oversight

Paperwork Reduction Act: Record Increase in Agencies' Burden Estimates

Published by the Government Accountability Office on 2003-04-11.

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

                          United States General Accounting Office

GAO                       Testimony
                          Before the Subcommittee on Energy, Policy, Natural
                          Resources and Regulatory Affairs, Committee on
                          Government Reform, House of Representatives


For Release on Delivery
Expected at 10 a.m. EDT
Friday, April 11, 2003
                          PAPERWORK
                          REDUCTION ACT
                          Record Increase in
                          Agencies’ Burden
                          Estimates
                          Statement of Victor S. Rezendes, Managing Director
                          Strategic Issues Team




GAO-03-619T
                          A
                                               April 11, 2003


                                               PAPERWORK REDUCTION ACT

                                               Record Increase in Agencies' Burden
Highlights of GAO-03-619T, testimony           Estimates
before the Subcommittee on Energy
Policy, Natural Resources and Regulatory
Affairs, Committee on Government
Reform, House of Representatives




The Paperwork Reduction Act                    As of September 30, 2002, federal agencies estimated that there was about
requires federal agencies to                   8.2 billion “burden hours” of paperwork governmentwide. IRS accounted for
minimize the paperwork burden                  about 6.7 billion burden hours (81 percent) of this estimate. The federal
they impose on the public. The act             paperwork estimate increased by about 570 million burden hours during
also requires agencies to obtain               fiscal year 2002—nearly double the previous record increase for a 1-year
approval from the Office of
Management and Budget (OMB)
                                               period. IRS and the Department of Transportation (DOT) accounted for
before collecting covered                      almost 90 percent of the increase. IRS increased its paperwork estimate by
information. At the                            about 330 million burden hours during fiscal year 2002, which the agency
Subcommittee’s request, GAO                    said was primarily caused by growth in the number of taxpayers using Form
examined changes during the past               1040. DOT’s burden estimate rose by about 165 million burden hours, an
fiscal year in federal agencies’               increase that the department said was almost entirely attributable to the
paperwork burden estimates and                 reintroduction and reestimation of one information collection.
their causes, focusing on the
Internal Revenue Service (IRS).                Federal agencies identified 244 violations of the PRA during fiscal year
GAO also examined changes in the               2002—a significant reduction from the number of violations reported during
number of violations of the                    the previous fiscal year. OMB deserves a great deal of credit for this
Paperwork Reduction Act.
                                               decrease in violations. However, 244 violations of the law during a single
                                               fiscal year are still troubling and should not be tolerated. Also, although
                                               some longstanding violations have been resolved, others remained open at
GAO is not making any                          the end of the fiscal year and, in some cases, had been open for 2 years or
recommendations. However,                      more. OMB has not taken some of the actions that we previous
because IRS accounts for most                  recommended to improve compliance with PRA.
federal paperwork and for most of
the increase in the governmentwide
                                               IRS Accounted for More than 80 Percent of the Estimated 8.2 Billion Hours of Federal
estimate, OMB could focus more of
                                               Paperwork Burden as of September 30, 2002)
its burden reduction efforts on that
agency. Also, OMB and the
agencies could do more to reduce
violations. For example, OMB
could promote the use of “best
practices” used in agencies with
good compliance records.




www.gao.gov/cgi-bin/getrpt?GAO-03-619T.

To view the full report, including the scope
and methodology, click on the link above.
For more information, contact Victor
Rezendes at (202) 512-6806 or
rezendesv@gao.gov.
Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss the implementation of the
Paperwork Reduction Act of 1995 (PRA). As you requested, I will discuss
changes in federal paperwork burden during the past year and their causes,
with a particular focus on the Internal Revenue Service (IRS). I will also
revisit an issue that we have discussed during previous hearings before this
Committee—violations of the PRA in which information collections were
either not authorized by the Office of Management and Budget (OMB) or
those authorizations had expired.

In brief, the agencies’ estimate of federal paperwork at the end of fiscal
year 2002 stood at about 8.2 billion burden hours. The paperwork estimate
increased by about 570 million burden hours from last year—nearly double
the previous record increase for a 1-year period that I reported last year.
Two agencies—IRS and the Department of Transportation (DOT)—
accounted for almost 90 percent of the increase. IRS increased its
paperwork estimate by about 330 million burden hours, most of which
involved adjustments to the agency’s burden-hour estimate for Form 1040.
DOT’s burden estimate rose by about 165 million burden hours, an increase
that was almost entirely attributable to the reintroduction and reestimation
of one information collection.

Also, federal agencies identified 244 violations of the PRA that occurred
during fiscal year 2002—a more than 40 percent reduction in the number of
violations that were reported during the previous fiscal year and about one-
fourth the number reported for fiscal year 1998. Some agencies reported
fewer violations in each of the last 3 fiscal years, but other agencies
reported increases in 1 or more of those years. Although some
longstanding violations were resolved, others remained open at the end of
the fiscal year and had been in violation for 2 years or more at that point.
OMB has taken several actions to address PRA violations since last year’s
hearing—and deserves a lot of credit for the reductions that have occurred
in the past year. However, 244 violations of the law during a single year are
still troubling and should not be tolerated. We continue to believe that
OMB and the agencies can do more to ensure that the PRA is not violated
and that long-standing violations are resolved.




