Congressional Oversight: FAA Case Study Shows How Agency	 
Performance, Budgeting, and Financial Information Could Enhance  
Oversight (08-MAR-06, GAO-06-378).				 
                                                                 
Pursuant to various statutes, federal agencies develop an	 
abundance of performance, budget, and financial information that 
could be useful for Congress' review and monitoring of agencies. 
However, agencies' understanding of Congress' information needs  
is often limited and agencies may not be providing timely	 
information in a format that aids congressional understanding of 
trends and issues. Thus, Members and their staff may not be aware
of or avail themselves to certain information. To describe the	 
information available and how it might be used to support	 
congressional oversight, the Federal Aviation Administration was 
selected as a case study in part due to the large quantity of	 
information already available. GAO was asked to identify: (1)	 
information FAA produces that could enhance congressional	 
oversight, (2) other technology and information resources that	 
could enhance congressional oversight, and (3) how committee	 
access to FAA's information could be improved to enhance its	 
timeliness and usefulness.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-378 					        
    ACCNO:   A48577						        
  TITLE:     Congressional Oversight: FAA Case Study Shows How Agency 
Performance, Budgeting, and Financial Information Could Enhance  
Oversight							 
     DATE:   03/08/2006 
  SUBJECT:   Congressional oversight				 
	     Congressional/executive relations			 
	     Government information				 
	     Information resources management			 
	     Internal controls					 
	     Performance measures				 
	     Timeliness 					 

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GAO-06-378

     

     * Report to the Chairman, House Committee on Transportation and
       Infrastructure
          * March 2006
     * CONGRESSIONAL OVERSIGHT
          * FAA Case Study Shows How Agency Performance, Budgeting, and
            Financial Information Could Enhance Oversight
     * Contents
          * Results in Brief
          * Agency Performance, Budget, and Financial Management Documents
            Can Enhance Oversight Efforts
               * FAA's Strategic and Performance Reporting Documents Outline
                 Agency Goals and Priorities
                    * FAA's Strategic Plan
                    * Unit-Specific Business Plans
                    * Annual Performance Reports
                    * Quarterly Performance Reporting
               * FAA's Budget and Long- Term Planning Documents Can Be Used
                 to Generate Questions About FAA's Planned Resource Use
                    * FAA's Budget
                    * FAA's Budget-In-Brief
                    * FAA's Performance-Based Budget
                    * FAA's Other Long-Term Planning and Budget Documents
               * Cost Accounting Provides Detailed Operating Cost Analysis
          * Analytical Agencies and Organizations Can Provide Information and
            Analysis to Enhance Oversight Efforts
          * Regular Communication and Timely Access to Useful Information Can
            Enhance Oversight
               * Access to Timely and Useful Agency Information Could Improve
                 Committee Oversight
               * Regular Meetings Between Committees and Agency Officials
                 Could Provide a Forum to Discuss Oversight Issues
          * Conclusions
          * Recommendations for Executive Action
          * Agency Comments
     * Objectives, Scope and Methodology
     * Analytical Agencies and Organizations Can Provide Information and
       Analysis to Enhance Oversight Efforts
     * Financial Statements Provide Insights into Agency Financial Management
       and Resources
          * FAA's Balance Sheet
          * Statement of Net Cost
          * Statement of Changes in Net Position
          * Statement of Budgetary Resources
          * Statement of Financing
     * GAO Contact and Staff Acknowledgements

Report to the Chairman, House Committee on Transportation and
Infrastructure

March 2006

CONGRESSIONAL OVERSIGHT

FAA Case Study Shows How Agency Performance, Budgeting, and Financial
Information Could Enhance Oversight

Contents

Tables

Figures

Abbreviations

March 8, 2006 Letter

The Honorable Don Young Chairman, Committee on Transportation   and
Infrastructure House of Representatives

Dear Mr. Chairman:

In your letter dated September 13, 2004, you noted that federal agencies
develop an abundance of performance, budget, and financial information for
internal use as well as to report to Congress for oversight purposes.
However, Congress may not be fully aware of or availing itself of this
information. Further, communication between agencies and Congress to
clarify Congress' information needs is limited. For example, you stated
that agencies often do not provide information in a timely manner or in a
format that facilitates understanding of trends and issues, making it
difficult to synthesize and use the information to identify areas of
greatest concern and conduct effective oversight. As a result, you stated
that too often oversight occurs in an ad hoc manner as problems arise, and
with inadequate information to determine and address root causes. Further,
as government grows more complex, and agencies produce more information,
it becomes harder for Congress to access, analyze, and summarize this
information to develop its policy positions and legislative enactments.
New ways must be continually found to use emerging technology and
approaches to make agency information transparent and readily available.

You requested that we help to address these issues by working with
committee staff to develop a framework for establishing timely and
constructive oversight of programs under the committee's jurisdiction. To
establish a working precedent, the Federal Aviation Administration (FAA)
was selected as a case study as a result of its large quantity of
information already available, the forward-looking management systems
being developed, and the effective communications between the staff and
agency. Our objectives were to identify: (1) information FAA produces that
could enhance congressional oversight, (2) other available information
resources that could enhance congressional oversight and, (3) how
committee access to FAA's information could be improved to enhance its
timeliness and usefulness.

To achieve our objectives, we worked with members of your committee's
oversight staff, as well as Aviation Subcommittee staff to better
understand their information needs and delivery mechanisms. In addition,
we identified relevant FAA performance, budget, and financial documents
and met with senior officials from across FAA, including several lines of
business-Airports, Air Traffic Organization, Aviation Safety-and staff
offices-Aviation Policy, Planning and Environment, Financial Services,
Government and Industry Affairs, Human Resources and Management. We also
met with officials from the Department of Transportation's (DOT) Office of
Inspector General (OIG), the DOT's Chief Information Officer, the
Congressional Research Service, the General Service Administration's
FirstGov initiative, and the Office of Management and Budget, as well as
representatives from several think tanks. Our review was conducted from
September 2004 through December 2005 in accordance with generally accepted
government auditing standards.

Results in Brief

FAA has made available much of the information and analytic resources that
Congress needs to conduct its oversight role. For example, FAA developed a
strategic plan with long-term, outcome-oriented goals and objectives. Its
annual Performance and Accountability Report includes the agency's
progress in achieving its goals, and allows Congress to monitor
performance trends. This report also provides financial information useful
for analyzing its operating results and financial position. FAA's budget
documents combined with performance data could provide Congress
information to use in determining whether resources are achieving the
planned performance improvements. Used together, this information provides
a valuable tool to assist Members of Congress and congressional staff in
their oversight responsibilities.

Through its legislative support agencies-GAO, Congressional Research
Service and the Congressional Budget Office-as well as the Department of
Transportation's Inspector General, congressional committees also have
access to considerable resources for oversight. For example, GAO's High
Risk Series Update includes FAA's Air Traffic Control Modernization
program and discusses progress it has made in addressing its problems. The
DOT IG annually reports on the top management challenges facing FAA, such
as safety and capacity challenges.

Effective communication among agency officials, Members of Congress and
congressional staff is needed to ensure that information agencies provide
meets committee needs. While considerable information resources are
available, they may not be available in a manner that is useful to
committees. We have previously reported, in a review of interactions
between the Congress and other executive branch agencies, that although
agencies collect and produce a great deal of useful information, much of
it did not reach the interested congressional committees, and the
information that did reach the committees was difficult to digest, too
highly aggregated, or was received too late to be useful.1 In the case of
FAA, House Transportation and Infrastructure Committee staff noted that
the agency has a large quantity of information available and effective
communication between the staff and the agency, but it is also interested
in using technology to gain additional, timely access to agency data when
conducting oversight. While FAA provides a great deal of information on
its Web site, enhancing access to agency information using technology can
improve the timeliness and usefulness of agency information to the
Congress. For example, information alerts and summaries from the agency
could be effective information sharing tools. Further, regular meetings
between committees, staff and agency officials could identify the
committee's principal oversight objectives, provide a forum to discuss the
issues, and develop the best approaches to meet them.

To further enhance committee access to information about FAA, we recommend
the Secretary of the Department of Transportation direct the Administrator
of the FAA to implement a number of technology solutions to improve access
to information, such as:

o Continue to work with committee staff to further refine the For Congress
Web site by improving the flow of information and taking advantage of
emerging technologies;

o Include a Frequently Asked Questions page on the For Congress site,
allowing oversight committees to quickly find answers to commonly
requested items relevant to Congress;

o Add moderated access on the For Congress Web site to allow access to
information that should be made available to congressional committees, yet
may not be appropriate for the general public; and

o Consider offering regular meetings between the Members of the committee
and key staff with senior FAA executives to address matters of mutual
concern.

We provided a draft of this report to the Secretary of the Department of
Transportation for review and comment. We received comments from FAA
officials, including the Deputy Assistant Administrator for Financial
Services, on behalf of the Secretary who indicated that they were pleased
to have FAA serve as our case study and they would consider the report's
recommendations as they continue to strive for excellence in fulfilling
the Congress' information needs. They highlighted a number of ways in
which they are using technology solutions, including a dedicated Web page
for Congress and a subscription e-mail service for Congress to receive
notices of new information. We note that both improvements resulted from
our discussions with committee and FAA staff, the latter in response to a
recommendation contained in the draft of this report.

Agency Performance, Budget, and Financial Management Documents Can Enhance
Oversight Efforts

Congressional oversight is the review, monitoring, and supervision of
federal agencies, programs and policy implementation. This oversight
provides the legislative branch with an opportunity to inspect, examine,
review and check the executive branch and its agencies. Congressional
oversight includes two different features-that which is ongoing throughout
the course of a year and that which is done at a specific time in the year
in response to the issuance of the President's budget. For the latter,
House and Senate committees with jurisdiction over federal programs are
required to submit a views and estimates report-a report containing the
committee's comments or recommendations on budgetary matters within its
jurisdiction-to its respective budget committees each year within 6 weeks
of the submission of the President's budget. For example, the House
Transportation and Infrastructure Committee's fiscal year 2006 views and
estimates report identified a number of aviation-related issues and
recommended increased funding over the President's proposed budget for
facilities and equipment to pay for capital improvements designed to
increase capacity and reduce aviation gridlock and for airport safety
upgrades, including explosive detection systems for airport baggage
systems. Ongoing oversight and the specific views and estimates oversight
reports can draw information from documents and reports issued by federal
departments over the course of the year.

