Federal Judiciary: Efforts to Consolidate and Share Services between District and Bankruptcy Clerks' Offices
Published: 2013-06-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal judiciary has the critical responsibility for the fair and swift administration of justice in the United States. Like the rest of the federal government, the judiciary has been affected by decreasing federal resources, and is implementing and considering various cost containment initiatives, including sharing administrative services between district and bankruptcy courts, such as human resources, procurement, or financial management. In most federal judicial districts, the offices of the clerkresponsible for operational and administrative court functionsfor the district and bankruptcy courts are separate, but in a few districts, these have been consolidated into one clerks office.
GAO was requested to examine the potential savings from consolidating or sharing services between district and bankruptcy clerks offices. This report addresses (1) the steps the judiciary has taken to consolidate these clerks offices or share services between them and the costs and benefits of doing so, and (2) the extent to which the judiciary is assessing and considering further clerks office consolidations or shared services. GAO reviewed judicial guidance related to consolidation and shared services, budget documentation, surveys and data on the extent of shared services, and information on potential cost savings from 10 federal judicial districts, selected based on geography and size, and to include courts with consolidated and nonconsolidated clerks offices. GAO also interviewed court and judiciary officials. While the information and views obtained cannot be generalized, they provided insights.
section_title: What GAO Found
paragraphs: Few federal judicial districts have consolidated their court clerks' offices; courts are sharing services among the clerks' offices, but the costs and benefits are unclear. Four of the 91 districts served by bankruptcy courts have consolidated the clerks' offices of the district and bankruptcy courts. Court officials in districts that are not considering consolidation told GAO that they are not considering consolidation primarily because the bankruptcy courts in those districts did not want to give up their independence or risk the possibility that services would be prioritized in favor of the district court, and the courts did not have evidence of cost savings or other benefits that would make consolidation worthwhile. Officials from the Administrative Office of the U.S. Courts (AOUSC), which provides a wide range of services to the federal judiciary, were not aware of other districts considering consolidation and noted that the consolidation process is complicated--for example, it requires congressional approval. The judiciary has taken steps to share administrative services as part of its cost containment initiatives, but the cost savings and operational benefits of sharing services are unclear. In an AOUSC survey, 154 of 283 court units--district courts, bankruptcy courts, and probation and pretrial services offices--reported that they are sharing services with other court units, though the extent of this sharing is unknown because the survey did not ask for this information. For example, sharing can comprise various methods, such as shared staff, shared contracts for service, or shared space. According to AOUSC officials, since staff expenses make up the majority of judiciary expenses, sharing staff and eliminating positions may be the most promising way to achieve cost savings through shared services. However, the ability to cut staff based on sharing services is dependent on the attributes of each district, including the level of staff utilization, and courts GAO spoke with did not provide documented evidence of cost savings or the lack thereof. Court opinions on the operational benefits from sharing services also varied. For example, court officials stated that sharing can provide opportunities for staff specialization and better-quality service, but can also negatively affect courts if services are not provided equitably.
In August 2011, AOUSC began a cost savings study on shared administrative services. AOUSC plans to use data collected from the courts to conduct an analysis of the percentage of time devoted to administrative work in court units that share services and consequently whether there are associated cost savings. AOUSC plans to provide a draft report from the study to the Budget Committee of the Judicial Conference--the conference is the judiciary's principal policy-making body--in July 2013, but did not know when the report would be final. In addition to determining whether shared services could save money, the results of the study could provide courts with information to aid in their decisions about sharing services. For example, AOUSC officials said that after the study is completed, they may conduct case studies of courts that are sharing services and disseminate information on these courts' practices. As courts consider whether to begin or increase shared services arrangements, the results of AOUSC's cost savings study will likely be important to help determine whether shared services could result in savings or other benefits. However, since the study is ongoing and case study plans are not firm, it is too early to tell whether the results, the final report, or subsequent AOUSC actions will provide this information.

