oversight

Federal User Fees: Budgetary Treatment, Status, and Emerging Management Issues

Published by the Government Accountability Office on 1997-12-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Chairman, Committee on
                 the Budget, House of Representatives



December 1997
                 FEDERAL USER FEES
                 Budgetary Treatment,
                 Status, and Emerging
                 Management Issues




GAO/AIMD-98-11
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Accounting and Information
      Management Division

      B-275109

      December 19, 1997

      The Honorable John R. Kasich
      Chairman
      Committee on the Budget
      House of Representatives

      Dear Mr. Chairman:

      Federal user fees1—such as agricultural commodity grading fees,
      trademark registration fees, and park entrance fees—provided the United
      States government with $196.4 billion in revenues in fiscal year 1996.2 This
      total amounted to 12 percent of all federal revenues collected in fiscal year
      1996 and was more than twice the amount collected from excise taxes,
      estate and gift taxes, and customs duties combined. User fee collections
      have grown steadily since the early 1980s and have played several roles in
      the federal budget. They have financed new spending by replacing or
      supplementing agency appropriations capped by deficit reduction
      agreements. They also have fostered more business-like practices in the
      government by making some agencies3 wholly reliant on fees to finance
      their operations. In other cases, user fees have provided revenues for
      deficit reduction.

      If user fee collections continue to grow, how the Congress oversees and
      federal agencies manage these fees will continue to increase in

      1
       The Office of Management and Budget (OMB) defines user fees as “a general term referring to fees
      charged to users directly availing themselves of, or subject to, a government service, program, or
      activity, in order to cover the government’s costs.” OMB’s October revisions to OMB Circular A-11 for
      the fiscal year 1999 budget expanded and clarified the term user fee. The revised definition excludes
      fees deposited in the general fund of the Treasury. OMB’s revised definition is comparable to how fees
      are defined in this report, except for voluntary payments to social insurance programs, which OMB
      classified as user fees and we did not. The Federal Accounting Standards Advisory Board (FASAB)
      uses the term “exchange revenue” which it defines as “inflows of resources to a Government entity
      that the entity has earned. They arise from exchange transactions, which occur when each party to the
      transaction sacrifices value and receives value in return.” Both OMB and FASAB include regulatory
      fees in their definitions. Exchange revenue is reported on an accrual basis. All amounts included in
      this report are shown on a budgetary or cash basis. See footnote 2 for a fuller explanation of OMB’s
      definition of offseting collections from the public.
      2
       Total federal user fees is the amount shown in the Budget of the United States Government, Fiscal
      Year 1998—Analytical Perspectives for offsetting collections from the public. OMB included the
      following in this total: medicare premiums, Outer Continental Shelf payments, naval petroleum reserve
      lease receipts, spectrum auction proceeds, sale of property and services, interest income, deposit
      insurance funds, loan guaranty and other insurance premiums, loan repayments, both distributed and
      undistributed offsetting receipts, and all offsetting collections to appropriation or fund accounts.
      3
       As used in this report, the term agency refers to the grouping of activities shown as bureaus or listed
      as other independent agencies in the President’s budget request to the Congress. See appendix I, Scope
      and Methodology, for more discussion on the use of this term.



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                   importance. You asked us to identify agencies that rely on fees for a
                   significant portion of their budget. We identified 27 agencies where fees
                   from the public represented 20 percent or more of their funding averaged
                   over fiscal years 1991 through 1996. For these agencies, you asked us to
                   (1) identify changes in agency reliance on user fees since passage of the
                   Budget Enforcement Act4 (BEA) of 1990 and (2) describe the ways user fees
                   are structured in the budget, including what budgetary controls govern the
                   availability and use of these fees and how they are treated under BEA.
                   Based on these findings, you also asked us to identify issues for
                   consideration in the future design and management of user fees.


                   Since the 1990 enactment of BEA, the 27 agencies in our review have
Results in Brief   increased or maintained their reliance on user fees as a source of funding.
                   Several of the regulatory agencies we surveyed were given authority to
                   substantially increase user fee collections and to use these fees for
                   program purposes. For example, in fiscal year 1991, the Federal
                   Communications Commission (FCC) received less than 1 percent of its new
                   funding from user fees. However, by fiscal year 1996 user fees made up
                   73 percent of the agency’s operating budget. For those agencies that relied
                   at least in part on general fund appropriations in fiscal year 1991, new or
                   existing fee authority was used to maintain rather than supplement agency
                   funding. Only the Immigration and Naturalization Service (INS) received
                   increases in general fund appropriations and in fee collections, some of
                   which was the result of new authority.

                   Although federal agencies often collect user fees for similar purposes, not
                   all user fees are treated alike in the federal budget. Some user charges
                   must be deposited in the general fund of the U.S. Treasury, while others
                   are required by law to provide funding for specific purposes. Yet, even
                   when fees are dedicated to the agency or activities that generated the fee,
                   there are differences in when and how the fees are made available to the
                   agency and in how much flexibility agencies have in using the fee revenue.
                   The attempt to distinguish between fees collected for the government’s
                   business-type activities from those derived from the government’s power
                   to tax was always problematic. How fees are categorized has become


                   4
                    BEA divides federal spending into (1) discretionary spending controlled through annual appropriation
                   acts, which is further subdivided and capped for fiscal years 1998 through 2000 and (2) direct, or
                   mandatory, spending controlled by permanent law. BEA constrains discretionary spending through
                   fixed dollar amounts, called spending limits or caps, on total budget authority and outlays for each
                   fiscal year through 2002. Mandatory spending and receipts are constrained through a pay-as-you-go
                   (PAYGO) requirement that the cumulative effects of legislation in this area must not increase the
                   deficit. See the glossary for more information on BEA. Receipts are normally scored as PAYGO under
                   BEA requirements unless the law directs that they be used to offset discretionary spending.



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                 increasingly important by the fact that under BEA scoring rules, some fees
                 are netted against their accounts’ budget authority and outlay spending. If
                 offset, growth in new and existing fees does not add to the amount of
                 spending that is scored under BEA discretionary spending limits, but frees
                 up discretionary resources for other purposes. Most new user fees enacted
                 between fiscal years 1991 and 1996 were authorized to offset discretionary
                 spending.

                 The disparate treatment of fees—particularly those associated with
                 discretionary spending—raises issues for congressional control, agency
                 management, and competition for limited federal resources. In shifting to a
                 more fee-reliant government, inconsistencies in budgetary treatment of
                 fees with similar characteristics are likely to increase. Unlike agencies that
                 rely primarily on appropriated funds from general revenues, both the
                 Congress and fee-reliant agencies face additional policy and management
                 issues such as how to (1) meet the needs for accountability to both the
                 Congress and fee payers, including agreement on priorities and the
                 appropriate assessment of fees and (2) define the relationship between
                 fee-financed and appropriated activities, particularly if resource disparities
                 between the two groups increase.


                 Given the scope and variety of federal activities, the federal budget is
Background       inevitably complex. This is particularly seen in the federal budgetary
                 treatment of receipts. The 1967 President’s Commission on Budget
                 Concepts recommended a dual system of accounting for federal receipts.
                 The Commission recommended that receipts from activities which were
                 essentially governmental in nature, including regulation and general
                 taxation, be reported as receipts, and that receipts from business-type
                 activities “offset to the expenditures to which they relate.” The
                 Commission recommended this system so that budget totals could present
                 a clear picture of the extent of governmental activity.

                 In practice, however, the distinction was never sharp as evidenced by the
                 fact that revenue from business-type transactions, termed “offsetting
                 collections,” are not made available to agencies in the same way.

             •   Collections credited to appropriation or fund accounts go directly to
                 expenditure accounts. Here, legislation requires that collections be
                 credited to an appropriation or fund account and offset spending in the
                 account without further legislative action. Collections are typically
                 credited to revolving funds when they are the main source of financing



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                  and are permanently appropriated to fund business-like activities, such as
                  the Postal Service. However, offsetting collections to appropriation or
                  fund accounts are not limited to business-like or self-supporting activities.5

              •   Offsetting receipts are required by law to be deposited into receipt
                  accounts. Additional congressional action is necessary to move these into,
                  most often, special or trust fund expenditure accounts. Offsetting receipts
                  offset budget authority and outlays, but at a level other than at the
                  expenditure account. The U.S. Fish and Wildlife Service’s (USFWS)
                  migratory bird conservation activities are funded through appropriated
                  offsetting receipts.

                  Whatever the budget accounting, the Congress grants agencies authority to
                  spend offsetting collections either through permanent or current
                  appropriations. For example, the Congress permits some agencies to
                  obligate fees credited directly to appropriation or fund accounts without
                  further congressional action. In this report, we refer to this type of
                  permanent authority as spending authority. In other cases, the Congress
                  requires some agencies to obtain budget authority through current
                  appropriations before spending offsetting receipts. In this report, we refer
                  to this budget authority as an appropriation.


                  To better understand differences in how offsetting collections for
Scope and         business-type activities are treated in the budget process and how they
Methodology       have fared recently, we created a universe of 27 agencies to review that
                  rely on fees as a source of funds. We defined fee-reliant agencies using the
                  following criteria (1) fees from the public must be used to support the
                  agency that generated the fee, (2) services, goods, or benefits must be
                  provided in exchange for fees and the exchange should be closely linked
                  in time, and (3) new fees from the public must represent 20 percent or
                  more of the agency’s gross outlays less offsetting collections from federal
                  sources averaged over fiscal years 1991 through 1996.

                  To identify changes in agency reliance on user fees since the passage of
                  BEA, we used OMB actual year data to construct a series of analyses that
                  described trends in budget authority and collections for fee-reliant
                  agencies. Data used in this report cover fiscal years 1991 through 1996.

                  5
                   There are six types of federal budget accounts—general fund, special fund, nonrevolving trust fund,
                  public enterprise revolving fund, revolving trust fund, and intragovernmental fund—and all can receive
                  user fees from the public. All budget accounts are classified as either expenditure or receipt accounts.
                  Receipt accounts record income and are credited with either governmental or offsetting receipts.
                  Expenditure accounts may receive appropriations, can be credited directly with collections, and
                  record outlays. See the glossary for a further description of these accounts.



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                        OMB codes also allowed us to track changes in discretionary versus
                        mandatory classifications of agency funding and shifts from current to
                        permanent budget or spending authority.

                        To review the classification and treatment of fees in budget accounts, we
                        used OMB codes created for the Administration’s annual budget request.
                        These codes allowed us to identify (1) fees from the public and their
                        classification as an offsetting receipt or an offsetting collection credited to
                        an appropriation or fund account, (2) the type of expenditure account the
                        fee is credited to, and (3) the fee’s availability for obligation in a given
                        fiscal year.

                        To identify issues for consideration in the future design and management
                        of such fees, we conducted interviews with budget officials at CBO, OMB
                        and 6 of the 27 agencies we identified as fee-reliant.

                        This report discusses user fees in a budget context and not from a
                        financial management perspective. Issues related to reporting of fees in
                        financial statements or compliance with standards, such as OMB Circular
                        A-25, User Charges and the Statements of Federal Financial Accounting
                        Concepts and Standards No. 4, Managerial Cost Accounting Standards, are
                        not addressed in this report.

                        Details of our scope and methodology are contained in appendix I and
                        related GAO products are listed at the end of the report.

