Budget Account Structure: A Descriptive Overview (Letter Report,
09/18/95, GAO/AIMD-95-179).
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-95-179
TITLE: Budget Account Structure: A Descriptive Overview
DATE: 09/18/95
SUBJECT: Presidential budgets
General fund accounts
Trust funds
Budget authority
Federal agencies
Agency missions
Mission budgeting
Strategic planning
Budget administration
Budget obligations
IDENTIFIER: Head Start Program
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Cover
================================================================ COVER
Report to Congressional Requesters
September 1995
BUDGET ACCOUNT STRUCTURE - A
DESCRIPTIVE OVERVIEW
GAO/AIMD-95-179
Budget Account Structure
(935157)
Abbreviations
=============================================================== ABBREV
DOC - Department of Commerce
DOD - Department of Defense
DOE - Department of Energy
DOI - Department of the Interior
DOJ - Department of Justice
DOL - Department of Labor
DOT - Department of Transportation
Educ. - Department of Education
EOP - Executive Office of the President/Funds Appropriated to the
President
EPA - Environmental Protection Agency
EX-IM - Export-Import Bank
FASAB - Federal Accounting Standards Advisory Board
FDIC - Federal Deposit Insurance Corporation
FEMA - Federal Emergency Management Agency
GPRA - Government Performance and Results Act
GSA - General Services Administration
HHS - Department of Health and Human Services
HUD - Department of Housing and Urban Development
Ind. Ag. - Other Independent Agencies
JB - The Judiciary
LB - Legislative Branch
NASA - National Aeronautics and Space Administration
NSF - National Science Foundation
OMB - Office of Management and Budget
OPM - Office of Personnel Management
RRB - Railroad Retirement Board
RTC - Resolution Trust Corporation
SBA - Small Business Administration
Smith. - Smithsonian Institution
SSA - Social Security Administration
TVA - Tennessee Valley Authority
USDA - Department of Agriculture
USIA - United States Information Agency
VA - Department of Veterans Affairs
Letter
=============================================================== LETTER
B-261180
September 18, 1995
The Honorable Mark O. Hatfield
Chairman, Committee on Appropriations
United States Senate
The Honorable Pete V. Domenici
Chairman, Committee on the Budget
United States Senate
The Honorable Ted Stevens
Chairman, Committee on Governmental Affairs
United States Senate
The Honorable William V. Roth, Jr.
United States Senate
This report responds to your request that we provide a descriptive
overview of the federal budget account structure. The need to better
understand the budget account structure is prompted by recent
congressional actions, such as the Government Performance and Results
Act, and executive branch initiatives, such as the National
Performance Review, which call for or suggest cross-cutting changes
to budget accounts.
As discussed with your offices, we explored the following eight
dimensions to define and explain budget accounts.
Number: How many accounts are there?
Size: What is the level of resources available in an account?
Orientation: What is the primary focus of an account as created by
the Congress?
Resource type: What type(s) of budget authority is available to an
account?
Fund type: What is the extent of resource restriction or
earmarking
within an account?
Mission: What are the purposes or areas of national need
addressed by an account?
Organization: What is the responsible federal entity for an
account?
Appropriations
subcommittee: Which subcommittee acts on the resources in an
account?\1
The first section of this report, "Understanding the Federal Budget
Account Structure," describes the structure in terms of these eight
dimensions. The second section, "Discerning Patterns Within the
Federal Budget Account Structure," constructs profiles and discusses
relationships among the dimensions.
Appendix I is a glossary of selected terms used in this report.
Appendix II contains summary figures relating account number and
size, resource type, and fund type to the final three dimensions.
Appendix III presents figures (1) summarizing medians and ranges of
account size by federal missions, federal organizations, and
cognizant appropriations subcommittees and (2) relating federal
missions, federal organizations, and appropriations subcommittees.
In appendix IV, we present details of our scope and methodology.
This is followed by a selected bibliography from our literature
search.
--------------------
\1 In this report, we emphasize the role of the appropriations
subcommittees because of their central role within the appropriations
process, including the requirement to report bills which ultimately
define federal budget accounts in appropriations statutes.
OVERVIEW OF OBSERVATIONS
------------------------------------------------------------ Letter :1
Federal budget accounts are a product of the needs and goals of many
users and reflect the many roles which they have been asked to
address. The present budget account "structure" was not created as a
single integrated framework but rather developed, for the most part,
as separate budget accounts over time to respond to specific needs.
Viewing these individually developed accounts collectively discloses
not only the variety within the current structure but also its
complexity.
Our review of fiscal year 1995\2 budget accounts revealed a structure
characterized by
a concentration of budgetary resources in a few large accounts and
a scattering of remaining resources among hundreds of other
accounts;
a mix of account orientations with an emphasis on programs and
processes, rather than objects of expense or organizations;
over 70 percent of total budgetary resources available in fiscal
year 1995 from sources which did not require congressional
approval in the current year; and
extensive use of general funds to provide most budgetary resources
to most accounts, but with special and trust funds supporting
about 30 percent of total resources and 20 percent of all
accounts.
These observations vary significantly among federal missions, federal
organizations, and appropriations subcommittees and help to
illustrate the intricate network of relationships within the budget
account structure. As a result, cross-cutting initiatives that
affect budget accounts will encounter in hundreds of accounts a
fundamentally heterogeneous structure that serves many different
needs and objectives.
--------------------
\2 In this report, fiscal year 1995 refers to the fiscal year 1995
estimate as reported in the President's fiscal year 1996 budget.
BACKGROUND AND SCOPE
------------------------------------------------------------ Letter :2
Nearly 50 years ago, the Hoover Commission examined the federal
budget account structure and concluded, "The present appropriation
structure underlying the budget is a patchwork affair evolved over a
great many years and following no rational pattern."\3
Although federal budgeting has undergone considerable change over the
years,\4 today's federal budget account structure retains a focus on
the individual account. For example, in the Balanced Budget and
Emergency Deficit Control Act of 1985, an account is defined as
"an item for which appropriations are made in any appropriation
Act and, for items not provided for in appropriation Acts, [an
account]...means an item for which there is a designated budget
account identification code number in the President's budget."\5
We began our analysis from this definition of an account. However,
within federal budgeting and financial management, operational
definitions for the term "account" vary depending on the user and the
purpose to be served. For example, congressional appropriators
establish budget accounts to facilitate congressional allocation and
oversight responsibilities. The President's budget presentation
generally reflects this structure but may consolidate separate items
into a single account.\6 Agency officials use these budget account
structures to report to the Congress and the Office of Management and
Budget (OMB), but they often rely on more detailed account
structures--such as standard general ledger accounts which integrate
proprietary and budgetary accounting, internal budgetary allotment
schedules, or project and activity plans maintained by program
managers--to monitor expenditures and performance and for other
management needs.
Once defined, accounts may be quantified in various ways depending on
the user and the purpose to be served. A wide variety of budgetary
information and subsidiary classifications are available to meet the
many needs of different users. For example, users interested in
relative priorities within the annual budget process might
concentrate on budget authority; those interested in the approaches
used by government to address its needs might look to obligations;
and those interested in deficits and how much the government
ultimately spends might emphasize outlays. Each perspective would
produce a different, but equally valid, universe of budget accounts.