section_title: Letter
paragraphs: The federal judiciary has the critical responsibility of the fair and swift  administration of justice in the United States and handles all federal civil,  criminal, and bankruptcy cases throughout the country. The judiciary, like  the rest of the federal government, has been affected by decreasing  federal resources, and has been identifying and implementing options for  saving money and increasing efficiency. The judiciary’s budget increased  by less than 1 percent in fiscal years 2011 and 2012, with a fiscal year  2012 budget of $6.97 billion. For fiscal year 2013, the judiciary is  operating under a continuing resolution that generally appropriates funds  based on fiscal year 2012 levels, and the judiciary must accommodate an  additional 5 percent reduction to all nonexempt appropriations accounts  based on the March 1, 2013, sequestration. In recent years, the judiciary  has considered and implemented various cost containment strategies to  meet the demand for judicial services with limited increases in resources  while seeking to avoid delays in cases and other negative consequences  that could result when funding for court services is diminished. According  to judiciary documentation, cost containment efforts designed to reduce  the judiciary’s budget have included limiting growth in space rental costs  and a new pay policy for employees, among others.
An additional cost containment initiative is the implementation of shared  administrative services between district and bankruptcy courts, such as  sharing human resources, procurement, or finance staff, among other  functions. The clerks’ offices for both the district and bankruptcy courts  are the primary administrative bodies within the districts and are  responsible for operational tasks such as docketing case-related  paperwork, among others, and administrative functions. In most federal  judicial districts, the offices of the clerk of court for the district and  bankruptcy courts are separate, but in a few districts, these functions  have been consolidated into one clerk’s office for the entire district.  Consolidation in these districts has raised questions about the potential  savings achieved and benefits gained from this structure, as well as  efforts to share administrative services between clerks’ offices.
You requested that we examine the potential savings that could be  generated if district and bankruptcy clerks’ offices were consolidated or  shared services, the process required to consolidate them or share  services, and the associated impact that consolidation or shared services  could have on court operations. This report addresses  1.  the steps the judiciary has taken to consolidate district and bankruptcy  clerks’ offices or share services between them, and the costs and  benefits of doing so, and  2.  the extent to which the judiciary is assessing and considering further  clerks’ office consolidations or shared services.
To address our objectives, we reviewed the statutory requirement and  judicial guidance related to the consolidation of clerks’ offices and shared  administrative services, as well as judiciary budget documentation from  fiscal years 2011 through 2013. Specifically, to address the first objective,  we reviewed documentation from federal district and bankruptcy courts on  estimates of cost savings related to consolidation and shared services,  and court consolidation and shared services plans, where available. We  also reviewed reports on consolidation and shared services to determine  the extent of consolidation and sharing and gain additional perspectives  on potential cost savings and benefits. In addition, we interviewed officials  within the Administrative Office of the U.S. Courts (AOUSC)—which  provides a wide range of services for the federal judiciary—about the  extent of consolidation and sharing in the courts. Further, we analyzed  data from AOUSC’s cost savings study on courts’ sharing arrangements  to determine the extent of sharing. We assessed the reliability of these  data by, for example, discussing missing and excluded data with officials  and reviewing to ensure that all court districts were included in the data,  and determined that the data were sufficiently reliable for the purposes of  this report. We obtained views and information on consolidation and  shared services, including potential cost savings and operational benefits,  from 20 federal district and bankruptcy courts in 10 judicial districts,  selected based on geography and size, and to include courts with  consolidated and nonconsolidated clerks’ offices. While the views and  information obtained from these courts cannot be generalized to all  judicial districts, they provided key insights across a range of different  types of districts. In each of the districts with a consolidated clerk’s office,  we met with the chief judges of the district and bankruptcy courts—who  have primary responsibility for the administration of their courts—and the  clerk of court. In each of the other districts, we met with the chief judges  of the district and bankruptcy courts and the clerks of the district and  bankruptcy courts. In several locations—including five judicial districts— we also met with the probation and pretrial services chief, probation chief,  or pretrial services chief to obtain the perspectives of other court units   Overall, from these 10 districts, we met with 10 chief  within the districts.district judges, 10 chief bankruptcy judges, 4 clerks of court serving both  the district and bankruptcy courts in a consolidated district, 6 clerks of the  district court, 6 clerks of the bankruptcy court, 1 chief of probation and  pretrial services, 4 probation chiefs, and 3 pretrial services chiefs.  Further, we met with two court clerks’ associations, representing district  and bankruptcy court clerks, to obtain a national perspective on  consolidation and shared services, including potential cost savings and  the benefits of consolidation and shared services.