                        Our work was performed in Washington, D.C. between September 1996
                        and September 1997 in accordance with generally accepted government
                        auditing standards. We requested comments on a draft of this report from
                        the Director of the Office of Management and Budget or his designee. On
                        December 12, 1997, the Deputy Associate Director for Budget Analysis and
                        Systems in the Budget Review Division provided us with comments, which
                        are discussed in the “Agency Comments and Our Evaluation” section.


                        The agencies we reviewed increased the overall amount of fees they
Agencies Increasingly   collected and these fees constituted a larger proportion of their budgets in
Rely on User Fees       fiscal year 1996 than in fiscal year 1991. Fee collections among the 27
                        agencies we surveyed totaled $74.9 billion in fiscal year 1996. As noted
                        earlier, federal user fees provided the United States government with




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                            $196.4 billion in revenues in fiscal year 1996.6 Of this total, Congress has
                            earmarked $154.3 billion to the agencies that generated the fees, while
                            $42.1 billion was not earmarked to specific agencies but was credited to
                            the general fund of the Treasury. Fees collected by the 27 agencies in our
                            review represented 49 percent of the $154.3 billion in earmarked user fees
                            from the public in fiscal year 1996.

                            In fiscal year 1991, these 27 agencies collected $58 billion from the public
                            in user fees to support their activities. By fiscal year 1996, this amount had
                            grown to $74.9 billion. Although these figures are dominated by the Postal
                            Service, which accounted for $13 billion of the $17 billion increase,
                            collections increased 27 percent in real terms between these years.7
                            Between 1991 and 1996, all agencies we studied either increased or
                            roughly maintained the percent of their budgets funded though user fees.
                            During this time period, the Congress substantially increased the
                            fee-reliance of some regulatory agencies, such as the Federal Trade
                            Commission, the Federal Communications Commission, and the Securities
                            and Exchange Commission.

                            Additional user fee collections appear to have replaced appropriated funds
                            or to have reduced the size of decreases in appropriated funds.
                            Replacement of general fund appropriations can also be seen in that most
                            increases in user fees enacted between fiscal years 1991 and 1996 were
                            designated as discretionary spending for BEA purposes. The classification
                            of these fees and increased use of fee collections to offset discretionary
                            spending has lessened the impact of BEA spending limits on agencies that
                            collect fees.


Congress Has Increased      As shown in table 1, 8 out of 27 agencies in our survey showed increased
Several Federal Agencies’   reliance on user fees from fiscal year 1991 to fiscal year 1996. Of the 27
Reliance on User Fees       agencies in our review, 15 were fully funded, or nearly so, by fees from the
                            public in fiscal year 1991 and remained so through fiscal year 1996
                            according to budgetary data. Of the remaining 12 agencies, 6 substantially
                            increased their reliance on fees from fiscal years 1991 to 1996. Congress
                            increased fee reliance of two additional agencies, though not to the extent
                            of the agencies noted above. Four agencies saw the percentage of their
                            budgets funded through user fees remain stable between fiscal year 1991
                            and 1996.

                            6
                             See footnote 2 for revenue sources included in OMB’s definition of offsetting collections from the
                            public.
                            7
                             Adjusted based on 1996 dollars.



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Table 1: Change in Fee Reliance
Among Fee-Reliant Agencies, Fiscal
Years 1991 to 1996                   Agencies Nearly or Fully Funded By Fees (15)
                                     — Comptroller of the Currency                       — Nuclear Regulatory Commission
                                     — Other Department of Defense Trust Funds           — Office of Thrift Supervision
                                     — Farm Credit Administration                        — Panama Canal Commission
                                     — Federal Housing Finance Board                     — Patent and Trademark Office
                                     — Federal Retirement Thrift Investment              — Postal Service
                                         Board                                           — Power Marketing Administrations
                                     — National Credit Union Administration              — Tennessee Valley Authoritya
                                     — National Technical Information Service            — U.S. Enrichment Corporation
                                     Agencies That Increased Fee Reliance Substantially (6)
                                     — Animal and Plant Health Inspection                — Federal Trade Commission Service
                                         Service                                         — Securities and Exchange Commission
                                     — Bureau of Reclamation                             — U.S. Customs Service
                                     — Federal Communications Commission
                                     Agencies That Increased Fee Reliance Slightly (2)
                                     — Immigration and Naturalization                    — U.S. Mint Service
                                     Agencies Where Fee Reliance Remained Stable (4)
                                     — Agricultural Marketing Service                    — Minerals Management Service
                                     — Grain Inspection, Packers and                     — U.S. Fish and Wildlife Service
                                         Stockyards Administration
                                     Note: Agencies we categorized as nearly or fully funded by fees received, on average, over
                                     95 percent of their funding from fees from fiscal years 1991 through 1996. Agencies that
                                     increased fee reliance substantially increased fee reliance between 21 percent and 70 percent
                                     between these fiscal years. Agencies that increased fee reliance slightly increased fee reliance
                                     between 8 percent and 10 percent. Agencies we categorized as where fee reliance remained
                                     stable either increased fee reliance by less than 3 percent or decreased fee reliance by less than
                                     3 percent.
                                     a
                                      We classified the Tennessee Valley Authority (TVA) as nearly or fully funded by fees because it
                                     was funded mainly through revenues from current power operations and borrowing against future
                                     power revenues.



                                     Many of the 15 agencies were fully funded, or nearly so, by fees from the
                                     public from fiscal years 1991 to 1996. The Congress authorized substantial
                                     fee increases for two of these agencies, the Patent and Trademark Office
                                     (PTO) and the Nuclear Regulatory Commission (NRC), in the Omnibus
                                     Budget and Reconciliation Act of 1990 (OBRA 90). While many of these 15
                                     agencies are primarily regulatory in nature, they also include service
                                     agencies, such as the Department of Commerce’s National Technical
                                     Information Service (NTIS) and the Postal Service. Several of these 15
                                     agencies are involved in banking or credit regulation, such as the Office of
                                     Thrift Supervision and the National Credit Union Administration, among
                                     others. These banking and credit regulatory agencies are usually
                                     supported through examination or assessment fees on their members.




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    Six agencies in our survey substantially increased their reliance on fees
    from fiscal years 1991 to 1996. Again, these agencies are primarily
    regulatory. The increased reliance on user charges among these agencies
    resulted mainly from legislative changes requiring increased collections
    for activities such as licenses, filings, and applications.

•   In fiscal year 1991, FCC received less than 1 percent of its new budget
    authority from user fees. However, the Omnibus Budget and
    Reconciliation Act of 1993 (OBRA 93) increased the fees that FCC charges to
    cover the cost of the application and licensing of radio stations,
    telecommunications equipment, and radio operators, so that by fiscal year
    1996 user fees made up 71 percent of the agency’s new budget authority.8
•   The fiscal year 1993 Commerce, Justice, State and the Judiciary
    Appropriation Act increased filing fees charged jointly by the Department
    of Justice and the Federal Trade Commission (FTC) to review proposed
    mergers. These fees had originally gone into effect in fiscal year 1990 and
    covered all costs associated with reviewing proposed mergers that might
    reduce competition. In fiscal year 1991, FTC received 18 percent of its new
    budget authority from user charges. With the 1993 fee increases, this grew
    to 69 percent by fiscal year 1996.
•   In fiscal year 1991, the Securities and Exchange Commission (SEC)
    received 19 percent of its new budget authority from user charges.
    Beginning that year, user fees became an increasingly important
    component of SEC appropriations so that by fiscal year 1996 these fees
    made up 70 percent of the agency’s new budget authority.
•   The U.S. Customs Service doubled its reliance on fees, as new budget
    authority from fees grew from 41 percent in fiscal year 1991 to 71 percent
    in fiscal year 1996. This increase was largely a function of the North
    American Free Trade Agreement Implementation Act of 1993, which
    extended the collection of Customs Service user fees through
    September 2003, increased air and sea passenger collections, and lifted air
    and sea passenger country exemptions through September 1997.
•   In fiscal year 1991, the Animal and Plant Health Inspection Service (APHIS)
    received less than 9 percent of its new budgetary authority from user fees.
    APHIS’ revenues increased primarily because four programs previously
    funded with appropriations were converted to user fee funding between
    fiscal years 1991 and 1993. As a result, by fiscal year 1996 APHIS received
    31 percent of new budget authority from user fees.
•   In addition, the Bureau of Reclamation increased its reliance on user fees
    between fiscal years 1991 and 1996 due to, among other activities,

    8
      OBRA 93 also gave FCC authority to auction licenses to use parts of the radio spectrum. We have not
    included proceeds from the spectrum auctions in our analysis since it is unlikely that the revenue from
    these asset sales will become available to FCC.



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                         increased offsetting receipts appropriated to carry out provisions of the
                         Central Valley Project Improvement Act.

                         The Congress increased the reliance of the U.S. Mint and INS on user fees,
                         though not to the extent of the agencies noted above. Although the U.S.
                         Mint’s collections increased, the most significant change was structural. In
                         fiscal year 1996, the U.S. Mint was restructured to operate with a single
                         revolving fund. Although INS fee collections from the public more than
                         doubled between fiscal years 1991 and 1996, from $411 million to
                         $922 million, fees as a portion of INS’s new budget authority increased only
                         slightly due to large increases in general fund appropriations.

                         With four agencies—the U.S. Fish and Wildlife Service, Minerals
                         Management Service, Agricultural Marketing Service (AMS), the Grain
                         Inspection, Packers and Stockyards Administration (GIPSA)—the
                         percentage of their budgets funded through user fees remained stable
                         between fiscal years 1991 and 1996.


User Fees Increasingly   Most new user fees enacted between fiscal years 1991 and 1996 were
Offset Discretionary     designated as offsets to discretionary spending for BEA purposes. In fiscal
Spending                 year 1991, 6 of the 27 agencies, the Postal Service, APHIS, SEC, NRC, INS and
                         FCC, had 90 percent or more of their total spending classified as
                         discretionary spending. By fiscal year 1996, four additional agencies, PTO,
                         NTIS, FTC, and the Panama Canal Commission, had more than 90 percent of
                         their total spending classified as discretionary spending. Spending for two
                         of these additional agencies, NTIS and the Panama Canal Commission, went
                         from 100 percent mandatory spending in fiscal year 1991 to 100 percent
                         discretionary spending by fiscal year 1996. For NTIS, this occurred when its
                         operations were converted from a trust fund to a self-supporting revolving
                         fund. For the Panama Canal Commission this change is attributable to the
                         decision made by OMB in fiscal year 1993 not to include fees that offset
                         spending in discretionary accounts in the PAYGO baseline.9

                         The Bureau of Reclamation also had a significant increase in the percent
                         of total spending classified as discretionary. In fiscal year 1991, 60 percent
                         of Reclamation’s total spending was classified as discretionary spending,
                         but by fiscal year 1996 this percentage had increased to 86 percent. Of the
                         27 agencies in our survey, 14 saw an increase in the percent of agency
                         spending classified as discretionary between fiscal years 1991 and 1996, 5
                         agencies saw a decrease, while 8 agencies showed no change. See table

                         9
                          See appendix III for a discussion of this OMB decision.



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                       III.1 in appendix III for detailed information on the BEA classifications for
                       each agency in our survey.


