prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.

Report 1: According to the President’s budget, the federal government plans to invest more than $96 billion for IT in fiscal year 2018—the largest amount ever budgeted  Despite such large IT expenditures, we have previously reported that investments in federal IT too often result in failed projects that incur cost overruns and schedule slippages, while contributing little to the desired mission-related outcomes  For example: The tri-agency National Polar-orbiting Operational Environmental Satellite System was disbanded in February 2010 by the White House’s Office of Science and Technology Policy after the program spent 16 years and almost $5 billion  The Department of Homeland Security’s (DHS) Secure Border Initiative Network program was ended in January 2011, after the department obligated more than $1 billion for the program  The Department of Veterans Affairs’ Financial and Logistics Integrated Technology Enterprise program was intended to be delivered by 2014 at a total estimated cost of $609 million, but was terminated in October 2011  The Department of Defense’s Expeditionary Combat Support System was canceled in December 2012 after spending more than a billion dollars and failing to deploy within 5 years of initially obligating funds  The United States Coast Guard (Coast Guard) decided to terminate its Integrated Health Information System project in 2015  As reported by the agency in August 2017, the Coast Guard spent approximately $60 million over 7 years on this project, which resulted in no equipment or software that could be used for future efforts  Our past work has found that these and other failed IT projects often suffered from a lack of disciplined and effective management, such as project planning, requirements definition, and program oversight and governance  In many instances, agencies had not consistently applied best practices that are critical to successfully acquiring IT  Such projects have also failed due to a lack of oversight and governance  Executive-level governance and oversight across the government has often been ineffective, specifically from CIOs  For example, we have reported that some CIOs’ roles were limited because they did not have the authority to review and approve the entire agency IT portfolio  In addition to failures when acquiring IT, security deficiencies can threaten systems once they become operational  As we previously reported, in order to counter security threats, 23 civilian Chief Financial Officers Act agencies spent a combined total of approximately $4 billion on IT security-related activities in fiscal year 2016  Even so, our cybersecurity work at federal agencies continues to highlight information security deficiencies  The following examples describe the types of risks we have found at federal agencies  In November 2017, we reported that the Department of Education’s Office of Federal Student Aid did not consistently analyze privacy risks for its electronic information systems, and policies and procedures for protecting information systems were not always up to date  In August 2017, we reported that, since the 2015 data breaches, the Office of Personnel Management (OPM) had taken actions to prevent, mitigate, and respond to data breaches involving sensitive personal and background investigation information  However, we noted that the agency had not fully implemented recommendations made to OPM by DHS’s United States Computer Emergency Readiness Team to help the agency improve its overall security posture and improve its ability to protect its systems and information from security breaches  In July 2017, we reported that IT security at the Internal Revenue Service had weaknesses that limited its effectiveness in protecting the confidentiality, integrity, and availability of financial and sensitive taxpayer data  An underlying reason for these weaknesses was that the Internal Revenue Service had not effectively implemented elements of its information security program  In May 2016, we reported that the National Aeronautics and Space Administration, the Nuclear Regulatory Commission, OPM, and the Department of Veteran Affairs did not always control access to selected high-impact systems, patch known software vulnerabilities, and plan for contingencies  An underlying reason for these weaknesses was that the agencies had not fully implemented key elements of their information security programs  In August 2016, we reported that the IT security of the Food and Drug Administration had significant weaknesses that jeopardized the confidentiality, integrity, and availability of its information systems and industry and public health data  Congress and the President have enacted various key pieces of reform legislation to address IT management issues  These include the federal IT acquisition reform legislation commonly referred to as the Federal Information Technology Acquisition Reform Act (FITARA)  This legislation was intended to improve covered agencies’ acquisitions of IT and enable Congress to monitor agencies’ progress and hold them accountable for reducing duplication and achieving cost savings  The law includes specific requirements related to seven areas: Agency CIO authority enhancements  CIOs at covered agencies have the authority to, among other things, (1) approve the IT budget requests of their respective agencies and (2) review and approve IT contracts  Federal data center consolidation initiative (FDCCI)  Agencies covered by FITARA are required, among other things, to provide a strategy for consolidating and optimizing their data centers and issue quarterly updates on the progress made  Enhanced transparency and improved risk management  The Office of Management and Budget (OMB) and covered agencies are to make detailed information on federal IT investments publicly available, and agency CIOs are to categorize their investments by level of risk  Portfolio review  Covered agencies are to annually review IT investment portfolios in order to, among other things, increase efficiency and effectiveness and identify potential waste and duplication  Expansion of training and use of IT acquisition cadres  Covered agencies are to update their acquisition human capital plans to support timely and effective IT acquisitions  In doing so, the law calls for agencies to consider, among other things, establishing IT acquisition cadres (i e , multi-functional groups of professionals to acquire and manage complex programs), or developing agreements with other agencies that have such cadres  Government-wide software purchasing program  The General Services Administration is to develop a strategic sourcing initiative to enhance government-wide acquisition and management of software  In doing so, the law requires that, to the maximum extent practicable, the General Services Administration should allow for the purchase of a software license agreement that is available for use by all executive branch agencies as a single user  Maximizing the benefit of the Federal Strategic Sourcing Initiative  Federal agencies are required to compare their purchases of services and supplies to what is offered under the Federal Strategic Sourcing Initiative  In June 2015, OMB released guidance describing how agencies are to implement FITARA  This guidance is intended to, among other things: assist agencies in aligning their IT resources with statutory establish government-wide IT management controls to meet the law’s requirements, while providing agencies with flexibility to adapt to unique agency processes and requirements; strengthen the relationship between agency CIOs and bureau CIOs; strengthen CIO accountability for IT costs, schedules, performance, and security  The guidance identifies a number of actions that agencies are to take to establish a basic set of roles and responsibilities (referred to as the common baseline) for CIOs and other senior agency officials; and thus, to implement the authorities described in the law  For example, agencies are to conduct a self-assessment and submit a plan describing the changes they intend to make to ensure that common baseline responsibilities are implemented  In addition, in August 2016, OMB released guidance intended to, among other things, define a framework for achieving the data center consolidation and optimization requirements of FITARA  The guidance directs agencies to develop a data center consolidation and optimization strategic plan that defines the agency’s data center strategy for fiscal years 2016, 2017, and 2018  This strategy is to include, among other things, a statement from the agency CIO indicating whether the agency has complied with all data center reporting requirements in FITARA  Further, the guidance indicates that OMB is to maintain a public dashboard to display consolidation-related costs savings and optimization performance information for the agencies  Congress has recognized the importance of agencies’ continued implementation of FITARA provisions, and has taken legislative action to extend selected provisions beyond their original dates of expiration  Specifically, Congress and the President enacted laws to: remove the expiration date for enhanced transparency and improved risk management provisions, which were set to expire in 2019; remove the expiration date for portfolio review, which was set to expire in 2019; and extend the expiration date for FDCCI from 2018 to 2020  In addition, Congress and the President enacted a law to authorize the availability of funding mechanisms to help further agencies’ efforts to modernize IT  The law, known as the Modernizing Government Technology (MGT) Act, authorizes agencies to establish working capital funds for use in transitioning from legacy IT systems, as well as for addressing evolving threats to information security  The law also creates the Technology Modernization Fund, within the Department of the Treasury, from which agencies can “borrow” money to retire and replace legacy systems, as well as acquire or develop systems  Further, in February 2018, OMB issued guidance for agencies to implement the MGT Act  The guidance was intended to provide agencies additional information regarding the Technology Modernization Fund, and the administration and funding of the related IT working capital funds  Specifically, the guidance allowed agencies to begin submitting initial project proposals for modernization on February 27, 2018  In addition, in accordance with the MGT Act, the guidance provides details regarding a Technology Modernization Board, which is to consist of (1) the Federal CIO; (2) a senior official from the General Services Administration; (3) a member of DHS’s National Protection and Program Directorate; and (4) four federal employees with technical expertise in IT development, financial management, cybersecurity and privacy, and acquisition, appointed by the Director of OMB  Congress and the President enacted the Federal Information Security Modernization Act of 2014 (FISMA) to improve federal cybersecurity and clarify government-wide responsibilities  The act addresses the increasing sophistication of cybersecurity attacks, promotes the use of automated security tools with the ability to continuously monitor and diagnose the security posture of federal agencies, and provides for improved oversight of federal agencies’ information security programs  Specifically, the act clarifies and assigns additional responsibilities to entities such as OMB, DHS, and the federal agencies  Table 1 describes a selection of OMB, DHS, and agency responsibilities  Beyond the implementation of FITARA, FISMA, and related actions, the current administration has also initiated other efforts intended to improve federal IT  Specifically, in March 2017, the administration established the Office of American Innovation, which has a mission to, among other things, make recommendations to the President on policies and plans aimed at improving federal government operations and services  In doing so, the office is to consult with both OMB and the Office of Science and Technology Policy on policies and plans intended to improve government operations and services, improve the quality of life for Americans, and spur job creation  In May 2017, the Administration also established the American Technology Council, which has a goal of helping to transform and modernize federal agency IT and how the federal government uses and delivers digital services  The President is the chairman of this council, and the Federal CIO and the United States Digital Service Administrator are among the members  In addition, on May 11, 2017, the President signed Executive Order 13800, Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure  This executive order outlined actions to enhance cybersecurity across federal agencies and critical infrastructure to improve the nation’s cyber posture and capabilities against cyber security threats  Among other things, the order tasked the Director of the American Technology Council to coordinate a report to the President from the Secretary of DHS, the Director of OMB, and the Administrator of the General Services Administration, in consultation with the Secretary of Commerce, regarding the modernization of federal IT  As a result, the Report to the President on Federal IT Modernization was issued on December 13, 2017, and outlined the current and envisioned state of federal IT  The report focused on modernization efforts to improve the security posture of federal IT and recognized that agencies have attempted to modernize systems but have been stymied by a variety of factors, including resource prioritization, ability to procure services quickly, and technical issues  The report provided multiple recommendations intended to address these issues through the modernization and consolidation of networks and the use of shared services to enable future network architectures  Further, in March 2018, the Administration issued the President’s Management Agenda, which lays out a long-term vision for modernizing the federal government  The agenda identifies three related drivers of transformation—IT modernization; data, accountability, and transparency; and the workforce of the future—that are intended to push change across the federal government  The Administration also established 14 related Cross-Agency Priority goals, many of which have elements that involve IT  In particular, the Cross-Agency Priority goal on IT modernization states that modern IT must function as the backbone of how government serves the public in the digital age and provides three priorities that are to guide the Administration’s efforts to modernize federal IT: (1) enhancing mission effectiveness by improving the quality and efficiency of critical services, including the increased utilization of cloud-based solutions; (2) reducing cybersecurity risks to the federal mission by leveraging current commercial capabilities and implementing cutting edge cybersecurity capabilities; and (3) building a modern IT workforce by recruiting, reskilling, and retaining professionals able to help drive modernization with up-to-date technology  Most recently, on May 15, 2018, the President signed Executive Order 13833, Enhancing the Effectiveness of Agency Chief Information Officers  Among other things, this executive order is intended to better position agencies to modernize their IT systems, execute IT programs more efficiently, and reduce cybersecurity risks  The order pertains to 22 of the 24 Chief Financial Officer Act agencies: the Department of Defense and the Nuclear Regulatory Commission are exempt  For the covered agencies, the executive order strengthens the role of agency CIOs by, among other things, requiring to report directly to their agency head; to serve as their agency head’s primary IT strategic advisor; and to have a significant role in all management, governance, and oversight processes related to IT  In addition, one of the cybersecurity requirements directs agencies to ensure that the CIO works closely with an integrated team of senior executives, including those with expertise in IT, security, and privacy, to implement appropriate risk management measures  In the February 2017 update to our high-risk series, we reported that agencies still needed to complete significant work related to the management of IT acquisitions and operations We stressed that OMB and federal agencies should continue to expeditiously implement FITARA and OMB’s related guidance, which include enhancing CIO authority, consolidating data centers, and acquiring and managing software licenses  Our update to this high-risk area also stressed that OMB and agencies needed to continue to implement our prior recommendations in order to improve their ability to effectively and efficiently invest in IT  Specifically, from fiscal years 2010 through 2015, we made 803 recommendations to OMB and federal agencies to address shortcomings in IT acquisitions and operations  In addition, in fiscal year 2016, we made 202 new recommendations, thus, further reinforcing the need for OMB and agencies to address the shortcomings in IT acquisitions and operations  As stated in the update, OMB and agencies should demonstrate government-wide progress in the management of IT investments by, among other things, implementing at least 80 percent of our recommendations related to managing IT acquisitions and operations within 4 years  As of May 2018, OMB and agencies had fully implemented 489 (or about 61 percent) of the 803 recommendations  Figure 1 summarizes the progress that OMB and agencies have made in addressing our recommendations as compared to the 80 percent target  Overall, federal agencies would be better positioned to realize billions in cost savings and additional management improvements if they address these recommendations, including those aimed at implementing CIO responsibilities, review of IT acquisitions; improving data center consolidation; and managing software licenses  In all, the various laws, such as FITARA, and related guidance assign 35 IT management responsibilities to CIOs in six key areas  These areas are: leadership and accountability, budgeting, information security, investment management, workforce, and strategic planning  In a draft report on CIO responsibilities that we have provided to the agencies for comment and plan to issue in June 2018, our preliminary results suggest that none of the 24 agencies we reviewed had policies that fully addressed the role of their CIO, as called for by federal laws and guidance  In this regard, a majority of the agencies fully or substantially addressed the role of their CIOs for the area of leadership and accountability  In addition, a majority of the agencies substantially or partially addressed the role of their CIOs for two areas: information security and IT budgeting  However, most agencies partially or minimally addressed the role of their CIOs for two areas: investment management and strategic planning  These preliminary results are shown in figure 2  Despite these shortfalls, most agency officials stated that their CIOs are implementing the responsibilities even if the agencies do not have policies requiring implementation  Nevertheless, the CIOs of the 24 selected agencies acknowledged in responses to a survey that we administered for our draft report that they were not always very effective in implementing the six IT management areas  Specifically, our preliminary results show that at least 10 of the CIOs indicated that they were less than very effective for each of the six areas of responsibility  We believe that until agencies fully address the role of CIOs in their policies, agencies will be limited in addressing longstanding IT management challenges  Figure 3 depicts that extent to which the CIOs reported their effectiveness in implementing the six areas of responsibility  Beyond the actions of the agencies, however, our preliminary results indicate that shortcomings in agencies’ policies also are partially attributable to two weaknesses in OMB’s FITARA implementation guidance  First, the guidance does not comprehensively address all CIO responsibilities, such as those related to assessing the extent to which personnel meet IT management knowledge and skill requirements, and ensuring that personnel are held accountable for complying with the information security program  Correspondingly, the majority of the agencies’ policies did not fully address nearly all of the responsibilities that were not included in OMB’s guidance  Second, OMB’s guidance does not ensure that CIOs have a significant role in (1) IT planning, programming, and budgeting decisions and (2) execution decisions and the management, governance, and oversight processes related to IT, as required by federal law and guidance  In the absence of comprehensive guidance, CIOs will not be positioned to effectively acquire, maintain, and secure their IT systems  Based on our preliminary results, 24 agency CIOs also identified a number of factors that enabled and challenged their ability to effectively manage IT  As shown in figure 4, five factors were identified by at least half of the 24 CIOs as major enablers and three factors were identified by at least half of the CIOs as major challenges  Specifically, most agency CIOs cited five factors as being enablers to effectively carry out their responsibilities: (1) NIST guidance, (2) the CIO’s position in the agency hierarchy, (3) OMB guidance, (4) coordination with the Chief Acquisition Officer (CAO), and (5) legal authority  Further, three factors were cited by CIOs as major factors that have challenged their ability to effectively carry out responsibilities: (1) processes for hiring, recruiting, and retaining IT personnel; (2) financial resources; and (3) the availability of personnel/staff resources  As our draft report states, although OMB has issued guidance aimed at addressing the three factors that were identified by at least half of the CIOs as major challenges, the guidance does not fully address those challenges  Further, regarding the financial resources challenge, OMB recently required agencies to provide data on CIO authority over IT spending; however, its guidance does not provide a complete definition of the authority  We believe that in the absence of such guidance, agencies have created varying definitions of CIO authority  Further, until OMB updates its guidance to include a complete definition of the authority that CIOs are to have over IT spending, it will be difficult for OMB to identify any deficiencies in this area and to help agencies make any needed improvements  In order to address challenges in implementing CIO responsibilities, we intend to include in our draft report recommendations to OMB and each of the selected 24 federal agencies to improve the effectiveness of CIOs’ implementation of their responsibilities for each of the six IT management areas  FITARA includes a provision to enhance covered agency CIOs’ authority through, among other things, requiring agency heads to ensure that CIOs review and approve IT contracts  OMB’s FITARA implementation guidance expanded upon this aspect of the legislation in a number of ways  Specifically, according to the guidance: CIOs may review and approve IT acquisition strategies and plans, rather than individual IT contracts; CIOs can designate other agency officials to act as their representatives, but the CIOs must retain accountability; CAOs are responsible for ensuring that all IT contract actions are consistent with CIO-approved acquisition strategies and plans; and CAOs are to indicate to the CIOs when planned acquisition strategies and acquisition plans include IT  In January 2018, we reported that most of the CIOs at 22 selected agencies were not adequately involved in reviewing billions of dollars of IT acquisitions  For instance, most of the 22 agencies did not identify all of their IT contracts  In this regard, the agencies identified 78,249 IT- related contracts, to which they obligated $14 7 billion in fiscal year 2016  However, we identified 31,493 additional contracts with $4 5 billion obligated, raising the total amount obligated by these agencies to IT contracts in fiscal year 2016 to at least $19 2 billion  Figure 5 reflects the obligations that the 22 selected agencies reported to us relative to the obligations we identified  The percentage of additional IT contract obligations we identified varied among the selected agencies  For example, the Department of State did not identify 1 percent of its IT contract obligations  Conversely, 8 agencies did not identify over 40 percent of their IT contract obligations  Many of the selected agencies that did not identify these IT contract obligations did not follow OMB guidance  Specifically, 14 of the 22 agencies did not involve the acquisition office in their process to identify IT acquisitions for CIO review, as required by OMB  In addition, 7 agencies did not establish guidance to aid officials in recognizing IT  We concluded that until these agencies involve the acquisitions office in their IT acquisition identification processes and establish supporting guidance, they cannot ensure that they will identify all IT acquisitions  Without proper identification of IT acquisitions, these agencies and CIOs cannot effectively provide oversight of these acquisitions  In addition to not identifying all IT contracts, 14 of the 22 selected agencies did