HispanicBusiness

The Government Accountability Office (GAO) issued a report (ed. note: link is a PDF download) today assessing recent management changes at the Small Business Administration (SBA). The report stated that progress has been made in improving the SBA loan operations, but that years of underfunding and poor management policies have significantly reduced morale among the agency's employees.

In response to the GAO investigation, Sen. John Kerry, chairman of the Senate's Committee on Small Business and Entrepreneurship, declared that "President Bush's policies have undermined lender oversight at the Small Business Administration, left state offices without staff or funding to adequately serve small businesses, marginalized union representatives, and led to the lowest employee morale ratings of 30 agencies."

Starting in 2003, the SBA launched an overhaul of the agency, seeking to make its loan to small businesses more transparent and efficient. A major focus of transformation was to centralize the loan functions previously performed by 68 district offices. However, the SBA's early efforts did not reflect key practices that the GAO considered as "important for successful transformations." Consequently, the centralization of some loan programs resulted in backlogs and other problems.

Additional SBA actions led to a reduction in staff at district offices and a fall in employee morale. During the 1990s, SBA's workforce had decreased from more than 3,800 employees to about 3,100 employees--a change of about 19 percent. Furthermore, between 2000 and 2007, when additional restructuring occurred, SBA's workforce decreased by another 26 percent. As of September 2007, SBA had 2,166 employees.

According to a press release from Sen. Kerry's office, "The GAO report noted that state employees have less time and resources for business development activities because they must take on more duties as staff sizes decrease. This has contributed to low morale. Reflecting the need for more changes, the SBA placed last in a 2007 'Best Places to Work' list of federal agencies."

The GAO report notes that the SBA "continues to clarify and refine the district office role." While district offices have the flexibility to determine how they will achieve their office goals, some offices face challenges adjusting to reductions in staffing that accompanied the centralization of loan functions they previously performed. Since 2003, the roles and responsibilities of SBA district offices have shifted from engaging in loan processing, purchase, and liquidation functions, to promoting SBA programs and services through marketing and outreach, training lenders, providing support to SBA resource partners, and developing small businesses.

Sen. Kerry declared, "The SBA's performance and morale have suffered because of a White House that continues to make this agency, and small businesses in general, a low priority."