You are given two reports by the government agency.  

Report 1:
Black lung benefits include both cash assistance and medical benefits. Maximum cash assistance payments generally ranged from about $650 to $1,300 per month in fiscal year 2017, depending on the number of dependents the miner has. Miners receiving cash assistance are also eligible for medical benefits that cover the treatment of their black-lung- related conditions, which may include hospital and nursing care, rehabilitation services, and drug and equipment charges, according to DOL documentation. DOL estimates that the average annual cost for medical treatment in fiscal year 2017 was approximately $6,980 per miner. There were about 25,700 total beneficiaries (primary and dependents) receiving black lung benefits during fiscal year 2017 (see fig. 1). The decrease in the number of beneficiaries over time has resulted from a combination of declining coal mining employment and an aging beneficiary population, according to DOL officials. Further, black lung beneficiaries could increase in the near term due to the increased occurrence of black lung disease and its most severe form, progressive massive fibrosis, particularly among Appalachian coal miners, according to HHS officials. Black lung claims are processed by DOL’s Office of Workers’ Compensation Programs. Contested claims are adjudicated by DOL’s Office of Administrative Law Judges, which issues decisions that can be appealed to the Benefits Review Board. Claimants and mine operators may further appeal these agency decisions to the federal courts. If an award is contested, claimants can receive interim benefits, which are generally paid from the Trust Fund according to DOL officials, while their claims are in the appeals process. Final awards are either funded by mine operators—who are identified as the responsible employers of claimants—or the Trust Fund, when responsible employers cannot be identified or do not pay. In fiscal year 2017, black lung claims had an approval rate of about 29 percent, according to DOL data. Of the 19,430 primary black lung beneficiaries receiving benefits during fiscal year 2017, 64 percent (12,464) were paid from the Trust Fund, 25 percent (4,798) were paid by liable mine operators, and 11 percent (2,168) were receiving interim benefits, according to DOL officials. Black Lung Disability Trust Fund revenue is primarily obtained from mine operators through the coal tax. The coal tax is imposed at two rates, depending on whether the coal is extracted from underground or surface mines. The current tax rates are $1.10 per ton of underground-mined coal and $0.55 per ton of surface-mined coal, up to 4.4 percent of the sales price. Therefore, if a ton of underground-mined coal is sold for less than $25, than the tax paid would be less than $1.10. For instance, if a ton of underground-mined coal sold for $20, than it would be taxed at 4.4 percent of the sales price, or $0.88. To a lesser extent, the Trust Fund also receives other miscellaneous revenue from interest payments, and various fines and penalties paid by mine operators, among other sources, according to DOL documentation. Coal tax revenue is collected from mine operators by Treasury’s Internal Revenue Service and then transferred to the Trust Fund where it is then used by DOL officials to pay black lung benefits and the costs of administering the program. Trust Fund expenditures include, among other things, black lung benefit payments, certain administrative costs incurred by DOL and Treasury to administer the black lung benefits program, and debt repayments. When necessary for the Trust Fund to make relevant expenditures under federal law, the Trust Fund borrows from the Treasury’s general fund. When this occurs, the federal government is essentially borrowing from itself—and hence from the general taxpayer—to fund its benefit payments and other expenditures. Multiple factors have challenged Trust Fund finances since it was established about 40 years ago. Its expenditures have consistently exceeded its revenue, interest payments have grown, and legislative actions taken that were expected to improve Trust Fund finances did not completely address its debt. Combined black lung benefit payments and program administrative costs exceeded Trust Fund revenue every year for the program’s first decade (fiscal years 1979 through 1989), resulting in the accrual of debt. During the Trust Fund’s first three fiscal years in particular, revenue covered less than 40 percent of the Trust Fund’s combined benefit payments and administrative costs. For instance, in fiscal year 1980, the Trust Fund received about $251 million in revenue and paid about $726 million in black lung benefits and administrative costs. Beginning in 1982, revenue increased as a result of the Black Lung Benefits Revenue Act of 1981 that doubled the coal tax rates from $0.50 to $1 per ton of underground-mined coal and from $0.25 to $0.50 per ton of surface-mined coal, up to 4 percent of the sales price. Even with the tax rate increase, combined benefit payments and administrative costs continued to exceed revenue throughout the 1980s (see fig. 2). As a result, the Trust Fund borrowed from Treasury’s general fund to cover the annual differences between its expenditures and revenues, and by fiscal year 1989 the Trust Fund’s outstanding debt to Treasury’s general fund exceeded $3 billion. Beginning in fiscal year 1990, Trust Fund revenue generally began to exceed combined benefit payments and administrative costs, and, in fact, total Trust Fund cumulative revenue collected from fiscal years 1979 through 2017 exceeded total cumulative benefit payments and administrative costs incurred during these years. However, interest owed from earlier years of borrowing led to more borrowing and debt. From fiscal years 1979 through 1989, the Trust Fund borrowed—primarily through 30-year term loans according to Treasury officials—from Treasury’s general fund at interest rates that varied from about 6.5 percent to about 13.9 percent. In fiscal year 1985, for instance, the Trust Fund paid about $275 million in interest, which was equal to about half of the total revenue collected that year. Since fiscal year 1990, revenue has generally exceeded combined benefit payments and administrative costs, although interest payments on the Trust Fund’s outstanding debt kept the fund in a position whereby its total expenditures continued to exceed its total revenues. As a result, the principal amount of the Trust Fund’s total outstanding debt to Treasury’s general fund increased and exceeded $10 billion by fiscal year 2008. Legislation has been enacted over the years that was expected to improve Trust Fund finances: In 1981, the Black Lung Benefits Revenue Act of 1981 doubled the coal tax rates from $0.50 cents to $1 per ton of underground-mined coal, and from $0.25 cents to $0.50 cents per ton of surface-mined coal, up to 4 percent of the sales price (as mentioned previously). In 1986, the Consolidated Omnibus Budget Reconciliation Act of 1985 established a 5 year moratorium on interest accrual with respect to repayable advances to the Trust Fund (which we refer to as annual borrowing from Treasury’s general fund), and increased the coal tax rates to $1.10 per ton of underground-mined coal, and $0.55 per ton of surface-mined coal (up to 4.4 percent of the sales price), where they have remained since. In 2008, the EIEA included provisions that were expected to eliminate the Trust Fund’s debt. Specifically, EIEA (1) generally extended the coal tax rates at their current rates until December 31, 2018 (after which they are scheduled to decrease to their original levels of $0.50 per ton of underground-mined coal, and $0.25 per ton of surface- mined coal, up to 2 percent of the sales price); (2) provided for a one- time federal appropriation toward Trust Fund debt forgiveness (about $6.5 billion, according to DOL data); and (3) provided for the refinancing of the Trust Fund’s debt that was not forgiven as a result of EIEA (which we refer to as the Trust Fund’s legacy debt). Specifically, the Trust Fund’s legacy debt was refinanced with more favorable interest rates, according to DOL data. Interest rates on the refinanced legacy debt range from about 1.4 percent to about 4.5 percent. The forgiveness and refinancing of Trust Fund debt along with extending the current coal tax rates through 2018 were expected to result in annual tax revenue that could be used to pay down interest and principal on the Trust Fund’s legacy debt, according to DOL and Treasury officials. These officials said that models showed that debt would be eliminated by fiscal year 2040; however, they noted that coal tax revenue has been less than originally projected due, in part, to the 2008 recession and increased market competition from other energy sources. As a