not fully satisfy OMB’s requirement that the CIO review and approve IT acquisition plans or strategies  Further, only 11 of 96 randomly selected IT contracts at 10 agencies that we evaluated were CIO-reviewed and approved as required by OMB’s guidance  The 85 IT contracts not reviewed had a total possible value of approximately $23 8 billion  We believe that until agencies ensure that CIOs are able to review and approve all IT acquisitions, CIOs will continue to have limited visibility and input into their agencies’ planned IT expenditures and will not be able to use the increased authority that FITARA’s contract approval provision is intended to provide  Further, agencies will likely miss an opportunity to strengthen CIOs’ authority and the oversight of IT acquisitions  As a result, agencies may award IT contracts that are duplicative, wasteful, or poorly conceived  As a result of these findings, we made 39 recommendations in our January 2018 report  The recommendations included that agencies ensure that their acquisition offices are involved in identifying IT acquisitions and issuing related guidance, and that IT acquisitions are reviewed in accordance with OMB guidance  OMB and the majority of the agencies generally agreed with or did not comment on the recommendations  In our February 2017 high-risk update, we stated that OMB and agencies needed to demonstrate additional progress on achieving data center consolidation savings in order to improve the management of IT acquisitions and operations  Further, data center consolidation efforts are key to implementing FITARA  Specifically, OMB established the FDCCI in February 2010 to improve the efficiency, performance, and environmental footprint of federal data center activities  The enactment of FITARA in 2014 codified and expanded the initiative  In a series of reports that we issued from July 2011 through August 2017, we noted that, while data center consolidation could potentially save the federal government billions of dollars, weaknesses existed in several areas, including agencies’ data center consolidation plans, data center optimization, and OMB’s tracking and reporting on related cost savings  In these reports, we made a total of 160 recommendations to OMB and 24 agencies to improve the execution and oversight of the initiative  Most agencies and OMB agreed with our recommendations or had no comments  As of May 2018, 80 of these 160 recommendations remained unimplemented  Further, we recently reported in May 2018 that the 24 agencies participating in OMB’s Data Center Optimization Initiative (DCOI) had communicated mixed progress toward achieving OMB’s goals for closing data centers by September 2018  Over half of the agencies reported that they had either already met, or planned to meet, all of their OMB- assigned goals by the deadline  This would result in the closure of 7,221 of the 12,062 centers that agencies reported in August 2017  However, 4 agencies reported that they do not have plans to meet all of their assigned goals and 2 agencies are working with OMB to establish revised targets  With regard to agencies’ progress in achieving cost savings, 24 agencies reported $3 9 billion in cost savings through 2018  The 24 agencies also reported limited progress against OMB’s five data center optimization targets for server utilization and automated monitoring, energy metering, power usage effectiveness, facility utilization, and virtualization  As of August 2017, 1 agency reported that it had met four targets, 1 agency reported that it had met three targets, 6 agencies reported having met either one or two targets, and 14 agencies reported meeting none of the targets  Further, as of August 2017, most agencies were not planning to meet OMB’s fiscal year 2018 optimization targets  Specifically, 4 agencies reported plans to meet all of their applicable targets by the end of fiscal year 2018; 14 agencies reported plans to meet some of the targets; and 4 reported that they did not plan to meet any targets  Figure 6 summarizes agency-reported plans to meet or exceed the OMB’s data center optimization targets, as of August 2017  In 2016 and 2017, we made 81 recommendations to OMB and the 24 DCOI agencies to help improve the reporting of data center-related cost savings and to achieve optimization targets  As of May 2018, 71 of these 81 recommendations have not been fully addressed  In our 2015 high-risk report’s discussion of IT acquisitions and operations, we identified the management of software licenses as an area of concern, in part because of the potential for cost savings  Federal agencies engage in thousands of software licensing agreements annually  The objective of software license management is to manage, control, and protect an organization’s software assets  Effective management of these licenses can help avoid purchasing too many licenses, which can result in unused software, as well as too few licenses, which can result in noncompliance with license terms and cause the imposition of additional fees  As part of its PortfolioStat initiative, OMB has developed policy that addresses software licenses  This policy requires agencies to conduct an annual, agency-wide IT portfolio review to, among other things, reduce commodity IT spending  Such areas of spending could include software licenses  In May 2014, we reported on federal agencies’ management of software licenses and determined that better management was needed to achieve significant savings government-wide  Of the 24 selected agencies we reviewed, only 2 had comprehensive policies that included the establishment of clear roles and central oversight authority for managing enterprise software license agreements, among other things  Of the remaining 22 agencies, 18 had policies that were not comprehensive, and 4 had not developed any policies  Further, we found that only 2 of the 24 selected agencies had established comprehensive software license inventories, a leading practice that would help them to adequately manage their software licenses  The inadequate implementation of this and other leading practices in software license management was partially due to weaknesses in agencies’ policies  As a result, we concluded that agencies’ oversight of software license spending was limited or lacking, thus potentially leading to missed savings  However, the potential savings could be significant considering that, in fiscal year 2012, 1 major federal agency reported saving approximately $181 million by consolidating its enterprise license agreements, even when its oversight process was ad hoc  Accordingly, we recommended that OMB issue a directive to help guide agencies in managing software licenses  We also made 135 recommendations to the 24 agencies to improve their policies and practices for managing licenses  Among other things, we recommended that the agencies regularly track and maintain a comprehensive inventory of software licenses and analyze the inventory to identify opportunities to reduce costs and better inform investment decision making  Most agencies generally agreed with the recommendations or had no comments  As of May 2018, 78 of the 135 recommendations had not been implemented  Table 2 reflects the extent to which the 24 agencies implemented the recommendations in these two areas  Since information security was added to the high-risk list in 1997, we have consistently identified shortcomings in the federal government’s approach to cybersecurity  We have previously testified that, even though agencies have acted to improve the protections over federal and critical infrastructure information and information systems, the federal government needs to take the following actions to strengthen U S  cybersecurity: Effectively implement risk-based entity-wide information security programs consistently over time  Among other things, agencies need to (1) implement sustainable processes for securely configuring operating systems, applications, workstations, servers, and network devices; (2) patch vulnerable systems and replace unsupported software; (3) develop comprehensive security test and evaluation procedures and conduct examinations on a regular and recurring basis; and (4) strengthen oversight of contractors providing IT services  Improve its cyber incident detection, response, and mitigation capabilities  DHS needs to expand the capabilities and support wider adoption of its government-wide intrusion detection and prevention system  In addition, the federal government needs to improve cyber incident response practices, update guidance on reporting data breaches, and develop consistent responses to breaches of personally identifiable information  Expand its cyber workforce planning and training efforts  The federal government needs to (1) enhance efforts for recruiting and retaining a qualified cybersecurity workforce and (2) improve cybersecurity workforce planning activities  Expand efforts to strengthen cybersecurity of the nation’s critical infrastructures  The federal government needs to develop metrics to (1) assess the effectiveness of efforts promoting the National Institute of Standards and Technology’s (NIST) Framework for Improving Critical Infrastructure Cybersecurity and (2) measure and report on the effectiveness of cyber risk mitigation activities and the cybersecurity posture of critical infrastructure sectors  Better oversee protection of personally identifiable information  The federal government needs to (1) protect the security and privacy of electronic health information, (2) ensure privacy when face recognition systems are used, and (3) protect the privacy of users’ data on state-based health insurance marketplaces  As we have previously noted, in order to take the preceding actions and strengthen the federal government’s cybersecurity posture, agencies should implement the information security programs required by FISMA  In this regard, FISMA provides a framework for ensuring the effectiveness of information security controls for federal information resources  The law requires each agency to develop, document, and implement an agency- wide information security program  Such a program includes risk assessments; the development and implementation of policies and procedures to cost-effectively reduce risks; plans for providing adequate information security for networks, facilities, and systems; security awareness and specialized training; the testing and evaluation of the effectiveness of controls; the planning, implementation, evaluation, and documentation of remedial actions to address information security deficiencies; procedures for detecting, reporting, and responding to security incidents; and plans and procedures to ensure continuity of operations  Since 2010, we have made 2,733 recommendations to agencies aimed at improving the security of federal systems and information  These recommendations have identified actions for agencies to take to strengthen technical security controls over their computer networks and systems  They also have included recommendations for agencies to fully implement aspects of their information security programs, as mandated by FISMA  Nevertheless, many agencies continue to be challenged in safeguarding their information systems and information, in part because many of these recommendations have not been implemented  As of May 2018, 793 of information security-related recommendations we have made have not been implemented  In order to determine the effectiveness of the agencies’ information security programs and practices, FISMA requires that federal agencies’ inspectors general conduct annual independent evaluations  The agencies are to report the results of these evaluations to OMB, and OMB is to summarize the results in annual reports to Congress  In these evaluations, the inspectors general frame the scope of their analysis, identify key findings, and detail recommendations to address the findings  The evaluations also are to capture maturity model ratings for their respective agencies  Toward this end, in fiscal year 2017, the inspector general community, in partnership with OMB and DHS, finalized a 3-year effort to create a maturity model for FISMA metrics that align to the five function areas in the NIST Framework for Improving Critical Infrastructure Cybersecurity (Cybersecurity Framework): identify, protect, detect, respond, and recover  This alignment is intended to help promote consistent and comparable metrics and criteria and provides agencies with a meaningful independent assessment of their information security programs  This maturity model is designed to summarize the status of agencies’ information security programs on a five-level capability maturity scale  The five maturity levels are defined as follows: Level 1 Ad-hoc: Policies, procedures, and strategy are not formalized; activities are performed in an ad-hoc, reactive manner  Level 2 Defined: Policies, procedures, and strategy are formalized and documented but not consistently implemented  Level 3 Consistently Implemented: Policies, procedures, and strategy are consistently implemented, but quantitative and qualitative effectiveness measures are lacking  Level 4 Managed and Measurable: Quantitative and qualitative measures on the effectiveness of policies, procedures, and strategy are collected across the organizations and used to assess them and make necessary changes  Level 5 Optimized: Policies, procedures, and strategy are fully institutionalized, repeatable, self-generating, consistently implemented and regularly updated based on a changing threat and technology landscape and business/mission needs  In March 2018, OMB issued its annual FISMA report to Congress, which showed the combined results of the inspectors general’s fiscal year 2017 evaluations  Based on data from 76 agency inspector general and independent auditor assessments, OMB determined that the government-wide median maturity model ratings across the five NIST Cybersecurity Framework areas did not exceed a level 3 (consistently implemented)  Table 3 shows the inspectors general’s median ratings for each of the NIST Cybersecurity Framework areas  In its efforts toward strengthening the federal government’s cybersecurity, OMB also requires agencies to submit related cybersecurity metrics as part of its Cross-Agency Priority goals  In particular, OMB developed the IT modernization goal so that federal agencies will be able to build and maintain more modern, secure, and resilient IT  A key part of this goal is to reduce cybersecurity risks to the federal mission through three strategies: manage asset security, protect networks and data, and limit personnel access  The key targets supporting each of these strategies correspond to areas within the FISMA metrics  Table 4 outlines the strategies and their associated targets  In conclusion, FITARA and FISMA present opportunities for the federal government to address the high-risk areas on improving the management of IT acquisitions and operations, and ensuring the security of federal IT, thereby saving billions of dollars  Most agencies have taken steps to execute key IT management and cybersecurity initiatives, including implementing CIO responsibilities, requiring CIO review of IT acquisitions, realizing data center consolidation cost savings, managing software assets, and complying with FISMA requirements  The agencies have also continued to address the recommendations that we have made over the past several years  However, further efforts by OMB and federal agencies to implement our previous recommendations would better position them to improve the management and security of federal IT  To help ensure that these efforts succeed, we will continue to monitor agencies’ efforts toward implementing these recommendations  Chairmen Meadows and Hurd, Ranking Members Connolly and Kelly, and Members of the Subcommittees, this completes my prepared statement  I would be pleased to respond to any questions that you may have at this time  If you or your staff have any questions about this testimony, please contact David A  Powner, Director, Information Technology, at (202) 512- 9286 or pownerd@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement  GAO staff who made key contributions to this testimony are Kevin Walsh (Assistant Director), Chris Businsky, Rebecca Eyler, Meredith Raymond, and Jessica Waselkow (Analyst in Charge)  This is a work of the U S  government and is not subject to copyright protection in the United States  The published product may be reproduced and distributed in its entirety without further permission from GAO  However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately 


Report 2: CSPF is a defined benefit multiemployer pension plan  Multiemployer plans are often created and maintained through collective bargaining agreements between labor unions and two or more employers, so that workers who move from job to job and employer to employer within an industry can continue to accrue pension benefits within the same plan over the course of their careers  Multiemployer plans are typically found in industries with many small employers such as trucking, building and construction, and retail food sales  In 2017, there were about 1,400 defined benefit multiemployer plans nationwide covering more than 10 million participants  Most multiemployer plans are jointly administered and governed by a board of trustees selected by labor and management  The labor union typically determines how the trustees representing labor are chosen and the contributing employers or an employer association typically determines how the trustees representing management are chosen  The trustees set the overall plan policy, direct plan activities, and set benefit levels (see fig  1)  Multiemployer plans are “prefunded,” or funded in advance, primarily by employer contributions  The employer contribution is generally negotiated through a collective bargaining agreement, and is often based on a dollar amount per hour worked by each employee covered by the agreement  Employer contributions are pooled in a trust fund for investment purposes, to pay benefits to retirees and their beneficiaries, and for administrative expenses  Multiemployer plan trustees typically decide how the trust fund should be invested to meet the plan’s objectives, but the trustees can use investment managers to determine how the trust fund should be invested  Multiemployer plan trust funds can be allocated among many different types of assets, any of which can generally be passively- or actively-managed, domestically or internationally based, or publicly or nonpublicly traded (see table 1)  A plan’s funded percentage is its ratio of plan assets to plan liabilities  Because the amount needed to pay pension benefits for many years into the future cannot be known with certainty due to a variety of economic and demographic factors, including the potential volatility of asset values, estimates of a plan’s funded percentage may vary from year to year  Defined benefit pension plans use a “discount rate” to convert projected future benefits into their “present value ” The discount rate is the interest rate used to determine the current value of estimated future benefit payments and is an integral part of estimating a plan’s liabilities  The higher the discount rate, the lower the plan’s estimate of its liability  Multiemployer plans use an “assumed-return approach” that bases the discount rate on a long-term assumed average rate of return on the pension plan’s assets  Under this approach, the discount rate depends on the allocation of plan assets  For example, a reallocation of plan assets into more stocks and fewer bonds typically increases the discount rate, which reduces the estimated value of plan liabilities, and therefore, reduces the minimum amount of funding required  Looking at the entire “multiemployer system”—the aggregation of multiemployer plans governed by ERISA and insured by PBGC—shows that while the system was significantly underfunded around 2001 and 2009, its funded position has improved since 2009  Specifically, analyses published by the Center for Retirement Research at Boston College and the Society of Actuaries used plan regulatory filings to calculate the funded status for the system and determined that it was approaching 80 percent funded by 2014 after falling during the 2008 market downturn  However, some observers have noted that while many plans are making progress toward their minimum targets, a subset of plans face serious financial difficulties  Multiemployer retirement benefits are generally determined by the board of trustees  The bargaining parties negotiate a contribution rate and the trustees adopt or amend the plan’s benefit formulas and provisions  Decisions to increase benefits or change the plan are also typically made by the board of trustees  Benefit amounts are generally based on a worker’s years of service and either a flat dollar amount or the worker’s wage or salary history, subject to further adjustment based on the age of retirement  CSPF was established in 1955 to provide pension benefits to International Brotherhood of Teamsters union members (Teamsters) in the trucking industry, and it is one of the largest multiemployer plans  In the late 1970s, CSPF was the subject of investigations by the IRS within the U S  Department of the Treasury (Treasury), and by DOL and the U S  Department of Justice (DOJ)  The DOL investigation ultimately resulted in the establishment of a federal court-enforceable consent decree in 1982 that remains in force today  CSPF held more than $4 3 billion in Net Assets at the end of 1982 after the consent decree was established  The plan’s Net Assets peaked at nearly $26 8 billion at the end of 2007 and declined to about $15 3 billion at the end of 2016 (see fig  2)  As of 2016, CSPF reported that it had about 1,400 contributing employers and almost 385,000 participants  The number of active CSPF participants has declined over time  In 2016, 16 percent of about 385,000 participants were active, i e , still working in covered employment that resulted in employer contributions to the plan  In comparison, CSPF reported in 1982 that 69 percent of more than 466,000 participants were active participants  Since the 1980s, CSPF’s ratio of active to nonworking participants has declined more dramatically than the average for multiemployer plans  By 2015, only three of the plan’s 50 largest employers from 1980 still paid into the plan, and for each full-time active employee there were over five nonworking participants, mainly retirees  As a result, benefit payments to CSPF retirees have exceeded employer contributions in every year since 1984  Thus, CSPF has generally drawn down its investment assets  In 2016, CSPF withdrew over $2 billion from investment assets (see fig  3 )  CSPF has historically had fewer plan assets than were needed to fully fund the accrued liability—the difference referred to as unfunded liability  In 1982, we reported that CSPF was “thinly funded”—as the January 1, 1980, actuarial valuation report showed the plan’s unfunded liability was about $6 billion—and suggested that IRS should closely monitor CSPF’s financial status  In 2015, the plan’s actuary certified that the plan was in “critical and declining” status  The plan has been operating under an ERISA-required rehabilitation plan since March 25, 2008, which is expected to last indefinitely  As of January 1, 2017, the plan was funded to about 38 percent of its accrued liability  In September 2015, CSPF filed an application with Treasury seeking approval to reduce benefits pursuant to provisions in the Multiemployer Pension Reform Act of 2014 (MPRA), which is fully discussed later in this section  The application was denied in May 2016 based, in part, on Treasury’s determination that the plan’s proposed benefit suspensions were not reasonably estimated to allow the plan to remain solvent  In 2017, CSPF announced it would no longer be able to avoid the projected insolvency  (See app  II for a timeline of key events affecting CSPF ) As previously mentioned, CSPF was the subject of investigations in the 1970s by IRS, DOL, and DOJ  DOL’s investigation focused on numerous loan and investment practices alleged to constitute fiduciary breaches under ERISA, such as loans made to companies on the verge of bankruptcy, additional loans made to borrowers who had histories of delinquency, loans to borrowers to pay interest on outstanding loans that the fund recorded as interest income, and lack of controls over rental income  As a result of its investigation, DOL filed suit against the former trustees of CSPF and, in September 1982, the parties entered into a consent decree, which remains in force today  The consent decree provides measures intended to ensure that the plan complies with the requirements of ERISA, including providing for oversight by the court and DOL, and prescribes roles for multiple parties in its administration  For example, certain plan activities must be submitted to DOL for comment and to the court for approval, including new trustee approvals and some investment manager appointments  According to DOL, to prevent criminal influence from regaining a foothold of control over plan assets, the consent decree generally requires court-approved independent asset managers—called “named fiduciaries”—to manage CSPF’s investments  CSPF’s trustees are generally prohibited from managing assets; however, they remain