Environmental Protection Agency: Comparing Annual Budgets for Science and
Technology (Testimony, 03/23/2000, GAO/T-RCED-00-132).

Pursuant to a congressional request, GAO: (1) discussed the
Environmental Protection Agency's (EPA) budget justification for the
Science and Technology account; and (2) presented observations on EPA's
budget justifications for fiscal years (FY) 1999, 2000, and 2001.

GAO noted that: (1) for the FY 1999 budget justification, the requested
amounts could not be easily compared with amounts requested or enacted
for FY 1998 and prior years because the justification did not show how
the budget would be distributed among program offices or program
components--information needed to link to the prior years'
justifications that were constructed along these lines; (2) EPA's FY
2000 budget justification followed the same basic format as used in FY
1999--reflecting the agency's strategic goals and objectives--but EPA
revised several of its strategic objectives without explanations or
documentation to link the changes to the preceding year's budget; (3)
for example, funds were reallocated from one objective to others without
identifying the objectives that received the funds or amounts involved;
(4) to improve the clarity and comparability of its budget
justifications for FY 2000 and FY 2001, EPA included tables that detail,
for each objective, how amounts were allocated among key programs; (5)
in addition, the agency made available to Congress backup information
identifying program offices that would be administering the requested
funds; (6) the agency also implemented a new accounting system that
records budget data by goals and objectives, which enhances reporting
financial data by goals and objectives; (7) for FY 2001 budget
justification, EPA used the same strategic goals and objectives that
were in the 2000 budget justification, which facilitates comparisons of
the two budgets; (8) however, GAO's review of FY 2001 justification
identified three aspects that still inhibit comparison with the budget
justifications of prior years; (9) in the tables showing the key
programs associated with each objective, EPA did not consistently show
the same percentage of the funds associated with the programs; (10) for
example, in many cases, the amount shown for key programs under an
objective is less than the total allocation for the objective, while in
one case the sum exceeds the total for the objective; (11) the FY 2001
justification, as did the 2000 justification, does not clearly account
for funds transferred from Superfund to the Science and Technology
account; and (12) the 2001 budget justification also changes the
allocation of certain agency administrative funds across the strategic
goals and objectives, without fully identifying how the funds were
allocated in previous years.

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

 REPORTNUM:  T-RCED-00-132
     TITLE:  Environmental Protection Agency: Comparing Annual Budgets
	     for Science and Technology
      DATE:  03/23/2000
   SUBJECT:  Comparative analysis
	     Strategic planning
	     Budget administration
	     Mission budgeting
	     Environmental research
	     Reprogramming of appropriated funds
	     Agency missions
	     Financial records
	     Reporting requirements
	     Future budget projections
IDENTIFIER:  GPRA
	     Government Performance and Results Act
	     Superfund Program

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Testimony

Before the Subcommittee on Energy and Environment,

Committee on Science, House of Representatives

For Release on Delivery

Expected at 10:00a.m. EST

Thursday, March 23, 2000

ENVIRONMENTAL

PROTECTION

AGENCY

Comparing Annual Budgets for Science and Technology

Statement of David G. Wood, Associate Director,

Environmental Protection Issues,

Resources, Community, and Economic Development Division

GAO/T-RCED-00-132

Mr. Chairman and Members of the Subcommittee:PRIVATE

I am pleased to be here to discuss the Environmental Protection Agency's
(EPA) budget justification for the Science and Technology account and
present observations on EPA's budget justifications for fiscal years 1999,
2000, and 2001. For fiscal year 2001, EPA is seeking $674 million for the
Science and Technology account, an amount that represents 9 percent of the
agency's total budget request of $7.3 billion.

EPA's budget justifications for fiscal years 1999, 2000, and 2001 differed
significantly from its justifications for fiscal year 1998 and prior years
because they were organized according to the agency's strategic goals and
objectives (e.g., Clean Air: Reduce Emissions of Air Toxics). These goals
and objectives were established in the strategic plan EPA prepared to meet
the requirements of the Government Performance and Results Act. In contrast,
the fiscal year 1998 and prior years budget justifications were organized
according to EPA's program offices and components (e.g., Office of Air and
Radiation: Air Toxics).

