Welcome back. On Friday, January 18th, right before she went home for the night, OMB’s Courtney Timberlake circulated a link to the revised OMB Circular A-129 Policies For Federal Credit Programs And Non-Tax Receivables. Given that she has been an expert in Federal Credit for almost 15 years, she was the perfect messenger. The revision of Circular A-129 is what we are discussing today.
Gimme Some Credit
For Federal Credit budgeting practitioners, OMB Circular A-129 hasn’t been a big part of our thoughts for a long time. Unlike OMB Circular A-11, Part 5, which is annually updated and regularly dog-eared by scoring nerds like me, A-129 hasn’t been touched by OMB since the last few days of the Clinton administration. For years, if you were creating a new program or improving an old one, you might glance at A-129 and be sure that you weren’t off the mark, but there wasn’t a whole lot there that you didn’t already know.
Not anymore. The revision we received Monday is pretty substantial.
Hats off to the folks at OMB and Main Treasury; this new A-129 is big, bold, specific, and even has more attractive formatting. To me, it’s clear that this revision is laser-focused on coaching Federal Credit Program Managers to be better lenders and managers of loan receivables, not just better budgeteers.
Here’s a quick summary of what I noticed right off the bat when comparing the November 2000 version to the one Courtney just circulated.
75% of the circular is unchanged and is a word-for-word copy of the November 2000 version. However, the 25% new stuff represents a powerful change. Changes/updates come in two forms:
- Sections that were re-written
- New sections and new appendices
- Section on Federal Policy Working Group
- This group was changed to the “Federal Credit Policy Council.” Not much other than the name was changed that I can tell.
- Section that starts with “Agencies shall ensure…”
- This section was re-written and will require an in-depth review of each credit program to test compliance. Some self-assessment will be required to determine if you are deficient.
- Periodic Review
- An old section that guided how credit program restructuring should be governed has been re-written to describe mandatory biennial review of all credit programs. Basically, each credit program must re-justify its existence every two years to OMB. This could be a huge effort for budget offices if OMB sticks to this requirement every two years.
- Credit Programs Management
- This is a brand new section that has no predecessor. It will require an in-depth review of all Credit Programs to test compliance.
- New Appendices: Each of the below appendices is new and substantial. Each one will require a review of Credit Programs to ensure compliance and get up to speed.
- Communications Policies: primarily designed to guide communications with the public.
- Effective Data-Driven Reporting: This appendix calls for “dashboards” and “watch lists” to provide reporting to help make decisions and manage risk. This is unique in that this data is not directly tied to calculating subsidy rates. More like management data.
- Management & Oversight: Describes the formation and membership of Credit Review boards and leadership positions necessary to ensure proper internal oversight.
- Program Reviews: Provides guidelines on how to perform the biennial review mentioned above.
All of the non-tax receivables section is a direct copy of the former version. It had no changes that I could find. However, if you are interested in how Treasury goes after bad receivables, it’s pretty interesting.
CredTip: The CSC2 will not accept a SER of 0. If you ever need to model an SER of 0, you can use 0.01, which will allow it to run and not impact your results in a material way.
Factoid: True or false: The final cohort Single Effective Rate is taken from the CSC2 output when the Interest Rate Reestimate is performed, not the Technical Reestimate. The first reader to post the right answer will get some kudos in a future post. Good luck.