result, the Trust Fund’s total expenditures continued to exceed revenue and the Trust Fund borrowed from Treasury’s general fund each year from fiscal years 2010 through 2017 to cover debt repayments expenditures. In fiscal year 2017, the Trust Fund’s total principal amount of outstanding debt, which includes its legacy debt and the amount borrowed from Treasury’s general fund that year, was about $4.3 billion (see fig. 3). Trust Fund borrowing will likely continue to increase from fiscal years 2019 through 2050 due, in part, to the scheduled coal tax rate decrease of about 55 percent that will take effect in 2019 and declining coal production, according to our moderate simulation. We simulated the effects of the scheduled 2019 tax rate decrease on Trust Fund finances through 2050, and in this report, we generally present the results of a moderate case set of assumptions (see table 1). These simulations are not predictions of what will happen, but rather models of what could happen given certain assumptions. For more information on our simulation methodology see appendix I. In addition to the moderate case assumptions, we also simulated how Trust Fund debt could change through 2050 given various other assumptions, and the full range of results for all of our simulations are presented in appendix II. Our moderate case simulation suggests that Trust Fund revenue may decrease, from about $485 million in fiscal year 2018 to about $298 million in fiscal year 2019, due, in part, to the scheduled approximate 55 percent decrease in the coal tax. Our simulation, which incorporates EIA data on future expected coal production, also shows that annual Trust Fund revenue will likely continue to decrease beyond fiscal year 2019 due, in part, to declining coal production. Domestic coal production has declined from about 1.2 billion tons in 2008 to about 728 million tons in 2016, according to EIA. Based on these projections, our moderate simulation shows that Trust Fund annual revenue may continue to decrease from about $298 million in fiscal year 2019 to about $197 million in fiscal year 2050 (see fig. 4). With the scheduled 2019 tax rate decrease, our moderate case simulation suggests that expected revenue will likely be insufficient to cover combined black lung benefit payments and administrative costs, as well as debt repayment expenditures. Specifically, our moderate case simulation suggests that revenue may not be sufficient to cover beneficiary payments and administrative costs from fiscal years 2020 through 2050 (see fig. 5). For instance, in fiscal year 2029, simulated benefit payments and administrative costs will likely exceed simulated revenue by about $99 million. These annual deficits will likely decrease over time to about $4 million by fiscal year 2050 due, in part, to the assumed continued net decline in total black lung beneficiaries. Our simulation also therefore suggests that Trust Fund revenue may not be enough to also cover the debt repayment expenditures it must continue to make through fiscal year 2040, per the payment schedule established following the 2008 EIEA. Our moderate simulation suggests that the amount borrowed by the Trust Fund will likely increase from about $1.6 billion in fiscal year 2019 to about $15.4 billion in fiscal year 2050 (see fig. 6). Although the Trust Fund’s legacy debt decreases through fiscal year 2040, total Trust Fund expenditures—including combined benefit payments and administrative costs as well as debt repayments—will likely continue to exceed revenue which will require continued annual borrowing from Treasury’s general fund. However, the amount borrowed by the Trust Fund could vary depending, in part, on future coal production and the number of new beneficiaries and could range between about $6 billion and about $27 billion in 2050, according to our simulations (see appendix II). We simulated three options that can affect Trust Fund finances through fiscal year 2050. Specifically, we simulated the effects of (1) adjusting the coal tax, (2) forgiving interest, and (3) forgiving debt. In each of the simulations, we compared the results of the option to a baseline in which the coal tax rates will decrease by about 55 percent, which we refer to as the scheduled 2019 tax rate decrease. We compare interest and debt forgiveness options to a baseline which assumes the scheduled 2019 tax rate decrease has taken effect, and that there is no interest or debt forgiveness. The simulated options are not intended to be exhaustive and we are not endorsing any particular option or combination of options. Using the moderate case, we simulated four options: (1) implementing the 2019 coal tax rate reduction to $0.50 per ton of underground-mined coal and $0.25 per ton of surface-mined coal; (2) maintaining the current coal tax rates of $1.10 per ton for underground-mined coal and $0.55 per ton of surface-mined coal; (3) reducing the tax rates by 25 percent (from $1.10 and $0.55); and (4) increasing these tax rates by 25 percent (see fig. 7). Increasing the tax rates by 25 percent was the only option that eliminated simulated Trust Fund debt by fiscal year 2050, according to our moderate case simulation. We simulated three interest forgiveness options including forgiving interest on (1) legacy debt, (2) annual borrowing, and (3) all debt. Our moderate case simulation suggests that forgiving interest will not eliminate simulated debt by fiscal year 2050 (see fig. 8). We simulated two debt forgiveness options by forgiving principal and interest on (1) legacy debt and (2) all debt. Our moderate case simulation suggests that both debt forgiveness options would reduce simulated Trust Fund borrowing by fiscal year 2050, but these options would not eliminate debt altogether as simulated revenue will likely not be enough to cover simulated expenditures (see fig. 9). In these cases, the Trust Fund will need to continue borrowing from Treasury’s general fund to cover annual deficits, and thus accumulate debt. While adjusting coal tax rates and forgiving interest or debt could reduce the Trust Fund’s simulated borrowing by 2050, implementing them could affect the coal industry or general taxpayers, according to stakeholders we interviewed. For instance, a coal industry representative noted that maintaining the coal tax at its current rate would continue to burden the coal industry and increasing the tax would exacerbate the burden at a time when coal production has been declining. Treasury officials noted that the costs associated with forgiving Trust Fund interest or debt would be borne by the general taxpayer since Treasury borrows from taxpayers to lend to the Trust Fund as needed. These officials also said that making a one-time federal appropriation to forgive interest or debt would be the most transparent way to satisfy the Trust Fund’s outstanding debt to Treasury’s general fund. In addition to the simulations, other options could affect the financial position of the Trust Fund including reducing black lung benefits, eliminating or adjusting the coal tax cap, or creating a variable coal tax. Our moderate case simulation suggests that completely eliminating black lung benefits as of fiscal year 2019 could reduce the Trust Fund’s borrowing from Treasury’s general fund in fiscal year 2050 from about $15.4 billion to about $6.4 billion. However, doing so would generally mean that coal tax revenue would be collected solely to fund the repayment of Trust Fund debt. Another option could be to eliminate or adjust the coal tax cap, which currently prevents mine operators from paying a coal tax of more than 4.4 percent of the price per ton of coal sold. If the coal tax cap were eliminated, for instance, mine operators would pay $1.10 per ton of underground-mined coal and $0. 