My statement today discusses the findings from our prior reports and
testimony on EPA's requests for Science and Technology funds and our limited
review of EPA's fiscal year 2001 budget justification. Specifically, I will
discuss (1) difficulties experienced in comparing EPA's Science and
Technology budget justifications for fiscal years 1999 and 2000 with those
of the preceding years, (2) actions EPA took to improve the clarity and
comparability of the fiscal years 2000 and 2001 justifications, and (3)
aspects of the fiscal year 2001 justification that still inhibit clear
comparisons with prior year budgets.

In summary, our work has shown the following:

   * For the fiscal year 1999 budget justification, the requested amounts
     could not be easily compared with amounts requested or enacted for
     fiscal year 1998 and prior years because the justification did not show
     how the budget would be distributed among program offices or program
     components-information needed to link to the prior years'
     justifications that were constructed along these lines. EPA's fiscal
     year 2000 budget justification followed the same basic format as used
     in fiscal year 1999-reflecting the agency's strategic goals and
     objectives-but EPA revised several of its strategic objectives without
     explanations or documentation to link the changes to the preceding
     year's budget. For example, funds were reallocated from one objective
     to others without identifying the objectives that received the funds or
     amounts involved.

   * To improve the clarity and comparability of its budget justifications
     for fiscal years 2000 and 2001, EPA included tables that detail, for
     each objective, how amounts were allocated among key programs. In
     addition, the agency made available to the Congress backup information
     identifying program offices that would be administering the requested
     funds. The agency also implemented a new accounting system that records
     budget data by goals and objectives, which enhances reporting financial
     data by goals and objectives.

   * For the fiscal year 2001 budget justification, EPA used the same
     strategic goals and objectives that were in the 2000 budget
     justification, which facilitates comparisons of the two budgets.
     However, our review of the fiscal year 2001 justification identified
     three aspects that still inhibit comparison with the budget
     justifications of prior years. First, in the tables showing the key
     programs associated with each objective, EPA did not consistently show
     the same percentage of the funds associated with the programs. For
     example, in many cases, the amount shown for key programs under an
     objective is less than the total allocation for the objective, while in
     one case the sum exceeds the total for the objective. Second, the
     fiscal year 2001 justification, as did the 2000 justification, does not
     clearly account for funds transferred from Superfund to the Science and
     Technology account. Third, the 2001 budget justification also changes
     the allocation of certain agency administrative funds across the
     strategic goals and objectives, without fully identifying how the funds
     were allocated in previous years.

Background

The Government Performance and Results Act of 1993 established a system for
agencies to set goals for program performance. Agencies are to prepare
annual performance plans that establish performance goals to be achieved and
describe the resources required to meet them. One way agencies can improve
the usefulness of annual plans is to show how budgetary resources relate to
the achievement of performance goals. In 1999, EPA was one of the initial
agencies to organize its budget justification by its performance goals and
objectives. However, this revision from the organization by program offices
and components used previously made it difficult to compare prior year
justifications.

Prior Difficulties in Comparing

Budget Justifications

In 1998, we reported that difficulties in comparing EPA's fiscal year 1999
and 1998 budget justifications arose because the 1999 budget justification
was organized according to the agency's strategic goals and objectives,
whereas the 1998 justification was organized according to EPA's program
offices and components. Funds for EPA's Science and Technology account were
requested throughout the fiscal year 1999 budget justification for all 10 of
the agency's strategic goals and for 25 of its 45 strategic objectives.

In its fiscal year 1999 budget justification, EPA did not show how the funds
requested for each goal and objective would be allocated among its program
offices or components. To be able to compare EPA's requested fiscal year
1999 funds for Science and Technology to the previous fiscal year's enacted
funds, EPA would have had to maintain financial records in two different
formats--by program components and by strategic goals and objectives--and to
develop crosswalks to link information between the two. EPA maintained these
two formats for some of the Science and Technology funds but not for others.
We previously reported how these funds would be allocated for fiscal year
1998 for comparison with fiscal year 1999. Guidance from the Office of
Management and Budget (OMB) does not require agencies to develop or provide
crosswalks in their justifications when a budget format changes. However,
OMB examiners or congressional committee staffs may request crosswalks
during their analyses of a budget request.

