NASA Budget: Carryover Balances in Selected Programs (Testimony,
07/18/96, GAO/T-NSIAD-96-207).

GAO discussed the extent of carryover budget balances for the National
Aeronautics and Space Administration's (NASA) Mission to Planet Earth
program and other NASA programs. GAO noted that: (1) certain NASA
program appropriations are available for obligation over a 2-year
period; (2) carryover balances in these program areas totalled $3.6
billion by the end of fiscal year (FY) 1995; (3) NASA estimated that
$654 million in total budget authority from these programs would be
carried over from FY 1996; (4) NASA expects $631 million in program
funding to be carried over in FY 1998; (5) large carryover balances are
due in part to NASA banking its budget authority to cover costs incurred
in later years; (6) NASA and its chief financial officer have
recommended actions to reduce carryover balances that exceed certain
thresholds; and (7) carryover balances should be examined over time to
better determine the thresholds for individual programs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-NSIAD-96-207
     TITLE:  NASA Budget: Carryover Balances in Selected Programs
      DATE:  07/18/96
   SUBJECT:  Unobligated budget balances
             Budget administration
             Budget authority
             Total obligational authority
             Aerospace contracts
             Appropriated funds
             Cost-based budgeting
             Space exploration
             Aerospace research
             Contract costs
IDENTIFIER:  NASA Mission to Planet Earth Program
             
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Cover
================================================================ COVER


Before the Subcommittee on Space and Aeronautics, Committee on
Science, House of Representatives

For Release on Delivery
Expected at
10:00 a.m., EDT
Thursday,
July 18, 1996

NASA BUDGET - CARRYOVER BALANCES
IN SELECTED PROGRAMS

Statement of Thomas J.  Schultz, Associate Director, Defence
Acquisitions Issues, National Security and International Affairs
Division

GAO/T-NSIAD-96-207

GAO/NSIAD-96-207T


(707189)


Abbreviations
=============================================================== ABBREV

  NASA - x
  GAO - x

============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are pleased to be here today to discuss the National Aeronautics
and Space Administration's (NASA) carryover balances.  In March of
this year, Mr.  Chairman, you expressed concern about the extent of
such balances for Mission to Planet Earth and other programs.  Our
recent report to you is attached to this statement.\1 The report
presents basic information on carryover balances for Mission to
Planet Earth and other programs in NASA's Human Space Flight and
Science, Aeronautics, and Technology appropriations for fiscal years
1995, 1996, and 1997.  The report (1) defines carryover balances and
its uncosted components, (2) analyzes Mission to Planet Earth's
carryover balances in relation to NASA's other programs, and (3)
describes NASA's reaction to high carryover balances in many of its
programs. 

The purpose of our testimony today is to place the report in context. 
Specifically, we want to focus on how important it is to use
information on carryover balances when considering NASA's request for
new budget authority.  There are also issues we believe warrant
further review as part of our basic legislative responsibility. 

Simply stated, while assessing NASA's request for new budget
authority and determining what adjustments, if any, to make to that
request, the focus should be on the total resources NASA has
available for the next fiscal year, not just the amount requested. 
Carryover balances, which represent available budgetary resources
from prior years, along with new budget authority, provide the total
budget resources available to a program.  Some level of carryover
balance is appropriate for government programs.  Table 1 in our
report shows that carryover balances represent a significant portion
of total budgetary authority.  For example, at the start of fiscal
year 1996, NASA's carryover balances for its Human Space Flight and
Science, Aeronautics, and Technology programs totaled $3.6
billion--about a quarter of all the budgetary resources available to
those programs during that fiscal year. 

Carryover balances consist of uncosted obligations and unobligated
funds.  Uncosted obligations represent the portion of its authority
that NASA has obligated for goods and services but for which it has
not yet incurred costs.  Funding provided for NASA's Human Space
Flight and Science, Aeronautics, and Technology programs is available
for obligation over a 2-year period.  In such circumstances, some
funds are expected to be obligated during the second year of
availability.  NASA officials pointed out that funds carried over
will eventually be expended to cover program costs. 

To illustrate how significant carryover balances can be as part of
total budget resources available, let's look at the Mission to Planet
Earth program.  We see that NASA requested $1.402 billion for the
program for fiscal year 1997.  If approved, this would provide about
two-thirds of the $2.1-billion total budget authority available to
the program in 1997.  The other third is the nearly $654 million that
NASA estimated would be carried over from fiscal year 1996. 
Therefore, the request for $1.402 billion in new authority really is
part of the larger question of how NASA will use $2.1 billion in
budgetary resources in fiscal year 1997.  Part of the answer is the
amount of costs that will be incurred for work performed in fiscal
year 1997.  NASA estimates such costs at $1.425 billion, which would
leave close to $631 million to be carried into fiscal year 1998.  The
question for NASA and the Committee is whether $631 million should be
carried over as part of acceptable operations of this program.  A
related question is how much, if any, should be rolled over for costs
anticipated beyond the current budget year?  There are several NASA
programs with large carryover balances where these questions need to
be addressed. 

Our report notes some reasons NASA has given as to why these balances
have accumulated over the years.  Again, while we agree that some
level of carryover balance is appropriate for government programs,
more in-depth review is needed on the justifications for carryover
balances in order to provide the context for assessing these
balances.  For example, in one case, a NASA official told us that a
portion of a program's carryover balance was part of a strategy to
accumulate budget authority in earlier years of a project to cover
later years when high levels of costs will be incurred, without
having to request increases in budget authority at that time.  There
are indications that this practice, referred to as "banking" by that
official, may occur in other NASA activities.  Given that the program
can annually request and receive new authority, significant carryover
balances are a reason for discussion on how much future work to fund
in the pending budget request, and how much in future budget
requests. 

Mr.  Chairman, you are not alone regarding your concern about the
size of NASA's carryover balances.  NASA is also concerned that the
current amounts of carryover are too high and is taking action to
reduce the balances.  We are specifically referring to the recent
NASA Chief Financial Officer's study of carryover balances that
established a threshold for amounts of carryover and recommended
actions to bring NASA programs within that threshold.  The study
noted that the threshold needs to be studied over time to determine
if it is appropriate.  Our report also notes the NASA Comptroller's
actions to scrutinize carryover amounts as part of the fiscal year
1998 budget development process.  These are good first steps to help
gain an understanding of the issues. 

NASA has shown that it is paying more attention to carryover
balances.  However, NASA has not yet reached the point where it fully
understands individual programs' carryover balances and what each
program's carryover threshold could or should be.  The agency at some
time will have to make decisions on how to develop and enforce
appropriate changes.  We intend to follow the agency's progress in
developing and implementing these changes.  We believe that this
hearing will help focus attention on an important matter for
consideration during deliberations on NASA's budget request. 


--------------------
\1 NASA Budget:  Carryover Balances for Selected Programs
(GAO/NSIAD-96-206, July 16, 1996). 


-------------------------------------------------------- Chapter 0:0.1

This completes my statement, Mr.  Chairman.  My colleagues and I will
be happy to respond to any questions you or Members of the
Subcommittee may have at this time. 




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============================================================ Chapter 0



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