AGENCY FINANCIAL REPORT — Fiscal Year 2013

www.dol.gov

FY 2013 Agency Financial Report 3

Table of Contents

Message from the Secretary of Labor.................................................................................................... 5

Management’s Discussion and Analysis................................................................................................. 7

Program Performance Overview............................................................................................................................ 11

Financial Performance Overview............................................................................................................................ 22

Management Assurances....................................................................................................................................... 29

Financial Section..................................................................................................................................32

Message from the Chief Financial Officer .............................................................................................................. 33

Independent Auditors’ Report................................................................................................................................ 34

Annual Financial Statements.................................................................................................................................. 47

Principal Financial Statements and Notes........................................................................................................ 49

Required Supplementary Stewardship Information ...................................................................................... 105

Required Supplementary Information........................................................................................................... 111

Other Information .............................................................................................................................141

Inspector General’s Top Management Challenges............................................................................................... 143

Summary of Financial Statement Audit and Management Assurances............................................................... 154

Improper Payments Reporting Details................................................................................................................. 155

Schedule of Spending ........................................................................................................................................... 183

Open Government Links....................................................................................................................................... 184

Acronyms.............................................................................................................................................................. 185

This report can be found on the Internet at www.dol.gov/dol/aboutdol/.

If you have questions or comments regarding this report, contact:

Office of the Chief Financial Officer

U.S. Department of Labor

200 Constitution Avenue, NW, Room S-4030

Washington, DC 20210

202-693-6800

The photographs in this publication were furnished by numerous individuals. All photographs are proprietary and prior permission from the 

photographer is required for any use or reproduction of the photographs. All references to non-governmental companies or organizations, 

their services, products or resources in this report are offered for informational purposes and should not be construed as an endorsement by 

the Department of Labor of any of the companies or organizations, or their services, products or resources. The Department of Labor does 

not endorse, takes no responsibility for, and exercises no control over non-governmental organizations’ Web sites mentioned in this report, 

or their views or contents; nor does it vouch for the accuracy of the information contained on other organizations’ Web sites.

FY 2013 Agency Financial Report 5

Message from the Secretary of Labor

December 16, 2013

I began my tenure as Secretary of Labor in the midst of the Department’s 

celebration of its 100th Anniversary. For 100 years our department has been 

central to fulfilling one of America’s most important and enduring premises: 

providing opportunity for everyone willing to work for it. That means the 

opportunity for workers to acquire the skills they need to succeed in the 

global economy; the opportunity to earn a fair day’s pay for a fair day’s work 

in a safe workplace; the opportunity for veterans to thrive in the civilian 

economy; the opportunity for people with disabilities to become productive 

members of the workforce; and the opportunity to retire with dignity and 

peace of mind.

But our goal of expanding opportunity can not be achieved without keeping a 

laser focus on ensuring that we use our resources in the most efficient and 

strategic way possible.

That is why I am pleased to present the U.S. Department of Labor’s Fiscal Year 2013 Agency Financial Report. 

This is our annual publication to Congress and the American public about our operational record and 

financial stewardship of public funds. The information in this report explains how we manage our resources, 

highlights our major accomplishments and outlines our plans to address the challenges ahead. It is with 

tremendous pride that I report that we have once again received a “clean” (unmodified) independent opinion

on our financial statements.

I am also pleased to provide an unqualified statement of assurance regarding the Department’sinternal controls, as 

required by the Federal Managers Financial Integrity Act (FMFIA) of 1982 and Office of Management and Budget 

Circular No. A‐123, Management’s Responsibility for Internal Control. The results of management’s assessment

of internal controls and compliance of financial management systems, pursuant to FMFIA and the Federal

Financial Management Improvement Act of 1996, is included in the Management’s Discussion and Analysis

section of this report. I am confident that the financial data and summary performance results included in this AFR 

are complete and reliable in accordance with federal requirements.

In addition to tools like this financial report, we analyze our programs to determine whether we are achieving the 

best results for the American public. Each DOL agency has an evaluation agenda intended to determine if our 

current activities and strategies are the most likely to lead to improving performance and outcomes or if evidence 

suggests that we should alter our activities and strategies. Our extensive work in supporting performance and 

outcomes is summarized in the “Program Performance Overview” part of Management Discussion and Analysis.

As the first Secretary of the Department’s second century, I look forward to carrying on the Department’s efforts to 

extend the ladder of opportunity to even more working families across our nation.

/S/

THOMAS E. PEREZ

U.S. Secretary of Labor

Management’s Discussion and Analysis

MANAGEMENT’S DISCUSSION & ANALYSIS

www.dol.gov

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FY 2013 Agency Financial Report 9

The Department of Labor's (DOL or the Department) annual Agency Financial Report (AFR) provides fiscal data and 

summary performance results that enable the President, Congress, and American people to assess the 

Department’s accomplishments for each fiscal year (October 1 through September 30). This report provides an 

overview of programs, accomplishments, challenges, and management’s accountability for the resources entrusted 

to the Department. The report is prepared in accordance with the requirements of Office of Management and 

Budget (OMB) Circular No. A-136, Financial Reporting Requirements.

DOL History

March 4, 1913, marked a milestone event in the history of the American workforce. On that day, President William 

Howard Taft — on his last day in office — signed legislation creating the U.S. Department of Labor and giving 

workers a direct seat in the President's Cabinet for the first time. In the words of the Organic Act, the Department's 

mission is "To foster, promote and develop the welfare of working people, to improve their working conditions, and 

to enhance their opportunities for profitable employment." William B. Wilson was appointed as the first secretary 

of the new department. Wilson, born in Scotland in 1862, was a champion of jobs for women and minorities, and 

played an important role in our World War I victory by mobilizing an effective workforce for defense production.

In 1933, President Franklin D. Roosevelt appointed Frances Perkins as the first woman ever to head a U.S. Cabinet 

agency. Perkins had served as Commissioner of Labor while FDR was governor of New York and developed plans to 

alleviate unemployment as the Depression deepened. She served until shortly after FDR’s death in 1945. DOL’s 

national office in Washington, D.C. – the Frances Perkins Building – is now named after her.

Secretary Perkins played a major role in the design of many New Deal programs, but her main contribution was the 

enactment of Social Security in 1935. Perkins led a campaign to convince the nation that a pension system would 

not only be humanitarian, but would help prevent future depressions. The New Deal also led to many of the 

mainstays of the American workplace, such as Unemployment Insurance, the eight-hour work day, minimum 

workplace safety and health standards, and the first federal minimum wage, then 25 cents per hour.

In the 1960s, DOL’s responsibilities were expanded to address President Lyndon B. Johnson’s "Great Society" and 

the "War on Poverty.” One of the most important programs was the Job Corps, which the Labor Department began 

administering in 1969, providing training for at-risk youth.

In 1970, the movement for a job safety and health law finally succeeded, and the next year the Department 

established the Occupational Safety and Health Administration (OSHA) to enforce rules to protect against hazards in 

most of the nation's workplaces. OSHA was joined by a sister agency seven years later – the Mine Safety and Health 

Administration (MSHA). The Employee Retirement Income Security Act (ERISA) of 1974 gave DOL a major role in 

protecting and improving the nation's private retirement systems. Steps to promote employment and provide 

workplace protections for groups such as persons with disabilities, veterans, and migrant workers followed, with 

the establishment of the Office of Disability Employment Policy (ODEP), the Veterans’ Employment and Training 

Service (VETS), and passage of laws like the Migrant and Seasonal Agricultural Worker Protection Act. President 

Clinton signed the Family and Medical Leave Act in 1993, protecting the job security of new parents, caretakers of 

injured or ill relatives, workers with personal health problems, and others.

Today, after the economic shock of the 2008 financial crisis and resulting unemployment, the Department of Labor 

continues to seek out new ways to meet the challenges of a new era and to inspire the next century of progress for 

the American workforce. As we recognize 100 years of achievement, we also seek opportunities for reinvention and 

renewal.
Management’s Discussion and Analysis

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10 United States Department of Labor

Mission Statement and Organizational Structure

DOL’s mission remains as relevant today as at the Department’s founding in 1913:

“To foster, promote and develop the welfare of the job seekers, wage earners and retirees 

of the United States; improve working conditions; advance opportunities for profitable 

employment; and assure work related benefits and rights.”

The Department accomplishes this mission through component agencies and offices that administer various 

statutes and programs. These programs are carried out through a network of regional offices and smaller field, 

district, and area offices, as well as through grantees and contractors.
(Unaudited)

FY 2013 Agency Financial Report 11

Program Performance Overview

The Program Performance Overview presents the Department’s performance goals, objectives and results and 

discusses key performance measures and program priorities. This section includes performance on measures 

related to spending as reported in the following Financial Section. Outcome data reported under the Government 

Performance and Results Act are included in the Annual Performance Report, which will be published in February 

2014 with the fiscal year (FY) 2015 Congressional Budget Justification. A third report, the Summary of Performance 

and Financial Information for Fiscal Year 2013, will be available on February 15, 2014.

The Department’s current five-year Strategic Plan - http://www.dol.gov/_sec/stratplan/ includes five strategic goals 

and 14 outcome goals that support the Secretary’s vision to promote and protect opportunity for all workers and 

their employers. These goals are presented in the following table:

STRATEGIC GOAL 1: Prepare workers for good jobs and ensure fair compensation.

1.1. Increase workers’ incomes and narrow wage and income inequality.

1.2. Assure skills and knowledge that prepare workers to succeed in a knowledge-based economy, including high 

growth and emerging industry sectors like “green” jobs.

1.3. Help workers who are in low-wage jobs or out of the labor market find a path into middle-class jobs. 

1.4. Help middle-class families remain in the middle class.

1.5. Secure wages and overtime.

1.6. Foster acceptable work conditions and respect for workers’ rights in the global economy to provide workers 

with a fair share of productivity and protect vulnerable people.

STRATEGIC GOAL 2: Ensure workplaces are safe and healthy.

2.1. Secure safe and healthy workplaces, particularly in high-risk industries.

STRATEGIC GOAL 3: Assure fair and high quality work‐life environments.

3.1. Break down barriers to fair and diverse work-places so that every worker’s contribution is respected.

3.2. Provide workplace flexibility for family and personal care-giving.

3.3. Ensure worker voice in the workplace.

STRATEGIC GOAL 4: Secure health benefits and, for those not working, provide income security.

4.1. Facilitate return to work for workers experiencing work-place injuries or illnesses who are able to work.

4.2. Ensure income support when work is impossible or unavailable.

4.3. Improve health benefits and retirement security for all workers.

STRATEGIC GOAL 5: Produce timely and accurate data on the economic conditions of workers and their families.

5.1. Provide sound and impartial information on labor market activity, working conditions and price changes in the 

economy for decision making, including support for the formulation of economic and social policy affecting 

virtually all Americans.

The goal structure incorporates the Department’s commitment to measuring activities that positively impact the 

day-to-day lives of working families. The results on the corresponding measures allow the Department to track 

progress in implementation of the strategic goals and objectives.

The table below organizes DOL program agencies into five categories that report FY 2013 performance data. The 

Department’s mission is also supported by administrative, policy, legal, public affairs, and Congressional liaison 

offices.
Management’s Discussion and Analysis

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12 United States Department of Labor

Employment and Training

Employment and Training Administration (ETA)

Veterans’ Employment and Training Service (VETS)

Worker Protection

Office of Federal Contract Compliance Programs (OFCCP)

Occupational Safety and Health Administration (OSHA)

Wage and Hour Division (WHD)

Employee Benefits Security Administration (EBSA)

Mine Safety and Health Administration (MSHA)

Office of Labor‐Management Standards (OLMS)

Policy

Women’s Bureau (WB)

Office of Disability Employment Policy (ODEP)

Bureau of International Labor Affairs (ILAB)

Benefits

Office of Workers’ Compensation Programs (OWCP)

Federal‐State Unemployment Insurance (UI) Program (administered by ETA)

Statistics

Bureau of Labor Statistics (BLS)

The following section presents a brief description of the programs administered by each agency, the most recent 

results for key performance measures, and a brief statement of forward-looking information. The Department 

tracks performance through over 400 output and outcome measures. The selected measures below are most

representative of agency activities based on resource allocation and strategic importance.

In achieving these performance results, the Department faced a challenging budgetary environment in FY 2013, 

including the impact of sequestration. In FY 2013, the Department had to absorb across the board cuts totaling 

$3.2 billion, all within the last half of the fiscal year. The Department's discretionary budget was reduced by $646 

million. These cuts affected every agency and activity within DOL.

The Department and its agencies underwent a thorough sequestration planning process to assure the continuation 

of high performance in 2013 for priority activities, while reducing performance for lower priority activities.

EMPLOYMENT & TRAINING

Employment and Training Administration (ETA)

ETA provides employment assistance, labor market information and job training through the administration of 

programs authorized by the Workforce Investment Act of 1998 (WIA) for adults, youth, dislocated workers and 

other targeted populations. ETA administers Job Corps; Trade Adjustment Assistance for Workers (TAA); 

Employment Services (ES) authorized under the Wagner‐Peyser Act; Foreign Labor Certification activities; the 

Community Service Employment for Older Americans program (CSEOA); and Apprenticeship programs. These 

programs support the Department’s Strategic Goal 1, to prepare workers for good jobs and ensure fair 

compensation and the associated Outcome Goals.

Percent of Initial Risk Assessments Conducted for New Grants Managed by Regional Offices within 45 Days of Award 

– Federal staff conduct risk assessments of grantee work plans and award documents at the onset of a grant to 

ensure procedures and performance expectations are clearly outlined and to assess grantees’ ability to carry out all 
Program Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 13

tasks. In FY 2012, ETA conducted 98.75% of these assessments within 45 days; in FY 2013, the result was 98.34% –

slightly below the FY 2012 result.

Average petition processing time in days for TAA – The TAA program provides benefits and services to workers who 

become unemployed due to the impact of international trade. This measure represents the average number of days 

it takes staff to process TAA petitions from initial filing to final determination during the applicable year. ETA 

continued to improve timeliness by further reducing the average processing time from 52 days in FY 2012 to 50 

days in FY 2013.

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Percent of Initial Risk Assessments 

Conducted for New Grants Managed by 

Regional Offices within 45 Days of Award

‐‐ ‐‐ ‐‐ ‐‐ 98.75% 98.34%

Average Petition Processing Time (in days) 35 48 140 [r]1

78 [r] 61 [r] 50

By September 30, 2015, in accordance with DOL’s industry‐recognized credentials priority goal, ETA aims to 

increase the percentage of training program completers who attain industry‐recognized credentials by 10 percent.

Veterans’ Employment and Training Service (VETS)

The Veterans’ Employment and Training Service provides training and transition programs that increase the ability 

of veterans to transition successfully to a civilian workforce. The agency works collaboratively with the Employment 

and Training Administration to ensure veterans receive enhanced services at one of the nearly 3,000 American Job 

Centers around the country, and undertakes a series of programs specifically designed to meet the needs of 

veterans transitioning to the civilian workforce. In addition, VETS protects the employment and reemployment 

rights of veterans and other service members under the provisions of the Uniformed Services Employment and 

Reemployment Rights Act (USERRA) program so that they can serve in the uniformed services without harm to their 

civilian employment; and by ensuring that veterans who seek Federal employment obtain the preferential hiring 

consideration to which they are entitled.

VETS tracks two timeliness measures related to its USERRA program. To provide prompt resolution for both 

claimants and employers, VETS strives to complete USERRA investigations within 90 days. Upon conclusion of VETS’ 

investigation, a USERRA claimant has the right to ask VETS to refer his or her case to the Department of Justice (if 

the case involves a non‐Federal employer) or to the Office of Special Council (if the case involves a Federal 

employer), for consideration of legal representation. The Veterans’ Benefits Improvement Act of 2008 requires 

VETS to complete those referrals within 60 days, unless the claimant agrees to an extension of time. The agency 

was below target for the Percent of USERRA Referrals Completed within 60 Days in FY 2013. Preparing a USERRA 

referral is resource-intensive and the VETS staff responsible for this task also conduct USERRA investigations and 

quality reviews. In FY 2014 and beyond, VETS will ensure that USERRA cases are consistently investigated by the 

agency’s most experienced and effective investigators. 

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Percent of USERRA Investigations 

Completed within 90 Days 78% 86% 84% 87% 89% 89.6%

Percent of USERRA Referrals Completed 

within 60 Days ‐‐ 56% 62% 57% 83% 72.8%

 

1

[r] indicates revised result from the FY 2012 AFR.
Management’s Discussion and Analysis

(Unaudited)

14 United States Department of Labor

By September 30, 2015, in accordance with DOL’s priority to provide intensive services to veterans, VETS aims to 

increase the percent of participants who receive intensive services from Disabled Veterans Opportunity Program 

specialists to 75 percent.

WORKER PROTECTION 

Office of Federal Contract Compliance Programs (OFCCP)

The Office of Federal Contract Compliance Programs ensures that nearly 200,000 contractor facilities and locations

provide equal employment opportunities leading to a fair and diverse workplace. OFCCP administers and enforces 

three legal authorities that require equal employment opportunity: Executive Order 11246, as amended; Section 

503 of the Rehabilitation Act of 1973, as amended; and the Vietnam Era Veterans’ Readjustment Assistance Act 

(VEVRAA) of 1974, as amended. Together, these laws ban discrimination and require Federal contractors and 

subcontractors to take affirmative action to ensure that all individuals have an equal opportunity for employment, 

without regard to race, color, religion, sex, national origin, disability, or status as a protected veteran. OFCCP 

supports the Department’s Strategic Goal 3, assure fair and high quality work‐life environments and the associated 

Outcome Goal 3.1, break down barriers to fair and diverse work places so that every worker's contribution is 

respected.

OFCCP’s compliance evaluations and investigations play a critical role in measuring Federal contractor compliance 

with legal obligations under these authorities. FY 2012 was a year of measure development for OFCCP, in which the 

agency collected data on contextual measures to diagnose and learn from quarterly results, and benchmarked 

measures for future targets. In FY 2013, OFCCP leveraged what it learned in FY 2012 to increase the number of 

compliance evaluations and increase the quality of its evaluations. OFCCP provides technical assistance and 

training to contractors to support compliance, delivering more training in FY 2013 than it had at any time during the 

previous three years. 

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Compliance Evaluations 4,333 3,917 4,960 4,014 4,017 4,345

OFCCP is working with the Department’s Chief Evaluation Office to develop outcome-focused measures of the 

impact of the agency’s enforcement activities on contractor compliance over time. In FY 2014, OFCCP will develop 

effective and strategic relationships with stakeholders to drive positive workplace change for workers. These 

stakeholders include community-based organizations, advocacy groups, employee resource groups, job placement 

providers, unions, and State and local government and intergovernmental agencies. 

Occupational Safety and Health Administration (OSHA)

OSHA is authorized by the Occupational Safety and Health Act of 1970 to assure safe and healthful conditions for 

working men and women by setting and enforcing standards and providing training, outreach, education and 

technical assistance. OSHA aims to reduce the number of worker illnesses, injuries, and fatalities and contributes to 

the broader goal to promote competitiveness of our nation's workers. OSHA supports the Department’s Strategic 

Goals 2 and 3, specifically as relates to Outcome Goals 2.1, secure safe and healthy workplaces, particularly in 

high‐risk industries and 3.3; ensure worker voice in the workplace. The most recent data for key measures of OSHA’s 

activity – the number of safety and health inspections – are presented in the table below.

Safety inspections in general industry encompass a variety of high‐hazard industries, such as the chemical and 

refinery industries, oil and gas well drilling, manufacturing, maintenance, arborist and logging work, power 

distribution and generation, coal manufacturing, telecommunications, green industries such as the windmill 

industry, forging, steel manufacturing, food manufacturing, and grain handling. Workers in these industries are 

exposed to a multitude of serious safety hazards.

Health inspections are conducted by industrial hygienists and address hazards such as chemical hazards, biological 

hazards (e.g., bloodborne pathogens and tuberculosis), physical hazards (e.g., noise, radiation, and heat and cold 
Program Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 15

stress), and ergonomic hazards (e.g., patient handling, repetitive motion, excessive force, and awkward postures). 

Safety and health inspections increased from FY 2008 through FY 2012, but dropped in FY 2013 due to reduced 

funding.

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Total Number of Safety Inspections Conducted 33,074 33,221 34,320 33,331 [r]33,580 [r] 31,948

Total Number of Health Inspections Conducted 5,517 5,783 6,649 7,317 [r] 7,381 [r] 7,280

Wage and Hour Division (WHD)

The WHD is responsible for administering and enforcing laws that establish the minimum standards for wages and 

working conditions. Collectively, these labor standards cover most private, State, and local government 

employment. They protect over 135 million workers in more than 7.3 million establishments throughout the U.S. 

and its territories.

WHD investigators, supervisors, analysts, technicians and administrative employees enforce and administer the 

minimum wage, overtime and child labor provisions of the Fair Labor Standards Act (FLSA); the prevailing wage 

requirements and wage determination provisions of the Davis Bacon and Related Acts (DBRA) and Service Contract 

Act (SCA); the wages and working conditions under the Migrant and Seasonal Agricultural Worker Protection Act 

(MSPA); and the Employee Polygraph Protection Act (EPPA). WHD also enforces the field sanitation and temporary 

labor camp standards in agriculture and certain employment standards and worker protections of the Immigration 

and Nationality Act (INA). WHD’s enforcement responsibilities directly contribute to the Department’s Strategic 

Goals 1, 2 and 3 and related Outcome Goals 1.1, increase workers’ incomes and narrow wage and income 

inequality; 1.5, secure wages and overtime; 2.1, secure safe and healthy workplaces, particularly in high‐risk 

industries; 3.2, provide workplace flexibility for family and personal care giving; and 3.3, ensure worker voice in the 

workplace.