Page 1                                                           GAO-03-619T
Background   Before discussing these issues in detail, it is important to recognize that a
             large amount of federal paperwork is necessary and serves a useful
             purpose. Information collection is one way that agencies carry out their
             missions. For example, IRS needs to collect information from taxpayers
             and their employers to know the correct amount of taxes owed. The
             Bureau of the Census collects information that was used to reapportion
             congressional representation and is being used for a myriad of other
             purposes. The events of September 11, 2001, have demonstrated the
             importance of accurate, timely information. On several occasions, we have
             recommended that agencies collect certain data to improve operations and
             evaluate their effectiveness.1

             However, under the PRA, federal agencies are required to minimize the
             paperwork burden they impose. The original PRA of 1980 established the
             Office of Information and Regulatory Affairs (OIRA) within OMB to provide
             central agency leadership and oversight of governmentwide efforts to
             reduce unnecessary paperwork and improve the management of
             information resources. Currently, the act requires OIRA to develop and
             maintain a governmentwide strategic information resources management
             (IRM) plan. In February 2002, we reported that OMB had not fully
             developed and implemented a strategic IRM plan that articulated a
             comprehensive federal vision and plan for all aspects of government
             information, including reducing information burdens, and we
             recommended that the agency develop such a plan.2 During the past year
             OMB has taken a number of actions that demonstrate progress in fulfilling
             the PRA’s requirement of providing a unifying IRM vision with a focus on
             burden reduction. For example, OMB’s E-Government Strategy outlines
             the federal government’s action plan for electronic government. One focus
             of that strategy is implementing initiatives that will reduce burden on


             1
              See, for example, U.S. General Accounting Office, Veterans’ Health Care: VA Needs Better
             Data on Extent and Causes of Waiting Times, GAO/HEHS-00-90 (Washington, D.C.: May 31,
             2000); Public Housing: HUD Needs Better Information on Housing Agencies’
             Management Performance, GAO-01-94 (Washington, D.C.: Nov. 9, 2000); and
             Environmental Information: EPA Needs Better Information to Manage Risks and
             Measure Results, GAO-01-97T (Washington, D.C: Oct. 3, 2000).
             2
              U.S. General Accounting Office, Information Resources Management: Comprehensive
             Strategic Plan Needed to Address Mounting Challenges, GAO-02-292 (Washington, D.C.:
             Feb. 22, 2002). Our conclusions in this report were similar to those in a report issued
             several years earlier. See U. S. General Accounting Office, Regulatory Management:
             Implementation of Selected OMB Responsibilities Under the Paperwork Reduction Act,
             GAO/GGD-98-120 (Washington, D.C.: July 9, 1998).




             Page 2                                                                       GAO-03-619T
businesses by reducing redundant data collection and providing one-stop
streamlined support. In addition, the Federal Enterprise Architecture
Business Reference Model provides an integrated view of the federal
government’s activities, thereby allowing agencies to look at federal
business operations and understand the gaps, overlaps, and opportunities
for consolidation. Although OMB’s strategies and models are promising,
their ability to reduce paperwork burden and accomplish other objectives
depends on how OMB implements them.

OIRA also has overall responsibility for determining whether agencies’
proposals for collecting information comply with the PRA.3 Agencies must
receive OIRA approval for each information collection request before it is
implemented. Section 3514(a) of the PRA requires OIRA to keep Congress
“fully and currently informed” of the major activities under the act, and to
submit a report to Congress at least annually on those activities. The
report must include, among other things, a list of all PRA violations and a
list of any increases in burden. To satisfy this reporting requirement, OIRA
develops an Information Collection Budget (ICB) by gathering data from
executive branch agencies. In November 2002, the OMB director sent a
bulletin to the heads of executive departments and agencies requesting
information to be used in preparation for the fiscal year 2003 ICB
(reporting on actions during fiscal year 2002).

OIRA published its ICB for fiscal year 2002 (showing changes in agencies’
burden-hour estimates during fiscal year 2001) in April 2002. OIRA officials
told us that they did not expect to publish the ICB for fiscal year 2003 until
today’s hearing. Therefore, we obtained unpublished data from OIRA to
identify changes in governmentwide and agency-specific “burden-hour”
estimates and PRA violations during fiscal year 2002. We then compared
the data to agencies’ burden-hour estimates and violations in previous ICBs
to determine changes in the data over time.




3
 The act requires the director of OMB to delegate the authority to administer all functions
under the act to the administrator of OIRA but does not relieve the OMB director of
responsibility for the administration of those functions. Approvals are made on behalf of
the OMB director. In this testimony, we generally refer to OIRA or the OIRA administrator
wherever the act assigns responsibilities to OMB or the director.




Page 3                                                                         GAO-03-619T
                   “Burden hours” has been the principal unit of measure of paperwork
                   burden for more than 50 years and has been accepted by agencies and the
                   public because it is a clear, easy-to-understand concept. However, it is
                   important to recognize that these estimates have limitations. Estimating
                   the amount of time it will take for an individual to collect and provide
                   information or how many individuals an information collection will affect
                   is not a simple matter.4 Therefore, the degree to which agency burden-hour
                   estimates reflect real burden is unclear. Nevertheless, these are the best
                   indicators of paperwork burden available, and we believe they can be
                   useful as long as their limitations are kept in mind.



