULP proceedings originate with the filing of a charge
in a Regional Office by an employee, labor organization, or agency. Once a charge has been
filed, Regional Office staff will investigate the charge to determine if it has merit. If the
Regional Director determines that the charge has merit, he or she will, absent settlement, issue
and prosecute a complaint before an Administrative Law Judge (ALJ). If the Regional Director
determines that the charge lacks merit, the charging party is entitled to a written explanation, and
if not satisfied, may appeal the decision to the General Counsel in Washington, DC. If the
dismissal is upheld, the case is closed. The Authority has appointed ALJs to hear ULP cases
prosecuted by the General Counsel. Decisions of the ALJs are transmitted to the Authority, and
may be affirmed, modified, or reversed in whole or in part. If no exceptions are filed, a decision
by the ALJ is adopted by the Authority.

15



To accomplish its mission, the FLRA has established the following four strategic goals.

Strategic Goals
1. Achieve superior customer service.

2. Develop leaders at every level to meet goals and position the agency for the future.

3. Advance performance through organizational and management excellence.

4, Develop, empower and engage FLRA employees to meet program needs and improve job
satisfaction.

The FLRA seeks to achieve its strategic goals primarily through the timely review and
disposition of cases. The agency supports these efforts by focusing on improvements in
information technology and the more effective and efficient use of its human capital.

FY 2010 Performance Goals

Provide timely adjudication of cases through electronic filing and case-tracking.

. Provide timely review and disposition of ULP cases.

Provide timely review and disposition of representation cases.

Provide timely review and disposition of arbitration cases.

Provide timely review and disposition of negotiability cases.

Provide timely review and disposition of bargaining impasse cases.

ajalalale/r]=

Develop, manage, and utilize the FLRA’s human resources to meet program needs.

Timeliness

Improvements in timeliness further the FLRA’s critical role in facilitating orderly, efficient and
effective change within the Federal government. The quality and timeliness of case dispositions
directly impacts the pace of government change. Moreover, the core purpose of the Statute is to
promote collective bargaining as a means of fostering improved employee performance and
government operations. The failure of the agency to process cases in a timely manner adversely
impacts the accomplishment of this purpose.

Information Technology

The FLRA makes extensive use of automated information technology (IT) systems in meeting its
timeliness goals. Recent efforts include modernizing the agency case-filing process to provide
an online alternative to paper. Electronic case filing has many advantages for external
customers, such as: the ability to file cases 24 hours a day, seven days a week; instantaneous
receipt and efficient case processing; and reduced postage, fax, and/or courier costs. Other
recent agency IT advancements include improving the FLRA website to provide more useful
tools and resources to the public. This includes posting Authority decisions within 24-hours,
improved research capabilities of Authority decisions, manuals and guidances, and
announcement of training and educational opportunities for the parties.

7



Fed Labor Relations Authority
STATEMENT OF CHANGES IN NET POSITION

(in dollar

2010 2009
Cumulative Results of Operations:
Beginning balance $(1,991,129} $(1,910,968
Budgetary financing sources:

Appropriations used 25,344,085 | 21,970,748 |
Other financing sources (non-exchange):

Imputed financing 1,670,952 1,243,346
Total financing sources 27,015,037 23,214,094
Net cost of operations 27,162,304) (23,301,462
Net change (147,267 (87,368

Cumulative Results of Operations $(2,138,396) $(1,998,336
Unexpended Appropriations:
Beginning balance $9,048,592 | $8,778,644
Budgetary financing sources:

Appropriations received 24,773,000 | 23,900,234

Appropriations transferred in/out 0 (1,226,234

Other adjustments (1,575,832 (433,304

Appropriations used (25,344,085) (21,970,748
Total budgetary financing sources (2,146,917 269,948

Total Unexpended Appropriations $6,901,675 | $9,048,592
Net Position $4,763,279 | $7,050,256

30



PRINCIPAL FINANCIAL STATEMENTS

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

During the past fiscal year, the FLRA took major steps toward rebuilding the agency to meet its
responsibility to provide leadership in establishing policies and guidance related to Federal sector
labor-management relations and with resolving disputes and ensuring compliance with the
Federal Service Labor-Management Relations Statute in a fiscally responsible manner. As
recently as FY2008, the agency only spent 90 percent of its appropriation, leaving 10 percent
unobligated despite the fact that these funds were necessary to fund basic operations and to fill
key positions to address the agency’s case backlog. By contrast, in FY2009 and FY 2010, the
agency spent nearly 100 percent of its appropriation. I am pleased to report that the FLRA’s
financial condition is sound and that we look back on a long list of accomplishments during FY
2010. Notably, the agency achieved an unqualified opinion from independent auditors on its
principal financial statements.

During FY 2010, the FLRA made significant progress addressing its case backlog and re-
engaging with its customers — Federal employees, the unions that represent them, and Federal
agencies. In FY 2010, the FLRA began taking steps to rebuild the agency’s workforce and
improve performance in terms of timely case processing as well as training, outreach, and offers
of alternative dispute resolution services to assist parties in their labor-management relationships.
Employees have noticed the change and those interviewed for the agency’s new on-line
newsletter, FLRA in Session, repeatedly remarked on the positive effects of the new leadership
and the increased energy evident throughout the agency.

The accomplishments highlighted above, represents the correlation between the financial and
programmatic aspects of the FLRA’s work. This report bridges these two areas, presenting
agency performance with the financial results of agency operations. The financial statements and
notes that follow explain the FLRA’s financial position as of September 30, 2010 and how
financial resources were expended to achieve performance results.

Looking ahead to FY 2011, the FLRA will continue its efforts to make the agency into a high
performing agency. A key aspect of rebuilding will be through the agency’s strategic planning
efforts. I am grateful to the FLRA leadership for their strategic vision, as well as their
commitment to rebuilding and promoting a culture of effective financial and performance
management.

Corn Byrn Tye

Carol Waller Pope
Chairman and Chief Financial Officer
November 15, 2010

27



AUTHORITY

CHAIRMAN AND
CHIEF
EXECUTIVE
OFFICER
FOREIGN
SERVICE FOREIGN FEDERAL
LABOR SERVICE SERVICE OfriceorTHE | | AUTHORITY GENERA
RELATIONS (IMPASSE IMPASSES: isos Cae) coUNeee
BOARD PANEL
CHIEF COUNSELS
REGIONAL
{ONE TO EACH
MEMBER) OFFICES
STAFF
f T T T I 1
COLUABORATION
NC
OFRCE OF THE OFFICE OF THE CHIEF COUNSEL ae
roman) | | iemecien! | | ionescine orpeeon = coun apetanve
PROGRAM, sad CHAIRMAN RESOLUTION
PROGRAM
Da ATS BUDGET AND PROMS TN AKAN eae hai
FINANCE RESOURCE: =e
DIVISION vision MANAGEWENT DIVISION URAC
The Authority

The Authority is composed of three full-time Members appointed by the President with the
advice and consent of the Senate. The Members are appointed for 5-year, staggered terms and
one Member is designated by the President to serve as Chairman. The Authority is empowered
to: resolve disputes over the negotiability of proposals made in collective bargaining; decide
whether conduct alleged in a complaint constitutes a ULP; resolve exceptions to grievance
arbitration awards; and review the decisions of Regional Directors in disputes over union
elections and unit determinations. FLRA Regulations, at section 2429.4, also permit the General
Counsel, the Assistant Secretary of Labor, or the Federal Service Impasses Panel to refer for
review and decision or general ruling any case involving a major policy issue that arises ina
proceeding before any of them. Following issuance of a final Authority decision or order, a
party can move for reconsideration if it can establish extraordinary circumstances.

