oversight

U.S. Department of Agriculture: Analysis of Budgets, Fiscal Years 1997-98

Published by the Government Accountability Office on 1997-05-05.

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

      United States
GAO   General Accounting  Office
      Washington, D.C. 20648

      Resources, Community,   and
      Economic Development    Division

      B-276691

      May 5, 1997

      Congressional Committees

      Subject: U.S. DeDartment of Agriculture:         Analvsis of Budgets. Fiscal Years
      1997-98

      We examined the U.S. Department of Agriculture’s (USDA) appropriation for
      fiscal year 1997 and budget request for fiscal year 1998 for selected budget
      accounts. Our objectives were to identify for congressional consideration
      potential rescissions’ to USDA’s appropriation for fiscal year 1997 and
      potential reductions or deferrals to USDA’s budget request for fiscal year 1998.
      Specifically, we reviewed selected USDA programs and projects to determine
      whether unobligated funds from USDA’s appropriations for fiscal year 1997
      and earlier years could be rescinded and whether USDA’s current budget
      request could, in part, be reduced or deferred.

      RESULTS IN BRIEF

      We identified the following potential opportunities for rescinding the budget
      authority for USDA’s current appropriations and for reducing or deferring the
      budget authority sought by USDA in its fiscal year 1998 request:

      -   About $3 billion of the budget authority appropriated for the Food Stamp
          Program in fiscal year 1997 will remain unobligated at the end of the fiscal
          year, including $100 million that agency records indicate will not be needed
          for a contingency reserve fund. Accordingly, a rescission of up to $3 billion
          in budget authority currently available to USDA for this program may be
          possible.

      -   USDA is seeking $2.5 billion in new budget authority in fiscal year 1998 for
          a contingency fund to cover unexpected expenses that may occur in the
          Food Stamp Program. However, this fund may not be needed. USDA’s
          records show that participation rates in the Food Stamp Program have


      ‘A rescission is a cancellation of budget authority that is otherwise available
      for obligation.
                       GAO/RCED-9’7-135R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
                                                                                          ,_ -(
B-276691
        steadily declined in recent years, and, as a result, the budget authority
        appropriated for the contingency fund in each of these years was returned
        to the U.S. Treasury. Thus, a reduction of up to $2.5 billion in the
        Department’s fiscal year 1998 budget request may be possible.

-       About $675,000 of USDA’s fiscal year 1997 appropriation for the Census of
        Agriculture may remain unobligated at the end of the fiscal year, primarily
        because of lower-than-expected printing costs. These funds will be carried
        over to fiscal year 1998 and will remain available for obligation. However,
        the Department did not consider the availability of these funds in
        formulating its fiscal year 1998 budget request for the agriculture census;
        therefore, a reduction or deferral of up to $675,000 to this request may be
        possible.

        About $58 million of the funds appropriated for major construction projects
        administered either by the Agricultural Research Service or by the Animal
        and Plant Health Inspection Service will remain unobligated at the end of
        fiscal year 1997. We noted that a number of these projects are on hold
        because of such factors as unresolved environmental, siting, funding, and/or
        legal and procedural issues. Thus, USDA will not be able to utilize the
        associated unobligated funds until these issues are resolved. USDA
        estimates that these projects will carry an unobligated balance of about
        $20 million at the end of fiscal year 1997. We also noted a number of
        projects with surplus funds remaining that USDA tentatively plans to
        redirect for other purposes. USDA estimates that these projects will carry
        an unobligated balance of about $11 million at the end of fiscal year 1997.
        Accordingly, a rescission of up to $31 million-the unobligated funds
        associated with projects either on hold or with surplus funds that will not
        be used for the original purpose intended-may be possible.

FOOD STAMP’ PROGRAM

Considered the cornerstone of federal food assistance programs, the Food
Stamp Program provides low-income households with either coupons or
electronic debit cards that can be used to purchase food at authorized grocery
stores. In fiscal year 1995, this program provided about $22 billion in benefits;
this amounted to a daily average of approximately $60 million in assistance to
more than 10 million households and 25 million individuals, USDA administers
the program at the federal level through its Food and Consumer Service (FCS);
state welfare agencies administer the program at the state and local levels.
The Food Stamp Program is considered an entitlement program-all households
meeting specified income and other criteria are guaranteed benefits even if the

    2               GAOIRCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691
Congress must appropriate supplemental funds to meet the actual level of
program activity in a given year.

USDA estimates that about $3 billion of the budget authority that was
appropriated for the Food Stamp Program in fiscal year 1997 will not be
needed, and that these funds wiil be returned to the U.S. Treasury at the end
of the fiscal year2 Approximately $2.5 billion of this amount is attributable to
reductions in program participation and benefits resulting from the passage of
the Personal Responsibility and Work Opportunity Reconciliation Act of 1996
(commonly known as the welfare reform act), which became law after the
passage of USDA’s appropriation for fiscal year 1997. Another $400,000 is
attributable to factors unrelated to provisions of the welfare reform act, such
as favorable economic conditions and relatively low inflation in food costs.
The remaining $100 million was appropriated for a contingency reserve fund to
cover unanticipated expenses.

FCS officials told us that a rescission of part or all of the estimated $3 billion
in excess budget authority could be risky and, in their view, would have no
apparent budgetary benefit. Noting the entitlement status of the Food Stamp
Program, these officials cautioned that if this budget authority were rescinded
and the program subsequently ran short of funds because of unforeseen
circumstances, such as a major economic recession, the Congress would need
to pass a supplemental appropriation.

FCS officials also told us that USDA’s estimate of the impact of the welfare
reform act on the Food Stamp Program should be viewed with a note of
caution because it is new law. For example, the act toughens employment
requirements for able-bodied adults without dependents in a manner that
should significantly reduce the food stamp benefits received by this category
of individuals. However, the legislation also provides that states may seek
waivers to these new requirements in areas with chronically high
unemployment. FCS officials said it is difficult to predict how many states will
request these waivers.

F’inaJly, FCS officials said that there is no apparent budgetary benefit to
rescinding the budget authority estimated to be excess. According to these
officials, the rescission of these funds would not result in budgetary savings in




2An appropriation for the Food Stamp Program remains available only until the
end of the fiscal year for which the appropriation was made.
3              GAO/RCED-97-13SR,   Analysis   of USDA’s Budgets,   Fiscal   Years 1997-98
                                                                                           _.
B-276691
the context of deficit reduction because FCS would not be making outlays
against this budget authority in any case.

Despite the concerns raised by FCS officials, rescinding part or aII of the
$3 billion in budget authority that USDA estimates wiII remain unobligated at
the end of fiscal year 1997, including the $100 million appropriated for the
contingency fund, is an option. FCS records indicate that participation in the
Food Stamp Program has steadily declined in recent years. For example,
average monthIy participation in the program declined from 27.5 million in
fiscal year 1994 to an estimated 25.9 million in fiscal year 1997. Including the
changes caused by the welfare reform act, USDA now estimates that average
monthly participation in fiscal year 1997will be 24.3 million. Furthermore, for
fiscal years 1993 through 1996, more than $2 billion in budget authority
appropriated for the Food Stamp Program remained unobligated at the end of
each year; in each case, these funds were returned to the U.S. Treasury.

