[Senate Hearing 114-177]
[From the U.S. Government Publishing Office]



 
         LEGISLATIVE BRANCH APPROPRIATIONS FOR FISCAL YEAR 2016

                              ----------                              


                        TUESDAY, MARCH 10, 2015

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 3:04 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Shelley Moore Capito (chairman) 
presiding.
    Present: Senators Capito, Schatz, and Murphy.

                      CONGRESSIONAL BUDGET OFFICE

STATEMENT OF DR. DOUGLAS W. ELMENDORF, PH.D., DIRECTOR


           opening statement of senator shelley moore capito


    Senator Capito. Good afternoon, everybody. The subcommittee 
will come to order. I would like to welcome everyone to the 
first of our fiscal year 2016 budget hearings for the variety 
of agencies under the jurisdiction of the Legislative Branch 
Appropriations Subcommittee.
    I would like to welcome my ranking member. This is our 
first run at this show, and I think I speak for myself and for 
the Senator, that we are excited about having this 
responsibility.
    We are going to begin today with the Director of the 
Congressional Budget Office (CBO), Dr. Douglas Elmendorf, and 
the head of the Government Accountability Office (GAO), Mr. 
Gene Dodaro. I appreciate the willingness of the witnesses to 
appear before the subcommittee today.
    I would like to start by thanking Dr. Elmendorf for his 6 
years of service as the Director of the Congressional Budget 
Office. As we talked just briefly, I know you are going to be 
welcoming a breath of fresh air in your life, a time to reflect 
and figure what you want to do for the rest of your life, but 
you have been a stellar public servant.
    Your tenure has assured that the CBO provided this 
committee with objective, non-partisan information that is 
necessary for us to do our job, and I speak for the rest of 
Congress as well.
    We appreciate the manner in which you have approached this 
with the very, very difficult task that you have had. We wish 
you well.
    As many of you already know, on February 27, the Speaker of 
the House, John Boehner, and the President Pro Tempore, Orrin 
Hatch, jointly appointed Dr. Keith Hall to be the next Director 
of the Congressional Budget Office, after consideration of the 
recommendation made to leadership by the chairmen of the House 
and Senate Budget Committees.
    Dr. Hall's term will begin on April 1. Maybe he should 
start on April 2. It will expire on January 3, 2019, in 
accordance with the guidelines set forth in the Congressional 
Budget and Impoundment Control Act of 1974.
    The total Congressional Budget Office request is $47.27 
million, a $1.57 million or 3.4 percent increase over the 2015 
enacted level. This funding request supports the current full-
time equivalent (FTE) level of 235 plus an additional three 
FTEs necessary for health related work and developing a 
specific structure within the existing Macroeconomic Division, 
in order to comply with the new House rule requirement.
    The total GAO request for fiscal year 2016 is $553.1 
million, a $31.1 million or 6 percent increase above the fiscal 
year 2015 enacted level. This funding request supports an 
increase in FTEs from 3,015 to 3,055, which would continue 
progress on GAO's multi-year plan to achieve an optimal level 
of 3,250 FTEs.
    I look forward to exploring these needs with you and the 
other members of the subcommittee today and over the next 
several months as we move forward through this fiscal year 2016 
process.
    Again, I would like to thank you, and I would like to turn 
it over to the ranking member, Senator Schatz, for any opening 
remarks he might have.


                   statement of senator brian schatz


    Senator Schatz. Thank you, Chair Capito. It is an honor to 
serve on the Senate Appropriations Committee and especially to 
be serving as your ranking member. I look forward to working 
with you on this subcommittee, and we are fortunate to have you 
and your 14 years of experience in the Federal legislative 
context.
    I am anxious today to get started on our work together 
examining the budgets of agencies funded in this bill and 
making sure that the taxpayers' money is being spent wisely.
    I would like to welcome Director Elmendorf and Comptroller 
General Dodaro to this hearing. CBO and GAO play a vital role 
in supporting the Congress' legislative and oversight 
responsibilities by providing objective and authoritative 
information to the Congress. CBO and GAO ensure that policy and 
funding debates are based on sound factual and independent 
information.
    Recent policy and funding decisions are being considered 
within a challenging fiscal climate, making CBO's cost 
estimates, budget projections, and economic forecasts 
especially important.
    Within GAO, one key component of their work is the agency's 
high risk list published at the start of each new Congress to 
identify areas at high risk for waste, fraud, abuse, or 
mismanagement. The high risk list provides Congress and the 
committee a clear and informed set of oversight priorities.
    I look forward to working with our two agencies today and 
throughout the year to ensure that both have the resources 
needed to fulfill your responsibilities.
    I am also interested in learning how your agencies may have 
to adjust their operations if current Budget Control Act (BCA) 
spending caps remain in place.
    Dr. Elmendorf, after 6 years, you will soon finish your 
service as CBO Director. I understand CBO has produced more 
than 3,000 written cost estimates under your leadership, and 
that this is your 50th and perhaps last congressional hearing.
    I want to thank you for your service to Congress and wish 
you the best in your future endeavors.
    Thank you, Chair Capito.
    Senator Capito. Thank you. Now, I would like to ask the 
witnesses, beginning with Dr. Elmendorf, to give a brief 
opening statement of approximately five minutes. The written 
testimony of each witness will be printed in full in the 
hearing record. Dr. Elmendorf.


             summary statement of dr. douglas w. elmendorf


    Dr. Elmendorf. Thank you, Madam Chairman, and Ranking 
Member Schatz, for your kind words. I appreciate the 
opportunity to present CBO's budget request for fiscal year 
2016.
    We are asking for appropriations of $47.3 million, which 
will be an increase of $1.6 million or 3.4 percent from the 
$45.7 million provided to CBO for 2015.
    About one-quarter of our requested increase, roughly 
$440,000, would fund three additional full-time equivalent 
positions. We aim to boost our staffing from the 235 FTEs 
contemplated for this year to 238 next year.
    The additional FTEs would be devoted, as the chair said, to 
analyze the economic effects of Federal tax and spending 
policies, including conducting so-called ``dynamic analysis'' 
of certain legislation under the new House rule, and probably 
on occasion for the Senate as well, and to analyze healthcare 
issues.
    The remaining $1.1 million of the increase, about 2.4 
percent, will be devoted to our ongoing operations. That figure 
is the net increase of an increase of $1.7 million in pay and 
benefits, and a decrease of about $550,000 in non-pay 
expenditures.
    The proposed increase in pay and benefits reflects small 
increases in average pay and rising costs of benefits, 
including a marked increase in contribution rates for the 
Federal Employees Retirement System that took effect this year 
but was not anticipated in our budget request for this year. We 
are meeting this year's costs within our appropriations because 
the pay of some new employees has turned out to be less than we 
anticipated.
    We continue to face considerable competitive pressure in 
attracting and retaining the highly educated and skilled 
employees that we and the Congress need. Talented economists 
and budget analysts are highly sought by other Government 
agencies, private analytic organizations, and private 
companies.
    Indeed, the gap between the compensation that CBO can 
provide and the compensation that people with such backgrounds 
can receive elsewhere is increasing.
    The decrease in non-pay expenditures in our request is 
mostly related to information technology, and it is possible 
because funding provided last year and this year allowed us to 
catch up on IT purchases that had been deferred from previous 
years.
    In various other areas, we expect to contain non-pay costs 
so it will be less than or equal to this year's expenditures, 
despite rising prices.
    Our goal with this funding request is to continue to 
provide the Congress with a timely, carefully thought out, non-
partisan budgetary and economic analysis that you and your 
colleagues expect from us.
    As you know, our work encompasses a wide array of subjects 
and appears in many different forms. We write reports on the 
outlook for the budget and the economy, long term budget 
outlook, and options for reducing budget deficits.
    We issue more than 500 formal cost estimates in a year and 
provide thousands of preliminary informal estimates as 
committees seek to have a clear picture of the budgetary impact 
of proposals before they formally consider legislation.
    We release more than 100 scorekeeping tabulations each 
year, including account level detail for individual 
appropriation acts at all stages of the legislative process.
    We publish roughly 85 analytical reports and other 
publications each year, generally as required by law, or in 
response to requests from the chairman and ranking members of 
key committees.
    A common thread running through all of that work is that 
the demand from you and your colleagues exceeds the quantity 
that the 235 of us at CBO can supply. The enactment of major 
healthcare legislation in 2010 has been followed as you know by 
a high level of congressional interest in analysis of that 
legislation and numerous proposals for further changes in 
Federal healthcare programs.
    In addition, the slow recovery of an economic down turn has 
spurred interest in our economic forecasts, and in policies 
that might boost economic growth and opportunity in both the 
near term and the longer term.
    Moreover, the surge in Federal debt and the high level of 
projected deficits over the long term have led to ongoing 
consideration of fundamental changes in spending and tax 
policies, from changes in benefit programs to defense policy, 
infrastructure, energy policy, and much more.
    Despite the very hard work of CBO's highly dedicated staff, 
we simply cannot keep up with the volume of requested estimates 
and other analyses. Of course, we regularly consult with the 
leadership of the key committees of the House and the Senate as 
a whole to ensure that our limited resources are focused on the 
work that is of highest priority to the Congress.
    Even so, if we have to reduce our staffing below the 
current level, the mismatch between the demand for and the 
supply of our work would become even more acute.
    I want to close by thanking this committee for the support 
it has supported CBO over many years. I have had the 
extraordinary privilege to lead a terrific organization and 
work with its very talented people for the past 6 years. I know 
CBO will continue to provide the Congress with careful 
objective analysis as you and your colleagues grapple with the 
many challenges the Nation faces.
    Thank you.
    [The statement follows:]
             Prepared Statement of Dr. Douglas W. Elmendorf
    Madam Chairman, Ranking Member Schatz, and members of the 
subcommittee, thank you for the opportunity to present the 
Congressional Budget Office's budget request. CBO requests 
appropriations of $47.3 million for fiscal year 2016. That amount 
represents an increase of $1.6 million, or 3.4 percent, from the $45.7 
million provided to CBO for 2015.
    About one-quarter of the requested increase, roughly $440,000, 
would fund three new full-time-equivalent positions (FTEs): The agency 
aims to boost its staffing from the 235 FTEs contemplated in the 2015 
appropriation to 238 for 2016. The additional FTEs would be devoted to 
analyzing the economic effects of Federal tax and spending policies 
(including conducting ``dynamic analysis'' of certain legislation 
pursuant to a new House rule) and healthcare issues.
    The remaining $1.1 million increase (about 2.4 percent) would be 
devoted to ongoing operations--the result of an increase of nearly $1.7 
million in pay and benefits, which would be partly offset by a decrease 
of about $550,000 in nonpay expenditures. The proposed increase in pay 
and benefits reflects small increases in average pay and rising costs 
of benefits, including a marked increase in contribution rates for the 
Federal Employees Retirement System (FERS) that took effect in 2015 but 
was not anticipated in CBO's 2015 budget request. The decrease in 
nonpay expenditures, mostly related to information technology (IT), is 
possible because funding provided in 2014 and 2015 allowed CBO to catch 
up on IT purchases deferred from previous years. In various other 
areas, CBO expects to contain nonpay costs so they will be less than or 
equal to this year's expenditures, despite rising prices.
    Of the requested funding for 2016, 91 percent would support pay and 
benefits, 6 percent would be for IT, and 3 percent would go toward 
purchases of data, training, office supplies, and other items.
      cbo's funding history and its effects on staffing and output
    Because such a large share of CBO's budget represents compensation, 
the contours of the agency's budget and staffing levels have been and 
will continue to be closely linked.
    Between fiscal years 2002 and 2008, the number of authorized FTEs 
at CBO held between 232 and 235 (see Figure 1). During that period, 
CBO's budget generally rose slowly, as Federal employees received 
salary increases and the cost of Federal benefits increased. For fiscal 
years 2009 and 2010, the Congress approved larger increases in CBO's 
budget to support a step-up in staffing. That step-up was intended 
primarily to increase the agency's ability to analyze potential changes 
in Federal healthcare policy while maintaining its capacity to provide 
cost estimates and reports on other topics. CBO had sufficient funding 
for 254 FTEs in 2010.
    The increase in staffing enabled CBO to engage in analyses of 
particularly complex issues and to provide substantially more estimates 
and other analyses to the Congress. Among the accomplishments that were 
facilitated by the larger staff were a significant expansion of 
healthcare analysis, substantial enhancement of financial analysis, 
considerable improvement in modeling the economic effects of Federal 
tax and spending policies, issuance of several reports with options for 
changing Federal benefit programs, significant gains in the 
transparency of CBO's analysis, and continued high quality of the 
agency's cost estimates and analyses of numerous other topics.
    However, constraints on CBO's funding (following from constraints 
on discretionary appropriations as a whole) caused the agency's 
staffing to shrink in fiscal years 2011 through 2013. The agency's 
appropriation for 2013 was well below the amounts provided to the 
agency during the preceding years (see Figure 2). Those cuts, combined 
with small increases in average pay and rising costs of benefits and 
other items during those years, required a drop in the number of FTEs 
to only 225 in 2013, the lowest level in more than a dozen years. In 
addition, the agency had to defer critical purchases of IT equipment 
and services and other items.