The Authority appoints Administrative Law Judges (ALJs) to hear and prepare decisions in cases
involving alleged ULPs, as well as decisions involving applications for attorney fees filed
pursuant to the Back Pay Act or the Equal Access to Justice Act. The Office of the
Administrative Law Judges also provides settlement opportunities in all ULP cases. Decisions of
the ALJs may be appealed to the Authority.

The Office of the Solicitor represents the Authority in court proceedings. Parties aggrieved by
certain Authority decisions may institute an action for judicial review within 60 days after the



MANAGEMENT?’S DISCUSSION AND ANALYSIS

BACKGROUND AND MISSION

The FLRA is the sole agency responsible for establishing policies and guidance regarding the
labor-management relations program for 1.6 million non-Postal, Federal employees worldwide,
approximately 1.1 million of whom are represented in 2,200 bargaining units. The FLRA was
created by Title VII of the Civil Service Reform Act of 1978, also known as the Federal Service
Labor-Management Relations Statute (the Statute). The agency’s real genesis, however, dates
from the issuance of Executive Order 10988 by President Kennedy in 1962. Executive Order
10988 established the first government-wide, labor-management relations program within the
Federal government. In 1970, President Nixon established the Federal Labor Relations Council
by Executive Order 11491 to administer the Federal labor-management relations program and to
make final decisions on policy questions and major disputes arising under the Order. Executive
Order 11491, as amended, was the basis for President Carter’s proposal to Congress to create a
Federal Labor Relations Authority as an independent agency.

The Statute protects the rights of Federal employees to form, join, or assist a labor organization
or to refrain from such activity freely and without fear of penalty or reprisal. These rights
include acting for a labor organization as a representative and, in that capacity, presenting the
views of the organization. Employees also have the right to engage in collective bargaining with
respect to conditions of employment through representatives chosen by the employees
themselves. Certain practices by Federal agencies and labor organizations are prohibited by the
Statute and are the bases for unfair labor practice (ULP) charges.

The mission of the FLRA is to promote stable, constructive labor-management relations in the
Federal government by resolving and assisting in the prevention of labor disputes in a manner
that gives full effect to the collective bargaining rights of employees, unions, and agencies.
Although the FLRA is a small agency, accomplishing its mission, including the timely, quality
resolution of disputes, is essential for program performance government-wide. If a labor-
management dispute in another agency remains unresolved for too long, the mission
accomplishment in that agency likely will suffer. In many ways, the FLRA provides grease for
the wheels of government. As such, its vitality is important beyond its size.

ORGANIZATIONAL STRUCTURE

The FLRA consists of the Authority, the Office of the General Counsel, and the Federal Service
Impasses Panel. The agency also provides full staff support to two other organizations, the
Foreign Service Impasse Disputes Panel and the Foreign Service Labor Relations Board.



| FY 2006

FY 2009

Charges pending, start of year

Charges filed

Total charges

Charges closed:
Withdrawn/settled
Dismissed
Complaints issued

Total charges closed

Corrected closures*

Charges pending, end of year

Cases pending, start of year
Case intake
Total caseload
Cases closed:
Before hearing
At hearing
By decision
Total cases closed
Cases pending, end of year

Authority

| Cases pending, start of year
Case intake
Total caseload
Cases closed:
Procedurally
Based on merits
Total cases closed
Cases pending, end of year

FY 2007 FY2008 FY 2010
1,164 1,705 2,300 1,237 1,587
4,799 4,687 3,572 3,954 4,398
5,963 6,392 5,872 5,191 5,985
2,979 2,920 2,648 2,443 3,130
1,008 1,038 1,941 1,075 751
271 134 46 74 268
4,258 4,092 4,635 3,592 4,149
0 0 0 12 25
1,705 2,300 1,237 1,587 1,811
FY 2007 FY 2009
271 134 46 74 282
289 166 i 74 349
216 114 59 7 275
2 0 0 0 0
39 27 12 0 20
257 141 7 7 295
32 25 0 67 54

FY 2009

19 24 36 32 14
38 25 ul 1 18
57 49 47 33 32
25 13 9 oO) 9

8 0 6 19 | 9
_33 13 15 49) 18
24 36 2 14 | 14

* The corrected closures totals in FY 2009 and FY 2010 are the result of data-entry errors.

16



Atlanta Regional
Office

rm)

Boston Regional
Office

Chicago Regional ° P
Office =

Dallas Regional
Office

Denver Regional
Office “ é
%

San Francisco

Regional Office
Washington DC
Regional Office

The Federal Service Impasses Panel

The Federal Service Impasses Panel (FSIP or the Panel) resolves impasses between Federal
agencies and unions representing Federal employees arising from negotiations over conditions of
employment under the Statute and the Federal Employees Flexible and Compressed Work
Schedules Act. The Chairman and six other Members of the Panel are appointed by the
President for 5-year terms. If bargaining between the parties, followed by mediation assistance,
does not result in a voluntary agreement, either party or the parties jointly may request the
FSIP’s assistance. Following a preliminary investigation by its staff, the Panel may determine to
assert jurisdiction over the request. If jurisdiction is asserted, the Panel has the authority to
recommend and/or direct the use of various ADR procedures. These include informal
conferences, additional mediation, fact-finding, written submissions, and mediation-arbitration
by Panel Members, the Panel’s staff, or private arbitrators. If the parties still are unable to reach
a voluntary settlement, the FSIP may take whatever action it deems necessary to resolve the
dispute, including imposition of contract terms through a final action. The merits of the FSIP’s
decision may not be appealed to any court.

STRATEGIC AND PERFORMANCE PLANNING FRAMEWORK

The FLRA’s FY 2010 performance planning framework is based on the FY 2010-2015 Strategic
Plan, and is supported by the Annual Performance Plan. The FLRA’s FY 2010 Performance
Plan reflects the agency’s commitment to establishing measures that will enable it to assess
performance outcomes, align resources, and effectively identify staffing and training needs for
future years. Senior executives are assigned responsibility for specific performance goals,
thereby providing a direct link between executive performance and attainment of agency
outcomes.



GOAL 5: PROVIDE TIMELY REVIEW AND DISPOSITION OF
NEGOTIABILITY CASES.

For certain types of cases, there is a procedure for resolving disputes over the negotiability of a
matter proposed to be bargained. A Federal agency bargaining with a union may claim that a
particular union proposal cannot be bargained because it conflicts with Federal law, a
government-wide rule or regulation, or an agency regulation for which there is a compelling
need,

FY 2006 | FY 2007 | FY2008 | FY 2009 | FY 2010

Cases pending, start of year 39
Case intake 52
Total caseload 91
Cases closed:

Procedurally 46

Based on merits 23
Total cases closed _69
Cases pending, end of year 22

Target | Actual | Target | Actual | Target | Actual Target | Actual
N/A N/A_| N/A | N/A | NIA | N/A 100% | 100%

Data Source: Case Tracking System

Target: Met.

2006 | 2007 008 | 0
Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
N/A | N/A N/A | N/A | N/A NIA 15 6% 20% 17%

Data Source: Case Tracking System
Target: Substantially Met. The Authority came within one decision of meeting the goal.

22



Thirty-one years — promoting and protecting labor-
management relations for effective, efficient government.