For this report, we have used budgetary resources as reported in the
President's budget presentation to define and measure the universe of
accounts. Budgetary resources are equivalent to all available budget
authority--appropriations, borrowing and contract authority,
reappropriations, and offsetting collections from the public and
other federal organizations, net of transferred authority and
statutory limitations. This approach captures a very large universe
by including all accounts with budgetary resources available for
obligation, but it can be confusing when compared to the outlays
occurring in a given fiscal year. Because budgetary resources
include current and permanent authority as well as resources
available from offsetting collections and from prior years, they may
vary significantly from outlays. This was the case for the fiscal
year 1995 estimate, as reported in the President's fiscal year 1996
budget, which projected budgetary resources of $2.5 trillion and net
outlays of $1.5 trillion.
Lastly, it might be inferred that discussing budget accounts as a
structure, rather than as separate and independent decisions as
indicated by the 1985 act quoted above, suggests that there is or
should be a set of coherent rules and criteria. This is not our
intention. In this report, we examine budget accounts collectively
for two reasons. First, the concept of a budget account structure is
accepted among budget practitioners and academics and allows for
succinct references to an ever-changing and complex environment.
Second, analyses which describe the budget account structure in terms
of the characteristics and patterns of its constituent parts-- the
separate accounts--can provide rich insights into the federal budget
process and are necessary to the consideration of cross- cutting
proposals.
For example, the following recent congressional actions and
administration initiatives call for or suggest certain cross-cutting
changes to budget accounts.
The Government Performance and Results Act (GPRA) of 1993 was
enacted to enhance program management, public accountability,
and congressional decision-making by establishing a process to
set strategic and annual program goals and to measure
accomplishments. By the fall of 1997, executive organizations
are required to submit to OMB an annual performance plan which
establishes a target level of performance for each project or
activity listed in the "program by activities" section of each
budget account presentation. Beginning with the February 1998
submission of the fiscal year 1999 budget, the President is
required to transmit to the Congress a "Federal Government
performance plan for the overall budget."\7
The National Performance Review (NPR), under the leadership of the
Vice President, is an executive branch management reform effort
intended to make the government "work better and cost less."\8
Among hundreds of NPR recommendations, generally intended to
emphasize results and enhance managerial flexibility, were
several dealing with "mission-driven, results-oriented
budgeting." Some of the most significant recommendations
concerning the budget account structure were proposals to (1)
restructure budget accounts to reduce over-itemization and to
align them with programs, (2) budget and manage on the basis of
operating costs, and (3) identify accounts that should be
converted to multi-year or no- year status.
The Federal Accounting Standards Advisory Board (FASAB) was created
to consider and recommend accounting principles for the federal
government. Recently, FASAB has proposed cost accounting
standards,\9 which (1) focus on "responsibility segments,"
defined as components associated with a specific mission,
conducting a major activity, or producing one or more related
products and services and (2) capture, for responsibility
segments, "full costs," defined as the costs of resources
consumed directly or indirectly plus the costs of identifiable
supporting services. Restructuring budget accounts to align
with programs and outputs could be one outgrowth from budgetary
and financial accounting that tracks entitywide expenditures and
expenses.
--------------------
\3 The Commission on Organization of the Executive Branch of the
Government, Budgeting and Accounting, Feb. 15, 1949, pp. 12 and 13.
\4 For a brief discussion of federal budgeting, see Budget Object
Classification: Origins and Recent Trends (GAO/AIMD-94-147, Sept.
13, 1994).
\5 2 U.S.C. section 900(c)(11).
\6 For example, the National Institutes of Health account (75-9915)
in the President's budget presentation consolidates 25 items included
in the appropriations act.
\7 31 U.S.C. section 1105(a)(29).
\8 From Red Tape to Results: Creating a Government that Works Better
and Costs Less--Report of the National Performance Review, Office of
the Vice President, Sept. 7, 1993. For a discussion of the National
Performance Review, see Management Reform: GAO's Comments on the
National Performance Review's Recommendations (GAO/OCG-94-1, Dec. 3,
1993) and Management Reform: Implementation of the National
Performance Review's Recommendations (GAO/OCG-95-1, Dec. 5, 1994).
\9 Managerial Cost Accounting Concepts and Standards for the Federal
Government (Draft Statement), Federal Accounting Standards Advisory
Board, May 1995.
UNDERSTANDING THE FEDERAL
BUDGET ACCOUNT STRUCTURE
------------------------------------------------------------ Letter :3
THE RELATIONSHIP BETWEEN
ACCOUNTS AND BUDGETARY
RESOURCES
---------------------------------------------------------- Letter :3.1
A persistent pattern permeating the budget account structure is the
unequal distribution of budgetary resources across accounts. When
the number and size of accounts are compared, an inverse relationship
is revealed. Figure 1 displays this "bookend" relationship.
Figure 1: Budget Accounts
Compared to Budgetary
Resources, Fiscal Year 1995
(See figure in printed
edition.)
Left Cluster: 84.8 percent of budget accounts (1,104) are associated
with 5.7 percent of budgetary resources ($138.8 billion).
Right Cluster: 3.7 percent of budget accounts (47) are associated
with 76.0 percent of budgetary resources ($1,877.3 billion).
As figure 1 shows, nearly 80 percent of the federal government's
resources are clustered in less than 5 percent of budget accounts (47
out of 1,303). Conversely, 85 percent of all budget accounts contain
about 6 percent of the federal government's total budgetary resources
($138.8 billion out of total budgetary resources of $2.5 trillion).
Collectively in fiscal year 1995, there are 199 accounts with total
budgetary resources over $1 billion and 162 accounts with budgetary
resources of less than $1 million. Table 4 on page 17 more fully
depicts the largest and smallest accounts.
A similar pattern of inequality emerges when comparing accounts and
budgetary resources across federal missions, organizations, and
appropriations subcommittees.
The three missions with the fewest number of accounts--social
security, net interest, and medicare--are among the largest in
terms of available 1995 budgetary resources. Consistent with
the generally inverse relationship between accounts and
budgetary resources, the missions with the most
accounts--general government and natural resources and
environment--have collectively only about 4 percent of total
budgetary resources.
The Departments of Commerce and of Health and Human Services (HHS)
have the same number of accounts but vastly different amounts of
budgetary resources--$6.7 billion and $383.8 billion,
respectively. Conversely, although the Departments of Defense
and of the Treasury have comparable resource levels--$444.1
billion and $418.7 billion, respectively--Defense has more than
twice the number of accounts.
Two appropriations subcommittees--Interior and Labor, Health and
Human Services, Education, and Related Agencies--appropriate to
similar numbers of accounts but provide widely different
resource levels ($15.0 billion and $260.6 billion,
respectively). The subcommittee concerned with the Departments
of Commerce, Justice, and State has the most accounts--almost 17
percent of the accounts which the appropriations subcommittees
acted on in 1995--but appropriated only about 4 percent of 1995
budgetary resources.
THE BUDGET ACCOUNT STRUCTURE
SHOWS A MIX OF ORIENTATIONS
---------------------------------------------------------- Letter :3.2
In establishing a budget account, the Congress articulates its
interests, which in turn define the account's orientation. The
current budget account structure displays a mix of orientations,
reflecting both the 200 years of federal budget development and
varying congressional interests.\10 We reviewed the fiscal year 1995
accounts of three judgmentally selected organizations--the
Departments of Energy (DOE), HHS, and Treasury--and found that these
accounts appear to emphasize program and process orientations to a
greater extent than objects and organizations. Within these three
organizations, program and process accounts represented 60 percent of
accounts and 55 percent of total budgetary resources.