    CBO's appropriation for 2014 was significantly larger than its 
appropriation for 2013, and the appropriation for 2015 equaled the 
amount provided in 2014. Accordingly, the agency sharply increased its 
recruiting efforts in order to return its staffing to the traditional 
level of 235 FTEs as quickly as possible and to catch up on deferred IT 
purchases. As a result, staffing now stands at 234 FTEs, and the number 
is expected to be slightly higher by the end of this fiscal year.
   cbo's funding request and its consequences for staffing and output
    In fiscal year 2016, CBO will continue its mission of providing 
objective, insightful, timely, and clearly presented budgetary and 
economic information to the Congress. To fulfill that mission, CBO 
requests $47.3 million in funding--an increase of $1,570,000 from the 
$45.7 million provided for 2015. The requested amount of funding would 
allow CBO to provide the following estimates and other analyses to the 
Congress:
  --Reports presenting the outlook for the budget and the economy, 
        analyses of the President's budget, long-term budget 
        projections, and options for reducing budget deficits;
  --More than 500 formal cost estimates, most of which will include not 
        only estimates of Federal costs but also assessments of the 
        cost of mandates imposed on State, local, and tribal 
        governments or the private sector;
  --Thousands of preliminary, informal cost estimates, the demand for 
        which is very high as committees seek to have a clear picture 
        of the budgetary impact of proposals and variants of proposals 
        before they formally consider legislation;
  --About 120 scorekeeping tabulations, including account-level detail 
        for individual appropriation acts at all stages of the 
        legislative process and summary tables showing the status of 
        discretionary appropriations (by appropriations subcommittee) 
        and running totals on a year-to-date basis; and
  --Roughly 85 analytical reports and other publications--generally 
        required by law or prepared in response to requests from the 
        Chairmen and Ranking Members of key committees--on a broad 
        range of topics, including healthcare, policies for increasing 
        economic growth and opportunity, changes in benefit programs, 
        defense policy, infrastructure, energy policy, and the 
        Government's role in the financial system.
    Those products would be the result of very hard work by CBO's 
highly dedicated staff. Nevertheless, the agency expects that the 
anticipated volume of estimates and other analyses will fall 
considerably short of the number of Congressional requests. The demands 
on CBO remain intense: The enactment of major healthcare legislation in 
2010 has been followed by a high level of congressional interest in 
analysis of that legislation and numerous proposals for further changes 
in Federal healthcare programs. In addition, the slow recovery from the 
economic downturn has spurred interest in the agency's economic 
forecasts and in policies that might boost economic growth and 
opportunity in both the near term and the longer term. Moreover, the 
surge in Federal debt and the high level of projected deficits have led 
to ongoing congressional efforts to enact fundamental changes in 
spending and tax policies. Analyzing the possibilities and proposals 
has strained the agency's resources in many areas. CBO regularly 
consults with committees and congressional leadership to ensure that 
its limited resources are focused on the work that is of highest 
priority to the Congress.
    The requested funds would be used as follows:
  --$32.1 million for pay of personnel--an increase of $1.6 million (5 
        percent) over the amount that will be spent in fiscal year 
        2015. The increase would cover $0.3 million in pay for the 
        additional FTEs, as well as performance-based salary increases 
        for current staff and an across-the-board increase of 2.2 
        percent for employees making less than $100,000 (if such an 
        increase is authorized for executive branch agencies).
  --$11.1 million for benefits of personnel--an increase of $0.5 
        million (5 percent) relative to the amount projected to be 
        spent in 2015, to fund an increase in the cost of Federal 
        benefits as well as the benefits for the added staff members. 
        The increase in the FERS contribution rate (about 1.7 
        percentage points for most of the affected employees) took 
        effect in 2015 but was not anticipated in the 2015 budget; 
        those costs are being met within the 2015 appropriation because 
        the pay of some new employees turned out to be lower than 
        anticipated. The higher FERS contribution rate accounts for 
        about $0.5 million of the proposed 2016 funding.
  --$4.1 million for other purposes--a decrease of $0.5 million (12 
        percent) from the amount appropriated in 2015. The funds would 
        go toward purchases of IT, data, training, and other items. The 
        decrease for 2016 is made possible primarily by the fact that 
        the 2014 funding allowed CBO to catch up on deferred IT 
        purchases and to make some purchases that reduced future needs.
    In closing, I would like to thank the Committee for the support it 
has provided CBO over many years, enabling the agency to provide 
timely, carefully thought-out nonpartisan budgetary and economic 
analysis to the Congress as it addresses the critical issues facing the 
Nation.

    Senator Capito. Comptroller General.
                    GOVERNMENT ACCOUNTABILITY OFFICE

STATEMENT OF HON. GENE L. DODARO, COMPTROLLER GENERAL
    Mr. Dodaro. Good afternoon, Madam Chairman, Senator Schatz. 
I am very pleased to be here this afternoon to discuss GAO's 
budget request.
    First, I would like to add to the compliments that both of 
you have provided to Doug Elmendorf. He has been a tremendous 
colleague to work with over the years. I want to wish him well 
in his future endeavors.

                               GAO BUDGET

    With regard to GAO's budget request, I just want to make 
three basic points. First, GAO provides an excellent return on 
investment in supporting the Congress and improving the 
performance and accountability of the Government.
    Second, our ability to make an impact and help the Congress 
is dependent on having a highly skilled and experienced 
workforce to carry out our responsibilities.
    Finally, we have advanced a prudent request that will 
enable us to meet the highest priority needs of the Congress 
and provide the greatest impact on achieving financial 
benefits.

                        GAO RETURN ON INVESTMENT

    First, on GAO's return on investment. Last year as a result 
of implementing our recommendations, there were over $54 
billion in financial benefits identified to the Congress and 
the country. This is about a $100 return for every dollar 
invested in GAO. There were also about 1,200 documented 
improvements in agency operations that addressed public health 
and safety issues or helped improve the performance and 
efficiency of Government programs.
    The Bipartisan Budget Act recently incorporated 
recommendations from GAO to save over $23 billion which helped 
in avoiding the sequestration process for fiscal years 2014 and 
2015. The Consolidated Appropriations Act for 2015 was replete 
with references to GAO's work. We made contributions to 
numerous authorizations and reauthorizations on everything from 
defense to agriculture programs.
    We also helped advance major management reforms that the 
Digital Accountability and Transparency Act will now improve, 
if properly implemented, such as the accuracy and searchability 
of all information on Federal spending.
    Our work also led to the Federal Information Technology 
Reform Act, which will improve IT acquisitions across 
Government. We have made a number of recommendations to five 
different pieces of legislation that were passed last year, 
addressing the Federal Government's response to cybersecurity 
issues going forward.
    I think the record of investing in GAO is very clear and 
demonstrates that you get good results.

                             GAO WORKFORCE

    With regard to our workforce, 82 percent of our request is 
for people. We need highly skilled and experienced people. 
Right now, we face succession planning challenges. Like many 
other public sector and private sector organizations, our 
workforce is aging.
    Right now, 40 percent of our Senior Executives are eligible 
to retire and 20 percent of our Senior Managers are eligible to 
retire. As I look ahead to 2018, those numbers go to well over 
50 percent of our Senior Executives and over 30 percent of our 
Senior Managers.
    We need to keep replenishing our pipeline. For people to 
make improvements across the breadth of the Federal 
Government's operations, they need to be experienced. We need 
to bring them in and train them not only on how GAO does its 
work, but also train them to become specialists in subject 
areas, since we serve about 94 percent of the full committees 
of the Congress, standing committees of the Congress, and 70 
percent of the subcommittees. We need experts in many different 
areas across the Federal Government.
    Finally, I would mention our request this year is for a 5.9 
percent increase. That would increase our number of FTE 
positions by 40. We believe this is a prudent increase. As you 
mentioned, Madam Chairman, in your opening comments, the 
optimal level, I believe, for GAO is 3,250 full-time equivalent 
positions. I am not asking to get to that level as a part of 
this request.
    As the auditor of the Federal Government's financial 
statements, I understand our fiscal position right now in terms 
of the deficit and debt. The 40 additional positions will 
enable us to tackle very important issues ranging from $124 
billion in improper payments that went out last year, as well 
as the $385 billion tax gap. We are losing money that we are 
paying that we should not be paying, and not collecting as much 
as we should be collecting.
    We can make a big difference in those areas and other high 
risk areas across the Government.
    Thank you very much for the opportunity to be here today. I 
look forward to responding to your questions.
    [The statement follows:]
               Prepared Statement of Hon. Gene L. Dodaro
    Chairman Capito, Ranking Member Schatz, and members of the 
subcommittee:

    On behalf of the U.S. Government Accountability Office (GAO), I 
appreciate the opportunity to discuss our fiscal year 2016 budget 
request. I also appreciate the confidence this subcommittee has shown 
in GAO by supporting our efforts to serve Congress and improve 
Government performance, accountability, and transparency.
    The fiscal year 2015 funding of $522 million will allow GAO to have 
a staff capacity of 3,015 full-time equivalent (FTE) positions. This is 
a positive step forward in rebuilding our staff capacity, which in 
recent years had dropped to its lowest level since 1935 due to funding 
constraints. GAO remains committed to quality, focusing on meeting the 
highest priorities of Congress, and assisting in improving Government 
efficiency and effectiveness.
    GAO's fiscal year 2016 budget request of $553.1 million will 
support 3,055 FTEs, continuing progress towards achieving an optimal 
level of 3,250 FTEs. The requested funding also provides the resources 
to maintain current operations and make limited investments in 
information technology (IT) and building infrastructure. Costs will be 
offset with $33.4 million in reimbursements, primarily from financial 
audits and rental income.
                             gao highlights
    Highlights of GAO-15-417T, a testimony before the Subcommittee on 
Legislative Branch, Committee on Appropriations, Senate.
                               background
    GAO's mission is to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the Federal Government for the benefit of the American people. GAO 
provides nonpartisan, objective, and reliable information to Congress, 
Federal agencies, and to the public and recommends improvements, when 
appropriate, across the full breadth and scope of the Federal 
Government's responsibilities.
    GAO's work supports a broad range of interests throughout Congress. 
In fiscal year 2014, GAO received requests for our work from 94 percent 
of the standing committees of Congress and almost 70 percent of their 
subcommittees. Additionally, senior GAO officials testified 129 times 
on a wide range of issues that touched virtually all major Federal 
agencies.
    GAO remains one of the best investments in the Federal Government, 
and GAO's dedicated staff continues to deliver high quality results. In 
fiscal year 2014 alone, GAO's work yielded $54.4 billion in financial 
benefits--a return of about $100 for every dollar invested in GAO. 
Since fiscal year 2003, GAO's work has resulted in:
  --over \1/2\ trillion dollars in financial benefits; and
  --about 15,800 program and operational benefits that helped to change 
        laws, improve public services, and promote sound management 
        throughout Government.
    These results are a reflection of the dedication and hard work of 
GAO's staff. GAO has again been recognized as an employer of choice, 
and continues to be ranked near the top on ``best places to work'' 
lists. In December 2014 the Partnership for Public Service ranked GAO 
second among mid-size agencies as one of the best places to work in the 
Federal Government.
                  fiscal year 2016 performance budget
    GAO's fiscal year 2016 budget request of $553.1 million supports 
3,055 full-time equivalent (FTE) staff and continues progress towards 
achieving an optimal level of 3,250 FTE. The request also provides the 
resources to maintain current operations and make limited investments 
in GAO's information technology (IT) and building infrastructure. Costs 
will be offset with $33.4 million in reimbursements, primarily from 
financial audits and rental income.
    The Congress used GAO's work extensively in 2014 to identify 
legislative solutions to emerging problems, achieve cost savings, and 
find efficiencies in Federal agencies and programs. GAO's work helped 
Congress achieve some of the billions in savings and revenue 
enhancements needed to avoid sequestration in fiscal years 2014 and 
2015. In addition, GAO's work was cited repeatedly in the Consolidated 
and Further Continuing Appropriations Act, 2015, and contributed to 
over a dozen key authorizations and reauthorizations, including, among 
others, the Department of Defense, the Coast Guard, workforce programs, 
and agriculture programs. GAO's work also contributed to bills intended 
to improve veteran's healthcare, Federal acquisitions of information 
technology and weapons systems, and transparency of Federal programs.
    In addition to the $54.4 billion in financial benefits from GAO's 
work, during fiscal year 2014, we recorded over 1,200 program and 
operational improvements in numerous areas affecting public safety and 
security and the efficient and effective functioning of Government 
programs, including:
  --cybersecurity governance;
  --oversight of international food aid;
  --security of diplomatic facilities and personnel overseas;
  --sharing of terrorism-related information with Federal and non-
        Federal partners; and
  --the future of nanomanufacturing, including research and 
        development, U.S. competitiveness, and environmental, health, 
        and safety concerns.
    Workforce and succession planning also remain a priority for GAO. 
In fiscal year 2015, GAO plans to achieve a staffing level of 3,015 
FTEs through a targeted recruiting strategy to address critical skills 
gaps. This is a positive step forward in rebuilding staff capacity 
which in recent years had fallen to the lowest level since 1935. The 
additional staff will help ensure GAO has the resources to assist 
Congress in improving Government performance, effectiveness, and 
accountability, as well as support GAO's commitment to service and 
quality. GAO's limited investments in IT and building infrastructure 
will allow GAO to further streamline business operations, increase 
staff productivity, as well as improve access to information. 
Implementation will be done through a phased approach to reduce risk 
and ensure effective implementation.
                   assisting congress and the nation
    GAO provides an exceptional investment, a return of about $100 for 
every dollar invested in GAO. In fiscal year 2014, our work resulted in 
$54.4 billion in financial benefits and 1,288 program and operational 
improvements across the Federal Government.
    The program areas where these benefits have been realized include 
public safety and security, program efficiency and effectiveness, 
public insurance and benefits, acquisition and contract management, tax 
law administration, and business process and management.
    GAO is recognized for its non-partisan, first-hand, objective, 
fact-based, and reliable analyses across the full breadth and scope of 
the Federal Government's responsibilities and the extensive interests 
of Congress.
    In fiscal year 2014, we responded to requests from 94 percent of 
the standing full committees of the Congress, and almost 70 percent of 
the standing subcommittees. Our analyses and testimony inform debate 
and decisions by providing facts and supporting documentation. We 
provide program and technical expertise to support Congress in 
overseeing the executive branch, evaluating spending priorities, and 
assessing information from outside parties.
    GAO remains steadfast in our financial stewardship responsibilities 
by providing high quality work identifying cost-savings and revenue 
enhancements as Congress and the administration deliberate on both the 
Federal Government's immediate priorities and the Nation's long-term 
fiscal path. Through sound analysis and advice, GAO recommends 
solutions across a vast array of areas to foster Government efficiency, 
effectiveness, and responsiveness on high priority challenges facing 
Congress and the Nation. In fiscal year 2014, we issued 693 reports and 
made 1,619 new recommendations. On average about 80 percent of GAO's 
recommendations have been implemented over a 4 year period.
GAO's Work Helps Congress Avoid Sequestration
    Our findings are often cited in House and Senate deliberations and 
committee reports supporting congressional action, including improving 
Federal programs on our High Risk list and addressing fragmentation, 
overlap, and duplication in Government. Congress used our work on a 
broad range of issues to inform its decisions on important legislation, 
which also resulted in financial and other benefits for the Government.
    For example, some of the key decisions adopted by Congress on the 
fiscal year 2014 and 2015 budget (the Bipartisan Budget Act of 2013) 
were linked to our work.
    Specifically, our efforts helped Congress achieve some of the 
billions in savings and revenue enhancements needed to avoid 
sequestration in fiscal years 2014 and 2015, including:
  --improving the cost-effectiveness of filling the Strategic Petroleum 
        Reserve resulting in estimated savings of $3.2 billion over 10 
        years;
  --reducing overpayments for unemployment insurance by $159 million 
        over 10 years by identifying fraud or failure to report 
        earnings;
  --expanding the risk-based element of the Pension Benefit Guaranty 
        Corporation's premium rate structure to increase revenues and 
        offset direct spending by $7.9 billion over 10 years;
  --reducing improper payments to inmates for disaster relief and other 
        assistance resulting in savings of $80 million over 10 years; 
        and
  --increasing aviation security fees to cover 43 percent of aviation 
        security costs in 2014, saving $12.6 billion over 10 years.
    Other contributions to mitigating the sequester related to our work 
included capping compensation costs for Federal contractors.
GAO Contributes to a Wide Range of Key Appropriations and Authorization 
        Legislation
    The Congress used GAO's work in 2014 to identify legislative 
solutions to emerging problems, achieve cost savings, and find 
efficiencies in Federal agencies and programs. For example, GAO's work 
was cited repeatedly in the Consolidated and Further Continuing 
Appropriations Act, 2015 (2015 Appropriations Act), and contributed to 
over a dozen key authorizations and reauthorizations, including for the 
Department of Defense, the Coast Guard, workforce programs, and 
agriculture programs.
    GAO's work also contributed to bills intended to improve veteran's 
healthcare, Federal acquisitions of information technology (IT) and 
weapons systems, and transparency of Federal programs, among others. 
Examples include:
  Cost savings and efficiencies
  --In the 2015 Appropriations Act, Congress rescinded funds or reduced 
        administration proposals for weapon systems, including the 
        Amphibious Combat Vehicle, Joint Tactical Radio System, and the 
        Kiowa Warrior helicopter program for an estimated total of over 
        $500 million.
  --To improve accountability, the Act also withheld funds from 
        agencies, including the Departments of Defense and Energy, 
        until problems identified by GAO were addressed.
  --The Agricultural Act of 2014 reflected billions of dollars in 
        savings through the end of the direct payment program and 
        clarification of eligibility for farm program payments.
  --The Workforce Innovation and Opportunity Act reauthorization 
        realigned and streamlined employment and training programs, and 
        the Water Resources Reform and Development Act directed the 
        Army Corps of Engineers to realign projects according to 
        priority.
  --The Carl Levin and Howard P. ``Buck'' McKeon National Defense 
        Authorization Act for fiscal year 2015 (2015 NDAA) required the 
        Department of Defense to periodically reassess their 
        headquarters requirements to address growth in headquarters 
        bureaucracy.
  Increasing Government transparency
  --The Digital Accountability and Transparency Act required the 
        Federal Government to set government-wide data standards for 
        financial data intended to result in consistent, reliable, and 
        searchable government-wide spending data available to the 
        Congress, agency managers, and the public.
  --The 2015 Appropriations Act and numerous authorization acts 
        required Federal agencies to report on how they would respond 
        to GAO's findings and recommendations.
  Services for veterans
  --The Veterans Access, Choice, and Accountability Act reflected GAO's 
        recommendations regarding changes in the procedures for which 
        VA will pay for healthcare for veterans outside of the VA 
        system. It also addresses concerns about coordination between 
        VA and the Indian Health Service on veteran's healthcare.
  --The Act takes measures to improve IT and staff training related to 
        appointment scheduling.
  --The fiscal year 2015 Appropriations Act instructs DOD to improve 
        cemetery and burial operations, including implementing GAO's 
        recommendations regarding better serving rural veterans.
  Responding to emerging security issues
  --Five new laws addressing emerging cybersecurity challenges 
        reflected GAO's recommendations, including provisions related 
        to security standards, improving the Federal cybersecurity 
        workforce, promoting public and private collaboration regarding 
        cybersecurity, and to clarify and strengthen cybersecurity 
        roles among Federal agencies.
  --With regard to chemical facility security, GAO's work was reflected 
        in the Protecting and Securing Chemical Facilities Act of 2014, 
        which should result in improved risk assessment procedures.
  Improvements to Federal acquisitions
  --In addition to the savings from weapon systems mentioned above, 
        GAO's work was reflected in the Federal Information Technology 
        Acquisition Reform Act, which addresses cost and performance 
        issues in Federal IT acquisitions by improving the transparency 
        of major IT investments, expanding the Chief Information 
        Officer's authorities, eliminating duplication, and identifying 
        cost savings opportunities.
  --Similarly, the Transportation Security Acquisition Reform Act of 
        2014 requires the Transportation Security Agency (TSA) and the 
        Department of Homeland Security (DHS) to reform their approach 
        to identifying technology investments and monitoring cost, 
        schedule and performance of these acquisitions.
  Protecting workers and consumers
  --In the 2015 Appropriations Act the Congress addressed the severe 
        financial difficulties of multiemployer pension plans and the 
        Pension Benefit Guaranty Corporation's Multiemployer Insurance 
        Program.
  --The Cooperative and Small Employer Charity Pension Flexibility Act 
        also reflected GAO's recommendations regarding these pensions.
  --The 2015 Appropriations Act also limits the ability of the National 
        Technical Information Service, within the Department of 
        Commerce, to charge consumers for reports from the Legislative 
        Branch offices that can be obtained from those offices for 
        free.
  --It also required the Department of Education to report on how it 
        would implement GAO's recommendations to improve management of 
        the District of Columbia's Opportunity Scholarship Program and 
        ensure that administrative funds can be used to implement them.
  --The Coast Guard reauthorization required that information about 
        crime on cruise ships be made easily available on the 
        Department of Transportation's Web site.
Program and Operational Benefits due to GAO's Work
    Many of the benefits resulting from our work cannot be measured in 
dollars, but led to program and operational improvements across the 
Government. During fiscal year 2014, we recorded 1,288 of these other 
benefits.\1\
---------------------------------------------------------------------------
    \1\ GAO's performance results can be found at: http://www.gao.gov/
about/perfaccountreport.html. Our Web site includes a summary of GAO's 
fiscal year 2014 Performance and Accountability Report as well as the 
complete report. The annual report informs Congress and the American 
people about what we have achieved on their behalf with the funds 
entrusted to us.
---------------------------------------------------------------------------
    GAO's work led to improvements in numerous areas affecting public 
safety and security and the efficient and effective functioning of 
Government programs. Examples of actions taken by Government agencies 
in response to our work include:
  --better guidance and oversight to ensure complete documentation of 
        investigations into abuse allegations at immigration detention 
        facilities;
  --an improved cyber security governance structure to ensure that 
        Federal agencies' efforts to educate the Nation's cyber 
        security workforce are effective;
  --strengthened oversight of international food aid to ensure that 
        targeted assistance reaches vulnerable groups, such as children 
        and pregnant women, in other countries;
  --enhanced security of diplomatic facilities and personnel overseas, 
        including improvements to security standards and efforts to 
        mitigate vulnerabilities;
  --better sharing of terrorism-related information with Federal and 
        non-Federal partners and enhanced efforts to identify and 
        narrow gaps in information sharing;
  --informed decisionmaking on the future of nanomanufacturing, 
        including research and development, U.S. competitiveness, and 
        environmental, health, and safety concerns; and
  --improved transparency regarding how sequestration decisions were 
        implemented so that agencies can better plan for such events if 
        they occur in the future.
    This past fiscal year, GAO also issued revised internal control 
standards for the Federal Government and made significant contributions 
to international auditing standards. These standards can help agencies 
achieve effective internal control systems to safeguard public 
resources, report reliable information about their operations, and 
comply with applicable laws and regulations.
    Through the products we issued in fiscal year 2014, we continued to 
build on bodies of work under our three broad strategic goals:
    (1)  address current and emerging challenges to the well-being and 
financial security of the American people;
    (2) respond to changing security threats and global 
interdependence; and
    (3) help transform the Federal Government to address national 
challenges.

    Work completed in these areas included:
  --Protection of children--we reported on the need for improvements to 
        school lunches, guidance for states on the use of psychotropic 
        drugs for children in foster care, and preventing sexual abuse 
        of students by school personnel;
  --Veterans--we reported on out-patient medical care, purchasing and 
        tracking of surgical implants, cost increases and schedule 
        delays in constructing and leasing VA medical facilities, and 
        the accuracy and quality of processing disability claims for 
        veterans;
  --Healthcare--we continued to report on the implementation of the 
        Patient Protection and Affordable Care Act (e.g., 
        HealthCare.gov), drug shortages, Internet pharmacies selling 
        counterfeit drugs, Medicare fraud, Medicaid financing, and 
        nursing home care; and
  --Financial literacy--we reported on retirement security, managed 
        retirement accounts, student loans, college debit cards, and 
        lump sum payment pension scams.
Testimonies
    Senior GAO officials testified 129 times before 70 separate 
committees or subcommittees on issues that touched virtually all major 
Federal agencies. Figure 1 shows examples of topics GAO testified on in 
fiscal year 2014 organized by strategic goal.
    Additional information on selected testimonies can be found in Part 
II of the 2014 Performance and Accountability Report at: http://
www.gao.gov/products/GAO-15-1SP.