responsible for selecting, subject to court approval, and overseeing named fiduciaries and monitoring plan performance  To focus attention on compliance with ERISA fiduciary responsibility provisions, the consent decree provides for a court-appointed independent special counsel with authority to observe plan activities and oversee and report on the plan  (See app  III for additional detail on the key provisions of the consent decree ) In 1974, Congress passed ERISA to protect the interests of participants and beneficiaries of private sector employee benefit plans  Among other things, ERISA requires plans to meet certain requirements and minimum standards  DOL, IRS, and PBGC are generally responsible for administering ERISA and related regulations  DOL has primary responsibility for administering and enforcing the fiduciary responsibility provisions under Part 4 of Title I of ERISA, which include the requirement that plan fiduciaries act prudently and in the sole interest of participants and beneficiaries  Treasury, specifically the IRS, is charged with determining whether a private sector pension plan qualifies for preferential tax treatment under the Internal Revenue Code  Additionally, the IRS is generally responsible for enforcing ERISA’s minimum funding requirements, among other things  ERISA generally requires that multiemployer plans meet minimum funding standards, which specify a funding target that must be met over a specified period of time  The funding target for such plans is measured based on assumptions as to future investment returns, rates of mortality, retirement ages, and other economic and demographic assumptions  Under the standards, a plan must collect a minimum level of contributions each year to show progress toward meeting its target, or the plan employers may be assessed excise taxes and owe the plan for missed contributions plus interest  Minimum contribution levels may vary from year to year due to a variety of economic and demographic factors, such as addressing differences between assumed investment returns and the plan’s actual investment returns  To protect retirees’ pension benefits in the event that plan sponsors are unable to pay plan benefits, PBGC was created by ERISA  PBGC is financed through mandatory insurance premiums paid by plans and plan sponsors, with premium rates set by law  PBGC operates two distinct insurance programs: one for multiemployer plans and another for single- employer plans  Each program has separate insurance funds and different benefit guarantee rules  The events that trigger PBGC intervention differ between multiemployer and single-employer plans  For multiemployer plans, the triggering event is plan insolvency, the point at which a plan begins to run out of money while not having sufficient assets to pay the full benefits that were originally promised when due  PBGC does not take over operations of an insolvent multiemployer plan; rather, it provides loan assistance to pay administrative expenses and benefits up to the PBGC-guaranteed level  According to PBGC, only once in its history has a financial assistance loan from the multiemployer pension insurance program been repaid  In 2017, PBGC provided financial assistance to 72 insolvent multiemployer plans for an aggregate amount of $141 million  For single-employer plans the triggering event is termination of an underfunded plan—generally, when the employer goes out of business or enters bankruptcy  When this happens, PBGC takes over the plan’s assets, administration, and payment of plan benefits (up to the statutory limit)  The PBGC-guaranteed benefit amounts for multiemployer plans and the premiums assessed by PBGC to cover those benefit guarantees are significantly lower than those for single-employer plans  Each insured multiemployer plan pays flat-rate insurance premiums to PBGC based on the number of participants covered  The annual premium rate for plan years beginning in January 2017 was $28 per participant and it is adjusted annually based on the national average wage index  (See app  II for the PBGC premium rates that have been in effect since the consent decree was established in 1982 ) When plans receive financial assistance, participants face a reduction in benefits  For example, using 2013 data, PBGC estimated 21 percent of more than 59,000 selected participants in insolvent multiemployer plans then receiving financial assistance from PBGC faced a benefit reduction  The proportion of participants facing reductions due to the statutory guarantee limits is expected to increase  About 51 percent of almost 20,000 selected participants in plans that PBGC believed would require future assistance were projected to face a benefit reduction  Since 2013, the deficit in PBGC’s multiemployer program has increased by nearly 700 percent, from a deficit of $8 3 billion at the end of fiscal year 2013 to $65 1 billion at the end of fiscal year 2017  PBGC estimated that at of the end of 2016, the present value of net new claims by multiemployer plans over the next 10 years would be about $24 billion, or approximately 20 percent higher than its 2015 projections  The program is projected to become insolvent within approximately 8 years  If that happens, participants who rely on PBGC guarantees will receive only a very small fraction of current statutory guarantees  According to PBGC, most participants would receive less than $2,000 a year and in many cases, much less  We have identified PBGC’s insurance programs as high-risk  This designation was made in part because multiemployer plans that are currently insolvent, or likely to become insolvent in the near future, represent a significant financial threat to the agency’s insurance program  We designated the single-employer program as high-risk in July 2003, and added the multiemployer program in January 2009  Both insurance programs remain on our high-risk list  Multiemployer Pension Plan Amendments Act of 1980 Among other things, the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) made employers liable for a share of unfunded plan benefits when they withdraw from a plan, unless otherwise relieved of their liability, and strengthened certain funding requirements  An employer that chooses to withdraw from a multiemployer plan may be required to continue to contribute if the plan does not have sufficient assets to cover the plan’s current and known future liabilities at the time the employer withdraws; however, these payments may not fully cover the withdrawing employer’s portion of the plan’s liabilities  In such cases, the employers remaining in the plan may effectively assume the remaining liability  The Pension Protection Act of 2006 The Pension Protection Act of 2006 (PPA) was intended to improve the funding of seriously underfunded multiemployer plans, among other things  It included provisions that require plans in poor financial health to take action to improve their financial condition over the long term and established two categories of troubled plans: (1) “endangered status” or “yellow zone” plans (this category also includes a sub-category of “seriously endangered”), and (2) more seriously troubled “critical status” or “red zone” plans  PPA further required plans in the endangered and critical zones to develop written plans to improve their financial condition, such as by revising benefit structures, increasing contributions, or both, within a prescribed time frame  Multiemployer plans in yellow or red zone status must document their remediation strategies in a written plan, notify plan participants, and report annually on whether scheduled progress has been made  Since the 2008 market decline, the number of participants in endangered and critical plans has generally been decreasing (see fig  4)  The Multiemployer Pension Reform Act of 2014 In response to the funding crisis facing PBGC and multiemployer pension plans, the Multiemployer Pension Reform Act of 2014 (MPRA) made changes to the multiemployer system that were intended to improve its financial condition  Key changes included: Creation of critical and declining status  MPRA created a new category, “critical and declining,” for plans in critical status projected to become insolvent during the current plan year or within any of the 14 succeeding plan years, or in certain circumstances, within any of the 19 succeeding plan years  In 2017, PBGC reported that more than 100 multiemployer plans (more than 7 percent of plans) representing approximately 1 million participants (about 10 percent of participants) have been determined to be “critical and declining ” Permitted reduction of accrued benefits  MPRA permits plans to reduce participants’ and beneficiaries’ accrued retirement benefits if the plan can demonstrate such action is necessary to remain solvent  Plans apply to Treasury for the authority to reduce benefits  Treasury, in consultation with PBGC and DOL, reviews the applications and determines whether the proposed changes would enable the plan to remain solvent  Increased PBGC premiums  MPRA also increased the PBGC premiums for multiemployer plans from $12 to $26 (per participant per plan year) in 2015 and from $26 to $28 in plan year 2017  The annual premium in subsequent years is indexed to changes in the national average wage index  Creation of new framework of rules for partition  Partition allows a multiemployer plan to split into two plans—the original and a successor  Partitions are intended to relieve stress on the original plan by transferring the benefits of some participants to a successor plan funded by PBGC and to help retain participant benefits in the plans at levels higher than the PBGC-guaranteed levels  At the time the consent decree was established in 1982, CSPF had less than half the estimated funds needed to cover plan liabilities (and to pay associated benefits over the lifetime of participants) and it has not attained 100 percent of its estimated funding need since then, according to regulatory filings  CSPF’s 1982 Form 5500 we reviewed shows that the plan was less than 40 percent funded prior to the consent decree becoming effective  Over the next two decades, the plan generally made progress toward achieving its targeted level of funding but was never more than 75 percent funded, and funding has generally deteriorated since its 2002 filing (see fig  5)  Overall, the plan’s unfunded liability increased by approximately $11 2 billion (in inflation-adjusted dollars) between January 1983 and January 2016  As a consequence, participant benefits were never fully secured by plan assets over this period, as measured by ERISA’s minimum funding standards, and the plan consistently needed to collect contributions in excess of those needed to fund new benefit accruals to try to make up for its underfunded status  CSPF officials and other stakeholders identified several factors that contributed to CSPF’s critical financial condition and reflect the challenges faced by many multiemployer plans  For example, like CSPF, many multiemployer plans have experienced financial difficulties due to a combination of investment losses and insufficient employer contributions  In addition to being underfunded prior to the consent decree going into effect, stakeholders identified other specific factors that contributed to CSPF’s critical financial condition, such as trends within the national trucking industry and its workforce, funding challenges and common investment practices of multiemployer plans, and the impact of market downturns on long-term investment performance  Stakeholders also described the effects of the 2007 withdrawal of a key employer, United Parcel Service (UPS), on CSPF’s critical financial condition  Stakeholders we interviewed said changes to the workforce, such as declining union membership rates and changes resulting from industry deregulation, affected CSPF and some other multiemployer plans by reducing the number of workers able to participate in their plans  While the multiemployer structure distributes bankruptcy risk across many employers, for any particular multiemployer plan employers are often concentrated in the same industry, making the plans vulnerable to industry- specific trends and risks  For example, stakeholders noted the impact that the Motor Carrier Act of 1980 had on the trucking industry  Specifically, deregulation of the trucking industry reduced government oversight and regulation over interstate trucking shipping rates  The trucking industry became increasingly dominated by nonunion trucking companies resulting in the bankruptcy of many unionized trucking companies, according to stakeholders  New trucking companies typically did not join multiemployer plans because their labor force was not unionized and this, coupled with the bankruptcy of many contributing employers, contributed to a decrease in active participant populations for many plans serving the industry  As the total number of active participants in a plan declines, the resources from which to collect employer contributions declines proportionally  Stakeholders also said these changes were unforeseeable  Limitations on a plan’s ability to increase contributions mean that a plan has less capacity to recover from an underfunded position or to make up for investment returns that fall short of expectations  A decline in the number of active workers can also accelerate plan “maturity,” as measured by the ratio of nonworking to working participants  Plan maturity has implications for a plan’s investment practices and the time frame over which the plan must be funded  According to PBGC’s data for the multiemployer plans it insures, there were approximately three active participants for every nonworking participant in 1980 (3:1); by 2014, the ratio was approximately one active worker for every two nonworking participants (1:2)  Figure 6 shows the change in the percentages of active and nonworking participants for the multiemployer plans that PBGC insures  CSPF saw an even more dramatic change in its active to nonworking participant ratio from 1982 through 2015  In 1982, there were more than two active workers for every nonworking participant (2:1) and by 2016 that ratio had fallen to approximately one active worker for every five nonworking participants (1:5) (see fig  7)  Because CSPF’s contributing employers were largely trucking companies, stakeholders said this made the fund especially vulnerable to industry-wide shocks  Like the industry as a whole, CSPF was unable to attract new employers to replace exiting employers, in part because of the lack of new unionized employers  CSPF officials said that changes to the trucking industry and its workforce also led to other challenges for the plan  For example, contributions to the plan declined with the shrinking number of active workers  CSPF officials told us they could not significantly increase the contribution rate paid by remaining employers because of the financial hardship it would cause, and as a result, the plan’s ability to recover from its underfunded position was limited  CSPF officials said that this increased the plan’s reliance on investment returns to try to close the gap between its assets and liabilities  Stakeholders we interviewed cited challenges inherent in multiemployer plans’ funding and investment practices, and described how the challenges may have contributed to the critical financial condition of some plans, including CSPF  Stakeholders said that CSPF and many other multiemployer plans have been challenged by employer withdrawals  An employer withdrawal reduces the plan’s number of active worker participants, thereby reducing its contribution base and accelerating plan maturity  A withdrawing employer generally must pay a share of any unfunded benefits  Stakeholders identified several ways in which the withdrawal liability framework could result in a withdrawing employer underpaying its share of an unfunded liability  We have previously reported on the challenges associated with withdrawal liability, including: withdrawal liability assessments are often paid over time, and payment amounts are based on prior contribution rates rather than the employer’s actual withdrawal liability assessment  withdrawal liability payments are subject to a 20-year cap, regardless of whether an employer’s share of unfunded benefits has been fully paid within this 20-year timeframe; plans often did not collect some or all of the scheduled withdrawal liability payments because employers went bankrupt before completing their scheduled payments; and fears of withdrawal liability exposure increasing over time could be an incentive for participating employers to leave a plan and a disincentive for new employers to join a plan; Stakeholders we interviewed also added that the calculation used to determine withdrawal liability may use an investment return assumption that inherently transfers risk to the plan  When exiting employers do not pay their share of unfunded benefits, any remaining and future employers participating in the plan may effectively assume the unpaid share as a part of their own potential withdrawal liability as well as responsibility for the exiting employer’s “orphaned” participants  Participating employers may negotiate a withdrawal if they perceive a risk that the value of their potential withdrawal liability might grow significantly over time  In its MPRA application, CSPF cited employer withdrawals and bankruptcies as a significant challenge for the plan  CSPF reported that after deregulation, the number of contributing employers dropped by over 70 percent  While some of the drop could be due to the consolidation of trucking companies after deregulation, CSPF officials cited several cases in which employers went bankrupt or withdrew from the plan, which reduced the plan’s contribution base and accelerated its maturity  Additionally, when employers went bankrupt, they often did not pay their full withdrawal liability  For example, CSPF said two of its major contributing employers left the plan between 2001 and 2003, and left $290 million of more than $403 million in withdrawal liability unpaid after they went bankrupt  Stakeholders identified funding timeframes as a factor that contributed to the challenges facing many multiemployer plans, including CSPF  ERISA’s minimum funding standards have historically allowed multiemployer plans to amortize, or spread out the period of time for funding certain events, such as investment shortfalls and benefit improvements  For example, CSPF began a 40-year amortization of approximately $6 1 billion in underfunding on January 1, 1981, giving the plan until the end of 2021 to fully fund that amount  Longer amortization periods increase the risk of plan underfunding due to the number and magnitude of changes in the plan’s environment that may occur, such as a general decline in participants or deregulation of an industry  The Pension Protection Act of 2006 shortened amortization periods for single- employer plans to 7 years and the amortization periods for multiemployer plans to 15 years  Shorter amortization periods provide greater benefit security to plan participants by reducing an unfunded liability more rapidly  In addition, shorter amortization periods can be better aligned with the projected timing of benefit payments for a mature plan  However, shorter periods can be a source of hardship for plans with financially troubled contributing employers because they may require higher contributions  According to CSPF officials, CSPF requested and received an additional 10-year amortization extension from the IRS in 2005 after relating that contribution requirements could force participating employers into bankruptcy  One CSPF representative said an amortization extension can also help avoid subjecting the plan’s employers to IRS excise taxes for failing to make required minimum contributions  Stakeholders we interviewed said that certain common investment practices may have played a role in the critical financial condition of CSPF and other mature and declining plans  In general, multiemployer plans invest in portfolios that are expected, on average, to produce higher returns than a low-risk portfolio, such as one composed entirely of U S  Treasury securities  Stakeholders also stated that these investment practices may have been too risky because returns can be more volatile, and the higher expected returns might not be achieved  In addition, the Congressional Budget Office has reported that if “plans had been required to fund their benefit liabilities—at the time those liabilities were accrued—with safer investments, such as bonds, the underfunding of multiemployer plans would have been far less significant and would pose less risk to PBGC and beneficiaries ” Stakeholders also told us that for mature plans like CSPF, these investment practices can pose further challenges  Mature plans, with fewer active employees, have less ability to recoup losses through increased contributions and have less time to recoup losses through investment returns before benefits must be paid  Market corrections, such as those that occurred in 2001 through 2002 and in 2008, can be particularly challenging to mature plans and their participants, especially if a mature plan is also significantly underfunded  Mature plans could mitigate these risks by investing more conservatively, however, the resulting lower expected returns from more conservative investing necessitates higher funding targets and contribution rates, which could be a hardship for employers in an industry with struggling employers  Alternatively, a plan that invests more conservatively may provide lower promised benefits to accommodate the level of contributions it can collect  Lower investment returns from a more conservative investment policy would cost employers more in contributions and could potentially result in employers leaving the plan  Further, investing in a conservative portfolio would be relatively unique among multiemployer plans, and stakeholders said plan managers may feel they are acting in a prudent fashion by investing similarly to their peers  Underfunded plans like CSPF may not see conservative investment as an option if they cannot raise the contributions necessary to fully fund their vested benefits  Officials from CSPF told us that, because they lacked the ability to significantly increase revenue or decrease accrued benefits, the named fiduciaries sought incrementally higher investment returns to meet funding thresholds required by the amortization extension they received in 2005  On the other hand, there are challenges associated with risk bearing investments  In our prior work, we reported that multiemployer plans generally develop an assumed average rate of investment return and use that assumption to determine funding targets, required contributions, and the potential cost of benefit improvements  Experts we interviewed for that report told us that using a portfolio’s expected return to value the cost of benefits increases the risk that insufficient assets could be on hand when needed  They also told us that using the portfolio’s expected return to calculate liabilities could incentivize plans to invest in riskier assets and to negotiate higher benefit levels because the higher returns expected from riskier portfolios can result in lower reported liabilities  Plan Terms Set through Collective Bargaining Stakeholders we interviewed said that plan terms, such as contribution rates, which are set through the collective bargaining process, can create an additional challenge for multiemployer plans  Employers in multiemployer plans generally are not required to contribute beyond what they have agreed to in collective bargaining, and these required employer contributions generally do not change during the term of a collective bargaining agreement  CSPF officials said that up until the early 2000s, plan officials did not request modifications to collective bargaining agreements, such as reallocating contribution dollars, to respond to adverse investment returns  Stakeholders highlighted the effects of market downturns on multiemployer plan assets as another contributing factor to CSPF’s critical financial condition and that of other multiemployer plans  Failure to achieve assumed returns has the effect of increasing unfunded liabilities  For the multiemployer system in aggregate, the average annual return on plan assets over the 2002 to 2014 period was about 6 1 percent, well short of typical assumed returns of 7 0 or 7 5 percent in 2002  Many multiemployer plans were especially impacted by the 2008 market downturn  PBGC estimated that from 2007 to 2009, the value of all multiemployer plan assets fell by approximately 24 percent, or $103 billion, after accounting for contributions to and payments from the plans  Although asset values recovered to some extent after 2009, some plans continued to be significantly underfunded, and stakeholders said this could be due to the contribution base not being sufficient to help recover from investment shortfalls  CSPF’s investment performance since 2000 has reflected performance similar to other multiemployer plans and the plan went from 73 percent funded in 2000 to about 38 percent funded in 2017  While the plan used an assumed rate of return of 7 5 to 8 0 percent per year between 2000 and 2014, our analysis of the plan’s regulatory filings shows that the plan’s weighted-average investment return over this period