In addition, for fiscal year 1998, USDA is seeking $2.5 billion in new budget
authority for the Food Stamp Program’s contingency fund. However, because
of declining program participation, contingency funds have not been needed
since fiscal year 1992, according to FCS’ records. In each subsequent year
through fiscal year 1996, the funds appropriated for the reserve were returned
to the U.S. Treasury. FCS records indicate that the agency expects that the
funds appropriated for the contingency fund in fiscal year 1997 wi.Il also not be
needed. Therefore, it appears that some or aII of the $2.5 billion contingency
fund requested by USDA for fiscal year 1998 may not be needed.

CENSUS OF AGRICULTURE

Responsibility for conducting the Census of Agricuhure-a census done every 5
years to collect comprehensive data on the agricultural economy-was
transferred from the Department of Commerce to USDA’s National Agricultural
Statistics Service (NASS) at the beginning of fiscal year 1997. However, a
number of issues related to personnel transfers, access to historical Census
records, and the support to be provided to NASS by the Department of
Commerce’s Bureau of the Census were still being addressed as of January
 1997, according to NASS officials. Nevertheless, these officials said that NAM
planned to obligate most of the $17.5 million appropriated for the agriculture
 census in fiscal year 1997.3



 3An appropriation for the Census of Agriculture remains available until
 obligated.
 4              GAO/RCED-97-1368,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691
About $675,000 of the funds appropriated for the agriculture census in fiscal
year 1997 may remain unobligated at the end of the year primarily because of
lower-than-expected printing costs. According to NASS! Administrator, a
contract for the printing of the census questionnaire was awarded for about
$1.8 million less than the $3.3 million that NASS had originally budgeted.
However, the Administrator indicated that about $800,000 of these funds would
be used for other purposes, including relocating newly transferred employees
from space leased by the Bureau of the Census and contracting with a
commercial firm for computer software support that NASS had anticipated
would be provided by the Bureau. In addition, as part of its comments on a
draft of this report, USDA indicated that approximately $525,000 of these funds
would be used to improve the census mail list to achieve better coverage of
minority and Native American farms and to maintain a separate process for
handling census forms for farms in Puerto Rico. As a result, about $475,000
may remain unobligated at the end of fiscal year 1997.

In addition, the Administrator told us that $200,000 of the approximately
$10.2 million that the agency is planning to use for support services to be
provided by the Bureau in fiscal year 1997 is likely to remain unobligated at
the end of the fiscal year. The Administrator said that these funds were
intended primarily as a buffer in case a3.lof the bids for the printing contract
had exceeded $3.3 million.

In summary, about $675,000 of the funds appropriated in fiscal year 1997 for
the agriculture census may remain unobligated at the end of the fiscal year;
these funds will be carried forward to fiscal year 1998 for possible obligation.
However, the Department did not consider the availability of these funds in
formulating its fiscal year 1998 budget request for the agriculture census; thus,
it may be possible to reduce this request by up to $675,000.

MAJOR CONSTRUCTION PROJECTS

We reviewed major construction projects (new construction or renovation of
existing facilities) administered by two USDA agencies-the Agricultural
Research Service (ARS) and the Animal and Plant Health Inspection Service
(APHIS). Each of these projects has received funding appropriated to their
agency’s or office’s Buildings and Facilities (B&F) budget account; the amount




5              GAO/RCED-97-136R,    Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691
of B&F funds to be applied to each was specified in relevant conference
committee reports.”

For ARS and APHIS, we reviewed a total of 34 major construction projects
with a total estimated cost, when completed, of approximately $1 billion. In
total, these projects are expected to have about $58 million in unobligated
funds at the end of fiscal year 1997. We noted that 10 projects were on hold
because of such factors as unresolved environmental, siting, funding, and/or
legal and procedural issues. USDA estimates that these projects will carry an
unobligated balance of approximately $20 million at the end of fiscal year 1997;
these funds cannot be obligated until USDA resolves the issue or issues
delaying each project. We also noted that five projects had surplus funds
remaining unobligated that USDA tentatively plans to redirect to other
purposes. USDA estimates that these projects will carry a total unobligated
balance of about $11 million at the end of fiscal year 1997. Accordingly, a
rescission of up to $31 million-the unobligated funds associated with projects
either on hold or with surplus funds-may be possible, either because the
available funds will not be needed in fiscal year 1997 or because USDA does
not intend to use the funds for the purpose for which they were appropriated.

We noted two projects whose design and/or construction is on hold because of
unresolved environmental issues that could lead to the selection of a new
construction site. These projects include ARS’ National Swine Research
Center and API-E’ National Germplasm Quarantine Center.5 Another project-
API-E’ Methods Development Rearing Facility-is on hold because of possible
resiting from Mission, Texas, to Phoenix, Arizona; this resiting may be done to
consolidate development of cotton pest control methods at one location.

We also found five projects whose design and/or construction is on hold
because of a lack of sufficient funds to begin and complete the next discrete




*Appropriations for major construction projects remain available until
obligated.

5Regarding the National Plant Germplasm Quarantine Center, the construction
of the first two phases of this project has been delayed several years because
of unresolved environmental issues. APHIS believes that these issues will soon
be resolved and the construction site will not be changed. However, at the
time of our review, these issues were still unresolved and, accordingly, the
project was on hold.
6               GAO/RCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691

phase of the intended work.6 These projects include ARS’ Water Conservation
Laboratory, U.S. Vegetable Laboratory, Poultry Disease -Laboratory, Regional
Poultry Research Center, and Soil and Water Laboratory. In some cases, these
projects have not received additional funding in several years; USDA’s 1998
budget request does not include funding for any of these projects.

In addition, we noted three projects that are on hold pending resolution of
legal or procedural issues, such as who will (1) hold the deed to a facility, (2)
be responsible for the operation of a facility once constructed, and/or (3) be
the source of construction and/or operating funds for a facility for which
USDA’s involvement is limited to project design. These projects include ARS
Ethanol Pilot Plant and National Swine Research Center and APHIS’
Screwworm Research Facility.

Finally, we noted five projects that apparently have surplus funds that the
cognizant agency tentatively plans to redirect to other purposes. These
projects include ARS’ Hurricane Andrew/h-&i Repair project,
Greenhouse/Sugar Beet Laboratory, Animal Health System Research
Laboratory, Soil Erosion Center, and South Central Agricultural Research
Laboratory.

Enclosure I provides detailed information on the funding and status of each of
ARS’ major construction projects. Enclosure II provides similar information
for APHIS’ major construction projects.

AGENCY COMMENTS

We provided USDA with a draft of this report for the Department’s review and
comment. USDA provided us with written comments on the draft report, and
we met with the Associate and Deputy Directors of USDA’s Office of Budget
and Program Analysis to discuss the Department’s comments.

USDA did not specifically disagree with our conclusions on budget reduction
opportunities for the Food Stamp Program. However, USDA indicated that the
opportunity to rescind the full $3 billion in its fiscal year 1997 budget authority
should be viewed with caution because of uncertainties in future program
costs. While we recognize that there are uncertainties associated with USDA’s



6Weviewed a proj ect as being on hold for a lack of sufficient funds if all
design and/or construction work for that project had or will come to a
standstill before the end of fiscal year 1997.
7              GAO/RCED-97-135R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691
forecast of food stamp expenditures, we based our review on the best
information that USDA could provide on these expenditures. We also
recognize that some cost categories associated with these programs may come
in over budget, as suggested by USDA, and that there may be other cost
categories that come in under budget. With regard to the opportunity to
reduce the fiscal year 1998 budget request for food stamps by $2.5 billion,
USDA said that contingency funds serve as insurance in the event of
unforeseen changes in the economy. However, USDA did not specifically
identify any national economic contingencies that would necessitate such a
substantial reserve. Consequently, we have not changed our views on budget
reduction opportunities for the Food Stamp Program.

