Judiciary rental rates are almost double the rates charged tenants for comparable space, and include charges for space unfit for occupation and rent paid on buildings that have been fully amortized—sometimes as many as four or five times over.

     These examples highlight the concerns the federal Judiciary has with a flawed rental system administered by the General Services Administration, to whom the courts currently pay a greater percentage of their operating budget than any other entity in the federal government.

     In an acute funding crisis since fiscal year 2004, the Judiciary may have to choose between paying staff or paying rent. Before cutting staff again, two representatives of the Judicial Conference of the United States appeared before Congress today to ask for rent relief.

     "The effect of these payments to GSA, along with the tightening of the federal budget, is that we must either continue to reduce court staff and further jeopardize our ability to deliver justice, or we must ask the Congress and the Executive Branch to re-examine how rent—the single largest component of our operating expense other than personnel costs—is computed," said Leonidas Ralph Mecham, Director of the Administrative Office of the U.S. Courts.

     Director Mecham and Judge Jane Roth (3rd Cir.), chair of the Judicial Conference Committee on Security and Facilities, appeared before the House Committee on Transportation and Infrastructure, Subcommittee on Economic Development, Public Buildings and Emergency Management to testify on the Judiciary's ability to pay for current and future space needs.

     Judge Roth cited the multiple cost-containment initiatives the Judiciary is pursuing in order to control building program costs and reduce the amount of rent the Judiciary pays to GSA, both now and in the future.

     These include a two-year moratorium on courthouse construction, a review of the U.S. Courts Design Guide space standards, a re-evaluation of the long-range planning process, including a re-examination of assumptions about staff and judgeship growth, and calls to the courts to release unneeded space and cancel pending space requests.

     "Controlling the Judiciary's current and future space costs is an issue that my Committee takes very seriously," Judge Roth told the House Subcommittee. "There is no question that the Judicial Conference recognizes the significant impact the building program is having on the Judiciary's budget and the need to control rental costs both now and in the future."

     However, while these initiatives are a good start, Judge Roth testified that rental relief from GSA is critical to the continued functioning of the courts.

     In his testimony, Director Mecham asked that the Subcommittee work constructively with the federal Judiciary to provide rent relief for the federal courts.

     Although congressional appropriations as recently as fiscal year 2003 were sufficient to allow the courts to maintain staffing levels and pay GSA rent bills, Director Mecham testified that this changed abruptly in fiscal year 2004. In FY 2004, the Judiciary's final appropriations were insufficient to support onboard court staff, and the courts subsequently experienced an estimated overall 8 percent reduction in personnel nationwide. This came at a time of record numbers of criminal defendants, and record appeals, civil, probation and pretrial caseloads, and a near record caseload in the bankruptcy system.

     "Even with the heroic efforts of remaining court staff, some degradation in service is already occurring," said Director Mecham. "Lawyers and the public are experiencing long lines as some clerks' offices are closing early. Payments of fees to jurors and for victim restitution are being delayed because of staffing reductions. And some probation offices that have been downsized are reporting an increase in new crimes attributed to offenders under their supervision." With less funding and an uncontrollable and growing workload, the Judiciary initiated a major cost containment effort.

     "However, one area that continues to elude our cost containment efforts is GSA rent, which under current law the Judiciary must pay to GSA in full as a first charge against its budget," said Director Mecham. "We are asking the Congress to provide sufficient appropriations to the Judiciary to allow us to fund both our staffing needs and GSA rent. If Congress is unable to do so, then a choice must be made—either reduce staff or reduce rent." According to Director Mecham, the Judiciary should not have to pay rent of $500 million per year to pay for costs. The only charge should be for actual operation and maintenance.

     Rent payments to GSA from the courts' operating account have grown from $133 million in 1986 to an estimated $980 million in FY 2006. By FY 2009, the rent bill to GSA will be about $1.2 billion, or nearly one-fourth of the courts' projected operating budget.

     Director Mecham noted:

• The Judiciary pays more rent in actual dollars to GSA than any other federal agency except the Department of Justice. But as a percentage of budget, the Justice Department pays only 3 percent while the courts must pay 22 percent.
• The courts must pay rent forever on all federal court buildings, even those fully amortized and paid for, often many times over. However, the Department of Defense does not pay rent to GSA for the Pentagon or its military bases, and the Treasury Department does not pay rent on the main Treasury building or on its mints. No rent is paid to GSA on federal prisons, embassies, NIH facilities, VA hospitals, EPA labs, or national forest facilities, among others. Congress pays no rent to GSA on any of its Capitol Hill buildings.
• GSA has adopted a pricing policy that allows it to add on local real estate taxes in calculating rental charges for tenants within federally-owned facilities, despite the fact that the federal government is exempt from such charges.
• In upstate New York courts, rent was charged for attic space and a driveway ramp. At a Rhode Island court, GSA charges the Judiciary $11,000 in rent per year on a parking lot the city donated to GSA for $1. Finding out the basis for rent overcharges is difficult, since GSA has a national policy in place prohibiting the sharing of actual back-up documents with federal agencies.
• GSA charges the Judiciary rent to recapture original costs of courthouses that Congress has already paid for from FY 1990 through FY 2004 through direct appropriations into the Federal Buildings Fund.

     Director Mecham asked the Subcommittee to recognize that the Judiciary's current financial predicament is the result of the changed priorities of the federal budget; in order to work within these new budget constraints, the courts must reduce the cost of operations. But, he said, "The courts will not be able to meet their statutory responsibilities if staffing continues to decline and workload continues to grow. We are hopeful that rent relief can be achieved so that we might retain the staff needed to handle the courts' Constitutional and statutory responsibilities."

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