was about 4 9 percent per year  CSPF officials said the 2008 downturn significantly reduced CSPF’s assets and it was unable to sufficiently recoup those losses when the market rebounded in 2009  Plan assets declined from $26 8 billion at the beginning of 2008 to $17 4 billion at the beginning of 2009, with $7 5 billion of the decline attributable to investment losses  Despite reporting a 26 percent return on assets during 2009, CSPF had only $19 5 billion in assets at the end of 2009 because benefits and expenses exceeded the contributions it collected and because it had fewer assets generating returns for the plan  By the end of 2009, CSPF’s funding target was $35 9 billion but the fund had less than $20 billion that could be used to generate investment returns  If CSPF’s portfolio had returned 7 5 percent per year over the 2000-2014 period, instead of the approximately 4 9 percent we calculated, we estimate that the portfolio value would have exceeded $32 0 billion at the end of 2014, or 91 percent of its Actuarial Accrued Liability  In addition to the factors mentioned that affected many multiemployer plans, stakeholders we interviewed also noted the unique effect of the UPS withdrawal on CSPF  In 2007, UPS negotiated with the International Brotherhood of Teamsters for a withdrawal from CSPF and paid a withdrawal liability payment of $6 1 billion  This payment was invested just prior to the 2008 market downturn  Moreover, the loss of UPS, CSPF’s largest contributing employer, reduced the plan’s ability to collect needed contributions if the plan became more underfunded  A UPS official said that, following the market decline of 2001-2002, the company considered whether it should withdraw from all multiemployer plans because it did not want to be the sole contributing employer in any plan  According to this official, UPS considered the large number of UPS employees in CSPF and the plan’s demographics—such as an older population and fewer employers—in its decision to withdraw  CSPF officials said they did not want UPS to withdraw because its annual contributions accounted for about one-third of all contributions to the plan  CSPF officials also told us that, prior to the UPS withdrawal, they had expected the population of active UPS workers in the plan to grow over time  UPS’ withdrawal of 30 percent of CSPF’s active workers, in combination with the significant market downturn just after UPS withdrew, reflected the loss of working members and investment challenges on a large scale  Additionally, stakeholders noted that although each of the factors that contributed to CSPF’s critical financial condition individually is important, their interrelated nature also had a cumulative effect on the plan  Industry deregulation, declines in collective bargaining, and the plan’s significantly underfunded financial condition all impaired CSPF’s ability to maintain a population of active workers sufficient to supply its need for contributions when investment shortfalls developed  Given historical rules for plan funding and industry stresses, CSPF was unable to capture adequate funding from participating employers either before or after they withdrew from the plan  The plan’s financial condition was further impaired when long-term investment performance fell short of expectations  For an underfunded, mature plan such as CSPF, the cumulative effect of these factors was described by some stakeholders as too much for CSPF to overcome  There have been three distinct periods related to CSPF’s investment policy after the original consent decree took effect: the early period, from the consent decree’s effective date in September 1982 through October 1993, during which named fiduciaries set different investment policies and sold many of CSPF’s troubled assets—mostly real estate; a middle period from November 1993 through early 2017, during which CSPF’s investment policies were consistently weighted towards equities and its asset allocation varied, with notable equity allocation increases occurring from year-ends 1993-1995 and 2000-2002; and the current period, starting in January 2017, during which named fiduciaries and CSPF trustees are moving assets into fixed income ahead of insolvency  Appendix I has a detailed timeline that includes changes to CSPF’s investment policies since the consent decree was established in 1982  The original consent decree placed exclusive responsibility for controlling and managing the plan’s assets with an independent asset manager, called a named fiduciary  Additionally, the original consent decree prohibited CSPF trustees from managing assets or making investment decisions and gave a single named fiduciary the authority to set and change the plan’s investment objectives and policies, subject to court approval (see fig  8)  During this period, two successive named fiduciaries—first Equitable Life Assurance Society of the United States (Equitable) and then Morgan Stanley—set and executed the plan’s investment objectives using similar investment philosophies, but differing investment return goals and target asset allocations (see fig  9)  Both named fiduciaries planned to sell the plan’s troubled real estate assets from the pre-consent decree era  They also limited nonpublicly traded investments to 35 percent of the plan’s assets and set broad allocation targets for new real estate, fixed income, and equity assets  In 1984, Morgan Stanley considered a dedicated bond portfolio in its capacity as the plan’s named fiduciary, but after review, Morgan Stanley decided similar results could be obtained through other investment strategies  In executing these policies, the plan’s asset allocation varied from year to year  Starting in 1987 and in subsequent years during the early period, Morgan Stanley invested a majority of the plan’s assets in fixed income assets—more than half of which were passively managed—and all equity assets were allocated to domestic equity through 1992  By 1989, CSPF officials reported that nearly all troubled real estate assets had been sold and Morgan Stanley’s responsibilities and risk of potential fiduciary liability were reduced, permitting a concomitant reduction in fees paid to the named fiduciary (see fig  10)  During the middle period, CSPF’s investment policy was broad and consistently directed that asset allocations be weighted toward equities  In 1993, Morgan Stanley revised its investment policy statement for CSPF to eliminate asset allocation targets for each asset class and instead specified that the plan invest a majority of assets in equity or equity-type securities and no more than 25 percent in nonpublicly traded assets  After 1999, CSPF’s investment policy under other, successive named fiduciaries continued to be broad and generally specified that the plan should invest a majority of assets in equity or equity-type securities  Specifically J P  Morgan’s and Northern Trust’s consecutive investment policies for part of the plan’s assets continued to specify that a majority of the plan’s assets be invested in equity or equity-type securities and no more than 15 percent be invested in nonpublicly traded assets  Goldman Sachs’ investment policy for another part of the plan’s assets did not specify asset allocation details but indicated slightly higher tolerance for risk in conjunction with its equity portfolio  CSPF trustees said that named fiduciaries considered investing in alternative assets, but instead chose to increase the plan’s allocation to equity assets  The named fiduciaries’ investment policies did not vary significantly over this period because CSPF officials said that the plan’s overarching investment objective of achieving full funding did not change, even though there were key changes to the plan’s investment management structure during this time period  Specifically, starting in 1999, the plan temporarily shifted to a dual named fiduciary structure and increased its use of passively-managed accounts—both described in detail below— changing the named fiduciary structure that had been in place since the original consent decree (see fig  11)  More specifically, the two key changes to the plan’s investment management structure were: A temporary shift to a dual named fiduciary structure  Effective in 1999, CSPF proposed and the court approved allocating plan assets between two named fiduciaries instead of one in order to diversify CSPF’s investment approach, among other things  Both named fiduciaries were in charge of setting and executing separate policies for plan assets they managed—called “Group A” and “Group B” assets—irrespective of the other named fiduciary’s allocations  During this time, the two named fiduciaries were J P  Morgan/Northern Trust and Goldman Sachs  Specifically, J P  Morgan was named fiduciary between 2000 and 2005 and Northern Trust between 2005 and 2007 for “Group A” assets  Goldman Sachs was named fiduciary for “Group B” assets between 2000 and 2010  In 2010, an investment consultant found the performance of two named fiduciaries under the dual named fiduciary structure had been similar and more expensive than it would be under a proposed move back to a single named fiduciary  Accordingly, CSPF officials proposed, and the court approved, consolidation of all assets allocated to named fiduciaries in August 2010, with Northern Trust as the plan’s single named fiduciary  An increased use of passively-managed accounts  Between 2003 and 2010, the portion of assets that named fiduciaries managed declined as the plan moved 50 percent of its assets into three passively-managed accounts  Specifically, in 2003, 20 percent of CSPF’s assets were transitioned into a passively-managed domestic fixed income account to lower the plan’s investment management fees  In addition, both of the named fiduciaries reported that they had not outperformed the industry index for the domestic fixed income assets they managed after they were approved as named fiduciaries in 1999 and 2000 through February 2003  Similarly, in 2007 and 2010, CSPF officials said that two more passively-managed accounts were created to further reduce plan fees  Specifically, in 2007, 20 percent of plan assets were moved into a passively-managed domestic equity account  Then, in 2010, an additional 10 percent of the plan’s assets were allocated to passively-managed accounts—5 percent were allocated to a new passively-managed international equity account and 5 percent were added to the passively-managed domestic equity account  CSPF officials and named fiduciary representatives also said that the plan’s investment policies did not change in response to a couple of the events that contributed to CSPF’s critical financial condition  For example, when UPS withdrew from the plan in December 2007, it paid $6 1 billion in a lump sum to fulfill its withdrawal liability  Consistent with the named fiduciaries’ investment policies during this time period, the majority of this withdrawal payment was invested in equity assets  Specifically, the court approved the UPS withdrawal liability payment to be allocated: $1 billion to Northern Trust to be invested primarily in short-term fixed income assets, $0 9 billion to the passively-managed domestic fixed income account, and $4 2 billion to partially fund the newly created passively- managed domestic equity account  As a result of the 2008 market downturn, the balance of each of CSPF’s accounts—Northern Trust’s named fiduciary account, the passively-managed domestic fixed income and domestic equity accounts, and Goldman Sachs’ named fiduciary account—declined because of investment losses or withdrawals from investment assets to pay benefits and expenses  Some of the declines in each account were reversed by investment gains in 2009  Although the changes made to CSPF’s investment management structure did not lead to investment policy changes during the middle period, they altered the process by which the policy was set and executed  In particular, trustee responsibilities in the policy process grew after CSPF trustees became responsible for developing investment policy statements and selecting and overseeing managers of the passively-managed accounts, subject to court approval  In addition, CSPF officials said the addition of passively-managed accounts between 2003 and 2010 had the effect of creating broad bounds within which the named fiduciary could set the plan’s asset allocation  For example, when the plan moved 20 percent of total plan assets into the passively-managed domestic fixed income account in 2003, this placed an upper bound on the plan’s total equity allocation at 80 percent  Similarly, since 2010 the 30 percent of total plan assets in passively-managed equity accounts has placed a lower bound on the plan’s total equity allocation at 30 percent (see fig  12)  Nevertheless, named fiduciaries maintained the largest role in setting and executing CSPF’s investment policy throughout the middle period  From 1993 to 2003, named fiduciaries managed all of the plan’s investment assets, and from 2003 to 2009, when the plan added two of the current passively-managed accounts, named fiduciaries still held the majority of the plan’s assets  It has only been since 2010 that the assets in passively-managed accounts equaled those managed by the named fiduciary  Furthermore, Northern Trust representatives said they considered the plan’s allocations to passively-managed accounts when developing the objectives and target asset allocations for the assets they managed  Northern Trust representatives also said they discussed the plan’s overall asset allocation with trustees, but the trustees, and ultimately the court, were responsible for the decision to move 50 percent of the plan’s assets into passively-managed accounts  After the 1993 policy change that specified the plan would invest a majority of assets in equity or equity-type securities, CSPF’s asset allocation changed significantly  For example, during the middle period the plan’s allocation to equities increased from 37 percent at the end of 1993 to 69 percent at the end of 2002, and its allocation to cash plus fixed income decreased from 63 percent at the end of 1993 to 27 percent at the end of 2002  In particular, Morgan Stanley increased the plan’s allocation to equity assets from 37 percent at the end of 1993 to 63 percent at the end of 1995, with the percentage in equities almost or above 50 percent through the end of 1999  From 1993 through 1999, Morgan Stanley generally decreased the plan’s allocation to fixed income assets and increased its allocation to international equity (reaching a high of about 28 percent of the plan’s assets in 1995), an asset class in which the plan had not previously invested (see fig  13)  After 1999, the plan’s asset allocation continued to be weighted towards equities  After the market downturn in 2001, CSPF trustees told us that J P  Morgan and Goldman Sachs explicitly increased the equity allocation in an attempt to generate higher investment returns and increase the plan’s funded ratio—the plan’s overarching investment objective  Between 2000 and mid-2010, when the plan had two named fiduciaries, equity assets increased from about 58 percent at the end of 2000 to between 66 and 70 percent at the end of 2001 and each year thereafter until the end of 2009, mostly based on the named fiduciaries’ decisions to increase the plan’s allocation to domestic equity assets  When Northern Trust became the sole named fiduciary in 2010, the proportion of equity assets declined from almost 72 percent at the end of 2010 to almost 63 percent at the end of 2016  During this time, Northern Trust generally decreased the plan’s allocation to domestic equity assets, increased the allocation to actively-managed fixed income, and started investing in global infrastructure assets  Northern Trust representatives said CSPF’s recent portfolio had been kept relatively aggressive in an attempt to achieve the returns the plan would need to become fully funded while balancing risk (see fig  14)  CSPF’s deteriorating financial condition precipitated a recent investment policy change that will move plan assets into fixed income and cash equivalent investments ahead of projected insolvency  In early 2017, Northern Trust representatives revised the plan’s investment policy because they, in consultation with the trustees, believed the plan had no additional options to avoid insolvency (see textbox)  This change to the plan’s outlook led to a significant change in the plan’s investment objective, from a goal of fully funding the plan to instead forestalling insolvency as long as possible while reducing the volatility of the plan’s funding  Northern Trust representatives and CSPF officials revised applicable plan investment policy statements and started to gradually transition the plan’s “return seeking assets”—such as equities and high yield and emerging markets debt—to high quality investment grade debt and U S  Treasury securities with intermediate and short-term maturities  Northern Trust’s new investment policy specified the assets under its control would not be invested in nonpublicly traded securities, in order to manage risk and provide liquidity  CSPF Has Limited Options to Achieve Solvency As of March 2018, the Central States, Southeast and Southwest Areas Pension Fund (CSPF) was projected to be insolvent on January 1, 2025  As of July 2017, CSPF officials said that the following measures (in isolation) could help the plan avoid insolvency: 18 percent year-over-year investment returns (infinite horizon), or 250 percent contribution increases (with no employer attrition), or 46 percent across-the-board benefit cut  However, CSPF officials said that investment returns and contribution increases of these magnitudes were untenable, and CSPF’s application to reduce accrued benefits under the Multiemployer Pension Reform Act of 2014 (MPRA) was denied in 2016  CSPF officials and Northern Trust representatives said these asset allocation changes are intended to provide participants greater certainty regarding their benefits and reduce the plan’s exposure to market risk and volatility until it is projected to become insolvent on January 1, 2025 (see fig  15)  Northern Trust is expected to continue to manage 50 percent of the plan’s investment assets until the plan becomes insolvent  While the total amount of assets in the passively-managed accounts will continue to constitute 50 percent of the plan’s assets, the trustees plan to transfer assets from the passively-managed domestic and international equity accounts into the passively-managed domestic fixed income account, which will be gradually transitioned to shorter-term or cash-equivalent fixed-income securities sometime before the end of March 2020 (see fig  16)  CSPF officials said the changes will reduce the amount of fees and transaction costs paid by the plan  Specifically, investment management fees are expected to generally decrease as the plan moves into shorter duration fixed income assets  In addition, Northern Trust’s plan is designed to reduce transaction costs in two ways: (1) in the near term, Northern Trust plans to liquidate “return-seeking assets” so the cash it receives can be used directly to pay benefits, and (2) it plans to synchronize the fund’s benefit payments with the maturity dates of fixed income assets it purchases so cash received can be used directly to pay benefits  Both of these design features are intended to eliminate the need to reinvest assets, which might entail additional transaction costs  Our analysis of available data from several different sources shows the returns on CSPF’s investments and the fees related to investment management and other plan administration activities appear generally in line with similar pension plans or other large institutional investors of similar size  The annual returns on CSPF’s investments in recent decades have generally been in line with the annual returns of a customized peer group provided by the investment consultant Wilshire  The comparison group data is from Wilshire’s Trust Universe Comparison Service (TUCS)—a tool used by CSPF to compare its investment returns to a group of peers  Over the 22 years covered by our analysis, CSPF’s returns were above the median in 12 years and below the median the other 10  Figure 17 illustrates how CSPF’s annual investment returns compare to CSPF’s customized peer group of master trusts with over $3 billion in assets  CSPF’s annual investment returns tended to fluctuate relative to the annual median of the TUCS peer group over the 1995 through 2016 period  For example, in 14 of the 22 years analyzed, its annual return was in the highest or lowest 25 percent of returns (7 years each)

ground_truth: The federal government plans to invest almost $96 billion in IT in fiscal year 2018. Historically, IT investments have too often failed or contributed little to mission-related outcomes. Further, increasingly sophisticated threats and frequent cyber incidents underscore the need for effective information security. As a result, GAO added two areas to its high-risk list: IT security in 1997 and the management of IT acquisitions and operations in 2015. This statement summarizes agencies' progress in improving IT management and ensuring the security of federal IT. It is primarily based on GAO's prior reports issued between February 1997 and May 2018 (and an ongoing review) on (1) CIO responsibilities, (2) agency CIOs' involvement in approving IT contracts, (3) data center consolidation efforts, (4) the management of software licenses, and (5) compliance with cybersecurity requirements. The Office of Management and Budget (OMB) and federal agencies have taken steps to improve the management of information technology (IT) acquisitions and operations and ensure the security of federal IT through a series of initiatives. As of May 2018, agencies had fully implemented about 61 percent of the approximately 800 IT management-related recommendations that GAO made from fiscal years 2010 through 2015. Likewise, since 2010, agencies had implemented about 66 percent of the approximately 2,700 security-related recommendations as of May 2018. Even with this progress, significant actions remain to be completed. Chief Information Officer (CIO) responsibilities . Laws such as the Federal Information Technology Acquisition Reform Act (FITARA) and related guidance assigned 35 key IT management responsibilities to CIOs to help address longstanding challenges. However, in a draft report on CIO responsibilities, GAO's preliminary results suggest that none of the 24 selected agencies have policies that fully address the role of their CIO, as called for by federal laws and guidance. GAO intends to recommend that OMB and each of the selected 24 agencies take actions to improve the effectiveness of CIO's implementation of their responsibilities. IT contract approval . According to FITARA, covered agencies' CIOs are required to review and approve IT contracts. Nevertheless, in January 2018, GAO reported that most of the CIOs at 22 selected agencies were not adequately involved in reviewing billions of dollars of IT acquisitions. Consequently, GAO made 39 recommendations to improve CIO oversight over IT acquisitions. Consolidating data centers . OMB launched an initiative in 2010 to reduce data centers, which was codified and expanded in FITARA. According to agencies, data center consolidation and optimization efforts have resulted in approximately $3.9 billion of cost savings through 2018. Even so, additional work remains. GAO has made 160 recommendations to OMB and agencies to improve the reporting of related cost savings and to achieve optimization targets; however, as of May 2018, 80 of the recommendations have not been fully addressed. Managing software licenses . Effective management of software licenses can help avoid purchasing too many licenses that result in unused software. In May 2014, GAO reported that better management of licenses was needed to achieve savings, and made 135 recommendations to improve such management. Four years later, 78 of the recommendations remained open. Improving the security of federal IT systems . While the government has acted to protect federal information systems, agencies need to improve security programs, cyber capabilities, and the protection of personally identifiable information. Over the last several years, GAO has made about 2,700 recommendations to agencies aimed at improving the security of federal systems and information. These recommendations identified actions for agencies to take to strengthen their information security programs and technical controls over their computer networks and systems. As of May 2018, about 800 of the information security-related recommendations had not been implemented. From fiscal years 2010 through 2015, GAO made about 800 recommendations to OMB and federal agencies to address shortcomings in IT acquisitions and operations. Since 2010, GAO also made about 2,700 recommendations to federal agencies to improve the security of federal systems. These recommendations include those to improve the implementation of CIO responsibilities, the oversight of the data center consolidation initiative, software license management efforts, and the strength of security programs and technical controls. Most agencies agreed with these recommendations, and GAO will continue to monitor their implementation.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.