USDA also said that the savings suggested by our draft report for the Census
of Agriculture appeared to be overstated. USDA cited two specific expenses
associated with the agriculture census that it had not previously identified.
Consequently, we included these expenses in our report and revised our
estimate-from $1.2 million to $675,00O-of the potential reduction that could be
made to USDA’s budget request for the agriculture census in fiscal year 1998.

Finally, USDA took issue with our descriptions of the status of a number of
construction projects, including whether specific projects are on hold or
whether the funds to be used for a project have been redirected from the
original purpose for which they were appropriated. While we revised the final
report to include additional information offered by USDA on the status or
financing of these projects, as appropriate, this information did not change our
views on the potential rescissions associated with the projects.

USDA’s comments and our responses are contained in enclosure III.

SCOPE AND METHODOLOGY

To determine whether USDA’s appropriation for fiscal year 1997 and request
for fiscal year 1998 for selected programs and projects could be reduced, we
reviewed budget information for the Food Stamp Program and the Census of
Agriculture. In addition, we reviewed budget information for major
construction projects, i.e., construction or renovation projects that were
specifically highlighted for funding in conference committee reports,
administered by ARS or APHIS. We examined pertinent USDA documents and
interviewed knowledgeable USDA officials. For the programs and projects we
 reviewed, we identified the amounts actually appropriated for fiscal year 1997,
 unobligated funds remaining from prior years’ appropriations, and the amounts
 requested for fiscal year 1998.

 8              GAO/RCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691

We conducted our review from October 1996 through April 1997 in accordance
with generally accepted government auditing standards,



We are sending this report to you because of your role in overseeing the
activities and funding of USDA for the issues discussed. We are also sending
copies of this report to the Secretary of Agriculture and to the Director, Office
of Management and Budget. In addition, we will make copies available to
others on request.

Please contact me at (202) 512-5138 if you or your staff have any questions.
Major contributors to this report were Charles M. Adams, James R. Jones, Jr.,
and Roberto R. PiiIero.




Robert A. Robinson
Director, Food and
 Agriculture Issues

Enclosures - 2




9                GAO/RCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691
List of Congressional Committees

The Honorable Richard G. Lugar
Chairman
The Honorable Tom Harkin
Ranking Minority Member
Committee on Agriculture, Nutrition,
 and Forestry
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Robert C. Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable Thad Cochran
Chairman
The Honorable Dale Bumpers
Ranking Minority Member
Subcommittee on Agriculture,
 Rural Development, and
 Related Agencies
Committee on Appropriations
United States Senate

The Honorable Robert F. Smith
Chairman
The Honorable Charles W. Stenholm
Ranking Minority Member
Committee on Agriculture
House of Representatives

 The Honorable Bob Livingston
 Chairman
 The Honorable David R. Obey
 Ranking Minority Member
 Committee on Appropriations
 House of Representatives



 10             GAO/RCED-97-136R,      Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
B-276691

The Honorable Joe Skeen
Chairman
The Honorable Marcy Kaptur
Ranking Minority Member
Subcommittee on Agriculture,
 Rural Development, FDA, and
 Related Agencies
Committee on Appropriations
House of Representatives




11           GAO/RCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
       ENCLOSURE I                                                                                         ENCLOiURE I ----’

          FUNDING AND STATUS OF MAJOR CONSTRUCTION PROJECTS ADMINISTERED BY
                THE AGRICULTURAL RESEARCH SERVICE fARS1. FISCAL YEAR 1997

       (Dollars in millions)



‘reject                   Total            Total   Unobligated      Projected      Projected               Status
                     estimated    appropriation     balance as    obligations    unobligated
                           cost     as of fiscal    of Mar. 31,            for    balance as
                                     year 199t’           1997     remainder     of Sept. 30,
                                                                     of fiscal          1997
                                                                   year 1997

Vater                 $52.200           $0.396         $0.396        $0.000          $0.396     Last appropriation in fiscal
>onservation                                                                                    year (fy) 1995. Additional
.aboratory,                                                                                     $51.8 million needed; not
Aaricopa,                                                                                       included in fy 1998 budget
GZ.                                                                                             request. Project on hold
                                                                                                until sufficient funding
                                                                                                available for
                                                                                                planning/design.

rlational Rice          11.234          11.234          0.977          0.432          0.545     Last appropriation in fy
qesearch                                                                                        1996. No additional funds
Zenter,                                                                                         needed. Design is
Stuttgart,                                                                                      complete. Construction
Ark.                                                                                            contract was awarded in fy
                                                                                                1996 for scheduled
                                                                                                completion in 1998. ARS
                                                                                                anticipates using
                                                                                                unobligated funds for
                                                                                                future design/construction
                                                                                                contingencies and contract
                                                                                                closeout.

Western                 28.500          27.919           6.080         5.580           0.500    Last appropriation in fy
Regional                                                                                        1997. No additional funds
Research                                                                                        needed. Construction
Center,                                                                                         contract for last phase will
Albany, Ca.                                                                                     be awarded in late fy 1997
                                                                                                with expected completion
                                                                                                by fy 1999. ARS
                                                                                                anticipates using
                                                                                                unobligated funds for
                                                                                                future design/construction
                                                                                                contingencies and contract
                                                                                                closeout.



12                                          GAO/RCED-97-136R,        Analysis    of USDA’s Budgets,     Fiscal Years 1997-98
       ENCLOSURE I                                                                                       ENCLOSURE I

 Project              Total            Total   Unobligated      Projected        Projected                Status
                 estimated    appropriation     balance as    obligations      unobligated    -
                       cost     as of fiscal    of Mar. 31,            for      balance as
                                 year 199?            1997     remainder       of Sept. 30,
                                                                 of fiscal            1997
                                                               year 1997

 Horticultural                       5.560                                          3.359     Last appropriation in fy
 Crop &                                                                                       1995. Additional $23.4
 Water                                                                                        million needed; fy 1998
 Management                                                                                   budget request includes full
 Research                                                                                     amount. Construction on
                                                                                              hold until sufficient funding
                                                                                              is available. ARS
                                                                                              anticipates using $100,000
                                                                                              of the unobligated balance




                                                                                              needed. Construction was
                                                                                              completed in fy 1995,
                                                                                              under budget. ARS
                                                                                              redirected $700,000 to
                                                                                              Animal Disease Center for
                                                                                              incinerator construction.
                                                                                              ARS plans to obligate
                                                                                              $340,000 to modify heating
                                                                                              and air conditioning system
                                                                                              at salinity laboratory. ARS
                                                                                              anticipates using
                                                                                              unobligated funds for
                                                                                              future design/construction
                                                                                              contingencies and contract
                                                                                              closeout.