To address the second objective, we also reviewed survey questions and  data from AOUSC’s cost savings study. We interviewed program officials  within AOUSC about its cost savings study and staffing formulas. In  addition, we interviewed the Chair of the Committee on Court  Administration and Case Management of the Judicial Conference of the  United States (Judicial Conference) to determine its perspective on the  potential for cost savings and benefits from consolidation and shared  services and the extent to which these models are being encouraged  throughout the judiciary. Further, we obtained views and information on potential cost savings and operational benefits from 20 federal district and  bankruptcy courts in 10 judicial districts, as previously mentioned.
We conducted this performance audit from August 2012 to June 2013 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Overview of the Federal Judiciary
paragraphs: The federal judiciary consists of the Supreme Court, regional circuit  courts of appeals, district courts, bankruptcy courts, as well as courts of  special jurisdiction including the Court of Appeals for the Federal Circuit,  the Court of International Trade, and the Court of Federal Claims.1 provides an overview of the district and bankruptcy courts.
There are 94 federal judicial districts—at least 1 for each state— organized into 12 regional circuits. Each judicial district is served by at  least one district court location, and 91 are served by a U.S. bankruptcy  court in one or more locations—a separate unit of the district court.  District courts also have probation and pretrial services offices to assist  the courts in the fair administration of justice and protect the community.  As shown in figure 1, AOUSC within the judicial branch provides a wide  range of services for the federal judiciary. The Judicial Conference  supervises the Director of AOUSC, is the principal policy-making body for  the federal judiciary, and recommends national policies and legislation on  all aspects of federal judicial administration.
Congress vested original jurisdiction over all bankruptcy cases in the U.S. District Court.  28 U.S.C. § 1334(a). Congress also provided that the district court could refer all cases in  bankruptcy and any and all proceedings arising under, in, or related to cases in  bankruptcy, to the bankruptcy court. 28 U.S.C. § 157(a). Some claims, however, must be  adjudicated by the district court, even if they arise in a bankruptcy proceeding, such as  those that involve both the bankruptcy code and other federal laws regulating  organizations or activities affecting interstate commerce, or state law matters. See 28  U.S.C. § 157(d); Stern v. Marshall, 131 S. Ct. 2594 (2011). appeals of the circuit in which the district is located and serve 14-year  terms. District courts and bankruptcy courts can have courthouses in  multiple cities in 1 district. In addition, within one city, district courts and  bankruptcy courts can be colocated in the same building or can be  located in separate buildings. District courts and bankruptcy courts vary in  size as shown by the number of authorized judgeships in table 1. The  clerks’ offices of individual courts have varying numbers of staff, from 7 to  268 for district courts and from 10 to 266 for bankruptcy courts, with more  than half of the clerks’ offices staffed with under 50 people and the vast  majority staffed with under 100 people.
Funding for the clerks’ offices of federal district and bankruptcy courts is  appropriated under the account for “court of appeals, district courts, and  other judicial services—salaries and expenses.” This account makes up  the majority of the judiciary’s budget—approximately $5 billion in fiscal  year 2011 and $5.02 billion in fiscal year 2012, with a fiscal year 2013  budget of about $4.78 billion after the effect of the sequester is taken into  account. As shown in figure 2, funding allocated from this account for the  clerks’ offices staff of the district and bankruptcy courts decreased from  fiscal year 2011 to 2013. During this time period, the clerks’ offices’ staff  numbers were reduced in the bankruptcy courts—from 4,515 to 3,896  staff as of April 2013—and were reduced in the district courts—from  6,225 to 5,755 staff as of April 2013.