To be effective in securing compliance, WHD continues to increase the number and percentage of directed 

investigations focused on new business models characterized by the use of subcontracting, franchising, temporary 

employment, labor suppliers, independent contracting, and a contingent workforce. These business models, where 

companies outsource key aspects of their production, often lead to less compliance with wage and hour related 

statutes. The first measure below is directed investigations as a percentage of all compliance actions conducted. In 

FY 2013, WHD continued moving resources to directed investigations and prioritizing complaints that point to 

systemic violations. 

The second measure reflects WHD’s commitment to maintaining an increased presence in those industries where 

the misclassification of employees as independent contractors is prevalent, such as the janitorial and residential 

construction industries.

The investigations WHD planned for FY 2013 included the janitorial and residential construction industries. In FY 

2014, WHD will continue to prioritize its presence in those industries where the misclassification of employees as 

independent contractors is prevalent.
Management’s Discussion and Analysis

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16 United States Department of Labor

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Percent of Directed Investigations* 36% 35% 27% 29% 40.63% 44.19%

Percent of Directed Investigations in Industries 

with a High Prevalence of Employees 

Misclassified as Independent Contractors 13% 10% 17% 21% 19.98% 19.08%

*WHD has revised this measure to exclude conciliations, which are largely a customer service function performed by WHD technicians, not 

WHD investigators. Prior year data reflects this change.

Employee Benefits Security Administration (EBSA)

EBSA protects more than 141 million Americans covered by an estimated 684,000 private retirement plans, 2.4

million health plans, and other welfare benefit plans which together hold more than $7.6 trillion in assets. EBSA 

protects the most vulnerable populations while ensuring broad compliance with the Employee Retirement Income 

Security Act of 1974 (ERISA) and related laws. EBSA enforcement programs target the most egregious and 

persistent violators; protect the most vulnerable populations while assuring broad-based compliance; and regular 

evaluation of enforcement activities. EBSA provides proactive enforcement, outreach and education programs that 

protect the most vulnerable populations while ensuring broad compliance with ERISA and related laws. EBSA 

supports the Department’s Strategic Goal 4, to secure health benefits and, for those not working, provide income 

security and the specific Outcome Goal 4.3, improve health benefits and retirement security for all workers.

Historical data for two key performance measures, “Number of Criminal Investigations Processed” and “Number of 

Civil Investigations Processed” are shown in the table below. EBSA’s investigation program is designed to deter and 

correct violations of ERISA. In FY 2013, EBSA focused on national enforcement projects, and began implementing 

Major Case Enforcement Initiative. EBSA’s Major Case Enforcement Initiative concentrates enforcement resources 

on areas that have the greatest impact on the protection of plan assets and participants' benefits (e.g., professional 

fiduciaries and service providers with responsibility for large amounts of plan assets and benefits).

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Number of Criminal Investigations

Processed 212 287 281 302 318 320

Number of Civil Investigations Processed 3,570 3,669 3,112 3,472 3,566 3,677

In FY 2014, EBSA will focus on expanding the health investigations as a new health insurance marketplace will 

become more accessible. EBSA will identify health enforcement issues, and develop the legal framework to address 

violations relating to group health plans. 

Mine Safety and Health Administration (MSHA)

MSHA protects the safety and health of the nation’s miners under the provisions of the Federal Mine Safety and 

Health Act of 1977, as amended by the Mine Improvement and New Emergency Response (MINER) Act of 2006. 

MSHA focuses on the prevention of death, disease, and injury from mining and on promoting safe and healthful 

workplaces for the Nation’s miners. MSHA supports the Department’s Strategic Goal 2, ensure workplaces are safe 

and healthy and Strategic Goal 3, assure fair and high quality work‐life environments, and related Outcome Goals 

2.1, secure safe and healthy workplaces, particularly in high‐risk industries and 3.3, ensure worker voice in the 

workplace.

MSHA is required to conduct four complete inspections annually at active underground mines and two complete 

inspections annually at active surface mines. The table below shows the number of inspections for Coal vs. Metal 
Program Performance Overview

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FY 2013 Agency Financial Report 17

and Nonmetal mine types. Fluctuations in the number of inspections over time reflect variation in the number of 

mines operating during any given time period.

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Coal mine inspections 5,385 5,526 5,121 5,139 5,117 4,658

Metal and Nonmetal mine inspections 18,235 17,168 16,127 16,269 16,620 16,624

By September 30, 2015, MSHA aims to reduce worker fatality rates in mining by five percent per year based on a 

rolling five‐year average.

Office of Labor‐Management Standards (OLMS)

OLMS protects the rights of American workers by administering the Labor-Management Reporting and Disclosure 

Act (LMRDA) and related laws, which safeguard union democracy and union financial integrity. OLMS supports the 

Department’s Strategic Goal 3, assure fair and high quality work‐life environments; and Outcome Goal 3.3, ensure 

worker voice in the workplace.

OLMS focuses audit resources by using advanced targeting techniques to identify the unions most likely to be 

subject to a violation of the law. The success of audit targeting strategies is measured by “Percent of Audits

Resulting in a Criminal Case (Fallout Rate).”

Timely resolution of union election complaints is a paramount goal of the LMRDA, and OLMS gauges its progress 

against this goal through the “Days to Resolve Union Officer Election Complaints” measure. Since 2008, OLMS has 

dramatically reduced the average number of elapsed days per case.

OLMS is also making it easier for unions, employers, and consultants to file the financial and activity reports 

required under the LMRDA, and it tracks its success in these efforts through the “Percent of LMRDA Required Forms 

Filed Electronically” measure. In the future, OLMS will increase transparency using existing outreach tools (e.g., 

seminars, compliance assistance incidental to an audit) to introduce and encourage union leaders and other filers 

to use web-based forms.

Measure

FY

2008

FY

2009

FY

2010

FY

2011

FY

2012

FY

2013

Percent of Audits Resulting in a Criminal Case (Fallout 

Rate) -- -- -- 14.9% 13.8% 20.9%

Number of Days to Resolve Union Officer Election 

Complaints 92 70 81 79 71 71

Percent of LMRDA Reports Filed Electronically -- -- -- 21.4% 37.8% 42.4%

POLICY

Women’s Bureau (WB or Bureau)

The mission of the Women’s Bureau is to develop policies and standards and conduct inquiries to safeguard the 

interests of working women, advocate for their equality and economic security for themselves and their families, 

and promote quality work environments. The Bureau is the only Federal office dedicated to serving and promoting 

the interests of women in the workforce. The Bureau supports the Department’s Strategic Goal 1, to prepare 

workers for good jobs and ensure fair compensation and Strategic Goal 3, assure fair and high quality work‐life 

environments and their associated Outcome Goals.

The Bureau conducts research to identify and formulate practices and policies that support working women and 

inform strategic interventions and recommends these practices and policies within DOL and the Federal 
Management’s Discussion and Analysis

(Unaudited)

18 United States Department of Labor

government, national organizations and local communities. It identifies trends, data gaps, policy and programmatic 

needs, and promising practices.

Office of Disability Employment Policy (ODEP)

ODEP promotes the employment of people with disabilities by developing, validating, and disseminating policies 

and effective practices. ODEP provides technical assistance to stakeholders to promote the adoption and 

implementation of these policies and practices. Through these activities, ODEP contributes to break down barriers 

to fair and diverse workplaces and narrow income inequality. ODEP supports the Department’s Strategic Goal 1, 

prepare workers for good jobs and ensure fair compensation and Strategic Goal 3, assure fair and high quality 

work‐life environments and associated Outcome Goals, specifically Outcome Goal 3.1, break down barriers to fair 

and diverse work places so that every workers’ contribution is respected.

ODEP develops, evaluates and disseminates policy strategies and effective practices to reduce the employment 

disparity that exists between people with and without disabilities. ODEP’s key measures are the numbers of “Policy 

Outputs,” “Effective Practices” and “Formal Agreements.” Policy outputs are recommendations for significant policy 

change or an interpretation of existing policy related to disability employment – which could be legislation, 

regulations, policy guidance and executive orders or memoranda. Effective practices are ODEP-developed 

strategies, models or theories that lead directly to an identified outcome and have a documented record of success 

or validated effectiveness. Formal agreements are collaborations that are formalized through memoranda of 

understanding, inter/intra‐agency agreements, public private partnership agreements or alliance agreements.

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Policy Outputs 44 39 35 42 39 54

Effective Practices 27 15 23 44 131 192

Formal Agreements 36 17 30 29 30 103

In FY 2014, ODEP will focus on four priority areas: countering employer’s low expectations and negative 

perceptions of people with disabilities; increasing exposure to role models and access to training, employment and 

transition services; expanding access to employment supports and accommodations; and ensuring the availability 

and use of disability data and statistics regarding the characteristic of people with disabilities.

Bureau of International Labor Affairs (ILAB)

In a global economy, opportunities for American workers are shaped by the working conditions and opportunities 

of workers worldwide. Addressing worker rights and livelihoods overseas has the dual effect of protecting American 

and foreign workers. Realizing the Secretary’s vision of promoting and protecting opportunity requires improving 

working conditions, raising living standards, protecting workers’ ability to exercise their rights, and addressing the 

workplace exploitation of children and other vulnerable populations.

ILAB has three major strategies for achieving its goal: (1) promoting labor standards through an integrated 

approach; (2) combatting child labor, forced labor and human trafficking through integrated approaches and 

evidence; and (3) improving workers’ rights through targeted labor policy engagement. ILAB supports the 

Department’s Strategic Goals 1 and 3, specifically as they relate to Outcome Goals 1.6, foster acceptable work 

conditions and respect for workers’ rights in the global economy to provide workers with a fair share of productivity 

and protect vulnerable people and 3.3, ensure worker voice in the workplace.

ILAB has adopted an integrated approach that combines efforts to amend laws and strengthen enforcement with 

activities to assist worker organizations, improve industrial relations, effectively engage companies, and raise 

awareness about worker rights. In FY 2014, ILAB will support current Free Trade Agreements through monitoring 

and reporting of conditions and engaging in technical assistance projects.
Program Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 19

BENEFITS

Office of Workers’ Compensation Programs (OWCP)

OWCP is comprised of four separate programs that provide workers’ compensation benefits supporting the 

Department’s Strategic Goal 4, secure health benefits and, for those not working, provide income security, and 

Outcome Goals 4.1, facilitate return to work for workers experiencing workplace injuries or illnesses who are able to 

work and 4.2, ensure income support when work is impossible or unavailable:

 The Federal Employees' Compensation Act (FECA) Program provides wage-loss compensation, payment for 

medical treatment, return to work assistance, and vocational rehabilitation to civilian employees of the 

Federal Government injured at work and to certain other designated groups. In the event of death, FECA 

provides ongoing monetary compensation to dependents.

 The Longshore and Harbor Workers' Compensation Act (Longshore) Program oversees the provision of 

similar benefits to injured private sector workers engaged in certain maritime and related employment, and

by extension to contractors working overseas for the U.S. government under the Defense Base Act.

 The Black Lung Benefits Act (Black Lung) Program oversees the provision of monetary compensation and 

medical benefits to coal miners who are totally disabled due to pneumoconiosis arising out of coal mine 

employment, and monetary benefits to their eligible dependent survivors.

 The Energy Employees Occupational Illness Compensation Program Act (Energy) Program provides 

compensation and medical benefits to employees or survivors of employees of the Department of Energy, 

contractors or subcontractors with DOE, who worked on the Nation’s nuclear weapons program and 

became ill due to exposure to radiation or toxic substances.

Key measures for the FECA Program are Lost Production Day rates (LPD), expressed as days of lost production and 

wages in the first year following injury per 100 employees in Federal Government agencies, and Return To Work 

(RTW) rates, expressed as the share of injured workers returned to work within two years of injury. Together, the 

LPD and RTW rates provide valuable measures of the overall incidence and severity of workplace injuries for 

Federal employees and the effectiveness of OWCP’s and Federal agencies’ return to work programs.

The Longshore and Harbor Workers’ Compensation Act program focuses on employer performance to ensure that 

injury reports and first payment of benefits are timely and that disputed claims are resolved as quickly as possible. 

The Percent of First Payment of Compensation for Defense Base Act cases is a key measure that monitors the 

improvement of insurance carriers and providers in providing compensation to workers injured on the job. Since FY 

2009, the performance of this program has steadily improved and the program expects performance to continue to 

improve in FY 2014.

The Black Lung Program aims to reduce the average time it takes to process Black Lung claims, monitored through a 

key measure, Average time to render Proposed Decision and Order (PDO) on Black Lung claims. Two provisions 

within the Patient Protection and Affordable Care Act (PPACA) of 2010 dramatically increased the workload for the 

Black Lung Program in FY 2010. Compared to the pre-PPACA level of 4,354 claims filed in FY 2009, claim numbers 

have increased in each subsequent year: 7,044 claims filed in 2010 (a 62% increase over 2009); 6,181 claims filed in 

2011 (a 42% increase over 2009); 5,300 claims filed in 2012 (a 22% increase over 2009); and 6,420 claims filed in 

2013 (a 47% increase over 2009). These increases in claims filings caused a backlog of the aged case inventory that 

has directly impacted results for this performance measure. Average processing time increased from 210 days in FY 

2010 to 238 days in FY 2011 and to 262 days in FY 2012. In FY 2013, the average PDO timeliness began to trend 

back down to 221 days.

The Energy Employees Occupational Illness Compensation Act program has joint measures with the Department of 

Energy (DOE) and the National Institute for Occupational Safety and Health (NIOSH) that focus on shortening the 

overall time to make claims decisions and improve program implementation. A priority focus for the program is to 

reduce the time required to process cases that are sent to NIOSH for dose reconstruction that require an oral 
Management’s Discussion and Analysis

(Unaudited)

20 United States Department of Labor

hearing. The average number of days between filing date and final decision for cases sent to NIOSH when a hearing 

was held was 452 days in FY 2013.

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

Government-Wide LPD Rate in Non-Postal 

Agencies

41.3 35.8 34.6 33.8 [r] 34.8 [r] 34.6

Government-Wide Share of Injured Workers

Returned to Work within two years of injury -- 85.8% [r] 89.7% 91.6% 91.5% 91.9% 

Percent of First Payment of Compensation issued 

within 30 days for Defense Base Act cases

-- 43% 55% 56% 63% 67%

Average time to render Proposed Decision and 

Order (PDO) on Black Lung claims (days) 205 201 210 238 262 221

Average number of days between filing date and 

final decision for cases sent to NIOSH when a 

hearing is held

-- -- -- 619 552 452

In FY 2014, OWCP will continue to chair the Protecting Our Workers and Ensuring Reemployment (POWER) Return 

to Work Council, consisting of representatives from the 14 Executive Branch agencies; expand the reemployment 

pathways and opportunities for injured workers; increase the number of injured workers placed in jobs when they 

cannot be reemployed by their date-of-injury Federal employer; and establish a candidate bank (Labor for America) 

of FECA claimants for potential employers in both the public and private sectors.

Federal‐State Unemployment Insurance (UI) Program (administered by ETA)

The Federal-State UI Program, authorized under the Federal Unemployment Tax Act and Title III of the Social 

Security Act, provides temporary, partial wage replacement for unemployed workers, providing them with income 

support when suitable work is unavailable. To be eligible for benefits, unemployed workers must meet eligibility 

requirements established by state laws that conform to federal law, including that they have worked recently, be 

involuntarily unemployed, and be able and available for work. One of the key measures for this program is “Percent 

of All Intrastate First Payments Made within 21 Days after the Last Day of the First Compensable Week.” The table 

below provides historical data, along with unemployment statistics, that illustrate the impact of claims volume on 

program performance during the recession that began in FY 2008. The Total Unemployment Rate, calculated by 

using Bureau of Labor Statistics data, is the sum of the not seasonally adjusted unemployment level for October 

through September divided by the sum of the not seasonally adjusted labor force level for October through 

September.

Measure FY2008 FY2009 FY2010 FY2011 FY2012 FY2013

First Payment Timeliness* 86.8% 82.9% [r] 82.2% 84.0% 83.7% 81.0%

Total Unemployment Rate 5.3% 8.5% 9.7% 9.2% 8.3% 7.6%

*This program operates on a program year, which ends June 30th.

In FY 2014, UI will place a priority on program integrity, especially improper payments, and claimant reemployment.
Program Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 21

STATISTICS

Bureau of Labor Statistics (BLS)

In support of the Department’s Strategic Goal 5, to produce timely and accurate data on the economic conditions of 

workers and their families, BLS produces accurate, objective, relevant, timely, and accessible statistics reflecting 

labor market activity, working conditions, and price changes in the economy. Statistics produced by BLS support the 

formulation of economic and social policy affecting virtually all Americans. In FY 2013, BLS reached 100 percent of 

the underlying timeliness, accuracy and relevance targets for all of its Principal Federal Economic Indicators (PFEIs). 

Results for the Labor Force Statistics and the Prices and Living Conditions PFEIs are indicated in the table below.

BLS uses the American Customer Satisfaction Index (ACSI) to measure customer satisfaction with its website, since 

most users access BLS data through bls.gov, which averages more than 8 million user sessions each month. The 

ACSI survey prompts users while they are on the website for feedback regarding the extent to which the website 

meets their needs. BLS uses these results to improve the website to better serve its stakeholders and as a measure 

of mission achievement.

Measure FY2009 FY2010 FY2011 FY2012 FY 2013

Percent of timeliness targets achieved for the Labor Force 

Statistics Principal Federal Economic Indicators (PFEIs) -- 100% 100% 100% 100%

Percent of accuracy targets achieved for the Labor Force 

Statistics PFEIs

--

100% 100% 100% 100%

Percent of relevance targets achieved for the Labor Force 

Statistics PFEIs

--

100% 100% 100% 100%

Percent of timeliness targets achieved for the Prices and Living 

Conditions PFEIs

--

100% 100% 100% 100%

Percent of accuracy targets achieved for the Prices and Living 

Conditions PFEIs

--

100% 100% 100% 100%

Percent of relevance targets achieved for the Prices and Living 

Conditions PFEIs

--

100% 100% 83% 100%

Customer Satisfaction with BLS Web Site as measured by the 

ACSI Score* 75 75 75 77 77

* ACSI Score is calculated on a 100 point scale.
(Unaudited)

22 United States Department of Labor

Financial Performance Overview

Sound financial management is an integral part of the Department's efforts to deliver services and administer 

programs. With the Department's emphasis on internal controls, accurate financial information delivery to key 

decision makers, and transparent and accountable reporting, the Department's stakeholders can be confident that 

resources are used efficiently and effectively.

DOL's internal control program and centralized processes for reporting financial data help to ensure the relevance 

and reliability of financial performance data. DOL's comprehensive internal control program has the objective of 

providing, on a continuing basis, reasonable assurance that all financial, non-financial, performance, statistical 

records, and related reports are reliable. DOL's internal control program helps ensure that appropriate internal 

controls are in place for financial performance management and that agencies institute sound, effective internal 

control policies and procedures for financial performance measurement and regular evaluation of their processes. 

Financial performance is evaluated during comprehensive ongoing financial management reviews and corrective 

actions are implemented as required to resolve audit findings and increase efficiency. These business processes 

help to ensure that reported financial performance information is relevant and reliable.

In FY 2013 and FY 2012, DOL used managerial cost accounting for costing programs and performance indicator 

results in accordance with the Federal Accounting Standards Advisory Board’s (FASAB) Statement of Federal 

Financial Accounting Standards (SFFAS) No. 4, Managerial Cost Accounting Standards and Concepts, as amended by 

SFFAS No. 30, Inter-Entity Cost Implementation. The statements outline the standards for Federal entities to 

provide “reliable and timely information on the full cost of Federal programs, their activities, and outputs.” This 

information can be used to allocate resources and evaluate program performance. Managerial cost accounting 

directly supports the sections of the AFR that address Net Program Cost in the Statement of Net Cost. Total Net 

Cost of DOL activities was $82.9 billion for FY 2013, and $105.7 billion for FY 2012.

Analysis of Financial Statements and Stewardship Information

The principal financial statements summarize the Department's financial position, net cost of operations, and 

changes in net position, and provide information on budgetary resources and social insurance.
Financial Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 23

Figure 1: Summary of Selected Financial Data for FY 2013 and 2012

(Dollars in billions) 2013 2012 Amount Percent

Financial position

Total assets $ 53.9 $ 43.8 $ 10.1 23.1% 

 Funds with U.S. Treasury 13.1 12.0 1.1 9.2% 

Investments 29.7 20.8 8.9 42.8% 

Total liabilities $ 57.5 $ 60.3 $ (2.8) (4.6)%

Debt 35.7 39.0 (3.3) (8.5)%

Net cost of operations

Net cost of operations $ 82.9 $ 105.7 $ (22.8) (21.6)%

Income maintenance 73.9 96.3 (22.4) (23.3)%

Employment and training 6.4 6.7 (0.3) (4.5)%

Budgetary resources

 Appropriations $ 102.6 $ 136.2 $ (33.6) (24.7)%

 Borrowing authority 7.7 12.4 (4.7) (37.9)%

 Obligations incurred 118.1 156.3 (38.2) (24.4)%

Summary of Selected Financial Data

Change

Financial Position

The Department's Balance Sheet presents DOL’s financial position through the identification of agency assets, 

liabilities, and net position, as shown below. The Department's total assets increased from $43.8 billion at the end 

of FY 2012 to $53.9 billion at the end of FY 2013, an increase of 23.1%, primarily due to an increase in investments. 

