Fiscal Year 1997 Budget Estimates for the U.S. General Accounting Office
(Testimony, 02/29/96, GAO/T-OCG-96-1).
During the past year, GAO again demonstrated its worth to Congress and
the taxpayer. Agency officials testified nearly 250 times before
congressional committees on issues ranging from budget savings, to
waste, fraud, and abuse, to reengineering the federal government. During
fiscal year 1995, GAO recommendations produced more than $15 billion in
measurable financial benefits, as well as many improvements to
government operations. GAO's current staff of 3,700 employees--down from
5,325 in 1992--is the agency's lowest staffing level since before World
War II. GAO is meeting the challenge of doing a good job even
better--and doing it faster, at less cost, and with fewer people. The
agency is constantly seeking to improve productivity, take advantage of
modern technology, and improve employee skills and expertise. Concerns
have been raised, however, about GAO's lack of enough technical
expertise to successfully conduct a consolidated audit of the executive
branch--an important requirement of the Chief Financial Officers' Act.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-OCG-96-1
TITLE: Fiscal Year 1997 Budget Estimates for the U.S. General
Accounting Office
DATE: 02/29/96
SUBJECT: Reductions in force
Agency missions
Total quality management
Future budget projections
Financial management
Budget cuts
Federal agency reorganization
Productivity
Strategic information systems planning
Information resources management
IDENTIFIER: GAO Following the Federal Dollar Strategic Plan
TQM
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Cover
================================================================ COVER
Before the Subcommittee on Legislative
Committee on Appropriations
U.S. House of Representatives
For Release
on Delivery
Expected at
9:30 a.m. EST
Thursday
February 29, 1996
FISCAL YEAR 1997 BUDGET ESTIMATES
- THE U.S. GENERAL ACCOUNTING
OFFICE
Statement of Charles A. Bowsher
Comptroller General of the United States
GAO/T-OCG-96-1
GAO/OCG-96-1T
Abbreviations
=============================================================== ABBREV
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today to testify on GAO's fiscal year 1997
budget request.
This year we celebrate the agency's 75th anniversary. While GAO's
structure and operations have evolved over the years, its key role in
helping the Congress in its legislative oversight responsibilities
remains unchanged.
We see our mission as seeking to achieve honest, efficient management
and full accountability throughout government. To accomplish this
mission, we are prepared to follow the federal dollar wherever it
goes and to evaluate the efficiency and effectiveness of federal
programs.
During this past year, GAO has again demonstrated its high value to
the Congress and the American taxpayer. Since the Congress convened
last January, House and Senate committees have asked us to testify
nearly 250 times on issues ranging from budget savings, to fraud,
waste and abuse, to proposals for reengineering the federal
government. During fiscal year 1995, legislative and executive
actions based on our recommendations have led to over $15 billion in
measurable financial benefits, as well as numerous improvements to
agency programs and processes. GAO's expertise across the full range
of government programs and activities and its extensive past and
ongoing audit and evaluation work have allowed the agency to respond
quickly to changing congressional needs and priorities.
To meet the challenges of the upcoming year, the Congress will
continue to turn to GAO for accurate information and unbiased
analyses. GAO is in a unique position to help the Congress as it
strives to cut the deficit and reexamine the objectives and
structures of federal programs and initiatives. Committees in both
houses have requested that GAO do work vital to their legislative
agendas. Moreover, new and continuing statutory requirements
necessitate that GAO continue to play a key role in improving
government accountability and management.
GAO assists the Congress with a staff level of about 3,700 full time
equivalent (FTE) positions for the current fiscal year. This level
is down from 5,325 employees in 1992 and is GAO's lowest staffing
level since before World War II. Although agencies audited by GAO
have grown several times over as the federal government has grown in
size and complexity, GAO has been able to fulfill its added
requirements and responsibilities despite fewer staff. We have
fulfilled our expanding mission by continually working to increase
productivity, take advantage of modern technology, and improve our
skills and expertise.