Governmentwide     At the end of fiscal year 1995—just before the PRA of 1995 took effect—
                   federal agencies estimated that their information collections imposed
Paperwork Burden   about 7 billion burden hours on the public. The amendment and
Estimate Has       recodification of the PRA that year made several changes in federal
                   paperwork reduction requirements. One such change required OIRA to set
Increased          a goal of at least a 10-percent reduction in the governmentwide burden-
                   hour estimate for each of fiscal years 1996 and 1997, a 5 percent
                   governmentwide burden reduction goal in each of the next 4 fiscal years,
                   and annual agency goals that reduce burden to the “maximum practicable
                   opportunity.” Therefore, if federal agencies had been able to meet each of
                   these goals, the 7-billion burden-hour estimate in 1995 would have
                   decreased about 35 percent to about 4.6 billion hours by September 30,
                   2001.

                   However, as figure 1 shows, this anticipated reduction in paperwork
                   burden did not occur. In fact, the data we obtained from OIRA show that
                   the governmentwide burden-hour estimate stood at more than 8.2 billion
                   hours as of September 30, 2002—about a 1.2 billion hour (17 percent)
                   increase since the PRA of 1995 took effect. Nearly half of that increase
                   (about 570 million hours) occurred during fiscal year 2002 alone, and about
                   70 percent (about 860 million hours) occurred during the last 2 fiscal years.




                   4
                    See U.S. General Accounting Office, EPA Paperwork: Burden Estimate Increasing
                   Despite Reduction Claims, GAO/GGD-00-59 (Washington, D.C.: Mar. 16, 2000) for how one
                   agency estimates paperwork burden.




                   Page 4                                                                   GAO-03-619T
Figure 1: Governmentwide Paperwork Burden-Hour Estimate Continues to Grow
10 Burden hour estimate (in billions)

 9

 8

 7

 6                    10% burden
                       reduction 10% burden
 5                                reduction       5% burden
                                                   reduction   5% burden
                                                                reduction   5% burden
                                                                                         5% burden
 4                                                                           reduction
                                                                                          reduction
 3

 2

 1

 0
        FY 1995         FY 1996         FY 1997    FY 1998     FY 1999      FY 2000      FY 2001      FY 2002
        Fiscal year

                   Agencies’ burden-hour estmates
                   Burden-reduction goals envisioned in PRA
Source: OMB and agencies’ ICB submissions.

Note: Data are as of the end of each fiscal year. The governmentwide burden-hour estimate as of
September 30, 2002, was about 8.2 billion hours.


It is also important to understand how the most recent estimate of federal
paperwork is allocated by the purpose of the collections. As figure 2
shows, data that we obtained from the Regulatory Information Service
Center (RISC) indicate that almost 95 percent of the 8.2 billion hours of
estimated paperwork burden in place governmentwide as of September 30,
2002, was being collected primarily for the purpose of regulatory
compliance.5 Less than 5 percent was being collected as part of
applications for benefits, and about 1 percent was collected for other
purposes.




5
 RISC is part of the General Services Administration but works closely with OIRA to provide
information to the President, Congress, and the public about federal regulations. It
maintains a database that includes information on all information collection review actions
by OIRA.




Page 5                                                                                          GAO-03-619T
Figure 2: As of September 30, 2002, Most Federal Paperwork Was Primarily
Collected for Regulatory Compliance

                                               4.7%
                                               Application for benefits

                                               0.4%
                                               Program planning/management

                                               0.7%
                                               Other




                  94.3%                        Regulatory/compliance




Source: OMB and RISC.

Note: The governmentwide burden-hour estimate as of September 30, 2002, was about 8.2 billion
hours. The “other” category includes program evaluation, general purpose statistics, audit, and
research. Addition of individual elements does not total 100 percent due to rounding.


Figure 3 shows that more than 60 percent of the governmentwide burden
estimate was primarily directed toward businesses or other for-profit
organizations. About one-third of the burden was primarily on individuals
or households, and less than 3 percent was on state, local, or tribal
governments.




Page 6                                                                              GAO-03-619T
Figure 3: As of September 30, 2002, Most Federal Paperwork Was Primarily Directed
at Businesses




                           33.8%              Individuals


          62.2%



                                              2.1%
                                               State, local, or tribal governments
                                              1.9%
                                              Other
                                              Businesses
Source: OMB and RISC.

Note: The governmentwide burden-hour estimate as of September 30, 2002, was about 8.2 billion
hours. The “other” category includes farms, nonprofit organizations, and the federal government.


As of September 20, 2002, IRS accounted for about 99 percent of the
Department of the Treasury’s burden-hour estimate—nearly 6.7 billion
burden hours. In fact, as figure 4 shows, IRS accounted for about 81
percent of the governmentwide burden-hour estimate (up from about 75
percent in September 1995). Other agencies with burden-hour estimates of
100 million hours or more as of that date were the departments of Health
and Human Services (HHS) and Labor (DOL), DOT, the Environmental
Protection Agency (EPA), and the Securities and Exchange Commission
(SEC). Because IRS constitutes such a significant portion of the
governmentwide burden-hour estimate, changes in IRS’ estimate can have
a significant—and even determinative—effect on the governmentwide
estimate.