13                                    GAO/RCED-97-136R,        Analysis      of USDA’s Budgets,     Fiscal Years 1997-98
      ENCLOSURE1                                                                                        ENCLOSURE I

reject               Total           Total    Unobligated      Projected      Projected                 Status
                estimated    appropriation     balance as    obligations    unobligated    -
                      cost     as of fiscal    of Mar. 31,            for    balance as
                                year 1997            1997     remainder     of Sept. 30,
                                                                of fiscal          1997
                                                               year 1997

iorticultural     34.770           34.770         31.407        28.638           2.769     Last appropriation in fy
jesearch                                                                                   1997. No additional funds
.aboratory,                                                                                needed. Design is
:t. Pierce,                                                                                complete; construction
:la.                                                                                       contract award is
                                                                                           scheduled for late fy 1997
                                                                                           with completion by late fy
                                                                                           1999. ARS anticipates
                                                                                           using unobligated funds for
                                                                                           future design/construction
                                                                                           contingencies and contract
                                                                                           closeout.

iurricane         15.000           15.000         12.815          2.155         10.660     Last appropriation in fy
dndrew/lniki                                                                               1992~-$15 million
qepair, Fla.,                                                                              emergency supplemental
iawaii, La.                                                                                to repair damage caused
                                                                                           by natural disasters such
                                                                                           as Hurricanes Andrew and
                                                                                            lniki and Typhoon Omar.
                                                                                            No additional funds
                                                                                            needed. Repairs
                                                                                            completed in Hawaii and
                                                                                            Louisiana; temporary
                                                                                            repairs continue in Florida.
                                                                                            ARS plans to use
                                                                                            remaining funds for
                                                                                             renovation and new
                                                                                            construction at the
                                                                                             Subtropical Horticultural
                                                                                             Research Laboratory in
                                                                                             Miami.

Poultry             6.177             1.077         0.936          0.259          0.677        Last appropriation in fy
Disease                                                                                        1993. Additional $5.1
Laboratory,                                                                                    million needed; not
Athens, Ga.                                                                                    included in fy 1998
                                                                                               request. Project on hold
                                                                                               pending reassessment of
                                                                                               scope of work and possible
                                                                                               resiting.




14                                     GAO/RCED-97-136B,        Analysis    of USDA’s Budgets,       Fiscal Years 1997-98
        ENCLOSURE I                                                                                      ENCLOSURE

 Project              Total            Total   Unobligated      Projected        Projected                Status
                 estimated    appropriation     balance as    obligations      unobligated
                       cost     as of fiscal    of Mar. 31,            for      balance as    -
                                 year 199?            1997     remainder       of Sept. 30,
                                                                 of fiscal            1997
                                                               year 1997

 National          81.900           11.730          6.620          4.775            1.845     Last appropriation in fy
 Center for                                                                                    1997. Additional $70.2
 Agricultural                                                                                 million needed; $8 million
 Utilization                                                                                  sought in 1998 request.
 Research,                                                                                    Sufficient funds available to
 Peoria, III.                                                                                 award construction contract
                                                                                              for first phase of pilot
                                                                                              plant.. Design of the
                                                                                              chemical wing on hold until
                                                                                              sufficient funds available to
                                                                                              complete pilot plant. ARS
                                                                                              anticipates using $300,000
                                                                                              of the unobligated balance
                                                                                              for future construction
                                                                                              contingencies and contract
                                                                                              closeout.

 Ethanol Pilot    20.000             1.500          1.500         0.000             1.500     Last appropriation in fy
 Plant,                                                                                        1997; grant for design of
 Edwardsville,                                                                                pilot plant in conjunction
 Ill.                                                                                         with Southern Illinois
                                                                                              University for testing
                                                                                              technologies for converting
                                                                                              corn to ethanol fuel. No
                                                                                              additional funds needed;
                                                                                              construction costs--$1 8.5
                                                                                              million--will be covered by
                                                                                              nonfederal sources.
                                                                                              Project design on hold
                                                                                              because ARS is concerned
                                                                                              that facility, as proposed,
                                                                                              would be near commercial,
                                                                                              not research, capacity. In
                                                                                              addition, questions remain
                                                                                              about sources of
                                                                                              construction and operating
                                                                                              funds.




15                                    GAO/WED-97-136R,         Analysis      of USDA’s Budgets,     Fiscal Years 1997-98
     ENCLOSURE I                                                                                        ENCLOSURE I

reject              Total           Total    Unobligated      Projected      Projected                   Status
               estimated    appropriation     balance as    obligations    unobligated    -
                     cost     as of fiscal    of Mar. 31,            for    balance as
                               year 1997            1997     remainder     of Sept. 30,
                                                               of fiscal          1997
                                                             year 1997

ioil Erosion      4.320            4.320          0.010          0.000          0.010     Last appropriation in fy
ienter, West                                                                              1981. No additional funds
.afayette,                                                                                needed. Project completed
Id.                                                                                       in fy 1981. ARS views
                                                                                          unobligated funds as
                                                                                          surplus and available for
                                                                                          redirection.

Jational           4.900            4.900         0.134          0.134          0.000     Last appropriation in fy
krimal                                                                                    1994. ARS also
Xsease                                                                                    transferred $700,000 from
>enter,                                                                                   salinity laboratory project.
imes, la.                                                                                 No additional funds
                                                                                           needed. Construction will
                                                                                           be completed in fy 1997.

rlational         26.829          14.107           2.107         0.100           2.007        Last appropriation in fy
swine                                                                                         1995. Additional $12.4
qesearch                                                                                      million needed to construct
Zenter,                                                                                       farm complex; not included
Jmes, la.                                                                                     in fy 1998 request.
                                                                                              Off ice/laboratory
                                                                                              construction completion
                                                                                              anticipated late fy 1997.
                                                                                               Farm complex design
                                                                                               delayed because of
                                                                                               environmental concerns
                                                                                               and consideration of
                                                                                               alternative site. In
                                                                                               addition, legislation
                                                                                               requires transfer of farm
                                                                                               complex deed to Iowa
                                                                                               State University; university
                                                                                               does not want deed. ARS
                                                                                               anticipates using $1.5
                                                                                               million of the unobligated
                                                                                               funds for the eventual
                                                                                               design of the farm comple:
                                                                                                and the remaining
                                                                                                $500,000 for future
                                                                                                construction contingencies
                                                                                                and contract closeout.



16                                     GAO/WED-97-136R,        Analysis    of USDA’s Budgets,        Fiscal   Years 1997-98
           ENCLOSURE I                                                                                     ENCLOSURE I

 Project               Total            Total   Unobligated      Projected        Projected                Status
                  estimated    appropriation     balance as    obligations      unobligated    -
                        cost     as of fiscal    of Mar. 31,            for      balance as
                                  year 1997’           1997     remainder       of Sept. 30,
                                                                  of fiscal            1997
                                                                year 1997

 Grain              11.500            2.450          1.583          0.030            1.553     Last appropriation in fy
 Marketing                                                                                     1997. Additional $9.05
 Research                                                                                      million needed; not
 Laboratory,                                                                                   included in fy 1998
 Manhattan,                                                                                    request. Design work is
 Kans.                                                                                         scheduled for completion in
                                                                                               fy 1997. Construction on
                                                                                               hold until sufficient funds
                                                                                               available. ARS anticipates
                                                                                               using $253,000 of the
                                                                                               unobligated balance for
                                                                                               design contingencies and
                                                                                               contract closeout; the
                                                                                               remainder--$1.3 million--
                                                                                               will be put toward future
                                                                                               construction.

 Southern           42.900          17.836           0.490          0.245            0.245     Last appropriation in fy
 Regional                                                                                      1996. Additional $12
 Research                                                                                      million needed for
 Center, New                                                                                   industrial wing; $1 .l million
 Orleans, La.                                                                                  requested in fy 1998 for
                                                                                               industrial wing design.
                                                                                               Completion of chemical
                                                                                               wing construction expected
                                                                                               in late fy 1998. ARS
                                                                                               anticipates using
                                                                                               unobligated funds for
                                                                                               future construction
                                                                                               contingencies and contract
                                                                                               closeout.