Report 2:  Further, in 3 years, its investment returns fell either within the top 5 percent of returns (1996, 2009) or bottom 5 percent (1998)  In 8 of the 22 years, CSPF’s annual return was within the middle 50 percent of its TUCS peer group  The TUCS data we analyzed also included median portfolio allocations for the group of CSPF’s peers  Table 2 compares CSPF’s asset allocations for selected asset categories to the median allocations of its TUCS comparator group  In 1996, compared to the TUCS medians, CSPF had relatively lower proportions of its assets in both equities and fixed income and a relatively higher proportion in real estate  Twenty years later (2016), CSPF had relatively higher proportions of its assets in both equities and fixed income (about 15 and 7 percentage points, respectively) than the respective medians for its peer group  However, the relatively large difference between CSPF’s 2016 equity allocation and the median allocation of its peer group may be a result of the peers moving into different asset classes  For example, there is a relatively large difference, in the other direction, in the allocation to alternative investments (see table 2)  We did not identify an alternative asset category in CSPF’s asset reports for 2016, but the TUCS comparator group median asset allocation in that year is 11 8 percent of assets  Similar to our findings when comparing the returns on CSPF’s investments to a customized peer group of other large institutional funds, the annual returns on CSPF’s investments in recent decades have also generally been in line with the annual returns for a group of similar multiemployer pension plans  To create a group of comparable plans, we selected plans that had a similar degree of “maturity” to CSPF in 2000, as such plans may face similar cash flow challenges to those facing CSPF  This comparator group ultimately consisted of 15 plans in addition to CSPF  Relative to less mature plans, mature plans generally have a greater proportion of liabilities attributable to retired participants receiving benefit payments and a lower proportion attributable to active participants (i e , workers) earning benefits  Mature plans may have limited capacity to make up for insufficient investment returns through employer contributions  Similar to the comparison against other large institutional fund returns based on TUCS data, our comparison against other mature multiemployer plan returns based on Form 5500 data shows that CSPF’s annual returns fluctuate relative to the median annual return for the mature plan comparator group (see fig  18)  For example, in 12 of the 15 years, CSPF’s annual return was in the highest or lowest 25 percent of returns (7 times high and 5 times low)  In 3 of the 15 years analyzed, CSPF’s annual return fell within the middle 50 percent of the peer group  Overall, from 2000 to 2014, CSPF’s annual return was above the group median return in 9 of the 15 years—and lower than the median return in the other 6 years  Relative to its peers, CSPF’s annual returns performed worst during economic downturns and best in years coming out of such downturns  CSPF’s annual investment return was in the bottom 10 percent of returns in 2001, 2002, and 2008  Alternatively, its annual return was in the top 10 percent of returns from 2003 to 2006, in 2009, and in 2012  Additionally, the dollar-weighted average annual return for CSPF over the 2000 through 2014 period was roughly the same as the median for the mature plan comparison group  Specifically, the dollar-weighted average annual return over this period for CSPF was roughly 4 9 percent, while the median dollar-weighted average annual return over this period among the comparison plans with continuous data was 4 8 percent  Our analysis of investment returns for mature plans compares investment returns for a set of peers that includes only multiemployer defined benefit plans  However, as with the comparison against other large institutional funds, the comparisons against other mature plans are not measures of over- or under-performance relative to an index or benchmark  Similarly, as with the earlier comparison, the analysis does not account for variations in the levels of investment risk taken by the plans  Our analysis of Form 5500 data shows CSPF’s investment fees and administrative expenses were in line with other large multiemployer plans  Plan investment fees and administrative expenses are often paid from plan assets so many plans seek to keep these fees and expenses low  Additionally, investment fees are likely to be related to the value of assets under management, and plans with greater asset values tend to be able to negotiate more advantageous fee rates  According to a pension consultant and a DOL publication, investment management fees are typically a large defined benefit plan’s largest category of expense, but a pension plan also incurs a number of lesser expenses related to administering the plan  Administrative expenses (other than investment fees) may include those for: audit and bookkeeping/accounting services; legal services to the plan (opinions, litigation and advice); administrative services provided by contractors; plan staff salaries and expenses; plan overhead and supplies; and other miscellaneous expenses  These administrative expenses relate to plan operations beyond the management of the assets, including the day-to-day expenses for basic administrative services such as participant services and record keeping  Furthermore, some of these expenses can vary based on the number of participants in the plan  To compare CSPF’s fees and expenses against similarly sized plans, we tallied various investment fee-related and other administrative expenses and compared CSPF to a group of multiemployer defined benefit plans that were among the 19 largest plans in terms of assets as of January 1, 2014  According to CSPF’s 2014 Form 5500, CSPF spent about $46 5 million on investment fees (or $47 6 million in 2016 dollars) and had about $17 4 billion in assets (or $17 8 billion in 2016 dollars) as of the end of the year—resulting in an investment fee expense ratio of about 27 basis points, or 0 27 percent  Over the 2000 to 2014 period, CSPF’s average annual investment fee expense ratio was 34 basis points (0 34 percent) while the median of the averages for our large plan comparison group was 37 basis points (0 37 percent)  While CSPF’s average investment fee expense ratio was below the median for its comparison group over the period we examined, the relationship of CSPF’s annual ratio to the annual median changed over time  CSPF’s annual investment-fee expense ratio was consistently at or above the median from 2000 through 2006, but was below the median thereafter  In addition, CSPF’s average investment fee expenses over the period that followed 2006 were 26 percent less than the average over the period before 2007  (They averaged 39 basis points, or 0 39 percent, from 2000 through 2006 and 29 basis points, or 0 29 percent, from 2007 through 2014 ) Two events may have contributed to this change  First, CSPF introduced the passively-managed accounts beginning in 2003—as noted earlier, and CSPF moved certain assets to those accounts in an effort to reduce fees  Second, the change back to a single named fiduciary, which was suggested as an expense saving move, occurred in the middle of the 2007 to 2014 period analyzed  Figure 19 illustrates how CSPF’s investment fee expense ratio compares to other large plans  Our analysis uses investment fee data reported in the Form 5500 that does not include details about the sources of the fees  Investment fees may be sensitive to a plan’s particular investment strategy and the way assets are allocated  For example, with CSPF, a named fiduciary has responsibility for executing the investment strategy and allocations  According to a representative from Northern Trust—the current named fiduciary—CSPF pays a fee of about 5 basis points for named fiduciary services, and this, combined with investment management fees, is in line with investment fees for other clients (though the overall fees depend on the types of asset allocations and investment strategies)  Figure 20 shows how CSPF’s administrative (or non-investment) expenses compare to those of other large plans on a per participant basis  According to CSPF’s 2014 Form 5500, CSPF spent about $38 million on administrative expenses ($39 million in 2016 dollars)—the third most among the 20 peer plans  However, when these expenses are expressed relative to the number of plan participants, CSPF had per participant expenses of $98 in 2014, which is about 16 percent less than the median of the large comparator group, $117  Over the period studied, CSPF’s administrative expenses per participant were at or above the large comparator median in 3 years (2001, 2004, and 2005), but lower than the median in all other years of the 2000 to 2014 period  CSPF’s administrative expenses were also in line with a broader group of comparators  For example, PBGC reported on 2014 administrative expenses of a population of large multiemployer plans (plans with more than 5,000 participants)  By closely replicating the methodology of that study, we found CSPF’s expenses of $98 per participant in 2014 fell below the median expense rate of $124 dollars per participant but above the lowest quartile of this group of large multiemployer plans  In comparing administrative expenses as a percentage of benefits paid, we found CSPF’s administrative expenses were among the lowest 5 percent of this group of large multiemployer plans  We performed a similar comparison against the peer group of large plans  CSPF had the lowest administrative expense rate among the large plan peer group in 2014, paying administrative expenses at a rate of 1 4 percent of benefits paid  In addition, CSPF’s annual administrative expenses as a percentage of benefits were below the median of our peer group of large plans in all years we reviewed  Our analysis of administrative expenses is highly summarized and does not account for possibly unique sources of administrative expenses  Plans may have unique organizational structures and attribute expenses differently  For example, one plan may contract a significant portion of administrative duties with a third-party, while another plan may administer the plan in-house  According to an actuary we interviewed, most multiemployer plans are administered by a third-party, but the plan’s in- house staff will still retain a number of duties  Additionally, the amount of individual administrative expenses could vary significantly by plan depending on the importance of the related administrative function in the plan’s organization  We provided a draft of the report to the U S  Department of Labor, U S  Department of the Treasury, and the Pension Benefit Guaranty Corporation for review and comment  We received technical comments from the U S  Department of Labor and the Pension Benefit Guaranty Corporation, which we incorporated as appropriate  The U S  Department of the Treasury provided no comments  We will send copies to the appropriate congressional committees, the Secretary of Labor, the Secretary of the Treasury, Director of the Pension Benefit Guaranty Corporation, and other interested parties  This report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact Charles Jeszeck at (202) 512-7215 or jeszeckc@gao gov or Frank Todisco at (202) 512-2700 or todiscof@gao gov  Mr  Todisco meets the qualification standards of the American Academy of Actuaries to address the actuarial issues contained in this report  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix IV  Our objectives were to review: (1) what is known about the factors that contributed to the Central States, Southeast and Southwest Areas Pension Fund’s (CSPF) critical financial condition; (2) what has been CSPF’s investment policy, and the process for setting and executing it, since the consent decree was established; and (3) how has CSPF performed over time, particularly compared to similar pension plans  For all objectives, we reviewed relevant federal laws and regulations, literature, and documentation the U S  Department of Labor (DOL) and CSPF officials provided, including reports prepared by the court- appointed independent special counsel  We interviewed knowledgeable industry stakeholders, participant advocates, CSPF officials, International Brotherhood of Teamsters officials and members, and federal officials— including officials from the Pension Benefit Guaranty Corporation (PBGC), DOL, and the U S  Department of the Treasury (Treasury)  To describe the major factors that led to CSPF’s critical financial condition, we conducted semi-structured interviews and reviewed CSPF documentation, relevant scholarly materials, trade and industry articles, government reports, conference papers, research publications, and working papers  We also collected actuarial, financial, and other data on current and historical measures of plan assets, liabilities, investment performance, and other factors, and performed our own analyses of these data  The data and documentation collected were generally from the plan or agencies that oversee pensions  We determined the information to be generally reliable for the purposes of our objectives  To describe CSPF’s investment policy and the process by which it was set and executed we (1) reviewed CSPF’s investment policy statements, court orders and consent decree amendments, and other documentation provided by CSPF officials; (2) interviewed CSPF officials, including pension plan staff, the board of trustees, and the investment advisor, and representatives of the named fiduciary serving the plan at the time of our review; and (3) summarized certain aspects of CSPF’s assets using year- end performance reports prepared by the named fiduciaries  To describe how CSPF has performed over time compared to similar pension plans, we analyzed investment and fee data from DOL’s Form 5500, the government’s primary source of pension information  We also examined CSPF’s investment returns in comparison to a customized Wilshire Associates’ (Wilshire) Trust Universe Comparison Service (TUCS) benchmark of trusts with $3 billion or more in assets  CSPF provided these data and the data are included in the independent special counsel reports  Wilshire provided supplemental data using the same benchmark specifications  We reviewed three types of documentation provided by CSPF for changes in named fiduciaries; changes in investment policy, strategy, and asset allocation; major issues that affected funding; and how these issues affected CSPF’s investment strategy and policy  Select independent special counsel reports  CSPF officials provided 4th quarter reports for each year from 1982 through 2002 and available quarterly reports from 2003 through 2007  We downloaded all available quarterly reports from 2008 through 2017 from CSPF’s website  Select board of trustee meeting minutes  We requested board of trustee meeting minutes from 1983, 1994-95, 1998-2005, 2007-2010, and 2016 so we could review trustee discussions from the first full year the plan was covered by the 1982 consent decree, the most recent full year; periods that included a recession and/or when the plan’s assets performed poorly; and periods that preceded a change or reappointment of the named fiduciary  CSPF officials selected portions of the trustee meeting minutes from those years that pertained to the following topics: named fiduciary reports concerning investment performance; discussions relating to the amortization extension the Internal Revenue Service (IRS) granted to the plan and the contribution rate increases the plan required of participating employers in an effort to comply with funding targets required as condition of the IRS-approved amortization extension; major amendments to the plan; significant reports concerning the plan’s financial condition; amendments to the consent decree; discussions relating to any inquiries or issues DOL raised; discussions of named fiduciary appointments or resignations; discussions of particularly significant contributing employer delinquencies, bankruptcies, and settlements; and discussions relating to the independent special counsel  In addition to the board of trustee meeting minutes, CSPF officials provided select documentation on similar topics a former secretary of the board of trustees retained (1995 through 2008)  Select correspondence between CSPF and DOL  CSPF officials provided select correspondence with DOL from 1987 through 2017 relating to DOL’s oversight of the plan  CSPF officials said they provided all records of those communications that related to significant, substantive, and nonroutine issues  The correspondence excluded other documents, such as periodic reports concerning asset rebalancing and correspondence related to fairly noncontroversial motions to the consent decree  In addition, DOL provided documentation throughout the course of our engagement, including documentation it provided between September and October 2017 that it had not previously identified as being relevant to our review  We completed an on-site file review at DOL in September 2017, and DOL sent us additional electronic documentation in September and October 2017  Overall, we reviewed extensive documentation from DOL—spanning over 10,000 pages of paper-based and electronic files— and spent substantial time cataloging and categorizing it  However, DOL officials reported that certain documentation related to CSPF was no longer available because it had only been retained for the time specified in the records retention policy of the relevant office  We conducted 23 semi-structured interviews with federal agency officials and other stakeholders, including affected parties, and persons knowledgeable about unions, participants and retirees, the trucking industry, collective bargaining agreements, and multiemployer pension plans  We also interviewed three stakeholders with actuarial expertise to specifically understand actuarial standards and procedures  We selected knowledgeable stakeholders based on review of literature and prior GAO work, and recommendations from other stakeholders  We judgmentally selected stakeholders whose expertise coincided with the scope of our objectives and who would be able to provide a broad range of perspectives  In our semi-structured interviews we asked about key factors affecting the plan, the broader regulatory and financial environment in which multiemployer plans operate, and solvency options for plans like CSPF  We reviewed CSPF’s investment policy statements after CSPF entered into a consent decree in 1982, most of which are documented in the consent decree or other court orders  Seven of the investment policy statements were developed by named fiduciaries in consultation with the plan’s board of trustees and four were developed by the trustees  (See fig  21 ) From each investment policy statement, we compiled relevant information on: (1) investment philosophy and plan characteristics considered in developing it, (2) investment return benchmarks, (3) asset allocation, and (4) strategies and assets  See table 3 for select asset allocation information  To describe how CSPF’s investment policy was executed, we compiled information from performance reports prepared by named fiduciaries  We reported CSPF’s asset allocation generally based on the aggregate asset allocation categories CSPF’s named fiduciaries assigned in those reports  CSPF provided these reports for the end of each year 1984 through 2016—except 1992 and 1995, for which it provided reports as of the end of November  Information we compiled included the plan’s: account breakdown (i e , assets in named fiduciary and passively- asset allocation; and investment assets withdrawn to pay benefits and administrative expenses  When possible, we checked the information from year-end performance reports against that in other sources  Specifically, to ensure we captured the vast majority of the plan’s assets in our asset summary we compared the total amount of plan assets named fiduciaries reported with Net Assets reported in CSPF’s Form 5500 filings, available from 1982 through 2016  We generally found these totals to be similar for each year—in most years the difference was about or under 1 percent  Also, named fiduciary performance reports included information on withdrawals from investment assets to meet pension and administrative expense obligations as of the end of each year, except for 1995 and 1999-present  For 1995 through 2016, we compiled this information from independent special counsel reports  For years in which we had overlapping information, 1996 through 1998, we found the reported totals were similar—no more than about 0 6 percent difference in each of those years  Based on our review we believe that the differences were insignificant to our overall analysis and did not impact our findings  To determine investment returns, investment fees, and administrative expenses for CSPF and related comparator group multiemployer defined benefit plans, we analyzed electronic Form 5500 information, the primary, federal source of private pension data  We analyzed information from 2000 through 2014, the most current and complete year at the time we performed our analysis  We began our analysis with 2000 data as data on investment returns and plan fees is primarily found in the Schedule H  Schedule H information was first collected in 1999  But we begin our analysis with 2000 data as electronic data became more reliable the year after the schedule was introduced  We have previously reported on the problems associated with the electronic data of the Form 5500  To mitigate problems associated with the data, we used Form 5500 research data from PBGC  PBGC analysts routinely and systematically correct the raw 5500 data submitted by plans, and PBGC’s Form 5500 research data are thought to be the most accurate electronic versions  Although we did not independently audit the veracity of the PBGC data, we took steps to assess the reliability of the data and determined the data to be sufficiently reliable for our purposes  For example, we performed computer analyses of the data and identified inconsistencies and other indications of error and took steps to correct inconsistencies or errors  A second analyst checked all computer analyses  Funded status is a comparison of plan assets to plan liabilities  One measure of funded status is the funded percentage, which is calculated by dividing plan assets by plan liabilities  Another measure of funded status is the dollar amount of difference between plan assets and plan liabilities; the excess of plan liabilities over plan assets is the unfunded liability (or surplus if assets exceed liabilities)  In this report, we measured funded status using the Actuarial Value of Assets and the Actuarial Accrued Liability, which are the basic measures used to determine the annual required minimum contribution for multiemployer plans under ERISA  We chose these measures because of the consistent availability of data for these measures  There are other ways to measure plan assets and plan liabilities  The Actuarial Value of Assets can be a “smoothed” value that differs from the market value of plan assets  The Actuarial Accrued Liability depends on the choice of actuarial cost method and discount rate, and on whether it is determined on an ongoing plan basis or a plan close-out basis  While different measures of plan assets and liabilities will produce different measures of funded status at any particular point in time, we found that our use of the Actuarial Value of Assets and the Actuarial Accrued Liability was sufficient for our purposes, which included examining the plan’s progress relative to statutory funding standards as well as its trend over time  We developed multiple comparison groups for our analysis  The general rationale behind these comparator groups is to identify plans with similar fundamental characteristics, such as plan size or plan maturity, for purposes of investment return and fee and expense comparisons  We created the following two comparator groups: 1  Large plans (in terms of assets)  We ordered multiemployer defined benefit plans by descending 2014 plan assets (line 2a of the 2014 of the Schedule MB)  Because one of our key analyses of the data involves comparing investment returns across plans, we also limited the comparable plans to those that share a common plan year to CSPF (specifically if they have the same plan year-end of December 31)  We selected the 20 plans that had the largest plan asset values  This includes CSPF, which was the second largest multiemployer plan as of the beginning of 2014  Because these comparator plans are among the largest, they should