U.S. FEDERAL LABOR RELATIONS AUTHORITY
_PERFORMAN' CEL AND. ACCOUNT ABI Y. REPORT

WWW.FLRA.GOV



OTHER ACCOMPANYING INFORMATION

SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion:

Unqualified

Ending

New | Resolved | Consolidated | Balance

Statement of Assu

Beginning Ending

Balance | New | Resolved | Consolidated eral Balance

Ending
Balance

Beginning Ending
Balance | New | Resolved | Consolidated | Reassessed | Balance

Non-conformances

45



percent (from 438 to 284), substantially meeting the performance goals established in the
Corrective Action Plan submitted to the Office of Management and Budget (OMB) in July 2009.
Furthermore, the OALJ processed 282 cases, resolving all but 29 without a hearing while
achieving a median time from hearing to decision in 90 days. The CADR Program also closed
30 negotiability cases and narrowed the parties’ dispute in a number of cases — in one case
narrowing down 44 disputed provisions to a mere six.

Similar challenges faced the case processing efforts of the OGC and the FSIP in the absence of
leadership in FY 2009. In FY 2010, both offices were successful in quickly addressing their
backlog of cases. The OGC resolved more than 340 complaint cases and closed more than 800
appeals cases, while the FSIP resolved all outstanding requests for Panel assistance. The FSIP
conducted seven business meetings and closed 176 cases, asserting jurisdiction in 109 cases with
41 mediation-arbitrations, 14 decisions, and complete settlements of 27 impasses in the
mediation phase of the proceeding.

Case processing regulations were also revised and updated in FY 2010 to formally incorporate
ADR, and to more fully address procedural and substantive matters to reduce filing deficiencies
and to obtain more complete and focused records upon which decisions are made.

The following table summarizes the FLRA’s actual performance results in FY 2010 compared its
FY 2010 targets.

FY FY

2010 2010
Performance Outcome Measures Target Actual Result
Strategic Goal 1: Achieve superior customer service.

Performance Goal 1: Provide timely adjudication of cases through e-filing and case
tracking.

Measure 1.1: Percentage of process completed. 10% 75% Exceeded
Performance Goal 2: Provide timely review and disposition of ULP cases.

Measure 2.1: Percentage of ULP charges resolved | ° 5

within 120 days from the date filed. , 75% | 49% | NotMet
Measure 2.2: Percentage of decisions on appeals issued 80% 31% Not Met
within 60 days. |

Measure 2.3: Percentage of ULP complaints receiving 100% 39% | Substantially
a hearing within 90 days or otherwise settling. ° ° | Met
Measure 2.4: Percentage of records closing and

decisions issuing within 90 days of the hearing 100% 60% Not Met
completion date,

Measure 2.5: Percentage of ULP cases cleared and 100% 100% Met
assigned within 5 working days. |

Measure 2.6: Percentage of ULP cases decided within | 20% 18% Substantially
180 days of assignment to an Authority Member staff. | ° ° Met

9



Human Capital

The FLRA’s workforce is its greatest asset. The agency opened FY 2010 with its first
collaborative strategic planning effort in nearly ten years. This effort built upon the agency’s
work in FY 2009 addressing mission needs through effective performance, budget and strategic
human capital management, and planning. In FY 2010, the FLRA focused its attention on
improving all aspects of employee work life, including: workplace flexibilities; empowering
career managers with decision and budget authority; instituting regular presidential and career
management meetings; establishing collaborative work groups addressing workplace and
work/life issues; and increasing internal communication between and among employees at all
levels. In addition, the FLRA continues to work collaboratively with the Union of Authority
Employees to further improve and sustain employee morale and job satisfaction, addressing all
issues involving succession planning and the need to have the FLRA prepared to respond to any
external workforce changes.

Full-Time Equivalents (FTE)

250

200 +

212
206 196
188-1934
167
4 142
150 729 1 18
114

100 + a
50 4 =

oO + T T T T T T r T r T —

FYOO FYO1 FYO2 FYO3 FYO4 FYOS FYO6 FYO7 FYO8 FYO9 FY10

PERFORMANCE SUMMARY

For several years, neither the necessary resources nor leadership was invested in addressing the
then-growing backlog of cases, resulting in the Authority beginning FY 2009 with nearly 400
pending cases. This inventory was nearly four times the inventory pending at the beginning of
FY 2001, and over double the inventory pending at the beginning of FY 2007. Moreover, the
inventory was old: nearly 75 percent of the inventory in all types of cases was already over 180
days old (approximately 300 cases) and almost 100 of those cases were over two years old.

In FY 2010, the Authority issued 222 decisions — which is more than all the decisions issued in
FY 2007 and FY 2008 combined. Since February 2009, the Authority has reduced its pending
case inventory by close to 47 percent (from 400 to 215); reduced its overage case inventory by
more than 45 percent (from 269 to 150); and reduced pending cases’ average age 154 days or 35



to Budget

Resources Used to Finance Activities:
Obligations incurred $25,049,312 | $23,972,535
Spending authority from offsetting collections:
Collected (52,146) 0
Change in receivable from Federal sources (8,466) 0
Recoveries of prior year unpaid obligations (187,003) (249,344)
Imputed financing sources 1,670,952 | _ 1,243,346
1
Total Resources Used to Finance Activity $26,472,649 1 $24,966,537
|
Resources Used That Do Not Fund Net Cost of Operations: |
Change in Undelivered Orders $535,181 | $(1,765,996)|
Other resources/adjustments that do not affect net cost of (278,891) (102,511)
operations
Components of the Net Cost of Operations Which Do Not
Generate or Use Resources in the Reporting Period: | |
Change in non-Federal receivables { 8,466 | 0
Other financing sources not in the budget H (1,670,952)| (1,243,346)
Depreciation and amortization 215,297 126,355
Future funded expenses 142,654 30,505
Imputed costs 1,670,952 1,243,346
Other expenses not requiring budgetary resources 66.948 46,572 |
. |
Net Cost of Operations ; $27,162,304 | $23,301,462 |

41



Federal Labor Relations Authority
STATEMENT OF NET COST

(in dollars)

2010 2009
Program costs:
Intragovenmental gross cost $4,128,502 | $4,956,405
Public cost 23,094,414 18,345,057
Less: earned revenues not attributed to programs (60.612 0
Net Cost of Operations $27,162,304 | $23,301,462

29



UNITED STATES OF AMERICA
FEDERAL LABOR RELATIONS AUTHORITY

Office of the Inspector General

1400 K Street, NW
WASHINGTON, D.C. 20424-0001

October 15, 2010

MEMORANDUM

TO: Carol W. Pope
Chairman

Thomas Beck
Member

Emest DuBester

Member uy
p

FROM: Dana A. Rooney-Fisher
Inspector General

SUBJECT: Management and Performance Challenges

This memorandum transmits the key management and performance challenges facing the Federal
Labor Relations Authority (FLRA) as identified by the Inspector General (1G).

The FLRA is required to prepare an annual “Performance and Accountability Report” (PAR)
which must be submitted to the President, the Office of Management and Budget, and to
appropriate committees and subcommittees of Congress within 45 days of the end of the fiscal
year (FY). The Reports Consolidation Act of 2000, Public Law 106-531, requires the IG to
provide the agency head with a statement that summarizes the most serious management and
performance challenges facing the agency and briefly assesses the agency’s progress in
addressing those challenges. This statement should be included in the PAR.

Accordingly, the attached document describes the most serious management and performance
challenges facing the FLRA along with a brief assessment of management's progress in
addressing them. These ongoing challenges include: Resource shortages; FLRA physical &
information technology security; proper handling of records and succession planning.