Each of the four orientations used in this report--object,
organization, process, and program--reflects a specific focus or
interest of the Congress.\11 An object orientation emphasizes the
items of expense, while an organization orientation focuses on the
responsible governmental unit. In effect, the former stresses
control of spending on an item-by-item basis; the latter accentuates
accountability. Accounts with a process orientation concentrate on
the specific operations or approaches underlying federal activities,
while those with a program orientation focus on the missions and
objectives of governmental units.
Object, organization, process, and program orientations are found
throughout the federal budget account structure. Each account
generally will have a predominant orientation but may have
characteristics of other orientations.\12 Thus, assigning an account
to a specific orientation reflects a judgment based on
interpretations of an account's statutory language and obligation
patterns. Table 1 presents examples of account orientations from
DOE, HHS, and Treasury.
Table 1
Examples of Account Orientations in DOE,
HHS, and Treasury
DOE HHS Treasury
------------------------- ------------- ------------- -------------
Object Operation and Retirement Payment of
Maintenance, pay and government
Southwestern medical losses in
Power benefits for shipment
Administratio commissioned (20-1710)
n (89-0303) officers (75-
0379)
Organization Federal National Office of
Energy Institutes of Inspector
Regulatory Health (75- General (20-
Commission 9915) 0106)
(89-0212)
Process Colorado Service, Exchange
River Basins supply, and stabilization
Power other funds fund
Marketing (75-9941) (20-4444)
Fund, Western
Area Power
Administratio
n (89-4452)
Program Clean coal Children and Tax law
technology Families enforcement
(89-0235) Services (20-0913)
Programs (75-
1536)
----------------------------------------------------------------------
Note: Numbers in parentheses are fiscal year 1995 account numbers.
Table 2 presents the results of our assessments of the account
orientations for DOE, HHS, and Treasury, showing the percentage of
accounts and budgetary resources for each orientation.
Table 2
Account Orientation in Three Departments
(Numbers in Percent)
Accoun Resourc Accoun Resourc Accoun Resourc
ts es ts es ts es
------------------- ------ ------- ------ ------- ------ -------
Object 28 4 20 2 32 82
Organization 14 13 16 4 10 0
Process 6 1 14 11 42 12
Program 52 82 50 83 16 6
======================================================================
Total 100 100 100 100 100 100
----------------------------------------------------------------------
Table 2 shows that more than half of the accounts in each of the
three organizations have a program or process orientation. Fifty
percent or more of DOE's and HHS' accounts had a program orientation,
and these accounts held most of their budgetary resources. A total
of 42 percent of Treasury's accounts were oriented to process, but 82
percent of its resources were in object accounts, principally due to
its large Interest on the Public Debt account. Excluding this
account changes the distribution of resources to 10 percent object, 1
percent organization, 60 percent process, and 28 percent program.
Accounts with a program orientation do not necessarily capture all
related program costs. For example, the costs of providing Medicare
are spread among at least three accounts with different orientations:
Federal Hospital Insurance Trust Fund (program orientation), Federal
Supplementary Medical Insurance Trust Fund (program orientation), and
Program Management (object orientation). Other programs separate
accounts for salaries and expenses from other program expenditure
accounts. Conversely, some accounts include the costs of a number of
programs and activities within a single account. For example, the
HHS' Children and Families Services Programs account includes Head
Start and many other social service and community services programs,
while DOE's Economic Regulation account captures the costs of both
the Economic Regulatory Administration and the Office of Hearings and
Appeals.
--------------------
\10 See GAO/AIMD-94-147.
\11 The orientations developed for this report are a variation on a
theme developed by Allen Schick in his seminal piece, "On the Road to
PPB: The Stages of Budget Reform," in Perspectives in Budgeting
(Washington, D.C.: American Society for Public Administration,
1987), pp. 40-63. Other categorizations, such as separating direct
program accounts from those providing support services, also might
provide productive lines of inquiry.
\12 For example, all accounts with budgetary resources retain an
object classification presentation, regardless of the account
orientation, to allow for comparative analysis across accounts.
ACCOUNTS DISPLAY VARYING
PATTERNS WITHIN RESOURCE
TYPES AND FUND TYPES
---------------------------------------------------------- Letter :3.3
One of the more informative ways to characterize an account is by its
resource and fund types. These closely related dimensions illustrate
the extent to which an account relies on current year authority, as
opposed to other permanent or available types of funding, and the
degree of earmarking or restriction associated with receipts
available to an account.
Resource type indicates when and how an account received resources
available for a particular fiscal year. We identified and analyzed
four resource types: resources received in prior years, current
authority, permanent authority, and offsetting collections. Fund
type refers to the extent of designation or restriction of the
receipts associated with an account. We analyzed five fund types:
general funds, intragovernmental revolving funds, public enterprise
funds, special funds, and trust funds.\13 Both resource and fund
types are defined in the glossary in appendix I. Table 3 summarizes
these characteristics in terms of the number of accounts and amount
of budgetary resources for fiscal year 1995.
Table 3
Accounts and Budgetary Resources by
Resource and Fund Type, Fiscal Year 1995
(Dollars in thousands)
Numb Perce Perce
Resource Type er nt Amount nt
------------------------------------ ---- ----- ------------ -----
Prior year funding 878 67.4 $309,193,506 12.5
Current authority 807 61.9 714,416,650 28.9
Permanent authority 274 21.0 1,136,595,92 46.0
5\b
Offsetting collections 480 36.8 311,822,009 12.6
======================================================================
Total \c \c $2,472,028,0 100.0
91\d
Fund Type
----------------------------------------------------------------------
General 856 65.7 $1,348,838,1 54.6
44
Intragovernmental revolving 44 3.4 117,085,435 4.7
Public enterprise 116 8.9 234,382,009 9.5
Special 108 8.3 10,085,730 0.4
Trust 179 13.7 761,636,773 30.8
======================================================================
Total 1,30 100.0 $2,472,028,0 100.0
3 91
----------------------------------------------------------------------
\a Aggregating budgetary resources bears little relevance to outlays
in a given fiscal year. Because total budgetary resources include
all current and permanent authority as well as those resources
available from offsetting collections and prior years, they vary
significantly from outlays.
\b Permanent authority excluding net interest totals $796,622,776 in
268 accounts.
\c Will not sum to our universe of 1,303 accounts because some
accounts have multiple resource types.
\d Budgetary resources do not total due to rounding.
As shown in table 3, permanent authority, the resource type
associated with the fewest accounts, provides nearly half of the
budgetary resources available in fiscal year 1995. Conversely, prior
year authority, the most common resource type among accounts,
provides the fewest budgetary resources (12.5 percent). Over
one-third of fiscal year 1995 budget accounts have access to
offsetting collections. Combining offsetting collections with prior
year funding and permanent authority means that approximately 70
percent of total budgetary resources (about $1.76 trillion out of
$2.47 trillion) were available for obligation without further action
by the Congress in fiscal year 1995.
Within fund types, general funds comprise about two-thirds of all
accounts and about 55 percent of available budgetary resources.
About 22 percent of accounts and 31 percent of available resources
involve designated or restricted receipts in trust and special funds.