Prior to the passage of the Bankruptcy Act of 1978 federal district courts  employed a system whereby “referees” were appointed by the district  court judges to serve as administrators for bankruptcy cases.  Recognizing that this system was designed in 1898—with the last major  overhaul in 1938—and that, among other things, there had been a steady  growth in the number of bankruptcies leading to great stresses and  strains in the bankruptcy system, after almost 10 years of study and  investigation, Congress passed a comprehensive revision of the  bankruptcy laws. The 1978 act established U.S. bankruptcy courts in  each federal judicial district and gave them the authority to hire their own  clerks and other staff, among other significant changes to the bankruptcy  code. Subsequently, in response to Northern Pipeline Construction Co.  v. Marathon Pipe Line Co., in which the Supreme Court declared  unconstitutional the grant of bankruptcy court jurisdiction to independent  courts composed of judges who did not have life tenure and the other  protections of Article III of the Constitution, Congress passed the  Bankruptcy Amendments and Federal Judgeship Act of 1984. This law  established bankruptcy courts as units of each district court and also  authorized the bankruptcy judges in a district to appoint a clerk of the  bankruptcy court, upon a certification of need to the judicial council of the  circuit involved and to the Director of AOUSC.
Once established, the bankruptcy courts began hiring their own clerks of  court to oversee the bankruptcy court clerks’ offices. In 1986, a new statutory provision was added prohibiting the consolidation of the offices  of the district and bankruptcy clerks of court without the prior approval of  the Judicial Conference and Congress.further clarified the process for consolidation of clerks’ offices in the  district courts and bankruptcy courts, which was promulgated in the Guide  to Judiciary Policy. The policy states that the voluntary consent of both  the district and bankruptcy courts is necessary before combining or  merging functions of the district and bankruptcy court clerks’ offices.
In 1998, the Judicial Conference  The Guide to Judiciary Policy also details the process for seeking  approval for consolidation. According to the policy, the district and  bankruptcy courts are to conduct a cost-benefit and programmatic study  of the proposed consolidation to describe the expected programmatic and  financial impacts of the consolidation and demonstrate that the  consolidation will result in cost savings without decreasing quality of  service. The chief district judge and chief bankruptcy judge then are to  submit the consolidation proposal, including the cost-benefit and  programmatic information, to the circuit judicial council for consideration,  and as shown in figure 3, the proposal is to then be considered and  approved by the Judicial Conference and Congress.
Although full consolidation of clerks’ offices is a multistep process  culminating in Judicial Conference and congressional approval, district  and bankruptcy clerks’ offices are allowed to share administrative  services provided by the clerks’ offices without undergoing such formal  approval. For example, the sharing of services may be initiated by a  memorandum of agreement between a district and a bankruptcy court or  may be an informal arrangement. Like full consolidation, however,  pursuant to the Guide to Judiciary Policy, the sharing of services that falls  short of consolidation requires the voluntary consent of both the district  and bankruptcy courts. In addition, shared services may occur across  district lines, between, for example, two bankruptcy courts in two separate  districts. Shared services can include administrative or operational  services in a variety of formats. For example, different court units may  share a joint contract for telephone service, share individual staff, or  share space, among other arrangements.
section_title: Few Districts Have Consolidated Clerks’ Offices, and Courts Are Sharing Services, but the Costs and Benefits Are Unclear
subsections: section_title: Four Districts Have Consolidated Clerks’ Offices, and No Known Others Plan to Do So in the Future
paragraphs: Of the 91 federal judicial districts served by bankruptcy courts, 4 function  with consolidated district and bankruptcy clerks’ offices. Three of the 4  districts consolidated clerks’ offices in the mid-1980s, and the fourth court  consolidated in 2006, as shown in table 2.