Page 7                                                                               GAO-03-619T
                             Figure 4: IRS Accounted for Most of the Federal Paperwork Burden-Hour Estimate
                             as of September 30, 2002
                                       IRS                                                1.7%           EPA
                                                                                          1.7%           SEC

                                                                                          2.8%           HHS

                                                                                          3.1%           DOT

                                      81.1%                 18.9%              Other
                                                                                          2.4%           DOL


                                                                                          7.2%           Other




                             Source: OMB and the Department of the Treasury.

                             Note: The governmentwide burden-hour estimate as of September 30, 2002, was about 8.2 billion
                             hours.




Changes in Individual        As table 1 shows, only a few agencies’ paperwork burden estimates
Agencies’ Estimates During   decreased during fiscal year 2002, most notably the Federal
                             Communications Commission (FCC)—from more than 40 million hours to
Fiscal Year 2002
                             less than 27 million hours. Other agencies, most notably the Department of
                             the Treasury (including IRS), DOT, HHS, and SEC, significantly increased
                             their burden hour estimates. Still other agencies with relatively small
                             burden-hour totals experienced large percentage increases in their
                             estimates—most notably the Department of Housing and Urban
                             Development (HUD) (an 81 percent increase) and the Department of State
                             (a 76 percent increase).




                             Page 8                                                                              GAO-03-619T
Table 1: Changes in Federal Agencies’ Burden-Hour Estimates During Fiscal Year 2002

Burden hours in millions
                                                         Program changes
                                FY 2001        New     Lapses in        Agency                              Total       FY 2002
                               estimate    statutes OMB approval         action    Total   Adjustments    change       estimate
Governmentwide                  7,651.4                                                                     570.5       8,221.7
Non-Treasury                    1,235.6                                                                     236.3       1,471.8
Departments
 Agriculture                       86.7            1.5           0.5       (0.3)     1.8           0.0        1.8          88.5
 Commerce                          10.3            0.2           0.0         1.2     1.3          (0.5)       0.9          11.2
 Defense                           92.1             –            0.5         0.6     1.0          (0.7)       0.3          92.4
 Education                         40.5            0.2          (0.1)      (3.2)   (3.1)           1.0      (2.1)          38.4
 Energy                             3.9             –              –         0.1     0.1          (0.2)     (0.1)           3.8
 Health and Human Services        186.6        35.9              1.4       (2.0)    35.3           1.9       37.2         223.8
 Housing and Urban
 Development                       12.1            0.0           9.9         0.0     9.9          (0.1)       9.8          21.9
 Interior                           7.6            0.1           0.1         0.3     0.4          (0.3)       0.1           7.7
 Justice                           40.5            5.1          (0.0)        0.8     5.9           0.2        6.1          46.6
 Labor                            186.1            0.1             –         2.4     2.5           0.7        3.1         189.2
 State                             16.6        12.1              0.4          –     12.5           0.1       12.6          29.2
 Transportation                    80.3            0.8             –       163.2   164.0           1.2      165.2         245.5
 Treasury                       6,415.9        64.1             (0.1)      (9.5)    54.6         279.6      334.2       6,750.0
 Veterans Affairs                   5.3             –            0.3          –      0.3           1.8        2.1           7.4
Agencies
 Environmental Protection
 Agency                           130.8            0.1             –         0.6     0.7           9.0        9.7         140.5
 Federal Acquisition
 Regulatory Council                23.8             –              –         0.7     0.7             –        0.7          24.5
 Federal Communications
 Commission                        40.1       (0.5)                –       (1.7)   (2.3)         (11.1)    (13.3)          26.8
 Federal Deposit
 Insurance Corporation             10.5             –              –         0.1     0.1          (0.7)     (0.5)          10.0
 Federal Emergency
 Management Agency                  5.5            0.0           0.0         0.3     0.3           2.0        2.3           7.8
 Federal Energy Regulatory
 Commission                         4.4             –            0.0         0.0     0.0             –        0.0           4.4
 Federal Trade
 Commission                        72.6             –              –          –       –           (2.9)     (2.9)          69.7
 National Aeronautic and
 Space Administration               6.9             –           (0.9)        0.0   (0.9)           0.0      (0.9)           6.0




                                          Page 9                                                                    GAO-03-619T
(Continued From Previous Page)
Burden hours in millions
                                                                      Program changes
                                              FY 2001        New     Lapses in          Agency                                       Total         FY 2002
                                             estimate    statutes OMB approval           action        Total    Adjustments        change         estimate
 National Science
 Foundation                                       4.8             –                 –         0.0        0.0              (0.3)        (0.3)            4.5
 Nuclear Regulatory
 Commission                                       8.2             –                 –           –          –                0.2          0.2            8.4
 Securities and Exchange
 Commission                                     114.3          0.2                  –         4.3        4.5               17.8        22.3          136.6
 Small Business
 Administration                                   1.9             –               0.3         0.0        0.4                0.5          0.9            2.8
 Social Security
 Administration                                  24.2          0.4                  –         0.3        0.7                0.0          0.6          24.8
Source: OMB and agencies’ ICB submissions.

                                                        Note: Data on the Federal Acquisition Regulatory Council were submitted by the General Services
                                                        Administration. Data from the 27 departments and agencies may not equal the governmentwide figure
                                                        because smaller agencies’ requirements are also included. Cells with “0.0” values were non-zero
                                                        values rounded to zero. Cells with “—“entries were zero values. Addition of individual elements may
                                                        not equal totals due to rounding.