Increased User Fee     Table 2 compares growth from current appropriations10 versus growth
Collections Replaced   from all sources, including fees from the public, from fiscal years 1991
General Fund           through 1996.11 See table IV.1 in appendix IV for detailed information on
                       current and permanent appropriations for the 27 agencies in our survey.
Appropriations




                       10
                        Current appropriations are provided by annual appropriation acts and are scored against BEA
                       discretionary spending limit totals. Current appropriations include general, special, and trust fund
                       appropriations.
                       11
                        Nine agencies—the Federal Retirement Thrift Investment Board, Other DOD Trust Funds, Farm
                       Credit Administration, Comptroller of the Currency, Office of Thrift Supervision, Federal Housing
                       Finance Board, National Credit Union Administration, Panama Canal Commission, and U.S.
                       Enrichment Corporation—were excluded from this table because they did not receive current
                       appropriations from fiscal years 1991 to 1996. The National Technical Information Service was also
                       excluded because it received only small current appropriations in fiscal years 1993 and 1995.



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Table 2: Fee-Reliant Agency Growth in
Current Appropriations Versus All                                                                Compound growth             Fiscal Years
Sources From Fiscal Years 1991                                                                        ratea                   1991-1996
Through 1996                                                                                                   Current
                                                                                                        appropriations         All sourcesb
                                        Agency                                                               (percent)             (percent)
                                        Agricultural Marketing Service                                             –1.37                 1.32
                                        Animal and Plant Health Inspection Service                                   1.86                1.69
                                        Grain Inspection, Packers and Stockyards                                     2.44                1.51
                                        Administration
                                        Federal Communications Commission                                         –12.77                11.29
                                        Federal Trade Commission                                                  –13.18                 5.56
                                        Immigration and Naturalization Service                                     14.13                15.42
                                        Patent and Trademark Office                                                –2.06                12.64
                                        Securities and Exchange Commission                                         –8.33                12.00
                                        Nuclear Regulatory Commission                                                0.30                0.40
                                        Power Marketing Administrations                                            –0.45                 0.21
                                        Tennessee Valley Authority                                                 –4.19                 1.05
                                        Bureau of Reclamation                                                      –3.61                –1.47
                                        Minerals Management Service                                                –0.83                –0.50
                                        U.S. Fish and Wildlife Service                                             –1.12                 2.98
                                        U.S. Customs Service                                                         2.46                4.19
                                        U.S. Mint                                                                 –100.0                26.13
                                        Postal Service                                                            –24.90                 4.55
                                        Note: When amounts are shown in constant dollars, which excludes inflation, all of the fee-reliant
                                        agencies show negative growth in current appropriations except for INS.
                                        a
                                         Compound growth rate means the average annual growth rate from fiscal years 1991 through
                                        1996.
                                        b
                                         Includes federal and nonfederal offsetting collections and funding from permanent and current
                                        budget authority.



                                        Twelve fee-reliant agencies that received current appropriations, either
                                        from general revenue or special fund appropriations, showed negative
                                        growth in appropriated funds. However, once user fees and other
                                        permanent budget authority were included, 15 of the 17 agencies shown in
                                        table 2 either increased their budgets or had decreases less than the
                                        decrease in current appropriations. For example, current appropriations
                                        for SEC declined by 8.3 percent between fiscal years 1991 and 1996.
                                        However, after fees were included in SEC’s budget totals, the agency’s
                                        budget grew 12 percent over this period. Current appropriations for the
                                        Bureau of Reclamation declined by 3.6 percent between fiscal years 1991



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                       and 1996. However, user fee revenues helped reduce the effect of this
                       decline on the Bureau’s budget so that it experienced only about a
                       1.5 percent reduction during this period.


                       The 27 fee-reliant agencies in our review varied in how their user fees
Budgetary Treatment    were classified, what kind of account they were deposited into, the
Among Agencies That    legislative controls on the amount or use of these fees, and how they were
Collect User Fees Is   treated under BEA. As a result, user fees for similar programs were often
                       treated quite differently in the federal budget process. For example, some
Inconsistent           agricultural inspection fees were netted against their accounts’ budget
                       authority and outlays, which reduced spending counted against BEA
                       discretionary spending limits. Other agricultural fees were appropriated as
                       new budget authority and were counted as discretionary spending. While
                       these fees offset spending, they do so at the department and subfunction
                       levels. In this case, the offset can be used to provide room under the
                       spending caps elsewhere and not necessarily for the program generating
                       the fee.

                       Table 3 lists these 27 agencies and identifies whether, in fiscal year 1996,
                       they received user fees from the public primarily as collections credited to
                       an appropriation or fund accounts or as offsetting receipts.




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Table 3: Twenty-Seven Fee-Reliant
Agencies and Their Fee Classifications
                                         Agencies That Primarily Had Collections Credited to Appropriation or
                                         Fund Accounts (18)
                                         — Comptroller of the Currency                         — Office of Thrift Supervision
                                         — Other Department of Defense Trust Funds             — Panama Canal Commission
                                         — Farm Credit Administration                          — Patent and Trademark Office
                                         — Federal Communications Commission                   — Postal Service
                                         — Federal Housing Finance Board                       — Power Marketing Administrations
                                         — Federal Trade Commission                            — Securities and Exchange Commission
                                         — Grain Inspection, Packers and                       — Tennessee Valley Authority
                                             Stockyards Administration                         — U.S. Enrichment Corporation
                                         — National Credit Union Administration                — U.S. Mint
                                         — National Technical Information
                                             Service
                                         Agencies That Primarily Received Offsetting Receipts (8)
                                         — Animal and Plant Health Inspection                  — Minerals Management Service
                                             Service                                           — Nuclear Regulatory Commission
                                         — Bureau of Reclamation                               — U.S. Customs Service
                                         — Federal Retirement Thrift Investment                — U.S. Fish and Wildlife Service
                                             Board
                                         — Immigration and Naturalization Service
                                         Agencies That Received a Mix of Offsetting Collections (1)
                                         — Agricultural Marketing Service
                                         Note: Agencies that we categorized as primarily having collections credited to appropriation or
                                         fund accounts received at least 75 percent of their fees from the public in this manner in fiscal
                                         year 1996. Agencies we categorized as primarily receiving offsetting receipts received at least
                                         75 percent of their fees in this manner in fiscal year 1996. The one agency we categorized as
                                         receiving a mix of offsetting collections received less than 75 percent of its offsetting collections
                                         in the form of collections credited to appropriation or fund accounts or as offsetting receipts in
                                         fiscal year 1996.



                                         As shown in table 3, 18 of the 27 agencies we identified as fee-reliant
                                         received fees from the public primarily as collections credited to
                                         appropriation or fund accounts. Eight other agencies received fees mainly
                                         as offsetting receipts, with two of those being authorized to use fees
                                         received during the year to reduce their appropriations. In practice, this
                                         treatment is similar to those agencies that have collections credited to
                                         their appropriation or fund accounts. One agency collected fees that were
                                         not predominantly one type or the other.

                                         The following sections provide more detail on the different budgetary
                                         treatment of these user fees. See appendix II for a detailed listing of
                                         budgetary characteristics for each of the 27 agencies in our review.




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                          B-275109




Budgetary Treatment of    As shown in table 3, we identified 18 fee-reliant agencies that received
Collections Credited to   user fees as collections credited to appropriation or fund accounts. This
Appropriation or Fund     treatment was typical for agencies that conduct business-type operations
                          and are largely self-supporting through the exchange of fees for goods or
Accounts                  services. Most of these agencies are authorized to use these collections
                          without further congressional action. In some cases, this reflects the belief
                          that an agency—such as the Postal Service—might not be able to respond
                          quickly to its customers if it were required to go through the
                          appropriations process. In other cases, the amount collected is too
                          insignificant or unpredictable to be separately appropriated and, instead,
                          is included in a general operating account. Of these 18 agencies, 12 were
                          funded entirely, or mostly so, through public enterprise funds. Fees for
                          two agencies, the Comptroller of the Currency and commissary sales in
                          the DOD Trust Funds, were deposited in trust revolving funds.

                          Collections for four agencies—FCC, the Federal Trade Commission (FTC),
                          PTO, and SEC—were deposited in general fund expenditure accounts.
                          Collections credited to a general fund expenditure account may be
                          broad-based and cover the agency’s operations as well as specific fee
                          activities. Where the definition of costs charged to users was broadened to
                          include indirect costs, this can mean that the agency is entirely supported
                          by fees. For instance, PTO is fully funded through fees. Of PTO’s $631 million
                          in new budget authority for fiscal year 1996, $82 million was appropriated
                          from a special fund and $549 million from spending authority from
                          offsetting collections. In other cases, fees may supplement an agency’s
                          general fund appropriation. In fiscal year 1996, the Southwestern Power
                          Administration’s operations and maintenance account was funded
                          primarily through $30 million in current appropriations from general
                          revenues, but received an additional $3 million in collections.

                          Although there are exceptions, figure 1 outlines the ways collections are
                          generally credited to appropriation or fund accounts in the budget
                          process, differences in BEA spending categories among these collections,
                          and subsequent BEA scoring treatment. As shown in figure 1, collections
                          credited to appropriation or fund accounts may either (1) offset
                          discretionary spending at the account level or (2) be treated as negative
                          direct spending, which has no effect on discretionary spending limits. As
                          noted above, collections credited to discretionary appropriation or fund
                          accounts are netted against account budget authority and outlays. For
                          example, of the $100 million in new budget authority available to FTC in
                          fiscal year 1996, only $35 million in its Salaries and Expenses account




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                                            B-275109




                                            counted towards BEA budget authority limits. The remaining $65 million
                                            from offsetting collections was not scored.



Figure 1: Collections Credited to Appropriation or Fund Accounts in the Budget Process
                                   Timing of
           Offsetting              legislative                  BEA spending                BEA scoring
           collection              action                       category                    treatment




                                                                                                Offsets
                                                                Discretionary                account level
                                                                                               spending

         Collections
         credited to                Permanent
     appropriation or fund
          accounts


                                                                                              Treated as
                                                                 Mandatory                  negative direct
                                                                                               spending




Timing of Legislative Action                In a number of instances, the Congress has authorized agencies to obligate
and Other Controls                          collections for program purposes without further congressional action, a
                                            form of permanent budget authority. Although fees credited directly to
                                            revolving funds are by definition available for the agency’s use, this does
                                            not make program size solely a function of fee collections. The Congress
                                            can limit the amount available to an agency, typically through provisions
                                            in appropriation acts. Nearly a third of the agencies in our study with one
                                            or more revolving funds had a limitation on obligations between fiscal
                                            years 1991 and 1996. An agency’s use of revolving funds may also be




                                            Page 15                                       GAO/AIMD-98-11 Federal User Fees
                         B-275109




                         limited through the apportionment process, which limits the amount of
                         obligations an agency or program can incur within a particular time
                         period, program, activity, or project.


Budgetary Treatment of   As shown in table 3, eight of the agencies we identified as fee-reliant
Offsetting Receipts      received most of their fees from the public through offsetting receipts.
                         Based on the agencies in our review, most that receive all or most of their
                         funding from offsetting receipts are not entirely fee-reliant. Offsetting
                         receipts are generally appropriated to a special, nonrevolving trust or
                         general fund account to support the agency or activity that generated the
                         fee. Agencies derive these fees from many of the same types of
                         transactions as those credited as collections to appropriation or fund
                         accounts.