55 per ton of surface-mined coal regardless of price sold, which could increase revenue. As an additional option, changing the structure of the coal tax to flexible rates that change based on an annual actuarial assessment of the Trust Fund could help to ensure that coal mine operators pay the necessary amount of tax to cover Trust Fund expenditures, without resulting in a Trust Fund balance or deficit. Multiple options could reduce the Trust Fund’s future debt and distribute the financial burden among the coal industry and general taxpayers. We simulated whether various coal tax and debt forgiveness options could balance the Trust Fund by fiscal year 2050, whereby its simulated revenue would be sufficient to cover its simulated expenditures. These options were selected, in part, based on interviews with Trust Fund stakeholders and the availability of DOL and other data. We approached these simulations from two perspectives. First, we simulated how much Trust Fund debt would need to be forgiven based on various coal tax rates. Second, we simulated the average tax collected per ton needed to balance the Trust Fund by 2050, based on certain debt forgiveness options. The simulated options are not intended to be exhaustive and we are not endorsing any particular combination of options. Our first set of options using the moderate case simulations are based on the current coal tax rates of $1.10 per ton of underground-mined coal and $0.55 per ton of surface-mined coal, and show the amount of debt forgiveness in fiscal year 2019 needed to balance the Trust Fund by fiscal year 2050 based on certain tax rates (see fig. 10). Specifically, our moderate case simulations show the following: Increasing current coal tax rates by 25 percent could balance the Trust Fund by 2050 and would likely require no debt forgiveness. For this option, the simulated coal tax revenue would likely be sufficient to cover simulated Trust Fund expenditures, including combined benefit payments and administrative costs, as well as debt repayments. However, this option would place the burden solely on the coal industry that would be paying higher taxes at a time when coal production has been declining. Maintaining current coal tax rates could balance the Trust Fund by 2050 if coupled with about $2.4 billion of debt forgiveness. This option would distribute the burden among the coal industry and general taxpayers. Decreasing current coal tax rates by 25 percent could balance the Trust Fund by 2050 if coupled with about $4.8 billion in debt forgiveness. This option would burden the coal industry less than maintaining the current tax rates, but would increase the burden on general taxpayers. Decreasing current tax rates by 55 percent, which we refer to as the scheduled 2019 tax rate decrease, would balance the Trust Fund by 2050 if coupled with about $7.8 billion in debt forgiveness. This figure comprises the Trust Fund’s total simulated outstanding debt in fiscal year 2019 ($6.6 billion), and an additional about $1.2 billion that would be required because the Trust Fund will accrue additional debt from fiscal years 2020 through 2050, according to our moderate case simulations. The coal industry would bear some of the financial burden of this option, while also placing a financial burden on general taxpayers. Our second set of options using moderate case simulations show the change in average coal tax revenue collected per ton to balance the Trust Fund by fiscal year 2050 based on certain debt forgiveness options (see fig. 11). Specifically, our moderate simulations show the following: Forgiving the Trust Fund’s legacy debt would allow for an average tax collected of about $0.59 per ton to balance the Trust Fund by 2050. Based on certain assumptions, this could be accomplished with a tax of $0.88 per ton on underground-mined coal and $0.44 per ton on surface-mined coal. Forgiving all Trust Fund debt would allow for an average tax collected per ton of coal sold of $0.47 per ton to balance the Trust Fund by 2050. Based on certain assumptions, this could be accomplished with a tax of $0.70 per ton on underground-mined coal and a tax of $0.35 per ton of surface-mined coal. We provided a draft of this report to the Departments of Labor (DOL), Treasury, and Health and Human Services (HHS) for review and comment. DOL, Treasury, and HHS provided technical comments, which we incorporated as appropriate. As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time we will send copies of this report to the appropriate congressional committees, the Secretaries of Labor, Treasury, and Health and Human Services, and other interested parties. In addition, the report will be available at no charge on GAO’s web site at http://www.gao.gov. If you or your staff should have any questions about this report, please contact me at (202) 512-7215 or brownbarnesc@gao.gov. 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 III. We examined the extent to which (1) Black Lung Disability Trust Fund (Trust Fund) debt may change through 2050 and (2) selected options to improve its future financial position. We interviewed officials from the Departments of Labor (DOL), Treasury, and Health and Human Services (HHS), as well as representatives from the National Mining Association and the United Mine Workers of America. We then selected options to simulate based, in part, on these interviews and the availability of DOL and other data. These options included adjusting the coal tax, forgiving interest on some or all Trust Fund debt, forgiving some or all Trust Fund debt, or various combinations of these options. The options we simulated are not intended to be exhaustive and we are not endorsing any particular option or combination of options. Our simulations are based on various assumptions and simulate Trust Fund revenues and expenditures from fiscal years 2016 through 2050. To develop these simulations, we used actual and projection data from (1) DOL for fiscal years 2015 through 2040; (2) Treasury’s Office of Tax Analysis for fiscal years 2011 through 2015; (3) the Department of Energy’s Energy Information Administration (EIA) for calendar years 2015 through 2050; and (4) the Office of Management and Budget for fiscal year 2017. To simulate future Trust Fund benefit expenditures, we simulated the number of beneficiaries each fiscal year, and the annual average amount of benefits received (cash assistance and medical benefits). To simulate the numbers of beneficiaries, we used DOL data on the (1) age distributions of miner and widow beneficiaries for fiscal year 2015; (2) mortality rates by age for miner and widow beneficiaries as of fiscal year 2015; and (3) numbers of beneficiaries—including married miners, single miners, widows, and miners receiving medical benefits only—in fiscal year 2015. We assumed—as DOL does in its Black Lung Budget and Liability Model—that all miners are men, all widows are women, and all spouses are 3 years younger than the miner. We also assumed that the age distribution of single miners is the same as for married miners, and that the age distribution of new miner and widow beneficiaries is the same as for miner and widow beneficiaries during fiscal year 2015. We used DOL’s mortality rates to simulate the number of beneficiaries of each age and type in each year, and used those numbers to then simulate the total number of beneficiaries of each type each year (see table 2). We also assumed that there will be no new medical-benefit-only recipients. Formula The number of married miner beneficiaries age a in fiscal year y is equal to the number of new married miner beneficiaries age a in fiscal year y plus the number of married miner beneficiaries age a-1 in fiscal year y-1 who survived and whose spouse survived. The total number of married miner beneficiaries in fiscal year y is then the sum of the number of married miner beneficiaries of all ages in fiscal year y. Finally, we averaged the number of married miner beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total. The number of single miner beneficiaries age a in fiscal year y is equal to the number of new single miner beneficiaries age a in fiscal year y plus the number of single miner beneficiaries age a-1 in fiscal year y-1 who survived plus the number of married miner beneficiaries age a-1 in fiscal year y-1 who survived but whose spouse did not survive. The total number of single miner beneficiaries in fiscal year y is then the sum of the number of single miner beneficiaries of all ages in fiscal year y. Finally, we averaged the number of single miner beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total. The number of widow beneficiaries age a in fiscal year y is equal to the number of new beneficiaries who are widows age a in fiscal year y plus the number of widow beneficiaries age a-1 in fiscal year y-1 who survived plus the number of married miner beneficiaries age a+2 in fiscal year y-1 who did not survive but whose spouse did survive. The total number of widow beneficiaries in fiscal year y is then the sum of the number of widow beneficiaries of all ages in fiscal year y. Finally, we averaged the number of widow beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total. The number of MBO beneficiaries of age a in fiscal year y is equal to the number of MBO beneficiaries of age a-1 in fiscal year y-1 who survived. The total number of MBO beneficiaries only in fiscal year y is then the sum of the number of MBO beneficiaries of all ages in fiscal year y. Finally, we averaged the number of MBO beneficiaries by averaging the prior fiscal year’s total and the current fiscal year’s total. To simulate future coal tax revenue, we used Treasury and EIA data to calculate (1) the amounts of underground and surface-mined coal taxed at fixed dollar amounts of $1.10 and $0.55 per ton, respectively, in 2015; (2) the amounts of underground and surface-mined coal taxed at variable dollar amounts per ton equal to 4.4 