17                                     GAO/RCED-97-135R,        Analysis      of USDA’s Budgets,      Fiscal Years 1997-98
      ENCLOSURE I                                                                                      ENCLOSURE I          .’

‘reject              Total            Total   Unobligated      Projected       Projected               Status
                estimated    appropriation     balance as    obligations     unobligated
                      cost     as of fiscal    of Mar. 31,            for     balance as
                                year 19971           1997     remainder      of Sept. 30,
                                                                of fiscal           1997
                                                              year 1997

rgricultural    205.000          103.417          17.462        14.337            3.125     Last appropriation in fy
jesearch                                                                                    1997; all appropriations to
Zenter &                                                                                    date have been for the
Jational                                                                                    research center. Additional
igricultural                                                                                $102 million needed to
.ibrary,                                                                                    complete project; fy 1998
seltsville,                                                                                 request includes $3.2
nd.                                                                                         million for center and $6
                                                                                            million for library
                                                                                            renovations. ARS
                                                                                            anticipates using
                                                                                            unobligated funds for
                                                                                            future design/construction
                                                                                            contingencies and contract
                                                                                            closeout.

qegional          18.600            0.462          0.002          0.000           0.002     Last appropriation in fy
‘oultry                                                                                     1993. Additional $18.1
qesearch                                                                                    million needed; not
Zenter, East                                                                                included in 1998 request.
-ansing,                                                                                    Project on hold until
tiich.                                                                                      sufficient funds available to
                                                                                            complete design work.

Soil and            4.800           1.125           0.043         0.000            0.043    Last appropriation in fy
Water                                                                                       1992. Additional $3.7
Laboratory,                                                                                 million needed; not
Morris, Minn.                                                                               included in fy 1998
                                                                                            request. First phase of
                                                                                            construction completed in
                                                                                            fy 1996; project on hold
                                                                                            until sufficient funds
                                                                                            available to complete
                                                                                            construction of phases II
                                                                                            and III. ARS anticipates
                                                                                             using unobligated funds for
                                                                                            future construction
                                                                                            contingencies and contract
                                                                                             closeout.




18                                    GAO/RCED-97-136R,         Analysis    of USDA’s Budgets,     Fiscal Years 1997-98
       ENCLOSURE I                                                                                     ENCLOSURE I

 Project             Total            Total   Unobligated      Projected       Projected               Status
                estimated    appropriation     balance as    obligations     unobligated
                      cost     as of fiscal    of Mar. 31,            for     balance as
                                year 1997’           1997     remainder      of Sept. 30,
                                                                of fiscal           1997
                                                              vear 1997

 Animal            5.627            5.627          0.018          0.000           0.018     Last appropriation in fy
 Health                                                                                     1990. No additional funds
 Systems                                                                                    needed. Construction
 Research                                                                                   completed in fy 1990.
 Laboratory,                                                                                ARS views unobligated
 Clay Center,                                                                               funds as surplus and
 Neb.                                                                                       available for redirection.

 Plum Island      90.000          24.029           8.545          8.530           0.015     Last appropriation in fy
 Animal                                                                                     1997. Additional $66
 Disease                                                                                    million needed; $5 million
 Center,                                                                                    requested in fy 1998.
 G reenport,                                                                                Total appropriation
 N.Y.                                                                                       includes funds transferred
                                                                                            from Animal and Plant
                                                                                            Health Inspection Service.
                                                                                            ARS anticipates using
                                                                                            unobligated funds for
                                                                                            future contingency
                                                                                            expenses.
 Greenhouse/      10.325           10.325          0.015          0.000           0.015     Last appropriation in fy
 Sugar Beet                                                                                 1991. No additional funds
 Laboratory,                                                                                needed. The sugar beet
 Fargo, N.                                                                                  laboratory was completed
 Dak.                                                                                       in fy 1989; the greenhouse
                                                                                            was completed in fy 1994.
                                                                                            ARS views unobligated
                                                                                            funds as surplus and
                                                                                            available for redirection.

 South             5.310            5.310          0.012          0.000           0.012     Last appropriation in fy
 Central                                                                                    1992. No additional funds
 Agricultural                                                                               needed. Construction was
 Research                                                                                   completed in fy 1992.
 Laboratory,                                                                                ARS views unobligated
 Lane, Okla.                                                                                funds as surplus and
                                                                                            available for redirection.




19                                   GAO/RCED-97-136R,        Analysis      of USDA’s Budgets,    Fiscal   Years 1997-98
      ENCLOSURE I                                                                                         ENCLOSURE I

lroject              Total           Total    Unobligated      Projected       Projected                  Status
                estimated    appropriation     balance as    obligations     unobligated
                      cost     as of fiscal    of Mar. 31,             for    balance as    -
                                year 1997            1997     remainder      of Sept. 30,
                                                                 of fiscal          1997
                                                              year 1997

llorthwest         2.100            2.125          0.005          0.000           0.005     Last appropriation in fy
small Fruit                                                                                 1992. No additional
qesearch                                                                                    funding needed.
>enter,                                                                                     Construction was
:orvallis,                                                                                  completed in fy 1995.
Ireg.                                                                                       ARS views unobligated
                                                                                            funds as being available
                                                                                            for post-construction
                                                                                            contingency expenses.

-astern           39.000           13.278          4.000          0.000           4.000     Last appropriation in fy
qegional                                                                                    1997. Additional $25.7
qesearch                                                                                    million needed; $5.2 million
Zenter,                                                                                     included in fy 1998 request
JVyndmoor,                                                                                  to fund phase Ill and IV
‘a.                                                                                         construction. ARS plans to
                                                                                            put unobligated funds
                                                                                            toward future construction.


U.S.              27.668            13.638        12.461           0.000         12.461     Last appropriation in fy
Vegetable                                                                                   1997. Additional $14.03
Laboratory,                                                                                 million needed; not
Charleston,                                                                                 included in fy 1998
S.C.                                                                                        request. Construction of
                                                                                            phase I and design of
                                                                                            phase II are on hold until
                                                                                            sufficient funds are
                                                                                            available to proceed.

 Plant Stress      16.100           16.103         13.365         12.797           0.568        Last appropriation in fy
 & Water                                                                                        1997. No additional funds
 Conservation                                                                                   needed. Construction of
 Laboratory,                                                                                    phase I complete. ARS
 Lubbock,                                                                                       plans to award phase II
 Tex.                                                                                           (laboratory/off ice building)
                                                                                                construction contract in fy
                                                                                                1997. ARS anticipates
                                                                                                using unobligated funds for
                                                                                                future design/construction
                                                                                                contingencies and contract
                                                                                                closeout.



20                                     GAO/RCED-97-136R,        Analysis     of USDA’s Budgets,        Fiscal Years 1997-98
           ENCLOSURE1                                                                                   ENCLOSURE1

 Project              Total            Total   Unobligated      Projected       Projected               Status
                 estimated    appropriation     balance as    obligations     unobligated
                       cost     as of fiscal    of Mar. 31,            for     balance as
                                 year 199?            1997     remainder      of Sept. 30,
                                                                 of fiscal           1997
                                                               year 1997

 Bee &             23.857           13.149          7.774         6.688            1.086     Last appropriation in fy
 Subtropical                                                                                 1997. Additional $15.1
 Agricultural                                                                                million needed: not
 Research                                                                                    included in fy 1998
 Laboratories,                                                                               request. Bee Laboratory
 Weslaco,                                                                                    renovation completed in fy
 Tex.                                                                                        1996; $383,000 of funds
                                                                                             appropriated for this work
                                                                                             redirected to Subtropical
                                                                                             Agricultural Research
                                                                                             Laboratory. Renovation of
                                                                                             the latter is under way.
                                                                                             ARS anticipates using
                                                                                             unobligated funds for
                                                                                             future design/construction
                                                                                             contingencies and contract
                                                                                             closeout.