The above challenges were also noted in the agency’s FY 2009 PAR. The agency has made
substantial progress in addressing these challenges as further described in the attachment.
Further, management has taken sufficient action to effectively mitigate several of the IG
identified challenges that were contained in the FY 2009 PAR, which the Office of the Inspector
General (OIG) no longer considers to be serious challenges. We appreciate management's
strong commitment in addressing these challenges and welcome comments to our assessment.

Attachment

46



Federal Labor Relations Authority
BALANCE SHEET

(in dollars)

2010 2009
Assets:
Intragovernmental:
Fund balance with Treasury (Note 2) $8,382,647 | $10,156,942
Accounts receivable (Note 3) 8,868 10,591
Advances and prepayments 21,659 16,156
Total intragovernmental 8,413,174 10,183,689
Accounts receivable, net (Note 3) 3,404 8,930
Capitalized property and equipment, net (Note 4) 716,672 668,525
Total Assets $9,133,250 | $10,861,144
Liabilities:
Intragovernmental:
Accounts payable $30,279 $103,575
Unfunded FECA liability (Note 5) 248,274 256,355
Accrued payroll and benefits 13,170 0
Custodial liability 40 73
Total intragovernmental 291,763 360,003
Accounts payable 117,213 69,945
FECA actuarial liability (Note 5) 1,172,904 1,135,860
Unfunded leave (Note 5) 1,437,695 ; 1,286,960
Accrued payroll and benefits 1,350,396 958.120
Total Liabilities $4,369,971 | $3,810,888
Net Position:
Unexpended appropriations — other funds $6,901,675 $9,048,592
Cumulative results of operations — other funds 2.138.396 (1,998,336
Total Net Position $4,763,279 | $7,050,256
Total Liabilities and Net Position $9,133,250 | $10,861,144

28



decision issues. The Authority may also seek enforcement of its orders, temporary relief or
restraining orders in the appropriate U.S. court of appeals or district court.

The FLRA established the Collaboration and Alternative Dispute Resolution (CADR) Program
to place greater emphasis on the use of ADR and consensus decision-making in resolving
workplace disputes. These efforts have been integrated into all of the FLRA’s case processes.
The CADR Program provides overall coordination and support for the agency’s labor-
management cooperation and ADR efforts. The program assists agencies and unions in
improving their labor-management relationships and in resolving disputes.

The Office of the Executive Director provides agency-wide financial and administrative support
as well as information systems implementation and maintenance. The Executive Director also
provides FLRA strategic policy and instructions.

The Office of the Inspector General provides independent and objective assessments of the
FLRA’s efficiency, effectiveness, and compliance with laws and regulations. This is
accomplished through proactive evaluations of agency operational processes. In addition to
striving to prevent and detect fraud, waste, and abuse of the FLRA’s resources and operations, a
key goal of the Inspector General is to serve as a catalyst for improving operations and
maximizing the efficiency and integrity of agency programs.

The Office of the General Counsel

Appointed for a 5-year term by the President with the advice and consent of the Senate, the
General Counsel has responsibility for investigating ULP charges and for filing and prosecuting
ULP complaints. Pursuant to section 7104(f) of the Statute, the General Counsel has direct
authority over, and responsibility for, all employees in the Office of the General Counsel (OGC),
including those in the regions. The Regional Offices, on behalf of the General Counsel,
investigate alleged ULPs, file and prosecute ULP complaints, and provide training and ADR
services. In addition, through delegation by the Authority, the Regional Offices process and
determine representation matters.

The General Counsel has a management staff in FLRA Headquarters, located in Washington,
DC, and the seven Regional Offices. Headquarters management staff provides administrative
oversight and develops policies, guidance, procedures, and manuals that provide programmatic
direction for the OGC’s seven regions and training and education for the parties. Each Regional
Office has a Regional Director who provides leadership and management expertise for the
respective region. The Dallas and Washington Regional Offices also have a Regional Attorney,
while the San Francisco Regional Office has a Deputy Regional Director to assist the Regional
Director in the operations of the region.



2006 | 2007, | = 2008 | 2009
‘Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual

NA N/A } N/A | N/A | N/A | N/A 0% 5% 20% | 18%
Data Source: Case Tracking System

Target: Substantially Met. The Authority came within one decision of meeting the goal.

GOAL 3: PROVIDE TIMELY REVIEW AND DISPOSITION OF
REPRESENTATION CASES.

The Federal Service Labor-Management Relations Statute sets out a specific procedure for
employees to petition to be represented by a labor union and to determine which employees will
be included in a “bargaining unit” that a union represents. Implementing this procedure, the
FLRA conducts secret-ballot elections for union representation and resolves a variety of issues
related to questions of union representation of employees. These issues include, for example,
whether particular employees are managers or “confidential” employees excluded from union
representation, whether there has been election misconduct on the part of agencies or unions, and
whether changes in union and agency organizations affect existing bargaining units.
Representation cases are initiated by the filing of a petition by an individual, labor organization,
or agency with a Regional Office. After a petition is filed, the Regional Director conducts an
investigation to determine the appropriateness of a unit or other matter related to the petition.
After concluding such investigation, the Regional Director may issue a Decision and Order
determining the appropriate unit, directing an election dismissing the petition, or making other
disposition of the matter. The Regional Director’s Decision and Order is final unless an
application for review is filed with the Authority.

FY 2006 | FY 2007 | FY2008 | FY 2009 | FY 2010

| Petitions pending, start of year 123 160 156 140 104
: Petitions filed 276 297 | 289 275 278
| Total petitions 399 457) 445 415 382
| Petitions closed: \ |
| Withdrawn 99 136 | 132 99 13 |
Based on merits 140 165 | 173 169 167
Total petitions closed _239 301 | 305 _268 _280
Corrected closures* 0 0} 0 43 0 |
Petitions pending, end of year 160 156 | 140 104 102

* The corrected closures total in FY 2009 is the result of data-entry errors over a number of
fiscal years (2005-2009). The discrepancy is not considered statistically significant.

19



(0)

@)

@

()

the dollar value of the agreement and is based on estimated resources needed to perform the
specified services, whether it is personnel services to include base pay, overtime and
benefits, or travel and per diem.

The agency receives an annual Salaries and Expenses appropriation from the Congress.
Annual appropriations are used, within statutory limits, for salaries and administrative
expenses and for operating and capital expenditures for essential personal property.
Appropriations are recognized as non-exchange revenues at the time the related program or
administrative expenses are incurred. Appropriations expended for capitalized property and
equipment are recognized as expenses when an asset is consumed in operations. The annual
appropriation for FY 2009 was $22,674,000. The annual appropriation for FY 2010 was
$24,773,000.

Expired Accounts and Cancelled Authority — Unless otherwise specified by law, annual
authority expires for incurring new obligations at the beginning of the subsequent fiscal
year. The account into which the annual authority is placed is called the expired account.
For five fiscal years, the expired account is available for expenditure to liquidate valid
obligations incurred during the unexpired period. Adjustments are allowed to increase or
decrease valid obligations incurred during the unexpired period but not previously reported.
At the end of the fifth expired year, the expired account is cancelled and any remaining
money is returned to Treasury.

Transactions with Related Parties —\n the course of its operations, the FLRA has
relationships and conducts financial transactions with numerous Federal agencies. The most
prominent of these relationships are with the Treasury, the U.S. Department of Health and
Human Services, the U.S. Department of the Interior’s National Business Center, and the
General Services Administration.