                                                        However, changes in agencies’ bottom-line burden-hour estimates do not
                                                        tell the whole story and can be misleading. It is also important to
                                                        understand how the agencies accomplished these results. OIRA classifies
                                                        modifications in agencies’ burden-hour estimates as either “program
                                                        changes” or “adjustments.”

                                                        • Program changes are the result of deliberate federal government action
                                                          (e.g., the addition or deletion of questions on a form) and can occur as a
                                                          result of new statutory requirements, agency-initiated actions, or
                                                          through the expiration or reinstatement of OIRA-approved collections.

                                                        • Adjustments are not the result of deliberate federal government action,
                                                          but rather are caused by factors such as changes in the population
                                                          responding to a requirement or agency reestimates of the burden
                                                          associated with a collection of information. For example, if the
                                                          economy declines and more people complete applications for food
                                                          stamps, the resultant increase in the Department of Agriculture’s
                                                          (USDA) paperwork estimate is considered an adjustment because it is
                                                          not the result of deliberate federal action.

                                                        The agencies’ ICB submissions identified what drove the changes in
                                                        agencies’ bottom-line burden-hour estimates during fiscal year 2002. For



                                                        Page 10                                                                                GAO-03-619T
example, more than 80 percent of the 13 million hour decline in the FCC
estimate was due to the adjustment of one information collection.
However, OMB does not require agencies to explain the causes of
significant adjustments in agencies’ burden-hour estimates. Therefore, it is
not clear whether the FCC adjustment reflected a real reduction in the
burden felt by the public (e.g., a change in the population responding to the
collection), or was simply a reestimation of the burden that already existed.
In any event, it appears that most of the FCC decrease was not the result of
agency burden-reduction initiatives.

In contrast, HHS indicated that the 37 million burden-hour increase in its
paperwork estimate during fiscal year 2002 was almost entirely driven by a
statutory program change in a single collection related to the enactment of
the Health Insurance Portability and Accountability Act of 1996.6 In its ICB
submission, HHS said the purpose of this statutory change was “to
establish standards for electronic transactions and for code sets to be used
in those transactions.” HUD indicated that the 87 percent increase in its
burden estimate was entirely driven by program changes—specifically the
reinstatement of two information collections that had been in violation of
the PRA (i.e., HUD continued to collect the information without OMB
approval). Therefore, although the department’s burden estimate
increased, the actual burden imposed on the public by the collection did
not change.

In some cases, we found the agencies’ explanations in their ICB
submissions for the changes in their burden estimates somewhat
misleading and/or inconsistent. For example, DOT indicated in its
summary table that virtually all of the department’s 165 million burden-
hour increase in its estimate was driven by program changes—specifically,
an “agency action.” However, the narrative that the department submitted
to OMB indicated that almost all of this change was driven by the
reinstatement of a collection that had been in violation (“Driver’s Records
of Duty Status”) and an adjustment to the collection’s burden estimate.7
DOT’s estimate of the burden associated with this collection declined about
42 million burden hours when the violation occurred during fiscal year


6
Pub. Law 104-191.
7
 This collection is used by DOT to determine the compliance of motor carriers and
commercial motor vehicle drivers with the maximum driving and duty time limitations
prescribed in the Federal Motor Carrier Safety Regulations. For a discussion of how DOT’s
burden-hour estimate for this collection changed, see 67 Fed. Reg. 1396 (Jan. 10, 2002).




Page 11                                                                     GAO-03-619T
                             2001, so the adjustment was about 120 million hours. Documentation that
                             we obtained from DOT’s Office of the Chief Information Officer indicated
                             that the adjustment was caused by significant increases in the department’s
                             estimates of the time needed for drivers and motor carriers to perform
                             certain tasks. Therefore, the actual burden associated with this
                             information collection did not change. The same information was being
                             collected when the authorization had lapsed during fiscal year 2001 and
                             when it was reinstated during fiscal year 2002. The rest of the increase was
                             caused by the department’s reestimation of the burden, not a change in the
                             burden itself.



Reasons for Changes in IRS   The increase in the IRS burden-hour estimate during fiscal year 2002 (about
Burden Estimate              330 million burden hours) was more than the increase in the rest of the
                             government combined. Therefore, although all agencies must ensure that
                             their information collections impose the least amount of burden possible, it
                             is clear that the key to controlling federal paperwork governmentwide lies
                             in understanding and controlling the increases at IRS.

                             The Department of the Treasury’s ICB submission indicated that more than
                             80 percent of the increase in the department’s estimate during fiscal year
                             2002 (about 280 million burden hours) was caused by adjustments. An IRS
                             official told us that this adjustment was largely driven by an increase in the
                             number of taxpayers using Form 1040.

                             IRS identified a number of burden-hour increases that it said were caused
                             by the underlying statutes. For example, IRS said that it added more than
                             18 million burden hours to its estimate because of changes to Form 1040
                             and its associated schedules and instructions that were precipitated by the
                             Economic Growth and Tax Relief Reconciliation Act of 2001.8 Also, IRS
                             said it added nearly 17 million hours to the burden associated with Form
                             4562 (“Depreciation and Amortization”) because of changes made by the
                             Job Creation and Worker Assistance Act of 2002.9




                             8
                             Pub. Law 107-16.
                             9
                              Pub. Law 107-147. IRS said that the provisions that affected Form 4562 include an
                             additional 30 percent depreciation deduction for qualified property placed in service after
                             September 10, 2001, and an increase in the section 179 expense deduction for property
                             placed in service in the New York Liberty Zone.