       FIGURE 1: EXAMPLES OF FISCAL YEAR 2014 TESTIMONIES BY GOAL

Goal 1: Address Current and Emerging Challenges to the Well-being and 
        Financial Security of the American People
Processing Veterans' Disability Benefits
Early Learning and Child Care
Social Security Disability Programs
Timely Outpatient Medical Care for Veterans
Federal Fiscal Exposure from Climate Risks
Export-Import Bank Management
Airport Development and Financing
Oil and Gas Management
U.S. Postal Service's Unfunded Benefit Liabilities
Oversight of Student Loans
Public Transit Challenges
Expectations of Government Support for Large Bank Holding Companies
Federal Efforts Supporting Financial Literacy
VA Construction of Major Medical Facilities Face Cost Increases and 
Schedule Delays
Medicare Fraud
Goal 2: Respond to Changing Security Threats and the Challenges of 
        Global Interdependence
Arizona Boarder Surveillance Technology Plan
Personnel Security Clearances
DOD's POW/MIA Mission and Challenges
Enhancing Federal Response to Information Security Breaches
Space Launch Acquisitions
Nuclear Nonproliferation
Defense Acquisition Management Reforms
DHS Chemical Security Program
DHS's Progress Addressing High Risk Issues
DOD Acquisition Risks
F-35 Joint Strike Fighter
NASA Export Controls
DHS Research and Development Oversight
Defense Health Reform
USAID Support for Haiti's Reconstruction
HealthCare.gov Security and Privacy Controls
TSA's Screening Partnership Program
Goal 3: Help Transform the Federal Government to Address National 
        Challenges
Biosafety Lapses in High Containment Labs
Use of Psychotropic Medications for Foster Children
IT Reform
Patient Protection and Affordable Care Act Enrollment Control
Leveraging Best Practices for IT Acquisitions
Monitoring Improper Payments
Government-wide Challenges to Efficiency and Effectiveness
Reducing Fragmentation, Overlap, and Duplication in Federal Programs
DOD Financial Management
----------
    Source: GAO.

    In addition, to better serve our clients and the public, we 
expanded our presence in digital and social media, releasing GAO iPhone 
and Android applications, and launching streaming video web chats with 
the public. More than 31,300 people now get our testimonies, reports, 
and legal decisions daily on Twitter, and our blog was just named one 
of the five best across the Federal Government.
    Building on our efforts in fiscal year 2013 to improve the GAO 
Watchdog website, available exclusively for members and their staff, in 
fiscal year 2014 we added drop-down menus, videos, and other features 
to enhance the user-friendliness of the site; improved functionality by 
allowing users to more easily find information on completed and ongoing 
GAO engagements; and feature new content such as descriptions of the 
full range of products and services GAO provides, including briefings 
by subject matter experts, comments on legislation, and assistance in 
drafting requests for work.
High Risk Program
    GAO maintains a list for Congress of High Risk areas, which focuses 
on Government operations that are at high risk of fraud, waste, abuse, 
and mismanagement, or need transformation to address economy, 
efficiency, or effectiveness challenges, organized by six broad areas 
that touch on every aspect of Government operations:
  --Strengthening the Foundation for Efficiency and Effectiveness, 
        including management of Federal oil and gas resources, 
        modernizing the U.S. financial regulatory system and the 
        Federal role in housing finance;
  --Transforming DOD Program Management;
  --Ensuring Public Safety and Security, including mitigating gaps in 
        weather satellite data and protecting public health through 
        enhanced oversight of medical products;
  --Managing Federal Contracting More Effectively, including at DOD, 
        NASA and DOE;
  --Assessing the Efficiency and Effectiveness of Tax Law 
        Administration; and
  --Modernizing and Safeguarding Insurance and Benefit Programs.
    In February 2015, GAO released its latest update of the list. The 
report noted that solid, steady progress has been made in the vast 
majority of the high-risk areas. Eighteen of the 30 areas on the 2013 
list at least partially met all of the criteria for removal from the 
High Risk List. Of those, 11 met at least one of the criteria for 
removal and partially met all others. Sufficient progress was made to 
narrow the scope of two high-risk issues--Protecting Public Health 
through Enhanced Oversight of Medical Products and DOD Contract 
Management. Overall, progress has been possible through the concerted 
actions of Congress, leadership and staff in agencies, and the Office 
of Management and Budget.

    This year GAO added 2 areas, bringing the total to 32:
  --Managing Risks and Improving Veterans Affairs (VA) Health Care.--
        GAO has reported since 2000 about VA facilities' failure to 
        provide timely healthcare. In some cases, these delays or (VA's 
        failure to provide care at all) have reportedly harmed 
        veterans. Although VA has taken actions to address some GAO 
        recommendations, more than 100 of GAO's recommendations have 
        not been fully addressed. The recently enacted Veterans Access, 
        Choice, and Accountability Act included provisions to help VA 
        address systemic weaknesses. VA must effectively implement the 
        Act.
  --Improving the Management of Information Technology (IT) 
        Acquisitions and Operations.--Congress has passed legislation 
        and the administration has undertaken numerous initiatives to 
        better manage IT investments. Federal IT investments too 
        frequently fail to be completed or incur cost overruns and 
        schedule slippages while contributing little to mission-related 
        outcomes. GAO has found that the Federal Government spent 
        billions of dollars on failed and poorly performing IT 
        investments which often suffered from ineffective management, 
        such as project planning, requirements definition, and program 
        oversight and governance. Over the past 5 years, GAO made more 
        than 730 recommendations; about 23 percent had been fully 
        implemented as of January 2015.

    GAO is also expanding two areas due to evolving high-risk issues:
  --Enforcement of Tax Laws.--This area is expanded to include IRS's 
        efforts to address tax refund fraud due to identify theft. IRS 
        estimates it paid out $5.8 billion (the exact number is 
        uncertain) in fraudulent refunds in tax year 2013 due to 
        identity theft. This occurs when a thief files a fraudulent 
        return using a legitimate taxpayer's identifying information 
        and claims a refund.
  --Ensuring the Security of Federal Information Systems and Cyber 
        Critical Infrastructure and Protecting the Privacy of 
        Personally Identifiable Information (PII).--This risk area is 
        expanded because of the challenges to ensuring the privacy of 
        personally identifiable information posed by advances in 
        technology. These advances have allowed both Government and 
        private sector entities to collect and process extensive 
        amounts of PII more effectively. The number of reported 
        security incidents involving PII at Federal agencies has 
        increased dramatically in recent years.

       Solving these high risk problems has the potential to save 
billions of dollars, improve service to the public, and strengthen the 
performance and accountability of the U.S. Government. For example, 
since our last update in 2013, we issued 317 reports, delivered 78 
testimonies to Congress, and prepared numerous other products such as 
briefings related to our high risk work. We documented more than $40 
billion in financial benefits and 866 other improvements related to 
high-risk areas. The complete list of high-risk areas is included as 
Appendix I. Details on each high-risk area can be found at http://
www.gao.gov/highrisk/overview.
Fragmentation, Overlap, and Duplication
    GAO issued the fourth annual report in 2014 identifying 26 new 
areas and 64 actions that could reduce fragmentation, overlap, and 
duplication, as well as other cost savings and revenue enhancement 
opportunities across the Federal Government. To date, we have 
identified 188 areas where opportunities exist for executive branch 
agencies or Congress to reduce, eliminate, or better manage 
fragmentation, overlap, or duplication; achieve cost savings; or 
enhance revenue. These areas span a broad range of Government missions 
and functions.
    Within these 188 areas, we've identified approximately 440 actions 
that executive branch agencies and Congress could take to address these 
opportunities for greater efficiency and effectiveness. Although 
Congress and executive branch agencies have made notable progress 
toward addressing the actions we have identified, further steps are 
needed to fully address the remaining actions.
    As of November 2014, of the recommended actions identified in 2011, 
2012, 2013, and 2014, 29 percent have been addressed; 44 percent have 
been partially addressed; and 23 percent have not been addressed.\2\ 
More specifically, of the actions directed to executive branch 
agencies, 30 percent have been addressed, 49 percent partially 
addressed, and 18 percent not addressed.\3\ Of the actions directed to 
Congress, 26 percent have been addressed, 16 percent partially 
addressed, and 51 percent not addressed.\4\
---------------------------------------------------------------------------
    \2\ Eighteen actions (or 4 percent) have been assessed as 
``consolidated or other'' due to additional work or other information 
that we considered.
    \3\ Of the 18 actions assessed as ``consolidated or other,'' 13 
relate to executive branch actions (or 3 percent of the actions 
directed to the executive branch).
    \4\ Of the 18 actions assessed as ``consolidated or other,'' five 
relate to congressional actions (or 7 percent of the actions directed 
to Congress).
---------------------------------------------------------------------------
    We estimate that executive branch and congressional efforts to 
address actions identified by GAO have resulted in over $10 billion in 
realized savings with an additional $60 billion in financial benefits 
to be accrued over the next 10 years. Implementing other suggested 
actions could result in tens of billions of dollars more in cost 
savings and enhanced revenues. For example, in 2012, GAO reported that 
the military's approach to acquiring combat uniforms was fragmented, 
which could increase battlefield risk and increase costs. As a result 
of a provision to the National Defense Authorization Act for fiscal 
year 2014, the Army did not field new camouflage uniforms, avoiding 
$4.2 billion in costs over 5 years.
    To assist congressional oversight of these issues, we maintain 
GAO's Action Tracker, a publicly accessible Web site containing the 
status of actions suggested in this series of reports. The Web site 
allows Congress, executive branch agencies, and the public to track the 
progress the Government is making in addressing the issues we have 
identified.
Legal Work
    In fiscal year 2014, GAO published 22 appropriations decisions, 
opinions, and letters on wide-ranging issues such as DOD's transfer of 
individuals from Guantanamo Bay, and the District of Columbia's budget 
autonomy. GAO attorneys also provided ongoing appropriations law 
assistance to various congressional committees and Federal agencies 
navigating the Government shutdown.
    GAO also assisted Congress on a number of other matters, including 
continuing advice on the implementation of sequestration. Finally, 
GAO's Office of General Counsel handled more than 2,500 bid protest 
cases during fiscal year 2014, issuing more than 500 decisions on the 
merits.
    The Consolidated Appropriations Act, 2014, directed GAO to develop 
an electronic bid protest filing system. The statute also authorized 
the collection and use of fees to offset the costs of that system. We 
conducted outreach with Congress and small business and veterans groups 
identified by congressional stakeholders regarding the implementation 
of a filing fee. Periodic updates are provided on our progress to the 
House and Senate Committees on Appropriations.
    We are making progress in developing the system. After considering 
the functional requirements for an electronic filing system, with an 
emphasis on IT security issues, we conducted market research through a 
Request for Information. We invited several vendors to provide 
demonstrations of their capabilities, and we developed a prototype bid 
protest electronic filing system as a proof of concept. We currently 
expect to complete development and launch the system by the end of 
calendar 2015.
                  strategic plan for serving congress
    In February 2014, GAO released its updated Strategic Plan: Serving 
the Congress and the Nation 2014-2019 (GAO-14-1SP). The plan describes 
our proposed goals and strategies for supporting Congress and the 
Nation as the country continues through this period of challenge and 
opportunity. Our strategic plan framework (Appendix II) summarizes the 
global trends, as well as the strategic goals and objectives that guide 
our work.
    While summarizing trends shaping the United States and its place in 
the world, the strategic plan reflects the areas of work we plan to 
undertake, including science and technology, weapons systems, 
healthcare, homeland security, the environment, and energy.
    GAO will also increase collaboration with other national audit 
offices to ensure sound collaboration and coordination on global issues 
that directly affect the United States, including international 
financial markets.
  managing workload by focusing resources on congressional priorities
    To manage our congressional workload, we continue to take steps to 
ensure our work supports the highest congressional legislative and 
oversight priorities while focusing on areas where there is the 
greatest potential for results, such as cost savings and improved 
Government performance.
    We actively coordinate with congressional committees in advance of 
new statutory mandates \5\ by identifying mandates real time as bills 
are introduced; participating in ongoing discussions with congressional 
staff; and collaborating to ensure that the work is properly scoped and 
is consistent with the committee's highest priorities.
---------------------------------------------------------------------------
    \5\ Congressional mandates include requirements directed by 
statutes, congressional resolutions, conference reports, and committee 
reports.
---------------------------------------------------------------------------
    In fiscal year 2014, 33 percent of our audit resources were devoted 
to mandates and 63 percent to congressional requests. I regularly meet 
with Chairs and Ranking Members of committees and subcommittees to hear 
firsthand feedback on our performance. Their priorities help ensure we 
maximize the return on your investment in us.
    As a matter of routine, GAO also reviews its list of recurring 
mandates (i.e., those that have repeating requirements over time) on an 
annual basis, and works with the appropriate committees to revise or 
repeal, as appropriate, those mandates on topics or programs which have 
already been fully analyzed, thereby freeing up resources for higher 
congressional priorities.
    During the second session of the 113th Congress, we collaborated 
with the Congress to revise or repeal GAO's mandated reporting 
requirements which had, over time, lost relevance or usefulness. 
Specifically, GAO worked with responsible committees to have six 
mandates repealed or revised as part of the 2014 National Defense 
Authorization Act. In addition, HR 4194, Government Reports Elimination 
Act repeals or revises an additional 11 mandates, and the National 
Defense Authorization Act for fiscal year 2015 included provisions to 
modify or repeal 4 reporting requirements for GAO. Both of these were 
passed by the Congress and signed by the President in November 2014.
                     fiscal year 2016 requirements
    GAO's fiscal year 2016 budget request seeks an appropriation 
increase of $31.1 million, or 5.9 percent, to support a modest increase 
in our staffing level to 3,055 FTE and continue critical improvements 
in our IT, building, and security infrastructures. Costs will be offset 
with $33.4 million in reimbursements, primarily from financial audits 
and rental income.
    The requested resources provide the funds necessary to ensure that 
GAO can meet the highest priority needs of Congress and produce results 
to help the Federal Government deal effectively with its serious fiscal 
and other challenges. A summary of GAO's resources for our fiscal year 
2010 baseline and fiscal years 2014 to 2016 is shown in Figure 2.