Pursuant to the Government Performance and Results Act of 1993 (GPRA) and
other statutes, federal agencies produce performance, budget, and
financial information for internal management purposes and for reporting
to Congress which can also be useful to congressional committees to
enhance their oversight efforts. GPRA required federal agencies to develop
strategic plans with long-term, outcome-oriented goals and objectives,
annual goals linked to achieving the long-term goals, and annual reports
on the results achieved. The Chief Financial Officers Act of 1990 (CFO) as
expanded by the Government Management and Reform Act of 1994 (GMRA)
requires annual audited agencywide statements for 24 major federal
departments. In the case of FAA, the agency has made available much of the
information and analytic resources that Congress needs to conduct its
oversight role.

As part of DOT, FAA addresses some of the requirements of GPRA through its
inclusion in DOT's Performance and Accountability Report. However, FAA
also produces its own strategic plan, unit-specific business plans and
performance reports that identify agency priorities, goals, strategies and
progress toward these goals and the success of the strategies employed.
Collectively, these documents help Congress determine whether FAA's goals
are aligned with congressional goals and whether FAA is achieving them.
Linking performance information to FAA's budgetary resources, such as FAA
is beginning to do in its performance-based budget, can also provide
Congress the opportunity to oversee the results planned or achieved with
budgeted resources and indicate FAA's priorities for funding. Used
together, these agency documents could assist committees in identifying
and tracking progress on the issues related to reauthorization and
oversight.

FAA's Strategic and Performance Reporting Documents Outline Agency Goals
and Priorities

FAA manages performance through a series of integrated performance
documents. FAA's principal performance reports are: the strategic plan,
called the Flight Plan; unit specific business plans; the annual
Performance Accountability Report; and quarterly performance reports. The
Flight Plan includes the agency's mission, goals and strategies. In
addition, each of FAA's lines of business has a unit-specific business
plan that outlines how its actions will support the goals and measures
identified in the Flight Plan. FAA monitors and reports on the Flight
Plan's key performance targets through quarterly and annual performance
reports.

FAA's Strategic Plan

FAA's current 5-year strategic plan, or Flight Plan, is designed to
outline the agency's mission, goals and strategies to achieve these goals
through 2009, with the overall aim of seeking "to provide the safest, most
efficient aerospace system in the world." Among other things, GPRA
requires agencies to consult with Congress and solicit the input of others
as they develop these plans-a good opportunity for congressional
committees and staff to influence FAA's future. According to FAA senior
executives, the Flight Plan is the primary document that identifies the
agency's priorities and performance expectations and is the driver of
decision making at all levels. As such, the Flight Plan is key for
internal agency and congressional oversight purposes. Committees can refer
to the plan to determine whether national priorities are appropriately
recognized and to raise questions about whether the strategies laid out
are likely to lead to success. The Flight Plan identifies four strategic
goals (see table 1), each of which are supported by objectives,
strategies, initiatives, and performance targets the agency is responsible
for achieving. FAA's Flight Plan can be accessed via its Web site at
http://www.faa.gov/about/plans_reports/ .

Table 1: FAA's Four Strategic Goals

                                        

       Increased safety       Achieve the lowest possible accident rate and   
                                        constantly improve safety             
Greater capacity          Work with local governments and airspace users   
                             to provide capacity in the U.S. airspace system  
                             that meets projected demand in an                
                             environmentally sound manner                     
International leadership  Increase the safety and capacity of the global   
                             civil aerospace system in an environmentally     
                             sound manner                                     
Organizational excellence Ensure the success of FAA's mission through      
                             stronger leadership, a better trained and safer  
                             workforce, enhanced cost-control measures, and   
                             improved decision making based on reliable data  

Source: FAA.

Committees could use the strategic plan to identify oversight questions.2
For example:

o Do these goals take into account legislative priorities?

o Are the strategies that support each goal consistent with legislative
decisions?

o How effective are the strategies in achieving these goals?

o How were the specific initiatives and performance targets for each
objective strategy developed?

o What key factors-external to FAA and beyond its control-exist and how
will FAA mitigate or leverage them as appropriate, if they affect the
achievement of the strategic plan goals?

o Does the plan include strategies for working with stakeholders (e.g.,
airlines, local governments or airport authorities)?

Unit-Specific Business Plans

The agency's Flight Plan is supported by unit-specific performance plans,
called business plans. Each line of business and staff office produces
annual business plans that demonstrate strategic alignment with the agency
Flight Plan and define core business activities. The business plans are
important tools for oversight because they provide a detailed description
of the activities and responsibilities of each business line in supporting
the Flight Plan. Specifically, the business plans define the Flight Plan's
performance targets, the specific initiatives that support the performance
targets-and type of support required of each line of business (e.g., lead
responsibility or support responsibility)-outline the key strategic
activities in support of those initiatives; and define strategic activity
targets to help gauge progress towards achieving the strategic initiative.
The business plans can be found on FAA's external Web site, at
http://www.faa.gov/about/plans_reports/business_plan2005/ .

For example, the Air Traffic Organization's3 (ATO) fiscal year 2005
business plan details six strategic initiatives it is employing to help
the agency meet its goal to reduce General Aviation (GA) fatal accidents.4
Each of the strategic initiatives, which indicates whether ATO is the lead
business line or is supporting other business lines, includes related
strategic activities and activity targets that enable the ATO to further
define and measure the degree its performance is contributing to overall
agency performance. Table 2 shows an example of one of ATO's strategic
initiatives, activities and activity targets for supporting a Flight Plan
goal.

Table 2: Example of ATO's Business Plan Efforts to Support a Flight Plan
Goal

                                        

FAA's Flight Plan performance          Reduce GA fatal accidents.          
              target             
Strategic initiative in ATO's Human factors: identify human factors that   
business plan supporting      may cause accidents and develop strategies,  
Flight Plan's performance     methods, and technologies that will reduce   
target                        those accidents (ATO has lead                
                                 responsibility.)                             
Strategic activity in ATO's   Develop pilot proficiency recommendations    
business plan                 for technically advanced aircraft            
Activity target in ATO's      Complete reports on: (1) proficiency         
business plan                 standards for technically advanced aircraft, 
                                 (2) the impact of technology on pilot        
                                 performance metrics, and (3) the impact of   
                                 technology on pilot aeronautical decision    
                                 making                                       

Source: FAA

Committees can use the business plans to identify oversight questions and
additional reports that could be made available to them. For example:

o How will the information from these reports affect the strategies for
reducing accidents?

o Do the activities being implemented match congressional priorities?

Annual Performance Reports

FAA annually publishes a detailed account of agency performance, including
its audited annual financial statements, in its Annual Performance and
Accountability Report (PAR). While this report is not required, FAA
believes it is essential to clearly and fairly present and discuss FAA's
finances and performance. GPRA requires agencies to measure performance
toward the achievement of their goals and report annually on their
progress in program performance reports. If a goal was not met, the report
must provide an explanation and present the actions needed to meet any
unmet goals in the future. These reports provide important information to
agency managers, policy makers, and the public on what each agency
accomplished with the resources it was given. FAA's PAR provides Congress
with annual and historical trend information for its key performance
goals. For example, under the strategic goal Increased Safety, FAA has a
performance target tied to its goal to reduce the number of operational
errors.5 Figure 1 shows the trend in the actual number of operational
errors between fiscal year 2002 and fiscal year 2005. FAA exceeded its
target number of operational errors in fiscal year 2003 by 38 and again in
fiscal year 2004 by 8.

Figure 1: Status and Trends: Number of Operational Errors

Based on this, potential questions for oversight could be:

o What are the primary causes of operational errors?

o What changes were put into place between fiscal year 2003 and 2004 to
decrease operational errors?

o How was the target for 2005 set and what efforts will be put into place
to meet this target?

The financial statements, supplementary information, and notes to the
financial statements included in the PAR present historical information,
showing the financial activity of the agency for the last 2 fiscal years
and the financial position as of the end of each of those years. The five
principal financial statements include: consolidated balance sheets,
consolidated statements of net cost, consolidated statements of changes in
net position, consolidated statements of budgetary resources, and
consolidated statements of financing. The notes to the financial
statements present more detailed information about transactions or
conditions reflected in these statements. Often the Management's
Discussion and Analysis section of the PAR will address the kinds of
operating conditions or changes that financial statement analysis
discloses.

The statement of budgetary resources, which interrelates with the other
financial statements, includes key information that is also included in
the agency's budget. This information is subjected to audit scrutiny,
providing some assurance of the reliability of related budgetary
information. The individual statements and examples of how they can be
used for congressional oversight are discussed in appendix III.

The independent auditor's report included in the PAR tells readers whether
or not, or to what extent, the information provided in FAA's financial
statements and related notes is, in the opinion of the auditor, fairly
stated. This report also includes the auditor's statements on whether FAA
had effective internal control over financial reporting and over
compliance with laws and regulations, which would indicate whether
financial management issues need more attention. They also report on any
identified significant matters of noncompliance with selected provisions
of applicable laws and regulations. In effect, the audit report is a
report card on how well the agency is managed from a financial
perspective.

The auditor's unqualified opinions on FAA's financial statements for
fiscal years 2002 through 2005 suggest that those statements are
sufficiently reliable to be used as a tool for public and congressional
oversight. However, the auditor's reports for each of those years
disclosed that FAA's financial management systems did not substantially
comply with federal financial management systems requirements under the
Federal Financial Management Improvement Act of 1996 (FFMIA)6, an issue
that may warrant additional oversight. For fiscal years 2004 and 2005, the
auditor noted, among other things, that in connection with FAA's
conversion to Delphi as its core financial system, several key financial
systems that feed or support Delphi exhibited weaknesses regarding
function, reporting or internal control. In addition, the auditor reported
that in 2005 FAA, also in conjunction with the implementation of Delphi,
had not timely processed all of its transactions and reconciled all of its
key accounts. Similar problems had been reported for fiscal year 2004 by
the auditor. While adjustments to the recorded balances were made during
the preparation of the year end audited financial statements, these
weaknesses could indicate that the agency's financial information during
the year may not be fully reliable.