                             Page 12                                                                        GAO-03-619T
                             However, IRS said that other increases in its burden-hour estimate were
                             made at the agency’s initiative—not because of new statutes. For example,
                             the agency said that an increase of more than 22 million hours in its
                             estimate for Form 941 and related forms were due to changes “requested by
                             IRS.”10

                             The Department of the Treasury also indicated in its ICB submission that it
                             had taken a number of initiatives to reduce paperwork burden. For
                             example, beginning with the 2002 tax year, Treasury said that IRS had
                             eliminated the requirement on small corporate filers (i.e., those with total
                             receipts and assets of less than $250,000) to file certain schedules with
                             their returns, resulting in a reduction of about 26 million burden hours.
                             Treasury also said it had decided to increase the threshold for taxpayers
                             having to file Schedule B (Form 1040) from $400 to $1,500. As a result, the
                             department said that more than 10 million fewer taxpayers would have to
                             file the schedule—about one-third of those who previously had to file.
                             However, Treasury did not estimate how many burden hours would be
                             reduced as a result of that action.



Focusing on IRS to Control   In summary, the agencies’ information collection estimates for the ICB
Paperwork                    being released today indicate that federal paperwork continues to increase
                             at a record pace, and that IRS continues to account for most of the
                             increases in estimated burden. Because IRS constitutes such a significant
                             portion of the annual increases and the governmentwide burden-hour
                             estimate, one strategy to address increases in federal paperwork could be
                             to focus more of OIRA’s burden-reduction efforts on that agency. Just as
                             increases in IRS’s estimates have had a determinative effect on the
                             governmentwide estimates, reduction in the IRS estimates can have an
                             equally determinative effect. For example, just one IRS information
                             collection (related to Form 1040) is estimated to impose more paperwork
                             burden than all of the non-Treasury collections combined. Just five IRS
                             information collections represent about half of the 8.2 billion hour
                             paperwork estimate governmentwide. A small reduction in the burden
                             associated with those five collections could have a major effect on the
                             governmentwide effort to reduce paperwork burden.




                             10
                              Form 941 is used by employers to report payments made to employees subject to income
                             and social security/Medicare taxes and the amounts of those taxes.




                             Page 13                                                                  GAO-03-619T
                       However, significant reduction of the burden hours associated with these
                       and other IRS information collections may ultimately depend upon
                       congressional action. IRS officials maintain that the agency’s paperwork
                       burden totals reflect the information that is needed to administer the tax
                       laws. Therefore, they suggest that significant reductions in IRS’s
                       paperwork burden would require changes to the tax laws. Within the
                       current tax laws, however, IRS has some discretion that can affect
                       paperwork burden. For example, in January 2001 IRS altered the threshold
                       over which businesses must pay employment taxes on a quarterly rather
                       than a more frequent basis. In general, when considering reductions in the
                       amount or frequency of data collection, IRS must also balance the potential
                       for decreasing its ability to ensure that taxpayers fulfill their tax obligations
                       with the amount of burden imposed.



Agencies Identified    I would now like to turn to the other main topic that you asked us to
                       address—PRA violations. The PRA prohibits an agency from conducting or
Fewer PRA Violations   sponsoring a collection of information unless (1) the agency has submitted
                       the proposed collection and other documents to OIRA, (2) OIRA has
                       approved the proposed collection, and (3) the agency displays an OMB
                       control number on the collection. The act also requires agencies to
                       establish a process to ensure that each information collection is in
                       compliance with these clearance requirements. OIRA is required to submit
                       an annual report to Congress that includes a list of all violations. Under the
                       PRA, no one can be penalized for failing to comply with a collection of
                       information subject to the act if the collection does not display a valid OMB
                       control number. OIRA may not approve a collection of information for
                       more than 3 years, and there are currently about 8,000 approved
                       collections.

                       As table 2 shows, the agencies indicated in their ICB submissions that a
                       total of 244 PRA violations occurred during fiscal year 2002 (i.e., were
                       either carried over from the previous year or were new violations). As in
                       previous years, most (217) of these violations were collections whose OIRA
                       approvals had expired and had not been reauthorized. Four cabinet
                       departments were responsible for nearly 60 percent of the violations—
                       USDA, the Department of Commerce (DOC), HUD, and the Department of
                       Veterans Affairs (DVA).




                       Page 14                                                              GAO-03-619T
Table 2: Reported Violations of the PRA During Fiscal Year 2002

                                                  Expired
                                              information        Other           Total
                                               collections   violations     violations
Departments
Agriculture                                            65            1             66
Commerce                                               28            2             30
Defense                                                 7            0              7
Education                                               3            1              4
Energy                                                  0            0              0
Health and Human Services                              11            7             18
Housing and Urban Development                          24            0             24
Interior                                                6            0              6
Justice                                                16            1             17
Labor                                                   0            0              0
State                                                   4            0              4
Transportation                                          0            0              0
Treasury                                                0            0              0
Veterans Affairs                                       23            0             23
Agencies
Environmental Protection Administration                 0            1              1
Federal Acquisition Regulation                          0            0              0
Federal Communications Commission                       2            0              2
Federal Deposit Insurance Corporation                   0            0              0
Federal Emergency Management Agency                     6            8             14
Federal Energy Regulatory Commission                    1            0              1
Federal Trade Commission                                0            0              0
National Aeronautics and Space                         12            0             12
Administration
National Science Foundation                             0            0              0
Nuclear Regulatory Commission                           0            0              0
Securities and Exchange Commission                      0            0              0
Small Business Administration                           9            0              9
Social Security Administration                          0            6              6
Total                                                 217           27            244
Sources: OMB and agencies’ ICB submissions.