                         Although there are exceptions, figure 2 outlines the ways offsetting
                         receipts are generally treated in the budget process, differences in BEA
                         spending categories among these receipts, and BEA scoring treatments. As
                         is the case for collections credited to appropriation or fund accounts,
                         offsetting receipts also may be classified as either discretionary or
                         mandatory spending under BEA. If offsetting receipts are classified as
                         discretionary, they may (1) offset discretionary spending at the agency
                         (executive department or independent agency) and subfunction level or
                         (2) be used, in the case of some regulatory agencies, to reimburse general
                         or special fund appropriations similar to collections credited to
                         appropriation or fund accounts. If offsetting receipts are classified as
                         mandatory spending, they are treated as negative direct spending and used
                         to meet PAYGO requirements on the mandatory side of the budget.

                         In those instances where offsetting receipts offset discretionary spending
                         at the agency or subfunction level, they provide room under the caps for
                         additional spending, but not necessarily for the account or agency that
                         generated the fees. For example, fees generated by the Animal and Plant
                         Health Inspection Service (APHIS), are treated as offsets to spending for the
                         Department of Agriculture as a whole.




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                                             B-275109




Figure 2: Offsetting Receipts in the Budget Process
                                    Timing of
           Offsetting               legislative                         BEA spending                           BEA scoring
           collection               action                              category                               treatment




                                                                                                               Offsets agency
                                      Current                            Discretionary                        and subfunction
                                                                                                               level spending



      Offsetting
       receipts



                                                                                                                  Treated as
                                    Permanent                            Mandatory                              negative direct
                                                                                                                   spending




Timing of Legislative Action                 The Congress may—as is true for funding from general revenues—make
and Other Controls                           offsetting receipts available in a permanent appropriation. Unlike current
                                             authority in which the Congress annually sets the program level which can
                                             not be exceeded without further congressional action, permanent
                                             authority is available in the first year as well as in succeeding years.

                                             The Congress can also decide to cap the amount of fee receipts available
                                             in a given fiscal year by making the budget authority definite—that is, for a
                                             fixed amount. If the amount of fees collected exceeds the amount
                                             appropriated, then the excess fees are held in special or trust receipt
                                             accounts to be made available in subsequent years or deposited in the
                                             general fund of the Treasury.12 Typically, fees that are permanently

                                             12
                                              Seven of the 11 agencies that received some offsetting receipts had appropriations for a fixed
                                             amount.



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                         B-275109




                         appropriated are not for a fixed or definite amount; instead, the program
                         retains for obligation whatever fees it generates. In contrast, fees that are
                         currently appropriated are more likely to be for a specific amount.

                         Increasingly, fees generated by some regulatory agencies are used to
                         reimburse or reduce amounts appropriated to an agency. Agencies with
                         this authority fund their activities either through (1) general or special
                         fund appropriations, which their legal authority directs be reduced as fees
                         are collected or (2) fees appropriated to special fund expenditure
                         accounts that are then used to offset spending in another account, such as
                         the agency’s main operating account.13 Two agencies in our survey—NRC
                         and INS—are required by law to reimburse their appropriations with
                         receipts collected during the fiscal year. This budgetary treatment is
                         similar to the treatment of user fees collected by FTC and FCC, as both
                         agencies’ appropriations are reduced dollar for dollar as collections are
                         credited to their appropriation accounts.

                         Many of these regulatory receipts, including some of those for NRC, were
                         previously classified as governmental and deposited in the general fund of
                         the Treasury. However, in OBRA 90, the Congress authorized NRC to charge
                         fees to its licensees to cover all its appropriation except for that amount
                         appropriated from the Nuclear Waste Fund. As a result, nearly all of NRC’s
                         budget is financed by fees. For instance, in fiscal year 1996, NRC was
                         appropriated $472.6 million which was reduced during the fiscal year by
                         $461.6 million in offsetting collections. The result was a net fiscal year
                         1996 appropriation of $11 million. Although NRC had budget authority equal
                         to $472.6 million only the $11 million was subject to BEA discretionary
                         spending limits.


Budgetary Treatment of   Although fees are treated differently for similar activities, increasingly
Similar User Fees        authority is being provided to allow fees to offset discretionary spending
                         no matter what the source or purpose of the fee. To illustrate, table 4
                         shows five accounts that receive fees from the public for their inspection
                         services. Although there are no economic differences in these
                         transactions, there were significant differences in budgetary treatment.

                         13
                           These fees usually offset spending in the generating agency at the account level up to a specified
                         amount. Any fees collected in excess of this amount may be made available either immediately, at a
                         specified time in the future, through the reprogramming process, if applicable, or in a subsequent
                         appropriation. From the agency’s perspective, this system has both advantages and disadvantages. The
                         advantage is the assurance of funding up to the appropriated amount whether or not fees are collected
                         for the full amount. The disadvantage is that the agency may not be permitted to spend fees collected
                         in excess of its general or special fund appropriation. In addition, the Congress may also direct that fee
                         balances be deposited in the general fund of the Treasury.



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                                       For purposes of BEA scoring, fees in all five accounts either reduce budget
                                       authority and outlays subject to discretionary limitations or do not affect
                                       discretionary spending because they are classified as mandatory.

Table 4: Budgetary Treatment and BEA
Scoring for Inspection Services                                      Budgetary treatment of
                                       Agency/Fee type               fees                         BEA scoring
                                       Agency: APHIS                 Account Title: Salaries and Account classified as
                                                                     expenses                    discretionary. Appropriated
                                       Activity: Agricultural                                    receipts are treated as new
                                       quarantine inspection         Account Type: general       budget authority at the
                                                                     fund expenditure account    account level and offset at
                                       Fee Type: proprietary                                     the agency (Department of
                                       receipt                       Type of Authority: current Agriculture) and
                                                                     budget authority            subfunction level. These
                                                                                                 offsetting receipts are
                                                                                                 scored as zero under BEA.
                                       Agency: Nuclear Regulatory    Account Title: Salaries and Account and receipts are
                                       Commission                    expenses                    classified as discretionary.
                                                                                                 Offsetting governmental
                                       Activity: Inspection,         Account Type: general       receipts are required by law
                                       oversight and licensing of    fund expenditure account    to offset appropriation. Only
                                       nuclear facilities                                        the net amount is included
                                                                     Type of Authority: current in BEA scoring of
                                       Fee Type: offsetting          budget authority            discretionary spending.
                                       governmental receipts
                                       Agency: AMS                   Account Title: Marketing     Account and offsetting
                                                                     services                     collections are classified as
                                       Activity: Inspection of egg                                discretionary. Budget
                                       handlers and hatcheries,      Account Type: general        authority and outlays are
                                       grading of tobacco and        fund expenditure account     offset by the amount of
                                       cotton, and other                                          collections. Only the net
                                       marketing services            Type of Authority:           amount is included in BEA
                                                                     permanent spending           scoring of discretionary
                                       Fee Type: offsetting          authority                    spending.
                                       collections to an
                                       appropriation or fund
                                       account
                                                                                                                   (continued)




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                              Budgetary treatment of
Agency/Fee type               fees                         BEA scoring
Agency: GIPSA                 Account Title: Inspection    Account and offsetting
                              and weighing services        collections were classified
Activity: Grain inspection,                                as mandatory at the time of
weighing and grading          Account Type: public         our review. Recently this
services                      enterprise revolving fund    account was reclassified
                                                           because of a concept
Fee Type: offsetting          Type of Authority:           change. As a mandatory
collections to an             permanent spending           account it had no effect on
appropriation or fund         authority.                   discretionary spending. As
account                                                    a discretionary account,
                                                           budget authority and
                                                           outlays are offset by the
                                                           amount of collections.
Agency: AMS                   Account Title:               Account and receipts are
                              Miscellaneous Trust Funds    mandatory. Included in the
Activity: Inspection and                                   direct spending baseline.
grading of agricultural       Account Type: trust fund     No effect on discretionary
commodities                                                spending.
                              Type of Authority:
Fee Type: Proprietary         permanent budget authority
receipts

APHIS’ fees for agricultural quarantine inspection are a dedicated source of
revenue that are earmarked for the purposes for which they were
collected. Since proprietary receipts are offsetting, any fees provided in
appropriations language to APHIS are offset against discretionary spending
limits. However, because APHIS is part of a larger agency, the benefits of
this offset accrue to the Department of Agriculture as a whole and for the
agricultural research and services subfunction.

NRC receipts are called offsetting governmental because they are
governmental receipts by nature but are required by law to offset
spending. Originally, some of NRC’s receipts were governmental and not
earmarked for NRC’s use. However, beginning with OBRA 90, NRC and several
other regulatory agencies were authorized to recover total agency costs or,
in some cases, amounts in excess of agency costs. The appropriations
language for these agencies directed that the collections be treated as
offsetting. OMB subsequently created the offsetting governmental receipt
classification to distinguish these receipts from other types of receipts.

AMS fees for inspection and cotton and tobacco grading, and GIPSA’s grain
inspection fees are both authorized to be credited directly to appropriation
or fund accounts. GIPSA was classified as a mandatory account at the time
of our review and therefore it and its collections were treated as direct or




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                       B-275109




                       mandatory spending subject to PAYGO requirements.14 Recently, this GIPSA
                       account was reclassified by OMB applying BEA scoring rules that, in most
                       cases, where the Congress has provided permanent authority but has
                       imposed an obligation limitation, the account will be treated as
                       discretionary.

                       The last example, AMS’s grading of agricultural commodities, is classified
                       as mandatory spending because the fees for these activities are authorized
                       as receipts to a trust fund. These fees and their activities are not subject to
                       discretionary spending limits.


                       Increased reliance on fee collections as an agency’s primary source of
Issues for             funding has implications for federal budgeting and management that may
Consideration in the   call for a reexamination of the basic principles as well as the actual
Design and             practices underlying the treatment of fees. Offsetting can inhibit
                       congressional tradeoffs based on the relative merit of programs and can
Management of User     obscure the amount of spending for fee-reliant agencies. The current trend
Fees                   to net fees against spending at the account or agency level offers agencies
                       some stability, even potential growth, not available to most agencies
                       dependent on current appropriations. However, fee-reliant agencies are
                       faced with some unique challenges that make management of these
                       agencies more complex.

                       How user fees are structured reflects competing considerations and the
                       sometimes differing interests of the Congress, OMB, agencies, and the fee
                       payers. Some believe that agencies will have less motivation to collect and
                       users to pay if the fees are not credited to the activity that generated the
                       fee. Others have cautioned that earmarking fees reduces congressional
                       flexibility in making resource decisions and can complicate agency
                       oversight. Still others maintain that the merits of a program—not its ability
                       to generate fees—should influence funding decisions and program size,
                       particularly in the context of continuing reductions in overall discretionary
                       spending. In considering these trade-offs, it is important that budgetary
                       treatment of fees influence, but not drive, resource and management
                       decisions.




                       14
                        The classification depends on whether the fees are authorized to be charged in appropriations acts or
                       authorizing statutes.



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                             B-275109




Inconsistencies Between      As scoring differences become more important and distinctions in fee
Budget Concepts and Fee      classifications more ambiguous, fee structure is likely to be driven by
Classifications Are Likely   budget rules that make certain designs most advantageous. The 1967
                             Commission on Budget Concepts could not have anticipated how
to Increase                  discretionary caps would serve to erode the criteria it proposed to
                             distinguish the budgetary treatment of fees. The obvious advantage of
                             netting fees against program spending and the pressures to earmark fees
                             for certain uses make it more likely in today’s budget environment that
                             fees from the public will be treated as offsets to appropriations under BEA
                             caps, regardless of whether the underlying federal activity is business or
                             governmental in nature. An agency is likely to consider offsetting
                             collections that are credited directly to its appropriation or fund account
                             more advantageous than a receipt that offsets at the department and
                             subfunction level. Moreover, inconsistencies have emerged in the
                             budgetary treatment of fees with similar characteristics and purposes, and
                             these differences have important implications for budgetary decisions
                             among these programs.