percent of the price in 2015; and (3) average prices of underground and surface-mined coal taxed at 4.4 percent of the price in 2015. We then used EIA data on projected amounts of total coal production, underground-mined coal production, lignite coal production, and coal exports, as well as projected average coal prices, for the period from 2015 through 2050 to simulate future coal tax revenues (see table 3). We simulated other Trust Fund expenditures and revenues, including administrative costs and debt repayments (see table 4). For our simulations, total Trust Fund expenditures are the sum of black lung benefits (cash assistance and medical benefits), total administrative costs, repayment of interest and principal on outstanding debt to Treasury’s general fund, and other expenditures. Total Trust Fund revenues are the sum of coal tax revenue and other miscellaneous revenue, and exclude annual borrowing from Treasury’s general fund. Annual borrowing from Treasury’s general fund is the difference between total Trust Fund expenditures and revenues and is assumed to be repaid with interest the following year. If total revenues are greater than total expenditures, then the Trust Fund has a balance and would not have to borrow that year. In this case, we assumed that the Trust Fund will earn interest on that balance at the same rate on which interest would accrue on annual borrowing. We simulated how the scheduled 2019 tax rate decrease and various options including adjusting the coal tax, forgiving debt interest, and forgiving debt principal and interest may affect Trust Fund finances through fiscal year 2050 (see table 5). The options listed are not intended to be exhaustive and we are not endorsing any particular option or combination of options. We simulated option combinations for coal tax rates, interest forgiveness, and debt forgiveness to demonstrate how potential financial adjustments could affect future Trust Fund borrowing from Treasury’s general fund through fiscal year 2050. For options that involve adjusting coal tax rates, we estimated the amount of debt that would need to be forgiven in fiscal year 2019 for the Trust Fund’s revenues to be sufficient to cover its expenditures through fiscal year 2050, assuming the Trust Fund does not borrow from Treasury’s general fund after fiscal year 2018. To do so, we first calculated the real discounted present value of Trust Fund expenditures for fiscal years 2019 through 2050, including benefit payments, administrative costs, legacy debt repayments, and repayment of annual borrowing from Treasury’s general fund. Second, we calculated the real discounted present value of Trust Fund revenue for the same period, including coal tax revenue and other miscellaneous revenue. Third, we calculated debt forgiveness as the difference between the real discounted present value of Trust Fund expenditures from the first calculation and the real discounted present value of Trust Fund revenues from the second calculation. When the amount of debt forgiveness is greater than the amount of debt outstanding, the Trust Fund would need an additional cash inflow in addition to forgiveness of all outstanding debt. Amounts of debt forgiveness less than zero suggest that no debt forgiveness is required. For options involving forgiving debt (interest or principal), we estimated the average tax per ton of coal that, if implemented in fiscal year 2019, would provide the Trust Fund sufficient revenue to cover its expenditures through fiscal year 2050, assuming the Trust Fund does not receive any advances from Treasury’s general fund after fiscal year 2018. To do so, we first calculated the real discounted present value of Trust Fund expenditures for the period from fiscal year 2019 through fiscal year 2050, again including benefit payments, administrative costs, legacy debt repayments, and repayment of annual borrowing from Treasury’s general fund, minus the real discounted present value of miscellaneous revenues for the same period. Second, we calculated the real discounted present value of coal production for the same period. Third, we calculated the average tax per ton of coal as the first amount divided by the second amount. To assess the sensitivity of each option, we ran each simulation 36 times using four different sets of assumptions about the numbers of future beneficiaries and nine different sets of assumptions about future coal production and prices (see table 6). Doing so provided a range of estimates about the Trust Fund’s future borrowing needs and provided insight on the sensitivity of its overall financial position relative to its various expenditures and revenues. The analysis also provided a range of estimates of the amount of debt forgiveness needed to bring the Trust Fund into balance by fiscal year 2050, assuming various coal tax rates, and the average tax collection per ton needed to do the same, and assuming various amounts of debt forgiveness. From the range of estimates that resulted from our sensitivity analysis, we selected cases with moderate expectations related to future Trust Fund expenditures and revenue. Specifically, for future expenditures, we assumed an average growth rate of new black lung beneficiaries for fiscal years 2003 through 2015 as a moderate case that reflects historical experience. For future revenue, we used a moderate coal production outlook based on EIA’s reference case, which reflects moderate expectations about future coal production based on various assumptions about economic growth, oil prices, technological innovation, and energy policy. We summarized the results of our simulations by showing the extent to which the Black Lung Disability Trust Fund’s (Trust Fund) balance—the sum of tax revenue and miscellaneous revenue less expenditures—may change in fiscal year 2050 for each option simulated. For example, with the scheduled 2019 tax rate decrease, our moderate case simulations suggest that the Trust Fund would likely have a deficit in fiscal year 2050 of about $15.4 billion. Multiple options could reduce the Trust Fund’s future debt and distribute the financial burden among the coal industry and general taxpayers. We simulated how various coal tax and debt forgiveness options could balance the Trust Fund by fiscal year 2050, whereby its simulated revenue would be sufficient to cover its simulated expenditures. We approached these simulations from two perspectives. First, we simulated how much Trust Fund debt would need to be forgiven based on various coal tax rates. Second, we simulated the average tax collected per ton needed to balance the Trust Fund by 2050, based on certain debt forgiveness options. For our first set of simulations, we calculated the amount of debt outstanding in fiscal year 2019 and the amount that would likely need to be forgiven in fiscal year 2019 for the Trust Fund to have sufficient revenues to cover its expenditures by fiscal year 2050, assuming that it does not borrow from Treasury’s general fund after fiscal year 2018. For example, before any options are implemented, our moderate case simulations suggest that the Trust Fund’s outstanding debt in fiscal year 2019—including both legacy debt and annual borrowing from Treasury’s general fund—would likely be about $6.6 billion (after discounting and adjusting for inflation). Therefore, with implementation of the coal tax rate decrease of about 55 percent as scheduled in calendar year 2019, about 117.7 percent of that debt would need to be forgiven to balance the Trust Fund. In other words, balancing the Trust Fund would require forgiveness of $6.6 billion and an additional cash inflow of about $1.2 billion because the Trust Fund will accrue additional debt from fiscal years 2020 through 2050, according to our moderate case simulations (see table 8). For our second set of simulations, we estimated the average tax per ton of coal that, if implemented in fiscal year 2019, would likely provide the Trust Fund sufficient revenues to cover its expenditures in fiscal year 2050, assuming that it does not borrow from Treasury’s general fund after fiscal year 2018. For example, if all principal and interest on Trust Fund legacy debt is forgiven, as of 2019, the estimated average tax that balances the Trust Fund is about $0.59 per ton (see table 9). Based on certain assumptions, this could be accomplished with a tax of $0.88 per ton on underground-mined coal and $0.44 per ton on surface-mined coal. In addition to the contact named above, Blake Ainsworth (Assistant Director), Justin Dunleavy (analyst-in-charge), Angeline Bickner, Courtney LaFountain, and Rosemary Torres Lerma made key contributions to this report. Also contributing to this report were James Bennett, Melinda Bowman, Lilia Chaidez, Caitlin Cusati, Holly Dye, Alex Galuten, Carol Henn, John Lack, Emei Li, Almeta Spencer, Kate van Gelder, and Shana Wallace.