Contingencies — A contingency is an existing condition, situation, or set of circumstances
involving uncertainty as to possible gain or loss to the agency. The uncertainty will
ultimately be resolved when one or more future events occur or fail to occur. With the
exception of pending, threatened, or potential litigation, a contingent liability is recognized
when a past transaction or event has occurred, a future outflow or other sacrifice of
resources is more likely than not, and the related future outflow or sacrifice of resources is
measurable. For pending, threatened, or potential litigation, a liability is recognized when a
past transaction or event has occurred, a future outflow or other sacrifice of resources is
likely, and the related future outflow or sacrifice of resources is measurable.

Use of Estimates — The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

36



(s) Advances and Prepayments — Advance payments are generally prohibited by law. There
are some exceptions, such as reimbursable agreements, subscriptions, and payments to
contractors and employees. Payments made in advance of the receipt of goods and services
are recorded as advances or prepayments at the time of the prepayments and recognized as
expenses when the related goods and services are received.

Note 2: Fund Balance with Treasury

U.S. government cash is accounted for on an overall consolidated basis by Treasury. The
amounts shown on the Balance Sheet represent the FLRA’s right to draw on the Treasury for
valid expenditures. The fund balance as shown on FLRA records is reconciled monthly with
Treasury’s records.

As of September 31

General funds $8,382,607 | $10,156,869

Other fund types 40 73

Total $8,382,647 | $10,156,942

Status of Fund Balance with Treasury

Unobligated balance available $67,773 | $81,715
Unobligated balance unavailable 4,808,905 | 6,399,492
Obligated balance not yet distributed 3,505,929 | 3,675,662
| Non-budgetary fund balance with Treasury 40 2 |
Total $8,362,647 | $10,156,942

Note 3: Accounts Receivable, Net

The reported amount for accounts receivable consists of amounts owed to the FLRA by other
Federal agencies (intragovernmental) and the public.

f September 30, _ | 2010 | 2809
| From Federal agencies, net $8,868 $10,591
| From the public, net 3,404 8,930
(‘Totl $12,272 $19,521

37



GOAL 7: DEVELOP, MANAGE, AND UTILIZE THE FLRA’S HUMAN
RESOURCES TO MEET PROGRAM NEEDS.

As previously mentioned, the FLRA was recently honored to receive the award of Most Improved
Small Agency in 2010 from Partnership for Public Service. Nevertheless, in overall small-agency
rankings, the FLRA moved only from 34th (last) to 20th. Moreover, although the agency ranked
among the top four small agencies in several survey categories, including overall leadership, the
survey revealed that significant work remains to be done in such areas as employee training,
leadership development, and succession planning.

The agency relies on its employees, supervisors, and managers to develop and implement policies
and operational processes to achieve its strategic goals. In order to ensure their continued success,
the agency strategically recruits and develops its employees to make sure it has the right people
with the right skills in the right jobs. The FLRA expects, beginning in FY 2011, a long-anticipated
and sure-to-arrive wave of retirements. As of November 1, 2010, approximately 25 percent of the
FLRA’s employees are eligible for retirement. This highlights the agency’s need to engage in
succession planning, as well as employee and leadership development. In addition, ensuring that
employees have access to training necessary for job performance as well as advancement into
management and executive positions is vital for the FLRA to continue to satisfy its mission and
performance objectives. Although the FLRA has effectively identified and used low-cost and free
fundamental legal training, needs dictate that comprehensive agency-specific training modules be
available to employees.

= 20 | 2¢ =
Target Actual | Target | Actual | Target | Actual } Target | Actual | Target | Actual

NA N/A N/A N/A N/A N/A N/A N/A 50% | 50%
Data Source: Workgroups

Target: Met.

¥ = 0
5 i

Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A 50% | 250%
Data Source: OPM Human Capital Survey

Target: Exceeded. The Authority was the Most Improved Small Agency in the 2010
Partnership for Public Service Survey.

25



MESSAGE FROM THE CHAIRMAN

lam pleased to present the Federal Labor Relations Authority’s (FLRA)
Performance and Accountability Report for Fiscal Year (FY) 2010. The
past year demonstrates that the agency’s rebuilding efforts, fueled by the
effective management of resources, hard work and dedication of FLRA
leadership and employees are showing results. Among other things, the
FLRA recently was honored with the distinction of being named the Most
Improved Small Agency by the Partnership for Public Service. Moving out
of last place (in the two previous surveys ranked by the Partnership) — with
a dramatic and unprecedented overall score increase of 250 percent —
provides solid evidence that the FLRA is on the right track in emphasizing mission
accomplishment through employee engagement and collaboration.

The Authority component (the three-Member adjudicatory body) also is on the right track in
adhering to a corrective action plan developed in FY 2009 for elimination of its case backlog.
During FY 2010, the Authority reduced its overall inventory as well as its inventory of overage
cases by more than 40 percent. Moreover, most performance goals established to measure
timeliness in case processing were met, or substantially met, in all categories. In addition,
although the Office of the General Counsel (OGC) (the investigatory and prosecutorial
component of the FLRA) experienced an increase in case filings, the OGC completely eliminated
the inventory of unfair labor practice (ULP) complaints that accumulated during the time that
there was no General Counsel or Deputy in place. The OGC also increased the number of initial
dispositions in ULP cases by 13 percent over the number in FY 2009. The Federal Service
Impasses Panel (FSIP), the component which resolves bargaining impasses, experienced a three
percent increase in case filings and showed improved performance outcomes. In particular, the
FSIP closed 176 cases, mediating settlements in 27 of the 41 cases that were before the FSIP for
decision. This commitment to obtaining settlements rather than issuing decisions returned the
FSIP to its original guiding philosophy that the voluntary settlement of impasses is the most
effective and efficient form of dispute resolution.

The FLRA began FY 2010 by engaging in strategic planning to set the course for the future and
guide ongoing efforts to effectively manage its resources. Consistent with the strategic plan,
over 30 hiring actions were completed in FY 2010, including the reallocation of vacant positions
to address critical staffing needs and improve performance outcomes. Also during the fiscal
year, the Authority undertook the first revision in 30 years of its regulations governing
arbitration cases, and the OGC both revised its ULP regulations to formally incorporate
alternative dispute resolution into case processing and revised and reissued its ULP Case-
Handling Manual.

The FLRA also re-established its leadership role in labor-management relations by delivering
training to approximately 7,500 individuals in more than 250 training sessions. Further, the
FLRA fulfilled its role as a “critical resource” in implementing Executive Order 13522 “Creating
Labor-Management Forums to Improve Delivery of Government Services,” by providing
training and facilitation to parties establishing labor-management forums and by offering training
and other services to labor and management participants in pilots established under the Executive

1



Our audits were conducted for the purpose of forming an opinion on the financial statements of
FLRA taken as a whole. The other accompanying information included in this performance and
accountability report is presented for purposes of additional analysis and is not a required part of
the financial statements. Such information has not been subjected to the auditing procedures
applied in the audit of the financial statements and, accordingly, we express no opinion on them.

This report is intended solely for the information and use of the management of the Federal
Labor Relations Authority, the U.S. Office of Management and Budget, the U.S. Government

Accountability Office, and the U.S. Congress and is not intended to be and should not be used by
anyone other than these specified parties.