Committee staff could use information from FAA's independent auditor to
facilitate an understanding of financial management and compliance issues,
addressing questions such as:

o Can users rely on the information provided in FAA's financial
statements?

o Did FAA have effective internal control over financial reporting and
compliance with laws and regulations?

o Did FAA's independent auditor report on any identified significant
matter of noncompliance with applicable laws and regulations?

o Did FAA's financial management improve or deteriorate over the fiscal
year?

The answers to the above questions are also key to assessing the
reliability of cost accounting information, which is discussed later. Cost
accounting information generated from FAA's financial reporting systems is
essential to managing on-going agency operations and provides useful
information to Congress about the cost of specific programs, activities,
or outputs.

FAA's annual Performance and Accountability Report can be accessed via
FAA's Web site at http://www.faa.gov/about/plans_reports/ .

Quarterly Performance Reporting

In addition to annual performance reporting, FAA monitors and reports
quarterly on performance towards the strategic goals through the tracking
of 31 key performance measures. FAA management conducts monthly, day-long
meetings with executives from each line of business. At these meetings,
the designated leaders for each of the four strategic goals present
information related to the performance targets for their goal. Each of the
31 performance targets is displayed using the traffic light graphics
colors of red, yellow, and green. When a target is either yellow or red,
the goal leader will discuss the steps needed to get to green-which
indicates that the performance measure is met.

Committees could use these reports to raise similar questions about ways
to improve performance to achieve the performance target. FAA reports
performance for these 31 measures on its external Web site quarterly, at
http://www.faa.gov/about/plans_reports/Performance/ . For example, under
the strategic goal Increased Safety, FAA has a performance target tied to
its goal to reduce the number of GA fatal accidents. FAA's target for
fiscal year 2005 is not to exceed 343 GA fatal accidents. However,
according to its final quarterly performance report for fiscal year 2005
published on the FAA Web site, the agency failed to meet its target, with
a total of 350 GA fatal accidents, 7 fatal accidents above the target.
Figure 2 shows the quarterly report for FAA's measure on GA fatal
accidents.

Figure 2: FAA Scorecard for General Aviation Fatalities

Committees could use this performance information to identify oversight
questions. For example:

o Why was FAA unable to meet its target for fiscal year 2005?

o What has the agency been doing to improve on its performance for this
target?

o Does FAA measure the number of nonfatal GA accidents? If so, how does it
use those data?

In addition, questions could be raised about the measure itself. For
example, why does the measure track the number of GA fatal accidents
rather then the rate of GA fatal accidents?

FAA's Budget and Long-Term Planning Documents Can Be Used to Generate
Questions About FAA's Planned Resource Use

The annual federal budget is developed using a year-round administrative
process of budget preparation and review. By the first Monday in February,
the President submits a budget request to Congress for the fiscal year
starting on the following October 1. However, preparation of that
particular budget request began about 10 months before it was submitted to
Congress. For example, for the fiscal year 2006 budget request,
transmitted to Congress in February 2005, the budget process began in the
spring of 2004. Thus federal agencies deal concurrently with three fiscal
years: (1) the current year, that is, the fiscal year in progress; (2) the
coming fiscal year beginning October 1, for which they are seeking funds;
and (3) the following fiscal year, for which they are preparing
information and requests. In the spring and summer, agencies work with the
Office of Management and Budget (OMB) to identify major issues for the
upcoming budget request, develop and analyze options for the upcoming
reviews of agency spending and program requests, and plan for the analysis
of issues that will need decisions in the future. In September and October
agencies submit their budget requests and other initial materials to OMB,
typically on the first Monday after Labor Day of the year prior to the
start of the year that the budget request covers. From October to December
OMB reviews and briefs the President and senior advisors on the proposed
budget policies and recommends a set of proposals after reviewing all
agency requests. Budget decisions are passed back to agencies in late
November and may be appealed. Final budget decisions are transmitted to
Congress in the President's budget request.

At the same time an agency is working to formulate a new budget, it is
executing its approved budget by spending the money Congress has
appropriated to carry out the objectives of its program legislation.
During the budget execution phase, agencies sometimes find they need more
funding than appropriated because of unanticipated circumstances. Under
such circumstances, agencies may request and Congress may enact a
supplemental appropriation.

FAA manages and reports budget decisions in several documents that could
be used to enhance oversight. The three principal budget documents include
the annual budget, the budget-in-brief and the performance-based budget
justification. FAA's annual budget presents actual receipts and spending
levels for the fiscal year just completed, current year estimated receipts
and spending, and estimated receipts and spending for the upcoming year as
proposed by the President. The budget-in-brief summarizes the
justification for FAA's estimated budget by strategic goal. Finally, FAA's
performance-based budget justification provides a more detailed outline of
its planned budget according to the Flight Plan's strategic goals and
describes the expected performance improvements.

FAA's Budget

The fiscal year 2006 budget reports the total funding for all FAA programs
and provides program and financing information by budget account. FAA's
budget has four components: operations; facilities and equipment;
grants-in-aid for airports; and research, engineering, and development.
There are two sources of FAA funding: the airport and airway trust fund,
which contains ticket tax and other earmarked receipts, and general fund
appropriations. In fiscal year 2006, the trust fund provides all funding
for facilities and equipment; the airport improvement grants; and
research, engineering and development, as well as partial funding for
operations. The general fund is also used for operations and other,
smaller accounts.

Many different analyses can be done with budget data to identify oversight
questions. For example, as shown in figure 3, fiscal year 2000 general
fund financing of operations and maintenance increased from its pre-2000
level.

Figure 3: Using Budget Information for Operations Obligations, Trust Fund
and General Fund

Further, figure 4 shows that trust fund outlays have outpaced receipts
since fiscal year 2002, resulting in a decline in the trust fund balance.

Figure 4: Using Budget Information: Trust Fund Outlays Outpacing Receipts
Since FY 2002

Based on these analyses, some oversight questions could be:

o What steps are being taken to understand the cost drivers of the
operations and maintenance portion of budget?

o What is the desired balance between trust fund and general fund
financing for FAA operations?

FAA's Budget-In-Brief

FAA's budget-in-brief is a publicly available summary of FAA's budget
justification. The budget-in-brief summarizes the FAA's annual budget
request by appropriation and by goal area. It provides committees with a
quick comparison of resource allocation by goal and program activity for
the prior year, current year and the budget year. For example, the
budget-in-brief states that safety is FAA's primary goal and proposes
spending 71 percent of the fiscal year 2006 request for the safety-related
goals shown in table 3. For the goal of reducing GA fatal accidents, FAA
is proposing a decrease from fiscal year 2005 in resources for facilities
and equipment, and grants-in-aid for airports, and in the number of full
time equivalent employees devoted to this goal.

Table 3: Estimated Funding to Support FAA's Safety Strategic Goal by
Performance Goal

                                        

       Dollars in millions                                    
        Performance goal       FY 2004 actual FY 2005 enacted FY 2006 request 
Reduce commercial fatal          7,276,192       7,669,769       7,885,275 
accident rate                                              
Reduce general aviation          1,411,095       2,000,514       1,851,296 
fatal accidents                                            
Zero commercial space               13,019          12,955          13,209 
accidents                                                  
Total Estimated Funding for      8,700,306       9,713,239       9,749,780 
Safety                                                     

Source: FAA's Budget-in-Brief, Fiscal Year 2006.

Based on this, potential questions for oversight could be:

o What changes were made in these areas to permit a reduction in funding
while still making progress toward the goal of reducing GA fatalities?

o How is the decrease going to affect more ambitious targets for GA fatal
accident reductions in performance plans?

o Was funding shifted from reducing GA fatal accidents to a different
safety-related activity? If so, which activity and why?

As table 3 shows, at the same time FAA is proposing decreases in certain
types of spending for reducing GA fatal accidents, FAA is proposing budget
increases for reducing commercial fatal accident rates and achieving zero
commercial space accidents. Another potential oversight question could
therefore be: is FAA proposing increases in these other areas-where FAA is
meeting its performance targets-while proposing decreases in reducing GA
fatal accidents, a goal for which FAA is not meeting its performance
target? FAA's budget-in-brief can be accessed on its external Web site at
http://www.faa.gov/about/budget/ .

FAA's Performance-Based Budget

FAA's performance-based budget, first done in fiscal year 2005 and
submitted to the appropriations committees, is a prominent source of both
performance and budgetary information on FAA and could also be useful for
oversight. It highlights FAA's identified resource needs and what the
agency deems to be the most important performance goals for that
particular year. One goal of agency performance budgets is to show the
relationship between resources and incremental improvements in
performance. Congressional oversight could focus on whether planned
performance improvements were achieved with the resources provided or, if
not, raise questions about why they were not achieved.

For example, FAA's fiscal year 2005 performance-based budget shows a
request for $10.2 million to reduce GA fatalities through the
implementation of the Flight Services Automation System (FSAS) and
Operational and Supportability Implementation System (OASIS). According to
the budget, FSAS and OASIS will enable flight specialists to more
efficiently provide weather and flight information, thereby aiding in the
reduction of accidents through increased pilot awareness of weather
conditions along the flight route. Committees could use information from
the performance-based budget to oversee spending on and installation of
the systems. For example:

o Was the installation completed within the originally estimated funding
level?

o What percentage of GA fatal accidents results from the pilots'
insufficient knowledge of weather conditions?

o Are the GA fatality rates decreasing in areas where the installation has
occurred?

FAA's Other Long-Term Planning and Budget Documents

FAA also produces some long-term planning and budget documents that could
be helpful for oversight. Intended to integrate and coordinate longer-term
perspectives and needs of organizations affecting airspace usage, these
documents are:

o National Plan of Integrated Airport Systems,

o Operational Evolution Plan,

o The Next Generation Air Transportation System Integrated Plan, and

o Capital Investment Plan.

The first three plans were cited by FAA officials as key documents
presenting FAA's long-term direction. The National Plan of Integrated
Airport Systems for 2005 to 2009 identifies 3,344 airports that are
significant to national air transportation and, therefore, eligible to
receive grants under the FAA's Airport Improvement Program. The plan and
grant program support the Flight Plan's goals of increased safety and
greater capacity. The plan describes the condition and performance of the
airport system according to six performance areas: safety, capacity,
pavement condition, financial performance, surface accessibility, and
noise. In addition, the plan provides cost estimates for needed
improvements to airports by airport type-large, medium or small hub
primary; no hub primary; non-primary commercial service; relievers;7 or
general aviation-and by purpose of development-safety, security,
reconstruction, standards, environment, airfield capacity, terminal
buildings, ground access, and new airports. The projects are not
prioritized, but inform the grant decisions for the Airport Improvement
Program. The National Plan of Integrated Airport Systems for 2005 to 2009
can be accessed on FAA's Web site at
http://www.faa.gov/airports_airtraffic/airports/planning_capacity/npias/ .