 

 Report 2:
Federal agencies’ personal property may include commonly used items, such as computers, office equipment, and furniture, and more specialized property reflective of their mission, such as scientific devices, fire control equipment, heavy machinery, precious metals, generators, and chemicals. Some items require special handling, such as hazardous materials, animals, and firearms. See figure 1 for examples of federal personal property. Federal agencies manage personal property while they are using it. Specifically, executive agencies are required by law to: maintain adequate inventory controls and accountability systems for property under their control; continually survey property under their control to identify excess; promptly report excess property to GSA and dispose of it in accordance with GSA regulations; and use existing agency property or obtain excess property from other federal agencies before purchasing new property. GSA assists agencies when they no longer need personal property and has established a government-wide personal-property disposal process in federal regulation. The process generally begins when an agency declares a personal property item as “excess”—that is, the agency determines it no longer needs the item to carry out its mission. Agencies are to make this determination only after ensuring the property is not needed elsewhere within the agency. Once property is declared excess, there are four potential property disposal methods: transfer to another federal agency or certain non-federal entities, donation, sale, and abandonment or destruction. Federal agencies and some non-federal entities have the priority to acquire excess property, through transfer. If none of these eligible entities have requested the property for transfer after 21 days, the property becomes “surplus”—that is, GSA determines that federal agencies no longer need the item to carry out their missions. Surplus property may be donated to eligible entities through a State Agency for Surplus Property, representing the state of the prospective donee. Property not donated within 5 days after the close of the 21-day screening period may be sold to the general public and, finally, unsold property may be abandoned or destroyed. See appendix II for an expanded description of the personal property disposal process. OMB is responsible for establishing government-wide management policies and requirements and provides guidance to agencies to implement them. OMB has issued guidance for specific types of personal property, such as for government aircraft and information technology systems. OMB also implemented the Freeze the Footprint and Reduce the Footprint initiatives, starting in 2012, to reduce the amount of domestic office and warehouse space needed by the federal government, in part, through consolidations and improved space utilization. As a result, federal agencies have reported achieving space reductions, and they have goals for additional reductions in the future. Although these reductions are a relatively small part of the federal government’s overall footprint, according to OMB, through this and other efforts agencies collectively reduced their office and warehouse space by about 25 million square feet from fiscal years 2012 through 20156. As federal agencies continue to reduce office and warehouse space, they will also likely have to manage or dispose of personal property, such as office furniture or stored property, from these spaces. Each of the five selected agencies we reviewed have policies and processes for carrying out their responsibilities to maintain adequate accountability systems and inventory controls for property under their control: All five agencies have policies for regularly inventorying their personal property to physically locate and verify property tracked in their asset management systems. EPA, GSA OAS, and IRS policies require physical inventories of personal property once a year, while Forest Service’s policy requires inventories every other fiscal year and a 10 percent sample inventory in the alternate years. HUD policies require inventories every 2 years at its headquarters, but according to HUD officials, field locations conduct inventories annually. All of the agencies also have an electronic asset-management system for maintaining information on personal property. Although each agency has its own system, and the type of information maintained varied by agency or type of property, generally each system generates a record for each property item that provides descriptive information about the item, such as manufacturer name, model number, serial number or other identifier, acquisition cost, condition, and current location. We found that the five agencies use these policies and processes to track and inventory certain property determined by each agency to be “accountable.” Accountable property is nonexpendable personal property with an expected useful life of 2 years or longer that an agency determines should be tracked in its property records, based on an item’s acquisition cost and sensitivity. Each agency determines its own appropriate acquisition cost threshold: four of the agencies—EPA, Forest Service, HUD, and IRS—consider property with an original acquisition cost of $5,000 or greater to be accountable; GSA OAS’s accountable threshold is $10,000 or greater. In addition, certain sensitive property— such as digital cameras, laptop computers with hard drives, and firearms—is considered accountable regardless of acquisition cost because it could be easily stolen or can store data or personal information. Table 1 provides a snapshot of accountable personal property items— including the reported original acquisition cost, amount, and examples— reported from 4 of the selected agencies’ asset management systems in 2017. The agencies in our review generally did not track in their asset management systems or formally inventory their remaining—or “non- accountable”—personal property that did not meet their definition of accountable property. According to agency officials we interviewed, they do not track or inventory low value items because: (1) the cost and manpower required to do so are too high; (2) certain property, such as office furniture, is less susceptible to theft; or (3) agencies believe they are not required by law to inventory low value items. While agencies are required to have systems of accounting and internal controls that provide effective control over, and accountability for, their assets, they generally have latitude in how they implement these procedures, including which property to track and inventory. While the five selected agencies had policies and processes for their property accountability and inventory control responsibilities, they largely did not have policies and processes for carrying out their responsibilities, as established in law, to continually survey property under their control to identify excess. According to officials at each of the selected agencies, the responsibility for identifying unneeded property generally lies with that agency’s property custodians—designated officials who are assigned responsibility for the property—or the agency program or individual using the property. Four of the five selected agencies’ policies do not require property custodians or other property users to assess property for continued need. Furthermore, these four agencies’ policies did not have specific criteria for the property custodian or user to assess property for continued need. Only IRS’s personal-property management policy specifies that the property custodian is responsible for identifying excess property and provides criteria to be applied in doing so, such as whether property is still needed in its location and the feasibility of transferring it to other locations, taking into account the property’s condition and transportation charges. An official at one of the selected agencies identified several specific criteria that should be used to assess property for continued need, including the item’s serviceability, whether it poses a safety hazard, and the feasibility of relocating it. However, the official acknowledged that these or any other criteria are not part of the agency’s formal policy. The personal property policy of an agency not included in our review— NASA—includes requirements and criteria to review NASA property for continued need in multiple ways. For example, it requires a high-level NASA official to conduct a walk-through inspection annually to identify idle or underused equipment that is no longer needed and report it as excess. It also requires, as part of an annual property inventory, that property that appears to be excess, worn out, or in obvious need of repair be noted as such and that guidance on identifying unneeded property be provided to personnel involved in conducting the inventories as well as employees assigned to use the property. In addition to not having policies on identifying and assessing property for continued need, agencies we reviewed also did not have a systematic process for doing so. Instead, when describing situations in which they declared property as excess, officials said they typically did so as a result of a “triggering event.” The types of triggering events the officials cited include an office move or consolidation or a lifecycle replacement of laptops. For example, officials from field locations of three of these agencies reported declaring most of their existing furniture as excess as the result of an office relocation or renovation. Agency officials said they were unable to use their existing furniture and had to declare it excess because it did not conform to new space utilization standards. At another agency, officials were disposing of a large number of laptop computers that had been declared excess because they had been replaced by new computers. Officials at two agencies said an assessment of property for continued need is an assumed practice that is part of the inventory for accountable property. However, an official from one of these agencies acknowledged that assessing need is not addressed in the written instructions provided to those conducting the inventory. Officials from two other agencies acknowledged that they continue to retain unneeded property that should be declared excess in storage on-site but had not pursued disposal due to other competing responsibilities with higher priorities. Proactively assessing personal property for continued need instead of responding to a triggering event can help agencies achieve both effective and efficient operations by ensuring that only needed property is retained and unneeded property is identified and declared excess. Federal internal control standards require that agencies design and maintain internal control activities—such as policies and procedures—to identify risks arising from mission and mission-support operations, and to provide reasonable assurance that agencies are operating in an efficient manner that minimizes the waste of resources. Such a system also provides reasonable assurance that agency property is safeguarded against waste, loss, or unauthorized use. OMB staff and GSA officials agreed that assessing all types of property—accountable and non-accountable—for continued need is important and called-for by internal control standards. Because the agencies we reviewed did not have systematic processes for assessing the continued need for personal property, they may not be aware of potential risks of maintaining property that may no longer be needed for operational purposes. Furthermore, previous work others have performed has shown that inaction on