 National          12.000            7.921          7.813          1.200           6.613      Last appropriation in fy
 Center for                                                                                   1997. Additional $6 million
 Cool and                                                                                     needed for construction;
 Cold Water                                                                                   not included in fy 1998
 Aquaculture,                                                                                 request. ARS plans to
 Leetown, W.                                                                                  award design contract in fy
 Va.                                                                                         *1997.




21                                    GAO/RCED-97-136R,        Analysis      of USDA’s Budgets,     Fiscal Years 1997-98
        ENCLOSURE I                                                                                   ENCLOSURE I

Project                Total           Total    Unobligated  Projected      Projected                 Status
                   estimated   appropriation     balanceas obligations    unobligated
                        cost     as of fiscal    of Mar. 31,        for    balance as -
                                  year 199?            1997 remainder     of Sept. 30,
                                                              of fiscal          1997
                                                             year 1997
Greenhouse            0.323           0.323         0.013        0.000         0.013      Last appropriation  in fy
for Cereal                                                                                1993. No additional funds
Crops,                                                                                    needed. Greenhouse
Madison,                                                                                  construction was
Wis.                                                                                      completed in early fy 1997.
                                                                                          ARS anticipates using
                                                                                          unobligated funds for post-
                                                                                          construction contingency
                                                                                          expenses.

Total               $847.470        $387.881       $146.405     $86.260       $64.145

        aTotal appropriations include primarily Building and Facilities account funds; for a number of
        projects, total appropriations also include Repair and Maintenance account funds and/or
        redirected funds from other projects, accounts, or U.S. Department of Agriculture agencies.

        Source:   ARS facilities and budget staff and agency documents.




          22                            GAO/RCED-97-136R,      Analysis   of USDA’s Budgets,      Fiscal Years 1997-98
       ENCLOSURE II                                                                                       ENCLOSURE LI
           FUNDING AND STATUS OF MAJOR CONSTRUCTION PROJECTS ADMINISTERED
              BY THE ANIMAL AND PLANT HEALTH INSPECTION SERVICE (APHIS),
                                   FISCAL YEAR 1997


       (Dollars in millions)



 Project                  Total            Total    Unobligated         Projected        Projected             Status
                     estimated    appropriation    balance as of      obligations      unobligated
                           cost     as of fiscal   Mar. 31, 1997               for   balance as of
                                     year 1997                         remainder          Sept. 30,
                                                                         of fiscal            1997
                                                                       year 1997
 National             $32.000         $25.000          $21.236          $19.236            $2.000     Last appropriation
 Plant                                                                                                in fy 1993.
 Germplasm                                                                                            Additional
 Quarantine                                                                                           $7 million needed to
 Center,                                                                                              complete phase III
 Beltsville,                                                                                          construction; not
 Md.                                                                                                  included in fy 1998
                                                                                                      budget request.
                                                                                                      Sufficient funds on
                                                                                                      hand for design and
                                                                                                      construction of first
                                                                                                      two phases and
                                                                                                      design of phase Ill.
                                                                                                      Construction
                                                                                                      delayed several
                                                                                                      years because of
                                                                                                      environmental
                                                                                                      issues. APHIS
                                                                                                      expects to receive
                                                                                                      environmental
                                                                                                      clearance during
                                                                                                      the Spring of 1997.




23                                      GAOIRCED-97-13SR,          Analysis   of USDA’s Budgets,      Fiscal   Years 1997-98
      ENCLOSURE II                                                                                 ENCLOSUREII

project              Total            Total    Unobligated        Projected        Projected           Status
                 estimated   appropriation    balance as of     obligations     unobligated
                      cost     as of fiscal   Mar. 31, 1997              for   valance as of
                                year 1997                        remainder          Sept. 30,
                                                                   of fiscal            1997
                                                                 year 1997

Screwworm        59.000 -                                                                       Last appropriation
Research         124.000                                                                        in fy 1993. APHIS
Facility,                                                                                       role limited to
Darien Gap,                                                                                     design and
Panama                                                                                          environmental
                                                                                                studies; no
                                                                                                additional
                                                                                                appropriated funds
                                                                                                needed.
                                                                                                Uncertainties
                                                                                                remain regarding
                                                                                                the source of
                                                                                                construction funding
                                                                                                to be obtained by
                                                                                                U.S.-Panamanian
                                                                                                Commission.
                                                                                                Project currently on
                                                                                                hold; APHIS
                                                                                                anticipates using
                                                                                                 unobligated balance
                                                                                                for design and
                                                                                                 environmental
                                                                                                 studies in fv 1998.

 Methods            0.672            0.672           0.672                            0.672     Last appropriation
 Development                                                                                    in fy 1994. No
 Rearing                                                                                        additional funds
 Facility,                                                                                      needed. Project on
 Mission, Tex.                                                                                  hold pending
                                                                                                possible resiting to
                                                                                                Phoenix, Ark., to
                                                                                                consolidate
                                                                                                development of
                                                                                                cotton pest control
                                                                                                 methods in one
                                                                                                 location.




24                                  GAO/RCED-97-136R,         Analysis   of USDA’s Budgets,      Fiscal Years 199’7-98
      ENCLOSUREII                                                                                       ENCLOSUREII

Project               Total             Total     Unobligated        Projected      Projected
                                appropriation    balanceas of      obligations   unobligated
                                  as of fiscal   Mar. 31, 1997              for balance as of
                                   year 1997                        remainder       Sept. 30,
                                                                      of fiscal         1997
                                                                    year 1997
National            30.000           12.000            0.000              0.000            0.000    Last appropriation
Wildlife                                                                                            in fy 1996.
Research                                                                                            Additional $18
Center, Ft.                                                                                         million needed; not
Collins, Colo.                                                                                      included in fy 1998
                                                                                                    request. Design is
                                                                                                    complete and
                                                                                                    project is planned
                                                                                                    for construction.

Predator             0.793             0.793           0.053              0.053            0.000    Last appropriation
Research                                                                                            in fy 1993. No
Building,                                                                                           additional funding
Logan, Utah                                                                                         needed.
                                                                                                    Construction will be
                                                                                                    completed 1997.
                   $122.465          $38.965          $22.461         $19.289              $3.172
                    187.465                                                       I

      Source:    APHIS facilities and budget staff and rel: ted agency            documents.




      25                             GAO/RCED-97-136R,         Analysis     of USDA’s Budgets,      Fiscal   Years 1997-98
ENCLOSURE III                                                                                  ENCLOSURE III

               COMMENTS FROM THE U.S. DEPARTMENT OF AGRICULTURE

Note: GAO’s comments
supplementing those in
in the letter appear at the
end of this enclosure.




       Mr. Robert A. Robinson
       Director, Food and Agriculture lssuss
       Resources. Community and
        Economic Development Division
       U.S. General Accounting Ottics
       Washington, D.C. 20549

       REF: GAOIRCED-97-135R

       Dear Mr. Robinson:

       Thank you for the opportunity 10 review the Draft GAO Report on Potential
       Rescissions and Reductions to USDA’s Ff 1997 Appropriation and FY 1999 Budget
       Request. We have reviewed your recommendations and are providing our comments
       on the enclosed paper. We appreciate the opportunity to provide our comments on
       this Report and are available to meet with your staff to discuss these .amments in
       further deteil.