        FIGURE 2: FISCAL YEAR 2010 BASELINE AND FISCAL YEAR 2014 TO FISCAL YEAR 2016 SUMMARY OF RESOURCES
                                             [Dollars in thousands]
----------------------------------------------------------------------------------------------------------------
                                       Fiscal Year 2010   Fiscal Year 2014   Fiscal Year 2015   Fiscal Year 2016
                                            Actual             Actual           Estimated           Request
           Funding Source            ---------------------------------------------------------------------------
                                        FTE     Amount     FTE     Amount     FTE     Amount     FTE     Amount
----------------------------------------------------------------------------------------------------------------
Salaries and Expenses Appropriation.  ......   $556,325  ......   $505,293  ......   $522,000  ......   $553,058
Non-legislative-branch appropriation  ......     21,804  ......         70  ......  .........  ......  .........
Reimbursements......................  ......     10,214  ......      2,330  ......      8,405  ......      7,955
Offsetting receipts.................  ......     10,892  ......     20,898  ......     25,000  ......     25,000
Bid protest user fees...............  ......  .........  ......  .........  ......  .........  ......        450
                                     ---------------------------------------------------------------------------
      Total budget authority........   3,347   $599,235   2,891   $528,591   3,015   $555,405   3,055  $586,463
----------------------------------------------------------------------------------------------------------------
Source: GAO.

                             staff capacity
    Our talented, diverse, and high-performing workforce is essential 
in fulfilling our mission of supporting Congress. While progress has 
been made, we still face challenges in addressing critical human 
capital management issues, including preparing for retirements of key 
subject matter experts, senior executives, and other key leaders; 
maintaining a performance-based and inclusive culture that helps 
motivate and retain a talented and diverse staff; and maintaining 
workplace and work-life practices that meet the needs of an evolving 
workforce in an equitable manner.
    A significant proportion of our employees are currently retirement 
eligible. Presently, about 40 percent of our senior executive staff and 
21 percent of our supervisory analysts are retirement eligible. In 
fiscal year 2015, through a targeted recruiting strategy to address 
critical skills gaps, we plan to hire entry-level staff and student 
interns to achieve a staff capacity of 3,015 FTEs. This will allow us 
to continue to reverse the downward trend in our FTEs and achieve some 
progress in reaching our optimal staffing level of 3,250 FTEs. Our 
fiscal year 2016 budget seeks funding for a 3,055 FTE level to help us 
continue to replenish the much needed pipeline of entry-level and 
experienced analysts to meet future workload challenges.
Priority Areas for Increased Staffing
    GAO has identified areas that merit increased review and attention 
as additional staffing is made available including:
  --Continued Identification and Reduction in Improper Payments.--In 
        fiscal year 2014 improper payments made in Federal programs 
        were estimated to be over $124 billion, nearly $19 billion 
        higher than reported for fiscal year 2013. Moreover, much of 
        this increase is in two of the fastest growing programs in 
        terms of Federal expenditures--Medicare and Medicaid. GAO will 
        continue to be vigilant in identifying improper payments and 
        providing recommendations to prevent this wasteful situation.
  --Science and Technology.--Congress increasingly asks GAO to review 
        multi-billion dollar Federal investments in science and 
        technology areas, such as cybersecurity, satellite and space 
        programs, sophisticated weapons systems, as well as the 
        environmental and energy sectors. GAO has also developed the 
        capability to do science and technology assessments, and will 
        continue to replenish our staff capacity to maintain a strong 
        position in this area.
  --The tax gap.--The net gap between taxes owed and taxes paid is an 
        estimated $385 billion each year. There is about an 84 percent 
        compliance rate on taxes owed to the Federal Government. GAO 
        has identified a number of opportunities for the Internal 
        Revenue Service to get better data to do the necessary 
        comparisons and increase collections. GAO will continue to 
        devote resources to this area. The additional resources will 
        enable us to expand our work in finding ways to further close 
        the tax gap.
                        operational efficiencies
    In addition to addressing critical staffing needs, the fiscal year 
2016 budget request also focuses funding on two other areas, 
information technology and building and security.

  --Information Technology

          GAO's IT systems are an essential component in ongoing 
        efforts to maintain efficient and effective business operations 
        and to provide timely data needed to inform management 
        decisions.
          Improvements to our aging IT software will streamline 
        business operations, reduce redundant efforts, increase staff 
        effectiveness and productivity, improve access to information, 
        facilitate a more agile and mobile workforce, and improve 
        operational efficiency.
          We continue to implement many of these actions in a phased 
        approach to promote efficiencies and monitor effectiveness. In 
        fiscal year 2016, we plan to:
    --complete implementation of the first phase of a new content 
            creation system, which will automate the creation, 
            indexing, referencing, review, approval, and publishing of 
            GAO products via a standard workflow;
    --increase the availability of our core network wireless 
            infrastructure at both headquarters and the field offices; 
            and
    --strengthen our cellular signal with a new antenna capability, 
            which will allow GAO to change providers without needing to 
            upgrade internal antennas.
          These efforts will strengthen GAO's technology infrastructure 
        and support an array of engagement management, human capital, 
        and financial management systems.

  --Building and Security

          GAO plans to upgrade critical aging building systems to 
        ensure more efficient operations and security. To support these 
        requirements our fiscal year 2016 budget request includes 
        resources to:
    --make general structural and architectural repairs, including the 
            elevator shafts, interior walls, auditorium walls, 
            projection booth, and the handicapped lift;
    --continue addressing priority items identified in the asset 
            management plan for critical repairs, end-of-life 
            replacements, and energy saving investments in the 
            headquarters building, including replacement of the first 
            floor heating and air conditioning system and the overhaul 
            and retrofit of two chillers;
    --complete the headquarters lockdown project, which would provide 
            building guards with the capability to lock all street exit 
            doors more quickly in the event of an emergency or threat; 
            and
    --install Joint Worldwide Intelligence Communication System 
            capabilities to facilitate access to DOD's Top Secret/SCI 
            Internet.
Telework/Workspace-Sharing Pilots Reduce Costs and Improve Operational 
        Efficiency
    GAO remains committed to sound operational efficiency and 
effectiveness. Our telework/workspace-sharing pilot has provided an 
opportunity for staff to work remotely while maintaining quality and 
productivity. This strategy has allowed GAO to reduce our physical 
footprint in the field and achieve cost savings of over $2 million.
    GAO is presently assessing the prospect of telework/workspace-
sharing pilots in our Washington, DC headquarters. Implementation in 
headquarters may provide opportunities to streamline space usage and 
release space for lease to a future tenant, resulting in additional 
revenue. Results of the pilot will be critical to determining the 
potential for space reductions.
          gao recognized as one of the ``best places to work''
    On December 9, 2014, the Partnership for Public Service announced 
that GAO placed second among mid-size agencies in the best places to 
work in the Federal Government, and ranked number one in its support of 
diversity in that same category. GAO has consistently placed among the 
top five on the Partnership's list since 2005.
    We continuously strive to be the employer of choice in the public 
sector. Our ranking results from the dedicated efforts of the entire 
GAO team and leadership for their commitment in continuing to make GAO 
one of the Best Places to Work. GAO management remains committed to 
work with our union (IFPTE, Local 1921), the Employee Advisory Council, 
and the Diversity Advisory Council to continue to make GAO a preferred 
place to work.
                      center for audit excellence
    The Consolidated and Further Continuing Appropriations Act, 2015, 
enacted in December 2014, authorized GAO to establish a Center for 
Audit Excellence to build institutional auditing capacity and promote 
good governance by providing training and assistance to qualified 
personnel and entities, and permitted GAO to charge fees for the 
Center's products and services.
    The Center's mission is to enhance good governance and build the 
institutional auditing capacity of domestic and international audit 
organizations by providing high quality training, technical assistance, 
and related services that leverage GAO's position as a global leader in 
auditing. A business plan will be provided to the Appropriations 
Committees that will outline several key principles to help ensure 
effective operation of the Center.
                           concluding remarks
    In conclusion, GAO values the opportunity to provide Congress and 
the Nation with timely, insightful analysis on the challenges facing 
the country. GAO's fiscal year 2016 budget request is a fiscally 
responsible approach that will better position GAO to continue to 
support Congress and foster Government accountability, address long-
standing challenges, and keep a watchful eye on the Nation's future.
    Our budget request includes funds to increase our staffing level 
and provide employees with the appropriate resources and support needed 
to effectively serve Congress. The requested funding will also allow us 
to continue efforts to promote operational efficiency, and begin 
addressing long-deferred investments and maintenance.
    This concludes my prepared statement. I appreciate, as always, your 
continued support and careful consideration of our budget. I look 
forward to discussing our fiscal year 2016 request with you.

                 APPENDIX I: GAO'S 2015 HIGH RISK LIST

Strengthening the Foundation for Efficiency and Effectiveness
  --Limiting the Federal Government's Fiscal Exposure by Better 
        Managing Climate Change Risks
  --Management of Federal Oil and Gas Resources
  --Modernizing the U.S. Financial Regulatory System and the Federal 
        Role in Housing Finance \a\
  --Restructuring the U.S. Postal Service to Achieve Sustainable 
        Financial Viability \a\
  --Funding the Nation's Surface Transportation System \a\
  --Strategic Human Capital Management
  --Managing Federal Real Property
  --Improving the Management of IT Acquisitions and Operations (new)
Transforming DOD Program Management
  --DOD Approach to Business Transformation
  --DOD Business Systems Modernization
  --DOD Support Infrastructure Management \a\
  --DOD Financial Management
  --DOD Supply Chain Management
  --DOD Weapon Systems Acquisition
Ensuring Public Safety and Security
  --Mitigating Gaps in Weather Satellite Data
  --Strengthening Department of Homeland Security Management Functions
  --Establishing Effective Mechanisms for Sharing and Managing 
        Terrorism-Related Information to Protect the Homeland
  --Ensuring the Security of Federal Information Systems and Cyber 
        Critical Infrastructure and Protecting the Privacy of 
        Personally Identifiable Information \a\
  --Ensuring the Effective Protection of Technologies Critical to U.S. 
        National Security Interests \a\
  --Improving Federal Oversight of Food Safety \a\
  --Protecting Public Health through Enhanced Oversight of Medical 
        Products
  --Transforming EPA's Processes for Assessing and Controlling Toxic 
        Chemicals \a\
Managing Federal Contracting More Effectively
  --DOD Contract Management
  --DOE's Contract Management for the National Nuclear Security 
        Administration and Office of Environmental Management
  --NASA Acquisition Management
Assessing the Efficiency and Effectiveness of Tax Law Administration
  --Enforcement of Tax Laws \a\
Modernizing and Safeguarding Insurance and Benefit Programs
  --Managing Risks and Improving VA Health Care (new)
  --Improving and Modernizing Federal Disability Programs
  --Pension Benefit Guaranty Corporation Insurance Programs \a\
  --Medicare Program \a\
  --Medicaid Program \a\
  --National Flood Insurance Program \a\
----------
    Source: GAO.
    \a\ Legislation is likely to be necessary to effectively address 
this high-risk area.

              APPENDIX II: GAO'S STRATEGIC PLAN FRAMEWORK


        EXPLANATION FOR THREE NEW FULL-TIME EQUIVALENT POSITIONS

    Senator Capito. Thank you. I want to thank both of you. I 
will begin the questions. Dr. Elmendorf, you mentioned and you 
highlighted in your statement the fact that the demand exceeds 
the supply in terms of your workforce. You have asked for three 
more FTEs.
    I am wondering, is this part of a gradual build up that you 
believe is necessary for the CBO in order to meet the demand 
you talked about? Or do you think this is because of the 
healthcare issue, and maybe some of the macroeconomic issues 
that need to be addressed?
    Dr. Elmendorf. Madam Chairman, I think the Congress would 
benefit from higher staffing levels at CBO. A few years ago, we 
had more than 250 FTEs. That was an increase relative to the 
235 that we had in the first part of the last decade, and that 
increase was designed by the Appropriations Committee, the 
Budget Committee, and CBO, so that CBO could serve the Congress 
better, and in particular, by being able to do more analysis of 
healthcare issues without cutting back on the analysis we do 
across the whole range of other topics.
    We put those extra resources to good use. We hired people 
and we produced more estimates of pending legislative 
proposals. We produced more reports, studying areas of the 
Federal budget. We did more building of models to give you and 
your colleagues more accurate estimates of the effects of 
proposals.
    If it were up to me and money was freely available, I would 
certainly have requested a larger increase for CBO, but we 
understand the constraints you operate under, and we view this 
as a small step in a direction that would be useful to you.