A fund type generally aligns with a specific resource type. Current
authority provides more than half of the resources in general fund
accounts. Permanent authority provides over 80 percent of the
resources to trust fund accounts and almost 50 percent of resources
to special fund accounts. Offsetting collections provide 89 percent
of the funding to intragovernmental revolving funds and 54 percent of
the resources to public enterprise funds. (See appendix II, figure
II.1 on page 34.)
Again, interesting and variable patterns emerge when resource type
and fund type are applied to federal missions, organizations, and
appropriations subcommittees. The figures in appendix II present
detailed information on these patterns. The following are some of
the observations that can be drawn from that information.
--------------------
\13 For purposes of this analysis, special and trust funds are
separated because the designation "trust" is used in the latter's
authorizing legislation.
FEDERAL MISSIONS
-------------------------------------------------------- Letter :3.3.1
The federal missions used in this report correspond to the 18 OMB
budget function classifications described in appendix I. Except for
net interest and medicare, the missions have all types of available
budgetary resources. (See appendix II, figure II.2 on page 36.)
Permanent authority provides nearly all the budgetary resources for
net interest and social security and is the dominant resource
type for medicare (83 percent). However, this resource type
provides less than 10 percent of available budgetary resources
for 8 other missions.
Seven missions (general science, space, and technology; education,
training, employment, and social services; administration of
justice; veterans benefits and services; natural resources and
environment; national defense; and health) received more than 50
percent of their available resources from current authority,
while 6 missions had less than 20 percent of their available
resources in current authority.
International affairs and community and regional development have
the greatest share of their resources provided through prior
year funding (63 percent and 37 percent respectively), but more
than half of the mission areas receive less than 13 percent of
their budgetary resources from this source.
Offsetting collections are significant only to commerce and housing
credit (62 percent), energy (55 percent), and agriculture (43
percent).
While virtually all missions have general fund and trust fund
accounts, more than three-fourths have special, public enterprise, or
intragovernmental fund types. (See appendix II, figure II.5 on page
44.)
Twelve of the 18 missions receive 50 percent or more of available
resources from the general fund. Three missions-- net interest;
general science, space, and technology; and education, training,
employment, and social services--are virtually fully funded
through the general fund. Conversely, 2 missions--social
security and commerce and housing credit-- receive less than 5
percent of their available resources from the general fund.
Trust funds provide the dominant share of budgetary resources for 3
missions--social security (99 percent), medicare (81 percent)
and transportation (71 percent)--but represent 1 percent or less
of budgetary resources in 8 other missions.
Public enterprise funds are the most significant source of
budgetary resources for 3 missions--commerce and housing credit
(95 percent of budgetary resources in 30 percent of accounts),
agriculture (80 percent of budgetary resources in 19 percent of
accounts), and energy (55 percent of resources in 15 percent of
accounts). However, public enterprise funds provide less than 5
percent of the budgetary resources for 12 other missions.
Only the general government mission has a significant amount of its
budgetary resources (41 percent) provided by intragovernmental
revolving funds; 13 missions receive less than 1 percent of
their resources from these funds. Only 1 mission--natural
resources and environment--has a sizeable number of special fund
accounts (24 percent), but these accounts amount to only 6
percent of its budgetary resources.
FEDERAL ORGANIZATIONS
-------------------------------------------------------- Letter :3.3.2
For this report, we considered all federal government entities that
received budgetary resources in fiscal year 1995. For presentation
purposes, the federal organizations shown in our analyses include (1)
all departments and agencies separately displayed in the President's
budget, (2) the legislative and judicial branches, (3) the Executive
Office of, and Funds Appropriated to, the President, and (4) the
following independent agencies: the Export-Import Bank of the United
States, the Federal Deposit Insurance Corporation, the Federal
Emergency Management Agency, the National Science Foundation, the
Postal Service, the Railroad Retirement Board, the Resolution Trust
Corporation, the Smithsonian Institution, and the United States
Information Agency. In our analyses, major organizations include all
departments and the Environmental Protection Agency. (See appendix
II, figure II.6 on page 46 and appendix III, figure III.6 on page 57
for federal organizations shown in our analyses and appendix IV for a
description of how these organizations were selected.)
Permanent authority provides more than half of available budgetary
resources for 5 organizations: the Social Security
Administration (93 percent), Treasury (86 percent), HHS (56
percent), the Railroad Retirement Board (54 percent), and Labor
(51 percent). However, about two-thirds of the organizations
received less than 10 percent of their available budgetary
resources from permanent authority.
For many federal organizations--including HHS; the Departments of
Housing and Urban Development (HUD), Labor, the Interior, the
Treasury, and Transportation; the General Services
Administration (GSA); and the Office of Personnel Management
(OPM)--current authority is less than half of total available
budgetary resources. None of the major organizations has more
than 80 percent of available budgetary resources stemming from
current authority.
Offsetting collections provided between 10 percent and 24 percent
of available resources for 9 of 15 major organizations: the
Department of Defense (DOD), Energy, Commerce, Agriculture, HUD,
Justice, Labor, State, and the Interior. Five other
organizations had more than 50 percent of budgetary resources in
collections--the Postal Service, the Tennessee Valley Authority
(TVA), GSA, the Resolution Trust Corporation (RTC), and the
Small Business Administration (SBA).
Resources from prior year authority comprise 13 percent of all
budgetary resources to federal organizations; however, they are
a significant percentage of resources for only one major
organization, HUD (49 percent).
Although general funds are the principal fund type for most federal
organizations, there are some notable exceptions. (See appendix II,
figure II.6 on page 46.)
Trust funds are the dominant fund type in the Social Security
Administration (90 percent of budgetary resources), the Railroad
Retirement Board (87 percent), OPM (75 percent), and the
Departments of Transportation (74 percent) and Labor (53
percent). However, trust funds provided less than 10 percent of
the budgetary resources to more than two-thirds of the
organizations.
Public enterprise funds are dominant for TVA, the Federal Deposit
Insurance Corporation, RTC, and the Postal Service (all about
100 percent), but about one-third of the organizations did not
receive any budgetary resources from these funds.
Intragovernmental revolving funds are a significant fund type only
for GSA (98 percent); about half of the organizations did not
receive resources from this fund type.
Special funds provided less than 1 percent of budgetary resources
to federal organizations but were about 17 percent of the
budgetary resources of both the Interior and the Legislative
Branch.
APPROPRIATIONS
SUBCOMMITTEES
-------------------------------------------------------- Letter :3.3.3
The budget accounts acted on by appropriations subcommittees
represent a smaller universe than the 1,303 accounts with $2.5
trillion in available budgetary resources that we analyzed to this
point. In fiscal year 1995, appropriations subcommittees provided
$903 billion in available budgetary resources to 860 accounts. This
smaller universe of accounts and resources results from excluding (1)
resources provided by authorizing committees and (2) resources
available from prior years.\14
Current authority is provided exclusively through the appropriations
process. Not surprisingly, current authority was the principal
budgetary resource among the appropriations subcommittees, comprising
almost 80 percent of budgetary resources appropriated. Permanent
authority provides more than 10 percent of resources for only one
subcommittee--the Labor, Health and Human Services, Education and
Related Agencies subcommittee. Offsetting collections are associated
with 39 percent of subcommittee accounts and provide 15 percent of
budgetary resources. The subcommittees in which offsetting
collections represent a larger share of resources are Defense (29
percent); Transportation and Related Agencies (27 percent); Treasury,
Postal Service, and General Government (26 percent); Military
Construction (20 percent); and Energy and Water Development (19
percent). (See appendix II, figure II.4 on page 42.)