EPA did maintain, as planned, the strategic goals and objectives format for
its fiscal year 2000 budget justification. However, for the objectives that
contain Science and Technology funds, EPA made several changes to its
objectives without explanations or documentation to link the changes to the
fiscal year 1999 budget justification.

These changes included:

   * Reallocating funds from one objective to several other objectives
     without identifying the objectives or amounts. Specifically, EPA did
     not indicate how $86.6 million shown for one objective in fiscal year
     1999 was distributed among specific objectives in the fiscal year 2000
     budget request. At your request, we provided information showing how
     these funds were distributed.

   * Differentiating funds in the Science and Technology account that were
     transferred from the Hazardous Substances Superfund account. In the
     fiscal year 2000 justification, the Science and Technology amounts
     shown as enacted for fiscal year 1999 included $40 million transferred
     from the Hazardous Substances Superfund. In contrast, the requested
     amounts for fiscal year 2000 did not include the transfer from
     Superfund.

   * Changing the number or wording of objectives that contain Science and
     Technology funds. For example, in the fiscal year 1999 budget
     justification, the strategic goal "Better Waste Management, Restoration
     of Contaminated Waste Sites, and Emergency Response" had three
     objectives: (1) Reduce or Control Risks to Human Health, (2) Prevent
     Releases by Proper Facility Management, and (3) Respond to All Known
     Emergencies. The fiscal year 2000 budget justification omitted the
     second and third objectives-for which $8.2 million had been requested
     in fiscal year 1999-and did not indicate where the funds previously
     directed to those objectives appeared.

Changes to Improve Comparability

for Fiscal Year 2000 and 2001

For fiscal year 2000 and 2001, EPA made several changes to improve the
comparability within its budget justification. In both fiscal years, EPA
provided tables for each objective to show how the amounts of funds were
associated with its key programs. EPA first presented the key program
information in the fiscal year 2000 budget justification and generally
augmented this information in its fiscal year 2001 justification. For each
fiscal year, EPA included tables for each objective that detail some of the
requested amounts by key programs. For example, in the fiscal year 2001
justification under the objective "Increase Use of Integrated, Holistic,
Partnership Approaches," EPA indicates that the $17.1 million requested for
the objective is divided among two key programs: the "Innovative Community
Partnership Program" and the "Regional Geographic Program."

EPA also made available backup information to this and other committees
identifying the program offices that would be administering the requested
funds. This backup information shows the program offices that will be
administering the requested funds. EPA also implemented its Planning,
Budgeting, Analysis, and Accountability System, which records budget data by
goals, objectives, subobjectives, program offices, and program components.
With this new system, EPA can provide information showing how the agency's
requested funds would be allocated according to any combination of goals,
objectives, subobjectives, program offices, and program components.

EPA also retained the same strategic goals and objectives in the fiscal year
2001 justification for Science and Technology that were in its fiscal year
2000 justification. The agency has begun to reassess its strategic goals and
objectives, as required every 3 years by the Government Performance and
Results Act. This assessment involves EPA's working with state governments,
tribal organizations, and congressional committees to evaluate its goals and
objectives to determine if any of them should be modified. Upon completion
of this assessment, if any of EPA's goals or objectives change, the agency's
budget justification would need to change correspondingly. Such changes
could require crosswalks and additional information to enable consistent
year-to-year comparisons in annual budget requests.

Aspects That Still Inhibit Comparison

While EPA has taken several steps to improve the clarity of its budget
justifications, our review of the fiscal year 2001 justification identified
three aspects that still inhibit comparison with the budget justifications
of prior years: (1) EPA does not consistently show the funding by key
programs, (2) the justification does not clearly identify funds transferred
from the Superfund account, and (3) the justification does not identify how
certain administrative funds are allocated among goals and objectives.

Inconsistent Identification of Key Program Funding Information by Objectives

The fiscal year 2001 justification is not consistent in the extent to which
the funding shown for key programs is shown for the related strategic
objective. For example, the budget shows a request of $115 million for the
"Research for Ecosystem Assessment and Restoration" objective (under the
"Sound Science" goal), but distribution of these funds among the key
programs only accounts for 45 percent of that amount. In contrast, the $58.3
million budget request for the objective "Research for Human Health Risk
Assessment" (also under the "Sound Science" goal) is fully accounted for in
EPA's crosswalk to its key programs.