                       USE OF CONTRACTORS AT CBO

    Senator Capito. I appreciate that. Do you use contractors 
at all?
    Dr. Elmendorf. Very little. We have a few contractors. We 
look for expertise outside of CBO when we do not have it, but 
the vast majority of our expertise is in-house, and we have 
just a few contractors in particular areas, some in support 
areas, in IT, and some in substantive areas of economic and 
budgetary analysis, but it is very limited.

               HIRING EMPLOYEES WITH NON-IMMIGRANT VISAS

    Senator Capito. You mentioned the skills gap, trying to 
find the highly skilled economists in terms of competition with 
both the private and public sector agencies. In the 2016 
budget, you include language that you have asked for for the 
last several years authorizing the hiring of employees with 
non-immigrant visas.
    I understand this is not the first time, but why do you 
believe that hiring of employees with non-immigrant visas is 
critical to the workforce, to your workforce? Is it because we 
do not have the talent here at all or you cannot compete for 
that talent?
    Dr. Elmendorf. I think we are always trying to attract and 
retain the best people we can, and I am very proud of the 
people we have at CBO, but we find the recruiting and retention 
processes to be difficult.
    On the recruiting side, about 35 percent of CBO staff have 
Ph.D.'s in economics, and two-thirds of the people who are 
obtaining Ph.D.'s in economics in this country are foreign 
nationals.
    If we can only look at the other third, we have just taken 
off the table two-thirds of the people who might have the 
skills that we need, and we cannot settle for people who do not 
have the right skills, but we end up looking harder and longer. 
We have larger gaps between when somebody leaves and before we 
can fill that slot. We sometimes hire people who then need more 
training from us, which is fine, but it slows our work for 
Congress.
    If we could broaden the field of people whom we could hire, 
at least in cases where we have a particular shortage of those 
skills in U.S. citizens, we think that would help us.
    We had some of that authority until 2010, and we hired a 
small number of foreign nationals. At that point, our authority 
was limited to countries that were allies of the United States, 
and there was a well defined list of such countries. We found 
at the time that helped us fill some crucial niches, and that 
is the authority that we are requesting to have restored.

                       GAO EDUCATION DEMOGRAPHIC

    Senator Capito. Just curious, Mr. Dodaro, what percentage 
of your workforce are Ph.D. economists, approximately?
    Mr. Dodaro. About 75 percent of our people have advanced 
degrees, Master's and Ph.D.'s.

                      CENTER FOR ADULT EXCELLENCE

    Senator Capito. There are probably not too many Ph.D. 
economists, not as many as maybe we need. Let me ask you, at 
GAO, you created the Center for Audit Excellence, authorized in 
the 2015 bill. Can you give us an update on that and what your 
plans for the Center are?
    Mr. Dodaro. The purposes of the Center are really to help 
advance U.S. interests abroad. The United States spent money 
along with others in the donor community. USAID and 
multinational lending organizations are moving to rely more on 
country systems.
    We would build the auditing capacity in other countries so 
there is better accountability over U.S. funds and other funds.
    Also, this would improve the global marketplace. Right now, 
for example, in the global financial markets it is important to 
have international regulations implemented properly. We get 
most of our drugs now, 80 percent ingredients for prescription 
drugs, from other countries, and 40 percent of finished drugs. 
More of our food is now being imported.
    If we can build the audit capacities in other countries, 
there will be better protections for U.S. consumers and U.S. 
interests.
    We have developed a business plan for the Center. Just in 
the last couple of months alone, the State Department 
approached us about providing training to an African country to 
help fight corruption. The Millennium Challenge Corporation has 
asked for help in providing training in South America and other 
areas.
    We get requests all the time. We are considered one of the 
global leaders in auditing in the world.
    Senator Capito. Quick question on that, and then I will go 
to my colleagues. When you are aiding another country, are you 
charging a consulting fee or anything like that?
    Mr. Dodaro. Right now, we have to have the committees 
approve our business plan before we can actually start 
operations. The idea is to charge a fee. The Center would be 
self financing. We need money for start up, like any other 
small business. Our plan is to use retired GAO people. That way 
it will not affect our service to the Congress.
    Senator Capito. Thank you. Senator Schatz.

ENERGY SAVINGS PERFORMANCE (ESPCS) AND UTILITY ENERGY SERVICE CONTRACT 
                                (UESCS)

    Senator Schatz. Thank you. Dr. Elmendorf, CBO recently 
released a report that had great things to say about the 
taxpayer benefits of using energy savings performance contracts 
and utility energy service contracts to make long term 
investments to reduce energy costs.
    You report that by law under Energy Savings Performance 
Contracts (ESPCs) and Utility Energy Service Contracts (UESCs), 
energy efficiency upgrades are paid back exclusively from 
realized energy savings. These contracts never result in a 
penny of new spending, and agencies do not need to make a 
meaningful upfront investment.
    CBO also reports that beyond having a guarantee of no cost 
to the taxpayer, ESPCs and UESCs save taxpayer spending on 
energy. CBO estimates that after a contract is repaid using 
energy savings, the taxpayer typically retains at least 25 
percent of the savings produced by the energy efficient 
equipment over its useful life.
    I think the report confirms ESPCs and UESCs are a sound 
strategy. Again, they do not require one penny of spending, 
typically produce savings well beyond their costs, and isolate 
the taxpayer from risk that the equipment will under perform or 
fail.
    As you know, the CBO's budgetary treatment of ESPCs and 
UESCs prevent Congress from enacting policies that will allow 
for more deployment across the Federal Government. This is 
because the score of the legislation to expand the use of ESPCs 
and UESCs only reflects the cost of the investments but not the 
savings that flow back over time.
    We need a clear picture of which programs are saving money 
and CBO's scoring hides the true financial benefits of these 
types of instruments. CBO has reported several times that the 
budget rules constrain the agency from reflecting the 
cumulative net costs and savings from expanding the use of 
ESPCs and UESCs.
    Dr. Elmendorf, why does CBO show any cost for entering into 
a contract when the contracts themselves guarantee no cost?
    Dr. Elmendorf. Senator, I appreciate your careful read of 
our report. Let me try to make a few points. The first is that 
in our analysis of the effects of ESPCs on the Federal 
Government's energy costs, we rely on analyses of other 
agencies, including the Government Accountability Office.
    Our summary does report that on balance, the energy savings 
performance contracts that have been entered into recently have 
reduced Federal energy costs. That is not true necessarily with 
every single contract. As we explained, there can be a wide 
variation in the return across contracts, but on average, that 
is what other agencies have determined has happened.
    In our cost estimates for legislation involving ESPCs, we 
provide the Congress with the same sort of information that we 
do for other legislation. We provide an assessment of effects 
of the legislation on the discretionary spending, the 
appropriations that are determined by this committee and the 
rest of the Congress every year, and we provide estimates of 
effects on mandatory spending.
    We do show as a cost in mandatory spending the commitment 
that the Federal Government is making when it enters into a 
contract of that sort. That is not a matter of scoring rules. 
That is just a matter of basic budget principles, which is to 
show the up front costs.
    We also show the savings that can accrue in subsequent 
years. I think one challenge is that the budget window goes 10 
years, and many of the savings, the largest savings in energy 
costs come well outside that window.
    Senator Schatz. Sure. There are a couple of issues here. 
One is the scoring window, and I kind of understand how 
constrained you may be because frankly it is a difficult 
challenge, and my view is if most of the savings occur outside 
of the scoring window, it becomes a policy and an 
appropriations question more so than a question of how it gets 
scored.
    To be precise about UESCs and ESPCs, the way these 
contracts are written, at least some of the time, is that the 
contract is written so that the Government pays no money.
    In other words, it is a deal that a State government or a 
county government has often made private sector companies do 
this all the time, the company says we will retrofit your 
building, and whatever savings there is, some will be remitted 
to the performance contractor and some will be remitted back to 
the client.
    I guess I am having a difficult time understanding how 
there is any costs at all that goes on the books. I understand 
there are technical details here.
    Try to explain to me in plain English why this would cost 
the Government anything, forgetting the window. Why would this 
be an obligation on the books, if this were a private sector 
company and this was under GAAP procedures or wherever you 
were, why in the world does this look like an expenditure in 
anyone's world?
    Dr. Elmendorf. I think part of the answer, Senator, as you 
say, is the 10 year budget window. This is a transaction where 
much of the savings occurs outside a 10 year window. If you 
truncate what is reported--our study goes out 25 years to try 
to show the full lifetime effects of a contract of this sort, 
but for the 10 year budget window, if the savings are outside 
the window and you truncate the numbers at that point, then you 
will not see the full savings that you are discussing.
    The other point is----
    Senator Schatz. That is the saving side. What about the 
expenditure side? Am I misunderstanding what an energy savings 
performance contract is? My understanding over the last 12 odd 
years in State government and 2 years in the Federal Government 
is at least some of these are written such that the Government 
has no obligation at all to expend a penny.
    What are you marking down? What are you recognizing as an 
expenditure there?
    Dr. Elmendorf. What we are recognizing as an expenditure is 
the commitment the Government makes, it is acquiring equipment, 
lighting or insulation or what have you, and it is making a 
commitment to pay for that over a period of a number of years, 
but the commitment occurs up front.
    It is true that on the year by year basis going forward, 
the Government will get some savings that will offset those 
payments so that----
    Senator Schatz. Just to be clear, even from the first year, 
it is not like you are paying a little more in the beginning 
and then you get your savings back. You are starting at----
    Dr. Elmendorf. Yes, in a standard contract, there is a 
little bit of savings for many years and then larger savings 
beyond that once the equipment has been essentially paid off.
    Senator Schatz. You are saying acquiring the commitment is 
what has to be recognized essentially on the spending side?
    Dr. Elmendorf. Yes, that is right. I think that is really a 
very important principle, that if the Government takes an 
action that commits it to spending money, then that cost should 
be recorded, we think, and very long-standing budget principles 
say it should be recorded at the time that commitment is made.
    The savings will be realized later in many cases, and we 
try to show those as well. The distinction, again, I think is 
partly the 10 year cutoff and partly the distinction between 
discretionary spending and mandatory spending.
    There is a very deep distinction in how the Congress thinks 
about money. The discretionary spending is now controlled by 
the Congress through caps and is controlled through annual 
appropriations. The mandatory spending is limited by PAYGO 
rules.
    It is really not our place to combine those two different 
sorts of flows that the Congress treats very differently. We 
try to provide information in a contract. You mentioned in your 
statement that we prevent the Congress from doing something. I 
want to emphasize we do not prevent the Congress from doing 
anything.
    Senator Schatz. Fair enough.
    Dr. Elmendorf. If the information we provide in these costs 
estimates does not explain the full picture that we see, then 
we should do a better job in the cost estimate, but I do not 
think it is by adding up budget categories that the Congress 
has really set very much apart for decades now.
    I am happy to talk to you about ways we can make the 
estimates express more clearly the point that you want to make.
    Senator Schatz. Thank you very much.
    Senator Capito. Senator Murphy.

                            KING V. BURWELL

    Senator Murphy. Thank you very much, Madam Chair. It is a 
pleasure to sit on this committee with both of you, and let me 
add my appreciation to you, Dr. Elmendorf, for your service.
    I think this is the first time you have been before any of 
the committees I have served on while I have been in the 
Senate, but while I was a member of the Energy and Commerce 
Committee during the healthcare debate and the energy debate, 
we got a lot of chances to speak to each other.
    One of the great frustrations to members of Congress is 
CBO's independence, and you really truly are an independent 
body. That means you do your own interpretation, your own read 
of the statutes that we pass. We do not tell you what they 
mean. You do your own derivation and analysis and then attach 
numbers to it.
    I wanted in that context to ask you a question about 
probably the most important pending case before the Supreme 
Court right now, which is King v. Burwell.
    This is a pretty simple question as to whether the 
Affordable Care Act posits and allows for subsidies to go to 
states with Federal exchanges and State exchanges, or whether 
subsidies are allowable only to states that have set up their 
own State exchanges.
    I guess my question is pretty simple. How did CBO read the 
law as to this question of whether subsidies would go to 
Federal and State exchange participants or as the petitioners 
in this case believe, only to State exchange participants?
    What was CBO's read? What did you base your numbers off of 
when you did your analysis of the law?
    Dr. Elmendorf. Senator, our estimates for the Affordable 
Care Act have always included subsidies flowing to people 
buying insurance through those exchanges whether the exchanges 
were being run by the Federal Government or State governments.
    We wrote in a letter to Chairman Issa a few years ago, and 
I quote ``To the best of our recollection, the possibility that 
those subsidies would only be available in States that created 
their own exchanges did not arise during the discussions CBO 
staff had with a wide range of congressional staff when the 
legislation was being considered.''
    Senator Murphy. When CBO comes to a place in which they may 
have questions about the interpretation of a statute, how do 
you deal with those questions? Do you just ask congressional 
staff or do you do your own interpretation of the totality of 
the statute and the totality of the record?
    Dr. Elmendorf. Senator, we read legislation and apply our 
judgment about its effects, but we did not conduct a full legal 
analysis of the Affordable Care Act of the sort some people may 
have then and certainly have since then.
    CBO has three attorneys on our staff. They read legislation 
with our analysts. They also handle all of the legislative 
needs of the agency as an operating organization.
    We do try to read the legislation that we see carefully, 
but we are not pouring over it with sort of a full legal 
analysis that you may be suggesting.
    Senator Murphy. Your analysis was that the Affordable Care 
Act allowed for subsidies to go to State and Federal exchanges, 
thus, you priced it based on those----
    Dr. Elmendorf. Our estimates included the subsidies being 
provided to people in exchanges, whether they were operated by 
the State governments or by the Federal Government.