unneeded or idle property can limit efficient use of the government’s personal property, unnecessarily use an agency’s resources, or miss opportunities for potential cost savings, for example: The Department of Homeland Security’s Inspector General found that the U.S. Coast Guard could not ensure that personal property was efficiently reutilized or properly disposed of to prevent unauthorized use or theft because the Coast Guard did not have adequate policies, procedures, and processes to identify and screen, reutilize, and dispose of excess personal property properly, including criteria for identifying such property. The EPA’s Inspector General estimated EPA could save $8.9 million in reduced warehouse costs through improved management of stored personal property. GSA personal property asset management studies conducted in 2003 and 2005 found, among other things, that personal property is not being used to its fullest extent in some agencies and that no government-wide usage assessment or standard exists to detect whether property is no longer needed and can be reported as excess. Without a triggering event, agencies may not be seeking out or identifying property that is no longer needed and declaring it excess as often as they should. Such unneeded property may be put to better use elsewhere within the agency or the federal government, or agencies may purchase or lease new property instead of using another agency’s property that is unneeded but not reported as excess. In addition, agencies may be missing opportunities to realize cost savings by identifying and disposing of unneeded property, such as property stored in warehouses, to reduce or make better use of that space. While the requirements for agencies to continually survey property under their control to identify excess is established in law, according to GSA officials, there are no government-wide regulations on managing personal property or fulfilling this specific requirement. According to GSA OGP officials, GSA does not have the authority to promulgate regulations or issue formal guidance on personal property that is in use by executive agencies. Furthermore, according to the officials, GSA is only authorized by law to prescribe regulations on excess and surplus personal property. OMB staff stated that they could issue a notification, such as a controller alert to agencies’ chief financial officers, to reinforce the statutory requirement that agencies conduct assessments of personal property for continued need. OMB periodically issues such alerts to highlight emerging financial management issues for agencies and also issues guidance to agencies through bulletins, circulars, and memorandums. By issuing a controller alert or other guidance, OMB can help ensure that agencies are proactively taking steps to evaluate their property for continued need, including developing appropriate policies for doing so, and can thereby improve efforts to promote maximum use of excess personal property. Officials from the five agencies we reviewed reported that they followed GSA’s automated process to dispose of property once they had made the determination it was no longer needed to support their agency’s mission. As previously described, GSA regulations on disposing of property establish a specific process for all executive agencies to follow, and GSA has also issued guidance to help agencies dispose of property under this process. In particular, once an agency has determined that the property it has is no longer needed within the agency, the agency is required to promptly report the property to GSA as excess, typically by entering information about it into GSAXcess, GSA’s web-based system for facilitating personal property disposal. This method requires agency employees to manually enter information using data entry screens that include help screens and error messages. GSA encourages agencies to provide a complete description of the property and to include multiple photographs of it. Officials from the five agencies we reviewed reported no significant difficulties with entering information into GSAXcess; collectively, these agencies reported over 37,000 items as excess property from fiscal year 2012 through 2016. Figure 2 indicates the number of items each selected agency reported to GSA as excess during that period. Once information entry is completed, the disposal process begins. If the property is not disposed of during one stage, it advances to the next stage. The disposal process is shown in figure 3. Agency officials we interviewed told us that responsibility for disposing of property is decentralized and typically occurs at the property’s location, whether at an agency headquarters, regional office, or lower level. Because of the large federal government presence in the Washington, D.C., area, agency offices in that area may have access to resources to facilitate the disposal process that are unavailable elsewhere, such as transferring excess property to certain entities that complete some or all aspects of the disposal process for a fee. Two such entities are GSA’s Personal Property Center in Springfield, Virginia, which takes full accountability and control of an agency’s excess property for a fee and handles all the details of the disposal process, and USDA’s Centralized Excess Property Operation in Beltsville, Maryland. According to USDA’s Agriculture Property Management Regulations, property not needed by USDA or its bureau offices in the Washington, D.C., area must be transferred to this office for final disposal actions. It also provides these same services to some non-USDA agencies. Agencies also use GSAXcess to search for and select available excess property. Agency officials told us that the system also sends disposition instructions to the property-holding agency, when the property is to be transferred to other federal agencies, donated, or sold and that the agencies follow these instructions. For example, when an agency requests an excess item in GSAXcess and GSA approves the request, the system notifies the requesting agency and the property-holding agency and provides contact information to arrange to complete the transaction. None of the selected agency officials reported difficulties completing a transfer or donation transaction. For property not transferred, donated, or sold, GSA notifies the agency that the property has no commercial value and can be abandoned or destroyed. All of our selected agencies reported trying to recycle such property. Selected agency officials told us they disposed of property from space reduction efforts, such as Freeze the Footprint and Reduce the Footprint, the same way as other personal property—using GSA’s disposal process. To meet space reduction goals, selected agencies are undertaking projects at dozens of locations. Projects have primarily involved leased space for offices and warehouses and have included office moves, consolidations, and closures. As federal agencies carry out these space reduction projects, they must also address any personal property in the project spaces. Selected agencies reported several factors that affected their decisions about this property, which for three of the agencies was primarily office furniture. Four agencies reported needing less space than they previously occupied because of changes in agency missions or staffing levels. Furthermore, officials from GSA OAS and IRS noted that workplace trends, including teleworking and decreased staffing, reduced the space needed. Finally, agencies also reported that the office furniture itself was mostly unsuitable because it was old and because it could not be configured for use in more efficient office space designs. As a result, some selected agency locations that completed an office move or renovation project reported that most of their existing furniture was not needed in their new space. For example, in its Reduce the Footprint plan for fiscal years 2017 through 2021, HUD noted that many of its locations were designed and furnished when it had a much larger staffing level and reported that in 2016, its usable square feet per employee was 356. Subsequently, HUD revised its space design standards, requiring future office spaces to adhere to a utilization rate of 175 square feet or less. At the HUD project we visited, an official told us the furniture in use before the project was old and was generally too large to be used to achieve space design standards. In 2017, Housing and Urban Development (HUD) reduced its Denver regional office space by 30 percent. HUD’s lease was expiring and it needed less space because it had fewer employees in the office, in part due to increased telework. Adhering to new space utilization standards in its office and furniture design further reduced HUD’s overall required space. An example of a new workstation is shown above. Before the project, the agency occupied about five floors of a commercial building. HUD renovated in place, one floor at a time, and replaced its existing office furniture with new. Personal property at this office included primarily office furniture, such as desks and 25-year old modular systems, and equipment, such as telephones. As each floor was completed and employees moved to new workstations, the property official on-site disposed of their old furniture and workstations by entering its information in GSAXcess. The official reported selling some of the excess furniture after completing the first floor but recycled or discarded excess furniture in subsequent rounds. In some cases, agencies did not dispose of all the personal property after a space reduction project but instead were able to retain it for other uses within the agency. For example, IRS officials reported closing an office in Englewood, Colorado, and transferred its furniture to Ogden, Utah, for storage for an upcoming project. GSA OAS officials in Denver said that after a space reduction project in which GSA decreased the size of its regional office, it retained the unneeded furniture and office space for temporary use by other agencies. For property that was declared excess following a space reduction project, agencies reported transferring, donating, and selling property to dispose of it, using GSA’s process. For example, officials in GSA OAS, Forest Service, and IRS locations told us they transferred some excess property to other federal agencies. The Forest Service in Denver transferred some modular office furniture to the Bureau of Land Management and the U.S. Postal Service. The Forest Service and IRS also reported donating property, such as office furniture and equipment, through the State Agencies for Surplus Property program. Four agencies reported selling some of their property from a space reduction project. For example, HUD’s regional office in Denver sold some of its excess office furniture, which dated to 1992, and recycled or discarded the remainder. When disposing of property from a space reduction project, some agencies sought assistance from GSA. GSA’s Office of Personal Property Management (GSA OPPM) assists agencies, when requested, in disposing of personal property, and officials at selected agency locations reported receiving assistance and training. In one example, GSA officials told us that a regional office of a selected agency needed to dispose of an office full of furniture and, in addition to using the disposal process, contacted GSA OPPM for additional assistance. Because of the large amount of property, GSA OPPM took steps to make other agencies in the area aware of the available property and facilitated access to allow agencies to view the property. In another example, GSA OPPM officials met with