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

Letter

Background

Overview of the Federal Judiciary

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.

Few Districts Have Consolidated Clerks’ Offices, and Courts Are Sharing Services, but the Costs and Benefits Are Unclear

Four Districts Have Consolidated Clerks’ Offices, and No Known Others Plan to Do So in the Future

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.

The Judiciary Is Assessing and Considering Further Efforts to Share Services

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.

Agency Comments

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.

Appendix I: Comments from the Administrative Office of the U.S. Courts

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

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.