FY 1997 BUDGET REQUEST
---------------------------------------------------------- Chapter 0:1
GAO is committed to being a model government agency of the
future--smaller and at the same time achieving greater efficiencies
through effectively using technology and modern management
principles. We have worked with this committee to develop strategies
for reducing the size of GAO. Last year, the Congress directed a 25
percent reduction in funding, 15 percent to be accomplished in fiscal
year 1996 and an additional 10 percent in fiscal year 1997.
GAO's total budget authority for fiscal year 1996 is $383 million, 15
percent below the fiscal year 1995 level, and we are continuing to
implement initiatives in response to Congress' direction to further
reduce our staff level for fiscal year 1997. We have conducted a
separation incentive program and an early retirement program,
consolidated some of our issue areas at headquarters, closed several
regional offices, and are in the process of implementing a
reduction-in-force of our administrative and support staff. We are
also in the process of privatizing our supply function and we are
looking for other opportunities to use contract assistance. These
actions will reduce the agency by over 30 percent from our 1992
level.
However, one serious problem has emerged. There is a great risk that
GAO will not have adequate resources in some key areas, particularly
in financial accounting and information systems management, which is
essential to carry out its Chief Financial Officers Act
responsibilities and to support congressional efforts to reform the
federal government's financial management systems. Staff skilled in
these critical areas have left GAO in disproportionate numbers.
Although we have reassigned remaining staff to the extent possible, a
shortage of expertise in these disciplines remains. This problem is
exacerbated because we do not have the funds necessary to acquire
this expertise from other sources. Also, our program audit areas
have suffered losses in key expertise and will require attention at
some point.
Therefore, I am presenting a fiscal year 1997 budget for the
Committee's consideration that will enable GAO to effectively carry
out its mission while still reducing its budget below the fiscal year
1996 level. I am sensitive to last year's commitment to reduce GAO's
budget 15 percent in fiscal year 1996 and an additional 10 percent in
fiscal year 1997. I am also sensitive to the fact that the Committee
wants to achieve that objective without seriously damaging GAO's
ability to perform its core mission. My fiscal year 1997 budget
submission is an attempt to properly balance these two important
objectives. This request reflects a good faith effort to continue to
reduce the size of GAO while allowing us to replace staff with highly
specialized skills that are essential to the performance of mission
critical work. GAO's request of $378 million for fiscal year 1997
provides about $8 million to pay for badly needed financial
accounting and information management expertise while also reflecting
mandatory increases in personnel costs. Overall, this request
represents an 8 percent reduction in budget authority from the fiscal
year 1996 budget when adjusted for mandatory increases in personnel
costs.
GAO'S WORKLOAD AND
ACCOMPLISHMENTS
---------------------------------------------------------- Chapter 0:2
During this past year, GAO has maintained its productivity at high
levels. We produced 1,052 written reports to the Congress,
congressional committees, and individual members as well as 104
reports to federal agency officials. We gave hundreds of
congressional briefings; 72 GAO executives testified a total of 246
times at the request of the Congress on issues of the greatest
urgency; and we issued over 3,300 legal decisions.
We produced reports that address issues of national importance and
contribute to congressional oversight and debate. I would like to
discuss our work from this past year as well as the focus of our
current and future work within the framework of our strategic plan
entitled, Following the Federal Dollar, which identifies our five
highest priority issues according to congressional expectations.
PROMOTING A MORE EFFICIENT
AND COST-EFFECTIVE
GOVERNMENT
-------------------------------------------------------- Chapter 0:2.1
Year after year, our work has led to legislative and executive
actions--budget reductions, cost-avoidance measures, appropriation
deferrals, and revenue collections--that have provided financial
savings and other benefits in the billions of dollars. In fiscal
year 1995 alone, these financial benefits totaled over $15.8
billion--a return of more than $35 for every dollar appropriated to
GAO. Because of the importance of reducing the federal budget
deficit, we keep financial benefits at the forefront of our work.
