/.../In November, Panetta had said OCO funds would be exempt from sequestration. But Pentagon officials recently came to the opposite conclusion after discussing the issue with OMB, Pentagon spokesman Capt. John Kirby tells us.
WHAT DOES IT ALL MEAN? Less than you might think, according to Todd Harrison, a defense expert at the Center for Strategic and Budgetary Assessments. “The only real impact I can see that this would have is that it will make the cuts more heavily weighted toward [operations and maintenance] because OCO funding is more heavily weighted toward O&M,” Harrison says in an email. “That could mean more layoffs/furloughs for DoD civilians.”
Harrison explains that OCO funds are not included when determining the total amount of money affected by sequestration -- meaning the size of the cuts will remain the same, regardless of whether or not OCO funds are exempt. “Once OCO funding is appropriated it goes into the same accounts as all of the DoD’s other funds,” Harrison says. “They don’t have separate accounts for OCO, even though it is appropriated separately.”
“So,” he adds, “the dollar amount of the cut does not change, but the percentage cut will be lower because they are using a larger denominator that includes OCO and unobligated balances.”