       TWENTY PERCENT REDUCTION IN AFFORDABLE CARE ACT SUBSIDIES

    Senator Murphy. One other question on generally the same 
topic. You just released an updated cost analysis on the 
Affordable Care Act where you estimate that the overall cost 
will be about 10 percent less but the cost of the subsidies 
will be 20 percent less.
    Can you just speak for a moment as to the driver for 
specifically that 20 percent reduction? That is a pretty large 
decrease in terms of the estimate over the course of 10 years 
as to how much the subsidy is going to cost. It was very 
welcome news.
    There are a couple of factors, right, that figured into 
your change in an analysis of the rest of the window of the 
law.
    Dr. Elmendorf. Senator, we released an analysis of the 
costs of the coverage provisions of the Affordable Care Act. 
That sort of analysis comes as a natural course of us doing 
updated baseline projections, because that coverage expansion 
is so recent, and it is not so much in the existing flow of 
data. We look at it separately still.
    For the other parts of the Affordable Care Act, the big 
change is Medicare and the big revenue increases. We do not 
update those separately as private baseline projections because 
they are woven into current law.
    For these coverage provisions, our new estimate of the 
costs of those provisions is 11 percent less over the next 
decade than our previous estimate, and as part of that, there 
was a down revision in the costs of the subsidies provided 
through insurance exchanges of about 20 percent.
    The larger factor there was continued slow growth in 
private health insurers' spending. We have been expecting some 
bounce back, and that has not occurred. In fact, the latest 
data show slower growth than the years preceding that. We now 
have a number of years of quite slow growth, so we marked down 
our projection of growth in that spending going forward.
    A second factor was we now think there will be slightly 
fewer people who will take up coverage in the exchanges. That 
is from a combination of data about the sources of insurance 
coverage actually before the Affordable Care Act's big 
insurance expansion. We now have more recent data than we had 
when we did these estimates some time ago.
    There were slightly fewer uninsured people, so less take up 
of those people into exchanges, and more of the people with 
employer sponsored health insurance or at large firms that are 
less likely to drop their coverage because of the Affordable 
Care Act, and therefore, less flow from employers into the 
exchanges as well.
    Those factors together caused us to mark down our 
projection of coverage in the exchanges by about one million 
people in most years going forward.
    Senator Murphy. Just one last quick question. Is part of 
that reason for increased numbers of people being on employer 
based coverage because your estimate of cancellations, policy 
cancellations, has decreased, or the trend line in the number 
of cancelled policies has decreased?
    Dr. Elmendorf. We think there will be fewer cancellations 
because of the creation of the exchanges and other features of 
the Affordable Care Act.
    Senator Murphy. Thank you, Madam Chair.
    Senator Capito. I am going to go for a second round. Just a 
clarification. When you said fewer people are projected to be 
on the exchanges than were originally, which was the cause of 
your projections going down by a certain percent, did you say 
you were predicting one million less people? Is that in 1 year 
or over 10 years?
    Dr. Elmendorf. Yes, it is about one million fewer people in 
each of the next 10 years roughly.
    Senator Capito. Ten million less?
    Dr. Elmendorf. Yes, well, we put it carefully as being 
number of people in a given year, because people can turn up 
the following year and are or are not covered in various years.
    Senator Capito. In a given year, I get that.
    Dr. Elmendorf. We had been projecting on the order of 27 
million people in the exchanges in 2025, and now we think it 
will be 25 million. That difference may look like two, but 
there is some rounding, so the difference actually rounds to 
one million fewer people in 2025. Also, one million fewer in 
most of the years, each of the years of the coming decade.
    Senator Capito. Just curiosity wise, the last year that we 
have full data for would be 2013, that we have actual data of 
how many people are on the exchanges?
    Dr. Elmendorf. The exchanges were not in place in 2013. We 
know how many people were in the exchanges last year.
    Senator Capito. Okay, 2014.
    Dr. Elmendorf. That number we have. Some data we get pretty 
much right away, and for some data, we have a lag.
    Senator Capito. What was that number? Do you have it?
    Dr. Elmendorf. That was, I think, six or seven million 
people.
    Senator Capito. Right. What were you projecting? I am just 
curious.
    Dr. Elmendorf. We had been projecting, I think, somewhat 
more people a year or two or three ago. I think it came in a 
little below what we had been expecting a few years before 
that, but I am not 100 percent sure. We have been expecting a 
gradual ramp up in enrollment.
    We have actually knocked down our projection of enrollment 
for this year by a million people now, and I think a million 
people in January. We have come down a little bit for this 
year. We still think there will be much more enrollment in the 
future, but not quite as much more than we had thought.
    Senator Capito. As you had originally thought.
    Dr. Elmendorf. In our last projections.

                            DYNAMIC SCORING

    Senator Capito. Thank you. Since I have you here and the 
House has changed their rule 13, clause 8, the dynamic scoring 
rule. You hear a lot of controversy about this. I just came out 
of the House 14 years. Subject of great discussion.
    If you would not mind and my colleagues do not mind, would 
you just take a short period of time and tell in layman's terms 
what the difference between the way you score and a dynamic 
score would be?
    Dr. Elmendorf. Yes, of course, I am happy to do that. In 
CBO's cost estimates, we take on a whole variety of behavioral 
responses by individuals, by firms, by State governments. What 
we do not do in our estimates is to incorporate changes in 
people's behavior that would affect the size of the overall 
economy. We hold overall employment, overall GDP fixed in our 
estimates.
    We do a substantial amount of work in providing 
information/analysis of the macroeconomic effects of policy 
proposals. We do this every year in the analysis of the 
President's budget. We do this for proposals that Chairman Ryan 
put forward the last few years as chairman of the Budget 
Committee.
    We do those analyses for major pieces of legislation, major 
proposals, and we do them separately from our basic cost 
estimates.
    What the House rule does, as you know, is to require CBO to 
include that sort of macroeconomic feedback in our regular cost 
estimates for certain pieces of legislation, and in particular 
for major pieces of legislation, legislation that would have 
effects on spending or revenues that exceed a quarter percent 
of GDP in any era of the 10 year budget window at the threshold 
of $40 to $45 billion now.
    We will follow that rule in our estimates for the House. We 
will include those sorts of feedback effects in our estimates 
for large pieces of legislation.
    The closest thing we have done, I think, that has been 
prominently seen in the Senate was our analysis of immigration 
legislation the Senate took up a few years ago. A number of 
years before I arrived at CBO and considering comprehensive 
immigration legislation, people at CBO decided to assume there 
would be no change in the labor force or employment when the 
legislation was designed to increase the number of people in 
the country in some ways would have forced the estimate to be 
too distorted, so for the immigration legislation, we actually 
allowed for some macroeconomic consequences a number of years 
ago and then again a few years ago when this came up.
    We also did a separate analysis a few years ago as part of 
our analysis of immigration. We had a cost estimate and we had 
this extra analysis to look at even broader macroeconomic 
effects on productivity and saving behavior and so on.
    Under the current House rule, if that legislation were to 
come up in the House, we would include all those effects in the 
cost estimate for the legislation.
    Senator Capito. For the Senate, you were just asked to do 
that in sort of an advisory capacity? Is that correct? Or there 
is no requirement at all in the Senate?
    Dr. Elmendorf. There is no specific requirement. Of course, 
the chair or the ranking member of the Budget Committee or 
other key committees can ask us to do that sort of analysis, 
and we are happy to do that.
    We spent a good deal of effort in the past several years 
improving our modeling of the macroeconomic effects of changes 
in fiscal policy. We understand Congress' interest in this. The 
fact that we had not included it in cost estimates has not 
relieved us in our minds of the responsibility to be able to do 
that sort of analysis and to do it for major pieces of 
legislation of the sort I described.
    We have done a lot of modeling work, and we have tried to 
be very transparent about that. There is a collection of 
working papers essentially, maybe eight or nine separate 
reports, that as a collection explain how we do that sort of 
analysis, so that you and your staff can understand it and so 
we can receive the scrutiny of outside experts, many of whom we 
have consulted in the course of building these models, but to 
continue to receive scrutiny in the way that we do that sort of 
modeling so you can understand where it is coming from.

                 DYNAMIC SCORING IMPACT ON CBO'S STAFF

    Senator Capito. Assuming this is going to be a larger part 
of what the CBO is going to be asked to do, how do you think 
that is going to affect your workforce? Do you see that as you 
are going to need more people or different types of staff?
    Dr. Elmendorf. The increase in FTEs, the small increase 
that we have asked for, is partly to build up our staffing in 
that area. We have an excellent staff now. We have done this 
modeling work. It is not that it comes entirely out of the 
blue.
    We do expect there will be more demand for this sort of 
work and additional resources would help us to meet that demand 
in a quick and efficient way. Part of the challenge here is 
this sort of analysis takes a good deal of time, and if we had 
even a few more people who could do it, then we could respond 
more quickly to Congress' needs.
    Senator Capito. We always want everything yesterday, too.
    Dr. Elmendorf. Yes, ma'am.

                    GAO REPORTS AND RECOMMENDATIONS

    Senator Capito. I understand. Mr. Dodaro, one last question 
for you. I really appreciate the high quality reports the GAO 
generates and the money savings that have resulted from this. I 
think there is a gap between what we have actually enacted or 
been able to move forward with and what you all have uncovered, 
so to speak, where there could be greater savings.
    Would you have any suggestions for us, either House or the 
Senate, to be able to look at your recommendations and really 
achieve more cost savings and more efficiencies that your 
agency has brought forward? How would you recommend that we go 
about being better at responding?
    Mr. Dodaro. First, I would suggest more oversight hearings. 
Senator Schatz mentioned our high risk list, which has 32 areas 
on it right now. There is a very significant potential for 
saving billions of dollars by addressing those issues. More 
oversight hearings should be guided by the high risk list.
    We also produce a report every year on overlap, 
duplication, and fragmentation in the Federal Government. We 
add cost savings suggestions and revenue enhancements to that 
list.
    I just testified last week before the Senate Budget 
Committee. I think there could be more attention by the budget 
committees. I mentioned the Bipartisan Budget Act for 2014 and 
2015 to avoid sequestration. A number of GAO's recommendations 
were adopted to help avoid sequestration. There were over $23 
billion in contributions there.
    I also reach out to the Executive Branch Cabinet officials 
and encourage them to implement all the recommendations, they 
can voluntarily. We are going to send letters to all the agency 
heads in the coming months on the top recommendations that are 
outstanding. I anticipate providing that information to the 
Congress as well so they can use it in appropriation and 
authorization decisions.
    Right now we have about 6,000 outstanding GAO 
recommendations. On the whole, over a 4 year period, 80 percent 
of our recommendations are adopted. There are certain areas, 
like IT acquisitions, we put on the high risk list.
    In that area in the last 5 years we made 737 
recommendations, and only 23 percent have been implemented. On 
the Veterans Affairs (VA) healthcare issue, we have over 100 
outstanding recommendations. Those are two, VA and IT 
acquisitions, that we added to the high risk list.
    I also thank the subcommittee for looking carefully at our 
request for 40 FTEs. Many would be used to do more work and 
provide additional recommendations on how to close the tax gap 
and how to get on top of the improper payment issue.

                           IMPROPER PAYMENTS

    I am very concerned. Last year's estimate for 2014 was $125 
billion in improper payments. These are payments that should 
not have been made or were made in the wrong amounts. That is 
an increase of $19 billion from the prior year. Most of the 
increase is in Medicaid and Medicare. These are the two fastest 
growing challenges in the Federal Government's budget. This 
problem will get worse before it will get better.
    I have been saying that for a while, and the additional 
resources would help.