Consolidation of clerks’ offices generally results in one clerk of court  serving both the district and bankruptcy courts.consolidated clerks’ offices have varying management structures, such as  managers or chiefs with responsibilities for operational or administrative  functions, or cross-trained staff who serve both courts. Figure 4 shows a  sample of an organizational chart for a district with a consolidated clerk’s  office, compared with districts with two separate clerks’ offices that do  and do not share administrative services.
section_title: The Judiciary Is Assessing and Considering Further Efforts to Share Services
paragraphs: Since the extent of cost savings and other benefits in courts with  consolidated clerks’ offices or shared services is unclear at this time,  AOUSC is assessing whether additional arrangements would be  beneficial. Because, according to AOUSC officials and court officials we  interviewed, consolidation of clerks’ offices in additional districts is  unlikely, AOUSC has focused on assessing whether shared services  results in cost savings, and its efforts are ongoing. In August 2011,  AOUSC began a study to determine the extent to which court units have  been sharing administrative services; what the results have been,  including any cost savings; and how courts may be able to contain costs  through sharing more services. For the study, AOUSC distributed surveys  to district and bankruptcy courts and probation and pretrial services  offices to collect data on the number of court units that are sharing  services and the number of court unit employees categorized as  performing administrative versus operational functions.
As previously discussed, the first survey asked the court units to report  whether they had a substantial sharing arrangement with other court  units. The responses indicated that over half of the court units that  responded to the survey are involved in some sort of sharing  arrangement, although the extent of the sharing was not requested, so  the range of what constitutes a substantial sharing relationship could vary  widely—for example, from sharing a contract for telephone service to  sharing a human resources staff person to sharing a training room.
The second survey requested information from the court units about the  breakdown of their administrative and operational employees, and how  much time staff spend on administrative tasks. For example, court unit  employees are sometimes cross-trained in both operational and  administrative positions, or in some cases they work in more than one  administrative area. AOUSC plans to use the data collected from these  surveys to conduct an analysis of the percentage of time devoted to  administrative work in court units that share services and consequently  whether there are associated cost savings with sharing services.  According to officials, AOUSC is still analyzing the data and has drafted a  report from the study, which after further review, they anticipate providing  to the Judicial Conference’s Committee on the Budget in July 2013, but  they did not know when the report would be final.
While AOUSC studies the potential cost savings, the Judicial Conference  continues to encourage shared services as a way to save money while  maintaining high-quality court services. In a 2012 hearing, the Chair of the  Budget Committee of the Judicial Conference stated that shared  administrative services would reduce the duplication caused by multiple  human resources, procurement, financial management, and information   The Chair also stated that  technology staffs in a single judicial district.shared administrative services would reduce staffing and overhead costs  and streamline the administrative process in the courts. Furthermore, in  September 2012, the Judicial Conference approved a revised bankruptcy  court staffing formula that included an assumption that shared services  will save money and reduce staffing needs. The staffing formula, which is  developed by AOUSC and approved by the Judicial Conference,  determines the number of staff that individual clerks’ offices need. The  revised staffing formula has resulted in lower staffing allocations and  decreased funding for the courts.
The Judicial Conference specified the administrative areas considered  suitable for sharing, including human resources, education and training,  finance, budget, information technology, property management, contracts  and procurement, space and facilities, mail room management, and  continuity of operations and emergency planning. According to the Chair  of the Judicial Conference’s Committee on Court Administration and Case  Management, the Judicial Conference identified these areas as  administrative functions, and determined that administrative functions are  conducive to sharing. According to judiciary documentation, the staffing  formula reductions are to be rolled out over the next several years based  on the assumption of gradual increases in shared services in these  administrative areas, with full sharing of information technology functions,  for example, anticipated in fiscal year 2016. However, AOUSC officials  stated that the total dollar amount of the budget savings from the  reduction in the staffing formula was not yet known. Further, according to  AOUSC officials, the district court staffing formulas are still being  calculated, but will likely include reductions based on shared  administrative services.