Page 15                                                                   GAO-03-619T
Number of Violations Has   As figure 5 shows, the number of PRA violations that the agencies
Declined in Recent Years   identified has fallen markedly during the past 5 fiscal years—from 872
                           violations during fiscal year 1998 to 244 during fiscal year 2002. The
                           decline in the number of violations between fiscal year 2001 and fiscal year
                           2002 is particularly notable. Last year, OIRA only asked the cabinet
                           departments and EPA to report data on violations. The number of
                           violations during fiscal year 2002 in just those agencies was less than half
                           the number reported by the same agencies during fiscal year 2001 (200
                           versus 402).



                           Figure 5: The Number of PRA Violations Has Declined During the Past 5 Fiscal
                           Years
                           1000 Number of violations


                                     872


                            750                    710




                            500                                  487
                                                                         402




                            250                                                   244




                              0
                                   1998          1999          2000      2001    2002
                                   Fiscal year
                            Source: OMB and agencies’ ICB submissions.

                           Note: In fiscal year 2001, OMB reported the violations only for the cabinet-level departments and the
                           EPA. Therefore, the data for that year does not include information for 12 independent agencies
                           included in the other years.


                           As figure 6 shows, federal agencies vary in the extent and the consistency
                           with which they have been able to reduce their number of violations. In
                           some agencies, the number of violations has gone down in each of the last 3
                           fiscal years (e.g., USDA and the Department of Justice). In other agencies,
                           the number of violations has gone up during this period (e.g., DOC) or
                           exhibited an inconsistent pattern (e.g., HUD and DVA).




                           Page 16                                                                                GAO-03-619T
                         Figure 6: Agencies Exhibit Varying Patterns of Compliance with the PRA
                         120 Number of violations
                                                                                112


                         100                                               99
                                 96


                          80
                                        67    66
                                                                                                                64

                          60

                                                                                           44
                                                                                                           40
                          40
                                                                      30
                                                                22                    24                              23
                                                                                                21
                          20                             16                                           17



                           0
                                      USDA                     DOC              HUD             DOJ             DVA
                               Federal Department


                                         FY 2000

                                         FY 2001

                                         FY 2002

                         Source: OMB and agencies’ ICB submissions.



                         Notably, some cabinet departments were able to completely eliminate their
                         violations during the past fiscal year—the Department of the Treasury
                         (from 14 violations during fiscal year 2001 to zero during fiscal year 2002);
                         DOT (from 12 violations to zero); DOL (from 8 violations to zero); and the
                         Department of Energy (from 6 violations to zero).



OIRA Efforts to Reduce   OIRA deserves a great deal of the credit for the reduction in the number of
Violations               PRA violations during the past year. In June 2002—2 months after last
                         year’s hearing before this Committee—the OIRA Administrator sent a
                         memorandum to agency chief information officers (CIOs), general
                         counsels, and solicitors emphasizing the importance of compliance with
                         the PRA. The Administrator said that, despite recent progress, the number
                         of overall and unresolved violations was still “unacceptably high,” and
                         asked each agency to identify progress on violations reported in the ICB for
                         fiscal year 2001 and to identify any new violations that had occurred since
                         September 30, 2001. He also asked the agencies to describe the procedures



                         Page 17                                                                           GAO-03-619T
                           that they had in place to prevent future violations, and said OIRA was
                           planning to meet with the CIOs and general counsels of the five agencies
                           with the highest number of overall, long-standing, or high-burden
                           violations—USDA, HHS, HUD, the Department of State, and DVA.

                           In November 2002, the OIRA Administrator sent another memorandum to
                           the CIOs, noting that although most agencies had done a good job of
                           resolving existing violations, some were still having problems in this area.
                           He also reported that six agencies had reported 10 or more new violations
                           from October 2001 through June 2002—USDA, DOC, the Department of
                           State; the Federal Emergency Management Administration, the National
                           Aeronautics and Space Administration, and the Small Business
                           Administration. The Administrator said OIRA’s goal was “to achieve zero
                           violations by no later than April 1, 2003,” and urged each agency to
                           reexamine the efficacy of its PRA clearance system. To assist in that effort,
                           he attached a list of collections that had expired in the previous 30 days and
                           those that were due to expire in the next 150 days, and asked the agencies
                           to take action to resolve existing violations and to prevent future ones.



Long-standing Violations   In our previous testimonies on the implementation of the PRA, we noted
Still a Problem            that many of the agencies’ PRA violations had been occurring for years.
                           The agencies appear to have made some progress in this area, resolving
                           certain long-standing violations by either obtaining OMB clearance or
                           discontinuing the collections. For example, during fiscal year 2002, the
                           Department of the Interior resolved three violations that had been
                           occurring since 1993 or 1994. DVA resolved five violations that had been
                           occurring since 1996 or 1997.