Investments increased primarily due to net inflows in the Unemployment Trust Fund (UTF) in excess of immediate 

program needs for benefit payments and administrative costs. 

Figure 2: Assets by Type for FY 2013 and 2012
Management’s Discussion and Analysis

(Unaudited)

24 United States Department of Labor

Liabilities decreased from $60.3 billion at the end of FY 2012 to $57.5 billion at the end of FY 2013, a decrease of 

(4.6)%. This decrease was primarily due to a decrease in intra-governmental debt [(8.5)%] due to UTF repayments 

of borrowings from the General Fund of the Treasury as tax collections by the states exceeded the requirements for 

benefit payments.

Figure 3: Liabilities by Type for FY 2013 and 2012

In Figure 3 above, Other also includes accounts payable and accrued leave. 

Net Cost of Operations 

The Department's net cost of operations for the year ended September 30, 2013, was $82.9 billion, a decrease of 

$(22.8) billion [(21.6)%] from FY 2012. This decrease was attributable to the decreases in the major programs 

discussed below:

Figure 4: Net Cost of Operations by Program for FY 2013 and 2012
Financial Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 25

Income Maintenance programs continue to comprise the major portion of departmental costs. These programs 

include unemployment benefits paid to covered individuals who are out of work and seeking employment, as well 

as payments to individuals who qualify for disability benefits due to injury or illness suffered on the job, and the 

costs to administer these programs. Income maintenance net costs were $73.9 billion, a decrease of (23.3)% from 

FY 2012. This decrease was primarily due to decreases in unemployment benefits provided under existing 

legislation which reduced the length of coverage, and lower levels of unemployment as compared to FY 2012.

Employment and Training programs comprise DOL’s second largest cost. These programs are designed to help 

individuals deal with the loss of a job, identify new occupational opportunities, find training to acquire different 

skills, start a new job, and make long-term career plans, as well as connect employers to workers with the skills 

they need. Employment and training costs were $6.4 billion in FY 2013, a decrease of (4.5)% from FY 2012. This 

decrease was due to reductions in amounts appropriated for the 2012 program year for various programs including 

the Trade Adjustment Allowance programs.

Budgetary Resources

The Statement of Budgetary Resources reports the budgetary resources available to DOL to effectively carry out the 

activities of the Department during FY 2013 and FY 2012, as well as the status of these resources at the end of each 

fiscal year. During FY 2013, the Department’s appropriations decreased ($33.6) billion [(24.7)%] primarily due to 

decreases in transfers to the UTF for Emergency Unemployment Compensation; also, the Department’s borrowing 

authority decreased ($4.7) billion [(37.9)%], which is consistent with the lower balance of intra-governmental debt 

at the end FY 2013. The Department had total obligations incurred of $118.1 billion in FY 2013, a decrease of 

$(38.2) billion [(24.4)%] from FY 2012. This decrease was primarily due to decreases in total obligations incurred for 

income maintenance programs as noted above.

Social Insurance and the Black Lung Disability Benefit Program 

FASAB has classified the Black Lung Disability Benefit Program as a social insurance program that is required to 

report a Statement of Social Insurance (SOSI) and a Statement of Changes in Social Insurance Amounts (SCSIA) for 

the Black Lung Disability Trust Fund (BLDTF).

The SOSI reports for the projection period (which begins on September 30 of the reporting year and ends 

September 30, 2040), for all current and future participants, the actuarial present value of future benefits and the 

present value of future administrative costs, less the present value of future coal excise tax income. For FY 2009 

through FY 2013 as presented in the SOSI, the present value of the future coal excise tax income has been greater 

than the sum of the actuarial present value of the future benefits and the present value of future administrative 

costs. This amount is also called the open and closed group measure.
Management’s Discussion and Analysis

(Unaudited)

26 United States Department of Labor

Figure 5: Black Lung Disability Benefit Program - Table of Key Measures for FY 2013 and 2012

(Dollars in millions) 2013 2012 Amount Percent 

 Total assets $ 145.8 $ 102.5 $ 43.3 42.2% 

 Less: total liabilities (6,040.0) (6,080.1) 40.1 0.7% 

 Net position (assets net of liabilities) $ (5,894.2) $ (5,977.6) $ 83.4 1.4% 

 Net cost of operations $ (403.7) $ (441.2) $ 37.5 8.5% 

 Total financing sources 487.1 562.8 (75.7) (13.5)%

 Net change of cumulative results of operations $ 83.4 $ 121.6 $ (38.2) (31.4)%

 Open and closed group measure,

 beginning of year $ 4,658.5 $ 4,720.2 $ (61.7) (1.3)%

 Open and closed group measure,

 end of year $ 4,620.3 $ 4,658.5 $ (38.2) (0.8)%

Social insurance

Black Lung Disability Benefit Program – Table of Key Measures

 Change 

Costs and changes in net position

Financial position 

The decrease in the net cost of operations for the year ended September 30, 2013 of $37.5 million [8.5%] from 

FY 2012 was mainly due to lower benefit costs. FY 2013 total financing sources decreased $(75.7) million [(13.5)%] 

from FY 2012 mainly due to decreases in taxes. The resulting net change of cumulative results of operations for 

FY 2013 was $83.4 million, a decrease of $(38.2) million [(31.4)%] from FY 2012.

Total assets increased $43.3 million [42.2%] at the end of FY 2013 primarily due to an increase in the Funds with 

U.S. Treasury balance. Liabilities decreased $40.1 million [0.7%] at the end of FY 2013 due to repayments of debt. 

The resulting net position (deficit) decreased $83.4 million at the end of FY 2013.

At the end of FY 2013, the open and closed group measure decreased $(38.2) million [(0.8)%] and at the end of FY 

2012 decreased $(61.7) million [(1.3)%]. Reasons for the net decreases in the measures for FY 2013 and FY 2012 

include changes in the assumptions, such as:

 Decreases in the projected coal excise tax revenues due to revisions based on current year experience and 

decreases in future collections;

 Changes in future benefits costs; and

 Changes in the interest rates used to discount cash flows (described as changes in assumptions about interest 

rates on the SCSIA).

The total of open and closed group measure plus fund assets as of September 30, 2013, of $4,766.1 million

represents a projected net positive cash flow that may be used to liquidate the liabilities of the BLDTF, which were 

$6,040.0 million as of September 30, 2013.

Refer to Notes 1-W and 21, and Required Supplementary Information (RSI) for additional information on the SOSI, 

including the summary section; SCSIA; the Black Lung Disability Benefit Program; its reported activity and balances; 

and projections and sensitivity analysis in constant dollars through 2040.
Financial Performance Overview

(Unaudited)

FY 2013 Agency Financial Report 27

Limitations on the Principal Financial Statements

As required by the Government Management Reform Act of 1994 (31 USC 3515(b)), the principal financial 

statements report the Department's financial position and results of operations. While the statements have been 

prepared from the Department's books and records in accordance with U.S. Generally Accepted Accounting 

Principles (GAAP) for Federal entities and the formats prescribed by OMB, the statements are in addition to the 

financial reports used to monitor and control budgetary resources, which are prepared from the same books and 

records. The statements should be read with the realization that they are a component of the U.S. Government, a 

sovereign entity, and that liabilities reported in the financial statements cannot be liquidated without legislation 

providing resources to do so.

Reducing Improper Payments

Improved financial performance through the reduction of improper payments continues to be a key financial 

management focus of the Federal government. At DOL, developing strategies and the means to reduce improper 

payments is a matter of good stewardship. Accurate payments lower program costs.

In accordance with the Improper Payments Information Act (IPIA), as amended by the Improper Payments 

Elimination and Recovery Act (IPERA) of 2010, the Improper Payments Elimination and Recovery Improvement Act 

(IPERIA) of 2012, and as implemented by OMB Circular No. A-123, Appendix C, Requirements for Effective 

Measurement and Remediation of Improper Payments, the Department reviews its programs and activities annually 

to identify programs that might be susceptible to significant improper payments. For programs and activities 

deemed risk susceptible, the Department performs testing to estimate the rates and amounts of improper 

payments, establishes improper payment reduction targets in accordance with OMB guidance, and develops and 

implements corrective actions.

The Department has two programs that are classified to be at risk of significant improper payments in accordance 

with OMB criteria or classification – the UI benefit program and WIA grant programs. The table shows the target 

and actual improper payments error rates for the programs classified as at-risk.

Table 1: Target and Actual Improper Payments Rates for the Department’s “At‐Risk” Programs

DOL Program 2012 2013 2014 2015 2016

Target Actual Target Actual Target Target Target

Unemployment Insurance 

(UI)

9.7% 10.78%19.23% 9.32% (See 

Note)

(See 

Note)

(See 

Note)

Workforce Investment Act 

(WIA)

0.44% 0.22% 0.44% 0.19% 0.44% 0.44% 0.44%

Note: Integrity rate target for 2013 is based on the alternative methodology explained in Other Information at Section II ‐ UI Statistical 

Sampling. The 2014 - 2016 target will be set pending additional guidance and consultation regarding estimation methodology with OMB. 

2012 target is based on the combined overpayment and underpayment rates and is not adjusted for overpayment recoveries.

The 2013 target error rate for UI’s improper payments was 9.23%, as compared to the reported error rate of 9.32% 

(8.82% net overpayment rate plus 0.50% underpayment rate) for the period July 2012 to June 2013, the most 

recent period for which data were available. 

 

1

Figure revised from FY2012 AFR reporting. Please see Improper Payments Reporting Details part IV of this report for more information.
Management’s Discussion and Analysis

(Unaudited)

28 United States Department of Labor

With regard to WIA programs, the Department continues to improve accuracy in rate estimation and program 

integrity. The rate for 2013 is 0.19%, which is less than half of the target of 0.44%. 

The Department has implemented various corrective actions to address the causes and to reduce improper 

payments in both of these programs. Like many other Federal agencies, the Department faces challenges in 

meeting its improper payment reduction and recovery targets, particularly with programs that are sensitive to 

economic fluctuations or natural disasters, such as the UI program. Furthermore, meeting the improper payments 

reduction and recovery targets of programs such as UI and WIA are contingent upon the cooperation and support 

of State agencies and other outside stakeholders who are intricately involved in the day-to-day administration and 

management of these programs’ activities. A variety of complexities related to administration of the UI program 

create significant challenges in controlling improper payments as compared to other Federal benefit programs, 

including state unemployment insurance laws, under which the program is administered; structural impediments 

such as the Federal requirement to pay UI benefits “when due” causing states to proceed with payment when not 

all eligibility information has been received and verified; aging information technology (IT) systems; and resource 

capacity. 

See “Improper Payments Reporting Details” in the Other Information section of this report for additional 

information on improper payments.

Financial Management Systems and Strategy

The Department strives to maintain and enhance financial management systems, processes and controls that 

ensure financial accountability and transparency, provide financial management information to decision makers 

and comply with Federal laws, regulations and policy. The New Core Financial Management System (NCFMS) is the 

system of record for the Department.

FY 2013 efforts, in part focused on developing requirements and processes to seamlessly integrate two new major 

administrative systems coming on line in FY 2014: Acquisition Management System (AMS) and HR-Connect for 

personnel and payroll processing. The NCFMS interfaces will automatically record the financial activity initiated by 

these systems.

Additionally, significant work was initiated to develop the groundwork for the re-procurement of the Department’s 

financial management system due in FY 2016 as well as a supporting database of all financial transactions to 

facilitate the process.

Paperless invoices, introduced in FY 2012, were institutionalized during the year and have become an integral part 

of the financial system. Emphasis continued on executive-level reporting with the development of a set of financial

measures included in the Department’s Performance Measurement Plan for all agencies. These metrics are 

reviewed quarterly with the Deputy Secretary.

Training continued during FY 2013 based on the results of a Department-wide Financial Management Skills 

Assessment for all finance and budget personnel. Overall, efforts to fully utilize the capabilities of NCFMS 

continued throughout the year. Business processes continued to be reviewed and modified to enhance the 

utilization of the system. 
 (Unaudited)

FY 2013 Agency Financial Report 29

Management Assurances

Federal Managers’ Financial Integrity Act of 1982 (FMFIA)

FMFIA requires that agencies establish internal controls and financial systems that provide reasonable assurance 

that the integrity of Federal programs and operations is protected. It requires that the head of the agency provide 

an annual assurance statement whether the agency has met this requirement. 

Appendix A of OMB Circular No. A-123 provides specific requirements for conducting management’s assessment of 

internal control over financial reporting, and also requires the agency head to provide an assurance statement on 

the effectiveness of internal controls over financial reporting. 

Federal Financial Management Improvement Act of 1996 (FFMIA) 

FFMIA requires that agencies implement and maintain financial management systems that comply substantially 

with the Federal financial management system requirements, applicable Federal accounting standards, and the 

United States Government Standard General Ledger at the transaction level. The agency head is to make an annual 

determination whether the financial systems substantially comply with FFMIA. 

13 Agency Financial Report 31

2013 Agency Financial Report 33 FY 2013 Agency Financial Report 33

Message from the Chief Financial Officer

One of the Department of Labor’s (DOL or the Department) top goals is sound financial 

management, and in our Centennial year, the Department displayed its high standard of 

financial management by once again receiving an unmodified (“clean”) audit opinion on 

our financial statements. This is the 17th year DOL has achieved a clean opinion and it 

provides independent confirmation that the Department’s financial statements are 

presented fairly, transparently, and in conformity with U.S. Generally Accepted Accounting 

Principles (GAAP).

For the second year running, the auditors reported that none of the Department’s control 

deficiencies were considered to be a material weakness. While we celebrate our successes, 

we also realize we have areas in which we can improve. Please see the “Independent 

Auditors Report” in the Financial Section of this Report for more information regarding these issues and our efforts 

to address them.

DOL faced a serious challenge when the Office of Job Corps (OJC) recognized a funding shortfall and was 

temporarily forced to suspend new student enrollment. Jobs Corps concurred with all recommendations made by 

the Department’s Office of Inspector General (OIG) report and has worked with my office to establish criteria for 

detecting potential financial and program risks, to improve related policies, procedures, and internal controls, and 

to routinely reconcile accounting systems data. Through lessons learned, the Department has made changes that 

will prevent similar issues in the future. 

The Office of the Chief Financial Officer (OCFO) strives to stay ahead of the curve on Federal financial management 

and to return greater value on every taxpayer dollar. Throughout fiscal year (FY) 2013 my office has worked with 

the Department of the Treasury and the Office of Management and Budget (OMB) to improve the governmentwide, anti-improper payment program known as the Do Not Pay (DNP) program. Our DNP Team has provided 

analysis and developed business rules that can be applied government-wide to increase the accuracy of the system 

and decrease the government’s rate of improper payments. Through a robust review and clearance process for 

conference and travel expenses, we have decreased travel and conference expenses in response to the 

Administration’s goal of a 30% decrease.

Accurate, timely financial information holds the Department accountable to its stakeholders and improves the 

operational, budget, and policy decision-making processes which are the foundation for the services the 

Department delivers to the American public. FY 2012 marked the 12th year the Department’s Agency Financial 

Report (AFR) was awarded the Certificate of Excellence in Accountability Reporting by the Association of 

Government Accountants, clearly demonstrating the quality of our reporting.

I am proud of the Department’s financial management accomplishments in FY 2013. These achievements meet the

high standards of professionalism demanded by the American people. Our efforts allow DOL to place an emphasis 

on maximizing outcomes, while delivering an efficient, effective, and accountable government.

/S/

James L. Taylor

Chief Financial Officer

December 16, 2013
34 United States Department of Labor

KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

Independent Auditors’ Report

Secretary and Inspector General

U.S. Department of Labor:

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of the U.S. Department of Labor

(DOL), which comprise the consolidated balance sheets as of September 30, 2013 and 2012; the related 

consolidated statements of net cost and changes in net position and combined statements of budgetary 

resources for the years then ended; the statements of social insurance as of September 30, 2013, 2012, 

2011, 2010, and 2009; and the statements of changes in social insurance amounts for the years ended 

September 30, 2013 and 2012; and the related notes to the consolidated financial statements. 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial 

statements in accordance with U.S. generally accepted accounting principles; this includes the design, 

implementation, and maintenance of internal control relevant to the preparation and fair presentation of 

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of 

America; the standards applicable to financial audits contained in Government Auditing Standards issued 

by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin 

No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 

14-02 require that we plan and perform the audit to obtain reasonable assurance about whether the 

consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to 

fraud or error. In making those risk assessments, the auditors consider internal control relevant to the 

entity’s preparation and fair presentation of the consolidated financial statements in order to design audit 

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on 

the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also 

includes evaluating the appropriateness of accounting policies used and the reasonableness of significant 

accounting estimates made by management, as well as evaluating the overall presentation of the 

consolidated financial statements. 

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative

(“KPMG International”), a Swiss entity.
Independent Auditors’ Report

FY 2013 Agency Financial Report 35

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 

audit opinion.

Opinion on the Financial Statements

In our opinion, the consolidated financial statements referred to above present fairly, in all material 

respects, the financial position of the U.S. Department of Labor as of September 30, 2013 and 2012; its net 

costs, changes in net position, and budgetary resources for the years then ended; the financial condition of 

its social insurance as of September 30, 2013, 2012, 2011, 2010 and 2009; and the changes in its social 

insurance amounts for the years ended September 30, 2013 and 2012, in accordance with U.S. generally 

accepted accounting principles.

Emphasis of Matter

As discussed in Notes 1-W and 1-Y to the consolidated financial statements, the statements of social 

insurance present the actuarial present value of DOL’s future expenditures to be paid to or on behalf of 

participants, estimated future income to be received from excise taxes, and estimated future expenditures 

for administrative costs during a projection period ending in 2040. In preparing the statements of social 

insurance, management considers and selects assumptions and data that it believes provide a reasonable 

basis for the assertions in the statements. However, because of the large number of factors that affect the 

statements of social insurance and the fact that future events and circumstances cannot be known with 

certainty, there will be differences between the estimates in the statements of social insurance and the 

actual results, and those differences may be material.

Other Matters

Required Supplementary Information

U.S. generally accepted accounting principles require that the information in the Management’s Discussion 

and Analysis, Required Supplementary Information, and Required Supplementary Stewardship 

Information sections be presented to supplement the basic consolidated financial statements. Such 

information, although not a part of the basic consolidated financial statements, is required by the Federal 

Accounting Standards Advisory Board who considers it to be an essential part of financial reporting for 

placing the basic consolidated financial statements in an appropriate operational, economic, or historical 

context. We have applied certain limited procedures to the required supplementary information in 

accordance with auditing standards generally accepted in the United States of America, which consisted of 

inquiries of management about the methods of preparing the information and comparing the information 

for consistency with management’s responses to our inquiries, the basic consolidated financial statements, 

and other knowledge we obtained during our audits of the basic consolidated financial statements. We do 

not express an opinion or provide any assurance on the information because the limited procedures do not 

provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial 

statements as a whole. The information in the Message from the Secretary of Labor, Message from the 

Chief Financial Officer, and Other Information section is presented for purposes of additional analysis and 

is not a required part of the basic consolidated financial statements. Such information has not been 

subjected to the auditing procedures applied in the audit of the basic consolidated financial statements, and 

accordingly, we do not express an opinion or provide any assurance on it.
Financial Section

36 United States Department of Labor

Other Reporting Required by Government Auditing Standards

Internal Control over Financial Reporting

In planning and performing our audit of the consolidated financial statements, we considered DOL’s

internal control over financial reporting (internal control) to determine the audit procedures that are 

appropriate in the circumstances for the purpose of expressing our opinion on the consolidated financial 

statements, but not for the purpose of expressing an opinion on the effectiveness of DOL’s internal control. 

Accordingly, we do not express an opinion on the effectiveness of DOL’s internal control. We did not test 

all internal controls relevant to operating objectives as broadly defined by the Federal Managers’ 

Financial Integrity Act of 1982.

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or 

detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination 

of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of 

the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A 

significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe 

than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this 

section and was not designed to identify all deficiencies in internal control that might be material 

weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may 

exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies 

in internal control that we consider to be material weaknesses. However, we did identify certain 

deficiencies in internal control, described in Exhibit I that we considerto be significant deficiencies. 

Compliance and Other Matters

As part of obtaining reasonable assurance about whether DOL’s consolidated financial statements are free 

from material misstatement, we performed tests of its compliance with certain provisions of laws, 

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material 

effect on the determination of financial statement amounts, and certain provisions of other laws and 

regulations specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with 

those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.

The results of our tests of compliance disclosed no instances of noncompliance or other matters that are 

required to be reported herein under Government Auditing Standards or OMB Bulletin No. 14-02.

We also performed tests of its compliance with certain provisions referred to in Section 803(a) of the 

Federal Financial Management Improvement Act of 1996 (FFMIA). Providing an opinion on compliance 

with FFMIA was not an objective of our audit, and accordingly, we do not express such an opinion. The 

results of our tests of FFMIA disclosed no instances in which DOL’s financial management systems did 

not substantially comply with the (1) Federal financial management systems requirements, (2) applicable 

Federal accounting standards, and (3) the United States Government Standard General Ledger at the 

transaction level.

Other Matters. DOL is currently reviewing four incidents regarding potential violations of the Antideficiency Act. As of the date of this report, no final noncompliance determination has been made for these 

incidents.
Independent Auditors’ Report

FY 2013 Agency Financial Report 37

DOL’s Responses to Findings

DOL’s responses to the findings identified in our audit are described in Exhibit I. DOL’s responses were

not subjected to the auditing procedures applied in the audit of the consolidated financial statements and, 

accordingly, we express no opinion on the responses.