We are committed not only to making government cost less, but also to
making it operate more efficiently and effectively. While downsizing
is one way to move toward this goal, it must be carefully planned and
implemented--a process that demands the kind of objective and
comprehensive information GAO is uniquely equipped to gather and
analyze. We have, for example, monitored the closing of military
bases, studied defense force structure in light of decisions to
reduce the size of the U.S. armed forces, tracked the results of
previous downsizing efforts at the Social Security Administration and
other agencies, and studied downsizing approaches taken by private
organizations.
We have several audits and evaluations either under way or
contemplated for the coming months that could yield significant
savings for the federal government. For example, GAO will be
identifying "best practices" to help streamline defense acquisition,
procurement, finance, inventory management, maintenance and repair,
and transportation; identifying more cost-effective ways to clean up
the nation's nuclear weapons complex; and evaluating proposals to
achieve major reorganizations of the Federal Aviation Administration
and Amtrak.
EXPOSING FRAUD, WASTE,
ABUSE, AND MISMANAGEMENT
-------------------------------------------------------- Chapter 0:2.2
After the scandal at the Department of Housing and Urban Development
in the late 1980s and the "Ill Wind" scandal at the Department of
Defense, we began a widely publicized effort to identify and monitor
programs at risk for fraud, waste, abuse, or mismanagement. Through
scores of studies and two special series of "high risk" reports--the
most recent of which appeared in February 1995--we have highlighted
areas in which major improvements are needed to protect the
taxpayers' interests. Among our priorities have been to assess
payment practices under Medicare, where losses could run as high as
10 percent of the $167 billion spent annually; to minimize defaults
in federal loan programs, such as student assistance and the Farmers
Home Administration where loss exposure runs into the billions of
dollars; and to monitor defense programs in which billions of dollars
have been spent on unneeded inventory and millions of dollars have
been incorrectly paid to defense contractors.
Our emphasis on high risk programs is paying off. The most recent
high risk reports confirmed that progress had been made in attacking
the root causes of problems at 15 of the 18 programs we had
identified through fiscal year 1994. Five of the 18 programs--the
Bank Insurance Fund, the Resolution Trust Corporation, the Pension
Benefit Guaranty Corporation, the State Department's management of
overseas property, and the Federal Transit Administration's grant
management program--are now on sound enough footing that we have
removed their high risk designations. In fiscal year 1995, we
designated seven new high risk areas in hopes that increased focus
afforded these areas will yield progress among them as well.
TARGETING SPENDING
REDUCTIONS TO REDUCE THE
DEFICIT
-------------------------------------------------------- Chapter 0:2.3
As the Congress works to balance the federal budget, one of its major
challenges will be to cut federal spending over the next 6 years by a
total of $1 trillion or more. Every year, we work with the
congressional appropriations committees to find potential savings in
the administration's proposed budget; usually, we identify savings as
much as $1 billion. We also work with the various budget and
authorizing committees to find opportunities to save money by
modifying, limiting, or abolishing entire programs.
For example, we are looking at ways to reduce the deficit in the $160
billion Medicare program. We have identified savings that can be
realized by better targeting federal payments to medically
underserved areas. We have recommended changes to the collection of
payments for those instances where the government pays first but
should pay second for Medicare patients who have other health
insurance coverage. And we have identified problems with the payment
rates for reimbursements to risk-contract HMOs that provide services
to Medicare beneficiaries.
Due to continuing rapid inflation in health care costs, major changes
are underway in the delivery of health services--most notably the
emergence of managed care which holds promise for better cost control
in the future. We have worked to identify ways for the Medicare and
Medicaid systems to more effectively use managed care's potential,
such as better rate setting mechanisms for Medicare HMOs to avoid
overpayments and better oversight of managed care systems to protect
beneficiaries from inappropriate denial of care and federal dollars
from payment abuses.