Heaper, Couns Keght 2 Compouy,PA-

November 15, 2010

44



Harper, Rains, KNIGHT
&¢ COMPANY

Certified Public Accountants
A Professtonal Assactation

Report of Independent Auditors

Chairman and Inspector General
Federal Labor Relations Authority

Opinion on the Financial Statements

We have audited the accompanying balance sheets of the U.S. Federal Labor Relations Authority
(FLRA) for the years ended September 30, 2010 and 2009 respectively, and the related
statements of net cost and changes in net position, and statements of budgetary resources, for the
years then ended. These financial statements are the responsibility of FLRA management. Our
responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United
States of America, the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, and OMB Bulletin No. 07-04,
Audit Requirements for Federal Financial Statements, as amended. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in all material respects,
the financial position of FLRA as of September 30, 2010 and 2009, and its net cost of operations,
changes in net position, and budgetary resources for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

Report on Internal Control over Financial Reporting

In planning and performing our audit, we considered FLRA’s internal control over financial
reporting and compliance. We did this in order to determine our audit procedures for the purpose
of expressing our opinion on the financial statements and not to provide an opinion on internal
control. We limited our internal control testing to those controls necessary to achieve the
objectives described in OMB Bulletin No. 07-04, as amended. We did not test all internal
controls relevant to the operating objectives as broadly defined by the Federal Managers!
Financial Integrity Act of 1982. Providing an opinion on internal control was not the objective of

42



Assets as of September 30, 2010 | 2009
|

| Fund balance with Treasury $8,382,647 | $10,156,942
General property and equipment, net 716,672 668,525
Advances and prepayments 21,659 16,1 56 |
Accounts receivable 12,272 19,521
Total $9,133,250 | $10,861,144 |

Funds held at the Treasury are available to pay agency liabilities. Liabilities represent the
amount of monies or other resources likely to be paid by the FLRA as a result of transactions or
events that have already occurred. Agency liabilities totaled $3.8 million at the end of FY 2009
and $4.4 million in FY 2010. The increase over FY 2009 reflects an increase in accrued
employee leave, payroll, and benefits costs, which along with accrued workers’ compensation,
accounted for 97 percent of total liabilities in FY 2010.

Liabilities as of September 30, 2010 2009
Unfunded leave $1,437,695 $1,286,960
FECA liability 1,421,178 1,392,215
Accrued payroll and benefits 1,363,566 958,120 |
Accounts payable 147,492 173,520
Custodial liability 40 B |
Total $4,369,971 } $3,810,888 |

The FLRA’s total net position at the end of FY 2010 was $4.8 million, a $2.3 million decrease
from the previous year.

Statement of Net Cost

The Statement of Net Cost presents the gross cost of operating the FLRA’s three major
programs, less any exchange revenue earned from those activities. The net cost of operations for
FY 2010 was $27.2 million, a $3.9 million increase over the agency’s FY 2009 cost of
operations. In FY 2010, 40 percent of the agency’s resources were dedicated to the OGC, 57
percent were dedicated to the Authority, and the remaining three percent were devoted to the
FSIP.

The following chart summarizes the FLRA’s FY 2010 financial obligations by budget object
classification.

12



MANAGEMENT ASSURANCES

The Federal Managers Financial Improvement Act (FMFIA) of 1982 requires agencies to
establish internal control and financial systems that provide reasonable assurance that the
integrity of Federal programs and operations are protected. The FMFIA also requires the
Chairman to annually assess and report on the effectiveness of internal controls and to provide an
annual Statement of Assurance on whether the agency has met this requirement.

Annual FMFIA Statement of Assurance

In accordance with the requirements of the Office of Management and Budget (OMB) Circular
A-123, Management's Responsibility for Internal Control, the FLRA conducted an assessment
of the effectiveness of the organization’s internal controls to support effective and efficient
operations, reliable financial reporting, and compliance with applicable laws and regulations; and
whether the financial management system conforms to applicable financial requirements.

Based on the results of this assessment, the FLRA provides reasonable assurance that it internal
controls over the effectiveness and efficiency of operations, reliable financial reporting and
compliance with applicable laws and regulation as of September 30, 2010, were operating
effectively and that no material weaknesses were found in the design or operation of our internal
controls.

Further, based on our assessment, we determined that the FLRA financial management system
conforms to applicable financial systems requirements.

Con Kyra Tye

Carol Waller Pope
Chairman
November 15, 2010

14



TABLE OF CONTENTS

MESSAGE FROM THE CHAIRMAN .......sce00e soneencenesees: soeseraeeerscseeseaceeeseareneesee 1
MANAGEMENT?’S DISCUSSION AND ANALYSIS...

Background and Mission..
Organizational Structure ..
Strategic and Performance Planning Framework .
Performance Summary.
Financial Analysis.....
Management Assurances..

PERFORMANCE GOALS AND RESULTS ....

Goal 1: Provide Timely Adjudication of Cases through Electronic Filing and Case-Tracking...15
Goal 2: Provide Timely Review and Adjudication of Unfair Labor Practice Cases
Goal 3: Provide Timely Review and Adjudication of Representation Cases.
Goal 4: Provide Timely Review and Adjudication of Arbitration Cases .
Goal 5: Provide Timely Review and Adjudication of Negotiability Cases .
Goal 6: Provide Timely Review and Adjudication of Bargaining Impasse Cases...
Goal 7: Develop, Manage and Utilize the FLRA’s Human Resources to Meet Program Needs. 25
Verification and Validation of Performance Data cn

PRINCIPAL FINANCIAL STATEMENTS. ....ccscsssssssssssssssssenseassssscnsssearsseneneses 27

Message from the Chief Financial Officer
Balance Sheet...........
Statement of Net Cost
Statement of Changes in Net Position.
Statement of Budgetary Resources.....
Notes to the Financial Statements.
Report of Independent Auditors ..

OTHER ACCOMPANYING INFORMATION

Summary of Financial Statement Audit.
Summary of Management Assurances...
Memorandum from the Inspector General on Management and Performance Challenges
Mana GeMeNtsSHIRESPODSE messsereseereteaatersersestmtseesetenerentteseatststststsesrerersestertretteterrtnrerrtsests



() Retirement Plans — FLRA’s employees participate in the Civil Service Retirement System
(CSRS) or the Federal Employees’ Retirement System (FERS). For CSRS employees, hired
prior to January 1, 1984, the FLRA withholds seven percent of each employee’s salary and
contributes seven percent of the employee’s basic salary to the CSRS Retirement and
Disability Fund. These employees may also contribute, on a tax-deferred basis, to a defined
contribution plan — the Thrift Savings Plan (TSP). In 2009, the regular IRS limit was
$16,500; that limit remained at $16,500 for 2010. FLRA is not required to and does not
contribute any matching amounts for CSRS employees.

The FERS was established by enactment of Public Law 99-335. Pursuant to this law, FERS
and Social Security automatically cover most employees hired after December 31, 1983.
Employees hired before January 1, 1984 elected either to join FERS and Social Security or to
remain in CSRS. For FERS employees, the FLRA withholds 6.2 percent in an old age
survivors and disability insurance up to a specified wage ceiling and 0.8 percent of an
employee’s gross earnings for retirement. FLRA matches the retirement withholdings with a
contribution equal to 11.2 percent of the employee’s taxable salaries.

All employees are eligible to contribute to the TSP. For those employees under the FERS, a
TSP account is automatically established. The FLRA is required to make a mandatory
contribution of one percent of the base salaries of all employees under the FERS. The
agency is required to match the employee’s contribution up to a maximum of five percent of
their salaries. Matching contributions are not made to the TSP accounts established by CSRS
employees. The FLRA does not report on its financial statements information pertaining to
the retirernent plans covering its employees. Reporting amounts such as plan assets,
accumulated plan benefits, and related unfunded liabilities, if any, is the responsibility of the
OPM.

FERS employees and certain CSRS reinstatement employees are eligible to participate in the
Social Security program after retirement. CSRS employees who are 65 or older are eligible
for Social Security payments (even if they have not retired). In these instances, the FLRA
remits the employer’s share of the required contribution.