                           However, the agencies also indicated that many other long-standing
                           violations had not been addressed. Of the 244 violations that occurred
                           during fiscal year 2002, 120 were still occurring at the end of the fiscal year
                           (September 30, 2002). Forty-five of these 120 violations had been occurring
                           for at least 1 year at that point, and 27 had been occurring for at least 2
                           years.

                           Some agencies had a particularly large number of long-standing unresolved
                           violations.

                           • USDA indicated that 27 of its 66 violations were unresolved as of
                             September 30, 2002. Of these, 14 had been occurring for more than 1




                           Page 18                                                            GAO-03-619T
                            year, and 6 had been in violation for more than 2 years. Three of the
                            USDA collections had been in violation for at least 5 years—since 1997.

                       • HUD indicated that 23 of its 24 violations during fiscal year 2002 were
                         unresolved as of September 30, 2002. Of these, 17 had been occurring
                         for at least 1 year, and 13 had been in violation for at least 2 years.

                       • SBA indicated that 8 of its 9 violations during fiscal year 2002 were
                         unresolved as of September 30, 2002. Of these, 6 had been occurring for
                         at least 1 year, and 4 had been occurring for at least 2 years.

                       Federal agencies brought a number of their unresolved violations into
                       compliance after the fiscal year ended. For example, by the end of January
                       2003, HUD had resolved 15 of its 23 violations that were open at the end of
                       fiscal year 2002. USDA resolved 12 of its 27 open violations by January
                       2003. Overall, 46 of the 120 violations that were still occurring as of
                       September 30, 2002, were resolved between that date and the end of
                       January 2003. However, that still leaves 74 violations occurring during
                       fiscal year 2002 that had not been resolved by the end of January 2003.



Violations and Costs   In our testimony in previous years, we provided an estimate of the
                       monetary cost associated with certain PRA violations. To estimate that
                       cost, we multiplied the number of burden hours associated with the
                       violations by an OMB estimate of the “average value of time” associated
                       with each hour of paperwork.11 Although the ICBs list the information
                       collections that were in violation during the previous year, they do not
                       show the number of burden hours associated with each of the violations.
                       Therefore, we obtained data from OIRA on the estimated number of burden
                       hours for the 45 information collections that had been in violation for at
                       least 1 year as of September 30, 2002.

                       The data suggest that PRA violations may constitute significant costs for
                       those who provide the related information. The 45 violations that we
                       examined involved an estimated 48 million burden hours of paperwork, or



                       11
                        Office of Management and Budget, Draft Report to Congress on the Costs and Benefits of
                       Federal Regulations, 67 Fed. Reg. 15014 (Mar. 28, 2002). In this report, OMB used an
                       average value of time of $30 per hour to estimate the cost associated with paperwork
                       burden.




                       Page 19                                                                   GAO-03-619T
                      (at $30 per hour) about $1.4 billion in costs. Just 2 of the 45 collections
                      accounted for more than $1 billion in estimated opportunity costs.

                      Many of the information collections that were in violation were being
                      administered for regulatory purposes, so if the respondents knew that the
                      collections were not valid they might not have completed the required
                      forms. However, other violations involved collections in which individuals
                      or businesses were applying for benefits such as loans or subsidies.
                      Therefore, it is not clear whether these individuals or businesses would
                      have refused to complete the required forms if they knew that the
                      collections were being conducted in violation of the PRA.



OIRA Can Do More to   Although OIRA and the agencies have clearly made progress in reducing
Address Violations    the overall number of PRA violations in recent years, more progress is
                      needed. As I am sure that the Administrator would agree, 244 violations of
                      the law in 1 year is not acceptable. Agencies can and should achieve OIRA’s
                      goal of zero violations.

                      As I noted earlier, OIRA has taken a number of steps during the past year to
                      try to address this problem. As we recommended last year, OIRA has used
                      its database to identify information collections that (1) have recently
                      expired and attempted to determine whether the agencies are continuing to
                      collect the information and (2) are about to expire, thereby attempting to
                      prevent future violations. OIRA has also asked the agencies to describe the
                      procedures that they have in place to prevent future violations and has met
                      with agencies that have the highest number of overall, long-standing, or
                      high-burden violations. We believe that these actions precipitated the
                      improvements that occurred during fiscal year 2002, and will have positive
                      benefits for years to come.

                      However, OIRA still has not taken some of the actions that we previously
                      recommended to improve compliance with the PRA. For example, OIRA
                      could notify the budget side of OMB that an agency is collecting
                      information in violation of the PRA and encourage the appropriate
                      resource management office to use its influence to bring the agency into
                      compliance. OIRA could also encourage the use of “best practices” learned
                      from agencies with a good record of PRA compliance. Agencies that have
                      recently eliminated their violations altogether (e.g., the Department of the
                      Treasury, DOT, and DOL) may have much to teach agencies that continue to
                      violate the act.




                      Page 20                                                            GAO-03-619T
           Although OIRA's current workload is clearly substantial, we do not believe
           the kinds of actions that we suggested would require significant additional
           resources. Primarily, the actions require a continued commitment by OIRA
           leadership to improve the operation of the current paperwork clearance
           process. However, we also recognize that OIRA cannot eliminate PRA
           violations by itself. Federal agencies committing these violations need to
           evidence a similar level of resolve.


           Mr. Chairman, this completes my prepared statement. I would be pleased
           to answer any questions.




(450192)   Page 21                                                         GAO-03-619T