Based on this plan, some oversight questions could be:

o How are the projects in the National Plan of Integrated Airport Systems
selected for airport improvement grants?

o To what extent have the grant-funded improvements to airports achieved
performance improvements for the Flight Plan goals of increased safety and
greater capacity?

The Operational Evolution Plan, created in collaboration with the aviation
community, the Department of Defense, the National Weather Service and the
National Aeronautics and Space Administration, is a rolling 10-year
tactical implementation plan designed to increase the capacity and
efficiency of the national airspace system8 by approximately 30 percent
within its initial 10-year horizon. The plan identifies four specific
areas for improvement: terminal area, en route, and airport congestion;
and air traffic management flow efficiency. It also identifies milestones
for expected improvements at each of the airports included in the plan.
The Operational Evolution Plan can be accessed on FAA's Web site at
http://www.faa.gov/programs/oep/ .

Based on this plan, some oversight questions could be:

o Are the milestones for expected improvements realistic and are they
being met?

o As airport improvements are completed what has been the impact on
congestion? Are the changes as great as anticipated?

The Next Generation Air Transportation System Integrated Plan is a
multiorganization plan designed to transform the nation's air
transportation system to meet expected needs in 2025. This plan outlines
eight transformation strategies that will be researched, developed,
implemented and maintained by teams composed of federal, state, and local
governments; quasi-government research institutions; universities; and the
private sector. For each strategy there is a description of the research
area and milestones for completion.

Table 4: Example of a Strategy and Research Area in the Next Generation
Air Transportation System Integrated Plan

                                        

      Strategy       Develop airport infrastructure to meet future demand.    
                                                                              
                     Provide a system that meets or exceeds user demand by    
                   integrating airport, airspace and air traffic management   
                  design, development, and deployment. Airport infrastructure 
                  must address the need to expand in a way that meets future  
                     capacity while satisfying the other objectives. This     
                   strategy is intended to provide customers a wide-range of  
                        options for air transportation in an efficient        
                                    cost-conscious manner.                    
Research areas Develop requirements and concepts for servicing a variety   
                  of future demands, from maximizing overall metropolitan     
                  area capacity to servicing smaller communities. Groundside  
                  questions address airport access alternatives and           
                  associated transportation, security, and information        
                  systems requirements, such as regional airports and city    
                  check-in by specific location.                              

Source: Next Generation Air Transportation System Integrated Plan.

Based on this plan, some oversight questions could be:

o How do the strategic goals and performance targets in the Flight Plan
and unit-specific business plans relate to these transformation
strategies?

o How were these transformation strategies identified?

FAA also reports on long-term capital financing options in the Capital
Investment Plan (CIP), which is a rolling 5-year financial plan that
allocates planned funding to NAS projects. The Secretary of Transportation
transmits the CIP to Congress each year at the time of the President's
annual budget submission. It includes estimated expenditures for each line
item in the facilities and equipment budget for the current fiscal year
and for the following 4 years. However, the CIP includes only projects
that are likely to receive funding rather than all initiatives originally
considered.

According to the CIP, a project's planned funding is based on its support
for the agency's strategic goals and performance targets. As such, the CIP
is an important oversight tool because it not only details estimated
expenditures, but also provides the agency's rationale for spending
federal dollars on specific projects-or a group of related projects-and
explains how such spending will enhance the agency's ability to meet its
strategic goals, and ultimately its mission.

Based on this plan, potential questions for oversight could include:

o Are the projects clearly linked to agency goals and priorities?

o What other projects could meet these goals and priorities? Why were they
rejected?

Cost Accounting Provides Detailed Operating Cost Analysis

Financial accountability goes beyond an agency's obtaining an unqualified
opinion on its annual financial statements. The key to financial
accountability is obtaining accurate and useful information on a timely
and ongoing basis to support day-to-day managerial decisions and
oversight. As a critical part of its new Delphi financial management
system installation, FAA's cost accounting system (CAS) draws upon
accounting information in Delphi to provide financial information that can
be used to monitor ongoing operations as well to plan for the future. CAS
has been principally implemented in the ATO and Commercial Space
Transportation, which together comprise over 80 percent of FAA's budget.
FAA's other two lines of business, Aviation Safety and Airports are
expected to implement CAS in fiscal year 2006.

CAS takes direct cost data from DOT's financial management system and
allocates those costs from the organization that incurred the costs to the
organization, product, or service that benefited from the costs. The
system allows analysis of costs aggregated within a program, activity,
location or strategic goal. Allocated costs can also be used in an
analysis of comparative operating efficiency for different operating
periods or different locations. An example is a ratio of costs to a
nonfinancial activity measure, such as cost per day, per employee, or per
flight. Apparent abnormalities in trends or at particular locations may
then be investigated. For example, at FAA the direct cost of an air
traffic controller at a terminal would be allocated to airport operations,
in proportion to takeoffs and landings, which are a major "driver" of
those costs. Similarly, the indirect cost of a maintenance technician
would be allocated to the lines of business that benefited from those
costs using an appropriate allocation base.

A financial scoreboard in use at FAA regularly tracks trends in these unit
costs, overhead rates, and other performance measures. Tracking these
trends is key to identifying operating inefficiencies and, when projected
to anticipated operating volumes, can help determine future financing
needs.

According to FAA, CAS provided labor and overhead cost data which were
used in the preparation of a competitive sourcing study for ATO flight
service stations. The cost data were used as a basis to estimate the
future cost of those existing in-house flight services. Comparison of
those projected in-house costs to the costs of procuring the services from
bidders in the private sector resulted in contracting out ATO Flight
Service Stations in fiscal year 2005 at a projected contract savings of
about $2.2 billion through fiscal year 2015. FAA has also reported that
CAS data led to cancellation of a $27 million airport weather program and
to savings of $7 million from modification of an airport radar
surveillance program.

CAS can break down the full costs for the individual activities undertaken
to provide each of ATO's services9-En Route, Oceanic, Flight Services, and
Terminal Services-by location, program and function. Using this kind of
information, a separate fiscal year 2004 performance report prepared by
ATO displayed unit costs of certain activities and services as well as
some overall ATO revenue and cost trend analyses and other performance
measures. The report cited a reduction of ATO's total unit cost per flight
by $17, or 4.21 percent. This type of report is a tool for ongoing
congressional oversight, addressing key operating issues identified by ATO
management.

Committees could use information from FAA's cost accounting system to
better understand costs and performance of individual programs,
activities, or outputs, addressing questions such as:

o What is the total cost of ATO services per flight?

o How do this year's costs per flight compare to last year's?

o How does the per flight cost of traffic controllers compare among
airports?

CAS can be used to link costs to strategic performance areas and to
combine air traffic safety data with financial information. FAA has also
used cost finding techniques for selected programs during the fiscal year
2006 budget cycle to estimate the marginal cost of performance, i.e., the
incremental results that might be achieved at different levels of funding.

Analytical Agencies and Organizations Can Provide Information and Analysis
to Enhance Oversight Efforts

Through its legislative support agencies-GAO, Congressional Research
Service and the Congressional Budget Office-and the Department of
Transportation's Inspector General, congressional committees also have
access to considerable resources for oversight. See appendix II for a
summary of additional information resources.

GAO, as the investigative arm of Congress, examines the use of public
funds; evaluates federal programs and activities; and provides analyses,
options, and other assistance to help Congress make effective oversight,
policy, and funding decisions. Several documents that GAO produces on an
ongoing basis or as part of a body of work may prove useful to
congressional committees when setting an oversight agenda.

o GAO Strategic Plan (2004-2009)10 GAO's strategic plan, which has been
updated every 2 years since 2000, describes the trends and issues that are
likely to affect congressional decision makers over the 6-year period of
the plan. It also provides GAO's plans for analyses and other activities
to help support Congress's information needs. One of GAO's strategic
objectives is to support congressional and federal efforts to obtain and
maintain a safe, secure, and effective national physical infrastructure.
Several performance goals under this objective involve
transportation-related issues, including assessing efforts to improve
safety and security in the nation's transportation system and assess the
impact of transportation policies and practices. As such, oversight
committees can look to GAO for information on these issues and more.

o High-Risk Series: An Update11 Since 1990, GAO has periodically
reported-generally at the start of each new Congress-on government
operations it identifies as having a high risk of fraud, waste, abuse, and
mismanagement. Increasingly, the list has grown to include programs or
agencies that need urgent attention or transformation, such as the
Department of Homeland Security. In the January 2005 update, GAO presented
the status of areas previously identified as high-risk. These included two
involving FAA-FAA Financial Management and FAA Air Traffic Control
modernization. We determined that FAA's progress in improving financial
management overall, a high-risk area since 1999, has been sufficient to
remove it from the list. However, while FAA had made progress in
addressing root causes of problems with its Air Traffic Control
modernization, originally designated as high-risk in 1995, we maintained
the high-risk designation. Therefore, the status of FAA's Air Traffic
Control modernization may be an area for oversight by the Transportation
and Infrastructure Committee.

o 21st Century Challenges: Reexamining the Base of the Federal
Government12 In February 2005, GAO issued a report on 21st century
challenges facing the nation-including the federal government's long-term
fiscal imbalance and changing demographics-that suggests the need to
reexamine the base of the federal government. The report is intended to
help Congress address these challenges by providing a series of
illustrative questions, both generic and for 12 examination areas that
could help support a fundamental and broad-based reexamination initiative.
One of the 12 examination areas we identified is transportation, in which
the report describes FAA's challenge in addressing the declining revenues
in the Aviation Trust Fund and how that could affect funding for the
agency. Committees could ask the related illustrative question: Should the
federal government continue to provide public financing to stimulate
private financing in areas such as aviation, where a mix of private and
public beneficiaries exists?