Similarly, budget accounts acted on by appropriations subcommittees
are largely associated with the general fund. For example, 96
percent or more of budgetary resources come from general funds for
all subcommittees except the following:
Energy and Water Development (89 percent general funds);
Defense (78 percent general fund, 22 percent intragovernmental
revolving funds);
Treasury, Postal Service and General Government (76 percent general
funds, 24 percent intragovernmental revolving funds); and
Transportation and Related Agencies (69 percent general funds, 26
percent trust funds).
Overall, less than 1 percent of all subcommittee resources were
appropriated to accounts with special funds and public enterprise
funds. (See appendix II, figure II.7 on page 50.)
--------------------
\14 As discussed in appendix IV (Scope and Methodology), we could not
associate an appropriations subcommittee with prior year budgetary
resources due to data limitations.
DISCERNING PATTERNS WITHIN THE
FEDERAL BUDGET ACCOUNT
STRUCTURE
------------------------------------------------------------ Letter :4
As the preceding discussion has shown, each dimension or
characteristic can provide some insight into the federal budget
account structure. The following discussion highlights some of the
patterns which can be detected when one or more of the variables is
mapped against the others. However, this represents only a
preliminary and high-order analysis. Each dimension discussed in
this report also could be analyzed at the individual budget account
level. This kind of detailed analysis would be needed to address
specific questions or to comment on cross-cutting proposals.\15
--------------------
\15 In a series of fact sheets and associated testimony for the
Chairman, Senate Committee on Governmental Affairs, we used the
budget account structure to map organization spending patterns and
employment levels against the missions of the federal government.
See Government Restructuring: Identifying Potential Duplication in
Federal Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995);
Budget Function Classification: Agency Spending and Personnel Levels
for Fiscal Years 1994 and 1995 (GAO/AIMD-95- 115FS, April 11, 1995);
Budget Function Classification: Agency Spending by Subfunction and
Object Category, Fiscal Year 1994 (GAO/AIMD-95-116FS, May 10, 1995);
and Budget Function Classification: Relating Agency Spending and
Personnel Levels to Budget Functions (GAO/AIMD/GGD-95-69FS, Jan. 30,
1995).
A PROFILE OF THE LARGEST AND
SMALLEST ACCOUNTS
---------------------------------------------------------- Letter :4.1
As discussed earlier, the account structure is comprised of a few
very large accounts and many very small accounts (see figure 1).
This raises the question of whether the largest and smallest accounts
have different characteristics. Table 4 helps to answer this
question. It separates accounts into two groups--"large," which we
have defined arbitrarily as containing over $1 billion, and "small,"
which we have defined arbitrarily as containing less than $1 million.
While no dominant order or design emerges, tendencies can be
discerned.
Table 4
Profile of Large and Small Accounts
Large accounts Small accounts
(more than $1 (less than $1
billion in million in
Dimensions resources) resources)
------------------------------ ------------------ ------------------
Number of accounts 199 162
Total resources $2.3 trillion (94 $49 million (0.1
percent of total percent of total
resources) resources)
Size range $1 billion to $334 $1,000 to $997,000
billion (median (median $206,000)
$3.2 billion)
Orientation Programs (e.g., Processes (e.g.,
social security gifts and
and medicare) bequests)
Fund type More likely to be More likely to be
general funds, trust funds
public enterprise
funds, or
intragovernmental
revolving funds
Resource type More large Fewer small
accounts received accounts received
current authority current authority
and offsetting and offsetting
collections than collections than
small accounts large accounts
Missions with most accounts Defense, income General
security government,
natural resources
and environment
Appropriations subcommittees Defense; Labor, Commerce, Justice,
with most accounts Health and Human State, Judiciary
Services, and Related
Education and Agencies; Energy
Related Agencies and Water
Development;
Legislative
Branch; Veterans
Affairs, HUD and
Independent
Agencies
Organizations with most DOD, HHS Legislative
accounts Branch,
Agriculture
----------------------------------------------------------------------
Although the number of accounts with budgetary resources over $1
billion and under $1 million is roughly similar, over 94 percent of
all budgetary resources are concentrated in the accounts over $1
billion. For the 361 accounts in these two categories, each of the
four orientations was found in the group of accounts over $1 billion
and in the group of accounts under $1 million. However, accounts
over $1 billion are oriented to programs more often than accounts
under $1 million, which emphasize processes. Accounts under $1
million are more likely to be trust funds and less likely to receive
current authority and offsetting collections than accounts over $1
billion. Accounts over $1 billion are more likely than accounts
under $1 million to be general funds and to receive current authority
and offsetting collections.
REPRESENTATIVE ACCOUNT SIZES
---------------------------------------------------------- Letter :4.2
The preceding analysis helps to explain a budget account structure
marked by a wide and unequal distribution of accounts by size.
Analyzing median account sizes--the budgetary resources level at
which half the accounts in a particular dimension are above and half
are below--is another method to deal with this persistent pattern.
The median identifies representative accounts because it is
unaffected by a few extremely large or small values. In table 4, the
large accounts have a median of $3.2 billion, while the small
accounts' median is $206,000. Figures III.1, III.2, and III.3 on
pages 52, 53, and 54 in appendix III present detailed information
about account medians, the total number of accounts, and the ranges
of budgetary resources for missions, organizations, and
appropriations subcommittees. The following are some of the more
interesting patterns shown in these figures.
The medicare, social security, and net interest missions have the
largest medians and the fewest accounts. General government and
community and regional development--missions with more diverse
and numerous accounts--have the smallest medians.
Five federal organizations (the Social Security Administration,
RTC, TVA, OPM, and the Federal Deposit Insurance Corporation)
have comparatively large account medians; the Legislative Branch
has the smallest account median.
The Defense appropriations subcommittee has the largest median
account size, while the Legislative Branch subcommittee has the
smallest.\16
Organizations with similar account medians can have quite different
profiles. The Department of Justice (DOJ) and HUD have roughly equal
median account sizes (about $135 million). DOJ has $18.8 billion in
budgetary resources, with 10 percent of its accounts over $1 billion,
and it has no public enterprise funds. In contrast, HUD has
resources of $75.9 billion, with 20 percent of its accounts over $1
billion, and about 25 percent of its accounts are public enterprise
funds. There also are some similarities. Both organizations are
reviewed by one appropriations subcommittee and implement programs in
about the same number of missions.
Median account size also varies by fund type. (See appendix III,
figure III.4 on page 55.) The median of intragovernmental revolving
funds is three times that of public enterprise funds--the next
largest median--due to large revolving funds in DOD and GSA.
Although the medians for public enterprise and general funds are
similar, there are 116 public enterprise funds and 856 general funds.
Trust funds have the smallest median, despite the existence of some
very large trust funds such as social security, medicare, and
highways.
--------------------
\16 The median account size for appropriations subcommittees is
measured by the amount of resources affected by an appropriations
subcommittee. Because other budgetary resources (notably permanent
authority) are provided by other congressional committees, the
account universe and size used to compute the median may differ from
that used to compute medians for other dimensions.
