The Office of Personnel Management (OPM) underspent its budget in fiscal year (FY) 2025 by about $38 million in appropriated funds and decided to invest $12 million of the excess funding in its technology development fund, OPM Director Scott Kupor announced today.
In a Sept. 30 blog post, Kupor explained that while government agencies oftentimes rush to spend, or “allocate,” those dollars before the end of the fiscal year, OPM took a different approach this year.
“We underspent our budget this year by about $38 million in appropriated funds – that’s just under 10% of our budget. But, instead of allowing independent groups to spend their budgets, we asked the teams to submit their suggestions on whether it would make sense to use any excess funds to invest in critical areas,” Kupor wrote in the blog post.
“Thus, I reviewed an agency-wide view of opportunities and made decisions based not on which group had underspent but rather based on what initiatives overall were in the best interest of the American taxpayer,” he added.
With the leftover funds, Kupor said that OPM decided to make “our maximum contribution (~$12 million) to our technology development fund.”
An OPM spokesperson confirmed to MeriTalk that the technology development fund Kupor is referencing is the agency’s IT working capital fund. The 2017 Modernizing Government Technology Act (MGT) Act allowed agencies to set up these funds to finance technology modernization efforts.
“This enables us to invest in critical, multi-year technology projects – modernizing our retirements services operation; deploying AI projects to improve operational efficiency; improving our ability to better serve our health insurance customers; etc,” Kupor wrote.
“The funds are available for up to three years, a recognition that technology investments don’t always lend themselves well to fiscal year boundaries. Precisely where and when we deploy those funds will depend upon a more in-depth review and prioritization of each potential project,” he explained.
In addition to contributing to its technology fund, OPM is using the extra funds to invest about $6.5 million in the president’s “Merit Hiring” proposals, about $5 million for OPM’s building fund, and about $3 million in modernizing OPM’s retirement services operations. Kupor said it is “returning the rest (more than $11 million)” to the U.S. Treasury to help reduce the national deficit.
With today marking the last day of FY 2025, Congress has until midnight to agree on a spending package for the new fiscal year. If not, parts of the federal government could shut down.
IT leaders across the federal government and industry have long agreed that stopgap spending measures, known as continuing resolutions (CRs), are harmful to agency operations – particularly when it comes to modernizing technology.
Ross Nodurft, executive director of the Alliance for Digital Innovation (ADI), told MeriTalk last October that CRs make it “even harder” for emerging commercial technology solutions to enter the government market.
“CRs add uncertainty and risk around any budgeting decision an agency makes – whether to critical enterprise cloud services or investments in modern technology that can help deliver services to citizens or give our warfighters an edge on the front lines,” Nodurft told MeriTalk.
“ADI continues to advocate for more funding pathways that provide multi-year funding or use of working capital funds to help de-risk the government acquisition process,” he added. “This would give agency enterprise technology providers and mission owners the ability to acquire the latest technology and not continue sinking money into costly legacy solutions.”
Notably, the FITARA Scorecard grades federal agencies on their IT modernization efforts, including those related to the MGT Act and their use of working capital funds. As of last September, many federal agencies had yet to set up working capital funds.