In addition, through our review of federal programs and activities, we
have a large body of work on aviation issues, FAA management, programs,
and performance. Further, committees can also request additional
evaluations to address issues of further interest. Recent examples of
these reports include the following:

o National Airspace System: Initiatives to Reduce Flight Delays and
Enhance Capacity Are Ongoing but Challenges Remain;13

o Airport and Airway Trust Fund: Preliminary Observations on Past,
Present, and Future;14

o Air Traffic Control: FAA Needs to Ensure Better Coordination When
Approving Air Traffic Control Systems;15

o Air Traffic Control: FAA's Acquisition Management Has Improved, but
Policies and Oversight Need Strengthening to Help Ensure Results;16

o Aviation Safety: FAA Needs to Strengthen the Management of Its Designee
Programs;17

o National Airspace System: FAA Has Made Progress but Continues to Face
Challenges in Acquiring Major Traffic Control Systems;18

DOT's OIG works within DOT to promote effectiveness and head off, or stop,
waste, fraud and abuse in departmental programs through audits and
investigations. The OIG also consults with Congress about programs in
progress and proposed laws and regulations. The OIG also publishes
semiannual reports, which summarize its recent audits and investigations.
In addition, the OIG annually reports on the top management challenges
facing DOT. DOT's Top Management Challenges report can be found at:
http://www.oig.dot.gov/item.jsp?id=1701 . Three challenges identified in
the most recent management challenges report by the OIG,19 relate wholly
to FAA.

o Mitigating flight delays and relieving congestion-actions needed to meet
demand. The OIG report states that the growth in aviation operations has
brought an increase in the number of aviation delays, with the incidence,
rate, and length of delays in the summer of 2005 approaching 2000 levels,
generally regarded as the worst summer of aviation delays. The report
states that DOT will need to develop a toolbox of relief measures to use
including new construction, technological improvements, procedural
changes, administrative controls, and market-based solutions. The report
also states that new runways provide the most increases in capacity, and
that DOT and FAA will need to ensure the navigation equipment and airspace
modifications are in place before the eight new runway projects, planned
to be completed by 2008, are constructed. Finally, FAA will need to
continue to consider the use of market-based solutions to mitigate
congestion, such as schedule caps and congestion pricing.

o Reauthorizing aviation programs-establishing requirements and
controlling costs are prerequisites for examining FAA financing options.
The OIG report states that a major focus of the FAA over the next year
will be preparing to reauthorize a wide range of aviation programs and
exploring alternative financing mechanisms. Challenges facing FAA include
(1) controlling costs with major acquisitions by delivering new systems
that work, are on time, and are within budget, and by making decisions on
the scope of billion-dollar projects that have been delayed for years; (2)
getting control of support service contracts, reducing associated costs,
and following through on the implementation of new procedures; (3)
establishing requirements for the next generation air traffic management
system; (4) addressing the expected surge in controller attrition and
negotiating an affordable and equitable bargaining agreement; and (5)
completing a cost-accounting system to reduce costs and improve
operations.

o Aviation safety-developing effective oversight programs for air carrier
operations, repair station maintenance, and operational errors. The OIG
report states that the FAA maintains an impressive safety record, but
still faces challenges with air carrier and repair station oversight as a
result of financial uncertainty, competition from low-cost carriers, and
rebounding air traffic. Further, the report states that the FAA
experienced an increase in the number of reported operational errors-when
planes come too close together in the air-over the past year, and at
additional locations where operational errors were not reported.

Regular Communication and Timely Access to Useful Information Can Enhance
Oversight

Effective communication among agency officials, Members of Congress and
congressional staff is needed to ensure that information agencies provide
meets committee needs. While considerable information resources are
available, they may not be available in a manner that is useful to
committees. We have previously reported, in a review of interactions
between the Congress and other executive branch agencies, that although
agencies collect and produce a great deal of useful information, much of
it did not reach the interested congressional committees, and the
information that did reach the committees was difficult to digest, too
highly aggregated, or was received too late to be useful.20 While FAA
provides a great deal of information on its Web site, enhancing access to
agency information using technology can improve the timeliness and
usefulness of agency information to the Congress. For example, information
alerts and summaries from the agency could be effective information
sharing tools. Further, regular meetings between committees, staff and
agency officials could identify the committee's principal oversight
objectives, provide a forum to discuss the issues, and develop the best
approaches to meet them.

Access to Timely and Useful Agency Information Could Improve Committee
Oversight

Providing relevant agency information using technology solutions can
improve committee access and minimize the effort required of agency staff.
House Transportation and Infrastructure Committee staff indicated that FAA
has a large quantity of information available and effective communication
between the staff and the agency, but it is also interested in using
technology to gain additional, timely access to agency data when
conducting oversight. From our discussions with committee and agency
staff, improving access through technology solutions could meet the needs
of both groups. Access to information could be improved by

o A For Congress page on FAA's Web site,

o A Frequently Asked Questions section on the For Congress Web site,

o A Web site subscription service notifying committee staff when relevant
information has been updated, and

o Moderated access rights to selected FAA documents.

Several applications allowing Web-based access to information could
benefit both the committee seeking information as well as the agency that
provides information. For example, as a result of our discussions with
committee and agency staff, FAA has initiated a For Congress page on its
Web site. The page provides a single point of access for information
committee staff identified in our discussions as relevant for oversight,
as shown in figure 5. In addition, following a recommendation contained in
our draft report, FAA added a subscription e-mail service to notify
congressional users about new information available, such as new press
releases and speeches by agency officials. We had pointed out that a
subscription service could enhance the timeliness in which Congress
receives information for oversight. For example, a subscription service
notifying committees when notices of proposed rulemakings and other
regulatory or policy guidance documents are published would give
committees relevant information in a timely manner.

Figure 5: FAA's For Congress Web site Page

The For Congress Web site could be further improved by including a
Frequently Asked Questions (FAQ) section to provide information often
requested by committees. According to a manager within FAA, the agency
provides a great deal of budget information to Congress in response to
questions for the record (QFRs) that are submitted by the appropriations
committees of both chambers. However, the agency response is shared only
with the requesting committee, even though it could be useful to all
committees involved in oversight. In addition, many of these QFRs, as well
as other requests for information, are handled in an ad hoc manner by
individual FAA officials. When similar requests for information arrive,
FAA officials often have to create an entirely new response. An FAA
official said they had a general FAQ section, available on the bottom of
all FAA Web pages, but it does not include the QFRs, or other questions
regarding FAA planning, budgeting or performance. A FAQ section on the For
Congress Web page could minimize agency efforts by allowing it to post
requested information once, rather than tying up valuable time and
resources by repeatedly responding to similar questions. In addition,
sharing agency responses to congressional information requests could
enable quick access to information likely to assist in other congressional
efforts.

Other uses of technology, such as granting moderated access rights to
selected FAA documents, could also enhance committee access to
information. Moderated access would allow increased access of FAA
information to committee staff, beyond what is available on the agency's
public Web site. To provide moderated access, individual committee staff
would be issued accounts or use passwords to obtain access to information
restricted to congressional users. The content allowed through the
moderated access would be negotiated between the agency and committee. One
way for committees to identify documents that are available would be to
provide increased search capabilities on the FAA Web site. Increasing the
Web site search capability would allow committees to identify what
information exists, even if the entire document content was not
immediately available. Using this knowledge of what information exists,
committees could better identify exactly which of the information they
would like to have made available through moderated access.

Regular Meetings Between Committees and Agency Officials Could Provide a
Forum to Discuss Oversight Issues

We have previously reported in a review of interactions between Congress
and other executive branch agencies, that communication between committees
and agency staff is often one-way, with little opportunity for direct
discussion. According to Transportation and Infrastructure Committee
staff, they generally contact the agency when they have a specific
question, on an ad hoc basis. Transportation and Infrastructure Committee
staff and experts we interviewed said constant communication with agencies
within the committee's jurisdiction, both formal and informal, could
contribute to successful oversight. Developing a routine schedule of
meetings could create a degree of certainty for both parties that issues
important to each will be discussed. The timing, frequency, attendees, and
agenda items could be negotiated in advance by both parties. Meetings
could serve several purposes-they could be used to identify the
committee's principal oversight objectives, provide a forum to discuss the
issues, and develop the best approaches to meet them.

Agency officials that we spoke with also supported regular meetings with
committees. An FAA official said establishing an effective way to
regularly communicate with Transportation and Infrastructure Committee
staff would better enable FAA to directly inform the committee about
emerging issues, whereas now the committee often relies on third party
analysis and information. They understood that such meetings were not only
opportunities for the committee to improve its oversight capacity, but
also were opportunities for the agency to identify issues that may have
received less attention and to help put the large amount of performance,
budget, and financial information in a broader context so that committees
can better understand the agency's operations. The potential benefits of
regular committee and agency staff meetings were evident during the
constructive discussions coordinated by GAO for this report.

Conclusions

In order to conduct effective oversight of federal agencies and programs,
congressional committees need access to timely and useful information. The
types of information we identified as available for FAA management could
also be used for oversight. Moreover, these types of information are
produced routinely by all federal agencies and could be used by committees
of jurisdictions to regularly monitor agency performance.

However, as government grows more complex and agencies produce more
information, it becomes harder for Congress to access, analyze, and
summarize this information to develop its policy positions and legislative
enactments. New ways must be continually found to use emerging technology
and approaches to make agency information transparent and readily
available. But despite the availability of information, and in FAA's case,
its public accessibility, more can be done to make this information
readily accessible to congressional committees. In particular, improving
access to information via technology solutions like those described in
this report could allow congressional committees to access information as
needed and minimize the number of duplicative information requests
agencies are asked to respond to. In addition, establishing a schedule of
routine meetings will provide congressional committees and agency
officials with the opportunity to discuss in-depth the issues and
challenges facing all federal agencies, including FAA. Establishing a
collaborative approach to oversight will allow more consistent, rather
than ad hoc, committee oversight. Importantly, these findings constitute
lessons learned that may be transferable to other agencies.

Recommendations for Executive Action

We recommend the Secretary of the Department of Transportation, direct the
Administrator of FAA, to take the following actions to further enhance
committee access to FAA information:

o Continue to work with committee staff to further refine the For Congress
Web site by improving the flow of information and taking advantage of
emerging technologies;

o Include a Frequently Asked Questions page on the For Congress site,
allowing oversight committees to quickly find answers to commonly
requested items relevant to Congress;

o Add moderated access on the For Congress Web site to allow access to
information that should be made available to congressional committees, yet
may not be appropriate for the general public;

o Consider offering regular meetings between the Members of the committee
and key staff with senior FAA executives to address matters of mutual
concern.