officials from another agency in the planning stages of a relocation to answer questions and provided advice and guidance for disposing of personal property. When the Forest Service’s lease on its Denver-area office expired, the agency leased space in another location, requiring a move but reducing its office by over 21,000 square feet. The agency sought to conform to new space utilization standards, which required more efficiently-designed furniture than its existing office furniture. Because the Forest Service did not reuse most of its old furniture in its new space, it no longer had a need for it. The Forest Service retained some of the furniture for use in other Forest Service offices within the region and declared the remainder as excess. Through GSAXcess, the Forest Service transferred some of its excess furniture to other federal agencies, such as the Bureau of Land Management and the U.S. Postal Service. The Forest Service sold some furniture at auction; broken items were recycled. Agencies may dispose of large amounts of property during a space reduction project, but overall, agency officials reported few challenges in doing so. This may be in part because any effects from space reductions are distributed across an entire agency. Although selected agencies’ average Reduce the Footprint space reduction goals ranged from 97,000 square feet to 662,000 square feet each fiscal year from 2016 to 2020, each agency’s efforts consisted of dozens of geographically dispersed projects of various sizes to be completed over several years. For example, as of fiscal year 2016, EPA had 21 space reduction projects planned from fiscal years 2016 through 2021, with individual anticipated reductions ranging from less than 1,000 square feet to more than 140,000 square feet. At least one project is present in 8 of EPA’s 10 regions. Agencies’ ability to pay for space reduction projects may also have affected these projects’ effects. Two selected agencies said they delayed projects because of a lack of funding. Agencies may reduce costs over the long term because of lower rent for smaller spaces but they may have to pay some expenses upfront, such as for moving, renovations, and new furniture. Although officials from all five agencies told us they have been able to manage personal property disposals from space reductions, they identified factors that can impact the efficient use of the disposal process during a space reduction project and some strategies taken to address them: Inventorying non-accountable property: As a space reduction project commenced at a location, most selected agencies reported that they did not have a complete list of the personal property affected by the project. As previously described, selected agencies do not maintain an itemized list of non-accountable personal property and for four agencies, office furniture is generally non-accountable. During a space reduction project, property personnel had to develop some type of inventory to identify property that would be needed and property that should be disposed of. Selected agencies had various methods for conducting such an inventory. For example, officials from two agencies said they walked through the affected space and created a list of all the items. Officials from one agency said a contractor was hired for this purpose. Most agencies reported using the inventory they created to enter information on excess property into GSAXcess. Officials at GSA’s OPPM offices in Philadelphia and Fort Worth said that they offer training and guidance to agencies in conducting inventories. Managing disposals within time frames: Agencies generally are not able to begin the disposal process until the property is no longer in use. For example, agency staff continue to use their old workspaces until they can move to new workspaces. Agencies also face deadlines, such as vacating space due to a lease expiration or commencement of renovation work. Officials from three agencies described challenges completing the disposal process—reporting excess personal property as well as completing transactions to transfer, donate, sell or abandon or destroy it—within required time frames. Some agency officials reported using different strategies to address this timing challenge. For example, one agency official was able to enter information about the excess property items into GSAXcess while employees were still using them. According to the official, this was possible because a note could be included in the property item’s description in GSAXcess, with the date when the property would be available. When the property was no longer in-use within the agency, the transfers or other transactions were completed. Additionally, an agency may conduct an on-site screening of its unneeded property to allow other federal agencies or authorized parties to physically view and identify any furniture they want. For example, GSA OPPM officials in Philadelphia conducted an on-site screening of unneeded office furniture resulting from the agency’s regional office relocation. Federal agencies collectively have billions of dollars’ worth of personal property, ranging from office furniture to highly specialized equipment that, when in use, supports agency missions. However, the agencies in our review did not have policies and systematic processes for identifying unneeded property. Furthermore, other’s previous work has shown that agencies across the government may not be effectively assessing their property for continued need, leading to idle property that could be put to better use elsewhere within the agency or the federal government and potential unnecessary storage costs. Consequently, agencies may be retaining property that is no longer needed. GSA has recognized that opportunities may exist for agencies to more effectively manage property under their control, but according to GSA OGP officials, GSA’s authority is limited to agency property that has been declared excess or surplus. According to OMB staff, OMB has the authority to issue guidance, such as controller alerts, emphasizing agencies’ property management obligations, and thus, it is well-positioned to assist agencies to more effectively manage their property and to ensure unneeded property is made available to others, as appropriate. The Director of OMB should provide guidance to executive agencies on managing their personal property, emphasizing that agencies’ policies or processes should reflect the requirement to continuously review and identify unneeded personal property. (Recommendation 1) We provided a draft of this report to OMB, EPA, the Forest Service, GSA, HUD, and IRS for comment. OMB stated that it did not have any comments on our draft report in an email and provided a technical clarification to the report, which we incorporated. GSA and IRS provided technical comments in an email, which we incorporated as appropriate. EPA, the Forest Service, and HUD each stated in an email that they did not have any comments on the draft report. We are sending copies of this report to the appropriate congressional committees, the Director of the Office of Management and Budget, the Administrator of the Environmental Protection Agency, the Secretary of the U.S. Department of Agriculture, the Administrator of the General Services Administration, the Secretary of the Department of Housing and Urban Development, and the Secretary of the Department of the Treasury. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staffs have any questions about this report, please contact me at (202) 512-2834 or rectanusl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff making key contributions to this report are listed in appendix III. The objectives of this report were to examine (1) how selected federal agencies assess whether personal property is needed and (2) how selected federal agencies dispose of unneeded personal property, and how, if at all, space reduction efforts have affected disposals. We excluded certain types of personal property, such as aircraft and vehicles, from our review because of our prior or ongoing work. To address our objectives, we reviewed applicable federal statutes and regulations pertaining to personal property management and disposal, our prior work, and reports by federal agencies’ Offices of Inspector General on personal property issues. In addition, to determine how selected federal agencies assess whether personal property is needed, we conducted background searches to inform our understanding of key practices for personal property and asset management through a search of databases containing peer-reviewed articles, government reports, general news, hearings and transcripts, and association and think tank papers. We also reviewed relevant asset management practices, such as ASTM standards and the General Services Administration’s (GSA) Federal Asset Management Evaluation and Personal Property Asset Management Study. In order to select agencies that may have had recent experiences with excess personal property, we selected 5 of the 24 agencies that were included in the Freeze the Footprint and Reduce the Footprint initiatives. We selected agencies based on their overall Freeze the Footprint results, in terms of the amount of square feet reduced, and Reduce the Footprint goals for reducing domestic office and warehouse space, and the amount of personal property declared excess over the last 5 years, as reported to GSA’s GSAXcess system from fiscal years 2012 to 2016, to coincide with the Freeze the Footprint time frame. Specifically, we obtained information on the Freeze the Footprint results and Reduce the Footprint goals from the Office of Management and Budget’s public website and from Performance.gov. We limited our scope to civilian federal agencies with personal property within the United States. Although we have previously reported that the overall accuracy of data that agencies reported on office and warehouse space reductions could be improved, we found that the data were generally reliable for our purposes. After reviewing the data for any inconsistencies and discussing the information with selected agency officials to ensure that the reported numbers for the Reduce the Footprint initiative were current, we determined that the quality of the data were sufficient for our use in selecting agencies. In order to select agencies that were more likely to have relevant, recent experience with excess personal property from space reduction efforts, we ranked these agencies based on their Freeze the Footprint results, Reduce the Footprint goals, and the amount of declared excess personal property, and eliminated the bottom third of the agencies. We selected GSA as our first agency due to its central role in excess personal property disposal, and randomly selected four additional agencies from the remaining agencies. These agencies were the Environmental Protection Agency, the U.S. Department of Agriculture, the Department of Housing and Urban Development, and the Department of the Treasury. The organizational structure of two selected agencies, the Department of Agriculture and the Department of the Treasury, is different than the other three agencies in that they are comprised primarily of sub-agencies. Therefore, we selected the largest sub-agency for both departments—the Forest Service within the Department of Agriculture and the Internal Revenue Service within the Department of the Treasury. We obtained information from the five selected federal agencies on the total value and number of items in their asset management systems in 2017 to understand the size and scope of personal property assets they manage. As we used the information