We have underway a number of reviews at the Social Security
Administration to identify opportunities for program savings.
Several reviews target fraud, waste and abuse in SSA's Supplemental
Security Income Program which pays $25 billion in benefits each year.
We are also reviewing SSA's strategy for conducting continuing
disability reviews to identify whether process improvements would
allow the agency to more effectively terminate benefits for
individuals who no longer qualify to receive them.
In October 1995, we issued a report raising concerns with HUD's
mortgage assignment program, which was created in 1959 to help
mortgagors who have defaulted on HUD-insured loans avoid foreclosure
and retain their homes by providing them with financial relief.
However, this program has not reduced FHA's foreclosure losses;
instead, losses have exceeded those that would have been incurred if
loans had gone immediately to foreclosure without assignment. We
have identified several options that are available to the Congress to
reduce the losses incurred by this program.
We also have under way, or else soon will begin, other efforts to
identify ways to reduce federal expenditures. These efforts include
reviewing the need for such Department of Energy programs as the
civilian nuclear waste program, the power marketing administrations,
and the Strategic Petroleum Reserve; identifying agricultural
commodity programs in which savings could be achieved; and
identifying discretionary programs at the Department of Health and
Human Services that are ineffective or whose overhead expenses run
too high.
IDENTIFYING TRENDS WITH
FISCAL, BUDGETARY, OR
OVERSIGHT CONSEQUENCES FOR
THE GOVERNMENT
-------------------------------------------------------- Chapter 0:2.4
Numerous GAO reports have alerted the Congress and other policymakers
to crises in the making--from an outdated federal food inspection
system to the crumbling financial condition of the District of
Columbia, from cost overruns in major weapon systems to the
deterioration of nuclear weapons facilities. We believe that one of
our priorities must always be to identify trends that could lead to
major problems for the government. For example, the financial
services industry is growing larger and more complex while the
regulatory structure to protect investors and depositors has many
gaps. Although health care costs continue to grow at a rate faster
than inflation the delivery of health care services is rapidly
changing, the implications of these changes for the financially
pressed Medicare and Medicaid systems are unclear. Lastly, the
Department of Energy's program to store and dispose of spent
radioactive fuel from civilian nuclear power plants may be reaching a
crisis. GAO is committed to helping the Congress face the challenge
of deciding how to deal with this growing problem.
IMPROVING ACCOUNTABILITY
THROUGH FINANCIAL AND
INFORMATION MANAGEMENT
-------------------------------------------------------- Chapter 0:2.5
For more than a decade, GAO has reported to the Congress that federal
agencies were lacking even minimally acceptable accounting and
financial management systems. Tens of billions of dollars could not
be accounted for, agency books could not be balanced, and widespread
mismanagement was wasting billions of dollars every year.
Recognizing the need for better financial management in the federal
government, the Congress passed, on a bipartisan basis, the Chief
Financial Officers Act (CFO) of 1990. This law requires major
federal departments and agencies to prepare financial statements and
to undergo annual financial audits.
We have a major responsibility to monitor agencies' progress under
the CFO act. This year, the 24 largest federal departments and
agencies are required to produce auditable financial statements.
Beginning in 1997, we will also have the job of auditing the annual
consolidated financial reports of the U.S. government, which are
intended to show the Congress and American taxpayers the status of
federal finances. It is crucial that CFO Act implementation stay on
schedule. Likewise, GAO must maintain the ability to develop
comprehensive, reliable information that congressional leaders rely
on to reduce spending and ensure accountability among federal
departments and agencies. Moreover, this information will contribute
to the effective implementation of the Government Performance and
Results Act of 1993, which makes performance measurement a key
element of federal program management.