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the 

result of that testing, and not to provide an opinion on the effectiveness of DOL’s internal control or 

compliance. Accordingly, this communication is not suitable for any other purpose.

December 16, 2013
Financial Section

Significant Deficiencies

Exhibit I

38 United States Department of Labor

1. Lack of Sufficient Security Controls over Key Financial and Support Systems

In fiscal year (FY) 2013, U.S. Department of Labor (DOL) agencies completed corrective action to address 

certain previously-identified control deficiencies. However, during our FY 2013 testing of significant DOL 

financial and support systems, we identified new security control deficiencies in addition to certain ones that 

were reported in prior years across the four DOL agencies responsible for these systems. We have classified the 

deficiencies identified into the following four categories: account management, system access settings, system 

audit log reviews, and vulnerability management. 

The first two categories summarize the identified deficiencies related to controls that were designed to help 

prevent unauthorized access to information technology (IT) systems. Control deficiencies related to account 

management increase the risk that current employees, separated employees, and/or contractors may obtain 

unauthorized or inappropriate access to financial systems and/or data. Such access could lead to unauthorized 

activities and/or inappropriate disclosures of sensitive data. System access setting control deficiencies may be 

exploited, in either a singular fashion or in combination, by a malicious user, which may affect the 

confidentiality, integrity, and/or availability of DOL systems and data. The specific deficiencies identified in 

these two categories were as follows: 

Account Management 

• User accounts were not timely removed for separated users, and certain separated users had active system 

accounts;

• Incidents were not timely reported;

• Periodic user account re-certifications were not appropriately performed; and

• Account management controls were not performed, as evidenced by incomplete or missing access requests, 

non-disclosure agreements, modification forms, and termination forms.

System Access Settings 

• Inactive accounts were not disabled in a timely manner; 

• Password settings did not comply with the Office of the Chief Information Officer (OCIO) Computer 

Security Handbook; and 

• Inadequate system configurations were in place.

 

System Audit Logs Reviews 

The system audit logs reviews category represents controls designed to detect unauthorized access to IT systems. 

Although DOL has certain detective controls in place to mitigate the aforementioned account management and 

system access settings risks, we identified that certain audit logs were not generated, reviewed, or reviewed

timely. The lack of effective and timely system audit log reviews may allow for unauthorized or inappropriate 

activities to go undetected by management for lengthy periods of time. 

Vulnerability Management

Controls related to vulnerability management are designed to prevent weaknesses in IT systems from being 

exploited. Such controls include proactively monitoring system vulnerabilities, timely patching related security 

issues, and configuring IT systems in compliance with baseline security requirements. During our FY 2013

vulnerability assessments, we identified the following deficiencies: 

• Numerous critical and high-risk application and operating system patches were not implemented; 

• Numerous servers were not compliant with minimum security baselines; and
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2013 Agency Financial Report 39

• Logical access control weaknesses, such as the ability to obtain the host security identifier for the remote host 

without credentials, existed. 

In addition, we noted that one agency did not implement any corrective actions in FY 2012 or FY 2013 related to 

patch and configuration management weaknesses we identified in FY 2011 for one of its IT systems. The agency 

had developed Plans of Action and Milestones to address these weaknesses; however, they were not scheduled 

for completion until December 31, 2013. 

Vulnerabilities that are not remedied in a timely manner may result in information leaks or system threats. These 

vulnerabilities may also disrupt normal system processes, allow inappropriate access, prevent updates from being 

implemented, and jeopardize the integrity of financial information. Additionally, vulnerabilities that are not 

remedied or mitigated can present an opportunity to circumvent account management, system access settings, 

and audit logging controls.

Collectively, the aforementioned IT control deficiencies pose a significant risk to the integrity of DOL’s data, 

which could ultimately impact its ability to accurately and timely perform its financial reporting duties. The 

specific nature of these deficiencies, their causes, and the systems impacted by them have been communicated 

separately to management. These deficiencies, which were noted across all four agencies selected for testing, 

were the result of issues in the implementation and monitoring of departmental procedures and controls. DOL 

agencies have not invested the necessary level of effort and resources to ensure that certain IT policies and 

procedures are operating effectively.

The National Institute of Standards and Technology Special Publication 800-53, Revision 3, Recommended 

Security Controls for Federal Information Systems and Organizations, provides federal information systems

standards and guidelines for controls that include, but are not limited to, the controls in which deficiencies were 

identified.

To address the deficiencies noted above, the Chief Information Officer should: 

a) Coordinate efforts among the DOL agencies to develop procedures and controls to address account 

management, system access settings, system audit log reviews, and vulnerability management control 

deficiencies in financial and support systems;

b) Monitor the agencies’ progress to ensure that procedures and controls are appropriately implemented and 

maintained; and 

c) Coordinate with the applicable agencies to ensure that sufficient resources are available to develop, 

implement, and monitor the procedures and controls that address account management, system access 

settings, system audit log reviews, and vulnerability management control deficiencies.

Management’s Response: The Office of the Assistant Secretary for Administration and Management (OASAM) 

appreciates the importance of adequately managing Information Technology (IT) security risks within DOL’s 

major information systems and is committed to ensuring the Department implements appropriate corrective 

actions in a timely fashion. The Chief Information Officer continues to enhance its Enterprise Risk Management 

and Continuous Monitoring efforts and completed the following activities in FY 2013:

• Monitored Agencies progress in mitigating weaknesses found to be contributors to the Department’s 

Significant Weakness via Agency Operating Plans and Departmental Administrative Measures.

• Implemented Enterprise IT Security Performance Metrics enabling a Departmental view into agency 

compliance progress with respect to achieving vulnerability and configuration management targets, and risk 

management goals. 
Financial Section

Significant Deficiencies

Exhibit I

40 United States Department of Labor

• Deployed an enterprise IT security tool enabling a Departmental view and automated monitoring 

capability of asset inventories, and vulnerability and configuration management of all Departmental 

systems. 

OASAM accepts the OIG’s recommendations. Moving forward in FY 2014, the OCIO will increase 

communication with DOL Agencies to ensure they give priority attention and sufficient resources to prioritize 

and complete the corrective action required to address the identified account management, vulnerability and 

configuration control deficiencies. The OCIO will monitor agency progress on addressing these deficiencies, as 

well as; assess agency progress on achieving the IT Security Performance Metrics on a quarterly basis via 

Agency dashboards. In FY 2014, the OCIO will also acquire and begin a Department-wide deployment of 

additional Enterprise IT Security tools as a part of the Department’s Continuous Monitoring efforts via the 

Department of Homeland Security sponsored Continuous Diagnostics and Mitigation program. Further, to 

ensure we continue to safeguard DOL’s financial systems, OASAM will evaluate its current policies and 

procedures to seek ways we can improve continuous monitoring processes to strengthen the overall security 

posture of DOL’s information systems.

Auditors’ Response: We will conduct follow-up procedures in FY 2014 to determine whether corrective actions 

have been developed and implemented.

2. Lack of Sufficient Controls over Grants

DOL awards numerous formula and discretionary grants to various state and local governments, nonprofit 

organizations, and other organizations. The Employment and Training Administration (ETA) awards and 

monitors the majority of these grants. Recipients of DOL grants are required to report their expenses to DOL on a 

quarterly basis via form ETA 9130, U.S. DOL ETA Financial Report, or a SF-425, Federal Financial Report

(cost reports). During our FY 2013 audit procedures, we identified new deficiencies in certain controls over 

grants, in addition to certain ones that were reported in prior years, as described below. These deficiencies are 

grouped into two categories Grant Accrual and Grant Monitoring.

Grant Accrual

Each year, ETA performs a grant accrual accuracy analysis to determine if the methodology used to calculate the 

previous year’s September 30 grant accrual is reasonable, and to develop cost-to-payment ratios for subsequent 

grant accrual calculations. The accuracy analysis compares the expense amounts accrued at year end to the 

expenses subsequently reported on the grantees’ cost reports. During our FY 2013 testwork over the accuracy 

analysis for the grant accrual as of September 30, 2012, we identified discrepancies between information in the 

executive summary and the accompanying tables of ETA’s initial analysis documentation, which included 

evidence of management review of the analysis. However, the review was not adequate enough to detect those 

discrepancies because sufficiently detailed procedures were not in place to document the review process. If the 

analysis is not properly reviewed, an increased risk exists that errors in the validity of the data and preparation of 

the grant accrual accuracy analysis will not be detected and could potentially affect the reliability of the accrual 

ratios.

During our control test work performed over the ETA grant accrual as of March 31, 2013, we reviewed the draft 

Standard Operating Procedures for Grant Accrual and Review dated March 2013 and the grant accrual summary 

to determine if the deficiencies previously reported by us were remediated and noted the following continuing 

issues:

• The draft standard operating procedures were updated to show ETA’s assessment over the reasonableness of 

management’s expectations for the grant accrual each period. However, ETA did not consider changes in 
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2013 Agency Financial Report 41

funding levels or other relevant changes and did not compare historical amounts to actual expenses recorded 

to evaluate if historical accrual amounts were consistently accurate or if ETA’s accrual methodology should 

be changed to account for any material differences. 

• The draft standard operating procedures did not include a requirement to investigate and resolve estimated 

grant accruals outside the range of management’s expectations. 

• Procedures requiring individuals performing supervisory reviews to verify the accuracy of the accrual data 

and calculation had not been developed. 

In addition, we noted that at the time of our testing, the standard operating procedures had not been finalized and 

more than half of the fiscal year had passed.

ETA management believes that its existing policies and procedures are adequate, as they detail how the accrual 

should be prepared and include comparability of its accrual calculation over a period of years. ETA management 

notes that, in their opinion, this is a sufficient method to demonstrate reasonableness of the accrual. Therefore, 

they have not updated the procedures sufficiently to resolve all prior year recommendations.

The lack of sufficient internal controls over the grant accrual increases the risk that gross costs, other liabilities, 

and advances could be misstated.

Office of Management and Budget (OMB) Circular No. A-123, Management’s Responsibility for Internal 

Control, states:

Control activities include policies, procedures and mechanisms in place to help ensure that agency 

objectives are met. Several examples include: proper segregation of duties (separate personnel with 

authority to authorize a transaction, process the transaction, and review the transaction); physical 

controls over assets (limited access to inventories or equipment); proper authorization; and 

appropriate documentation and access to that documentation.

OMB Circular No. A-123, Management’s Responsibility for Internal Control, Appendix A, Section I, states:

Internal control over financial reporting is a process designed to provide reasonable assurance 

regarding the reliability of financial reporting. Reliability of financial reporting means that 

management can reasonably make the following assertions...All assets and liabilities have been 

properly valued, and where applicable, all costs have been properly allocated (valuation).

In addition, the U.S. Government Accountability Office’s Standards for Internal Control in the Federal 

Government (the Standards) states:

Control activities occur at all levels and functions of the entity. They include a wide range of diverse 

activities such as approvals, authorizations, verifications, reconciliations, performance reviews, 

maintenance of security, and the creation and maintenance of related records which provide evidence 

of execution of these activities as well as appropriate documentation. Control activities may be 

applied in a computerized information system environment or through manual processes.

Managers also need to compare actual performance to planned or expected results throughout the 

organization and analyze significant differences.
Financial Section

Significant Deficiencies

Exhibit I

42 United States Department of Labor

Grant Monitoring

Site Visits

We selected a sample of 45 site visits from the on-site monitoring reviews planned in FY 2013 as of June 30, 

2013, by each of the six regions to determine if the on-site monitoring reviews were properly performed and 

documented in the Grant Electronic Management System (GEMS). Based on our testwork, we identified issues 

with both the site visit monitoring plans and the site visit monitoring review reports, as follows:

• For 3 items, ETA was unable to provide an on-site visit monitoring review report for FY 2013;

• For 1 item, the on-site monitoring review was not performed as indicated on the monitoring review plan 

received from the region as of August 2013;

• For 12 items, an on-site monitoring review was performed, but the on-site monitoring review report was not 

issued within 45 business days of the last day of the on-site review; the reports were issued ranging from 5 to 

137 days past the due date;

• For 2 items, inconsistencies existed between findings in the completed on-site monitoring review report and 

those in GEMS; 

• For 5 items, the on-site monitoring review report was not included in GEMS; and

• For 5 items, the on-site monitoring review report was not uploaded in GEMS until after we notified ETA the 

report was missing during the completion of our testwork.

ETA did not have cohesive policies and procedures in place to ensure region site visit plans were prepared,

reviewed, and updated timely throughout the fiscal year. In addition, ETA was unable to provide a current year 

monitoring report for two site visits because of inaccurate completion and review of site visit plans. Although 

ETA procedures specified a timeline requirement for completing and filing on-site monitoring review reports, 

that requirement was not properly monitored. Lastly, ETA did not have policies and procedures in place to 

monitor the completeness of documentation included in GEMS related to on-site monitoring review reports 

issued. 

Failure to monitor site visit plans increases the risk that proper monitoring is not occurring, which increases the 

risk of undetected grantee reporting errors and/or violations. In addition, failure to implement proper monitoring 

controls to ensure compliance with existing policies and procedures increases the risk that policy deviations are 

not detected and corrected. Specifically, failing to ensure on-site monitoring review reports are completed timely 

increases the risk that issues identified with grantees are not resolved timely. 

If proper documentation is not retained and readily accessible in GEMS, possible findings may not be 

communicated in the monitoring review reports and tracked for correction. This could ultimately lead to errors in 

grant expenses not being identified properly by ETA management. 

Without adequate controls in the grant monitoring process, grantees may be misusing grant funds without 

detection by DOL. As a result, grant-related expenses, advances, payables and undelivered orders could be 

misstated.

The Standards states: 

Internal control and all transactions and other significant events need to be clearly documented, and 

the documentation should be readily available or examination. The documentation should appear in 

management directives, administrative policies, or operating manuals and may be in paper or 

electronic form. All documentation and records should be properly managed and maintained.
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2013 Agency Financial Report 43

For an entity to run and control its operations, it must have relevant, reliable, and timely 

communications relating to internal as well as external events.

Internal control should generally be designed to assure that ongoing monitoring occurs in the course 

of normal operations. It is performed continually and is ingrained in the agency’s operations. It 

includes regular management and supervisory activities, comparisons, reconciliations, and other 

actions people take in performing their duties.

The ETA Core Monitoring Guide states:

Subsequent to the review, the results of using the guide in conducting the review are to be entered 

into GEMS at the objective level for each core activity.

The DOL Update to the August 30, 2011, Memo for Federal Project Officer (FPO) Grant Management 

Responsibilities Related to the Grants Electronic Management System (GEMS) memorandum states: 

Details of the monitoring event, including all findings, observations, and promising practices will be 

entered into GEMS within 30 working days of issuing the report to the grantee...

The FPO is required to input all reportable compliance findings, observations, promising practices 

and the grantee’s progress to resolution. The FPO must also input questioned cost amounts under the 

appropriate finding. Details of the monitoring event, including all findings, observations, and 

promising practices will be entered into GEMS within 30 working days of issuing the formal report 

to the grantee. A copy of the formal compliance report will be uploaded to the Case File module 

within 30 working days of issuing the report to the grantee.

The SES Performance Management; Executive Performance; Agreement Appraisal Cycle [October 1 –

September 30] results 2 section (Measure of Outcomes/Targets) state:

1. Conduct on site monitoring according to plan and issue Monitoring Reports

a. 80% of all initial written Monitoring Reports issued within 45 days of the exit conference 

date.

b. Copies are uploaded to GEMS within 30 days of issuance.

Other Monitoring Procedures

As part of our audit procedures over grant controls as of June 30, 2013, we selected a sample of 45 grants from 

the population of grant expenses recorded in the New Core Financial Management System (NCFMS) to 

determine if Federal Project Officers’ (FPO) desk reviews were properly performed and documented in GEMS. 

However, for 1 of the 45 grants selected, the desk review was not completed within the required timeframe, and 

for 1 of 45 grants selected, adequate documentation did not exist to support the assigned risk factors. ETA 

management communicated to us that workload management issues existed because of staff turnover and 

vacancies that created shortages of experienced staff. 

We also tested the December 31, 2012, Delinquent Reporting Analysis, and noted that the analysis did not 

identify all grantees that were delinquent in filing their cost reports. As noted in FY 2012, the analysis only 

identified those grantees that were delinquent and had cash advance balances over a certain threshold because 

related procedures were designed in this manner. Based on our testwork as of March 31, 2013, we noted that the 

deficiency related to the analysis only identifying those grantees that were delinquent and had a cash advance 

balance over a certain threshold was remediated.
Financial Section

Significant Deficiencies

Exhibit I

44 United States Department of Labor

 

Based on testwork performed as of June 30, 2013 over the Delinquent Reporting Analysis, we noted that all other 

deficiencies previously reported by us (i.e., inadequate procedures related to the timeliness of the quarterly 

notification of delinquent filers and deadlines for follow-up on delinquent filers) were resolved but had been 

present for a majority of the fiscal year. In addition, upon review of the revised policies, we noted a lack of 

specific requirements related to documentation needed by FPOs to evidence their follow-up with delinquent 

grantees; ETA management did not deem such specific requirements necessary. 

Without adequate grantee monitoring controls, grantees may misreport, intentionally or unintentionally, grant 

expenses without the misstatement being detected by ETA, or may fail to report grant expenditure details. In 

addition, the miscoding of grantee risk factors may lead to inappropriate allocation of monitoring resources. As a 

result, grant-related expenses, advances, payables, and undelivered orders could be misstated.

The DOL Update to the August 30, 2011, Memo for Federal Project Officer (FPO) Grant Management 

Responsibilities Related to the Grants Electronic Management System (GEMS) memorandum states: 

A quarterly desk review is required on all projects in GEMS. Desk reviews must be completed 

following a review of both the progress and cost reports submitted during the reporting timeframe. 

Section iii below identifies the due dates for Desk Review completions.... 

Frontline supervisors are responsible for ensuring the FPOs meet these requirements and timeframes. 

Supervisors conduct quarterly reviews of the GEMS exception report and notify FPOs of concerns or 

anomalies regarding completeness or timeliness. Supervisors report their unit’s status to their 

Administrator on a regular basis.

Chapter 75 of Title 31, United States Code (commonly referred to as the Single Audit Act), states:

Each Federal agency shall, in accordance with guidance issued by the Director under section 7505, 

with regard to Federal awards provided by the agency – (1) monitor non-Federal entity use of 

Federal awards...

In addition, the Standards states:

Control activities occur at all levels and functions of the entity. They include a wide range of diverse 

activities such as approvals, authorizations, verifications, reconciliations, performance reviews, 

maintenance of security, and the creation and maintenance of related records which provide evidence 

of execution of these activities as well as appropriate documentation. Control activities may be 

applied in a computerized information system environment or through manual processes...

Internal control and all transactions and other significant events need to be clearly documented, and 

the documentation should be readily available for examination. The documentation should appear in 

management directives, administrative policies, or operating manuals and may be in paper or 

electronic form. All documentation and records should be properly managed and maintained.

To address the issues noted above, the Acting Assistant Secretary for Employment and Training should:

a) Revise current management review procedures to ensure that all aspects of the grant accrual accuracy 

analysis are properly reviewed and approved to prevent potential errors in the preparation of the analysis; 

b) Update grant accrual review procedures to include assessing and documenting the reasonableness of 

management’s expectations for the grant accrual each period by comparing historical accrual data to actual 
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2013 Agency Financial Report 45

recorded grant expenses and taking relevant changes into consideration; estimated grant accruals outside the 

range of management’s expectations should be investigated and resolved;

c) Require individuals performing supervisory reviews to verify the accuracy of the grant accrual data and 

calculations;

d) Develop and implement a monitoring procedure to ensure changes to original regional site visit plans are

appropriate and accurately documented; 

e) Update written policies and procedures to include specific guidance on monitoring the timely completion of 

regional on-site monitoring;

f) Update written policies and procedures to include specific documentation requirements for GEMS to support 

the conclusions included in the on-site monitoring review reports;

g) Develop and implement monitoring controls to determine that on-site monitoring review reports are timely 

issued and uploaded into GEMS with the appropriate documentation;

h) Adhere to existing written policies and procedures for evaluating and documenting grantee risk;

i) Develop and implement monitoring procedures to review FPOs’ risk factors quarterly on a sample basis;

j) Develop and implement a staffing contingency plan to address potential future FPO turnover or staff 

shortages; and

k) Update written policies and procedures to require FPOs to document communication with delinquent 

grantees in a standardized manner;

Management’s Response: ETA does not agree with the auditor’s determination of a significant deficiency in 

controls in the area of grants management. While we recognize room for improvement in some areas, ETA 

manages its grants in a sound and reliable manner.

Grant Accrual 

ETA updated the grant accrual standard operating procedure (SOP) to provide additional clarification of 

management’s expectation of the quarterly grant accrual. Additionally, the SOP was updated to provide 

procedures for individuals performing supervisory review to verify the reasonableness of the accrual data (e.g. 

ensuring only grant activity for the current accrual period) and the result of the calculation (as compared to the 

general ledger). ETA considers historical accrual amounts in establishing management’s expectations as well as 

considering changes in funding levels when needed (e.g. ARRA funding). While we track the historical accrual 

amounts and assess changes in funding levels, we also compare the estimated accrual to actual costs on an 

annual basis. Significant differences are analyzed to determine if changes in the grant accrual methodology is 

needed. Additional analysis and updates to the procedures will be considered in fiscal year 2014.