have similar cost advantages  For example, for investment management services, they should have similar advantages in obtaining lower fees and thus garner greater net returns due to the more favorable fee structures  2  Mature plans (in terms of retiree liability proportions)  We ordered multiemployer defined benefit plans by their similarity to CSPF’s ratio of retiree to total liabilities as of the beginning of calendar year 2000  The ratio of retiree to total liabilities is defined as line 2(b)1(3) of the 2000 Schedule B divided by total liabilities of line 2(b)4(3) of the 2000 Schedule B  To compare retiree to total liability ratios, we created a variable for the absolute value of the difference between CSPF’s ratio and that of a given plan  We ordered the plans by ascending differences in the ratios (excluding any with missing differences)  CSPF was the top plan because its difference is zero by definition  Because one of our key analyses of the data involved comparing investment returns across plans, we also limited the comparable plans to those that shared a common plan year with CSPF (specifically if they have the same plan year-end of December 31)  Of the plans that had the same plan year as CSPF and assets over $300 million, we selected the 20 plans (including CSPF) that had the smallest absolute difference from CSPF in the retiree-to-total liability ratio  Plans with a high ratio of liabilities attributable to retirees will have a relatively large portion of future benefit payments attributable to those that are older and retired  By selecting plans that were similarly mature to CSPF (and had $300 million in assets as of the beginning of 2000), we identified plans that may have had a similar basis for their plan investments, similar cash flow characteristics, or similar potential deviations between time-weighted and dollar-weighted average investment returns over time (see section below entitled “Calculation of Average Investment Return over Multiple Years”)  That is, these plans should have roughly similar cost advantages and similar considerations in their investment objectives such as the balance of cash flows into and out of the fund and the plans’ investment horizons  Similarity in the balance of cash flows is important because it helps to mitigate the influence of plan maturity on the weighted average investment return over multiple years  The year 2000 was used to select the group because the primary purpose of this group is comparison of investment returns for plans that are similarly situated at the beginning of the period being analyzed  Our calculation of investment returns is based on the investment return calculation expressed in the Form 5500 instructions for the Schedule MB  Specifically the instructions of the 2014 Schedule MB state: Enter the estimated rate of return on the current value of plan assets for the 1-year period ending on the valuation date  (The current value is the same as the fair market value—see line 1b(1) instructions ) For this purpose, the rate of return is determined by using the formula 2I/(A + B – I), where I is the dollar amount of the investment return, A is the current value of the assets 1 year ago, and B is the current value of the assets on the current valuation date  Enter rates to the nearest  1 percent  If entering a negative number, enter a minus sign (“ - “) to the left of the number  After preliminary analysis of the variable and consultation with a GAO senior actuary, we determined that Form 5500, Schedule H contains all the information necessary to derive the calculation for years prior to 2008—as far back as 1999 when the Schedule H first came into existence  Additionally, we made adjustments for the timing of cash flows, to the extent indicated by the data  For example, employer and employee contributions that were considered receivable at the end of the prior year and thus included in the Schedule MB calculation were instead included in the year when the plan received the cash for the contribution  Thus, our calculation of annual rate of return is expressed as line items of the 2014 Schedule H to be: 2 * / [[{item1(f)a} – {item 1(b)1(a)} - {item 1(b)2(a)} - {item 1j(a)}] + [{item1(f)b} – {item 1(b)1(b)} - {item 1(b)2(b)} - {item 1j(b)}] – [{item 2d} - {item 2a(3)} – {item 2c}]] Or expressed with expository names as: (2 * (TLINCOME - TOTLCON - OTHERINCOMEW)) / ((TASSTSBY - (ERCONBOY + EECONBOY + OTHER_LIAB_BOY_AMT)) + (TASSTSEY - (ERCONEOY + EECONEOY + OTHER_LIAB_EOY_AMT)) - (TLINCOME - TOTLCON - OTHERINCOMEW)) For purposes of data reliability and validation of our results, we ran permutations of the calculation to see how, if at all, certain items could influence the calculation  In two permutations, we changed the timing of net asset transfers to or from other plans  (This occurs when, for example, there is a plan merger ) A senior actuary determined whether the calculations with/without net asset transfers affected our calculation  If the timing of the net transfer caused the investment return calculation to vary by more than 0 1 percent, we excluded the data for that particular plan in that particular year  We also ran another calculation that did not include “other” income so we could estimate the impact of not adjusting for such information  Historical average investment returns over multiple years can be calculated in at least two different ways  One measure is the “time- weighted” average return, calculated as a geometric average of the annual returns during the period  A time-weighted average measures average investment performance without regard to the order of the annual returns or the impact of different plan circumstances over time  Another measure is the “dollar-weighted” average return–also known as the “internal rate of return” (and also referred to as the “cash flow weighted” return in this report)—which reflects the impact of the plan’s cash flow pattern  The dollar-weighted average return is the rate that, when applied over time to the asset value at the beginning of the period and to each year’s net cash flow into or out of the plan over the period, reproduces the asset value at the end of the period  We calculated dollar-weighted average returns (along with some time- weighted returns for comparison), for both CSPF and for the multiemployer system as a whole, as discussed in the report  We used a market value of plan assets for this purpose  The dollar-weighted average captures the impact of negative cash flow on average investment return  For example, with negative cash flow, investment results in an earlier year can have a bigger impact than investment results in a later year because more money is at stake in the earlier year  Using the same beginning-of-period asset value, and subsequent annual net cash flows into or out of the plan, used in calculating the dollar- weighted average return, we also performed a hypothetical calculation of what CSPF’s end-of-period asset value would have been if the plan had earned 7 5 percent per year instead of its actual return  Conceptually, there are multiple ways to express investment fees, but our analysis used the following two methods for calculating them: Investment fee ratio  Investment fees [line 2i(3) of the 2014 Schedule H] divided by end-of-year net assets [line 1l(b) of the 2014 Schedule H] less receivables [line 1b(1)(b); line 1b(2)(b); and line 1b(3)(b) of the 2014 Schedule H]  Investment fees per participant  Investment fees [line 2i(3) of the 2014 Schedule H] divided by total (end-of-year) participants [line 6f of the 2014 main form]  We define administrative expenses as all other expenses besides investment fees  In part, we used this definition of administrative expenses as it represents the expenses that remain after excluding investment fees  In addition, according to a PBGC analyst, this is the unit of analysis that they also used in their study of administrative expenses  Administrative expense to benefits paid  This is administrative expenses (professional, contract and other) divided by benefits paid  For administrative expenses we derived the value by taking total expenses less investment fees   For benefits paid, we used the 2014 Schedule H, line 2e(1), “Benefit payment and payments to provide benefits directly to participants or beneficiaries, including direct rollovers ” However, if the benefit payment value for such payments is missing or zero, we used the 2014 Schedule H, line 2e(4) “Total Benefit Payments” since the plan may be expressing their benefit payments on another line  Administrative expense per participant  Administrative expenses (professional, contract and other) divided by total (end-of-year) participants   For administrative expenses we derived the value by taking total expenses [line 2i(5) of the 2014 Schedule H] less investment fees [line 2i(3) of the 2014 Schedule H]  PBGC Study on Administrative Expenses PBGC has reported on administrative expenses and included various breakouts of these data in past data book supplements  The calculations of administrative expenses in this report are similar to those used by PBGC  Certain differences may exist because our calculation did not include certain multiemployer plans that reported missing data  Additionally, our population of multiemployer plans included only those plans exclusively associated with defined benefit features  The table below compares our results for plans with 5,000 or more participants, which is a subset of plans analyzed in the PBGC study  Our results used a sample that includes three fewer plans than the PBGC study, but our distributional results were within one-tenth percent for the administrative expense ratio and within $5 of the administrative expenses per participant (see table 4)  Comparing the administrative expenses across reports using other statistics such as the minimum, maximum and standard deviation shows similar results for the PBGC and our analysis (see table 5)  The mean administrative expenses per participant differ by $2 47  This difference is 1 5 percent lower than the PBGC estimate and could be a result of the difference in sample size  We also performed additional analyses as summarized below  We compared CSPF’s annual returns against plans that have the largest assets among multiemployer defined benefit plans (with the same plan year as CSPF) and CSPF’s results against these plans were broadly similar to results for the mature plans (see fig  22)  We compared CSPF’s administrative expenses as a percentage of benefit paid against other large plans  As noted in this report, CSPF has the lowest relative administrative expenses among the comparators in 2014 with administrative expenses at 1 4 percent of benefits (see fig  23)  In addition, CSPF’s administrative expenses as a percentage of benefits were consistently below the median  For our analysis of Wilshire TUCS data, we used two sources of data  Data from 1999 through 2016 was provided by CSPF  CSPF provided reports of their TUCS custom comparison group, master trusts with greater than $3 billion in assets  These data also included the year-end return results for the total fund (also known as the combined fund) as well as returns by subcategory such as a specific named fiduciary or fund  For example, subcategories listed for year-end 2006 included the results for both named fiduciaries (Goldman Sachs and Northern Trust) as well as the passively-managed accounts (then known as the CSSS fund)  The custom comparison groups for the 1999 through 2016 data were determined each year in early-February of the year following the December 31 return results for the prior year  Thus, over time more master trusts were added (or subtracted) depending on the level of assets for the master trusts in that year  For example, the return results for year- end 1999 are determined as of February 10, 2000 and the group of master trusts with more than $3 billion contains 62 observations  The number of trusts in the custom group of master trusts with more than $3 billion generally grew over time with the number peaking with the return results for year-end 2014 (determined as of February 9, 2015), which contains 124 observations  The TUCS data from 1995 through 1998 was provided by Wilshire  The comparison group for these data were not selected each year, but, instead, selected retrospectively  For example, the comparison group of master trusts with more than $3 billion from 1995 through 1998 was selected as of January 9, 2017  There were 99 reported observations in 1995 and 132 observations in 1998  In addition, the 1995 through 1998 TUCS data did not include specific returns for CSPF  We were able to find the annual year-end return in the December (i e  year-end) management report, which for these years was provided by the named fiduciary, Morgan Stanley  Below is a list of selected events that have affected the Central States, Southeast and Southwest Areas Pension Fund (CSPF) as identified through a review of relevant documentation and interviews with stakeholders and agency officials  It is not intended to be an exhaustive list of the events that have impacted CSPF, nor is it intended to include comprehensive descriptions of each event  On September 22, 1982, the Department of Labor (DOL) entered into a court-enforceable consent decree with the Central States Southeast and Southwest Areas Pension Fund (CSPF) to help ensure the plan’s assets were managed for the sole benefit of the plan’s participants and beneficiaries as required by the Employee Retirement Income Security Act of 1974 (ERISA)  The consent decree has been amended several times and currently remains in effect, as amended, under the jurisdiction of the Federal Court for the Northern District of Illinois, Eastern Division  Below is a description of the key parties to and their primary responsibilities under the consent decree  The consent decree defines roles and responsibilities for its parties, including the court, the court-appointed independent special counsel, DOL, the plan and its Board of Trustees, and the independent asset manager, which is called the named fiduciary  The primary role of the court is to oversee and enforce the consent decree  Specifically, the court: appointed an independent special counsel to assist it in administering has approval over the appointment of named fiduciaries and trustees; has approval over the appointment of investment managers of the may, for good cause shown, remove a named fiduciary after 60 days’ notice provided to the named fiduciary and DOL; and may, upon request by the plan, dissolve the consent decree absent good cause shown by DOL why the consent decree should continue in effect  The court-appointed independent special counsel is intended to serve the court by assisting in identifying and resolving issues that arise in connection with the plan’s compliance with the consent decree and Part 4 of Title I of ERISA, and to report on the plan to the court  Specifically, the independent special counsel: has full authority to examine the plan’s activities and oversee and report on the plan’s performance of the undertakings of the consent decree; may, with court approval, employ attorneys, accountants, investigators, and others reasonably necessary and appropriate to aid him in the exercise of his responsibilities; has full access to all documents, books, records, personnel, files, and information of whatever type or description in the possession, custody, or control of the plan; may attend meetings of the plan, including meetings of the board of trustees and any meetings at which plan-related matters are discussed or considered; can petition the court to compel the plan to cooperate with the independent special counsel in the performance of his duties and responsibilities; may consult with DOL, the Internal Revenue Service, and other agencies, as appropriate, but must provide access to DOL upon its request to any documents prepared by the independent special counsel within the exercise of his power; is required to file quarterly reports, as well as any other reports the independent special counsel deems necessary or appropriate, with the court, and provide copies to DOL and the plan; may have other powers, duties, and responsibilities that the court may later determine are appropriate; and cannot be discharged or terminated during the duration of the consent decree except for leave of court, and upon the termination, discharge, death, incapacity, or resignation of an independent special counsel, the court will appoint a successor  Under the consent decree, DOL has an oversight role and may object to certain proposed plan changes  Specifically, DOL: may request and review certain reports provided by the plan and any documents prepared by the independent special counsel in the exercise of his authority; may object to the appointment of proposed trustees, named fiduciaries, investment managers of the passively-managed accounts, and asset custodians; receives notice of proposed changes to the plan’s investment policy statements from the plan; and may object to the dissolution of the consent decree  The plan must operate in full compliance with the consent decree, with ERISA, and with any conditions contained in determination letters it receives from the Internal Revenue Service  Specifically, CSPF, its board of trustees, and its internal audit staff must meet certain requirements  is required to use an independent asset manager known as the named fiduciary; must rebid the named fiduciary role at least once within every 6 years, with the option to extend the appointment for 1 calendar year; may remove a named fiduciary without cause shown on 6 months’ written notice to the named fiduciary and DOL; must cooperate with the independent special counsel in the performance of his duties and responsibilities and with DOL in its continuing investigation and enforcement responsibilities under ERISA; is required to recommend to the court three replacement candidates, agreeable to DOL, to replace an outgoing independent special counsel; and is required to maintain a qualified internal audit staff to monitor its affairs  is required to appoint, subject to court approval, the investment managers of the passively-managed accounts; is prohibited from authorizing any future acquisitions, investments, or dispositions of plan assets on a direct or indirect basis unless specifically allowed by the consent decree; and is required to comply with ERISA fiduciary duties, such as monitoring the performance of the assets of the plan, under Part 4 of Title I of ERISA  is required to review benefit administration, administrative expenditures, and the allocation of plan receipts to investments and administration; and is required to prepare monthly reports setting forth any findings and recommendations, in cooperation with the executive director of the plan, and make copies available to the independent special counsel and, upon request, to DOL and the court  The independent asset managers, known as named fiduciaries, are appointed by the plan’s trustees, subject to court approval, and have exclusive responsibility and authority to manage and control all assets of the plan allocated to them  Specifically, the named fiduciaries: may allocate plan assets among different types of investments and have exclusive authority to appoint, replace, and remove those have responsibility and authority to monitor the performance of their are required to develop, in consultation with the Board of Trustees, and implement investment policy statements for the assets they manage, giving appropriate regards to CSPF’s actuarial requirements  In addition to the individual named above David Lehrer (Assistant Director), Charles J  Ford, (Analyst-in-Charge), Laurel Beedon, Jessica Moscovitch, Layla Moughari, Joseph Silvestri, Anjali Tekchandani, Margaret J  Weber, Adam Wendel, and Miranda J  Wickham made key contributions to this report  Also contributing to this report were Susan Aschoff, Deborah K  Bland, Helen Desaulniers, Laura Hoffrey, Jennifer Gregory, Sheila McCoy, Mimi Nguyen, Jessica Orr, Monica P  Savoy, and Seyda Wentworth  Central States Pension Fund: Department of Labor Activities under the Consent Decree and Federal Law  GAO-18-105  Washington, D C : June 4, 2018  High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others  GAO-17-317  Washington, D C : February 15, 2017  Pension Plan Valuation: Views on Using Multiple Measures to Offer a More Complete Financial Picture  GAO-14-264  Washington, D C : September 30, 2014  Private Pensions: Clarity of Required Reports and Disclosures Could Be Improved  GAO-14-92  Washington, D C : November 21, 2013  Private Pensions: Timely Action Needed to Address Impending Multiemployer Plan Insolvencies  GAO-13-240  Washington, D C : March 28, 2013  Private Pensions: Multiemployer Plans and PBGC Face Urgent Challenges  GAO-13-428T  Washington, D C : March 5, 2013  Pension Benefit Guaranty Corporation: Redesigned Premium Structure Could Better Align Rates with Risk from Plan Sponsors  GAO-13-58  Washington, D C : November 7, 2012  Private Pensions: Changes Needed to Better Protect Multiemployer Pension Benefits  GAO-11-79  Washington, D C : October 18, 2010  Private Pensions: Long-standing Challenges Remain for Multiemployer Pension Plans  GAO-10-708T  Washington, D C : May 27, 2010  The Department of Labor’s Oversight of the Management of the Teamsters’ Central States Pension and Health and Welfare Funds  GAO/HRD-85-73  Washington, D C : July 18, 1985  Investigation to Reform Teamsters’ Central States Pension Fund Found Inadequate  HRD-82-13  Washington, D C : April 28, 1982 