       Sincerely,




       Director

       Enclosure




 26                                  GAOIRCED-97-13SR,        Analysis    of USDA’s Budgets,   Fiscal Years 1997-98
 ENCLOSURE III                                                                                           ENCLOSURE III



                                     UNITED STATES DEPARTMENT OF AGRICULTURE
                                      Responses to GAO’s Draft Report (RCED-97-135R)
                                          Analysis of Budgets Fiscal Years 1997-98


                    GAO% drafl reporl examines selected programs and projects in the U.S. Depmment
                    of Agricutture’s appropriations for Ascal Year (FY) 1997 and budget request for
                    FY 1998. The objectives are to identify potential rescissions to the FY 1997
                    appropriations and potential reductions to the budget request for FY 1998.

                    Food                    (FSPL The Report recommends rescinding $3 billion projected
                    to be unobligated by the end 01 PI 1997 and reduce the P/ 1998 budget request by
                    the $2.5 billion contingency request.
See c:omment   1.   The Welfare Reform legislation made a number of changes to the FSP. The USDA
                    estimate of the impact of the Wellare Reform legislation should be viewed with a note
                    of caution. For example, it is diffiartt to predict how many states will request waivers
                    for the new employment requirements for unemployed able-bodied adults without
                    dependents. Since meeting wfth representatives of your office, 40 States and the
                    District of Cohrmbia have requested waivers. We am in the process of preparing
                    estimates ol the effect 01 the waivers we have approved: and it appears that more 01
                    the casebad may be exempt from the new employment requirements than was
                    assumed in the budget. As a result. food stamp benefit costs may be greater for this
                    group than was assumed in the budget.

                    Another provision of the Welfare Reform legislation deals with the eligibility of legal
                    immigrants. This has been implemented somewhat differentty than assumed in the
                    budget. States have received waivers to extend the certification period for legal
                    immigrants receivtng food stamps, delaying the eligibility to late in the year. This will
                    increase the Food Stamp benefit costs.

                    In addition, an unantlcipatad effect of the Welfare R&form legislation is an increase in
                    the demand for Food Stamp Program empbyment and training services.
See c:omment 2.     the oonttngency funds are not used unless they are needed. The benefit reserve
                    serves as insurance pmt~UIng the program’s ability to get food lo people who need it
                    in the event oi unkreseen changes in the economy. The contingency fund ensures
                    that if such growth would occur, the funds would be readily available. Without the
                    contingency fund, the Administration w&M need to request and the Congress would
                    need to appropriate additional funds and thus raising the possibility that the time
                    required lor suoh aEtkn would w        a reoccurrence of the disruptions of the earty
                    1990’s. Under current law the Seoretafy is required to submit monthly reporls and
                    state whether supplemental appropriatfons are needed to support the program. If
                    additional funds are needed, then not later than 80 days after such reporl the
                    Secretary is to take steps to reduce allotments to food stamp participants.




 27                             GAO/RCED-97-136R,            Analysis     of USDA’s Budgets,         Fiscal     Years 1997-98
 ENCLOSURE III                                                                                         ENCLOSURE III



See   comment   3.   Footnote 3 on page 4 of the report should be deleted. This redirection has not been
                     submitted to or cleared by the Administration as of this date.

                     Ce sus of m.             The Report recommends a reduction or deferral of up to
                     $1.: million in the M 1998 request. The Report notes that these savings are
                     attnbutabte to “tower than expected printing costs”.

See   comment   4.   The savings appear to be overstated and it is erroneous to assume that savings in
                     one projected cost category results in an unobligated balance for the Census of
                     Agriculture approprtation at the conclusion 01 the fiscal year. Other categories could
                     come in over protecttons or unexpected costs not included in the in&tat cost projections
                     could occur. For exampte, the agency is now committed to increasing the coverage of
                     Native American and minority farm operators in the upcoming Census of Agriculture
                     due to new policy guidance. To achieve better coverage of minority and Native
                     American farms will require addltkwai work to build the census mail list. It is
                     estimated that this work will costs approximately $375,WCl in N 1997. The agency
                     met with Puerto Rican offk+ak and had ptedged to maintain the Puerto Rican farm
                     definition of SSOCtin annual farm sates. something that the Census Sureau had not
                     budgeted for since they planned to make the Puerto Rican farm definttbn the same as
                     that in the U.S., and process those census forms under the same system as the rest
                     01 the census. This will cost NABS an esttmated addttfonat $1WMlCt, not in&ding
                     the reatlocation of staff resources to lhe project. Neither of these two items were
                     inctuded in the budget.


                     and Plant m                           The Report recommends a resdssion ol up to
                     $31 million of unobligated hinds asskated with projects either on hotd or with surplus
                     IUtldS.

                     -- The GAO Repoti noted two projects whose design andlor oonstructton is on hold
                        due to unresotved environmental issues that curkt lead to the sefectton of a new
                        ccnstruction site.
See comment 5.              ARS. National Swine Research Center, Ames, Iowa ($2 million). GAO
                            categorized this amount as being “on hold due to unresolved environmental
                            issues,’ (page 8) and was tdenttfted for poesibte rescieskm. The $2 million is
                            not on hold but is required for awWuction phase contingencies as well as for
                            the ptanning and design of the Farm Complex portton of the swine lactlity.
                                                             .
See comment 6.              APHIS, Nattonal Plant Germplasm Quaranttne Center. This Center is not on
                            hold and has been designed and is undergoing design review. The agency is
                            expecting tlnal environmental clearance during the Spring of 1997. The design
                            is betng cbvebped for a Bettsvtlte, Maryland site. and msittng is not an option
                            for this facility.


                                                                 2




 28                             GAO/RCED-97-13SR,           Analysis    of USDA’s Budgets,         Fiscal Years 1997-98
ENCLOSURE III                                                                                               ENCLOSUREIll



See comment 7.        -- ARS. Hurricane Andrew/In&i Repair Projscts ($10.7 million). This amount was
                         categorized by GAO as “surplus funds which the agency plans to redirect for other
                         purposes.” As originally planned, these funds will be used for the restorationof the
                         Subtropical HoRicuttural Research Laboratory at Miami, Florida The status section
                         of Enclosure I of the GAO Aepon does accurately reflect how the agency plans to
                         use these funds.

See comment 8.        -- ARS, National Center for Cool and Cold Water Aquaculture, Leetown, West
                         Virginia. The status section of Enclosure I of the GAO Repon indicates that an
                         additional $4 million is required for the full construction cysts of this facility. The
                         actual amount required is $6 million.

See   comment   9.    -- APHIS, Methods Development Rearing Facility, Mission, Texas. In the status
                         section of Enclosure I of the GAO Report, change the phrase “pest research” to
                         ‘pest methods development’.

See   comment   10.   -- APHIS. Screwworm Research Facility. The GAO Report states that the
                         Screwworm Research Facility is on hold. This facility is not on hold. The status
                         reported in Enclosure I of the GAO Report indicates that APHlS is simply planning
                         the facility. The Department of State issues have been resolved and APHIS is
                         allowed to move 5 people to Panama to begin Screwworm eradication achities.
                         APHIS will use carryover funds to conduct design and environmental shKCes for
                         the facility in 1999: the location issue is resolved; and the source of construction
                         funding is being addressed by the U.S.-Panama Commission.