(m) Imputed Financing from Costs Absorbed by Others — The FASAB’s SFFAS Number 5,
“Accounting for Liabilities of the Federal Government,” requires that employer agencies
recognize the full cost of pensions, health, and life insurance benefits, during their
employees’ active years of service. The OPM, as administrator of the CSRS and FERS
plans, the Federal Employees Health Benefits Program, and the Federal Employees Group
Life Insurance Program, must provide the “cost factors” that adjust the agency contribution
rate to the full cost for the applicable benefit programs. An imputed financing source and
corresponding imputed personnel cost is reflected in the Statement of Changes in Net
Position and the Statement of Net Cost, respectively.

(n) Revenue and Other Financing Sources — FLRA’s revenues are derived from reimbursable
agreements (exchange) and direct, annual appropriation (financing source). The FLRA
recognizes reimbursable work agreement revenue when eared, i.e., goods that have been
delivered or services that have been rendered. Each reimbursable work agreement specifies

35



GOAL 6: PROVIDE TIMELY REVIEW AND DISPOSITION OF
BARGAINING IMPASSE CASES.

In carrying out the right to bargain collectively, it is not uncommon for a union representative
and a Federal agency to simply not agree on certain issues and for the bargaining to reach an
impasse. Several options are available by which the parties may attempt to resolve the impasse.
The parties may: decide on their own to use certain techniques to resolve the impasse, but may
proceed to private binding arbitration only after the Federal Service Impasses Panel (FSIP or the
Panel) approves the procedure; seek the services and assistance of the Federal Mediation and
Conciliation Service; or seek the assistance of the Panel in resolving the negotiation impasse,
only after the previous attempts have failed.

FY 2009

FY2008

FY 2007

FY 2006

Cases pending, start of year
Case intake

Total caseload

Cases closed

Cases pending, end of year

2006S | 2007s) 2008

2009 2
= ul = = z I B
Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual
N/A N/A | N/A | N/A | N/A | N/A | 100% | 79% | 100% | 28%

| Data Source: Case Tracking System

Target: Not Met. The FSIP was unable to meet its target under this measure primarily
because there were no Panel Members from March 6, 2009, when the Administration.
dismissed the holdover Bush appointees, until October 9, 2009, when new Panel Members
were sworn into office. When normal case processing resumed during FY 2010, after the new
Panel was appointed, most of the cases that fell under this measure already were over 90 days

old.

23



UNITED STATES
FEDERAL LABOR RELATIONS AUTHORITY

Performance and Accountability Report
Fiscal Year 2010



Challenge: Human Resources shortage

Until recently (FY 2009), the Federal Labor Relations Authority (FLRA) has conducted its
operations with fewer and fewer Full-Time Equivalents (FTE) during the past decade. In FY
2001 the staffing level was about 200 FTE, but by FY 2009 total FTE decreased by 38 percent
from the FY 2001 level, to less than 125 FTE. Although the entire Federal Government is faced
with the prospect of doing more with less, this decline in total human resources which FLRA has
absorbed since 200! poses a risk that the agency will be handicapped in effectively performing
its mission. Having substantially fewer resources will cause management, by necessity, to
strategically fill positions and thereby accept higher degree of risk in areas deemed less critical,
though still important to agency operations. The issue of resource shortages in the proper places
was identified as a top management and performance challenge by the Inspector General (IG) in
a prior statement which was included in the FY 2009 PAR.

Progress made:

The FLRA has proactively addressed this challenge by assessing the status of resources
throughout the agency, and strategically re-allocating and leveraging resources to address the
most pressing program performance issues.

Challenge Ahead:

Although management is proactively addressing this challenge by reallocating its existing
resources, reallocating the same level of resources may detract from the agency’s ability to
perform functions previously staffed. Accordingly, the challenge is to obtain the sufficient
human resources for optimal performance, while also considering efficiency. The IG noted the
agency’s FY 2011 Congressional Budget Justification included a request for an increase in
funding to support an additional 5 FTE.

Challenge: Security as well as information technology security

While technological advances enable increases in efficiency, they also can pose additional
vulnerabilities and threats to agency operations. The agency must remain vigilant in establishing
acontrol environment that incorporates monitoring potential Information Technology risks,
threats and vulnerabilities and in mitigating them.

Progress made:

In response to a report that was issued in FY 2009 based on an independent evaluation of the
quality and compliance of the agency’s security program, management has proactively taken a
number of steps to address findings contained in the report. Management expects to complete all
actions needed to resolve the outstanding Federal Information Security Management Act of 2002
(FISMA) findings and recommendations no later than July 2011.

Challenge Ahead:

Maintaining a capability to proactively assess and mitigate risks that result from advances in IT
is a challenge facing not only FLRA but also the Government as a whole. This challenge could
become more prominent if adequate attention and resources are not vested in the IT program.

47



Federal Labor Relations Authority

STATEMENT OF BUDGETARY RESOURCES

(in dollars)

Budgetary Resources:
Unobligated balance, brought forward, October 1
Recoveries of prior year unpaid obligations
Budget authority:
Appropriation
Spending authority from offsetting collections
Collected
Change in receivables from Federal sources
Total budget authority
Nonexpenditure transfers, net, anticipated and actual
Permanently not available

Total Budgetary Resources

Status of Budgetary Resources:
Obligations incurred:
Direct
Reimbursable
Total obligations incurred
Unobligated balance:
Apportioned
Unobligated balance not available

Total Status of Budgetary Resources

Change in Obligated Balance:
Obligated balance, net:
Unpaid obligations, brought forward, October 1
Obligations incurred, net (Note 8)
Gross outlays
Recoveries of prior year unpaid obligations, actual
Change in uncollected customer payments from Federal sources

Total, Unpaid Obligated Balance, Net, End of Period

Unpaid obligations
Uncollected customer payments from Federal sources

Total, Unpaid Obligated Balance, Net, End of Period
Net Outlays:

Gross outlays
Offsetting collections

Net Outlays

2010

$6,481,207
187,003

24,773,000
52,146
8.466
24,833,612
0
(1,575,832)

$29,925,990

$24,988,700
60,612
25,049,312

67,773
4,808,905

$3,675,662
25,049,312
(25,023,576)
(187,003)
(8.466)

$3,505,929

3,514,395
(8.466)

$3,505,929

$25,023,576
52,146)

$24,971,430

2009

$7,963,702
249,344

23,900,234
0
0
23,900,234

(1,226,234)
(433,304)

$30,453,742

$23,972,535
0
23,972,535

81,715
6,399,492

$30,453,742

$2,250,273

23,972,535
(22,297,802)
(249,344)

0

$3,675,662

3,675,662
0

$3,675,662

$22,297,802
—___9

$22,297,802

31



Note 8: Apportionment Categories of Obligations Incurred: Direct Versus
Reimbursable Obligations

i

Direct obligations — Category A $24,988,700 ; $23,972,535
Reimbursable obligations — Category A 60,612 0
Total $25,049,312 | $23,972,535

Note 9: Undelivered Orders at the End of the Period

The amount of budgetary resources obligated for undelivered orders at the end of September 30,
2010 and 2009, is $2,003,337 and $2,544,022, respectively.

Note 10: Explanation of Differences between the SBR and the Budget of the
U.S. Government

SFFAS No. 7, “Accounting for Revenue and Other Financing Sources and Concepts for
Reconciling Budgetary and Financial Accounting,” calls for explanation of material differences
between amounts reported in the Statement of Budgetary Resources (SBR) and the actual
balances published in the Budget of the U.S. Government (the President’s Budget).