INTERSECTIONS BETWEEN
FEDERAL MISSIONS AND
STRUCTURES
---------------------------------------------------------- Letter :4.3
Finally, combining the dimensions discussed in this report into an
overall matrix discloses the rich and complex relationships within
the budget account structure. Figure 2 shows the intersections
between the descriptive characteristics of federal missions, federal
organizations, and cognizant appropriations subcommittees. It
visually presents another aspect of the complex setting that would be
encountered by any cross-cutting proposals affecting the budget
account structure. The following are some of the overall patterns
displayed in figure 2 which follows, as well as in figures III.5,
III.6, and III.7 on pages 56, 57, and 58 of appendix III.
Three missions are concentrated in one subcommittee each, while
eight missions are addressed by five or more subcommittees.
Three missions are concentrated in one organization each, while 10
missions are carried out by five or more organizations.\17
Seven major federal organizations are considered by one
appropriations subcommittee each and six others are considered
by two subcommittees. Five subcommittees review parts of DOD
and HHS.
Two subcommittees appropriate to more than 10 federal organizations
and two others address 8 and 7 federal organizations,
respectively. Five subcommittees deal with 2 or fewer federal
organizations.
Figure 2: Budget Accounts of
Federal Organizations by
Federal Missions and
Appropriations Subcommittees,
Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
--------------------
\17 For a more complete discussion, see GAO/T-AIMD-95-161 and
GAO/AIMD- 95-115FS.
---------------------------------------------------------- Letter :4.4
The descriptive overview discussed in this report represents only a
first order of analysis. As proposals suggesting across-the-board
changes to the budget account structure are generated, more detailed
analyses, keyed to the specific proposals, will be necessary.
However, this preliminary work demonstrates both the extent of
analysis which can be performed and its potential utility. We would
be pleased to work with your offices to determine other avenues of
inquiry.
We provided a draft of this report to OMB for technical review and
comment. Their comments have been included as appropriate.
We are sending copies of this report to the Ranking Minority Members
of the Senate Committee on Appropriations, Committee on the Budget,
and Committee on Governmental Affairs; the Chairmen and Ranking
Members of the House Committee on Appropriations, Committee on the
Budget, and Committee on Government Reform and Oversight; and other
interested Members of the Congress. We also will make copies
available to others upon request.
If you have any questions, I can be reached at (202) 512-9573. Major
contributors to this report are listed in appendix V.
Paul L. Posner
Director, Budget Issues
GLOSSARY
=========================================================== Appendix I
FEDERAL MISSION
--------------------------------------------------------- Appendix I:1
The federal missions listed in this report are defined by OMB's
budget function classification system, in which all accounts are
assigned to one or more budget functions that generally indicate
broad areas of national need. The following are descriptions of the
budget functions used in this report. For a more complete
description, see appendix II in A Glossary of Terms Used in the
Federal Budget Process (Exposure Draft) (GAO/AFMD-2.1.1, Jan. 1993).
ADMINISTRATION OF JUSTICE
------------------------------------------------------- Appendix I:1.1
Programs to provide judicial services, police protection, law
enforcement (including civil rights), rehabilitation and
incarceration of criminals, and the general maintenance of domestic
order.
AGRICULTURE
------------------------------------------------------- Appendix I:1.2
Promoting the economic stability of agriculture and the nation's
capability to maintain and increase agricultural production.
COMMERCE AND HOUSING CREDIT
------------------------------------------------------- Appendix I:1.3
Promotion and regulation of commerce and the housing credit and
deposit insurance industries, which pertain to collection and
dissemination of social and economic data (unless they are an
integral part of another function, such as health); general purpose
subsidies to business, including credit subsidies to the housing
industry; and the Postal Service fund and general fund subsidies of
that fund.
COMMUNITY AND REGIONAL
DEVELOPMENT
------------------------------------------------------- Appendix I:1.4
Development of physical facilities or financial infrastructures
designed to promote viable community economies.
EDUCATION, TRAINING,
EMPLOYMENT, AND SOCIAL
SERVICES
------------------------------------------------------- Appendix I:1.5
Promoting the extension of knowledge and skills, enhancing employment
and employment opportunities, protecting workplace standards, and
providing services to the needy.
ENERGY
------------------------------------------------------- Appendix I:1.6
Promoting an adequate supply and appropriate use of energy to serve
the needs of the economy.
GENERAL GOVERNMENT
------------------------------------------------------- Appendix I:1.7
General overhead cost of the federal government, including
legislative and executive activities; provision of central fiscal,
personnel, and property activities; and provision of services that
cannot reasonably be classified in any other major function.
GENERAL SCIENCE, SPACE AND
TECHNOLOGY
------------------------------------------------------- Appendix I:1.8
Budget resources allocated to science and research activities of the
federal government that are not an integral part of the programs
conducted under any other function.
HEALTH
------------------------------------------------------- Appendix I:1.9
Programs other than medicare whose basic purpose is to promote
physical and mental health, including the prevention of illness and
accidents.
INCOME SECURITY
------------------------------------------------------ Appendix I:1.10
Support payments (including associated administrative expenses) to
persons for whom no current service is rendered. Included are
retirement, disability, unemployment, welfare, and similar programs,
except for social security and income security for veterans, which
are in other functions.
INTERNATIONAL AFFAIRS
------------------------------------------------------ Appendix I:1.11
Maintaining peaceful relations, commerce, and travel between the
United States and the rest of the world and promoting international
security and economic development abroad.
MEDICARE
------------------------------------------------------ Appendix I:1.12
Federal hospital insurance and federal supplementary medical
insurance, along with general fund subsidies of these funds and
associated offsetting receipts.
NATIONAL DEFENSE
------------------------------------------------------ Appendix I:1.13
Common defense and security of the United States, including raising,
equipping, and maintaining of armed forces; development and
utilization of weapons systems; direct compensation and benefits paid
to active military and civilian personnel; defense research,
development, testing, and evaluation; and procurement, construction,
stockpiling, and other activities undertaken to directly foster
national security.
NATURAL RESOURCES AND
ENVIRONMENT
------------------------------------------------------ Appendix I:1.14
Developing, managing, and maintaining the nation's natural resources
and environment.
NET INTEREST
------------------------------------------------------ Appendix I:1.15
Transactions which directly give rise to interest payments or income
(lending) and the general short fall or excess of outgo over income
arising out of fiscal, monetary, and other policy considerations and
leading to the creation of interest-bearing debt instruments
(normally the public debt).
SOCIAL SECURITY
------------------------------------------------------ Appendix I:1.16
Federal old age and survivors and disability insurance trust funds,
along with general fund subsidies of these funds and associated
offsetting collections.
TRANSPORTATION
------------------------------------------------------ Appendix I:1.17
Providing for the transportation of the general public and/or its
property, regardless of whether local or national and regardless of
the particular mode of transportation. Included are construction of
facilities; purchase of equipment; research, testing, and evaluation;
provision of communications related to transportation; operating
subsidies for transportation facilities and industries; and
regulatory activities directed specifically toward the transportation
industry rather than toward business.
VETERANS BENEFITS AND
SERVICES
------------------------------------------------------ Appendix I:1.18
Programs providing benefits and services, the eligibility for which
is related to prior military service, but the financing of which is
not an integral part of the costs of national defense.
FUND TYPE
--------------------------------------------------------- Appendix I:2
The extent of restriction or earmarking within accounts. The five
fund types discussed in this report follow.
GENERAL FUNDS
------------------------------------------------------- Appendix I:2.1
Accounts containing resources to be expended for the general support
of the federal government.