See comment 11.       -- In the status section of Endowm II of the GAO Repart under the column lab&d
                         “Unobligated baknoe as of March 31, 1997”, the figures mftected for the APHIS
                         faciliies represent unobligated balances as of February 1,1997. The figures
                         should be revised as follows: (1) National Plant Germplasm Quarantine Center
                         ($21.236 thousand): (2) National Wildlife Reseafoh Center (SO): and Predator
                         Research Building ($53 thousand).

                      m.                      The Repolt recommends a re&ction or deferral of $5 million
                      for the project in FY 1999 due to the fact that about $19 million is expected to remain
                      unobliied    at the end of FY 1997. The Report stated tfwt USDA did not consider the
                      availabilii of these funds in formulating the FY 1998 Budget reqwst.

See comment 12.       The Department recognizes that some planned obligations could ‘slip’ until FY 1998.
                      However, the completion of the Belts4e Oftke Facility and of Phase I of the
                      Modernization of the South Building are both necessary and all funds appropriated are
                      needed to implement these pmjects. Construction of the Beltsville Facility is
                      scheduled for completion in December 1997, and design of Phase I of the South
                      Building Modernization, which began on January 17.1997, is proceeding quickly with
                      completion scheduled by August 1997.


                                                                    3




29                              GAO/RCED-97-135R,              Analysis     of USDA’s Budgets,          Fiscal Years 1997-98
ENCLOSURE III                                                                                      ENCLOSURE III



         The South Building Modemizauon is a long term program presentfy planned in eight
         primary phases to upgrade the 60-year-old South Efuilding. Modernization of the
         South Building is akio crucial to the Washingtcn Strategic Space Plan to consolidate
         USOA agencies into two government-owned facilities, releasing approximately 18
         leased facilities which currently result in expenditure of about $30 million a year for
         leased space. The need for $5 million in FY 1996 does net depend on awarding all
         prior funds by September 1997. The 96 recfuested in N 1998 is needed in addition to
         current appropriations, in order to matte contfnued progress on the modernization.




                                                      4




 30                              GAO/NED-97-136R,            Analysis    of USDA’s Budgets,        Fiscal Years 1997-98
ENCLOSURE III                                                                        ENCLOSURE III
The following are GAO’s comments on the U.S. Department of Agriculture’s (USDA) letter
dated April 25, 1997.

GAO’S COMMENTS

1. While USDA called attention to some uncertainties in Food Stamp Program costs for
fiscal year 1997 and identified reasons why costs may be greater than it had originally
anticipated, it did not estimate what these additional costs will be or provide a revised
estimate of the excess budget authority that will be returned to the U.S. Treasury at the
end of the year. We recognize that some cost categories associated with the Food Stamp
Program may come in over budget; however, other cost categories may come in under
budget. In addition, in developing its original estimate of excess budget authority, USDA
made technical adjustments (i.e., reductions) totaling $430 million for anticipated waivers
and exemptions to the new employment requirements contained in the welfare reform
act. Thus, in the absence of new cost information from USDA, we continue to believe
that a rescission of up to $3 billion in budget authority currently available to the Food
Stamp Program may be possible.

2. We continue to believe that a reduction of up to $2.5 billion to USDA’s fiscal year 1998
budget request for a Food Stamp Program contingency fund may be possible because (1)
program participation has steadily declined since fiscal year 1994, (2) contingency funds
have not been needed to meet program caseload since fiscal year 1992, (3) more than$2
billion per year in program budget authority was returned to the U.S.Treasury during
fiscal years 1993 through 1996, and (4) economic conditions remain favorable-average
monthly unemployment for the first 7 months of fiscal year 1997 was at one of the lowest
levels in the last 25 years and inflation in food costs continues to be low.

3. Deleted in final report.

4. We recognize that some cost categories associated with the Census of Agriculture
could come in over budget; however, other cost categories could come in under budget,
as was the case with the printing contract for the census form. At the time of our review,
we based our conclusions on the best information that USDA had available on planned
expenditures for the agriculture census for fiscal year 1997. However, we included the
new specific information on planned expenditures that USDA provided in its comments in
the final report, and, as a consequence, we revised our estimate of the potential reduction
that may be possible to USDA’s budget request for fiscal year 1998 from $1.2 million to
$675,000.

5. Although one phase of the National Swine Research Center’s construction is currently
ongoing, this work will be completed before the end of fiscal year 1997. The other


31                            GAO/RCED-97-135R,   Analysis   of USDA’s Budgets,   Fiscal   Years 1997-98
ENCLOSURE III                                                                    ENCLOSURE III
phase-construction of a farm complex-is not expected to begin in fiscal year 1997, and
the starting date for this work remains uncertain in light of unresolved environmental,
siting, and legal issues. Because the construction work on this project will stop before
the end of fiscal year 1997, we view this project as being on hold with respect to the
funds expected to remain unobligated at the end of fiscal year 1997. Consequently, we
continue to view these funds as potentially available for rescission.

6. The construction of the first two phases of the National Plant Germplasm Quarantine
Center has been delayed several years because of unresolved environmental issues. At
the time of our review, these issues were still unresolved and planned construction work
was at a standstill. Nevertheless, we amended the final report to reflect USDA’s comment
that the outstanding environmental issues delaying this project may soon be resolved.
However, until these long-standing issues are actually settled, the project will remain on
hold. Therefore, we have not changed our view that the project funds expected to remain
unobligated at the end of fiscal year 1997 could be considered for rescission.

7. The funds for the Hurricane Andrew/In& Repair Project were originally appropriated
in 1992 for the restoration of facilities destroyed or damaged by natural disasters such as
Hurricanes Andrew and Iniki and Typhoon Omar. USDA’s current plans for these funds
include not only additional hurricane-related repairs at its Subtropical Horticultural
Research Laboratory in Miami, Florida, but also the renovation of old buildings and new
construction at this facility. Although USDA did not provide a breakdown of the funds to
be used for repairs, renovation, and new construction, Department officials have indicated
that most of the remaining unobligated funds will be used for renovation and new
 construction. The use of these funds for these latter purposes appears to represent a
redirection of the funds from the purpose for which they were originally appropriated-
 restoration necessitated by natural disasters. Thus, we categorized these funds as
 “surplus funds that the agency plans to redirect for other purposes.” We have previously
 addressed a similar redirection of funds appropriated for the repair of damage caused by
 Hurricane  lrtiki at U.S. Fish and Wildlife Service facilities (GAO/RCED-94132R, Apr. 18,
 1994).

8. Change made in final report.

9. Change made in final report. Specifically, we changed the wording to “development of
pest control methods” after consulting with USDA.

 10. We amended the final report to reflect USDA’s plan to eventually use the unobligated
 funds associated with the Screwworm Research Facility project for design work and
 associated environmental studies. However, design and construction work on this project
 is currently at a standstill and is not expected to begin until fiscal year 1998. Thus, this
 project remains on hold and we have not changed our view that the project funds

 32                         GAOIRCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal   Years 1997-98
ENCLOSURE III                                                                   ENCLOSURE III
expected to remain unobligated at the end of fiscal year 1997 could be considered for
rescission.

11. As requested, we made these changes, which reflect additional obligations made for
these projects between February 1, 1997, and March 31, 1997. In light of this updated
information, we also made adjustments to the column reflecting projected obligations for
the remainder of fiscal year 1997, as appropriate, after consulting with USDA.

12. In response to USDA’s comments on the Strategic Space Plan project, we deleted the
section of the report dealing with this construction project.




(150718)




33                        GAOIRCED-97-136R,   Analysis   of USDA’s Budgets,   Fiscal Years 1997-98
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