                             Any further examination of fees might include a broader range of user
                             charges not discussed in this report, including possibly excise taxes and
                             those fees collected under authority provided by the Independent Offices
                             Appropriation Act of 1952.15 Questions could be asked, such as the
                             following: What rules make sense for comparable types of activities? What
                             are the best ways of presenting user fees in a unified budget that will be
                             inclusive and consistent? Finally, recognizing that not all activities are
                             alike, What treatment will provide the most appropriate oversight and
                             control for a particular fee-reliant activity?


Fee-Reliant Agencies Face    Fee-reliant agencies face management issues not faced by those that
Unique Management Issues     depend primarily on general fund appropriations. Agencies’ reliance on
                             fees may raise expectations that these agencies will be self-supporting,
                             thereby prompting questions about the applicability of market or
                             business-like principles to their funding and operations. For example,
                             dependence on fees may cause these programs to become more vulnerable
                             to cyclical swings in demand and fee income. This in turn raises questions
                             about how to respond to such downturns in income, such as whether
                             general appropriations should be used to subsidize operations if fees
                             decline. If these agencies are expected to operate in a market
                             environment—especially without an appropriations “safety
                             net”—pressures to provide exemptions from government rules and

                             15
                               See the glossary for a discussion of the Independent Offices Appropriation Act of 1952.



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                     B-275109




                     regulations on procurement and personnel may arise. Balancing these with
                     other issues, such as accountability to the Congress and the general
                     taxpayer, will be a continuing challenge.

                     Increasingly, agencies are being asked to provide greater accountability.
                     Where the Congress and fee payers agree on priorities, there may be no
                     conflict between oversight and accountability to the Congress and
                     accountability to fee payers. However, where congressional and fee payer
                     priorities differ, the agency may be under greater pressure to satisfy the
                     demands of fee payers, particularly if the exchange of fee for service is
                     voluntary.

                     Even where there may be agreement in principle that fees should be
                     charged for an activity, there is the possibility of increased conflict
                     between different payers about the allocation among them. Moreover, few
                     agencies provide purely business-type services. To the extent that
                     fee-reliant agencies also provide services to the general public and do not
                     receive general fund appropriations, fees may have to be set to subsidize
                     non-fee-related costs and activities, which can prompt further conflict
                     between the fee payers and those receiving these broader benefits.

                     In addition, agencies with some fee-funded activities will have to redefine
                     relationships between fee-funded and appropriated activities. Agencies
                     will be faced with the inequities, real or perceived, that different funding
                     sources may create. In addition to any perceived funding imbalances
                     between fee and appropriations supported programs, management
                     challenges can arise from differences in their funding status. For example,
                     during times of government shutdowns, programs with authority to
                     obligate fees without congressional action were among those able to
                     continue operating while programs and staff funded solely through current
                     appropriations were shutdown and furloughed.


                     OMB officials agreed that different budgetary treatments have occurred as
Agency Comments      agencies have sought and the Congress has enacted laws that allow
and Our Evaluation   agencies to use the fees they generate to offset spending. Several
                     comments by OMB officials suggested that offsetting correctly applied, that
                     is, offsetting that results from business-like activities, does not inhibit
                     tradeoffs between programs or limit congressional flexibility in
                     decision-making because this type of spending is self-controlling. These
                     comments assume that it is possible to make clear distinctions between
                     business-like and governmental activities. Although the 1967 President’s



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B-275109




Commission on Budget Concepts recommended a dual system of
accounting based on these distinctions, such distinctions have been
difficult to make in practice. A clear line between governmental and
business-type activities is even less likely to be applied in the future given
the overwhelming benefits of offsetting under BEA discretionary spending
limits.

OMB officials also provided a number of technical and clarifying comments,
which we incorporated in the report where appropriate.


We are sending copies of this report to other interested Members of the
Congress and the Director of the Office of Management and Budget. We
will make copies available to others on request. Please call me at
(202) 512-9142 if you or your staff have any questions. This report was
prepared under the direction of Barbara Bovbjerg. Major contributors
were Denise Fantone, Tim Minelli, Carlos Diz (Attorney-Advisor), John
Mingus, and Paul Yoon (Intern).

Sincerely yours,




Susan J. Irving
Associate Director, Budget Issues




Page 24                                         GAO/AIMD-98-11 Federal User Fees
Page 25   GAO/AIMD-98-11 Federal User Fees
Contents



Letter                                                           1


Appendix I                                                      30

Scope and
Methodology
Appendix II                                                     34

Budgetary
Characteristics of
Fee-Reliant Agencies,
Fiscal Year 1996
Appendix III                                                    37

BEA Classification of
Fee-Reliant Agencies
Appendix IV                                                     40

Current Versus
Permanent
Appropriations
Appendix V                                                      42

Current
Appropriations for
Fee-Reliant Agencies
Versus Subcommittee
Agencies, Fiscal Years
1992 Through 1996
Glossary                                                        44


Related GAO Products                                            50




                         Page 26   GAO/AIMD-98-11 Federal User Fees
          Contents




Tables    Table 1: Change in Fee Reliance Among Fee-Reliant Agencies,                7
            Fiscal Years 1991 to 1996
          Table 2: Fee-Reliant Agency Growth in Current Appropriations              11
            Versus All Sources From Fiscal Years 1991 Through 1996
          Table 3: Twenty-Seven Fee-Reliant Agencies and Their Fee                  13
            Classifications
          Table 4: Budgetary Treatment and BEA Scoring for Inspection               19
            Services
          Table III.1: Mandatory Versus Discretionary Classification for            37
            Fee-Reliant Agencies
          Table IV.1: Permanent Versus Current Appropriations for                   41
            Fee-Reliant Agencies

Figures   Figure 1: Collections Credited to Appropriation or Fund Accounts          15
            in the Budget Process
          Figure 2: Offsetting Receipts in the Budget Process                       17




          Page 27                                      GAO/AIMD-98-11 Federal User Fees
Contents




Abbreviations

AMS        Agricultural Marketing Service
APHIS      Animal and Plant Health Inspection Service
BEA        Budget Enforcement Act
CBO        Congressional Budget Office
COBRA 85   Consolidated Budget Reconciliation Act of 1985
DOD        Department of Defense
FCA        Farm Credit Administration
FCC        Federal Communications Commission
FHFB       Federal Housing Finance Board
FRTIB      Federal Retirement Thrift Investment Board
FTC        Federal Trade Commission
GPRA       Government Performance and Results Act
GIPSA      Grain Inspection, Packers and Stockyards Administration
GRH        Gramm-Rudman-Hollings
INS        Immigration and Naturalization Service
IOAA       Independent Offices Appropriation Act of 1952
MMS        Minerals Management Service
NRC        Nuclear Regulatory Commission
NTIS       National Technical Information Service
OBRA 90    Omnibus Reconciliation Act of 1990
OBRA 93    Omnibus Reconciliation Act of 1993
OMB        Office of Management and Budget
OTS        Office of Thrift Supervision
PAYGO      pay-as-you-go
PCC        Panama Canal Commission
PTO        Patent and Trademark Office
PMAs       Power Marketing Administrations
SEC        Securities and Exchange Commission
TVA        Tennessee Valley Authority
USEC       United States Enrichment Corporation
USFWS      United States Fish and Wildlife Service


Page 28                                   GAO/AIMD-98-11 Federal User Fees
Page 29   GAO/AIMD-98-11 Federal User Fees
Appendix I

Scope and Methodology


             To better understand the roles fees have had as a funding source since BEA
             was enacted, we reviewed all agencies in which fees for business or
             regulatory services to the public provided a significant and continuing
             source of funding. Twenty-seven agencies met our criteria.

             We defined our universe of fee-reliant agencies using the following
             criteria: (1) fees from the public must be used to support the agency that
             generated the fee, (2) services, goods, or benefits must be provided in
             exchange for fees and the exchange should be closely linked in time, and
             (3) budget authority from fees from the public must represent 20 percent
             or more of the agency’s gross outlays from federal sources averaged over
             fiscal years 1991 through 1996. This excludes offsetting collections and
             associated outlays from federal sources.

             To meet these criteria, we excluded (1) agencies that collected fees that
             were deposited in the general fund of the Treasury instead of designated
             for the agency’s use, (2) insurance and retirement programs because of the
             delay between when a fee is paid and when there is a pay out, although
             many of these programs, such as the Federal Deposit Insurance
             Corporation are totally self-supporting, (3) credit programs because they
             involve subsidies, (4) agencies that receive fees from the public that are
             then transferred to another federal agency or a state, (5) agencies that
             receive fees from the public intermittently, (6) Government-sponsored
             enterprises, such as the Federal Reserve, which receive funding from the
             public, but are classified as private and not included in the federal budget,
             and (7) agencies that receive most of their fees from other federal
             agencies, although many of the agencies included have some funding from
             this source.

             Certain accounts of the agencies we identified as fee-reliant were
             excluded from subsequent analyses. Insurance and credit accounts were
             excluded from Bureau of Reclamation and National Credit Union
             Administration totals, except for the examination and regulatory fees that
             are deposited in the Credit Union Share Insurance Fund and transferred to
             the Operating Fund account. Other DOD Trust Funds includes only those
             accounts that received offsetting collections from the public for
             commissary sales. Accounts on gift funds and separation pay were
             excluded from Other DOD Trust Funds totals. The Funds for Strengthening
             Markets, Income, and Supply account was excluded from Agricultural
             Marketing Service totals because most of its funding is transferred to other
             programs, principally child nutrition. Also, the Universal Service Fund and




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Appendix I
Scope and Methodology




the Spectrum Auction Program account were excluded from Federal
Communication Commission totals.

The 27 agencies span 7 of the 13 appropriations subcommittees:
(1) Agriculture and Rural Development, (2) Commerce, Justice, State, and
the Judiciary, (3) Defense, (4) Energy and Water Development, (5) Interior
and Related Agencies, (6) Treasury, Postal, and General Government, and
(7) Veterans Administration, Housing and Urban Development, and
Independent Agencies.

As used in this report, the term “agency” refers to the grouping of activities
shown as “bureaus” or listed as “other independent agencies” in the
President’s budget request to the Congress. The bureau designation
generally corresponds to a subordinate organization in an executive
department. Although this structure will include both fee and non-fee
programs and activities, we selected this level of aggregation because it is
organizationally comprehensive and more readily understood than either
of the alternatives, appropriation account or program activity. For
example, the U.S. Fish and Wildlife Service is more recognizable an entity
than the various accounts, such as Resource Management, Migratory Bird
Conservation, and Sport Fish Restoration, that make up the agency. In two
cases the bureau designation does not correspond with a single entity.
Other DOD Trust Funds described above, and the Power Marketing
Administrations, which includes 5 separate organizational entities.

To review the classification and treatment of fees in budget accounts, we
used OMB codes created for the President’s annual budget request. These
codes allowed us to identify (1) fees from the public and their
classification as an offsetting receipt or a collection credited to an
appropriation or fund account, (2) the type of expenditure account the fee
is credited to, and (3) the fee’s availability for obligation in a given fiscal
year.