Onsite Monitoring

The ETA Regional Offices have a corrective action plan in place to ensure better results. This plan was already 

in place at the time of the audit. ETA Regions continue to have a set of policies and procedures in place 

including: the Regional Administrator (RA) Performance Standards, that cascade down to managers and staff; a 

number of policies and procedures in place for monitoring and the issuance of monitoring reports such as the 

Core Monitoring Guide, the monitoring report template, and the Memo for Federal Project Officer Grant 

Management Responsibilities related to GEMS.

Other Monitoring Procedures

Since the auditor’s testing period, the Delinquent Reporting Analysis has improved significantly. As previously 

recommended, all grantees that were delinquent are included in the analysis regardless of the advance balance. 

Additionally, communication between ETA’s Accounting, National and Regional offices has increased. Federal 

Project Officers are followed up with closely to make sure they provide comments to the delinquent ETA 9130 
Financial Section

Significant Deficiencies

Exhibit I

46 United States Department of Labor

cost reports and take appropriate actions to increase the rate of on-time submissions. The results of this review 

are communicated back to ETA’s accounting office as evidence of follow up with grantees. The results can be 

in whatever form the FPOs deem sufficient. The methods of such communication are a means to an end. The 

end result is that ETA wants to reduce the number of delinquent reports. ETA believes that the results of these 

efforts were evidenced by the decline in the number of delinquent reports from March 31 quarter to June 30 

quarter.

ETA will review and consider the auditor’s recommendations in all these areas of grants management. ETA 

will develop corrective action plans to address any control deficiencies. 

Auditors’ Response: In accordance with auditing standards generally accepted in the United States of America, 

we considered the grant-related deficiencies identified above in our FY 2013 audit individually and in the 

aggregate. In our professional judgment, the aggregation of these findings results in a significant deficiency. 

Although management stated that they do not concur with our categorization of identified deficiencies as a 

significant deficiency, they plan on taking steps to address the deficiencies identified. We will conduct 

follow-up procedures in FY 2014 to determine whether corrective actions have been developed and 

implemented.
594747

Annual Financial Statements

594949

Principal Financial Statements and Notes
Financial Section

PRINCIPAL FINANCIAL STATEMENTS

50 United States Department of Labor

Principal Financial Statements Included in This Report

The principal financial statements included in this report have been prepared in accordance with the requirements 

of the Chief Financial Officers Act of 1990 (P.L. 101-576), the Government Management Reform Act of 1994, and 

OMB Circular No. A-136, Financial Reporting Requirements. The responsibility for the integrity of the financial 

information included in these statements rests with management of the Department. The audit of DOL’s principal 

financial statements was performed by KPMG LLP. The auditors’ report accompanies the principal statements.

The Department’s principal financial statements for FY 2013 and 2012 consist of the following: 

 The Consolidated Balance Sheet, which presents as of September 30, 2013 and 2012, those resources owned 

or managed by DOL that are available to provide future economic benefits (assets); amounts owed by DOL that 

will require payments from those resources or future resources (liabilities); and residual amounts retained by 

DOL, comprising the difference (net position).

 The Consolidated Statement of Net Cost, which presents the net cost of DOL operations for the years ended 

September 30, 2013 and 2012. DOL’s net cost of operations includes the gross costs incurred by DOL less any 

exchange revenue earned from DOL activities. The classification of gross cost and exchange revenues by major 

program and major program agency is presented in Note 15 to the consolidated financial statements.

 The Consolidated Statement of Changes in Net Position, which presents the change in DOL’s net position 

resulting from the net cost of DOL operations, budgetary financing sources other than exchange revenues, and 

other financing sources for the years ended September 30, 2013 and September 30, 2012.

 The Combined Statement of Budgetary Resources, which presents the budgetary resources available to DOL, 

change in obligated balance, and budget authority and net outlays of budgetary resources for FYs 2013 and 

2012; and the status of these resources as of September 30, 2013 and 2012.

 The Statement of Social Insurance, which presents the net present value of projected cash inflows and cash 

outflows of the Black Lung Disability Trust Fund (BLDTF) as of September 30, 2013, 2012, 2011, 2010, and 2009; 

the net present value of these cash flows is also known as the open and closed group measure. The summary 

section presents the total of open and closed group measure plus fund assets (Funds with U.S. Treasury and 

receivables).

 The Statement of Changes in Social Insurance Amounts, which presents the net change in the open and closed 

group measure of the BLDTF for the years ended September 30, 2013 and 2012, and provides information 

about the change.
Annual Financial Statements

CONSOLIDATED BALANCE SHEET

As of September 30, 2013 and September 30, 2012

(Dollars in Thousands)

FY 2013 Agency Financial Report 51 

 2013 2012

ASSETS

Intra-governmental

Funds with U.S. Treasury (Note 1-C and 2) $ 13,110,719 $ 12,023,183

Investments (Note 1-D and 3) 29,684,278 20,840,571

Accounts receivable (Note 1-E and 4) 5,824,506 5,982,460

Advances (Note 1-G and 6) 1,928 3,128

Total intra-governmental 48,621,431 38,849,342

Accounts receivable, net of allowance (Note 1-E and 4) 2,090,927 2,258,276

Property, plant and equipment, net

 of accumulated depreciation (Note 1-F and 5) 1,269,915 1,280,338

Advances (Note 1-G and 6) 1,925,678 1,456,500

Total assets $ 53,907,951 $ 43,844,456

LIABILITIES AND NET POSITION

Liabilities (Note 1-I and 12)

Intra-governmental

Accounts payable $ 28,086 $ 33,524

Debt (Note 1-J and 8) 35,722,273 38,997,340

Other liabilities (Note 9) 312,778 278,638

Total intra-governmental 36,063,137 39,309,502

Accounts payable 282,751 308,932

Accrued benefits (Note 1-K and 10) 2,517,122 2,289,602

Future workers' compensation benefits (Note 1-L and 11) 1,613,335 1,677,985

Energy employees occupational illness compensation benefits (Note 1-M) 16,016,729 15,631,188

Accrued leave (Note 1-N) 121,677 121,716

Other liabilities (Note 9) 917,682 1,004,299

Total liabilities 57,532,433 60,343,224

Contingencies (Note 13)

Net position (Note 1-R)

Funds from dedicated collections

Cumulative results of operations (Note 21) (5,038,568) (18,333,071)

All other funds

Unexpended appropriations 9,346,932 10,476,263

Cumulative results of operations (7,932,846) (8,641,960)

Total net position - all other funds 1,414,086 1,834,303

Total net position (3,624,482) (16,498,768)

Total liabilities and net position $ 53,907,951 $ 43,844,456

The accompanying notes are an integral part of these statements.
Financial Section

CONSOLIDATED STATEMENT OF NET COST

For the Years Ended September 30, 2013 and 2012

(Dollars in Thousands)

52 United States Department of Labor

 2013 2012

NET COST OF OPERATIONS (Note 1-S and 15)

CROSSCUTTING PROGRAMS

Income maintenance

 Gross cost $ 77,921,579 $ 100,682,210

 Less earned revenue (4,037,710) (4,338,716)

 Net program cost 73,883,869 96,343,494

Employment and training

 Gross cost 6,432,749 6,695,330

 Less earned revenue (12,408) (10,606)

 Net program cost 6,420,341 6,684,724

Labor, employment and pension standards

 Gross cost 839,964 851,197

 Less earned revenue (10,357) (10,059)

 Net program cost 829,607 841,138

Worker safety and health

 Gross cost 1,009,235 1,058,194

 Less earned revenue (5,305) (4,282)

 Net program cost 1,003,930 1,053,912

OTHER PROGRAMS

Statistics

 Gross cost 635,763 682,894

 Less earned revenue (12,083) (13,286)

 Net program cost 623,680 669,608

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost 110,672 81,176

 Less earned revenue not attributed to programs (816) (22,166)

 Net cost not assigned to programs 109,856 59,010

Net cost of operations $ 82,871,283 $ 105,651,886

The accompanying notes are an integral part of these statements.
Annual Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION

For the Years Ended September 30, 2013 and 2012

(Dollars in Thousands)

FY 2013 Agency Financial Report 53 

Funds from Funds from 

Dedicated All Other Dedicated All Other

Collections Funds Total Collections Funds Total

Cumulative results of operations, beginning $ (18,333,071) $ (8,641,960) $ (26,975,031) $ (33,466,525) $ (8,471,933) $ (41,938,458)

Budgetary financing sources (Note 1-T)

Appropriations used - 38,260,332 38,260,332 - 51,574,836 51,574,836

Non-exchange revenue (Note 16)

Employer taxes 54,494,335 - 54,494,335 63,653,314 - 63,653,314

Interest 1,272,176 - 1,272,176 1,586,958 3,996 1,590,954

Reimbursement of 

 unemployment benefits and other 2,509,745 22,716 2,532,461 3,457,681 (9,110) 3,448,571

Total non-exchange revenue 58,276,256 22,716 58,298,972 68,697,953 (5,114) 68,692,839

Transfers without reimbursement (Note 17) 22,153,422 (21,953,782) 199,640 35,770,127 (35,545,276) 224,851

Other financing sources (Note 1-U)

Imputed financing from 

 costs absorbed by others 2,992 109,937 112,929 3,462 121,680 125,142

Transfers without reimbursement (Note 17) - 4,764 4,764 - 966 966

Other - (1,737) (1,737) - (3,321) (3,321)

Total financing sources 80,432,670 16,442,230 96,874,900 104,471,542 16,143,771 120,615,313

Net cost of operations (67,138,167) (15,733,116) (82,871,283) (89,338,088) (16,313,798) (105,651,886)

Net change 13,294,503 709,114 14,003,617 15,133,454 (170,027) 14,963,427

Cumulative results of operations, end of year (5,038,568) (7,932,846) (12,971,414) (18,333,071) (8,641,960) (26,975,031)

 Unexpended appropriations, beginning - 10,476,263 10,476,263 - 9,210,647 9,210,647

Budgetary financing sources (Note 1-T)

Appropriations received (Note 18-F) - 43,105,275 43,105,275 - 62,229,387 62,229,387

Appropriations used - (38,260,332) (38,260,332) - (51,574,836) (51,574,836)

Appropriations transferred - 3,202 3,202 - (4,505) (4,505)

Other adjustments - (5,977,476) (5,977,476) - (9,384,430) (9,384,430)

Subtotal - (1,129,331) (1,129,331) - 1,265,616 1,265,616

 Unexpended appropriations, end of year - 9,346,932 9,346,932 - 10,476,263 10,476,263

Net position $ (5,038,568) $ 1,414,086 $ (3,624,482) $ (18,333,071) $ 1,834,303 $ (16,498,768)

2013 Consolidated 2012 Consolidated

The accompanying notes are an integral part of these statements.
Financial Section

COMBINED STATEMENT OF BUDGETARY RESOURCES

For the Years Ended September 30, 2013 and 2012

(Dollars in Thousands)

54 United States Department of Labor

(Note 1-Z and 18) 2013 2012

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 4,391,699 $ 3,376,261

Recoveries of prior year unpaid obligations 461,549 369,860

Other changes in unobligated balance (221,903) (128,341)

Unobligated balance from prior year budget authority, net 4,631,345 3,617,780

Appropriations (discretionary and mandatory) 102,609,040 136,219,806

Borrowing authority (discretionary and mandatory) 7,700,000 12,378,421

Spending authority from offsetting collections (discretionary and mandatory) 7,826,120 8,460,059

Total budgetary resources $ 122,766,505 $ 160,676,066

STATUS OF BUDGETARY RESOURCES

Obligations incurred $ 118,111,427 $ 156,284,367

Unobligated balance, end of year

 Apportioned 3,071,003 1,764,188

 Exempt from apportionment 54,279 56,721

 Unapportioned 1,529,796 2,570,790

 Total unobligated balance, end of year 4,655,078 4,391,699

Total budgetary resources $ 122,766,505 $ 160,676,066

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 15,529,168 $ 15,787,223

Obligations incurred 118,111,427 156,284,367

Less: outlays (gross) (118,186,925) (156,172,562)

Less: recoveries of prior year unpaid obligations (461,549) (369,860)

Unpaid obligations, end of year 14,992,121 15,529,168

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (2,324,892) (1,968,497)

Change in uncollected payments, Federal sources 378,835 (356,395)

Uncollected payments, Federal sources, end of year (1,946,057) (2,324,892)

Obligated balance, start of year $ 13,204,276 $ 13,818,726

Obligated balance, end of year $ 13,046,064 $ 13,204,276

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 118,135,160 $ 157,058,286

Less: actual offsetting collections (discretionary and mandatory) (8,204,955) (8,103,665)

Less: change in uncollected customer payments from Federal 

sources (discretionary and mandatory) 378,835 (356,395)

Budgetary authority, net (discretionary and mandatory) $ 110,309,040 $ 148,598,226

Outlays, gross (discretionary and mandatory) $ 118,186,925 $ 156,172,562

Actual offsetting collections (discretionary and mandatory) (8,204,955) (8,103,665)

Outlays, net (discretionary and mandatory) 109,981,970 148,068,897

Distributed offsetting receipts (28,189,684) (43,234,920)

Agency outlays, net (discretionary and mandatory) $ 81,792,286 $ 104,833,977

The accompanying notes are an integral part of these statements.
Annual Financial Statements

STATEMENT OF SOCIAL INSURANCE

As of September 30, 2013, 2012, 2011, 2010, and 2009

(Dollars in Thousands)

FY 2013 Agency Financial Report 55 

2013 2012 2011 2010 2009

BLACK LUNG DISABILITY BENEFIT PROGRAM (Note 1-W)

Actuarial present value of future benefit payments

 during the projection period to disabled coal miners

 and dependent survivors $ 1,953,763 $ 2,181,654 $ 1,951,755 $ 2,125,231 $ 2,170,943

 

Present value of estimated future administrative costs 

 during the projection period 920,740 963,995 935,444 881,311 984,996

Actuarial present value of future benefit payments and 

 present value of estimated future administrative costs during 

 the projection period for current and future participants 2,874,503 3,145,649 2,887,199 3,006,542 3,155,939

 

Less the present value of estimated future excise tax

 income during the projection period 7,494,800 7,804,178 7,607,428 8,457,022 8,876,813

Excess of present value of estimated future excise tax

 income over actuarial present value of future benefit 

 payments and present value of estimated future administrative

 costs during the projection period for current and future 

 participants (open and closed group measure) $ 4,620,297 $ 4,658,529 $ 4,720,229 $ 5,450,480 $ 5,720,874

 

Trust fund net position deficit at start 

 of projection period (Note 1-W and 21) $ (5,894,222) $ (5,977,619) $ (6,099,261) $ (6,238,612) $ (6,320,321)

Summary Section

Open and closed group measure $ 4,620,297 $ 4,658,529 $ 4,720,229 $ 5,450,480 $ 5,720,874

Add: Funds with U.S. Treasury and receivables from

 benefit overpayments (Note 21) 145,794 102,498 63,814 68,028 67,598

Total of open and closed group measure

 plus fund assets (Note 1-W) $ 4,766,091 $ 4,761,027 $ 4,784,043 $ 5,518,508 $ 5,788,472

For the Projection Period Ending September 30, 2040

The accompanying notes are an integral part of these statements.
Financial Section

STATEMENT OF CHANGES IN SOCIAL INSURANCE AMOUNTS

For the Years Ended September 30, 2013 and 2012 

(Dollars in Thousands)

56 United States Department of Labor

BLACK LUNG DISABILITY BENEFIT PROGRAM (Note 1-W)

Open and Closed Group Measure

2013 2012

Excess of present value of estimated future excise tax income over actuarial

 present value of future benefit payments and present value of estimated future

 administrative costs during the projection period for current and future participants

 (open and closed group measure), beginning of year $ 4,658,529 $ 4,720,229 

Reasons for changes in the open and closed group measure during the year:

 Changes in the assumptions about beneficiaries, including

 costs, number, type, age and life expectancy

 Changes in assumptions about coal excise tax revenues (141,062) (307,494)

 Changes in assumptions about Federal civilian pay raises for income benefits 13,254 (22,337)

 Changes in assumptions about medical cost inflation for medical benefits 1,004 (1,601)

 Changes in assumptions about administrative costs 33,575 31,516 

 Changes in assumptions about interest rates (148,713) 320,055 

Net change in open and closed group measure (38,232) (61,700)

Open and closed group measure, end of year $ 4,620,297 $ 4,658,529 

 203,710 (81,839)

The accompanying notes are an integral part of these statements.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 57 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

DOL, a cabinet level agency of the Executive Branch of the United States Government, was established in 1913, to 

promote the welfare of the wage earners of the United States. Today the Department’s mission remains the same: 

To foster, promote and develop the welfare of the wage earners, job seekers and retirees of the United States; 

improve working conditions; advance opportunities for profitable employment; and assure work-related benefits 

and rights. 

DOL accomplishes this mission through the execution of its congressionally approved budget, operating under four 

major budget functions: (i) education, training, employment, and social services; (ii) health (occupational health and 

safety); (iii) income security; and (iv) veterans benefits and services (veterans education and training). DOL is 

organized into major program agencies, which administer the various statutes and programs for which the 

Department is responsible. DOL’s major program agencies and the major programs in which they operate are 

shown below.

1. Major program agencies

 Employment and Training Administration (ETA)

- Office of Job Corps

 Office of Workers’ Compensation Programs (OWCP)

 Occupational Safety and Health Administration (OSHA)

 Bureau of Labor Statistics (BLS)

 Mine Safety and Health Administration (MSHA)

 Employee Benefits Security Administration (EBSA) 

 Veterans’ Employment and Training Service (VETS)

 Wage and Hour Division (WHD)

 Office of Federal Contract Compliance Programs (OFCCP)

 Office of Labor-Management Standards (OLMS)

 Departmental Management

- Office of the Secretary - Office of the Deputy Secretary

- Office of the Assistant Secretary for - Office of Inspector General

Administration and Management - Office of the Solicitor

- Office of the Assistant Secretary for Policy - Office of Public Affairs

- Office of Congressional and - Office of the Chief Financial Officer

Intergovernmental Affairs - Office of Disability Employment Policy

- Women’s Bureau - Bureau of International Labor Affairs

The Pension Benefit Guaranty Corporation (PBGC), wholly owned by the Federal government and whose Board of 

Directors is chaired by Secretary of Labor, has been designated by OMB as a separate reporting entity for financial 

statement purposes and has been excluded from these financial statements.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

58 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

2. Major programs

 Income maintenance

 Employment and training

 Labor, employment and pension standards 

 Worker safety and health

 Statistics 

The table below shows the relationship between the Department’s strategic goals and its major programs.

3. Fund accounting structure

DOL’s financial activities are accounted for by Federal account symbol, using individual funds and fund 

accounts within distinct fund types to report to the U.S. Department of the Treasury’s (Treasury) Bureau of 

the Fiscal Service and to OMB. For financial statement purposes, DOL funds are further classified as funds 

from dedicated collections, fiduciary funds, and all other funds, and are discussed below:

 

Funds from dedicated collections

Funds from dedicated collections are financed by specifically identified revenues, which can be 

supplemented by other financing sources, both of which remain available over time. These revenues and 

financing sources are required by statute to be used for designated purposes and must be accounted for 

separately from the Government’s general revenues. DOL’s funds from dedicated collections are disclosed 

in Note 21 and are discussed below:

Unemployment Trust Fund (UTF) was established under the authority of Section 904 of the Social Security 

Act of 1935, as amended, to receive, hold, invest, and disburse monies collected under the Federal 

Unemployment Tax Act (FUTA), as well as state unemployment taxes collected by the states and 

transferred to the Fund, and unemployment taxes collected by the Railroad Retirement Board and 

transferred to the Fund.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 59 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

Funds from dedicated collections - continued

Black Lung Disability Trust Fund was established under Part C of the Black Lung Benefits Act, to provide 

compensation and medical benefits to coal miners who suffer total disability due to pneumoconiosis (Black 

Lung disease), and compensation benefits to their dependent survivors for claims filed subsequent to June 

30, 1973. Claims filed from the origination of the program until June 30, 1973, are paid by the Special 

Benefits for Disabled Coal Miners fund. (See Note 1.A.3 – All other funds.) 

Gifts and Bequests Fund uses miscellaneous funds received by gift or bequest to support various activities 

of the Secretary of Labor. 

Panama Canal Commission Compensation Fund, was established to provide for the accumulation of funds 

provided by the Commission to pay its workers compensation obligations under the Federal Employees’

Compensation Act (FECA).

H-1B Funds provide demonstration grants to regional and local entities to provide technical skills training to 

unemployed and incumbent workers. The funds are supported by fees paid by employers applying for 

foreign workers under the H-1B temporary alien labor certification program authorized by the American 

Competitiveness and Workforce Improvement Act of 1998.

Fiduciary funds

Fiduciary funds are used to account for DOL’s fiduciary activities, which involve the collection or receipt and 

subsequent disposition of cash or other assets in which non-Federal entities have an ownership interest 

that the Department must uphold. Fiduciary assets are not assets of DOL or the Federal Government, and 

accordingly, are not recognized on the Department’s balance sheet. The fiduciary assets held by DOL and 

the fiduciary activities related to these assets are disclosed in Note 22 to these financial statements. DOL’s 

fiduciary funds are discussed below.

Wage and Hour and Public Contracts Restitution Fund, a deposit fund established by the Fair Labor 

Standards Amendments of 1949, receives deposits from employers assessed by the Department for unpaid 

minimum wages or unpaid overtime compensation owed to employees as a result of labor law violations, 

and pays these wages directly to the affected employees. 