President’s
(Table in Millions) | SBR | Budget | Difference | Explanation
Unobligated balance, beginning of FY | $24 $24 | $0
> , ] T
Unobligated balance available and H 6 0) 6 At
unobligated { {

* Line items are not reported in the President’s Budget.

Note 11: Reconciliation of Net Cost to Budget
Details of the relationship between budgetary resources obligated and the net costs of operations

for the fiscal years ended September 30, 2010 and 2009 are shown in the table on the following
page.

40



ated internal FLRA policy instructions
2007 2008 f
Target | Actual | Target | Actual | Target | Actual | Target | Actual | Target | Actual |
N/A N/A | N/A | N/A N/A_| N/A _| N/A | N/A | 50% 15%

Data Source: FLRA Office of the Executive Director 7

Target: Not Met. The process of updating internal FLRA policy instructions is ongoing.
Many agency instructions have been revised and updated, including those on Flexiplace
(including telework), use of BlackBerrys, preparation of financial disclosure reports,
reasonable accommodation, and SES pay. |

Measure 7.4: Increase stalling levels.
2007 9
Target | Actual | Target | Actual | Target | Actual | Target | Actual |
NA N/A N/A N/A N/A N/A N/A N/A
Data Source: Monthly Staffing Report

Target: Met.

—

(

VERIFICATION AND VALIDATION OF PERFORMANCE DATA

The FLRA CMS is used by each component to track and manage agency caseload. Each
component enters information on all cases into the CMS and is accountable for quality control of
all workload data entered into the system. Data verification and validation was performed under
both the new CMS and the former, soon-to-be retired system.

26



Performance Outcome Measures

FY
2010

Target

FY
2010
Actual

Result

Performance Goal 3: Provide timely review and disposition of representation cases.

Measure 3.1: Percentage of representation cases 710% 65% Substantially
resolved within 120 days from the filing of the petition. ° 7 Met
Measure 3.2: Percentage of representation cases 100% 100% Met
assigned or disposed of in 2 work days.

Measure 3.3: Percentage of representation cases in

which a decision whether to grant review issued by day 90% 100% Exceeded

60 and a final decision issued by day 90, upon
assignment to an Authority Member staff.

Performance Goal 4: Provide timely review and disposition of arbitration cases.

Measure 4.1: Percentage of arbitration cases cleared

10, 0,

and assigned, or otherwise resolved, within 5 work days. 100% 100% Met
Measure 4.2: Percentage of arbitration cases decided
within 180 days of assignment to an Authority Member 20% 30% Exceeded
staff.
Performance Goal 5: Provide timely review and disposition of negotiability cases.
Measure 5.1: Percentage of negotiability cases cleared

| and assigned, or otherwise disposed of, within 5 work 100% 100% Met
days.
Measure 5.2: Percentage of negotiability cases decided
within 180 days of assignment to an Authority Member 20% 17% Substantially
staff (reflecting reasonable time for a post-petition Met

conference).

Performance Goal 6: Provide timely review and disposition of bargaining impasse cases.

Measure 6.1: Percentage of cases in which the Panel

asserted jurisdiction or declined to assert jurisdiction 79% 28% Not Met
within 90 days of the completion of filing requirements.

Measure 6.2: Percentage of cases that closed within 20 |

days of the Panel’s determination to decline jurisdiction, 98% 100% | Exceeded
or of the parties’ request/s to withdraw. | |
Measure 6.3: Percentage of cases in which the

substantive case record closed within 120 days of the 100% 93% Substantially
Panel’s assertion of jurisdiction over the parties’ request Met |
for assistance. |
Measure 6.4: Percentage of cases that the Panel closed |
within 30 days of the Panel’s resolution through a 76% 100% Exceeded

Decision and Order or otherwise.

Strategic Goal 7: Develop, empower and engage FLRA employees to meet program needs

and improve job satisfaction.

10



Challenge: Proper handling of hard copy and electronic records that do not have legal
retention requirements

It is essential to have adequately documented policies, procedures and processes that address the
Proper handling of all hard copy and electronic records. Although, certain type of records (hard
copy and electronic) do not have legal retention requirements, the policies, processes and
procedures should clearly and specifically instruct staff on the proper handling. In addition,
management should periodically verify that such policies are being followed.

Progress made:

The FLRA is currently developing a case management infrastructure that supports electronic
files, and will further agency efforts to properly handle agency case file records. The FLRA has
also automated many of its systems — accounting, procurement, time and attendance.

Challenge Ahead:

The FLRA should ensure that policies, processes and procedures provide staff with clear
instruction for handling all types of records and ensuring compliance with agency policies in this
area.

Challenge: Succession planning

Maintaining an adequate number of skilled staff in light of the aging national workforce is a
challenge that the Federal Government as a whole faces moving forward into the next decade.
As the number of qualified and skilled workers available to fill positions declines, agencies must
proactively plan in advance for ensuring key leadership positions do not go unfilled for extended
periods. Accordingly, the FLRA faces the same challenges as other Federal agencies do in this
area.

Progress made:

In October 2010, the FLRA embarked on its first collaborative strategic planning effort in nearly
10 years. In addition, in both FY 2010 and FY 2011, the FLRA identified succession planning as
priority, setting forth such planning as one of the agency’s performance goals. In FY 2010, the
agency began offering developmental details to supervisory positions in the Office of the
General Counsel. Work to address the agency’s succession planning needs is on-going and
continuous.

Challenge Ahead:

The agency must maintain its current focus on ensuring that its transition plans are kept current
to address the external changes in the workforce landscape and changes that may impact tools
that are available for managing staff (e.g., changes to Government-wide policy made by the U.S.
Office of Personnel Management).

48



Moving forward, the FLRA intends to continue to take steps necessary to restore confidence in
the agency’s leadership, its management, and staff to accomplish our important mission of
providing guidance in resolving labor-management disputes in the Federal sector. We recognize
that a renewed and revitalized FLRA depends on not only funding but also creativity in using
existing resources as well as vigorous dedication to improving program performance, agency
management, and employee morale and satisfaction.

50



Supplies & T 1 &
Communications, uppies reve

ame eg Steen 1% __ transportation,

Compensation &
benefits, 75%

Statement of Changes in Net Position

The Statement of Changes in Net Position reflects the changes that occurred within the
cumulative results of operations and any unexpended appropriations. Unexpended
appropriations include undelivered orders and unobligated balances. Unobligated balances are
the amount of appropriations or other authority remaining after deducting the cumulative
obligations from the amount available for obligation. The cumulative results of operations
represent the net results of operations since inception, the cumulative amount of prior-period
adjustments, the remaining book value of capitalized assets, and future funding requirements.

Statement on Budgetary Resources

The Statement on Budgetary Resources reports the budgetary resources available to the FLRA
during FY 2010 and FY 2009 to carry out the activities of the agency, as well as the status of
those resources at the end of each year. The agency had $30 million in total budgetary resources
available to it in FY 2010, of which $4.9 million remained unobligated at year-end. The primary
source of FLRA funding is its annual salaries and expenses appropriation from the Congress.
The agency also receives reimbursements, pursuant to the Economy Act, for travel expenses
associated with training provided by agency employees on the FLRA guiding statute, mission,
Executive Order 13522, etc. The FLRA also recorded net outlays of $25 million in FY 2010.
Budgetary resources remained fairly constant in FY 2010, while net outlays increased by $2.7
million over FY 2009.

13