Using OMB actual year data we constructed a series of analyses that
described trends in budget authority and collections for these agencies.
Our trend data only includes new appropriations and spending authority
available to an agency and not funding from unobligated balances. We did
not include unobligated balances because the data coding did not
distinguish between unobligated balances from fees and those from other
sources.




Page 31                                          GAO/AIMD-98-11 Federal User Fees
Appendix I
Scope and Methodology




Data in this report cover fiscal years 1991 through 1996. OMB’s codes also
allowed us to track changes in discretionary versus mandatory
classifications of agency funding and shifts from current to permanent
budget or spending authority. Our observations are based on 6 years of
OMB data for those agencies selected. This work describes overall trends in
27 fee-financed agencies, but is not generalizable to all agencies with fees.

We also conducted interviews in six agencies: Agricultural Marketing
Service, National Technical Information Service, Nuclear Regulatory
Commission, Patent and Trademark Office, Securities and Exchange
Commission, and U.S. Fish and Wildlife Service.




Page 32                                        GAO/AIMD-98-11 Federal User Fees
Page 33   GAO/AIMD-98-11 Federal User Fees
Appendix II

Budgetary Characteristics of Fee-Reliant
Agencies, Fiscal Year 1996


                                                         Fees from the public
                                                          Offsetting                    Fees from the
                                                      collections to        Offsetting public (percent
               Agency                                      accounts          receipts     of outlaysa)
               Federal Retirement Thrift
               Investment Board                                                      X           215.8
               National Credit Union Administration               X                              129.2
               United States Enrichment
               Corporation                                        X                              122.2
               Office of Thrift Supervision                       X                              113.2
               Patent and Trademark Office                        X                  X           108.6
               Comptroller of the Currency                        X                              105.8
               Panama Canal Commission                            X                              105.5
               United States Mint                                 X                              105.1
               Postal Service                                     X                              101.0
               Federal Housing Finance Board                      X                              100.0
               National Technical Information
               Service                                            X                              100.0
               Power Marketing Administrations                    X                  X            98.7
               Farm Credit Administration                         X                               95.0
               Other DOD Trust Funds                              X                               94.3
               Tennessee Valley Authority                         X                               88.9
               Nuclear Regulatory Commission                      X                  X            88.8
               Securities and Exchange
               Commission                                         X                               85.5
               Bureau of Reclamation                                                 X            83.4
               Agricultural Marketing Service                     X                  X            81.1
               Federal Communications
               Commission                                         X                               73.2
               Minerals Management Service                        X                  X            72.8
               United States Customs Service                      X                  X            70.0
               Federal Trade Commission                           X                               64.7
               Grain Inspection, Packers and
               Stockyards Administration                          X                               54.4
               Immigration and Naturalization
               Service                                            X                  X            37.7
               United States Fish and Wildlife
               Service                                            X                  X            36.1
               Animal and Plant Health Inspection
               Service                                            X                  X            30.2




               Page 34                                                 GAO/AIMD-98-11 Federal User Fees
                                  Appendix II
                                  Budgetary Characteristics of Fee-Reliant
                                  Agencies, Fiscal Year 1996




                   Expenditure account fund type
     Fees from    General      Special or       Revolving Timing of legislative action      Amount available
federal sources     fund       trust fund            fund Permanent            Current    Indefinite        Definite

                                        X                                X                        X
                                                          X              X                        X

                                                          X              X                        X
                                                          X              X                        X
                       X                                                 X          X             X               X
             X                                            X              X                        X
                                                          X              X                        X
                                                          X              X                        X
             X                                            X              X                        X
                                                          X              X                        X

             X                                            X              X                        X
             X         X                X                 X              X          X             X               X
                                                          X              X                        X
             X                                            X              X                        X
             X                                            X              X                        X
             X         X                                                 X          X             X               X

             X         X                                                 X                        X
             X         X                X                 X              X          X             X               X
             X         X                X                 X              X                        X

                                                                                                                   b
             X         X                                                 X
                       X                X                                X          X             X               X
             X         X                X                                X          X             X               X
                                                                                                                   c
             X         X                                                 X

                                                          X              X                        X

             X         X                X                                X                        X

             X         X                X                                X          X             X               X

             X         X                X                                X          X             X




                                  Page 35                                           GAO/AIMD-98-11 Federal User Fees
Appendix II
Budgetary Characteristics of Fee-Reliant
Agencies, Fiscal Year 1996




Notes: (1) Categories are as shown in OMB budget documents and have not been independently
verified. For a fuller discussion of accounts with spending authority and permanent appropriations
see Budget Issues: Inventory of Accounts With Spending Authority and Permanent
Appropriations, 1996 (GAO/AIMD-96-79, May 31, 1996).

(2) This table includes only those agency accounts that have fees from the public. An agency
may have additional accounts that only get general fund appropriations or were excluded as
noted in appendix I. Revolving funds include public enterprise and trust revolving funds.
a
Gross outlays minus offsetting collections from federal sources.
b
 The Federal Communications Commission’s Salaries and Expenses account had a limitation on
spending authority from offsetting collections for fiscal year 1996.
c
 The Federal Trade Commission’s Salaries and Expenses account had a limitation on spending
authority from offsetting collections for fiscal year 1996.




Page 36                                                       GAO/AIMD-98-11 Federal User Fees
Appendix III

BEA Classification of Fee-Reliant Agencies


                                   The Budget Enforcement Act of 1990, as amended, divided spending at the
                                   budget account level into two broad categories: discretionary and
                                   mandatory. BEA classification is assigned to expenditure accounts within
                                   agencies. Some accounts may have both mandatory and discretionary
                                   funds and they are identified separately for BEA scoring purposes.
                                   Legislative changes to mandatory spending enacted in a given fiscal year
                                   are required to be deficit neutral in the aggregate. Discretionary spending
                                   is held to fixed annual limits.

                                   Table III.1 shows the change in classification from fiscal year 1991 to fiscal
                                   year 1996 for accounts in the 27 agencies we reviewed. During this time,
                                   there was an increase in the percentage of spending classified as
                                   discretionary spending for 14 of the 27 agencies. Four agencies showed
                                   decreases in spending classified as discretionary, while spending
                                   classifications for nine agencies in our survey did not change.

Table III.1: Mandatory Versus
Discretionary Classification for                                                 Mandatory             Discretionary
Fee-Reliant Agencies                                                        (percent of funding)    (percent of funding)
                                   Agency                                       FY91        FY96        FY91         FY96
                                   25 percent or more change from mandatory to discretionary
                                   National Technical Information Service        100            0           0          100
                                   Panama Canal Commission                       100            0           0          100
                                   Patent and Trademark Office                     74           0          26          100
                                   Bureau of Reclamation                           40          14          60           86
                                   Less than 25 percent change from mandatory to discretionary
                                   Agricultural Marketing Service                  78          59          22           41
                                   Federal Trade Commission                        18           0          82          100
                                   United States Customs Service                   35          22          65           78
                                   Animal and Plant Health Inspection              10           1          90           99
                                   Service
                                   Power Marketing Administrations                 91          86           9           14
                                   Grain Inspection, Packers and                   59          57          41           43
                                   Stockyards Administration
                                   Minerals Management Service                     71          69          29           31
                                   Federal Communications Commission                1           0          99          100
                                   Nuclear Regulatory Commission                    1           0          99          100
                                                                        a
                                   Securities and Exchange Commission               0           0        100           100
                                   No change: mandatory to discretionary
                                   Comptroller of the Currency                   100          100           0            0
                                   Other DOD Trust Funds                         100          100           0            0
                                   Farm Credit Administration                    100          100           0            0
                                                                                                                (continued)


                                   Page 37                                              GAO/AIMD-98-11 Federal User Fees
Appendix III
BEA Classification of Fee-Reliant Agencies




                                                  Mandatory               Discretionary
                                             (percent of funding)      (percent of funding)
Agency                                            FY91         FY96        FY91         FY96
Federal Housing Finance Board                       100          100            0              0
Federal Retirement Thrift Investment                100          100            0              0
Board
National Credit Union Administration                100          100            0              0
Office of Thrift Supervision                        100          100            0              0
United States Enrichment Corporation                100          100            0              0
No change: discretionary to mandatory
Immigration and Naturalization Service                 0           0         100          100
25 percent or more change from discretionary to mandatory
United States Mint                                   75          100          25               0
Less than 25 percent change from discretionary to mandatory
Tennessee Valley Authoritya                          98           98            2              2
United States Fish and Wildlife Service              30           35          70              65
Postal Servicea                                        0           0         100          100

a
 Three agencies—SEC, the Postal Service, TVA—had less than a 1 percent change in the amount
of funding classified as discretionary or mandatory spending between fiscal years 1991 and
1996.



Most of the change in classification is attributable to a decision made by
OMB in fiscal year 1993 not to include fees that offset spending in
discretionary accounts in the PAYGO baseline. A technical revision by OMB
for the fiscal year 1995 budget (OMB Circular A-11, Preparation and
Submission of the Budget Estimates, Sec. 21.2, p. 62 (August 4, 1993))
clarified that collections credited to discretionary appropriation or fund
accounts would be classified as discretionary. According to OMB, prior to
this change double counting had occurred in preparing the federal budgets
after enactment of BEA. Collections credited to appropriation or fund
accounts were counted as mandatory receipts (because they had
permanent spending authority), and, at the same time, were netted against
discretionary spending according to budget concept rules. Although this
correction did not change the impact of collections credited to
appropriation or fund accounts on discretionary spending, it means that if
discretionary spending were ever to exceed the annual caps, all
discretionary resources, including these offsetting collections, would be
subject to sequestration. For example, if a sequestration had occurred in
fiscal year 1996, all of FCC’s budget authority in its Salaries and Expenses
account would have been subject to sequestration. For FCC this would
have been $202 million. However, without the need for sequestration, only



Page 38                                                    GAO/AIMD-98-11 Federal User Fees
Appendix III
BEA Classification of Fee-Reliant Agencies




$59 million, or the net budget authority, is counted as discretionary
spending.




Page 39                                        GAO/AIMD-98-11 Federal User Fees
Appendix IV

Current Versus Permanent Appropriations


              Current and permanent appropriations refer to the timing of legislative
              action in making budget authority available to an agency. When budget
              authority is enacted permanently, it is available until spent. Such authority
              can be the result of substantive legislation or appropriations acts. When
              budget authority is enacted as current authority, the appropriations
              language specifies how long the funds will be available. In general, current
              appropriations are classified as discretionary and are under the
              jurisdiction of the appropriations committees and their subcommittees.
              While there are exceptions, permanent appropriations are more likely to
              be classified as direct, or mandatory, spending and be under the
              jurisdiction of authorizing committees.

              Table IV.1 shows that from fiscal years 1991 through 1996 spending
              authorized as permanent increased for 13 of the 27 agencies in our survey.
              Twelve other agencies did not see changes in the percent of the their
              funding classified as either permanent or current. The remaining two
              agencies, GIPSA and APHIS, had small declines in funding from what was
              permanently appropriated.