Report 2:  The Action Plan focuses on capacity building for security personnel in Central America and the Caribbean by Colombian security forces (both Colombian military and police)  To implement the plan, Colombia undertook several hundred activities in cooperation with Panama, Costa Rica, El Salvador, Honduras, Guatemala and the Dominican Republic, and between 2013 and 2017 trained almost 17,000 individuals (see Figure 4 )  The Colombian government notes that this program grew dramatically from 34 executed activities in 2013 to 441 activities planned for 2018  Colombia has increasingly trained military and police from other countries both under this partnership and other arrangements, including countries across the globe  According to the Colombian Ministry of Defense, around 80% of those trained were from Mexico, Central America, and the Caribbean  U S  and Colombian officials maintain that the broader effort is designed to export Colombian expertise in combating crime and terrorism while promoting the rule of law and greater bilateral and multilateral law enforcement cooperation  Critics of the effort to "export Colombian security successes" maintain that human rights concerns have not been adequately addressed  Some observers question the portion of these activities that are funded by the U S  government and want to see more transparency  In one analysis of the training, a majority of the training was provided by Colombian National Police rather than the Colombian Army, in such areas as ground, air, maritime, and river interdiction; police testimony; explosives; intelligence operations; psychological operations; and Comando JUNGLA, Colombia's elite counternarcotics police program  Other analysts praise the Colombian training and maintain that U S  assistance provided in this way has helped to improve, professionalize, and expand the Colombian military, making it the region's second largest  As that highly trained military shifts from combating the insurgency and the Colombian National Police take the dominant role in guaranteeing domestic security, Colombia may play a greater role in regional security and even in coalition efforts internationally  In September 2017, President Trump announced that he had considered designating Colombia in noncompliance with U S  counternarcotics requirements, but noted that he had not proceeded with the step in part because of Colombian training efforts to assist others in the region with combating narcotics and related crime  Colombia is a key U S  ally in the region  With diplomatic relations that began in the 19 th century following Colombia's independence from Spain, the countries have enjoyed close and strong ties  Because of Colombia's prominence in the production of illegal drugs, the United States and Colombia forged a close partnership over the past 16 years  Focused initially on counternarcotics, and later counterterrorism, a program called Plan Colombia laid the foundation for a strategic partnership that has broadened to include sustainable development, human rights, trade, regional security, and many other areas of cooperation  Between FY2000 and FY2016, the U S  Congress appropriated more than $10 billion in assistance from U S  State Department and Department of Defense (DOD) accounts to carry out Plan Colombia and its follow-on strategies  During this time, Colombia made notable progress combating drug trafficking and terrorist activities and reestablishing government control over much of its territory  Its economic and social policies have reduced the poverty rate and its security policies have lowered the homicide rate  Counternarcotics policy has been the defining issue in U S -Colombian relations since the 1980s because of Colombia's preeminence as a source country for illicit drugs  Peru and Bolivia were the main global producers of cocaine in the 1980s and early 1990s  However, successful efforts there in reducing supply pushed cocaine production from those countries to Colombia, which soon surpassed both its Andean neighbors  The FARC and other armed groups in the country financed themselves primarily through narcotics trafficking, and that lucrative illicit trade provided the gasoline for the decades-long internal armed conflict at least since the 1990s  Colombia emerged to dominate the cocaine trade by the late 1990s  National concern about the crack cocaine epidemic and extensive drug use in the United States led to greater concern with Colombia as a source  As Colombia became the largest producer of coca leaf and the largest exporter of finished cocaine, heroin produced from Colombian-grown poppies was supplying a growing proportion of the U S  market  Alarm over the volumes of heroin and cocaine being exported to the United States was a driving force behind U S  support for Plan Colombia at its inception  The evolution of Plan Colombia took place under changing leadership and changing conditions in both the United States and Colombia  Plan Colombia was followed by successor strategies such as the National Consolidation Plan, described below, and U S -Colombia policy has reached a new phase anticipating post-conflict Colombia  Announced in 1999, Plan Colombia originally was a six-year strategy to end the country's decades-long armed conflict, eliminate drug trafficking, and promote development  The counternarcotics and security strategy was developed by the government of President Andrés Pastrana in consultation with U S  officials  Colombia and its allies in the United States realized that for the nation to gain control of drug trafficking required a stronger security presence, the rebuilding of institutions, and extending state presence where it was weak or nonexistent  Initially, the U S  policy focus was on programs to reduce the production of illicit drugs  U S  support to Plan Colombia consisted of training and equipping counternarcotics battalions in the Colombian Army and specialized units of the Colombian National Police, drug eradication programs, alternative development, and other supply reduction programs  The original 1999 plan had a goal to reduce "the cultivation, processing, and distribution of narcotics by 50%" over the plan's six-year timeframe  The means to achieve this ambitious goal were a special focus on eradication and alternative development; strengthening, equipping, and professionalizing the Colombian Armed Forces and the police; strengthening the judiciary; and fighting corruption  Other objectives were to protect citizens from violence, promote human rights, bolster the economy, and improve governance  U S  officials expressed their support for the program by emphasizing its counterdrug elements (including interdiction)  The focus on counternarcotics was the basis for building bipartisan support to fund the program in the U S  Congress because some Members of Congress were leery of involvement in fighting a counterinsurgency, which they likened to the "slippery slope" of the war in Vietnam  President George W  Bush came to office in 2001 and oversaw some changes to Plan Colombia  The primary vehicle for providing U S  support to Plan Colombia was the Andean Counterdrug Initiative, which was included in foreign operations appropriations  The Bush Administration requested new flexibility so that U S -provided assistance would back a "unified campaign against narcotics trafficking, terrorist activities, and other threats to [Colombia's] national security" due to the breakdown of peace talks between the FARC and the Pastrana government in February 2002  Congress granted this request for a unified campaign to fight drug trafficking and terrorist organizations as Members of Congress came to realize how deeply intertwined the activities of Colombia's terrorist groups were with the illicit drug trade that funded them  However, Congress prohibited U S  personnel from directly participating in combat missions  Congress placed a legislative cap on the number of U S  military and civilian contractor personnel who could be stationed in Colombia, although the cap was adjusted to meet needs over time  The current limit (first specified in the FY2015 National Defense Authorization Act, as amended) caps total military personnel at 800 and civilian contractors at 600, although numbers deployed have been far below the 1,400-person cap for years and now total fewer than 200  President Uribe (2002-2010) embraced Plan Colombia with an aggressive strategy toward the insurgent forces that prioritized citizen security  His Democratic Security Policy, implemented first in a military campaign called Plan Patriota, relied on the military to push FARC forces away from the major cities to remote rural areas and the borderlands  Like his predecessor, President Pastrana, Uribe continued to expand the Colombian military and police  He enhanced the intelligence capacity, professionalization, and coordination of the forces, in part with training provided by U S  forces  His strategy resulted in expanded state control over national territory and a significant reduction in kidnappings, terrorist attacks, and homicides  In 2007, the Uribe administration announced a shift to a "Policy of Consolidation of Democratic Security " The new doctrine was based on a "whole-of-government" approach to consolidate state presence in marginal areas that were historically neglected—vulnerable to drug crop cultivation, violence, and control by illegal armed groups  Called a strategic leap forward by then-Defense Minister Juan Manuel Santos, in 2009 the new strategy came to be called the National Consolidation Plan (see below)  Colombian support for Plan Colombia and for the nation's security program grew under Uribe's leadership  President Uribe levied a "wealth tax" to fund Colombia's security efforts, taxing the wealthiest taxpayers to fund growing defense and security expenditures  Overall U S  expenditures on Plan Colombia were only a modest portion of what Colombians spent on their own security  By one 2009 estimate, U S  expenditures were not more than 10% of what Colombians invested in their total security costs  In 2000, Colombia devoted less than 2% of its GDP to military and police expenditures and in 2010 that investment had grown to more than 4% of GDP  One assessment notes "in the end there is no substitute for host country dedication and funding" to turn around a security crisis such as Colombia faced at the beginning of the millennium  In 2008, congressional support for Plan Colombia and its successor programs also shifted  Some Members of Congress believed that the balance of programming was too heavily weighted toward security  Prior to 2008, the emphasis had been on "hard side" security assistance (to the military and police) compared with "soft side" traditional development and rule of law programs  Members debated if the roughly 75%/25% mix should be realigned  Since FY2008, Congress has reduced the proportion of assistance for security-related programs and increased the proportion for economic and social aid  As Colombia's security situation improved and Colombia's economy recovered, the United States also began turning over to Colombians operational and financial responsibility for efforts formerly funded by the U S  government  The Colombian government "nationalized" the training, equipping, and support for Colombian military programs, such as the counterdrug brigade, Colombian Army aviation, and the air bridge denial program  U S  funding overall began to decline  The nationalization efforts were not intended to end U S  assistance, but rather to gradually reduce it to pre-Plan Colombia levels, adjusted for inflation  A key goal of Plan Colombia was to reduce the supply of illegal drugs produced and exported by Colombia but the goals became broader over time  Bipartisan support for the policy existed through three U S  Administrations—President Bill Clinton, President George W  Bush, and President Barack Obama  Plan Colombia came to be viewed by some analysts as one of the most enduring and effective U S  policy initiatives in the Western Hemisphere  Some have lauded the strategy as a model  In 2009, William Brownfield, then-U S  Ambassador to Colombia, described Plan Colombia as "the most successful nation-building exercise that the United States has associated itself with perhaps in the last 25-30 years " Other observers, however, were critical of the policy as it unfolded  Many in the NGO and human rights community maintained the strategy, with its emphasis on militarization and security, was inadequate for solving Colombia's persistent, underlying problems of rural violence, poverty, neglect and institutional weakness  Nevertheless, it appears that improvements in security conditions have been accompanied by substantial economic growth and a reduction in poverty levels over time  The National Consolidation Plan first launched during the Uribe Administration, (renamed the National Plan for Consolidation and Territorial Reconstruction), was designed to coordinate government efforts in regions where marginalization, drug trafficking, and violence converge  The whole-of-government consolidation was to integrate security, development, and counternarcotics to achieve a permanent state presence in vulnerable areas  Once security forces took control of a contested area, government agencies in housing, education, and development would regularize the presence of the state and reintegrate the municipalities of these marginalized zones into Colombia  The plan had been restructured several times by the Santos government  The United States supported the Colombian government's consolidation strategy through an inter-agency program called the Colombia Strategic Development Initiative (CSDI)  CSDI provided U S  assistance to "fill gaps" in Colombian government programming  At the U S  Embassy in Colombia, CSDI coordinated efforts of the U S  Agency for International Development (USAID), the State Department's Narcotics Affairs Section, the U S  Military Group, and the Department of Justice to assist Colombia in carrying out the consolidation plan by expanding state presence and promoting economic opportunities in priority zones  It combined traditional counternarcotics assistance for eradication, interdiction, alternative development, and capacity building for the police, military, and justice sector institutions with other economic and social development initiatives  As the peace agreement between the FARC and the government moved forward into implementation, the focus of U S  assistance to Colombia has shifted again  With a foundation of the work done to advance consolidation, U S  assistance has begun to aid in post-conflict planning and support Colombia's transition to peace by building up democratic institutions, protecting human rights and racial and ethnic minorities, and promoting economic opportunity  USAID's country cooperation strategy for 2014-2018 anticipated the Colombian government reaching a negotiated agreement with the FARC, but remained flexible if an agreement was not signed  It recognized early implementation efforts, especially in the first 24 months after signature, would be critical to demonstrate or model effective practices  In the next five years, it envisioned Colombia evolving from aid recipient to provider of technical assistance to neighbors in the region  Consolidating state authority and presence in the rural areas with weak institutions remains a significant challenge following the FARC's disarmament in the summer of 2017  Reintegration of the FARC and possibly other insurgent forces, such as the ELN, will be expensive and delicate  In particular, critics of the consolidation efforts of the Colombian government maintain that the Santos administration often lacked the commitment to hand off targeted areas from the military to civilian-led development and achieve locally led democratic governance  Consolidation efforts suffered from low political support, disorganization at the top levels of government, and failure to administer national budgets effectively in more remote areas, among other challenges  In August 2018, shortly after President Duque took office, USAID announced a framework of priorities for U S  economic development assistance to Colombia  Some of these priorities include promoting and supporting a whole-of-government strategy to include the dismantling of organized crime; increasing the effectiveness of Colombia's security and criminal justice institutions; promoting enhanced prosperity and job creation through trade; improving the investment climate for U S  companies; and advancing Colombia's capacity to strengthen governance and transition to sustainable peace, including reconciliation among victims, ex-combatants, and other citizens  The U S  Congress initially approved legislation in support of Plan Colombia in 2000, as part of the Military Construction Appropriations Act of 2001 ( P L  106-246 )  Plan Colombia was never authorized by Congress, but it was funded annually through appropriations  From FY2000 through FY2016, U S  funding for Plan Colombia and its follow-on strategies exceeded $10 billion in State Department and Defense Department programs  From FY2000 to FY2009, the United States provided foreign operations assistance to Colombia through the Andean Counterdrug Program (ACP) account, formerly known as the Andean Counterdrug Initiative, and other aid accounts  In FY2008, Congress continued to fund eradication and interdiction programs through the ACP account, but funded alternative development and institution building programs through the Economic Support Fund (ESF) account  In the FY2010 request, the Obama Administration shifted ACP funds into the International Narcotics Control and Law Enforcement (INCLE) account  Since FY2008, U S  assistance has gradually declined because of tighter foreign aid budgets and nationalized Plan Colombia-related programs  In FY2014, in line with other foreign assistance reductions, funds appropriated to Colombia from State Department accounts declined to slightly below $325 million  In FY2015, Congress appropriated $300 million for bilateral assistance to Colombia in foreign operation  The FY2016 Omnibus Appropriations bill ( P L  114-113 ) provided Colombia from U S  State Department and U S  Agency for International Development accounts, slightly under $300 million, nearly identical to that appropriated in FY2015 (without P L  480, the Food for Peace account, the total for FY2016 was $293 million as shown in Table 1 )  In FY2017, Congress funded a program the Obama Administration had proposed called "Peace Colombia" to re-balance U S  assistance to support the peace process and implementation of the accord  In May 2017, Congress approved a FY2017 omnibus appropriations measure, the Consolidated Appropriations Act, 2017 ( P L  115-31 ), which funded the various programs of Peace Colombia at $391 3 million  In the FY2017 legislation, Congress appropriated the following: The ESF account increased to $187 million (from $134 million in FY2016) to build government presence, encourage crop substitution to replace drug crops, and provide other assistance to conflict victims, including Afro-Colombian and indigenous communities  However, only $180 million was subsequently allocated  INCLE funding increased to $143 million with a focus on manual eradication of coca crops, support for the Colombian National Police, and judicial reform efforts  INCLE funding also included $10 million for Colombian forces' training to counterparts in other countries  $38 5 million in Foreign Military Financing (FMF); and $21 million in Nonproliferation, Anti-Terrorism, Demining, and Related Programs (NADR), which was a relatively large increase from under $4 million in FY2016 to focus on the demining effort  How the Trump Administration will engage with the issues of supporting post-conflict stability in Colombia has not been clearly defined by either the State Department or other executive departments  For example, the Trump Administration's proposed foreign aid budget for FY2018 would have reduced assistance to Colombia to $251 million  However, the FY2018 omnibus appropriations measure, approved by Congress in March 2018 ( P L  115-114 ), again included $391 3 million to support Colombia's transition to peace  The Trump Administration's FY2019 budget request for Colombia is $265 million, approximately a 32% reduction from the $391 3 million appropriated by Congress in FY2018  However, the House and Senate appropriations bills, H R  6385 and S  3108 , again would support the funding level of $391 3 million  The FY2019 Administration request would reduce post-conflict recovery programs and place greater emphasis on counternarcotics and security  Below, Table 1 provides account data from the annual international affairs congressional budget justification documents  The information about DOD-funded programs was provided to the Congressional Research Service by DOD analysts in December 2015 and October 2017 (and has not been updated)  The breakout of DOD assistance to Colombia is shown in Table 2     Colombia also has received additional U S  humanitarian funding to help it cope with more than 1 million Venezuelan migrants  As of September 30, 2018, U S  government humanitarian funding for the Venezuela response totaled approximately $96 5 million for both FY2017 and FY2018 combined, of which $54 8 million was for Colombia  (Humanitarian funding is drawn primarily from the global humanitarian accounts in annual Department of State/Foreign Operations appropriations acts ) In addition, the U S  Navy hospital ship USNS Comfort is on an 11-week medical support mission deployed through the end of 2018 to work with government partners, in part to assist with arrivals from Venezuela  In Colombia, the U S  response aims to help the Venezuelan arrivals as well as the local Colombian communities that are hosting them  In addition to humanitarian assistance, the United States is providing $37 million in bilateral assistance to support medium- and longer-term efforts by Colombia  Some Members of Congress have been deeply concerned about human rights violations in Colombia—especially those perpetrated by any recipients or potential recipients of U S  assistance  In Colombia's multisided, 50-year conflict, the FARC and ELN, the paramilitaries and their successors, and Colombia's security forces have all committed serious violations  Colombians have endured generations of noncombatant killings, massacres, kidnappings, forced displacements, forced disappearances, land mine casualties, and acts of violence that violate international humanitarian law  The extent of the crimes and the backlog of human rights cases to be prosecuted have overwhelmed the Colombian judiciary, which some describe as "inefficient" and overburdened  The United Nations and many human rights groups maintain that although some prosecutions have gone forward, most remain unresolved and the backlog of cases has been reduced slowly  In addition to the problem of impunity for such serious crimes, continued violations remain an issue  Since 2002, Congress has required in the annual foreign operations appropriations legislation that the Secretary of State certify annually to Congress that the Colombian military is severing ties to paramilitaries and that the government is investigating complaints of human rights abuses and meeting other human rights statutory criteria  (The certification criteria have evolved over time  ) For several years, certification was required before 30% of funds to the Colombian military could be released  The FY2014 appropriations legislation requires that 25% of funding under the Foreign Military Financing (FMF) program be held back pending certification by the Secretary of State  Some human rights groups have criticized the regular certification of Colombia, maintaining that evidence they have presented to the State Department has contradicted U S  findings  However, even some critics have acknowledged the human rights conditions on military assistance to Colombia to be "a flawed but useful tool" because the certification process requires that the U S  government regularly consult with Colombian and international human rights groups  Critics acknowledge that over time, conditionality can improve human rights compliance  Additional tools for monitoring human rights compliance by Colombian security forces receiving U S  assistance are the so-called "Leahy Law" restrictions, which Congress first passed in the late 1990s prior to the outset of Plan Colombia  First introduced by Senator Patrick Leahy, these provisions deny U S  assistance to a foreign country's security forces if the U S  Secretary of State has credible information that such units have committed "a gross violation of human rights " The provisions apply to security assistance provided by the State Department and DOD  The Leahy Law under the State Department is authorized by the Foreign Assistance Act (FAA) of 1961, as amended, and is codified at 22 U S C  2378d (§520M of the FAA)  The DOD Leahy provisions, which for years applied just to DOD training, now include a broader range of assistance, as modified in the FY2014 appropriations legislation  The provision related to the Leahy Laws for DOD assistance is codified at 10 U S C  362, and prohibits "any training, equipment, or other assistance," to a foreign security force unit if there is credible information that the unit has committed a gross violation of human rights  Both the State Department and DOD Leahy provisions require the State Department to review and clear—or vet—foreign security forces to determine if any individual or unit is credibly believed to be guilty of a gross human rights violation  Leahy vetting is typically conducted by U S  embassies and State Department headquarters  Reportedly on an annual basis about 1% of foreign security forces are disqualified from receiving assistance under the Leahy provisions, although many more are affected by administrative issues and are denied assistance until those conditions are resolved  Tainted security force units that are denied assistance may be remediated or cleared, but the procedures for remediation differ slightly between the DOD and State (or FAA) provisions  Because of the large amount of security assistance provided to Colombian forces (including the military and police), the State Department reportedly vets more candidates for assistance in Colombia than in any other country  In the late 1990s, poor human rights conditions in Colombia were a driving concern for developing the Leahy Law provisions  The U S  Embassy in Bogotá, with nearly two decades of experience in its vetting operations, has been cited as a source of best practices for other embassies seeking to bring their operations into compliance or enhance their performance  State Department officials have cited Colombia as a model operation that has helped Colombia to improve its human rights compliance  However, some human rights organizations are critical of the Leahy vetting process in Colombia, and cite the prevalence of extrajudicial executions allegedly committed by Colombian military units as evidence that these restrictions on U S  assistance have failed to remove human rights violators from the Colombian military  A human rights nongovernmental organization, Fellowship of Reconciliation, has published reports alleging an association between false positive killings and Colombian military units vetted by the State Department to receive U S  assistance  However, some have questioned the group's methodology  Some human rights organizations contend that the U S  government has tolerated abusive behavior by Colombian security forces without taking action or withholding assistance  Measured exclusively in counternarcotics terms, Plan Colombia has been a mixed success  Colombia remains the dominant producer of cocaine and in the DEA's National Drug Threat Assessment for 2017 continued to be the source for 95% of cocaine seized in the United States  Enforcement, eradication, and