Agency Comments

We provided a draft of this report to the Secretary of the Department of
Transportation for review and comment. We received comments from FAA
officials, including the Deputy Assistant Administrator for Financial
Services, who indicated that they were pleased to serve as our case study
and they would consider the report's recommendations as they continue to
strive for excellence in fulfilling the Congress' information needs. The
officials said that they endeavor to ensure Congress is fully informed of
FAA's planned and ongoing programs and activities, relying on a staff of
dedicated professionals who know and understand the needs of Congress to
maintain a steady flow of useful information to Congress. The officials
also said that they make extensive use of technology to enhance the
information available to Congress. They noted that a considerable amount
of information is available to Members of Congress and their staff in a
section of FAA's Web site dedicated to serving the information needs of
Congress-as our report notes, an improvement developed as a result of
discussions between agency and congressional staff during our review. In
addition, they indicated they had created a subscription e-mail service to
enable committee staff to be notified when information is updated on their
Web site, such as with new press releases and speeches by agency
officials. As noted earlier, this action was recommended in our draft
report; consequently, since FAA has taken these steps, we have eliminated
the recommendation from the final report.

As agreed with your office, unless you publicly announce the contents of
this report earlier, we plan no further distribution until 30 days after
its issuance date. At that time, we will send copies of this report to the
Secretary of Transportation and will make copies available to others upon
request. In addition, the report will be available at no charge on GAO's
Web site at http://www.gao.gov .

Please contact me on (202) 512-6543 if you or your staff have any
questions about this report. Contact points for our Office of
Congressional Relations and Public Affairs may be found on the last page
of this report. Other contacts and staff acknowledgments are listed in
appendix IV.

Sincerely yours,

Bernice Steinhardt Director, Strategic Issues

Objectives, Scope and Methodology Appendix I

The objectives of this report were to identify (1) information FAA
produces that could enhance congressional oversight; (2) other available
information resources that could enhance congressional oversight; and, (3)
how committee access to FAA's information could be improved to enhance
timeliness and usefulness.

To identify the information and delivery mechanisms that would enhance the
committee's ability to oversee FAA programs and management, we met with
staff from the U.S. House of Representatives Committee on Transportation
and Infrastructure and its subcommittee on Aviation.

To identify information produced by FAA that could enhance oversight, we
met with FAA senior officials from numerous offices, including several
lines of business-Airports; Air Traffic Organization; and Aviation
Safety-and staff offices-Aviation Policy, Planning and Environment;
Financial Services; Government and Industry Affairs; Human Resources and
Management. In addition, we met with officials from the Chief Information
Office/Office of Information Services and the Office of Inspector General
for the Department of Transportation.

To identify information resources external to FAA that could enhance
congressional oversight, we met with officials from other government
entities such as the Congressional Research Service, the General Service
Administration's FirstGov initiative, and the Office of Management and
Budget. In addition, we met with technology representatives from
Lexis-Nexis. Finally, we attended meetings with representatives from the
Mercatus Center, CATO Institute, and the Heritage Foundation, hosted by
the House Committee on Transportation and Infrastructure.

In addition, we reviewed FAA performance, budget and financial documents
and FAA's Web site. We also reviewed reports and evaluations produced by
analytical agencies and organizations and prior GAO work in this area.

Written comments from FAA are included in appendix II. We conducted our
work from September 2004 through November 2005 in accordance with
generally accepted government auditing standards.

Analytical Agencies and Organizations Can Provide Information and Analysis
to Enhance Oversight Efforts Appendix II

Table 5: Analytical Resource for Congressional Oversight, as Illustrated
by FAA Information

                                        

GAO               o GAO Strategic Plan (2004-2009) ( GAO-04-534SP ). GAO's 
                     strategic plan, which has been updated every 2 years     
www.gao.gov       since 2000, describes the trends and issues that are     
                     likely to affect congressional decision makers over the  
                     6-year period of the plan. It also provides GAO's plans  
                     for analyses and other activities to help support        
                     Congress's information needs. One of GAO's strategic     
                     objectives is to support congressional and federal       
                     efforts on a safe, secure, and effective national        
                     physical infrastructure. Several performance goals under 
                     this objective involve transportation-related issues,    
                     including assessing efforts to improve safety and        
                     security in the nation's transportation system and the   
                     impact of transportation policies and practices. As      
                     such, committee oversight staff can look to GAO for      
                     support on these issues and more. GAO's strategic plan   
                     can be found at: http://www.gao.gov/sp.html.             
                                                                              
                     o High-Risk Series: An Update ( GAO-05-207 ). Since      
                     1990, GAO has periodically reported-generally at the     
                     start of each new Congress-on government operations it   
                     identifies as having a high risk of fraud, waste, abuse, 
                     and mismanagement. Increasingly, the list has grown to   
                     include programs or agencies that need urgent attention  
                     or transformation, such as the Department of Homeland    
                     Security. In the January 2005 update, GAO presented the  
                     status of areas previously identified as high-risk.      
                     These included two involving FAA-FAA Financial           
                     Management and FAA Air Traffic Control modernization. We 
                     determined that FAA's progress in improving financial    
                     management overall, a high-risk area since 1999, has     
                     been sufficient to remove it from the list. However,     
                     while FAA had made progress in addressing root causes of 
                     problems with its Air Traffic Control modernization,     
                     originally designated as high-risk in 1995, we           
                     maintained the high-risk designation. Therefore, the     
                     status of FAA's Air Traffic Control modernization may be 
                     an area for oversight by the Transportation and          
                     Infrastructure Committee staff. GAO's High Risk Series:  
                     An Update can be found at:                               
                     http://www.gao.gov/docsearch/featured/highrisk.html.     
                                                                              
                     o 21st Century Challenges: Reexamining the Base of the   
                     Federal Government ( GAO-05-325SP ). In February 2005,   
                     GAO issued a report on 21st century challenges facing    
                     the nation-including the federal government's long-term  
                     fiscal imbalance and changing demographics-that suggests 
                     the need to reexamine the base of the federal            
                     government. The report is intended to help Congress      
                     address these challenges by providing a series of        
                     illustrative questions, both generic and for 12          
                     examination areas, that could help support a fundamental 
                     and broad-based reexamination initiative. One of the 12  
                     examination areas we identified is transportation, in    
                     which the report describes FAA's challenge in addressing 
                     the declining revenues in the Aviation Trust Fund and    
                     how that could affect funding for the agency. Committee  
                     staff could use the related illustrative question-should 
                     the federal government continue to provide public        
                     financing to stimulate private financing in areas such   
                     as aviation where a mix of private and public            
                     beneficiaries exists? GAO's 21st Century Challenges      
                     Report can be found at h ttp://www.gao.gov/index.html .  
                                                                              
                     In addition, through our review of federal programs and  
                     activities, we have a large body of work on aviation     
                     issues, FAA management, programs, and performance.       
                     Further, committee staff can also request additional     
                     evaluations to address issues of further interest.       
                     Recent examples of these reports include:                
                                                                              
                     o National Airspace System: Initiatives to Reduce Flight 
                     Delays and Enhance Capacity Are Ongoing but Challenges   
                     Remain ( GAO-05-755T )                                   
                                                                              
                     o Airport and Airway Trust Fund: Preliminary             
                     Observations on Past, Present, and Future ( GAO-05-657T  
                     )                                                        
                                                                              
                     o Air Traffic Control: FAA Needs to Ensure Better        
                     Coordination When Approving Air Traffic Control Systems  
                     ( GAO-05-11 )                                            
                                                                              
                     o Air Traffic Control: FAA's Acquisition Management Has  
                     Improved, but Policies and Oversight Need Strengthening  
                     to Help Ensure Results ( GAO-05-23 )                     
                                                                              
                     o Aviation Safety: FAA Needs to Strengthen the           
                     Management of Its Designee Programs ( GAO-05-40 )        
DOT's Inspector   DOT's OIG works within DOT to promote effectiveness and  
General           head off, or stop, waste, fraud and abuse in             
                     departmental programs through audits and investigations. 
www.oig.dot.gov   The OIG also consults with Congress about programs in    
                     progress and proposed laws and regulations. Twice a      
                     year, the OIG also publishes semiannual reports, which   
                     summarize its recent audits and investigations. In       
                     addition, the OIG annually reports on the top management 
                     challenges facing DOT. DOT's Top Management Challenges   
                     report can be found at:                                  
                     http://www.oig.dot.gov/item.jsp?id=1701 . Three          
                     challenges identified in the most recent management      
                     challenges report by the OIGa relate wholly to FAA       
                                                                              
                     o Mitigating flight delays and relieving                 
                     congestion-actions needed to meet demand. The OIG report 
                     states that the growth in aviation operations has        
                     brought an increase in the number of aviation delays.    
                     The incidence, rate, and length of delays this past      
                     summer is approaching 2000 levels, which was generally   
                     regarded as the worst summer of aviation delays. The     
                     report states that DOT will need to develop a toolbox of 
                     relief measures, including construction, technological   
                     improvements, procedural changes, administrative         
                     controls, and market-based solutions, that can be used   
                     as appropriate. The report also states that new runways  
                     provide the most increases in capacity, and that DOT and 
                     FAA will need to ensure the navigation equipment and     
                     airspace modifications are in place before the eight     
                     runway projects, planned to be completed by 2008, are    
                     constructed. Finally, FAA will need to continue to       
                     consider use of market-based solutions to mitigate       
                     congestion, such as schedule caps and congestion         
                     pricing.                                                 
                                                                              
                     o Reauthorizing aviation programs-establishing           
                     requirements and controlling costs are prerequisites for 
                     examining FAA financing options. The OIG report states   
                     that a major focus of the FAA over the next year will be 
                     preparing to reauthorize a wide range of aviation        
                     programs and explore alternative financing mechanisms.   
                     Challenges facing FAA include: (1) controlling costs     
                     with major acquisitions by delivering new systems that   
                     work, are on time, and are within budget, and making     
                     decisions on the scope of billion-dollar projects that   
                     have been delayed for years; (2) getting control of      
                     support service contracts, reducing associated costs,    
                     and following through on the implementation of new       
                     procedures; (3) establishing requirements for the next   
                     generation air traffic management system; (4) addressing 
                     the expected surge in controller attrition and           
                     negotiating an affordable and equitable bargaining       
                     agreement; and (5) completing a cost-accounting system   
                     to reduce costs and improve operations.                  
                                                                              