              Page 40                                        GAO/AIMD-98-11 Federal User Fees
                                       Appendix IV
                                       Current Versus Permanent Appropriations




Table IV.1: Permanent Versus Current
Appropriations for Fee-Reliant                                                   Permanent (percent     Current (percent of
Agencies                                                                             of funding)             funding)
                                       Agency                                       FY91        FY96       FY91        FY96
                                       25 percent or more change from current to permanent appropriations
                                       Federal Communications Commission                1          71         99         29
                                       Securities and Exchange Commission              19          70         81         30
                                       Federal Trade Commission                        18          69         82         31
                                       United States Mint                              74         100         26          0
                                       Less than 25 percent change from current to permanent appropriations
                                       Patent and Trademark Office                     74          87         26         13
                                       United States Fish and Wildlife Service         40          51         60         49
                                       Bureau of Reclamation                           37          44          6         56
                                       United States Customs Service                   34          39         66         61
                                       Immigration and Naturalization Service          29          33         71         67
                                       Agricultural Marketing Service                  79          81         21         19
                                       Minerals Management Service                     71          72         29         28
                                       United States Enrichment Corporation            98         100          2          0
                                       Postal Service                                  99         100          1          0
                                       No change: permanent to current
                                       Comptroller of the Currency                    100         100          0          0
                                       Other DOD Trust Funds                          100         100          0          0
                                       Farm Credit Administration                     100         100          0          0
                                       Federal Housing Finance Board                  100         100          0          0
                                       Federal Retirement Thrift Investment           100         100          0          0
                                       Board
                                       National Credit Union Administration           100         100          0          0
                                       National Technical Information Service         100         100          0          0
                                       Office of Thrift Supervision                   100         100          0          0
                                       Panama Canal Commission                        100         100          0          0
                                       Tennessee Valley Authority                      98          98          2          2
                                       Power Marketing Administrations                 91          91          9          9
                                       No change: current to permanent
                                       Nuclear Regulatory Commission                    1           1         99         99
                                       Less than 25 percent change from permanent to current appropriations
                                       Grain Inspection, Packers and                   59          57         41         43
                                       Stockyards Administration
                                       Animal and Plant Health Inspection              10           9         90         91
                                       Service




                                       Page 41                                              GAO/AIMD-98-11 Federal User Fees
Appendix V

Current Appropriations for Fee-Reliant
Agencies Versus Subcommittee Agencies,
Fiscal Years 1992 Through 1996

                                                                                                                      Compound
                                                                                                                    rate of growth
                                                         Change in current budget authority (percent)                  (percent)
Appropriation subcommittee and agency                  FY92-93        FY93-94         FY94-95            FY95-96          FY92-96
Agriculture and Rural Development
Agricultural Marketing Service                           –4.01            1.46           –5.19            –12.96             –5.32
Animal and Plant Health Inspection Service               –1.98            3.12           –1.93               0.00            –0.22
Farm Credit Administration                                0.00            0.00            0.00               0.00             0.00
Grain Inspection, Packers and Stockyards                 –0.06           –1.90            0.23               0.00            –0.44
Administration
Agriculture, Rural Development                           11.58            6.08            -1.57             -7.26             1.84
Appropriations
Subtotal: Fee-Reliant Agencies                           –2.12            2.72           –2.18              –1.31            –0.74
Subtotal: All Other Subcommittee Agencies                12.21            6.22           –1.54              –7.49             2.07


Commerce/Justice/State/Judiciary
Federal Communications Commission                        10.84          –27.43          –32.09            –14.49            –17.33
Federal Trade Commission                                  0.65           –2.48          –19.02            –43.64            –18.19
Immigration and Naturalization Service                    3.05            8.68           35.21              20.81            16.30
                                     a
National Technical Information Service                    0.00            0.00            0.00               0.00             0.00
Patent and Trademark Office                              –2.00            1.91           –7.17               0.00            –1.87
Securities and Exchange Commission                      –19.21          –54.53           86.67              –4.63           –10.07
Commerce/Justice/State/Judiciary                          6.90            1.64            5.21               7.86             5.37
Appropriation
Subtotal: Fee-Reliant Agencies                            1.35           –2.18           27.60              14.33             9.66
Subtotal: All Other Subcommittee Agencies                 7.29            1.89            3.77               7.35             5.05


Defense
Other DOD Trust Funds                                     0.00            0.00            0.00               0.00             0.00
Defense Appropriation                                    –6.18           –4.88            1.07              –0.09            –2.57
Subtotal: Fee-Reliant Agencies                            0.00            0.00            0.00               0.00             0.00
Subtotal: All Other Subcommittee Agencies                –6.18           –4.88            1.07              –0.09            –2.57


Energy and Water Development
Nuclear Regulatory Commission                             5.37           –0.93           –2.06              –9.92            –2.04
Power Marketing Administrations                           6.24           –9.62          –34.08              35.62            –3.75
Tennessee Valley Authority                                0.00            4.05           –1.76            –21.01             –5.21
Energy and Water Development                              0.92           –0.03           –7.04              –5.75            –3.04
Appropriations
Subtotal: Fee-Reliant Agencies                            4.97           –3.49          –13.02               0.22            –3.06
                                                                                                                        (continued)



                                             Page 42                                              GAO/AIMD-98-11 Federal User Fees
                                             Appendix V
                                             Current Appropriations for Fee-Reliant
                                             Agencies Versus Subcommittee Agencies,
                                             Fiscal Years 1992 Through 1996




                                                                                                                              Compound
                                                                                                                            rate of growth
                                                          Change in current budget authority (percent)                         (percent)
Appropriation subcommittee and agency                  FY92-93            FY93-94             FY94-95            FY95-96          FY92-96
Subtotal: All Other Subcommittee Agencies                  0.72                0.14              –6.75              –6.02            –3.04


Interior and Related Agencies
Bureau of Reclamation                                    –9.53                 0.21                0.03             –1.49            –2.78
Minerals Management Service                              –1.85               –0.82               –2.53              –3.09            –2.08
United States Fish and Wildlife Service                  –2.03               –5.70               –7.14              –0.30            –3.83
Interior and Related Agencies                            –4.71                 9.91              –0.24            –11.51             –1.94
Appropriations
Subtotal: Fee-Reliant Agencies                           –5.60               –2.43               –3.23              –1.21            –3.13
Subtotal: All Other Subcommittee Agencies                –4.56               11.93                 0.19           –12.93             –1.75


Treasury/Postal/General Government
Comptroller of the Currency                                0.00                0.00                0.00              0.00             0.00
Office of Thrift Supervision                               0.00                0.00                0.00              0.00             0.00
United States Customs Service                            –2.06               –0.67                 1.60             –1.68            –0.71
United States Mint                                         1.62                5.10                0.41          –100.00           –100.00
Postal Service                                          –19.21              –54.53               86.67              –4.63           –10.07
Treasury/Postal/General Government                        4.90                0.79                1.75              –5.44             0.43
Appropriations
Subtotal: Fee-Reliant Agencies                           –3.53               –4.62                 4.68             –5.21            –2.25
Subtotal: All Other Subcommittee Agencies                  6.46                1.69                1.29             –5.48             0.90


VA/HUD/Independent Agencies
Federal Housing Finance Board                              0.00                0.00                0.00              0.00             0.00
Federal Retirement Thrift Investment Board                 0.00                0.00                0.00              0.00             0.00
National Credit Union Administration                       0.00                0.00                0.00              0.00             0.00
Panama Canal Commission                                    0.00                0.00                0.00              0.00             0.00
United States Enrichment Corporation                       0.00                0.00                0.00              0.00             0.00
VA/HUD/Independent Agencies                                3.10                3.48                3.18           –11.92             –0.77
Appropriations
Subtotal: Fee-Reliant Agencies                             0.00                0.00                0.00              0.00             0.00

Subtotal: All Other Subcommittee Agencies                  3.10                3.48                3.18           –11.92             –0.77

                                             a
                                             NTIS received small appropriations in fiscal years 1993 and 1995.




                                             Page 43                                                      GAO/AIMD-98-11 Federal User Fees
Glossary


Agency            Under the broadest definition of the term, a department, agency, or
                  instrumentality of the U.S. government (31 U.S.C. 101). However, statutes
                  and regulations often include specific definitions of the term “agency” (or
                  related terms like “executive agency” or “federal agency”).


Budget Accounts   Accounts used by the federal government to record outlays (expenditure
                  accounts) and income (receipt accounts) primarily for budgeting or
                  management information purposes but also for accounting purposes.
                  There are six types of federal budget accounts and all can receive user
                  fees from the public.

                  General Fund Accounts: These accounts are composed of all federal
                  funds not allocated to any other account and are generally credited with
                  collections not earmarked by law for a specific purpose. Some general
                  fund accounts receive earmarked offsetting collections that are credited
                  directly to the appropriation or fund account and are available for use,
                  often without further legislative action. One such account, the Bureau of
                  Reclamation’s Water and Related Resources, is credited with offsetting
                  collections from federal and nonfederal sources.

                  Special Fund Accounts: These accounts record receipts collected from a
                  specific source and earmarked by law for a specific purpose. They are
                  essentially trust funds except not so designated by law. The Fish and
                  Wildlife Service’s Land and Water Conservation Fund is an example of a
                  special fund.

                  Nonrevolving Trust Fund Accounts: These accounts record revenues
                  collected for a specific purpose or for a program designated in law as trust
                  funds. Nonrevolving trust fund accounts finance programs such as Social
                  Security, Medicare, and Superfund.

                  Public Enterprise Revolving Fund Accounts: These accounts receive
                  funding generated in a continuing cycle of business-type operations
                  primarily from nonfederal sources. Examples include the Postal Service
                  and the United States Enrichment Corporation.

                  Revolving Trust Fund Accounts: These accounts receive revenues
                  generated in business-type operations and are designated as trust funds by
                  statute. A revolving trust fund finances the bank regulatory activities of the
                  Comptroller of the Currency.




                  Page 44                                         GAO/AIMD-98-11 Federal User Fees
                   Glossary




                   Intragovernmental Fund Accounts: These accounts receive primarily
                   federal funding either from organizations within a department or other
                   federal agencies, such as working capital.

                   The general fund, special fund, and nonrevolving trust fund accounts have
                   both a receipt account, which are credited with collections, and an
                   expenditure account, to which appropriations are made and outlays
                   recorded. The three revolving accounts—public enterprise, trust revolving,
                   and intragovernmental fund—are appropriation or fund accounts that are
                   credited directly with collections and do not require a separate receipt
                   account.


Budget Authority   Authority provided by law to enter into financial obligations that will
                   result in immediate or future outlays involving federal government funds.
                   The basic forms of budget authority include the following:

                   Appropriations: An act of the Congress that permits federal agencies to
                   incur obligations and to make payments out of the Treasury for specified
                   purposes. An appropriations act is the most common means of providing
                   budget authority.

                   Borrowing Authority: Statutory authority that permits a federal agency
                   to incur obligations and to make payments for specified purposes out of
                   money borrowed from the Treasury or the public.

                   Contract Authority: Statutory authority that permits a federal agency to
                   enter into contracts in advance of appropriations.

                   Offsetting Collections and Receipts: Authority to obligate and expend
                   the proceeds of offsetting receipts and collections.

                   Budget authority provided in laws other than appropriation acts is termed
                   spending authority. Spending authority includes contract authority,
                   authority to borrow, and entitlement authority for which the borrowing
                   authority is not provided in advance by appropriation acts.

                   Budget authority may be classified by its duration (1-year, multiple-year,
                   or no-year), by the timing of the legislation providing the authority
                   (current or permanent), by the manner of determining the amount
                   available (definite or indefinite), or by its availability for new obligations.