Longshore and Harbor Workers’ Compensation Act Trust Fund, established under the authority of the 

Longshore and Harbor Workers’ Compensation Act, provides medical benefits, compensation for lost 

wages, and rehabilitation services for job‐related injuries and diseases or death to private sector workers 

engaged in certain maritime and other employment covered by extensions such as the Defense Base Act. 

The Act authorizes the Department to assess insurance carriers on behalf of these beneficiaries.

District of Columbia Workmen’s Compensation Act Trust Fund, established under the authority of the 

District of Columbia Workmen’s Compensation Act, provides compensation and medical payments to the 

District of Columbia employees for work‐related injuries or death which occurred prior to July 26, 1982. 

The Act authorizes the Department to assess insurance carriers on behalf of these beneficiaries.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

60 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

All other funds 

Salaries and Expenses include appropriated funds which are used to carry out the missions and functions of 

the Department, except where specifically provided for from other departmental funds.

Training and Employment Services provides for a flexible, decentralized system of Federal and local training 

programs and other services for the economically disadvantaged and others, designed to lead to 

permanent gains in employment, through grants to states and Federal programs, authorized by the 

Workforce Investment Act (WIA) and the Job Training Partnership Act. 

Office of Job Corps supports the administration and management of the Job Corps program, which helps atrisk youth who need and can benefit from intensive education and training services to become more 

employable, responsible, and productive citizens. 

State Unemployment Insurance and Employment Service Operations (SUIESO) includes grants to states for 

administering the Unemployment Compensation (UC) and Employment Service (ES) programs. UC

Programs provide administrative grants to state agencies which pay unemployment benefits to eligible 

individuals and collect state unemployment taxes from employers. The ES Program is a nationwide system 

providing no-fee ES to individuals seeking employment and to employers seeking workers. ES funding 

allotments for state activities are determined upon a demographically based funding formula established 

under the Wagner-Peyser Act, as amended.

Payments to the Unemployment Trust Fund was initiated as a result of amendments to the Emergency 

Unemployment Compensation (EUC) law, which provided general fund financing to the UTF to pay EUC 

benefits and the related administrative costs. This account is currently used to provide general fund 

financing for EUC benefits and administrative costs under the Supplemental Appropriations Act of 2008, as 

extended by the Recovery Act and other authorizing legislation.

Advances to the Unemployment Trust Fund and Other Funds provides advances to other accounts within 

the UTF to pay UC whenever the balances in these accounts prove insufficient or whenever 

reimbursements to certain accounts, as allowed by law, are to be made. This account also makes advances 

to the Federal Unemployment Benefits and Allowances account to pay the cost of benefits and services 

under the Trade Adjustment Assistance (TAA) for Workers program; and provides loans to the BLDTF to 

make disability payments whenever the fund balance proves insufficient.

Federal Unemployment Benefits and Allowances provides for payment of benefits, training, job search, 

relocation allowances, and employment and case management services (and state administrative expenses 

for all benefits other than trade readjustment allowances, reemployment adjustment assistance, and 

alternative TAA) as authorized by the Trade Act of 1974. 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 61 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

All other funds - continued

Short-Time Compensation provides grants to states to implement or improve short-term compensation 

programs as authorized by the Middle Class Tax Relief and Job Creation Act. Short-term compensation 

programs allow employers to voluntarily reduce the number of hours worked by employees in lieu of 

layoffs and permits employees to collect a pro rata portion of the UC which would otherwise be payable to 

the employee if the employee was unemployed. 

Community Service Employment for Older Americans (CSEOA) provides part-time work experience in 

community service activities to unemployed, low income persons aged 55 and over.

Federal Employees’ Compensation Act Special Benefit Fund provides wage replacement benefits and 

payment for medical services to covered Federal civilian employees injured on the job, Federal employees 

and certain other workers who have incurred a work‐related illness or injury, and survivors of employees 

whose death is attributable to a job‐related injury. The Fund also provides for vocational rehabilitation of 

injured employees to facilitate their return to work. Under extensions of FECA, benefits are also paid to 

certain groups related to War Hazards, non-Federal law enforcement officers, Job Corps enrollees, and 

certain Federally-supported volunteers. Section 10(h) of the amended Longshore and Harbor Workers’ 

Compensation Act and the District of Columbia Workmen’s Compensation Act authorized payments from 

the Special Benefit fund for 50% of the annual increase in benefits for compensation and certain related 

benefits.

Energy Employees Occupational Illness Compensation Fund was established to adjudicate, administer, and 

pay claims for benefits under the Energy Employees Occupational Illness Compensation Program Act

(EEOICPA) of 2000. The Act authorizes compensation payments and the reimbursement of medical 

expenses to employees of the Department of Energy (DOE) or of private companies under contract with 

DOE, who suffer from specified diseases as a result of their work in the nuclear weapons industry. The Act 

also authorizes compensation to the survivors of these employees under certain circumstances. The Act 

was amended by the Ronald Reagan National Defense Authorization Act of 2005 to provide coverage to 

additional claimants. 

Special Benefits for Disabled Coal Miners was established under the Federal Mine Safety and Health Act to 

pay benefits to coal miners disabled from pneumoconiosis and to their widows and certain other 

dependents. Part B of the Act assigned processing of claims filed from the origination of the program until 

June 30, 1973, to Social Security Administration (SSA), after which time DOL began processing new claims as 

part of the BLDTF (known as Part C claims). SSA continued to administer Part B claims until DOL 

permanently assumed responsibility effective October 1, 2003. 

Working Capital Fund (WCF) maintains and operates a program of centralized services in the national office 

and the field. The Fund is paid in advance by the agencies, bureaus, and offices for which centralized 

services are provided at rates which cover the full cost of operations.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

62 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

A. Reporting Entity - Continued

3. Fund accounting structure - continued

All other funds - continued

General fund receipt accounts hold non-entity receipts and accounts receivable from DOL activities which 

by law cannot be deposited into funds under DOL control. The Treasury automatically transfers all fund 

balances in these receipt accounts to the General Fund of the Treasury at the end of each fiscal year. 

Deposit funds account for monies held by DOL as an agent for others or monies held temporarily by DOL 

until ownership is determined. 

4. Inter-departmental relationships

DOL and Treasury are jointly responsible for the operations of the UTF and the BLDTF. DOL is responsible 

for the administrative oversight and policy direction of the programs financed by these trust funds. 

Treasury acts as custodian over monies deposited into the funds and also invests amounts in excess of 

disbursing requirements in Treasury securities on behalf of DOL. DOL consolidates the financial results of 

the UTF and the BLDTF into these financial statements.

B. Basis of Accounting and Presentation

These financial statements present the financial position, net cost of operations, changes in net position and 

budgetary resources of DOL, and estimated and actuarial projections, and changes therein, for the Department’s 

Black Lung social insurance program, in accordance with U.S. GAAP and the form and content requirements of OMB 

Circular No. A-136. To ensure that the Department’s financial statements are meaningful, other liabilities as defined 

by OMB Circular No. A-136 have been disaggregated on the balance sheet. These include energy employees 

occupational illness compensation benefits, accrued leave, and other liabilities. Except as described in the following 

paragraphs, the financial statements have been prepared from the books and records of DOL, and include the 

accounts of all funds under the control of the DOL reporting entity. All inter-fund balances and transactions have 

been eliminated, except in the Statement of Budgetary Resources, which is presented on a combined basis, as 

required by OMB Circular No. A-136. 

DOL is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity and a 

receiving (child) entity. Allocation transfers are delegations by one department of its authority to obligate budget 

authority and outlay funds to another agency as prescribed by law. OMB Circular No. A-136 requires the parent to 

report all budgetary and proprietary activity in its financial statements. DOL (parent entity) allocates appropriations 

to the U.S. Department of Agriculture and the U.S. Department of the Interior (child entities) to provide funds for 

youth training programs. Accordingly, all activity for these allocation accounts is included in the DOL financial 

statements. DOL (child entity) receives allocated appropriations from the U.S. Department of State to support 

international HIV/AIDS relief efforts and the Executive Office of the President of United States to support an 

unemployment insurance (UI) financial data access project (parent entities). Accordingly, activity for these 

allocation accounts is excluded from the DOL financial statements and reported by the parent agencies.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 63 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

B. Basis of Accounting and Presentation - Continued

The Department implemented Federal Accounting Standards Advisory Board (FASAB) Statement of Federal 

Financial Accounting Standards (SFFAS) No. 43, “Funds from Dedicated Collections: Amending Statement of Federal 

Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds,” in FY 2013. For FY 2013, SFFAS No. 

43 amended, among other things, the definition, terminology, presentation, and disclosure of Funds from 

Dedicated Collections (formerly called Earmarked Funds).

U.S. GAAP encompasses both accrual and budgetary transactions. Under accrual accounting, revenues are 

recognized when earned and expenses are recognized when liabilities are incurred. Budgetary accounting facilitates 

compliance with legal constraints on, and controls over, the use of Federal funds. These financial statements are 

different from the financial reports, also prepared by DOL pursuant to OMB directives, used to monitor DOL’s use of 

budgetary resources.

Throughout these financial statements, assets, liabilities, earned revenue, and costs have been classified according 

to the type of entity with whom the transactions were made. Intra-governmental assets and liabilities are those 

from or to other Federal entities. Intra-governmental earned revenue represents collections or accruals of revenue 

from other Federal entities, and intra-governmental costs are payments or accruals to other Federal entities. 

C. Funds with U.S. Treasury 

DOL’s cash receipts and disbursements are processed by the U.S. Treasury. Funds with U.S. Treasury represent 

obligated and unobligated balances available to finance allowable expenditures, and restricted balances, including 

amounts related to expired authority and amounts not available for use by DOL. (See Note 2)

D. Investments 

Funds from Dedicated Collections

The Federal Government does not set aside assets to pay future benefits or other expenditures associated with 

DOL’s funds from dedicated collections. The cash receipts collected from the public for funds from dedicated 

collections are deposited in the U.S. Treasury, which uses the cash for general government purposes. Interest 

earning Treasury securities are issued to DOL’s funds from dedicated collections as evidence of the receipts. These 

Treasury securities are assets to DOL and liabilities to the U.S. Treasury. Because DOL and the U.S. Treasury are 

both parts of the Government, these assets and liabilities offset each other from the standpoint of the government 

as a whole. For this reason, they do not represent an asset or a liability in the U.S. Government-wide financial 

statements. Treasury securities provide DOL with authority to draw upon the U.S. Treasury to make future benefit 

payments or other expenditures. When DOL requires redemption of these securities to make expenditures, the 

government finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by 

borrowing from the public or repaying less debt, or by curtailing other expenditures, just as the government 

finances all other expenditures.

Balances held in the UTF are invested in non-marketable, special issue Treasury securities (certificates of

indebtedness and bonds) available for purchase exclusively by Federal government agencies and trust funds. 

Special issues are purchased and redeemed at face value (cost), which is equivalent to their net carrying value on

the Consolidated Balance Sheet. Interest rates and maturity dates vary. The UTF special issue Treasury bonds may 

be redeemed, in whole or in part, prior to their maturity date and continue to accrue interest until fully redeemed. 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

64 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

D. Investments - Continued

Balances held in the Panama Canal Commission Compensation Fund are invested in marketable Treasury securities. 

These investments are stated at amortized costs that equal their net carrying value on the Consolidated Balance 

Sheet. Discounts and premiums are amortized using the effective interest method. Interest rates and maturity 

dates vary. Management expects to hold these marketable securities until maturity; therefore, no provision is 

made in the financial statements for unrealized gains or losses. (See Note 3)

All Other Funds

Balances held in the Energy Employees Occupational Illness Compensation Fund are invested in non-marketable 

Treasury one-day certificates. (See Note 3) 

E. Accounts Receivable, Net of Allowance

Accounts receivable consists of intra-governmental amounts due to DOL, as well as amounts due from the public. 

(See Notes 4 and 23)

1. Intra-governmental accounts receivable

The Federal Employees Compensation (FEC) account within the UTF provides unemployment compensation

to eligible Federal employees (UCFE) and ex-service members (UCX). DOL recognizes as accounts receivable 

amounts due from other Federal agencies for unreimbursed UCFE and UCX benefits. DOL’s FECA Special 

Benefit Fund provides workers’ compensation benefits to eligible Federal workers on behalf of other 

Federal agencies. DOL recognizes as accounts receivable amounts due from other Federal agencies to the 

Special Benefit Fund for unreimbursed FECA benefits. 

DOL also has receivables from other Federal agencies for work performed on their behalf under various 

reimbursable agreements.

2. Accounts receivable due from the public

DOL recognizes as accounts receivable state unemployment taxes due from covered employers and 

reimbursements of benefits paid on behalf of other employers. Also recognized as accounts receivable are 

benefit overpayments made by DOL to individuals not entitled to receive the benefit.

DOL recognizes as accounts receivable amounts due from the public for fines and penalties levied against 

employers by OSHA, MSHA, WHD, and EBSA and for amounts due from grantees and contractors for grant 

and contract costs disallowed by ETA. 

3. Allowance for uncollectible accounts

Accounts receivable due from the public are stated net of an allowance for uncollectible accounts. The 

allowance is estimated based on an aging of account balances, past collection experience, and an analysis 

of outstanding accounts at year-end. Intra-governmental accounts receivable are considered fully 

collectible.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 65 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

F. Property, Plant and Equipment, Net of Accumulated Depreciation

The majority of DOL’s property, plant and equipment (PP&E) is general purpose PP&E held by Job Corps centers 

owned and operated by DOL through a network of contractors. Internal use software is considered general purpose 

PP&E. 

DOL’s capitalization thresholds for assets with a useful life of 2 years or longer, and the related depreciable life are 

displayed in the following table.

Capitalization Threshold Years

Structures, facilities and improvements $500,000 20 - 50

Furniture and equipment $50,000 2 - 36

Internal use software and software in development $500,000 2 - 15

Construction-in-progress $500,000 -

Land $500,000 -

PP&E purchases and additions are stated at cost. Normal repairs and maintenance are charged to expense as 

incurred. PP&E are depreciated over their estimated useful lives using the straight-line method of depreciation. 

Job Corps center construction costs are capitalized as construction-in-progress until completed. Upon completion 

they are reclassified as structures and facilities and depreciated over their estimated useful lives. Structures and 

facilities also includes DOL’s only asset under capital lease. Leasehold improvements made at Job Corps centers and 

DOL facilities leased from the General Services Administration (GSA) are capitalized as construction-in-progress until 

completed. Upon completion, they are reclassified as improvements to leased facilities, and amortized over the 

remaining life of the lease or the useful life of the improvements, whichever is shorter, using the straight-line 

method of amortization. DOL operating leases have one-year terms with multiple option years. The leases are 

cancelable by the government upon appropriate notice as specified in the lease agreements. Historically, these 

leases have not been canceled and DOL has no intention to cancel these leases in the near term. 

Internal use software development costs are capitalized as software in development until the development stage 

has been completed and successfully tested. Upon completion and testing, they are reclassified as internal use 

software and amortized over their estimated useful lives. (See Note 5)

G. Advances

DOL advances consist primarily of payments made to state employment security agencies (SESA) and to grantees 

and contractors to provide for future DOL program expenditures. These advance payments are recorded by DOL as 

an asset, which is reduced when actual expenditures or the accrual of estimated expenditures are recorded by DOL. 

(See Note 6)

H. Non-entity Assets

Assets held by DOL which are not available to DOL for obligation are considered non-entity assets. DOL holds nonentity assets for the Railroad Retirement Board and for transfer to the U.S. Treasury. (See Note 7)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

66 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

I. Liabilities

Liabilities represent probable amounts to be paid by DOL as a result of past transactions and are recognized when 

incurred, regardless of whether there are budgetary resources available to pay them. However, the liquidation of 

these liabilities will consume budgetary resources and cannot be made until available resources have been 

obligated. For financial reporting purposes, DOL’s liabilities are classified as covered or not covered by budgetary 

resources. 

Liabilities are classified as covered by budgetary resources if budgetary resources are available to pay them. 

Liabilities are also considered covered by budgetary resources if they are to be funded by permanent indefinite 

appropriations, which have been enacted and signed into law and are available for use as of the balance sheet date, 

provided that the resources may be apportioned by OMB without further action by the Congress and without a 

contingency having to be met first. Liabilities are classified as not covered by budgetary resources if budgetary 

resources are not available. These classifications differ from budgetary reporting, which categorizes liabilities as 

obligated, consuming budgetary resources, or unobligated, not consuming budgetary resources. Unobligated 

liabilities include those covered liabilities for which available budgetary resources have not been obligated, as well 

as liabilities not covered for which budgetary resources are not available to pay them. (See Note 12)

J. Debt

DOL’s debt consisted of the following:

1. Black Lung Disability Trust Fund borrowings from U.S. Treasury

The Energy Improvement and Extension Act of 2008 (P.L. 110-343, section 113), enacted October 3, 2008, 

authorized restructuring of the BLDTF debt by the repayment at market value the fund’s outstanding 

repayable Advances from U.S. Treasury, using the proceeds from borrowings from Treasury’s Bureau of the 

Fiscal Service and a one‐time appropriation. Pursuant to this authority, in FY 2009, the BLDTF borrowed 

from Treasury $6.496 billion which was structured into 32 discounted instruments with sequential annual 

September 30th maturities over the 32-year period 2009 through 2040, bearing interest rates ranging from 

1.412% to 4.556%. Interest on each instrument accrues until its September 30th maturity date or the 

instrument’s prepayment, whichever occurs first. These debt payments are to be made from the excise 

taxes assessed on mined coal. In the event that the BLDTF cannot repay a discounted instrument when it 

matures, or make benefit payments or other authorized expenditures, the Act authorizes the issuance of 

one-year discounted instruments to finance these activities. The BLDTF issued additional debt on 

September 30, 2012 (due September 30, 2013) bearing an interest rate of 0.174%, and on September 30, 

2013 (due September 30, 2014) bearing an interest rate of 0.098%. (See Note 8)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 67 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

J. Debt - Continued

2. Unemployment Trust Fund advances from U.S. Treasury

UTF advances from U.S. Treasury outstanding as of September 30, 2013, and September 30, 2012, represent 

borrowings from the General Fund of the U.S. Treasury pursuant to the authority of section 1203 of the 

Social Security Act (42 USC 1323) and appropriated through five continuing resolutions with P.L. 112-74 (125 

Stat. 1056) and P.L. 112-175, and P.L. 113-6 to pay unemployment benefits, when amounts in the UTF are 

insufficient to fund these benefits. These repayable advances bear interest rates ranging between 2.375% 

and 3.250%, which were computed as the average interest rate, as of the end of the calendar month 

preceding the issuance date of the advance, for all interest bearing obligations of the United States then 

forming the public debt, to the nearest lower one‐eighth of 1%. Interest on the repayable advances is due 

on September 30th of each year or upon the repayment of an advance. Advances are repaid by transfers 

from the UTF to the General Fund of the U.S. Treasury when the Secretary of the Treasury, in consultation 

with the Secretary of Labor, has determined that the balances in the UTF allow repayment. (See Note 8)

K. Accrued Benefits

The financial statements include a liability for unemployment, workers’ compensation, and disability benefits due 

and payable from various DOL funds, as discussed below. (See Note 10)

1. Unemployment benefits payable

The UTF provides benefits to unemployed workers who meet state and Federal eligibility requirements. 

Regular and extended unemployment benefits are paid from state accounts within the UTF, financed 

primarily by a state unemployment tax on employer payrolls. Fifty percent of the cost of extended 

unemployment benefits is paid from the Extended Unemployment Compensation Account (EUCA) within 

the UTF, financed by a Federal unemployment tax on employer payrolls. The Recovery Act provided for a 

100% Federal funding of Extended Benefits (EB) through December 2009. This 100% Federal funding 

provision has been extended several times, with phase out through December 31, 2013.

The Recovery Act also provided for Federal Additional Unemployment Compensation (FAUC), a $25 weekly 

supplement entirely funded from Treasury General Fund revenues, payable through December 2009, to 

individuals who were entitled under state law to otherwise receive any type of UC. FAUC benefits were 

extended several times, with phase-out of benefit eligibility by December 2010. Although the vast majority 

of FAUC activity has ceased, states are still reporting residual transactions related to the program on 

monthly reports.

EUC benefits, also paid from EUCA, were first authorized by the Supplemental Appropriations Act of 2008.

These benefits were extended by the Recovery Act and other authorizing legislation through January 1, 

2014, and are currently funded entirely from General Fund appropriations.

Unemployment benefits to unemployed Federal workers are paid from the FEC account within the UTF, 

which is then reimbursed by the responsible Federal agency. 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

68 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

K. Accrued Benefits - Continued

1. Unemployment benefits payable - continued

A liability is recognized for unpaid unemployment benefits applicable to the current period and for benefits 

paid by states that have not been reimbursed by the fund. DOL also recognizes a liability for Federal 

employees’ unpaid unemployment benefits for existing claims filed during the current period, payable in 

the subsequent period, to the extent reimbursable by other Federal entities. 