                     o Aviation safety-developing effective oversight         
                     programs for air carrier operations, repair station      
                     maintenance, and operational errors. The OIG report      
                     states that the FAA maintains an impressive safety       
                     record, but still faces challenges with air carrier and  
                     repair station oversight as a result of financial        
                     uncertainty, competition from low-cost carriers, and     
                     rebounding air traffic. Further, the report states that  
                     the FAA experienced an increase in the number of         
                     reported operational errors-when planes come too close   
                     together in the air-over the past year, and additional   
                     locations where operational errors were not reported.    
Program           PART is a diagnostic tool created as a central component 
Assessment Rating to the President's Management Agenda, and is intended to 
Tool (PART)       assess and improve program performance and results by    
                     providing a consistent approach to evaluating the        
www.whitehouse.   management and performance of federal programs. It is    
gov/omb/          used by the Office of Management and Budget to conduct   
                     oversight. PART evaluates a program's (1) purpose and    
                     design, (2) strategic planning, (3) program management,  
                     and (4) program results (e.g., whether a program is      
                     meeting its long-term and annual goals).b PART has been  
                     used to assess five FAA programs from the fiscal year    
                     2006 budget                                              
                                                                              
                     o Air traffic services                                   
                                                                              
                     o Grants-in-aid for airports                             
                                                                              
                     o Facilities and equipment                               
                                                                              
                     o Regulation and certification                           
                                                                              
                     o Research, engineering and development                  
The President's   The President's Management Agenda identifies five        
Management Agenda governmentwide goals to improve federal management and   
(PMA)             deliver results. The goals are strategic management of   
                     human capital, competitive sourcing, improved financial  
www.results.gov   performance, expanded electronic government, and budget  
                     and performance integration. The Executive Branch        
                     Management Scorecard tracks how well the departments and 
                     major agencies are executing the five governmentwide     
                     initiatives. The scorecard employs a stoplight grading   
                     system: green for success, yellow for mixed results, and 
                     red for unsatisfactory. The Department of                
                     Transportation, of which FAA is a part, received a       
                     rating of green for the strategic management of human    
                     capital, competitive sourcing, expanded electronic       
                     government and budget and performance integration, and a 
                     rating of red for improved financial performance in the  
                     September 2005 ratings.                                  
Congressional     CRS, a department of the Library of Congress, is a       
Research Service  nonpartisan analytical, research, and reference arm for  
(CRS)             Congress with the mission to support an informed         
                     national legislature. CRS serves Congress throughout the 
www.crs.gov       legislative process by providing comprehensive and       
                     reliable legislative research, analysis, and information 
                     services that are timely, objective, nonpartisan, and    
                     confidential. CRS is organized into five                 
                     interdisciplinary research divisions: American Law;      
                     Domestic Social Policy; Foreign Affairs, Defense and     
                     Trade; Government and Finance; and Resources, Science    
                     and Industry.                                            
                                                                              
                     Recent CRS reports related to the FAA include:           
                                                                              
                     o Aviation Taxes and Fees: Major Issues (Order Code      
                     RS21321)                                                 
                                                                              
                     o Avoiding Gridlock in the Skies: Issues and Options for 
                     Addressing Growth in Air Traffic (Order Code RL32707)    
                                                                              
                     o Federal Transportation Funding: Selected Programs      
                     Fiscal Years 1994-2004 (Order Code RL32472)              
                                                                              
                     o Fiscal Year 2006 Appropriations for the Department of  
                     Transportation (Order Code RL32945)                      
                                                                              
                     o Vision 100: An Overview of the Century of Aviation     
                     Reauthorization Act (Pub. L. No. 108-176) (Order Code    
                     RL32498)                                                 
Congressional     CBO is a nonpartisan legislative branch agency that      
Budget Office     produces material to inform congressional decisions on   
(CBO)             spending and taxes. Specifically, CBO publishes cost     
                     estimates and mandate statements for congressional       
www.cbo.gov       bills, reports needed for the budget process, budgetary  
                     and economic analytical studies, policy briefs,          
                     background papers, and a monthly budget review of the    
                     fiscal activity of the government. CBO is organized into 
                     six divisions: budget analysis, heath and human          
                     resources, macroeconomic analysis, microeconomic         
                     studies, national security, and tax analysis.            
                                                                              
                     CBO publications containing information on FAA include:  
                                                                              
                     o Budget Options (February 2005)                         
                                                                              
                     o Financing Small Commercial-Service Airports: Federal   
                     Policies and Options (April 1999)                        
                                                                              
                     Examples of relevant CBO cost estimates include:         
                                                                              
                     o H.R. 1496, Return of General Aviation to Ronald Reagan 
                     Washington National Airport Act of 2005 (May 4, 2005)    
                                                                              
                     o H.R. 2115, Vision 100-Century of Aviation              
                     Reauthorization Act (Dec. 9, 2003)                       
Think Tanks       Think tanks engage in a range of policy-related          
                     activities, and comprise a diverse set of institutions   
                     that have varied organizational forms. They could        
                     provide information and research to enhance              
                     congressional oversight.                                 
Industry,         Industry, interest and user groups are public and        
Interest and User private organizations involved in the aviation industry  
Groups            that could provide research and information to inform    
                     committee staff on oversight issues.                     

Source: GAO.

aTop Management Challenges: Department of Transportation, Nov. 15, 2005,
PT-2006-007.

bFor GAO's assessment of OMB's PART, see GAO, Performance Budgeting: PART
Focuses on Program Performance, but More Can Be Done to Engage Congress,
GAO-06-28 (Washington, D.C.: Oct. 28, 2005) and GAO, Performance
Budgeting: Observations on the Use of OMB's Program Assessment Rating Tool
for the Fiscal Year 2004 Budget, GAO-04-174 (Washington, D.C.: Jan. 30,
2004).

Financial Statements Provide Insights into Agency Financial Management and
Resources Appendix III

FAA's annual financial statements can be used to analyze the agency's
operating results and its financial position. Most of this analysis
involves looking at how various individual reported amounts interrelate or
represent the agency as a whole, and how those amounts or relationships
change from period to period. The historical information presented can
establish a baseline for estimates of future operations and funding needs.

Agency financial information can be valuable for

o facilitating an understanding of an agency's operations;

o providing a common database for the development, analysis, and debate of
alternative policies;

o supporting an historical perspective from which to evaluate future
plans, budgets, and spending proposals;

o assessing agency accountability for actual results when compared to
budgets; and

o evaluating program costs.

Further information regarding federal financial statements can be found in
a guide to the annual financial report of the U.S. Government, published
recently by GAO. This guide can be helpful to Congress and taxpayers in
evaluating both governmentwide financial reports and those of individual
agencies.1

FAA's Balance Sheet

FAA's balance sheet shows an end-of-the-year view of its overall financial
position, its assets (what it owns), its liabilities (what it owes), and
the difference between the two (its net position). A wide variety of
analyses can be applied to information presented in FAA's consolidated
balance sheets for fiscal years 2003 and 2004, which are presented in
Figure 6.

Figure 6: FAA's Consolidated Balance Sheets for Fiscal Years 2003 and 2004

Committee staff could use information from FAA's balance sheet to
facilitate a better understanding of the agency's financial position,
addressing questions such as

o What are FAA's largest asset and liability categories?

o What is the makeup of FAA's assets and liabilities?

o What future funding may be required to replace deteriorating operating
assets and to satisfy long-term liabilities?

For example, as shown in Figure 7, FAA's two largest asset categories are
property, plant, and equipment valued at about $14.5 billion and
investments valued at about $10.3 billion. For additional information
about the makeup of these assets, the balance sheet refers readers to the
related notes. Referring to the related note 6, one can learn that the
acquisition value (cost) of personal property (e.g. equipment) increased
by $1.3 billion, or 10 percent, from fiscal year 2003 to fiscal year 2004,
and that the sizeable increase in the reported cost of property, plant,
and equipment includes new acquisitions of National Airspace System
equipment. The balance sheet and notes also show that FAA has significant
amounts invested in the Airport and Airway Trust Fund but that the balance
of these investments fell during fiscal year 2004. A possible inquiry to
the FAA might address a relationship between the investment balance and
additions to property, plant and equipment. Also disclosed in note 6, the
accumulated depreciation of each asset class is one potential indicator of
the relative deterioration of those assets. Accumulated depreciation is
ultimately limited to the original acquisition value of an asset, and
substantially depreciated assets may possibly soon require funding for
their replacement.

Figure 7: Composition of FAA's Assets and Liabilities, as of September 30,
2004

The balance sheet also indicates a significant percentage increase in
accounts receivable that are not intragovernmental transactions among
federal entities. Though less significant than some of the other amounts
shown in the balance sheet, such an increase might warrant a follow-up
discussion with FAA regarding its cause and whether this indicates a new
trend that will require funding from additional appropriations in the
future.

Statement of Net Cost

FAA's statement of net cost is intended to show how much it costs
taxpayers to operate FAA. Net cost is calculated by subtracting any earned
revenues from gross cost, which include program costs as well as
administrative costs, resulting in FAA's costs to taxpayers. As shown in
Figure 8, FAA's statement of net costs presents cost information for each
of its four major lines of business - air traffic organization, regulation
and certification2, airports, and commercial space transportation -- and
two categories that are not lines of business, including agency overhead.

Figure 8: FAA's Consolidated Statements of Net Cost for Fiscal Years 2003
and 2004

Committee staff could use information from FAA's statement of net cost to
enhance their understanding of possible future cost trends, addressing
questions such as:

o How much did FAA's net cost increase or decrease from the prior fiscal
year?

o Which of FAA's programs experienced the largest increase and which
experienced the largest decrease in net cost from the prior fiscal year?

o Which of FAA's programs accounted for most of its net cost?