                   Page 45                                          GAO/AIMD-98-11 Federal User Fees
                            Glossary




Budget Enforcement Act of   BEA divides spending into two types—discretionary spending and direct or
1990 (BEA), as Amended      mandatory spending. Discretionary spending is controlled through annual
                            appropriations acts. Direct or mandatory spending is controlled by
                            permanent laws. BEA constrains discretionary spending differently from
                            mandatory spending and receipts. During the period of our review,
                            discretionary spending was constrained by dollar limits (“caps”) on total
                            budget authority and outlays for this category for each fiscal year through
                            1998. In fiscal year 1997 BEA was extended through 2002. Discretionary
                            spending was subdivided further into spending limits for defense,
                            non-defense and violent crime reduction in fiscal years 1998 and 1999, and
                            discretionary and violent crime reduction in fiscal year 2000. If the amount
                            of budget authority provided in appropriations acts for the year exceeds
                            the discretionary cap on budget authority, or the amount of outlays
                            estimated to result from this budget authority is estimated to exceed the
                            discretionary caps on outlays, BEA specifies a procedure, called
                            sequestration, for reducing discretionary spending. Under a sequester,
                            spending for most discretionary programs is reduced by a uniform
                            percentage. Special rules apply in reducing some programs and some
                            programs are exempt from sequester by law.

                            BEA constrains mandatory spending and receipts differently. Laws that
                            would increase mandatory spending or decrease receipts are constrained
                            through “pay-as-you-go” (PAYGO) rules. Under these rules, the cumulative
                            effects of legislation affecting mandatory spending or receipts must not
                            increase the deficit. For a complete description of the Budget
                            Enforcement Act, see chapter 24 of the Analytical Perspectives volume of
                            the Budget of the United States Government Fiscal Year 1998.


Discretionary Spending      Under the Budget Enforcement Act, discretionary spending limits, or
Limits/Spending Caps        spending caps, are maximum amounts of new budget authority and
                            outlays for specific categories of discretionary appropriations.
                            Discretionary appropriations are budgetary resources provided in
                            appropriation acts.


Fiscal Year                 A fiscal year is a 12-month accounting period. The fiscal year for the
                            federal government begins October 1 and ends September 30. The fiscal
                            year is designated by the calendar year in which it ends; for example fiscal
                            year 1998 is the year beginning October 1, 1997, and ending September 30,
                            1998.




                            Page 46                                        GAO/AIMD-98-11 Federal User Fees
                            Glossary




Independent Offices         The purpose of the IOAA, also called the “User Charge Statute,” was to
Appropriation Act of 1952   distribute the costs of government services to those who received benefits
                            beyond those provided to the general public. The statute gave agencies for
                            the first time broad statutory authority to set fees through administrative
                            regulation. Any fees collected under this authority are deposited in the
                            general fund of the Treasury and not credited to the agency or activity
                            generating the fees.


Offsetting Collections      All collections by government accounts from other government accounts
                            and any collections from the public that are of a business-type or
                            market-oriented nature. They are classified into two major categories:
                            (1) offsetting receipts, which are amounts deposited in receipt accounts
                            and (2) collections credited to appropriation or fund accounts.

                            Offsetting Receipts: Offsetting receipts are amounts deposited in receipt
                            accounts. Offsetting receipts cannot be used without being appropriated.
                            However, a significant portion of such collections, for example, most trust
                            fund offsetting receipts are permanently appropriated and, therefore, can
                            be used without subsequent appropriation legislation. The Congressional
                            Budget Act of 1974, as amended by the Budget Enforcement Act of 1990,
                            defines offsetting receipts and collections as negative budget authority and
                            the reductions thereof as positive budget authority. Offsetting receipts are
                            subdivided into three categories:

                            Intragovernmental Transactions are payments into receipt accounts from
                            governmental appropriations or fund accounts. They are treated as offsets
                            to budget authority and outlays rather than as governmental receipts.

                            Offsetting Governmental Receipts are governmental in nature but are
                            required by law to be treated as offsetting.

                            Proprietary Receipts From the Public are collections from outside the
                            government which are deposited in receipt accounts that arise as a result
                            of the government’s business-type or market-oriented activities. Among
                            these are interest received, proceeds from the sale of property and
                            products, charges for nonregulatory services, and rents and royalties. Such
                            collections may be credited to general fund, special fund, or trust fund
                            receipt accounts and are offset against budget authority and outlays. In
                            most cases, such offsets are by agency and by subfunction but some
                            proprietary receipts are deducted from total budget authority and outlays
                            for the government as a whole.



                            Page 47                                       GAO/AIMD-98-11 Federal User Fees
                        Glossary




                        Collections Credited to Appropriation or Fund Accounts: These
                        collections include all revolving funds and some appropriation accounts.
                        Laws authorize collections to be credited directly to appropriation or fund
                        accounts and may make them available for obligation to meet the
                        account’s purpose without further legislative action. However, it is not
                        uncommon for annual appropriations acts to include limitations on the
                        obligations to be financed by these collections.


Outlay                  The issuance of checks, disbursement of cash, or electronic transfer of
                        funds made to liquidate a federal obligation. Outlays also occur when
                        interest on the Treasury debt held by the public accrues and when the
                        government issues bonds, notes, debentures, monetary credits, or other
                        cash-equivalent instruments in order to liquidate obligations. Also, under
                        credit reform, the credit subsidy cost is recorded as an outlay when a
                        direct or guaranteed loan is disbursed. Outlays during a fiscal year may be
                        for payment of obligations incurred in prior years (prior-year obligations)
                        or in the same year. Outlays, therefore, flow in part from unexpended
                        balances of prior-year budgetary resources and in part from budgetary
                        resources provided for the year in which the money is spent.


Pay-As-You-Go (PAYGO)   Under the Budget Enforcement Act, the principle that all direct spending
                        and tax legislation enacted after BEA for a fiscal year must be
                        deficit-neutral in the aggregate. If the Congress enacts direct spending or
                        receipts legislation that causes a net increase in the deficit, it must offset
                        that increase by either increasing revenues or decreasing another direct
                        spending program in the same fiscal year. This requirement is enforced by
                        sequestration.




                        Page 48                                         GAO/AIMD-98-11 Federal User Fees
Page 49   GAO/AIMD-98-11 Federal User Fees
Related GAO Products


              Federal Electricity Activities: The Federal Government’s Net Cost and
              Potential for Future Losses, Volumes I and II (GAO/AIMD-97-110 and
              GAO/AIMD-97-110A, September 19, 1997).


              Intellectual Property: Fees Are Not Always Commensurate With the Costs
              of Services (GAO/RCED-97-113, May 9, 1997).

              Food-Related Services: Opportunities Exist to Recover Costs by Charging
              Beneficiaries (GAO/RCED-97-57, March 20, 1997).

              Airport and Airway Trust Fund: Issues Related to Determining How Best
              to Finance FAA (GAO/T-RCED-97-59, February 5, 1997).

              U.S. Forest Service: Fees for Recreation Special-Use Permits Do Not
              Reflect Fair Market Value (GAO/RCED-97-16, December 20, 1996).

              Airport and Airway Trust Fund: Issues Raised by Proposal to Replace the
              Airline Ticket Tax (GAO/RCED-97-23, December 9, 1996).

              Power Marketing Administrations: Cost Recovery, Financing, and
              Comparison to Nonfederal Utilities (GAO/AIMD-96-145, September 19, 1996).

              Analysis of USDA’s Budgets, Fiscal Years 1996-97 (GAO/RCED-96-182R, June 7,
              1996).

              U.S. Forest Service: Fee System for Right-of-Way Program Needs Revision
              (GAO/RCED-96-84, April 22, 1996).

              Federal Research: Information on Fees for Selected Federally Funded
              Research and Development Centers (GAO/RCED-96-31FS, December 8, 1995).

              Budget Issues: Earmarking in the Federal Government (GAO/AIMD-95-216FS,
              August 1, 1995).

              Federal Lands: Views on Reform of Recreation Concessioners
              (GAO/T-RCED-95-250, July 25, 1995).

              USDA   User Fees (GAO/RCED-95-229R, June 23, 1995).

              Customs Service: Passenger User Fee Needs to Be Reevaluated
              (GAO/GGD-95-138, May 22, 1995).




              Page 50                                          GAO/AIMD-98-11 Federal User Fees
Related GAO Products




USDA License Fees: Analysis of the Solvency and Users of the Perishable
Agriculture Commodities Act Program (GAO/T-RCED-95-135, March 16, 1995).

ATFI   User Fees (GAO/AIMD-95-93R, March 10, 1995).

IRS   User Fees (GAO/GGD-95-58R, December 15, 1994).

FDAUser Fees: Current Measures Not Sufficient for Evaluating Effect on
Public Health (GAO/PEMD-94-26, July 22, 1994).

Federal Lands: Fees for Communications Sites Are Below Fair Market
Value (GAO/RCED-94-248, July 12, 1994).

Customs Service: Information on User Fees (GAO/GGD-94-165FS, June 17,
1994).

Highway User Fees: Updated Data Needed to Determine Whether All
Users Pay Their Fair Share (GAO/RCED-94-181, June 7, 1994).

INSUser Fees: INS Working to Improve Management of User Fee Accounts
(GAO/GGD-94-101, April 12, 1994).

User Fees for Firearms Licenses (GAO/GGD-94-111R, March 14, 1994).

Futures Markets: A Futures Transaction Fee Is Administratively Feasible
(GAO/GGD-94-40, October 28, 1993).

FDA’s FOIA   Fees (GAO/GGD-93-47R, June 10, 1993).

Forest Service: Little Assurance That Fair Market Value Fees Are
Collected From Ski Areas (GAO/RCED-93-107, April 16, 1993).

USDA Revenues: A Descriptive Compendium (GAO/RCED-93-19FS,
November 27, 1992).

Nuclear Waste: Status of Actions to Improve DOE User-Fee Assessments
(GAO/RCED-92-165, June 10, 1992).

Child Support Enforcement: Opportunity to Defray Burgeoning Federal
and State Non-AFDC Costs (GAO/HRD-92-91, June 5, 1992).




Page 51                                              GAO/AIMD-98-11 Federal User Fees
           Related GAO Products




           U.S. Customs Service: Limitations in Collecting Harbor Maintenance Fees
           (GAO/GGD-92-25, December 23, 1991).

           U.S. Courts: Estimated User Fees to Pay for New Facilities (GAO/GGD-92-8BR,
           December 10, 1991).

           Patent and Trademark Office: Impact of Higher Patent Fees on
           Small-Entity and Federal Agency Users (GAO/RCED-92-19BR, October 11,
           1991).

           Rangeland Management: Current Formula Keeps Grazing Fees Low
           (GAO/RCED-91-185BR, June 11, 1991).

           Nuclear Waste: Changes Needed in DOE User-Fee Assessments
           (GAO/T-RCED-91-52, May 8, 1991).

           Nuclear Waste: Changes Needed in DOE User-Fee Assessments to Avoid
           Funding Shortfall (GAO/RCED-90-65, June 7, 1990).

           User Fees: Limited Survey of User Fees at the Departments of Commerce
           and the Interior (GAO/AFMD-90-53BR, March 23, 1990).

           Standards and Technology: Update of Information About Fee Increases for
           Measurement Services (GAO/RCED-90-63BR, January 12, 1990).




(935209)   Page 52                                       GAO/AIMD-98-11 Federal User Fees
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