2. Federal employees disability and 10(h) benefits payable

The FECA Special Benefit Fund provides income and medical cost protection to covered Federal civilian 

employees injured on the job, employees who have incurred a work-related occupational disease and 

beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. The 

fund is reimbursed by other Federal agencies for the FECA benefit payments made on behalf of their 

workers. The fund assumes the liability for unreimbursed (non-chargeable) FECA benefits. The fund also 

provides 50% of the annual cost-of-living adjustments for pre-1972 compensation cases under the authority 

of Section 10(h) of the Longshore and Harbor Workers’ Compensation Act and the District of Columbia 

Workmen’s Compensation Act. A liability for FECA benefits payable by the Special Benefit Fund to the 

employees of DOL and other Federal agencies and for 10(h) benefits is accrued to the extent of unpaid 

benefits applicable to the current period.

3. Black lung disability benefits payable

The BLDTF and Special Benefits for Disabled Coal Miners provide compensation and medical benefits for 

eligible coal miners who are totally disabled due to pneumoconiosis (black lung disease). DOL recognizes a 

liability for disability benefits to the extent of unpaid benefits applicable to the current period.

4. Energy employees occupational illness compensation benefits payable

The Energy Employees Occupational Illness Compensation Fund provides benefits to eligible current or 

former employees of the DOE and its contractors suffering from designated illnesses incurred as a result of 

their work with DOE. Benefits are also paid to certain survivors of those employees and contractors, as well 

as to certain beneficiaries of the Radiation Exposure Compensation Act (RECA). DOL recognizes a liability for 

disability benefits to the extent of unpaid benefits applicable to the current period.

L. Future Workers’ Compensation Benefits

The financial statements include an actuarial liability for future workers’ compensation benefits payable by DOL to 

its employees, to employees of the Panama Canal Commission and to enrollees of the Job Corps, as well as benefits 

not chargeable to other Federal agencies, which must be paid by DOL’s FECA Special Benefit Fund. The liability 

includes the expected payments for death, disability, medical, and miscellaneous costs for approved compensation 

cases, as well as a component for incurred but not reported claims. The liability is determined using historical 

benefit payment patterns related to injury years to predict the future payments. 

The actuarial methodology provides for the effects of inflation and adjusts historical payments to current year 

constant dollars by applying wage inflation factors (cost of living adjustments or COLA) and medical inflation factors 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 69 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

L. Future Workers’ Compensation Benefits - Continued

(consumer price index-medical or CPIM) to the calculation of projected benefits. The COLAs and CPIMs used in the 

projections for FY 2013 and FY 2012 were as follows:

 COLA CPIM 

 FY 2013 2012 2013 2012

 

2013 N/A 2.83% N/A 3.65%

2014 1.67 % 2.03% 3.46 % 3.66%

2015 1.80 % 1.93% 3.82 % 3.72%

2016 2.20 % 2.00% 3.83 % 3.73%

2017 2.20 % 2.03% 3.82 % 3.80%

2018+ 2.20 % 2.03% 3.82 % 3.80%

In FY 2013, DOL refined the approach for selecting the interest rate assumptions and enhanced matching between 

the timing of cash flows and interest rates. For FY 2013, projected annual payments were discounted to present 

value based on OMB’s interest rate assumptions which were interpolated to reflect the average duration for income 

payments of 14.7 years and medical payments of 9.6 years. For FY 2012, projected annual payments were 

discounted to present value based on OMB’s interest rate assumptions for ten-year Treasury notes. For FY 2013, 

interest rate assumptions were 2.727% in year one and 3.127% in year two and thereafter for income payments and 

2.334% in year one and 2.869% in year two for medical payments. For FY 2012, interest rate assumptions were 

2.293% in year one and 3.138% in year two and thereafter for both income payments and medical payments.

M. Energy Employees Occupational Illness Compensation Benefits 

The Energy Employees Occupational Illness Compensation Fund, established under the authority of the EEOICPA, 

provides benefits to eligible current or former employees of DOE and its contractors, or to certain survivors of those 

employees and contractors, as well as benefits to certain beneficiaries of RECA. DOL is responsible for adjudicating 

and administering claims filed under the EEOICPA. Effective July 31, 2001, compensation of $150,000 and payment 

of medical expenses from the date a claim is filed are available to covered individuals suffering from designated 

illnesses incurred as a result of their work with DOE. Prior to October 2004, compensation of $50,000 and payment 

of medical expenses from the date a claim is filed are available to individuals eligible for compensation under RECA. 

As a result of the October 2004 changes, subsequent RECA cases are paid the full $150,000 under EEOICPA.

The Ronald Reagan National Defense Authorization Act of 2005 amended EEOICPA to include Subtitle E – Contractor 

Employee Compensation. The amended program grants workers’ compensation benefits to covered employees and 

their families for illness and death arising from exposure to toxic substances at a DOE facility. The amendment also 

makes it possible for uranium workers as defined under Section 5 of RECA to receive compensation under Part E for 

illnesses due to toxic substance exposure at a uranium mine or mill covered under that Act. 

In FY 2013, DOL refined the approach for selecting the interest rate assumptions and enhanced matching between 

the timing of cash flows and interest rates. For FY 2013, projected payments were discounted to present value based 

on OMB’s interest rate assumptions which were interpolated to reflect the average duration for compensation

payments of 9.2 years and medical payments of 17.3 years.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

70 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

M. Energy Employees Occupational Illness Compensation Benefits - Continued

DOL has recognized a $16.0 billion and $15.6 billion actuarial liability for estimated future benefits payable by DOL 

as of September 30, 2013 and 2012, respectively, to eligible individuals under the EEOICPA. As of September 30, 

2013, the undiscounted liability is $23.0 billion discounted to a present value liability of $16.0 billion based on an 

interest rate of 2.826% for compensation payments and 3.245% for medical payments projected over a 58-year 

period. As of September 30, 2012, the undiscounted liability was $22.5 billion discounted to a present value liability 

of $15.6 billion based on an interest rate of 3.138% for both compensation payments and medical payments 

projected over a 58-year period. The estimated liability includes the expected compensation and estimated 

medical payments for approved compensation cases and cases filed pending approval, as well as claims incurred but 

not yet filed. The actuarial projection methodology provided an estimate of the ultimate number of reported cases 

as a result of estimating future reported claims from the historical patterns of reported claims and subsequent claim 

approval rates. Medical payments were derived by estimating an average benefit award per living employee 

claimant. 

N. Accrued Leave

A liability for annual and compensatory leave is accrued as leave is earned and paid when leave is taken. The 

balance of leave earned but not taken will be paid from future funding sources. Sick leave and other types of nonvested leave are expensed as taken.

O. Employee Health and Life Insurance Benefits

DOL employees are eligible to participate in the contributory Federal Employees Health Benefit Program (FEHBP) 

and the Federal Employees Group Life Insurance Program (FEGLIP). DOL matches the employee contributions to 

each program to pay for current benefits. During FY 2013, DOL’s contributions to the FEHBP and FEGLIP were 

$110.1 million and $2.4 million, respectively. During FY 2012, DOL’s contributions to the FEHBP and FEGLIP were 

$105.7 million and $2.4 million, respectively. These contributions are recognized as current operating expenses.

P. Other Retirement Benefits

DOL employees eligible to participate in the FEHBP and the FEGLIP may continue to participate in these programs 

after their retirement. DOL recognizes a current operating expense for the future cost of these other retirement 

benefits (ORB) at the time the employee’s services are rendered. This ORB expense must be financed by the U.S. 

Office of Personnel Management (OPM). Using cost factors supplied by OPM, DOL recorded ORB imputed costs and 

imputed financing sources of $70.3 million in FY 2013 and $79.9 million in FY 2012.

Q. Employee Pension Benefits

DOL employees participate in either the Civil Service Retirement System (CSRS) or the Federal Employees

Retirement System (FERS). For employees participating in CSRS, 7.0% of their gross earnings is withheld and 

transferred to the Civil Service Retirement and Disability Fund. DOL contributes an additional 7.0% of the employee 

gross earnings to the Civil Service Retirement and Disability Fund. P.L. 112-96, Section 5001, the “Middle Class Tax 

Relief and Job Creation Act of 2012,” changed the employee and employer contributions for new employees 

participating in FERS. For those employees designated by OPM as FERS Revised Annuity Employees (RAEs, i.e., new 

employees who, in general, were hired on or after January 1, 2013), DOL withholds 3.1% of gross earnings and 

makes a 9.6% employer contribution; for FERS employees hired on December 31, 2012, and before, DOL withholds 

0.8% of gross earnings and makes an 11.9% employer contribution. This total is transferred to the Federal 

Employees’ Retirement Fund. The CSRS and FERS retirement funds are administered by OPM. DOL contributions to 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 71 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Q. Employee Pension Benefits - Continued

the CSRS and FERS are recognized as current operating expenses. FERS participants are also covered under the

Federal Insurance Contribution Act (FICA) and are subject to withholdings. DOL makes matching FICA contributions, 

recognized as current operating expenses. DOL’s matching contributions were $115.5 million in FY 2013 and $111.5

million in FY 2012.

The Thrift Savings Plan (TSP) is a defined contribution retirement savings and investment plan for employees 

covered by either CSRS or FERS. CSRS participants may contribute up to $17,500 of their gross pay to the TSP during 

calendar year 2013 ($17,000 in calendar year 2012), but there is no departmental matching contribution. FERS 

participants may contribute up to $17,500 of their gross pay to the TSP during calendar year 2013 ($17,000 in 

calendar year 2012). CSRS and FERS participants aged 50 years or older may also contribute an additional $5,500 

each calendar year in “catch-up” contributions during calendar years 2013 and 2012, but there is no departmental 

matching on “catch-up” contributions. For employees covered under FERS, DOL contributes 1% of the employees’ 

gross pay to the TSP. DOL also matches employees’ contributions dollar-for-dollar on the first 3% of pay contributed 

each pay period and 50 cents on the dollar for the next 2% of pay contributed. DOL contributions to the TSP are 

recognized as current operating expenses. Employee and employer contributions to the TSP are transferred to the 

Federal Retirement Thrift Investment Board. (See Note 14) 

DOL recognizes the full cost of providing future CSRS and FERS pension benefits to covered employees at the time 

the employees’ services are rendered. The pension expense recognized in the financial statements equals the 

service cost for covered DOL employees, less amounts contributed by these employees. Service cost represents the 

actuarial present value of benefits attributed to services rendered by covered employees during the accounting 

period. 

The measurement of service cost requires the use of actuarial cost methods to determine the percentage of the 

employees’ basic compensation sufficient to fund their projected pension benefit. These percentages (cost factors) 

are provided by OPM, and applied by DOL to the basic annual compensation of covered employees to arrive at the 

amount of total pension expense to be recognized in DOL’s financial statements. 

The excess of total pension expense over the amount contributed by the Department and by DOL’s employees 

represents the amount of pension expense which must be financed directly by OPM. DOL recognized an imputed 

cost and an imputed financing source equal to the excess amount. DOL does not recognize in its financial 

statements FERS or CSRS assets, accumulated plan benefits or unfunded liabilities, if any, applicable to its 

employees. (See Note 14)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

72 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

R. Net Position

DOL’s net position consists of the following:

1. Unexpended appropriations

Unexpended appropriations include the unobligated balances and undelivered orders of DOL’s appropriated 

funds. Unobligated balances associated with appropriations that expire at the end of the fiscal year remain 

available for obligation adjustments, but not new obligations, until those appropriations are cancelled, five 

years after the appropriations expire. Unexpired multi-year and no-year appropriations remain available to 

DOL for obligation in future periods. 

2. Cumulative results of operations

Cumulative results of operations include the accumulated historical difference between expenses 

consuming budgetary resources and financing sources providing budgetary resources in DOL’s trust, 

revolving, and special funds; liabilities not consuming budgetary resources net of assets not providing 

budgetary resources; and DOL’s net investment in capitalized assets. 

S. Net Cost of Operations 

1. Operating costs 

Full operating costs are comprised of all direct costs consumed by programs and those indirect costs which 

can be reasonably assigned or allocated to programs. Full costs are reduced by exchange (earned) revenues 

to arrive at net program cost. The full and net operating costs of DOL’s major programs are presented in the 

Consolidated Statement of Net Cost, and are also reported by major program agency and major program in 

Note 15.

2. Earned revenue

Earned revenues arise from exchange transactions which occur through the provision of goods and services 

for a price, and are deducted from the full cost of DOL’s major programs to arrive at net program cost. 

Earned revenues are recognized by DOL to the extent reimbursements are payable from other Federal 

agencies and from the public, as a result of costs incurred or services performed on their behalf. Major 

sources of DOL’s earned revenue include reimbursements to the FECA Special Benefit Fund from Federal 

agencies for the costs of disability compensation and medical care provided to or accrued on behalf of their 

employees and reimbursements to the UTF from Federal agencies for the cost of unemployment benefits 

provided to or accrued on behalf of their former employees. (See Note 15)

T. Budgetary Financing Sources

Budgetary financing sources other than earned revenues provide funding for the Department’s net cost of 

operations and are reported on the Consolidated Statement of Changes in Net Position. These financing sources 

include appropriations received, less appropriations transferred and not available, non-exchange revenue, and 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 73 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

T. Budgetary Financing Sources - Continued

transfers without reimbursement, as discussed below:

1. Appropriations received, appropriations used, appropriations transferred, and adjustments

DOL receives financing sources through congressional appropriations to support its operations. A financing 

source is recognized for these appropriated funds received, less appropriations transferred, or adjusted due 

to rescission, cancellation, sequestration, or return of permanent indefinite authority. Appropriations are 

considered used as a financing source when goods and services are received or benefits are provided.

2. Non-exchange revenue

Non-exchange revenues arise primarily from the Federal government’s power to demand payments from 

the public. Non-exchange revenues are recognized by DOL on the Consolidated Statement of Changes in 

Net Position and are discussed below. (See Note 16)

Employer taxes 

Employer tax revenues are recognized on a modified cash basis, to the extent of cash transferred by the 

collecting entity to DOL, plus the change in inter-entity balances between the collecting entity and DOL. 

Inter-entity balances represent revenue received by the collecting entity, net amounts due to the collecting 

entity and adjustments made to previous transactions by the collecting entity which have not been 

transferred to DOL. 

Federal and state unemployment taxes represent non-exchange revenues collected from employers based 

on wages paid to employees in covered employment. Federal unemployment taxes are collected by the 

Internal Revenue Service and transferred to designated accounts within the UTF. State unemployment taxes 

are collected by each state and deposited in separate state accounts within the UTF. Among other things, 

Federal unemployment taxes are used to pay the Federal share of extended unemployment benefits and to 

provide for Federal and state administrative expenses related to the operation of the UI program, 

employment services including veterans’ ES, and foreign labor certifications (FLC). Additional Federal

collections from states with advances from the fund that have been outstanding for more than two years 

are used to reduce states’ outstanding advance balances. State unemployment taxes are restricted in their 

use to the payment of unemployment benefits.

Interest

The UTF, the Panama Canal Commission Compensation Fund, and the Energy Employees Occupational 

Illness Compensation Fund receive interest on fund investments. The UTF receives interest from states that 

had accounts with loans payable to the Federal Unemployment Account (FUA) at the end of the prior fiscal 

year. Interest is also earned on Federal funds in the possession of non-Federal entities. Interest is 

recognized as non-exchange revenue when earned. 

Reimbursement of unemployment benefits

The UTF receives reimbursements from state and local government entities and non-profit organizations for 

the cost of unemployment benefits provided to or accrued on behalf of their employees. These 

reimbursements are recognized as non-exchange revenue when earned. 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

74 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

T. Budgetary Financing Sources - Continued

3. Transfers without reimbursement

Transfers recognized as budgetary financing sources by DOL include transfers from the Department of 

Homeland Security H-1B Nonimmigrant Petitioner Account to H-1B Funds in ETA and WHD. There are also 

transfers between DOL entities, primarily for the administration of the UI program and of appropriations for 

extended unemployment benefits. (See Note 17)

U. Other Financing Sources

Other financing sources include items that do not represent budgetary resources. 

1. Imputed financing from costs absorbed by others

A financing source is imputed by DOL to provide for pension and other retirement benefit expenses 

recognized by DOL but financed by OPM. (See Notes 1-P, 1-Q, and 14)

2. Transfers without reimbursement

Transfers recognized as other financing sources by DOL include the transfers of property from the GSA. (See 

Note 17)

V. Custodial Activity

DOL collects and transfers to the General Fund of the U.S. Treasury custodial non-exchange revenues for penalties 

levied against employers by OSHA, MSHA, WHD, and EBSA for regulatory violations; and for FECA administrative 

costs assessed against government corporations in excess of amounts reserved to finance capital improvements in 

the FECA Special Benefit Fund; and for ETA collections and administrative changes and restitution payments. These 

collections are not available to the agencies for obligation or expenditure. Penalties and other assessments are 

recognized as custodial revenues when collected or subject to collection. (See Note 20)

W. Significant Assumptions Used in the Statement of Social Insurance and Statement of Changes in 

Social Insurance Amounts 

1. Program Background

The Black Lung Disability Benefit Program provides for compensation, medical, and survivor benefits for 

eligible coal miners who are totally disabled due to pneumoconiosis (black lung disease) arising out of their

coal mine employment and the BLDTF provides benefit payments when no responsible mine operator can 

be assigned the liability. The OWCP administers the program. 

The Federal Coal Mine Health and Safety Act sets Black Lung benefits at 37.5% of the base salary of a 

Federal employee at level GS-2, Step 1. Black lung disability benefit payments are funded by excise taxes 

from coal mine operators based on the sale of coal, as are the fund’s administrative costs. These taxes are 

collected by the Internal Revenue Service and transferred to the BLDTF, which was established under the

authority of the Black Lung Benefits Revenue Act, and administered by the U.S. Department of the Treasury.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 75 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statement of Social Insurance and Statement of Changes in 

Social Insurance Amounts - Continued

1. Program Background - continued

P.L. 110-343, Division B-Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, 

among other things, restructured the BLDTF debt by refinancing the outstanding high interest rate 

repayable advances with low interest rate discounted debt instruments similar in form to zero-coupon 

bonds, plus a one-time appropriation. This Act also allowed that any subsequent debt issued by the BLDTF 

may be used to make benefit payments, other authorized expenditures, or to repay debt and interest from 

the initial refinancing. (See Notes 1-J and 8)

2. Significant Assumptions

The significant assumptions used in the projections for the Statement of Social Insurance (SOSI) are the coal 

excise tax revenue estimates, the tax rate structure, the number of beneficiaries, life expectancy, Federal 

civilian pay raises, and medical cost inflation. These assumptions affect the amounts reported on the SOSI 

summary section and the Statement of Changes in Social Insurance Amounts (SCSIA). 

Treasury’s Office of Tax Analysis provides estimates of future receipts of the black lung excise tax. Its 

estimates are based on projections of future coal production and sale prices prepared by the Energy 

Information Agency of the U.S. Department of Energy. Treasury’s Office of Tax Analysis provides the first 

eleven years of tax receipt estimates. The remaining years are estimated using a growth rate based on both 

historical tax receipts and the Treasury’s estimated tax receipts. The coal excise tax rates of $1.10 per ton of 

underground-mined coal and $0.55 per ton of surface-mined coal sold, with a cap of 4.4% of sales price, 

continue until the earlier of December 31, 2018 or the first December 31 in which there exists no (1) 

balance of repayable debt described in section 9501 of the Internal Revenue Code and (2) unpaid interest 

on the debt. At that time, the tax rates revert to $0.50 per ton of underground-mined coal and $0.25 per 

ton of surface-mined coal sold, with a limit of 2.0% of sales price. 

The beneficiary population data is updated from information supplied by the program. The beneficiary 

population is a nearly closed universe in which attrition by death exceeds new entrants by a ratio of more 

than ten to one. Projections for new participants are included in the overall projections and are considered 

immaterial. Therefore, the difference between the open group measure and the closed group measure due 

to new participants is immaterial and the same measure is presented for both the open group and the 

closed group.

SSA life tables are used to project the life expectancies of the beneficiary population. OMB supplies 

assumptions for future monthly benefit rate increases based on increases in the Federal pay scale and future 

medical cost inflation based on increases in the CPIM, which are used to calculate future benefit costs.

During the current projection period, the future benefit rate (annualized for the fiscal year) increases 2.78% 

in 2014, 3.47% in 2015, and 3.4% in each year thereafter and medical cost increases 3.7% in 2014 and 3.8% 

in each year thereafter. Estimates for administrative costs for the first 11 years of the projection are supplied 

by DOL’s Budget Office, based on current year enacted amounts, while later years are based on the number 

of projected beneficiaries.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

76 United States Department of Labor

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

W. Significant Assumptions Used in the Statement of Social Insurance and Statement of Changes in 

Social Insurance Amounts - Continued

2. Significant Assumptions - continued

The projection period ends September 30, 2040, because the primary purpose of the BLDTF, which was 

established in 1978, is to compensate the victims of coal mine dust exposures which occurred prior to 1970.

By the end of FY 2040, not only the disabled miners and their widows in that class, but also virtually all of 

their eligible dependent disabled adult children will be deceased.

In FY 2013, DOL refined the approach for selecting the interest rate assumptions and enhanced matching 

between the timing of cash flows and interest rates. For FY 2013, projected annual payments were 

discounted to present value based on OMB’s interest rate assumptions which were interpolated to reflect 

the average duration of payments between 21.3 and 25.4 years for income payments, medical payments, 

administrative expenses, and coal excise tax collections. The interest rates used to discount current year 

projections are between 2.79% and 2.95% for income payments, medical payments, administrative 

expenses, and coal excise tax collections. For FYs 2009 through 2012, the projections were discounted using 

an interest rate published by Treasury as of the start of the projection period for Treasury loans to 

government agencies for loans with a duration that approximated the projection period. The valuation date 

for the FY 2013 and FY 2012 information presented in the SOSI, including the summary section, and in the 

SCSIA is September 30, 2013, and 2012, respectively.