We have also put considerable emphasis on the need to improve
information resource management (IRM). While, the federal government
spends about $25 billion each year on computers and information
technology, it ought to be getting far greater value than it has been
for so large an investment. In 1994, we produced a widely esteemed
report on how 11 basic principles drawn from leading public and
private sector organizations could be used in the federal
government's IRM programs. The Congress has already endorsed many of
these "best practices" in its reauthorization of the Paperwork
Reduction Act.
OPERATIONAL IMPROVEMENTS
---------------------------------------------------------- Chapter 0:3
As I mentioned earlier, we have made many operational improvements
over the past several years that have enabled us to maintain our
productivity levels and the high quality of our work even though our
resources have been decreasing. I'd like to update the Committee on
these efforts.
CAPITALIZING ON INFORMATION
RESOURCES TECHNOLOGY
-------------------------------------------------------- Chapter 0:3.1
Over the past several years, introduction of the latest technology
has helped our staff by giving them ready access to numerous sources
of information that are critical to successfully and efficiently
completing assignments. This technology has enabled staff to perform
more indepth analyses and do them much more quickly with automated
tools. In addition, the use of local area networks and the wide area
network has greatly enhanced communications, which is essential to
the timely and successful completion of our work.
During this past year, GAO has continued its efforts to further
develop its automated information resources to increase staff access
to information. We have extended our data network to all locations
and we will complete the installation of the Data Collection and
Analysis (DCA) application by mid-April. This application will
greatly enhance our ability to perform our mission effectively with
reduced resources. We have identified the requirements for
connecting our documents database and CD-ROM research networks to the
data network and have started implementation. We have upgraded and
integrated video conferencing and voice mail with our operations, and
we have begun publishing GAO products on the Internet through GPO's
wide Area Information Server. We are also using the network to
efficiently provide administrative information to agency staff. This
has been done in the context of modernizing our facilities while
removing asbestos from the GAO building. This will provide an
overall work environment that will maximize the efficiency of our
work processes.
RE-ENGINEERING JOB PROCESSES
-------------------------------------------------------- Chapter 0:3.2
Efficiency gains have also resulted from our quality management
efforts over the pas several years. We have identified and are
making several improvements to our work processes by using this
management approach. For example, we have made significant progress
in reducing rework and cycle time for jobs and improving on-time
delivery of reports. We are implementing, on a GAO-wide basis, a
standardized audit and evaluation process that incorporates the best
practices from throughout GAO. This process, which should be fully
operational by mid-summer 1996, incorporates new technology and
automated tools to ensure optimal responsiveness in every job as well
as enhance quality. In addition, we are finalizing plans for a cost
estimation and costing system that should be operational later this
fiscal year. This system will enable us to more accurately assess
the estimated and actual costs of jobs. Our goal is to reduce the
costs of our audit and evaluation jobs and the time it takes to
complete them.
In fiscal year 1994, GAO formally adopted a long range plan to
significantly improve its operations by using the principles of
quality management. One of these principles is to integrate quality
improvement into the strategic and day-to-day management of the
organization. This past year, GAO developed and implemented its
strategic plan. This plan sets forth the critical mission-related
work GAO needs to do to respond to congressional priorities as well
as the operational changes GAO needs to make to improve quality and
timeliness, reduce cost, and increase customer satisfaction.
CONCLUSION
---------------------------------------------------------- Chapter 0:4
These are challenging times for GAO. We must continue to find ways
of doing a good job even better--and doing it faster, at less cost,
and with fewer people. Over the past several years, we have worked
with the Congress to reduce GAO's resources because we recognize that
we need to take our share of the reduction as measures are taken to
balance the federal budget. Although we have been very successful in
reducing our resource levels while maintaining a high level of
productivity and keeping the quality of our work high, we face a
major effort in fiscal year 1997. While the Chief Financial
Officers' Act mandates that GAO conduct a consolidated audit of the
executive branch financial statements, we do not have sufficient
technical expertise to successfully undertake this new requirement.
Therefore, we request your support in the critical areas I have
mentioned.
*** End of document. ***