An EPA budget official said that the agency had an informal target of
accounting for 75 percent of the objectives' funds in its crosswalk to key
programs. The information that was eventually included for key programs was
a collaborative decision between the individual EPA program office and the
Office of Chief Financial Officer. We noted that for one objective,
"Increase Opportunities for Sector-based Approaches," under the Sound
Science goal, the dollar amounts shown for the key programs exceeded the
objective amount. An EPA budget official said that this was an error that
occurred from the way the information was input to the automated system.

Not Identifying Funds Transferred From Superfund

In the fiscal year 2001 budget justification, the Science and Technology
amounts shown as enacted for fiscal year 2000 include amounts transferred
from the Hazardous Substances Superfund. In contrast, the amounts shown as
requested for fiscal year 2001 do not include the transfer from Superfund.
As a result, amounts enacted for fiscal year 2000 cannot be accurately
compared to the amounts requested for fiscal year 2001. This difference, as
shown in table 1, is evident in the objective, "Reduce or Control Risks to
Human Health," under the goal "Better Waste Management, Restoration of
Contaminated Waste Sites, and Emergency Response."

Table 1: Science and Technology Funds Requested for the "Reduce or Control
Risks to Human Health" Objective

                                   Fiscal year
 Fiscal year 2000   Fiscal year    2001 request
 enacted            2001 request   vs. fiscal
                                   year 2000
                                   enacted
 $49,138,300        $7,516,600     ($41,621,700)

Source: EPA's fiscal year 2001 budget justification.

The $49.1 million shown as enacted for fiscal year 2000 contains a
significant amount of the $38 million transferred from the Superfund
account. This difference affects the budget justification's summary of
Science and Technology Account funds. As shown in table 2, the total amounts
enacted for the Science and Technology Account shown in the fiscal year 2001
budget justification also include amounts transferred from the Hazardous
Substances Superfund while the requested amounts do not.

Table 2: Science and Technology Funds Enacted and Requested

                   Fiscal year    Fiscal year
 Fiscal year 1999  2000           2001
 enacted                          Presidents
                   enacted        budget
 $700,000,000      $680,302,800   $674,347,600

Source: EPA's fiscal year 2001 budget justification.

The enacted amounts for the Science and Technology for fiscal years 1999 and
2000 were $650,000,000 and $645,000,000, respectively, as opposed to the
amounts shown in the budget justification that contain-but do not
identify-the transferred amounts.

Not Fully Identifying Allocated Administrative Costs

A final aspect of the fiscal year 2001 budget justification that impacts its
overall comparability to previous budgets is EPA allocation of certain
administrative costs to various strategic goals and objectives, both in the
amounts shown as enacted for fiscal year 2000 and requested for fiscal year
2001. The amounts allocated to all budget accounts were approximately $377.7
million and $414.1 million, respectively, for fiscal years 2000 and 2001. In
the fiscal year 2000 budget justification, this allocation was not
presented. Further, the amounts shown as enacted for fiscal year 1999 do not
contain any allocation of these administrative costs. Thus, the 1999 amounts
for goals and objectives cannot be accurately compared to the corresponding
goals and objectives for fiscal years 2000 and 2001.

The allocated amounts were for administrative costs such as rent, utilities,
security, human resource operations, and financial management associated
with specific strategic goals and objectives. EPA allocated these costs,
shown in previous years under the agency's goal "Effective Management,"
across all 10 goals. However, the amounts allocated to specific goals and
objectives were not readily identified in the budget justification. Without
a clear indication of the funds allocated to specific goals and objectives,
comparisons are difficult to make for the 3-year period, 1999 through 2001.

- - -

Mr. Chairman, this concludes my prepared statement. I will be pleased to
respond to any questions that you or the members of the Subcommittee may
have.

Contact and Acknowledgments

For additional information, please contact David G. Wood at (202) 512-6111.
Individuals making key contributions to this testimony included Everett O.
Pace and John A. Wanska.

(160519)
  
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