improved security squeezed production in Colombia, so that in 2012, Peru reemerged as the global leader in cocaine production, surpassing Colombia, for a year or so  In the early 2000s, given Colombia's predominance as the source of cocaine destined for U S  markets and its status as the second-largest producer of heroin consumed in the United States, eradication of coca bush and opium poppy (from which heroin is derived) was an urgent priority and became the preferred tool for controlling the production of these drugs  Another critical component of the drug supply reduction effort was alternative development programs funded by the U S  Agency for International Development (USAID) to assist illicit crop cultivators with transitioning to licit crop production and livelihoods  Analysts have long debated how effective Plan Colombia and its follow-on strategies were in combating illegal drugs  Although Plan Colombia failed to meet its goal of reducing the cultivation, processing, and distribution of illicit drugs by 50% in its original six-year time frame, Colombia has sustained significant reductions in coca cultivation in recent years  According to U S  estimates, cultivation of coca declined from 167,000 hectares in 2007 to 78,000 hectares in 2012  (Poppy cultivation declined by more than 90% between 2000 and 2009 ) According to U S  government estimates, Colombia's potential production of pure cocaine fell to 170 metric tons in 2012, the lowest level in two decades  However, it started to rise slightly in 2013, and more dramatically in 2014 through 2016  In those years, cultivation of coca and production of cocaine grew significantly in part due to ending the aerial eradication of coca crops  In 2015, following a U N  agency determination that the herbicide used to spray coca crops was probably carcinogenic, Colombia's minister of health determined that aerial eradication of coca was not consistent with requirements of Colombia's Constitutional Court  In 2016, as noted above, the U S  DEA reported that 95% of cocaine seized in the United States originated in Colombia  According to U S  Office of National Drug Control Policy, Colombia in 2017 cultivated an unprecedented 209,000 hectares of coca, from which cocaine is derived, capable of generating 921 metric tons of cocaine  The United Nations estimates for 2017, which typically differ in quantity but follow the same trends as U S  estimates, maintained that Colombia's potential production of cocaine reached nearly 1,370 metric tons, 31% above its 2016 estimate  Even with Colombia's economic stability and improving security, cocaine exports (primarily to the U S  market) remain a major concern for U S  lawmakers  However, in drug interdiction, Colombia has set records for many years and is considered a strong and reliable U S  partner  The United Nations Office on Drugs and Crime ( Table 4 ), shows Colombia cultivating 146,000 hectares of coca in 2016, a 52% increase over 2015 and another increase to 171,000 hectares, a 17% increase, in 2017  Although cocaine seizures were quite high in both years, the interdiction of cocaine was insufficient to counter the large increases in production  Both manual eradication and aerial eradication were central components of Plan Colombia to reduce coca and poppy cultivation  Manual eradication is conducted by teams, usually security personnel, who uproot and kill the plant  Aerial eradication involves spraying the plants from aircraft with an herbicide mixture to destroy the drug crop, but it may not kill the plants  In the context of Colombia's continuing internal conflict, manual eradication was far more dangerous than aerial spraying  U S  and Colombian policymakers recognized the dangers of manual eradication and, therefore, employed large-scale aerial spray campaigns to reduce coca crop yields, especially from large coca plantations  Colombia is the only country globally that aerially sprayed its illicit crops, and the practice has been controversial for health and environmental reasons, resulting in a Colombian decision to end aerial eradication in 2015  Since 2002, as a condition of fully funding the spraying program, Congress has regularly directed the State Department, after study and consultation with the U S  Environmental Protection Agency and other relevant agencies, to certify that the spraying did not "pose unreasonable risks or adverse effects to humans or the environment " This certification requirement was included most years in the annual foreign operations appropriations legislation  Some analysts have also raised questions about the monetary and collateral costs of aerial eradication compared with other drug supply control strategies, its effectiveness, and its limited effect on the U S  retail price of cocaine  U S  State Department officials attribute Colombia's decline in coca cultivation after 2007 and prior to 2013 to the persistent aerial eradication of drug crops in tandem with manual eradication where viable  Between 2009 and 2013, Colombia aerially sprayed roughly 100,000 hectares annually  In 2013, however, eradication efforts declined  Colombia aerially eradicated roughly 47,000 hectares  It manually eradicated 22,120 hectares, short of the goal of 38,500 hectares  This reduction had a number of causes: the U S -supported spray program was suspended in October 2013 after two U S  contract pilots were shot down, rural protests in Colombia hindered manual and aerial eradication efforts, and security challenges limited manual eradicators working in border areas  In late 2013, Ecuador won an out-of-court settlement in a case filed in 2008 before the International Court of Justice in The Hague for the negative effects of spray drift over its border with Colombia  In negotiations with the FARC, the government and the FARC provisionally agreed in May 2014 that voluntary manual eradication would be prioritized over forced eradication  Aerial eradication remained a viable tool in the government's drug control strategy, according to the agreement, but would be permitted only if voluntary and manual eradication could not be conducted safely  In April 2015, the Santos administration determined that glyphosate, a broad-spectrum, nonselective herbicide used commercially, but in Colombia sprayed on coca plants to eradicate them, was "probably carcinogenic" to humans in a review published by a World Health Organization (WHO) affiliate  In October 2015, the government ended spraying operations and began to implement a new public health approach toward illicit drugs, one that proponents suggested would reduce human rights violations  On the supply side, Colombia's new drug policy gives significant attention to expanding alternative development and licit crop substitution while intensifying interdiction efforts  The State Department in its 2015 International Narcotics Control Strategy Report (INCSR), however, warned that illicit cultivation was expanding in areas long off-limits to aerial spraying, including national parks, a buffer zone with Ecuador where aerial eradication has been restricted, and in indigenous or protected Afro-Colombian territories  Colombian interdiction practices are deemed some of the most effective in the world  The Colombian government reported seizing more than 207 metric tons (mt) of cocaine base in 2014 and that seizure total doubled by 2017 with capture of 442 mt of cocaine  According to the U S  State Department's 2018 INCSR , Colombia also seized 197 mt of marijuana, 348 kilograms of heroin, and destroyed more than 3,400 cocaine base and hydrochloride labs  USAID funds and runs alternative development programs in Colombia to assist communities with transitioning from a dependency on illicit crops to licit employment and livelihoods  Alternative development was once focused narrowly on crop substitution and assistance with infrastructure and marketing  Since the Colombian government's shift to a consolidation strategy, USAID has supported "consolidation and livelihoods" programming in 40 of the 58 strategically located, conflict-affected municipalities targeted by the government's National Consolidation Plan  To facilitate economic development, USAID funds initiatives that assist farmers and others with shifting from coca growing to licit economic opportunities  These programs are designed to strengthen small farmer producer organizations, improve their productivity, and connect them to markets  Some observers maintain that poor and unsustainable outcomes from alternative development programs while the Colombian conflict was still under way resulted from ongoing insecurity and lack of timeliness or sequencing of program elements  The renewed commitment to alternative development and crop substitution in the 2016 peace accord with the FARC may be similarly challenged  Formal implementation of the peace accord on drug eradication and crop substitution began in late May 2017 with collective agreements committing communities to replace their coca crops with licit crops  In some regions, the program is extended to families who cultivate coca and also to producers of legal crops and landless harvesters  The Colombian government also committed to a combined approach of both voluntary and forced manual eradication  The government's goal set for 2017 was eradicating 100,000 hectares of coca, 50,000 through forced manual eradication and 50,000 through "crop substitution" accords reached with coca farming households who would voluntary eradicate  At the U S -Colombia High Level Dialogue held in Bogotá in March 2018, a renewed commitment to the enduring partnership between the United States and Colombia was announced  A major outcome was a U S -Colombia pledge to reduce illegal narcotics trafficking through expanded counternarcotics cooperation  The new goal set was to reduce Colombia's estimated cocaine production and coca cultivation to 50% of current levels by 2023  In addition, a memorandum of understanding was signed to combat the illegal gold mining that funds transnational criminal organizations  Although President Duque appears determined to pursue a more aggressive approach to drug policy, he has not clearly stated how his approach to counternarcotics will differ from that of his predecessor  The government may restart aerial eradication, a strategy that ended in 2015 due to the Colombian Health Ministry's concerns over cancer-causing potential of the herbicide glyphosate, but no precise plans for restarting the program have been announced in the Duque Administration's first three months in office  Experimentation with delivering glyphosate by drones (rather than planes) began in June 2018 under the Santos Administration and is continuing under the Duque government  On October 1, 2018, President Duque authorized police to confiscate and destroy any quantity of drugs found on persons in possession of them, resulting in the seizure of more than 7 metric tons of drugs in less than two weeks  This enforcement measure may violate a 1994 Colombian Constitutional Court ruling, however, in which Colombians may carry small doses of drugs for personal use, including marijuana, hashish, and cocaine  Several court challenges have been filed that seek to nullify the Duque decree on constitutional grounds of protected personal use  Drug trafficking continues to trigger conflict over land in Colombia while affecting the most vulnerable groups, including Afro-Colombian, peasant, and indigenous populations  Some analysts warn that national and international pressure for drug eradication could also lead to increased human rights violations, including health consequences by reviving aerial spraying of drug crops and government actions to forcibly break up demonstrations by coca producers who resist eradication  Some analysts have advocated that investments to lower drug supply need to go beyond eradication, which has not been a lasting approach to reducing drug crop cultivation  For instance, the government could provide economic and education opportunities to at-risk youth to enhance their role in peace building and to prevent their recruitment into the drug trade and other illegal activity  Economic relations between Colombia and the United States have deepened  The U S -Colombia Free Trade Agreement (FTA) entered into force in May 2012  By 2020, it will phase out all tariffs and other barriers to bilateral trade between Colombia and the United States, its largest trade partner  Since the U S -Colombia FTA went into force, the stock of U S  investment in Colombia surpassed $7 billion in 2014 but dropped to $6 2 billion in 2016 (on a historical cost basis), concentrated mostly in mining and manufacturing  According to the U S  Department of Commerce, U S  exports to Colombia exceeded $26 8 billion in 2016 and Colombia was the 22 nd -largest market for U S  exports; however, U S  imports from Colombia declined between 2015 and 2016  Major U S  exports to Colombia include oil (noncrude oil products including gasoline), machinery, cereals, organic chemicals, and plastic  Because 65% of U S  imports from Colombia are crude oil imports, much of the decline in value was caused by the sharp fall in oil prices that began in 2014  Major U S  imports beside crude oil, include gold, coffee, cut flowers, and fruits  Congressional interest in Colombia now extends far beyond security and counternarcotics and has grown in the area of bilateral trade following implementation of the U S -Colombia FTA, (also known at the U S -Colombia Trade Promotion Agreement)  Colombia is a founding member of the Pacific Alliance, along with Chile, Mexico, and Peru, and has sought to deepen trade integration and cross-border investment with its partners in the alliance while reducing trade barriers  The Pacific Alliance aims to go further by creating a common stock market, allowing for the eventual free movement of businesses and persons, and serving as an export platform to the Asia-Pacific region  Colombia's leadership role in the Pacific Alliance and Colombia's accession to the Organization for Economic Cooperation and Development (OECD) in May 2018, following a review of the country's macroeconomic policies and changes, are major new developments  The accession to the OECD was approved by Colombia's lower house in October 2018 and the Senate in November 2018, but it remained under final review by Colombia's Constitutional Court in early February 2019  The Santos administration pushed to meet the criteria required for OECD membership because it maintained that such recognition signified Colombia's attainment of world-class development standards and policies  Colombia has made progress on trade issues such as copyright, pharmaceuticals, fuel and trucking regulations, and labor concerns (including subcontracting methods and progress on resolving cases of violence against union activists)  Congress remains interested in Colombia's future because the country has become one of the United States' closest allies  With 17 years of investment in Colombia's security and stability, some maintain that there has already been a strong return on U S  investment  Plan Colombia and its successor strategies broadened from counternarcotics to include humanitarian concerns, efforts to bolster democratic development and human rights protections, and trade and investment to spark growth  The record expansion of Colombia's coca crop and increasing cocaine exports to the United States, however, may significantly hinder the effort to consolidate peace in Colombia and could potentially increase corruption and extortion  A significant portion of the Colombian public remains skeptical of the peace process and the FARC's role in Colombia's democracy  Other Colombians maintain that support for peace programs in Colombia is important not only to benefit former FARC or other demobilized combatants but also to fulfill promises the government made in the peace accords to the country's 8 6 million victims of the five-decade conflict  As President Duque concluded his first 100 days in office, his government faced overlapping challenges: (1) an upsurge in illicit drug crops, which had set records in 2016 and 2017; (2) implementation of provisions of the peace accord negotiated by former president Santos but marred by slow implementation, attacks on land and human rights activists, and projected budgetary shortfalls; (3) renewed violent competition among criminal groups in rural areas, some of which reportedly are sheltering in Venezuela; and (4) Venezuela's humanitarian crisis, which resulted in a surge of migrants fleeing to or through Colombia  The annual level of foreign assistance provided by the U S  Congress for Colombia began to decline in FY2008 and then gradually increased in FY2017 and FY2018 to support peace and implementation of the FARC-government peace accord  Some Members of Congress may want to build on cooperation with Colombian partners to continue to train Central Americans and other third-country nationals in counternarcotics and security, including programs in citizen security, crime prevention and monitoring, military and police capacity building, and hostage negotiation and cybersecurity  Congress may continue to closely monitor Colombia's domestic security situation  It also may continue to oversee issues such as drug trafficking; Colombia's effort to combat other illegal armed groups such as Bacrim; the status of human rights protections; and the expansion of health, economic, environmental, energy, and educational cooperation  Congress may seek to foster Colombian leadership in the region to counter growing political instability in Venezuela  The U S  Congress has been interested in expanding investment and trade opportunities both bilaterally with Colombia and within regional groupings, such as the Pacific Alliance  Some analysts contend that U S -Colombian trade improvements rest on the strength of the overall relationship between Colombia and the United States  

ground_truth: Multiemployer plans are collectively bargained pension agreements often between labor unions and two or more employers. CSPF is one of the nation's largest multiemployer defined benefit pension plans, covering about 385,000 participants. Since 1982, the plan has operated under a court-enforceable consent decree which, among other things, requires that the plan's assets be managed by independent parties. Within 7 years, CSPF estimates that the plan's financial condition will require severe benefit cuts. GAO was asked to review the events and factors that led to the plan's critical financial status and how its investment outcomes compare to similar plans. GAO describes (1) what is known about the factors that contributed to CSPF's critical financial condition; (2) what has been CSPF's investment policy, and the process for setting and executing it, since the consent decree was established; and (3) how CSPF's investments have performed over time, particularly compared to similar pension plans. GAO reviewed relevant federal laws and regulations; interviewed CSPF representatives, International Brotherhood of Teamsters officials and members, federal officials, and knowledgeable industry stakeholders; reviewed CSPF documentation including investment policy statements and board of trustee meeting minutes; and analyzed investment returns and fees from required, annual pension plan filings and from consultant benchmarking reports. The Central States, Southeast and Southwest Areas Pension Fund (CSPF) was established in 1955 to provide pension benefits to trucking industry workers, and is one of the largest multiemployer plans. According to its regulatory filings, CSPF had less than half the estimated funds needed to cover plan liabilities in 1982 at the time it entered into a court-enforceable consent decree that provides for oversight of certain plan activities. Since then, CSPF has made some progress toward achieving its targeted level of funding; however, CSPF has never been more than 75 percent funded and its funding level has weakened since 2002, as shown in the figure below. Stakeholders GAO interviewed identified numerous factors that contributed to CSPF's financial condition. For example, stakeholders stated that changes within the trucking industry as well as a decline in union membership contributed to CSPF's inability to maintain a healthy contribution base. CSPF's active participants made up about 69 percent of all participants in 1982, but accounted for only 16 percent in 2016. The most dramatic change in active participants occurred in 2007 when the United Parcel Service, Inc. (UPS) withdrew from the plan. At that time, UPS accounted for about 30 percent of the plan's active participants (i.e. workers). In addition, the market declines of 2001 to 2002 and 2008 had a significant negative impact on the plan's long-term investment performance. Stakeholders noted that while each individual factor contributed to CSPF's critical financial condition, the interrelated nature of the factors also had a cumulative effect on the plan's financial condition. Both CSPF's investment policy and the process for setting and executing it have changed several times since the consent decree was established in 1982. The original consent decree gave an independent asset manager—called a named fiduciary—exclusive authority to set and change the plan's investment policies and manage plan assets, and prohibited CSPF trustees from managing assets or making investment decisions. Initially, the named fiduciaries sold the troubled real estate assets acquired during the pre-consent decree era. Subsequent changes include the following: In 1993, the named fiduciaries started to increase investment in equities, and their policies continued to direct that asset allocations be weighted toward equities until early 2017. Between 2003 and 2010, the court approved three plan decisions to move a total of 50 percent of CSPF's assets into passively-managed accounts (passive management typically seeks to match the performance of a specific market index and reduce investment fees). An early-2017 investment policy change precipitated by CSPF's deteriorating financial condition will continue to move plan assets into fixed income investments ahead of projected insolvency, or the date when CSPF is expected to have insufficient assets to pay promised benefits when due. As a result, assets will be gradually transitioned from “return-seeking assets”—such as equities and emerging markets debt—to high-quality investment grade debt and U.S. Treasury securities with intermediate and short-term maturities. The plan is projected to become insolvent on January 1, 2025. CSPF officials and named fiduciary representatives said these changes are intended to reduce the plan's exposure to market risk and volatility, and provide participants greater certainty prior to projected insolvency. GAO found that CSPF's investment returns and expenses were generally in line with similarly sized institutional investors and with demographically similar multiemployer pension plans. For example, GAO's analysis of returns using the peer group measure used by CSPF known as the Wilshire Associates' Trust Universe Comparison Service (TUCS), showed that CSPF's annual investment returns since 1995 were above the median about as many times as they were below. Similarly, comparing CSPF's returns to a peer group of similar multiemployer defined benefit plans using federally required annual reports found that CSPF's annual investment returns were in line with those of its peers. Specifically, CSPF's annual returns were above the median nine times and below it six times—and CSPF's overall (dollar-weighted) average annual return from 2000 through 2014 was close to that of the peer median average return of 4.8 percent. In addition, GAO found that CSPF's investment fees and other administrative expenses have also been in line with other large multiemployer plans. For example: CSPF's investment fees as a percentage of assets were about 9 percent lower than the median of large defined benefit multiemployer plans over the 2000 through 2014 period—though much of that difference is accounted for by a relative reduction in investment fees since 2007. CSPF's investment fees as a percentage of assets were, on average, about 34 basis points (or 0.34 percent). CSPF's administrative expenses related to the day-to-day operations of the plan have also been in line with other large multiemployer plans. CSPF's administrative expenses per participant were below the median for large defined benefit multiemployer plans for 12 of the 15 years over the 2000 through 2014 period. As of 2014, CSPF's administrative expense was $98 per participant, which is about 16 percent less than the median for large defined benefit multiemployer plans. GAO is not making recommendations in this report.