S. 298, Returning SBA to Main Street Act

Bill Summary

S. 298 would require the Small Business Administration (SBA) to relocate 30 percent of its employees from its headquarters in Washington, D.C., to regional offices throughout the United States and reduce its headquarters office space by 30 percent. Those changes would be contingent upon the agency determining that they would reduce costs to the federal government.

Estimated Federal Cost

The estimated budgetary effect of S. 298 is shown in Table 1. The costs of the legislation fall within budget function 370 (commerce and housing credit).

Basis of Estimate

CBO assumes that S. 298 will be enacted near the end of fiscal year 2025, that the SBA would not begin to relocate employees until 2026, and that the Congress would reduce annual appropriations by the estimated amounts each year. Outlays were estimated using historical obligation and spending rates.

Spending Subject to Appropriation

CBO estimates that implementing S. 298 would decrease spending subject to appropriation by $29 million over the 2025-2030 period. The Congress appropriated $974 million for the SBA’s administrative expenses in fiscal year 2025.

Salaries and Benefits. S. 298 would require the SBA to relocate 30 percent of its employees currently assigned to work at the headquarters in Washington, D.C., to regional offices throughout the United States within one year and to adjust their compensation for the new location. Additionally, employees would no longer be allowed to telework unless they qualify for an accommodation under the Americans with Disabilities Act.

There are currently about 900 full-time employees assigned to work at the SBA headquarters; under the bill, about 270 employees would need to be relocated. CBO assumes that half of those employees would relocate in 2026, and half would choose to leave the agency. CBO expects that it would take about two years for the SBA to hire new employees at regional offices to replace those that leave the agency. The lag in hiring new employees accounts for about 50 percent of the estimated reduction in costs for salaries and benefits.

Salaries and benefits for federal employees vary by location. Based on information from the SBA, CBO expects that the average salaries and benefits of those employees in 2026 would decrease from about $208,000 to $201,000. Employees that relocate would be eligible to receive amounts to cover their household’s transportation expenses, temporary housing, and assistance with selling and purchasing a home.

Using information from the Department of Agriculture, which relocated two subagencies in 2019, CBO estimates that average relocation expenses would be about $70,000 per employee. Additionally, some employees that leave the SBA would be eligible for severance averaging about $55,000 per employee. After accounting for anticipated inflation, attrition, and the time required to hire new employees, CBO estimates that implementing S. 298 would reduce the costs of SBA’s salaries and benefits by $26 million over the 2025-2030 period. Any reduction in spending would be subject to future appropriations being reduced by the estimated amounts.

S. 298 also would require the SBA to report within six months on the number of employees at its headquarters who would be eligible to be relocated and a plan for implementing those changes. CBO estimates that the report would cost less than $500,000.

Overhead Expenses. S. 298 also would require the agency to reduce office space at its headquarters location by 30 percent within two years. Using information from the SBA, CBO estimates that overhead expenses (including rent, security, and telecommunications services) for the affected employees at SBA headquarters totaled about $6 million in 2025 compared to costs of about $1.5 million at regional offices for the same number of employees.

Finally, the SBA would require assistance from the General Services Administration (GSA) to locate and set up additional office space in regional offices. Using information from GSA, CBO estimates that the new working and meeting space, furniture and workstation purchases, and installation of information technology and audiovisual equipment would cost $10 million. CBO expects those costs would be incurred in 2026 and 2027.

After accounting for inflation, attrition, and the time required for hiring and acquiring space and under the assumption that the SBA would reduce its office space in Washington, D.C., CBO estimates that implementing the bill would reduce overhead costs for the SBA by $3 million over the 2025-2030 period. Any reduction in spending would be subject to future appropriations being reduced by the estimated amounts.

Uncertainty

CBO’s estimate of S. 298 is subject to uncertainty because determining how many employees would relocate and the costs associated with their relocation is uncertain. For example, if the SBA paid severance to those that choose to leave the agency, decided not to hire new employees to offset expected attrition, or paid higher or lower relocation expenses, the actual costs could be higher or lower than those estimated.

Additionally, if employees chose to retire and collect retirement benefits earlier than they would under current law, spending on retirement benefits, which are recorded in the budget as direct spending, would change.

Pay-As-You-Go Considerations

Enacting the bill would not affect direct spending or revenues; therefore, pay-as-you-go procedures do not apply.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting S. 298 would not increase net direct spending or on-budget deficits in any of the four consecutive 10-year periods beginning in 2036.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Federal Costs: Aurora Swanson

Mandates: Rachel Austin

Estimate Reviewed By

Justin Humphrey
Chief, Finance, Housing, and Education Cost Estimates Unit

Kathleen FitzGerald 
Chief, Public and Private Mandates Unit

H. Samuel Papenfuss 
Deputy Director of Budget Analysis