AOUSC officials stated that some court units have told them anecdotally  that they have saved money through sharing administrative services, and  preliminary results from the cost savings study indicate that courts with at  least one shared services arrangement operated with fewer  administrative staff per court employee than courts that did not report  sharing services, thus potentially saving resources. However, AOUSC  officials said that these preliminary results did not take into account the  varying levels of shared services that courts have, since the self-reported  surveys did not ask for this information.
Further, AOUSC officials stated that there are multiple factors that could  play a role in the efficiency of court operations, such as the size of the  court, as well as local management practices, and that the study was not  able to isolate the potential savings associated with shared services.  Moreover, AOUSC’s guidebook for courts on shared administrative  services states that sharing services will not necessarily result in  immediate redundancies and therefore opportunities to reduce staff, and  thus does not suggest that sharing will produce cost savings. As courts  consider whether to begin or increase shared services arrangements, the  results of AOUSC’s cost savings study will likely be important to help  determine whether shared services could result in savings or other  benefits. However, since the study is ongoing, it is too early to tell  whether the results or the final report will provide this information.
In addition to determining whether shared services could save money, as  courts consider how to reduce costs and meet decreasing budgets, the  results of AOUSC’s study could provide courts with information or  promising practices to aid in their decisions about sharing services in their  particular districts. For example, AOUSC officials said that after the study  is completed, they may conduct case studies of courts that, according to  the survey data, are sharing services and show an efficient use of  administrative staff, and disseminate information on these courts’  practices to all courts. Several court officials we interviewed stated that  they would like AOUSC to provide such information as they consider  whether to share services. For example, courts noted that they did not  have access to measures that would allow them to compare their staff  numbers and utilization with those of other similarly sized courts, such as  if their human resource staff numbers were at an optimal level. Since  each court is unique, such ratios could be different for courts of different  sizes and could take into account the unique functions and operations of  district and bankruptcy courts, as well as other factors. In addition,  several court officials we interviewed described a promising practice that  could be useful to other courts, stating that they had agreed with the other  court officials in their district to consult with each other when a vacancy  arose to determine whether the lost functions could be performed through  a shared services arrangement without hiring new staff. The results of the  study and subsequent case studies could provide useful information that  courts can use in assessing whether shared services would be beneficial  in their particular districts and whether to implement additional shared  services. However, since the study is ongoing and subsequent case study  plans are not firm, it is too early to tell whether the results, the final report,  or subsequent AOUSC actions will provide this information.
section_title: Agency Comments
paragraphs: We provided a draft of this report to AOUSC on May 15, 2013, for review  and comment. On June 5, 2013, AOUSC provided written comments,  which are reprinted in appendix I. AOUSC underscored the financial  challenges facing the federal courts because of budget reductions and  sequestration, and its hope that sharing administrative services will help  control costs and improve services. AOUSC stated that the judiciary’s  cost containment efforts, including sharing administrative services, will not  fully offset the effects of sequestration on the judiciary’s budget. AOUSC  also provided us with technical comments, which we considered and  incorporated into the report where appropriate.
We are sending copies of this report to the Judicial Conference, the  Director of the Administrative Office of the U.S. Courts, and other  interested parties. In addition, the report is available at no charge on   the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-9627 or maurerd@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.
section_title: Appendix I: Comments from the Administrative Office of the U.S. Courts
section_title: Appendix II: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, William O. Jenkins, Jr. (Director);  Chris Currie (Assistant Director); Samantha Carter; Brendan  Kretzschmar; Jean Orland; and Rebecca Kuhlmann Taylor made  significant contributions to the report. Also contributing to this report were  Benjamin A. Bolitzer, Keith B. Cunningham, Elizabeth H. Curda,  Katherine M. Davis, Eric D. Hauswirth, Judith Kordahl, Amanda K. Miller,  and Janet G. Temko.