For example, FAA's statements of net cost for fiscal years 2003 and 2004
show that other than a nearly $200 million (6.8 percent) increase in net
costs related to the airport program, operating results were substantially
consistent for those two years, indicating that future operating costs of
FAA's other business lines may be stable. Based on the airports' program
increase, a reader may decide to perform further analysis using FAA's
statements of net cost from prior fiscal years. As shown in Figure 9,
further analysis of the airport program over time indicates that net costs
for the program have doubled over the last four fiscal years. This may
prompt questions to determine the causes for the increase, whether this
growth was expected and, going forward, how much the airport program
should continue to grow.

Figure 9: Net Costs for FAA's Airport Program for Fiscal Years 2000
through 2004

FAA provides additional information about the distribution of net costs in
note 12 of its financial statements, which is summarized in Figure 10.
This information shows that FAA's most costly line of business was air
traffic organization, which accounted for about two-thirds of its net
costs. The net cost information provided in note 12 also shows that 72
percent of FAA's net costs were used to support its strategic goal of
safety. Using the information about net costs disclosed by FAA, a reader
can consider whether FAA's current cost distribution appropriately
reflects its strategic goals and congressional priorities, or whether
resources should be redirected.

Figure 10: Composition of FAA's Net Costs, for Fiscal Year 2004, by
Business Line and Strategic Goal

Statement of Changes in Net Position

FAA's statement of changes in net position shows how it financed its
operations for the fiscal year. It shows the agency's net position at the
beginning of the fiscal year, the major inflows and outflows of funds that
caused the net position to change during the year, and the ending net
position. FAA's statements of changes in net position for fiscal years
2003 and 2004 are displayed in figure 11.

Figure 11: FAA's Consolidated Statements of Changes in Net Position for
Fiscal Years 2003 and 2004

Committee staff could use information from the statement of changes in net
position to facilitate a better understanding of FAA's financial position
and direction, addressing questions such as:

o What were FAA's primary financing sources and how much did they increase
or decrease?

o To what extent did FAA's excise tax revenue cover its net costs?

o Did FAA's net position improve or deteriorate?

For example, FAA's statement of changes in net position shows that FAA is
primarily financed through excise tax revenue and appropriations. However,
fiscal year 2004 appropriations used decreased by about 20 percent from
the previous year, while excise taxes and associated revenue rose by about
three percent, conditions that if analyzed in greater detail, might reveal
important information about the agency's future aggregate spending or
income trends. For example, the decrease from fiscal year 2003 to 2004 in
appropriations used approximated the amount associated with FAA's 2003
transferred operations, leading a reader to infer that the two are
related. However, analyzing the trend of this information going forward
may tell a different story about the agency's direction. If the trend
indicated by FAA's statement of changes in net position for fiscal year
2004 continues, FAA may be able to meet more of its costs through service
fees and excise taxes rather than appropriated funds. Also, the percentage
composition of financing sources can be compared to that of other agencies
or programs.

Statement of Budgetary Resources

The statement of budgetary resources presents the amount of budgetary
resources available during the fiscal year and the status of those
resources at the end of the year. This statement provides basic
information about budget authority made available from appropriations, fee
collection, and, when applicable, borrowing authority. The relationship of
obligations to outlays is also presented for the fiscal year. FAA's
statements of budgetary resources for fiscal years 2003 and 2004 are
displayed in figure 12.

Figure 12: FAA's Consolidated Statements of Budgetary Resources for Fiscal
Years 2003 and 2004

Committee staff could use information from FAA's statement of budgetary
resources to obtain an overview of the agency's financial position and
direction, addressing questions such as:

o Were there increases or decreases in budget authority, unobligated
budgetary resources, total budgetary resources, obligations incurred,
and/or disbursements?

o To what extent were current fiscal year budgetary resources used?

For example, FAA's statements of budgetary resources for fiscal years 2003
and 2004 show that budgetary authority, budgetary resources, obligations
incurred, and disbursements all increased in fiscal year 2004, indicating
a possible expansion in FAA's overall activities for the year. However,
FAA's budgetary resources increased at a faster pace than outlays and
obligations, which might indicate a change in FAA's budgetary needs that
should be analyzed further.

FAA provides additional information about the use of its budgetary
resources in the required supplementary information section of its PAR,
which includes a schedule of budgetary resources by major fund type. As
shown in figure 13, an analysis of this schedule shows that the operations
fund uses the most budgetary resources followed by the grants-in-aid to
airports fund and the facilities and equipment fund. In addition, readers
may compare the fiscal year 2004 schedule of budgetary resources by major
fund type to schedules for prior years. A comparison of the fiscal year
2003 and 2004 schedules included in the 2004 PAR shows that budgetary
resources for facilities and equipment grew by 3.8 percent, compared to
8.1 percent growth for grants and 5.0 percent growth for operations. This
type of analysis allows for consideration as to whether FAA's current use
of budgetary resources is efficient and reflects congressional priorities.

Figure 13: Composition of Budgetary Resources, by Major Fund Type

Statement of Financing

The statement of financing reconciles the resources used to finance an
agency's operations for each fiscal year using budgetary accounting with
the net cost of operations determined using the accrual basis of
accounting. It explains the differences between an agency's obligations of
budget authority as reported in budget documents and the statement of
budgetary resources, and the net cost of its operations as shown in the
statement of net cost, indicating the various categories of transactions
that are considered when preparing one of those statements but not the
other. The statement illustrates the link between budgetary accounting
(primarily cash basis), which records obligations when goods and services
are ordered, and financial (accrual basis) accounting, which records
expenses when goods are consumed and services are received in fulfillment
of the agency's objectives. FAA's fiscal year 2003 and 2004 statements of
financing are shown in figure 14.

Figure 14: FAA's Consolidated Statements of Financing for Fiscal Years
2003 and 2004

Committee staff could use information from the statement of financing to
facilitate an understanding of FAA's financial position and direction,
addressing questions such as:

o How much of FAA's net costs were due to the depreciation of its assets?

o How much did FAA spend on capitalized fixed assets?

For example, FAA's statements of financing for fiscal years 2003 and 2004
show an increase of 29 percent in resources used to acquire assets,
transactions which affect budgetary resources but are not shown on the
statement of net costs until they are used up or depreciated, in the case
of property, plant, and equipment. As a result, additional oversight may
be warranted for the increase in resources being used to finance the
acquisition of assets.

GAO Contact and Staff Acknowledgements Appendix IV

Bernice Steinhardt on (202) 512-6543 or [email protected] .

In addition to the contact names above, Linda Calbom, Director; Christine
Bonham, Assistant Director; Elizabeth Curda, Assistant Director; Jack
Warner, Assistant Director; Kevin J. Conway, Fred Evans, Benjamin Licht,
and Chelsa Gurkin made significant contributions to this report.

(450362)

www.gao.gov/cgi-bin/getrpt? GAO-06-378 .

To view the full product, including the scope

and methodology, click on the link above.

For more information, contact Bernice Steinhardt at (202) 512-6543 or
[email protected].

Highlights of GAO-06-378 , a report to the Chairman, House Committee on
Transportation and Infrastructure

March 2006

CONGRESSIONAL OVERSIGHT

FAA Case Study Shows How Agency Performance, Budgeting, and Financial
Information Could Enhance Oversight

Pursuant to various statutes, federal agencies develop an abundance of
performance, budget, and financial information that could be useful for
Congress' review and monitoring of agencies. However, agencies'
understanding of Congress' information needs is often limited and agencies
may not be providing timely information in a format that aids
congressional understanding of trends and issues. Thus, Members and their
staff may not be aware of or avail themselves to certain information. To
describe the information available and how it might be used to support
congressional oversight, the Federal Aviation Administration was selected
as a case study in part due to the large quantity of information already
available. GAO was asked to identify: (1) information FAA produces that
could enhance congressional oversight, (2) other technology and
information resources that could enhance congressional oversight, and (3)
how committee access to FAA's information could be improved to enhance its
timeliness and usefulness.

What GAO Recommends

While FAA makes much of its information available on its Web site, GAO
recommends that FAA further use technology to enhance congressional access
to information, and offer regular meetings with Members of the committee
and key staff to discuss areas of mutual concern. The agency generally
concurred.

The Federal Aviation Administration (FAA) has made available much of the
information and analytic resources that Congress needs to carry out its
oversight function. For example, FAA has a strategic plan with long-term,
outcome-oriented goals and objectives. Its annual Performance and
Accountability Report includes the agency's progress in achieving its
goals, and allows Congress to monitor performance trends. This report also
provides financial information useful for analyzing its operating results
and financial position. FAA's budget documents combined with performance
data could provide Congress information to use in determining whether
resources are achieving the planned performance improvements. Used
together, this information could assist Members of Congress and
congressional staff in their oversight responsibilities.

Through its legislative support agencies-GAO, Congressional Research
Service and the Congressional Budget Office-and the Department of
Transportation's (DOT) Inspector General (IG), congressional committee
staff also have access to considerable resources for oversight. For
example, GAO's 2005 High Risk Series Update includes FAA's Air Traffic
Control Modernization program and discusses progress the agency has made
in addressing its problems. DOT's IG annually reports on the top
management challenges facing FAA, such as safety and capacity challenges.

Effective communication is needed to ensure that information agencies
provide meets congressional needs. While considerable information
resources are available, they may not be available in a manner that is
useful to committees. We have reported that although agencies collect and
produce a great deal of information, much of it did not reach the
interested committees, and the information that did reach them was
difficult to digest, highly aggregated, or was received too late to be
useful. In the case of FAA, House Transportation and Infrastructure
Committee staff said FAA has a large quantity of information available and
effective communication between the staff and agency, but is interested in
using technology to gain additional agency data. While FAA provides a
great deal of information on its Web site, it could take additional
advantage of technology to improve the timeliness and usefulness of
information to the Congress. For example, a Frequently Asked Questions
section could provide quick access to information often requested by
committees. As a result of our discussions with committee and agency
staff, FAA has initiated two suggested technology enhancements, a For
Congress page on its Web site, providing a single point of access for
information relevant for oversight, and a Web site subscription service
notifying committee staff when relevant information has been updated on
its Web site. Further, regular meetings between congressional committees
and agency officials could identify the committee's oversight objectives,
provide a forum to discuss the issues, and develop approaches to meet
them. Importantly, these findings constitute lessons learned that may be
transferable to other agencies.
*** End of document. ***