to describe the scope of the agencies’ property holdings, we did not verify the data. We also analyzed documents, such as the selected agencies’ personal property management policies, along with policies from the National Aeronautics and Space Administration and Department of Energy, to understand how they addressed requirements for managing personal property. We included these agencies’ policies based on our review of prior work related to personal property. We interviewed officials from the selected agencies about their processes for managing personal property assets, such as their inventory procedures. However, we did not independently assess agencies’ inventory practices. We also interviewed staff from the Office of Management and Budget (OMB) to discuss regulations and policies pertaining to personal property and OMB’s role in personal property management. To determine how selected federal agencies dispose of excess and surplus personal property and how space reduction efforts may have affected disposals, in addition to the above, we obtained information from each selected agency on its space reduction projects and interviewed officials about their roles and responsibilities in the agency’s space reduction planning efforts and personal property disposal process. We also conducted site visits to Philadelphia, Pennsylvania, and Denver, Colorado to meet with regional and local officials from each selected agency responsible for managing and disposing of personal property. These locations were chosen based on the number of our selected federal agencies present, the amount of excess personal property declared, and the existence of space reduction projects. We discussed property accountability policies, overall personal property disposal processes, and how the disposal processes were affected by government-wide space savings initiatives, such as Freeze the Footprint and Reduce the Footprint, and any efforts to prepare for them, and requested supporting documentation on the amount of property declared as excess and the disposition outcomes of that property. We did not independently verify the information that was provided, as data reported as excess from space reduction projects are not always tracked separately from other property disposed of for other reasons. We reviewed documents and interviewed officials from GSA’s Office of Personal Property Management (GSA OPPM) in GSA’s headquarters, in Philadelphia and in Fort Worth, Texas, to discuss their role in assisting agencies in disposing of personal property and to obtain their views on how personal property disposals have been affected by space reductions. Finally, we interviewed GSA’s Office of Government-wide Policy (GSA OGP) officials about the Interagency Committee on Property Management and the Property Management Executive Council regarding their personal property and asset management efforts and met with officials and representatives from the following: the U.S. Department of Agriculture’s Centralized Excess Property Operation, the Users and Screeners Association–Federal Excess Personal Property, and the National Association of State Agencies for Surplus Property to discuss their roles in the reuse and disposal of Federal personal property. We conducted this performance audit from July 2016 to February 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The Federal Property and Administrative Services Act of 1949, as amended, requires executive agencies, in part, to promptly report excess property to the General Services Administration (GSA) and dispose of it in accordance with GSA regulations. Each executive agency is also required to fulfill requirements for personal property by using existing agency property or by obtaining excess property from other federal agencies before purchasing new property. GSA’s disposal process, as laid out in federal regulation, incorporates and facilitates these requirements, providing a means for both disposing of and acquiring unneeded property: agencies with excess personal property can dispose of it and other agencies, authorized non-federal entities, and, eventually, the general public can acquire this property. After determining that a property item is no longer needed to complete its mission, an agency may have several options for proceeding before formally declaring the property as excess to GSA: Immediately authorize abandonment or destruction of the property: Determine, in writing, that the property has no commercial value or the estimated cost of its continued care and handling would exceed the estimated proceeds from its sale. If an agency makes such a determination, it may abandon or destroy the property without reporting it to GSA as excess. In lieu of abandonment or destruction, an agency may donate excess personal property to a public body without going through GSA. Directly transfer the property to another federal agency: Agencies usually become aware of available property through informal means, such as a contact at the disposing agency, according to GSA. GSA approval for such a transfer is not needed if the total original acquisition cost for each item does not exceed $10,000. If this cost is greater than $10,000, the acquiring agency must obtain prior approval from GSA. In either case, the acquiring agency must notify GSA of the transfer. Directly transfer the property to an eligible recipient under a special authority: Special authorities are legal provisions that are designed to give excess assets to groups that may use them for a particular purpose, such as universities that can use the National Aeronautics and Space Administration’s scientific equipment in their research. Some authorities exist to collectively support all federal agencies and some support an agency-specific program. According to GSA, the primary government-wide programs are the Stevenson-Wydler Technology Innovation Act of 1980 and Executive Order 12999, also known as the Computers for Learning program. Recipients meeting eligibility requirements of the special authority contact agencies to determine the availability of property, and the agency and recipient must complete the appropriate documentation to make a record of the transfer. An agency initiates GSA’s disposal process by formally declaring property as excess, either by completing and submitting a form to GSA or, more typically, by electronic entry of an item into GSAXcess, GSA’s real-time, Web-based site for facilitating the disposal process. The latter method requires agency employees to enter information about the excess property using data entry screens that include help screens and error messages. GSA encourages reporting agencies to provide a complete description of the property and to include multiple photographs of the property. The disposal process generally consists of four sequential stages in which personal property may be transferred to another agency or eligible recipient, donated, sold, or abandoned or destroyed, as described below. If the property is not disposed of during one stage, it advances to the next stage, though the holding agency generally retains physical custody of the property until it is disposed of. Table 2 illustrates actions a disposing agency and eligible property recipients take during each of the four stages of the disposal process after an agency declares property excess. In addition to the individual named above, the following individuals made important contributions to this report: David J. Wise (Director), Nancy Lueke (Assistant Director), Travis Thomson (Analyst-in-Charge), Lacey Coppage, Rosa Leung, Josh Ormond, Amy Rosewarne, Pamela Vines, and Elizabeth Wood.

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

Answer: With revenue of about $450 million in fiscal year 2017, the Trust Fund paid about $184 million in benefits to more than 25,000 coal miners and eligible dependents. However, the Trust Fund also borrowed about $1.3 billion from the Treasury's general fund in fiscal year 2017 to cover its debt repayment expenditures. Adding to this financial challenge, the coal tax that supports the Trust Fund is scheduled to decrease by about 55 percent beginning in 2019. GAO was asked to review the financial positon of the Trust Fund and identify options to improve it. This report examines (1) factors that have challenged the financial position of the Trust Fund since its inception and (2) the extent to which Trust Fund debt may change through 2050, and selected options that could improve its future financial position. GAO reviewed Trust Fund financial data from fiscal years 1979 through 2017. GAO also interviewed officials from the Departments of Labor, Treasury, Health and Human Services (HHS) and representatives of coal industry and union groups. Using assumptions, such as the about 55 percent coal tax decrease and moderately declining coal production, GAO simulated the extent to which Trust Fund debt may change through 2050. GAO also simulated how selected options, such as forgiveness of debt, could improve finances. The options simulated are not intended to be exhaustive. Further, GAO is not endorsing any particular option or combination of options. GAO provided a draft of this report to DOL, Treasury, and HHS. The agencies provided technical comments, which were incorporated as appropriate. Multiple factors have challenged Black Lung Disability Trust Fund (Trust Fund) finances since it was established about 40 years ago. Its expenditures have consistently exceeded its revenues, interest payments have grown, and actions taken that were expected to improve Trust Fund finances did not completely address its debt. When necessary to make expenditures, the Trust Fund borrows with interest from the Department of the Treasury's (Treasury) general fund. Because Trust Fund expenditures have consistently exceeded revenue, it has borrowed almost every year since 1979, its first complete fiscal year, and as a result debt and interest payments increased. Legislative actions were taken over the years including (1) raising the rate of the coal tax that provides Trust Fund revenues and (2) forgiving debt. For example, the Energy Improvement and Extension Act of 2008 provided an appropriation toward Trust Fund debt forgiveness; about $6.5 billion was forgiven, according to Department of Labor (DOL) data (see figure). However, coal tax revenues were less than expected due, in part, to the 2008 recession and increased competition from other energy sources, according to DOL and Treasury officials. As a result, the Trust Fund continued to borrow from Treasury's general fund from fiscal years 2010 through 2017 to cover debt repayment expenditures. GAO's simulation suggests that Trust Fund borrowing will likely increase from fiscal years 2019 through 2050 due, in part, to the coal tax rate decrease of about 55 percent that will take effect in 2019 and declining coal production. The simulation estimates that Trust Fund borrowing may exceed $15 billion by 2050 (see figure). However, various options, such as adjusting the coal tax and forgiving interest or debt, could reduce future borrowing and improve the Trust Fund's financial position. For example, maintaining the current coal tax rates and forgiving debt of $2.4 billion could, under certain circumstances, balance the Trust Fund by 2050, whereby revenue would be sufficient to cover expenditures. However, a coal industry representative said that maintaining or increasing the coal tax would burden the coal industry, particularly at a time when coal production has been declining. Further, Treasury officials noted that the costs associated with forgiving Trust Fund interest or debt would be paid by taxpayers.