INTRAGOVERNMENTAL REVOLVING
FUNDS
------------------------------------------------------- Appendix I:2.2
Accounts similar to public enterprise funds except that their
governmental receipts primarily come from other government agencies
and accounts.
PUBLIC ENTERPRISE FUNDS
------------------------------------------------------- Appendix I:2.3
Accounts authorized by law to be credited with offsetting
collections, primarily from the public, that are generated by and
earmarked to finance a continuing cycle of business-type operations.
SPECIAL FUNDS
------------------------------------------------------- Appendix I:2.4
Accounts whose resources are earmarked by law for specific purposes.
TRUST FUNDS
------------------------------------------------------- Appendix I:2.5
Accounts designated by law as "trust funds" and earmarked for
specific purposes and programs according to the terms of a trust
agreement or a statute.
ORIENTATION
--------------------------------------------------------- Appendix I:3
The focus of the Congress in creating an account. The four
orientations discussed in this report follow.
OBJECT
------------------------------------------------------- Appendix I:3.1
Focus on the specific items--the objects of expenditure--needed to
operate a governmental unit. Examples are accounts containing
expenses for salaries or equipment. The predominant goal expressed
through an object orientation is to control spending.
ORGANIZATION
------------------------------------------------------- Appendix I:3.2
Focus on a specific governmental unit. This account orientation
emphasizes the accountability of, rather than control over, the
organization receiving the budgetary resources--that is, from a focus
on objects to a focus on stewardship.
PROCESS
------------------------------------------------------- Appendix I:3.3
Focus on the operations, approaches, and activities underlying
federal programs, reflecting congressional interest in those
processes. Examples include accounts for working capital funds or
inspection services.
PROGRAM
------------------------------------------------------- Appendix I:3.4
Focus on the missions and objectives of governmental units,
reflecting congressional attention to the purpose, program, or
activity of government. Examples of such accounts include the fiscal
year 1995 appropriations to the National Aeronautics and Space
Administration for Human Space Flight and for Science, Aeronautics
and Technology--accounts which emphasize the purpose and major
programs of the organization. These accounts replaced accounts for
Construction of Facilities and for Research and Development, which
emphasized activities and processes.
RESOURCE TYPE
--------------------------------------------------------- Appendix I:4
The source of funding for accounts. Four resource types are
discussed in this report.
CURRENT AUTHORITY
------------------------------------------------------- Appendix I:4.1
Resources provided by the Congress in, or immediately prior to, the
fiscal year or years during which the funds are available for
obligation.
OFFSETTING COLLECTIONS
------------------------------------------------------- Appendix I:4.2
Resources arising as collections from government or public sources
for business-type transactions. Laws authorize collections to be
credited directly to accounts and may make them available for
obligation to meet the account's purpose without further legislative
action. Usually a form of permanent authority, offsetting
collections are separately discussed in this report.
PERMANENT AUTHORITY
------------------------------------------------------- Appendix I:4.3
Resources available as a result of previously enacted legislation and
not requiring new legislation for the current year.
PRIOR YEAR FUNDING
------------------------------------------------------- Appendix I:4.4
Current or permanent authority provided and available in a previous
fiscal year that remains available in the current fiscal year.
UNDERSTANDING THE FEDERAL BUDGET
ACCOUNT STRUCTURE
========================================================== Appendix II
Figure II.1: Accounts and
Budgetary Resources by Resource
Type and Fund Type, Fiscal Year
1995
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.2: Accounts and
Budgetary Resources by Resource
Type and Federal Mission,
Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.3: Accounts and
Budgetary Resources by Resource
Type and Federal Organization,
Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.3: (Continued)
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.4: Accounts and
Budgetary Resources by Resource
Type and Appropriations
Subcommittee, Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.5: Accounts and
Budgetary Resources by Fund
Type and Federal Mission,
Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.6: Accounts and
Budgetary Resources by Fund
Type and Federal Organization,
Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.6: (Continued)
(See figure in printed
edition.)
(See figure in printed
edition.)
Figure II.7: Accounts and
Budgetary Resources by Fund
Type and Appropriations
Subcommittee, Fiscal Year 1995
(See figure in printed
edition.)
(See figure in printed
edition.)
DISCERNING PATTERNS WITHIN THE
FEDERAL BUDGET ACCOUNT STRUCTURE
========================================================= Appendix III
Figure III.1: Median and Range
of Account Budgetary Resources
by Federal Mission, Fiscal Year
1995
(See figure in printed
edition.)
Figure III.2: Median and Range
of Account Budgetary Resources
by Federal Organization, Fiscal
Year 1995
(See figure in printed
edition.)
Figure III.3: Median and Range
of Account Budgetary Resources
by Appropriations Subcommittee,
Fiscal Year 1995
(See figure in printed
edition.)
Figure III.4: Median and Range
of Account Budgetary Resources
by Fund Type, Fiscal Year 1995
(See figure in printed
edition.)
Figure III.5: Federal Missions
by Federal Organization and
Appropriations Subcommittee,
Fiscal Year 1995
(See figure in printed
edition.)
Figure III.6: Federal
Organizations by Federal
Mission and Appropriations
Subcommittee, Fiscal Year 1995
(See figure in printed
edition.)
Figure III.7: Appropriations
Subcommittees by Federal
Mission and Federal
Organization, Fiscal Year 1995
(See figure in printed
edition.)
SCOPE AND METHODOLOGY
========================================================== Appendix IV
The account-level data that formed the basis for this report were
extracted from automated information collected and maintained by the
Office of Management and Budget (OMB). As part of its annual process
to develop the President's budget, OMB uses its MAX budget system to
collect a wide variety of information\1 from all branches of
government, from executive departments and organizations, and from
independent agencies. We obtained MAX data for the fiscal year 1996
budget, which included the current year 1995 estimates used in this
report. Although we did not independently verify the extracted data
for each budget account, we reconciled total budget authority and
certain data from a judgmentally selected subset of accounts to the
published Budget of the U.S. Government, Fiscal Year 1996--Appendix.
To define a universe of budget accounts, we extracted current year
1995 estimates of gross budgetary resources from the 1996 budget
data. Gross budgetary resources are equivalent to gross budget
authority given in the current year and available for obligation from
prior years, net of transfers out, enacted rescissions, and statutory
limitations on the use of authority.\2 Any regular\3 account
reporting such resources was extracted and compiled into a separate
database we used for this project. We verified our approach with OMB
to ensure that we were accurately identifying and collecting
budgetary data consistent with the concept of gross budgetary
resources.
We chose gross budgetary resources as the operational definition of a
budget account for two reasons. First, it is a concept that fulfills
a wide variety of federal budget needs, from congressional oversight
and appropriations to program management. Second, this definition
ensured the largest possible universe of accounts with available
budget authority for our study. In effect, this approach caused a
selection of all budget accounts which had available and enacted
spending authority and thus could be the source of federal
commitments (or obligations) during fiscal year 1995.
Budget authority is heterogeneous in nature. It is provided in many
different forms, covers many different time periods, and reflects
congressional expectations ranging from indefinite authority that may
never be used (such as borrowing authority) to definite authority
which generally is expected to be outlayed in the current year (such
as current appropriations). As a result, it is not additive, either
across programs or organizations for a specific year or across a
series of years for one program or organization. However, even with
this qualification, we have aggregated budgetary resources in this
report, as OMB does in its annual Historical Tables. Just as OMB
recognizes the need for historical data on this subject, we recognize
a comparable need for current data to express the totality of current
obligational authority.