                                TAX GAP

    The tax gap is $385 billion. We have many outstanding 
recommendations that Congress could implement that would result 
in increased revenue collection. These are revenues that are 
due under the current structure. We are not talking about tax 
increases. We are just collecting what should be collected.
    Senator Capito. Right.
    Mr. Dodaro. Those are a few of my suggestions.
    Senator Capito. I appreciate that. I think there is nothing 
more grinding on a taxpayer than to realize improper payments 
are going in the wrong way, either through fraud, waste, abuse 
or whatever. It really is an insult to the hard working people 
in this country who are paying their taxes and doing the right 
thing. I appreciate that.
    Senator Schatz.
    Senator Schatz. Thank you for your leadership in this 
space. Chairman Capito, I would be happy to work with you in 
any way to try to help the Senate and Congress overall to try 
to implement all of the recommendations from your high risk 
list.
    I think this is an opportunity for us to find savings, find 
revenue, and find bipartisan cooperation.

            DYNAMIC SCORING (UNCERTAINTY OF CBO'S ESTIMATES)

    Dr. Elmendorf, on the question of dynamic scoring, I am not 
one of those Democrats as allergic to the dynamic scoring 
approach as others. I just have a technical question with 
respect to how it may or may not increase the kind of 
variability in your cost estimates.
    I have to believe that for your analysts and for you and 
your successor, it may give you a little bit of heartburn to 
try to imagine macroeconomic impacts of policy and to try to 
quantify that in a way that is not just hazarding a guess.
    I am just wondering how you see this increasing the 
likelihood that you are going to get something badly wrong in 
the future.
    Dr. Elmendorf. Senator, we are acutely aware of the 
uncertainty that surrounds many of our estimates. This is a 
hard business that we are engaged in. The estimates of the 
macroeconomic effects of legislation certainly have substantial 
uncertainty around them, and in recognition of that, when we 
report those sorts of macroeconomic estimates, we generally do 
so with explicit ranges.
    We provide a central estimate and a higher level and a 
lower level. I would not say higher and lower bounds because 
the outcomes could be even outside that range. We try to show 
you and your colleagues the range.
    I would emphasize our estimates that do not include 
macroeconomic feedback also often have a great deal of 
uncertainty. I think it is important for you and your 
colleagues to understand that.
    We put down numbers because the budget process really 
requires numbers that add up, but we always think of them as 
being in a range of some sort, and I would urge you and your 
colleagues to remember that.
    I would urge you and your colleagues to continue to press 
us to try to be clear with you and to quantify where we can 
that uncertainty as we try to do in these macro estimates.
    Again, I want to say it is not entirely new to us. This 
analysis of the President's budget each year and our long term 
budget outlook each year, they look at alternative scenario's 
with this sort of macroeconomic feedback.
    We draw on the best thinking in the economics profession to 
do that, both in our reading of the papers and in our direct 
consultation with members of our panels, advisors, and other 
people.
    We have some confidence that we are giving you the best 
information that can be provided, but you and we need to 
remember that there is a lot of uncertainty and the uncertainty 
gets greater the further out in time we are asked to look, and 
it gets greater the more stark are the changes in Federal 
policies.
    Senator Schatz. Thank you, both. I really want to say that 
you both represent the best in public service, and I know your 
agencies work very hard and are sometimes criticized. I just 
want to say how much I appreciate both of your public service.
    Thank you, Madam Chair.
    Senator Capito. Thank you. I, too, would like to thank both 
of you. I think I have learned a lot and I appreciate you 
taking the time to be here with us today.
    This concludes the Legislative Branch Appropriations 
Subcommittee hearing regarding fiscal year 2016 funding for the 
CBO and GAO. I want to again thank both of you.

                     ADDITIONAL COMMITTEE QUESTIONS

    Our hearing record will remain open for seven days allowing 
members to submit statements and/or questions for the record, 
which will be sent to the subcommittee by close of business on 
Tuesday, March 17.
    [The following questions were not asked at the hearing, but 
were submitted to the agency for response subsequent to the 
hearing:]
            Questions Submitted to Dr. Douglas W. Elmendorf
          Questions Submitted by Senator Shelley Moore Capito
    Question. I understand that the fiscal year 2016 budget request 
includes funding for three additional full-time equivalents (FTE's). 
Knowing that the salaries and benefits associated with FTE's continue 
to increase over time, would upgraded, or additional, information 
technology systems be a more cost-efficient means of increasing CBO's 
output, rather than hiring new people?
    Answer. In CBO's view, hiring the additional people would provide 
the greatest value to the Congress. The additional employees would be 
devoted to analyzing the economic effects of Federal tax and spending 
policies (including ``dynamic'' effects, as required by a new House 
rule) and healthcare issues.
    Certain needs for information technology were addressed by CBO's 
2014 appropriation: The agency acquired greater storage capacity and 
advanced servers designed for sophisticated statistical analysis and 
modeling undertaken by an increasingly wide swath of the agency. At 
this time, to analyze the ever-changing proposals considered by the 
Congress, CBO's most pressing need is for talented analysts who can 
determine the modeling approaches that are appropriate for a particular 
proposal, can develop new models or understand and manipulate existing 
models, can translate legislative language into a set of parameters for 
use in modeling, and can make other adjustments for features of the 
legislative language that are not amenable to standard modeling.
    Question. What would be the impact to the agency if the committee 
was not able to provide funding for these three additional FTE's in 
fiscal year 2016?
    Answer. With its current staffing, CBO cannot meet all of the 
Congress's requests for estimates and analyses, particularly in the 
area of healthcare, and there is an increasing desire for the agency to 
analyze the economic effects of Federal tax and spending policies, as 
evidenced by the new House rule and a similar provision in the Senate-
passed budget resolution. Without funding for three additional 
positions in fiscal year 2016, fewer of those requests would be 
fulfilled, and some such analyses would be less timely than desired. 
For instance, CBO would anticipate preparing fewer reports with policy 
options than hoped and being able to complete fewer informal estimates 
of the effects of bills before markup by committee. Even with the 
additional staffing, the volume of analyses and estimates that CBO 
could provide would fall far short of the total number of congressional 
requests.
    Question. I understand that CBO's budget request for fiscal year 
2016 includes an additional full-time equivalent (FTE) for the purpose 
of conducting dynamic scoring analysis of certain legislation pursuant 
to the new House rule XIII, clause 8. Why is an additional FTE 
necessary to help fulfill this requirement when CBO already has a 
Macroeconomic Analysis Division? Are any other changes required within 
the Macroeconomic Analysis Division in order to comply with the new 
House rule? If so, what are the costs associated with those changes?
    Answer. The agency has excellent analysts in its Macroeconomic 
Analysis Division, who have built--and continue to build and refine--
sophisticated models used as part of such dynamic analyses. Those 
analyses also involve contributions from analysts in other divisions. 
Although CBO has done a good deal of work to develop the tools 
necessary to estimate the macroeconomic effects of legislation, such 
estimates can be quite complicated and time-consuming because bills can 
affect a number of key economic variables and each piece of legislation 
can affect those variables in different ways. Under the House rule, CBO 
will have to do more such analyses. Because all of the analysts in the 
Macroeconomic Analysis Division were fully engaged in work for the 
Congress before the House imposed this new requirement, CBO expects 
that one additional analyst in its Macroeconomic Analysis Division 
would be very valuable in helping the agency to meet its additional 
responsibilities under the House rule in a timely way.
    CBO will continue to evaluate whether it has sufficient resources 
to implement the House rule and any further requirements that may be 
imposed by the budget resolution. At this point, the agency is 
uncertain whether additional resources, beyond those already requested, 
will be needed.
    Question. If enacted into law, would any of the provisions in the 
Senate bill S. 200 require CBO to make further adjustments to its 
Macroeconomic Analysis Division? Would additional FTE's be necessary, 
would upgraded software systems be required, or would it be necessary 
to purchase additional data? If so, what are the costs associated with 
those changes?
    Answer. The analyses required under S. 200--to prepare, to the 
extent practicable, macroeconomic analysis of major revenue 
legislation--would generally be prepared by the staff of the Joint 
Committee on Taxation (JCT). However, analyses of major legislation 
affecting the revenue provisions of the Affordable Care Act and certain 
other tax legislation affecting healthcare would probably be undertaken 
jointly by JCT and CBO because the two agencies usually work together 
on such analyses. Such work would affect multiple divisions within CBO, 
not just the Macroeconomic Analysis Division. The additional full-time-
equivalent positions that CBO has already requested would be helpful in 
meeting the requirements of S. 200, although, as mentioned, the agency 
is uncertain whether resources beyond those would be needed.
    Question. The House rule requires these estimates to cover the 
current 10-year budget window and the following 20-year period; while 
the Senate bill requires the estimates to cover the current 10-year 
window and the following three 10-year periods. Will it be more 
difficult to provide this analysis for 30 years beyond the first 10-
year window as opposed to just 20 years beyond the first 10-year 
window?
    Answer. The House rule requires a qualitative assessment of 
budgetary effects in the 20-year period beyond the usual 10-year 
window; S. 200 would require quantitative estimates of changes in 
economic output, employment, interest rates, the capital stock, and tax 
revenues over the 30-year period beyond the current 10-year budget 
window. (S. 200 would also require estimates of changes in employment 
during the 10-year budget window, which would involve additional 
analysis beyond that needed to fulfill the requirements of the House 
rule.) Providing qualitative estimates is not as difficult as preparing 
quantitative ones. The ability to do the latter will vary depending 
upon various factors, such as the time horizon involved, the amount of 
time available to conduct the analysis, the complexity of the 
legislation being considered, the capability of the tools that the CBO 
has to assess the legislation's effects, and the agency's judgment 
about the uncertainty of the analysis.
    Providing estimates that look farther into the future would be more 
difficult and time-consuming. To undertake analyses of effects between 
30 and 40 years in the future, CBO would need to assess various 
additional factors, such as how different trends affecting estimates 
for components of legislation that were projected for the previous 
decade might change and how aspects of the legislation that were not 
binding in previous periods might begin to have effects. Estimates that 
extend beyond 10 years are generally quite uncertain, and the farther 
out they go, the more uncertain they become and the more difficult that 
uncertainty is to evaluate. Hence, when quantifying budgetary effects 
beyond the first decade, CBO often presents them as a percentage of the 
size of the economy (in part because economic growth itself is a source 
of uncertainty).
    Question. The House rule requires that this analysis be made part 
of the standard CBO cost estimate, but the Senate bill only requires 
these estimates to be part of a supplemental analysis. Practically 
speaking, is there a difference in the work performed by CBO to provide 
this analysis as part of the standard cost estimate vs. providing it as 
a supplemental analysis?
    Answer. In either case, CBO will provide all of the typical 
information provided today plus additional information about 
macroeconomic effects. The way CBO presents the budgetary impact of the 
macroeconomic effects of a proposal--either as part of a cost estimate 
or as a supplemental analysis--would not fundamentally change the work 
performed by the agency. However, when dealing with similar 
legislation, meeting two different requirements for presentation would 
have the practical effect of adding some effort and time.
    Question. I understand that CBO is again requesting authorizing 
language that would allow no more than 50 percent of its unobligated 
balances to remain available for a second fiscal year beyond the year 
in which it was appropriated. Why is this necessary? What is CBO unable 
to do with its funds in the year in which they are appropriated that 
requires carrying them forward?
    Answer. To ensure that the agency does not obligate more funds than 
have been appropriated, CBO sets aside funds to cover unexpected 
expenses late in the year. When such expenses do not arise, some funds 
remain unobligated at the end of the year. The authorizing language 
would provide the agency the flexibility of using a portion of those 
unobligated balances in the following year to pay for data or other 
goods or services--such as additional information technology services--
that are critical but unforeseen and therefore not included in the 
budget.
    In addition, some obligations made at the end of the year do not 
result in outlays--when costs turn out to be lower than the maximum 
obligated amounts. The authorizing language would allow CBO to obligate 
a portion of those funds again so that they could be used, as 
originally intended, to sustain CBO's operations. The flexibility that 
CBO is seeking is based on general provisions that appear in the 
Financial Services, Homeland Security, and Transportation, Housing and 
Urban Development appropriation bills.
    Question. What would be the consequences to CBO of not providing 
this authorizing language in fiscal year 2016?
    Answer. If the requested flexibility regarding unobligated balances 
is not provided, CBO will have to use fiscal year 2016 funding to pay 
for any critical but unforeseen needs--perhaps additional data about 
healthcare--and then defer other activities included in the budget, 
such as the maintenance or replacement of information technology 
equipment. Moreover, obligated funds in excess of costs would continue 
to be unavailable to the agency.

                          SUBCOMMITTEE RECESS

    Senator Capito. The next hearing of this subcommittee will 
be on Thursday, March 12, at 9:45 in Dirksen 124, where we will 
hear testimony from the Secretary of the Senate, the Senate 
Sergeant At Arms, the Chief of the Capitol Police, regarding 
the fiscal year 2016 budget request for those agencies.
    Until then, the committee stands adjourned. Thank you.
    [Whereupon, at 3:56 p.m., Tuesday, March 10, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]