For each account reporting gross budgetary resources, we extracted a
variety of information from the OMB MAX system.
To determine the federal organization, we extracted the agency code
for each account. In the analyses contained in this report, we
identify the major branches and organizations that are
separately presented in the President's budget. Other entities
listed as "other independent agencies" in the budget are
separately identified in specific analyses in this report when
the entity represents a significant number of accounts and/or
budgetary resources. Thus, the actual federal organizations
listed in analyses based on appropriations subcommittees will
differ slightly from those used in other analyses.
To determine the congressional decision-making structure, we
extracted the appropriations bill originating subcommittee code
for each account. The MAX system indicates both the spending
jurisdiction (appropriations or authorizing committee) and the
specific appropriations subcommittee associated with each
authority action for each account. For analyses in which
appropriations subcommittee was a variable, only accounts (and
resources within those accounts) for which a specific
appropriations subcommittee took action are included. In
addition, because the MAX system does not indicate the
appropriations subcommittee associated with budgetary resources
available from prior years, analyses involving appropriations
subcommittees and resource types exclude any budgetary resources
available from prior years. Therefore, the universe of accounts
and budgetary resources for analyses involving appropriations
subcommittees is smaller than the universe used in the remainder
of this report.
To comment on the mission(s) addressed by the budgetary resources
of an account, we extracted budget function information. The
budget function classification system describes 18 broad areas
of national need and was developed to provide a coherent and
comprehensive basis for analyzing and understanding the
budget.\4 In some cases, the budgetary resources of a single
account may be coded to multiple functions. In these cases, we
assigned the account to the budget function which received the
majority of the account's budget authority in fiscal year 1995.
However, budgetary resources in multi-function accounts were
allocated to each of the functions according to the distribution
of budget authority in the account.
To determine the type of budgetary resources available to an account,
we aggregated data from the OMB MAX system into four components:
prior year authority, current year authority, permanent authority,
and offsetting collections. Prior year authority reflects the
balances of budget authority from previous years that remain
available for obligation. Current authority is budget authority
provided in fiscal year 1995 appropriations acts, while permanent
authority is provided in standing authorizing legislation.
Offsetting collections represent authority that results from the
receipt of collections from other government accounts or collections
from the public that are of a business-type or market-oriented
nature. Offsetting collections are usually a form of permanent
authority. However, in this report, we segregated offsetting
collections because the cyclical or business- type nature of such
authority differs from other permanent authority.
To determine the extent of restrictions associated with the resources
within an account, we extracted fund type information from the OMB
MAX system. All governmental activities are financed through federal
funds or trust funds. Federal funds are further separated into (1)
general funds or special funds, to distinguish unrestricted receipts
from those that are earmarked for a specific purpose, and (2) public
enterprise funds or intragovernmental revolving funds, to distinguish
between receipts arising from a cycle of business-type operations
from the public or governmental organizations. Although trust funds
are segregated into revolving and nonrevolving funds, for this
report, we have aggregated both into a single trust fund category.
We computed median accounts, in terms of budgetary resources, to
determine representative account sizes for federal mission, federal
organization, appropriations subcommittee, and fund type.
Statistical medians are particularly useful when wide variations
exist across multiple dimensions. Unlike other statistical measures
of central tendency (for example, averages), medians are not
influenced by a few extremely large or small values and thus yield a
more representative account size. We displayed ranges of account
size with the median to illustrate variability.
To describe the predominant interests of the Congress in enacting an
account, we defined four orientations--object, organization, process,
and program. These orientations were derived from a literature
search which focused on the key events or developments associated
with federal budgeting practices\5 and are not directly associated
with a particular data element in the OMB MAX system. Using the
definitions we developed for each of these orientations, we reviewed
each of the accounts in three judgmentally selected organizations and
all accounts with more than $1 billion and less than $1 million in
resources. To aid in assigning the accounts to an orientation, we
reviewed the account's title, statutory language, narrative
statement, and budget presentations. Many accounts possess aspects
which made assignment to a single orientation very difficult and
somewhat arbitrary. Thus, the assignments presented in this report
should be seen as suggestive or indicative, rather than definitive.
Lastly, to develop historical and anecdotal data on the federal
budget account structure, we performed literature searches and
conducted interviews with budget specialists in academia, OMB, the
Congressional Research Service, and the Congressional Budget Office.
We also reviewed written documents produced by OMB, the National
Performance Review, and the Federal Accounting Standards Advisory
Board.
Our work was performed in Washington, D.C., from April 1995 through
May 1995.
--------------------
\1 OMB Circular A-11 details both the information to be submitted and
the format to be used.
\2 Based on information provided in OMB's Circular A-11, Section 32,
"Program and Financing Schedules," we extracted negative balances of
lines 17 and 25, positive balances of lines 27-32, and all balances
of lines 21-23 and 40-69.
\3 Regular refers to accounts that contain only enacted, as opposed
to proposed, appropriations.
\4 For a description of the function classification system, see
appendix II in A Glossary of Terms Used in the Federal Budget
Process: Exposure Draft (GAO/AFMD-2.1.1, Jan. 1993).
\5 Budget Object Classification: Origins and Recent Trends
(GAO/AIMD-94-147, Sept. 13, 1994). The bibliography to this report
also contains several books and articles which provide background for
the orientations used in this report.
MAJOR CONTRIBUTORS TO THIS REPORT
=========================================================== Appendix V
ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION, WASHINGTON,
D.C.
Michael J. Curro, Assistant Director
Carolyn L. Litsinger, Evaluator-in-Charge
Laura E. Hamilton, Auditor
SELECTED BIBLIOGRAPHY
=========================================================== Appendix 0
GAO PRODUCTS
Managing for Results: Strengthening Financial and Budgetary
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Government Restructuring: Identifying Potential Duplication in
Federal Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995).
Budget Function Classification: Agency Spending by Subfunction and
Object Category, Fiscal Year 1994 (GAO/AIMD-95-116FS, May 10, 1995).
Budget Function Classification: Agency Spending and Personnel Levels
for Fiscal Years 1994 and 1995 (GAO/AIMD-95-115FS, April 11, 1995).
Budget Function Classification: Relating Agency Spending and
Personnel Levels to Budget Functions (GAO/AIMD/GGD-95-69FS, Jan. 30,
1995).
Management Reform: Implementation of the National Performance
Review's Recommendations (GAO/OCG-95-1, Dec. 5, 1994).
Budget Object Classification: Origins and Recent Trends
(GAO/AIMD-94-147, Sept. 13, 1994).
Management Reform: GAO's Comments on the National Performance
Review's Recommendations (GAO/OCG-94-1, Dec. 3, 1993).
Budget Issues: Assessing Executive Order 12837 on Reducing
Administrative Expenses (GAO/AIMD-94-15, Nov. 17, 1993).
Budget Issues: Financial Reporting to Better Support Decision-making
(GAO/AFMD-93-22, June 1993).
A Glossary of Terms Used in the Federal Budget Process
(GAO/AFMD-2.1.1, Jan. 1993).
Budget Issues: The Use of Spending Authority and Permanent
Appropriations is Widespread (GAO/AFMD-87-44, July 17, 1987).
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