The accumulated deficit of all past disbursements over past cash receipts, including interest on investments, 

is ($5.9) billion, the amount of the trust fund net position deficit at the start of the projection period, 

September 30, 2013. The excess of the present value of estimated future excise tax income over the 

actuarial present value of future benefit payments and present value of estimated future administrative 

costs during the projection period for current and future participants (open and closed group measure) is 

calculated by adding the outflows of:

(a) actuarial present value of future benefit payments during the projection period to disabled coal 

miners and dependent survivors and

(b) present value of estimated future administrative costs during the projection period;

and then subtracting the inflows of:

(c) the present value of estimated future excise tax income during the projection period.

As a result of changes in the assumptions described above, in FY 2013 the open and closed group measure 

decreased by ($38.2) million primarily due to projected lower coal excise tax revenues and the change in the 

interest rates used to discount the cash flows from 2.75% in FY 2012 to between 2.79% and 2.95% in FY 

2013 for income payments, medical payments, administrative expenses, and coal excise tax collections, 

offset in part due to lower beneficiary costs. In FY 2012, the open and closed group measure decreased by 

($61.7) million primarily due to projected lower coal excise tax revenues and higher beneficiary costs, offset 

in part due to the change in the interest rate used to discount the cash flows from 3.375% in FY 2011 to 

2.75% in FY 2012.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 77 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

X. Tax Exempt Status

As an agency of the Federal government, the Department is exempt from all taxes imposed by any governing body 

whether it is a Federal, state, commonwealth, local, or foreign government. 

Y. Application of Critical Accounting Estimates

The financial statements are based on the selection of accounting policies and the application of significant 

accounting estimates, some of which require management to make significant assumptions. 

Estimates and assumptions affect the reported amounts of assets and liabilities and the reported amounts of 

revenues and expenses during the reporting period. Actual results could differ from those estimates.

Estimates and assumptions also affect the amounts reported on the SOSI and the SCSIA. Further, the estimates are 

based on current conditions that may change in the future. Actual results could differ materially from the estimated 

amounts. The financial statements include information to assist in understanding the effect of changes in 

assumptions to the related information.

Z. Reclassifications

The FY 2012 financial statements were reclassified to conform to the FY 2013 financial statement presentation 

requirements and include changes in the presentation of the Combined Statement of Budgetary Resources in 

accordance with the requirements of OMB Circular No. A-136. The reclassifications had no effect on budgetary 

resources as previously reported.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

78 United States Department of Labor

NOTE 2 - FUNDS WITH U.S. TREASURY

Funds with U.S. Treasury as of September 30, 2013, consisted of the following:

(Dollars in thousands) Revolving funds Trust funds Special funds General funds Other Total

Unobligated Balance Available $ 11,187 $ 163 $ 370,975 $ 2,743,221 $ - $ 3,125,546

Unobligated Balance Unavailable 10,500 - 39,094 1,480,120 - 1,529,714

Obligated Balance Not Yet Disbursed 89,636 253,240 260,221 7,570,932 - 8,174,029

Non-Budgetary Fund Balance with Treasury - 276,804 - 66 - 276,870

Total Entity Assets 111,323 530,207 670,290 11,794,339 - 13,106,159

Non-entity Assets - 822 - - 3,738 4,560

Fund Balance with Treasury $ 111,323 $ 531,029 $ 670,290 $ 11,794,339 $ 3,738 $ 13,110,719

Funds with U.S. Treasury as of September 30, 2012, consisted of the following:

(Dollars in thousands) Revolving funds Trust funds Special funds General funds Other Total

Unobligated Balance Available $ 1,350 $ 80 $ 212,151 $ 1,606,952 $ - $ 1,820,533

Unobligated Balance Unavailable 15,670 - 89,208 2,465,834 - 2,570,712

Obligated Balance Not Yet Disbursed 95,582 (260,156) 303,149 7,495,730 - 7,634,305

Non-Budgetary Fund Balance with Treasury - - - - - -

Total Entity Assets 112,602 (260,076) 604,508 11,568,516 - 12,025,550

Non-entity Assets - (5,722) - - 3,355 (2,367)

Fund Balance with Treasury $ 112,602 $ (265,798) $ 604,508 $ 11,568,516 $ 3,355 $ 12,023,183

Obligated and unobligated balances differ from the amounts reported on the Statement of Budgetary Resources 

because budgetary balances are supported by amounts other than Fund Balance with Treasury, such as 

investments. Non-Budgetary Fund Balance with Treasury consists of amounts included in Fund Balance with 

Treasury but excluded from the Department’s budgetary resources, such as temporarily sequestered UTF budgetary 

authority. 

The negative fund balance reported as of September 30, 2012, relates to the UTF and is the result of the timing of 

processing the investments and redemptions of UTF. The investments and redemptions relating to the last business 

day of the month are not processed until the first day of the next month. This results in a negative cash position for 

the preceding business day when the disbursements are greater than the receipts to the fund.

Annual and multi-year budget authority expires at the end of its period of availability. During the first through the 

fifth expired years, the unobligated balance is unavailable and may be used to adjust obligations and disbursements 

that were recorded before the budgetary authority expired or to meet a legitimate or bona fide need arising in the 

fiscal year for which the appropriation was made. The unobligated balance for no-year budget authority may be 

used to incur obligations indefinitely for the purpose specified by the appropriation act. No-year budget authority 

unobligated balances, except those specifically exempt, are subject to the annual apportionment and allotment 

process.

Unobligated Balance Available as of September 30, 2013 and 2012, includes $991.7 million and $1.0 billion, 

respectively, of funds apportioned for use in the subsequent year.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 79 

NOTE 3 - INVESTMENTS

Investments as of September 30, 2013, consisted of the following:

Face Premium Interest Net Market

(Dollars in thousands) Value (Discount) Receivable Value Value

Unemployment Trust Fund

Non-marketable

Special issue U.S. Treasury Bonds

2.625% maturing June 30, 2014 $ 5,198,978 $ - $ 34,118 $ 5,233,096 $ 5,198,978

2.375% maturing June 30, 2015 4,000,000 - 23,750 4,023,750 4,000,000

2.375% maturing June 30, 2016 3,751,987 - 22,277 3,774,264 3,751,987

Special issue Certificate of Indebtedness

2.375% maturing June 30, 2014 16,527,070 - 49,327 16,576,397 16,527,070

 29,478,035 - 129,472 29,607,507 29,478,035

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

4.250% maturing November 15, 2013 51,509 264 821 52,594 51,509

Energy Employees Occupational Illness 

 Compensation Fund

Non-marketable

One day certificate

0.030% maturing October 1, 2013 24,177 - - 24,177 24,177

$ 29,553,721 $ 264 $ 130,293 $ 29,684,278 $ 29,553,721

Entity investments $ 29,367,286 $ 264 $ 129,474 $ 29,497,024 $ 29,367,286

Non-entity investments $ 186,435 $ - $ 819 $ 187,254 $ 186,435

$ 29,553,721 $ 264 $ 130,293 $ 29,684,278 $ 29,553,721
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

80 United States Department of Labor

NOTE 3 - INVESTMENTS - Continued

Investments as of September 30, 2012, consisted of the following:

Face Premium Interest Net Market

(Dollars in thousands) Value (Discount) Receivable Value Value

Unemployment Trust Fund

Non-marketable

Special issue U.S. Treasury Bonds

2.625% maturing June 30, 2013 $ 3,235,073 $ - $ 21,230 $ 3,256,303 $ 3,235,073

2.625% maturing June 30, 2014 5,198,978 - 34,118 5,233,096 5,198,978

Special issue Certificates of Indebtedness

2.625% maturing June 30, 2013 10,376,666 - 53,798 10,430,464 10,376,666

2.500% maturing June 30, 2013 1,861,861 - 829 1,862,690 1,861,861

 20,672,578 - 109,975 20,782,553 20,672,578

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

4.000% maturing November 15, 2012 51,886 245 778 52,909 51,886

3.625% maturing May 15, 2013 5,041 (1) 69 5,109 5,041

 56,927 244 847 58,018 56,927

$ 20,729,505 $ 244 $ 110,822 $ 20,840,571 $ 20,729,505

Entity investments $ 20,553,677 $ 244 $ 109,887 $ 20,663,808 $ 20,553,677

Non-entity investments 175,828 - 935 176,763 175,828

$ 20,729,505 $ 244 $ 110,822 $ 20,840,571 $ 20,729,505
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 81 

NOTE 4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE

Accounts receivable as of September 30, 2013, consisted of the following:

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits $ 519,690 $ - $ 519,690

Due for workers' compensation benefits 5,298,168 - 5,298,168

Other 6,648 - 6,648

 5,824,506 - 5,824,506

Entity assets

State unemployment taxes 1,403,161 (939,261) 463,900

Due from reimbursable employers 861,286 (75,979) 785,307

Benefit overpayments 4,480,925 (3,765,155) 715,770

Other 10,395 - 10,395

 6,755,767 (4,780,395) 1,975,372

Non-entity assets

Fines and penalties 141,499 (25,944) 115,555

 6,897,266 (4,806,339) 2,090,927

$ 12,721,772 $ (4,806,339) $ 7,915,433

Accounts receivable as of September 30, 2012, consisted of the following:

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits $ 578,111 $ - $ 578,111

Due for workers' compensation benefits 5,387,349 - 5,387,349

Other 17,000 - 17,000

 5,982,460 - 5,982,460

Entity assets

State unemployment taxes 1,454,900 (917,141) 537,759

Due from reimbursable employers 1,063,942 (115,773) 948,169

Benefit overpayments 4,732,359 (4,051,100) 681,259

Other 9,505 - 9,505

 7,260,706 (5,084,014) 2,176,692

Non-entity assets

Fines and penalties 138,040 (56,456) 81,584

 7,398,746 (5,140,470) 2,258,276

$ 13,381,206 $ (5,140,470) $ 8,240,736
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

82 United States Department of Labor

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

Property, plant and equipment as of September 30, 2013, consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities $ 1,411,415 $ (593,862) $ 817,553

Improvements to leased facilities 399,543 (279,676) 119,867

 1,810,958 (873,538) 937,420

Furniture and equipment

Equipment held by contractors 146,887 (139,173) 7,714

Furniture and equipment 40,230 (31,233) 8,997

 187,117 (170,406) 16,711

Internal use software and software in development 237,589 (99,272) 138,317

Construction-in-progress 77,925 - 77,925

Land 99,542 - 99,542

$ 2,413,131 $ (1,143,216) $ 1,269,915

2013

Property, plant and equipment as of September 30, 2012, consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities $ 1,350,272 $ (551,979) $ 798,293

Improvements to leased facilities 419,066 (274,063) 145,003

 1,769,338 (826,042) 943,296

Furniture and equipment

Equipment held by contractors 149,976 (144,359) 5,617

Furniture and equipment 44,314 (34,060) 10,254

 194,290 (178,419) 15,871

Internal use software and software in development 225,915 (80,521) 145,394

Construction-in-progress 81,676 - 81,676

Land 94,101 - 94,101

$ 2,365,320 $ (1,084,982) $ 1,280,338

2012
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 83 

NOTE 6 - ADVANCES

Advances as of September 30, 2013 and 2012, consisted of the following:

(Dollars in thousands) 2013 2012

Intra-governmental

Advances $ 1,928 $ 3,128

Advances to states for UI benefit payments 1,916,300 1,447,417

Other 9,378 9,083

 1,925,678 1,456,500

$ 1,927,606 $ 1,459,628

NOTE 7 - NON-ENTITY ASSETS

Non-entity assets as of September 30, 2013 and 2012, consisted of the following:

(Dollars in thousands) 2013 2012

Intra-governmental

Funds with U.S. Treasury $ 4,560 $ (2,367)

Investments 187,254 176,763

 191,814 174,396

Accounts receivable, net of allowance 115,555 81,584

Total non-entity assets 307,369 255,980

Total entity assets 53,600,582 43,588,476

$ 53,907,951 $ 43,844,456

NOTE 8 - DEBT

Debt during FY 2013 consisted of the following:

Balance at Balance at

September 30, Additional Repayment of September 30,

(Dollars in thousands) 2012 Borrowing Debt Interest 2013

Intra-governmental debt to Treasury

Black Lung Disability Trust Fund

 Borrowing from U.S. Treasury $ 6,065,585 $ 401,000 $ (610,403) $ 170,457 $ 6,026,639

Unemployment Trust Fund

 Advances from U.S. Treasury 32,931,755 7,700,000 (10,985,509) 49,388 29,695,634

$ 38,997,340 $ 8,101,000 $ (11,595,912) $ 219,845 $ 35,722,273

Debt during FY 2012 consisted of the following:

Balance at Balance at

September 30, Additional Repayment of September 30,

2011 Borrowing Debt Interest 2012

(Dollars in thousands)

Intra-governmental debt to Treasury

Black Lung Disability Trust Fund

 Borrowing from U.S. Treasury $ 6,163,075 $ 214,000 $ (502,035) $ 190,545 $ 6,065,585

Unemployment Trust Fund

 Advances from U.S. Treasury 42,772,829 12,164,421 (22,005,495) - 32,931,755

$ 48,935,904 $ 12,378,421 $ (22,507,530) $ 190,545 $ 38,997,340
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

84 United States Department of Labor

NOTE 8 - DEBT - Continued

For the year ended September 30, 2013, interest expense for the BLDTF was $226.6 million, of which $170.5 million 

was capitalized interest and $56.1 million was paid. For the year ended September 30, 2012, interest expense was

$227.8 million, of which $190.5 million was capitalized and $37.3 million was paid. 

For the year ended September 30, 2013, interest expense for the UTF was $968.4 million, of which $919.0 million

was paid. For the year ended September 30, 2012, all interest expense of $1.2 billion was paid. 

NOTE 9 - OTHER LIABILITIES

Other liabilities as of September 30, 2013 and 2012, consisted of the following:

(Dollars in thousands) 2013 2012

Intra-governmental

Non-entity receivables due to U.S. Treasury $ 115,044 $ 81,584

Accrued payroll and other liabilties 197,734 197,054

Total intra-governmental 312,778 278,638

Grant accruals 778,731 797,967

Capital lease liability 41,811 43,166

Environmental and disposal liability 31,501 31,930

Accrued payroll and other liabilities 65,639 131,236

Total other liabilities with the Public 917,682 1,004,299

$ 1,230,460 $ 1,282,937

The amounts above are current liabilities, except for the capital lease and environmental and disposal liabilities. 

NOTE 10 - ACCRUED BENEFITS

Accrued benefits as of September 30, 2013 and 2012, consisted of the following:

(Dollars in thousands) 2013 2012

State regular and extended unemployment benefits payable $ 1,017,609 $ 681,314

Federal extended unemployment benefits payable 242,907 261,067

Federal emergency unemployment benefits payable 808,505 814,397

Federal employees' unemployment benefits payable 259,137 286,630

Federal additional unemployment benefits payable 26,364 32,891

Total unemployment benefits payable 2,354,522 2,076,299

Black lung disability benefits payable 24,562 27,465

Federal employees' disability and 10(h) benefits payable 115,125 160,542

Energy employees occupational illness compensation benefits payable 22,913 25,296

$ 2,517,122 $ 2,289,602
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 85 

NOTE 11 - FUTURE WORKERS' COMPENSATION BENEFITS

DOL’s liability for future workers’ compensation benefits as of September 30, 2013 and 2012, consisted of the 

following: 

(Dollars in thousands) 2013 2012

Projected gross liability of the Federal government

 for future FECA benefits $ 36,787,794 $ 34,260,124

Less liabilities attributed to other agencies:

U.S. Postal Service (15,824,912) (14,404,031)

Department of the Navy (2,492,678) (2,427,697)

Department of Homeland Security (2,507,229) (2,229,503)

Department of Veterans Affairs (2,220,399) (2,014,108)

Department of the Army (1,927,282) (1,882,561)

Department of Justice (1,632,706) (1,474,279)

Department of the Air Force (1,441,960) (1,383,963)

Department of Transportation (1,047,454) (1,017,770)

Department of Agriculture (986,318) (944,353)

Department of Defense, Other (888,494) (847,082)

Department of the Interior (846,634) (802,555)

Department of the Treasury (618,603) (576,308)

Tennessee Valley Authority (460,475) (456,908)

Social Security Administration (368,218) (350,329)

Department of Health and Human Services (292,875) (273,372)

Department of Commerce (242,691) (227,990)

General Services Administration (138,657) (132,802)

Department of Energy (101,333) (93,350)

Department of State (88,426) (78,941)

Department of Housing and Urban Development (76,903) (75,577)

National Aeronautics and Space Administration (50,822) (50,389)

Environmental Protection Agency (51,818) (46,905)

Small Business Administration (33,703) (31,591)

Agency for International Development (26,047) (23,582)

Office of Personnel Management (24,750) (23,291)

Department of Education (17,575) (16,641)

Nuclear Regulatory Commission (7,023) (7,224)

National Science Foundation (1,425) (1,366)

Other (757,049) (687,671)

 (35,174,459) (32,582,139)

$ 1,613,335 $ 1,677,985

Projected liability of the Department of Labor for future FECA benefits

FECA benefits not chargeable to other Federal agencies payable by

 DOL's Federal Employees' Compensation Act Special Benefit Fund $ 1,323,300 $ 1,398,153

FECA benefits due to eligible workers of DOL and Job Corps enrollees 243,612 231,995

FECA benefits due to eligible workers of the Panama Canal Commission 46,423 47,837

$ 1,613,335 $ 1,677,985
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

86 United States Department of Labor

NOTE 12 - LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities not covered by budgetary resources as of September 30, 2013 and 2012, consisted of the following:

(Dollars in thousands) 2013 2012

Intra-governmental

Debt $ 35,722,273 $ 38,997,340

Future workers' compensation benefits 546,873 984,053

Accrued annual leave 116,030 116,063

Other liabilities 60,943 67,085

 723,846 1,167,201

Total liabilities not covered by budgetary resources 36,446,119 40,164,541

Total liabilities covered by budgetary resources 21,086,314 20,178,683

$ 57,532,433 $ 60,343,224

NOTE 13 - CONTINGENCIES

The Department is involved in various lawsuits incidental to its operations. In the opinion of management, the 

ultimate resolution of pending litigation will not have a material effect on the Department’s financial position.

NOTE 14 - PENSION EXPENSE 

Pension expense in FY 2013 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 12,780 $ 28,582 $ 41,362

Federal Employees' Retirement System 149,548 14,027 163,575

Thrift Savings Plan 54,514 - 54,514

$ 216,842 $ 42,609 $ 259,451

Pension expense in FY 2012 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 14,925 $ 32,504 $ 47,429

Federal Employees' Retirement System 143,552 12,754 156,306

Thrift Savings Plan 52,208 - 52,208

$ 210,685 $ 45,258 $ 255,943
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 87 

NOTE 15 - PROGRAM COST

Note 15 A and B present detailed cost and revenue information by major program and major program agency 

(responsibility segment) in support of the summary information presented in the Consolidated Statement of Net 

Cost for FY 2013 and FY 2012, respectively. Note 15 C presents a further breakdown of this cost and revenue 

information for DOL’s two largest program agencies, ETA, and the OWCP. (See Note 1-A.1)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

88 United States Department of Labor

NOTE 15 - PROGRAM COST - Continued

A. Consolidating Statement of Net Cost by Major Program Agency

Net cost by major program agency for the year ended September 30, 2013, consisted of the following:

Employment Office of Workers' Office Occupational

and Training Compensation of Safety and Health

(Dollars in thousands) Administration Programs Job Corps Administration

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental $ 1,078,164 $ 302,834 $ - $ -

With the public 71,443,513 5,086,617 - 274

 Gross cost 72,521,677 5,389,451 - 274

Intra-governmental earned revenue (1,131,451) (2,905,979) - -

Public earned revenue - (18) - -

 Less earned revenue (1,131,451) (2,905,997) - -

Net program cost 71,390,226 2,483,454 - 274

 Employment and training

Intra-governmental 50,753 - 12,467 -

With the public 4,595,597 - 1,512,470 -

 Gross cost 4,646,350 - 1,524,937 -

Intra-governmental earned revenue (12,246) - (25) -

Public earned revenue - - - -

 Less earned revenue (12,246) - (25) -

Net program cost 4,634,104 - 1,524,912 -

 Labor, employment and pension

 standards

Intra-governmental - - - -

With the public - - - -

 Gross cost - - - -

Intra-governmental earned revenue - - - -

Public earned revenue - - - -

 Less earned revenue - - - -

Net program cost - - - -

 Worker safety and health

Intra-governmental - - - 115,231

With the public - - - 476,410

 Gross cost - - - 591,641

Intra-governmental earned revenue - - - (401)

Public earned revenue - - - (1,829)

 Less earned revenue - - - (2,230)

Net program cost - - - 589,411

OTHER PROGRAMS

 Statistics

Intra-governmental - - - -

With the public - - - -

 Gross cost - - - -

Intra-governmental earned revenue - - - -

Public earned revenue - - - -

 Less earned revenue - - - -

Net program cost - - - -

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - -

 Less earned revenue not attributed to programs - - - -

Net cost not assigned to programs - - - -

Net cost of operations $ 76,024,330 $ 2,483,454 $ 1,524,912 $ 589,685
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 89 

Bureau of Mine Safety Employee Benefits Veterans' Wage and Other

Labor and Health Security Employment Hour Program 

Statistics Administration Administration and Training Division Agencies Total

$ - $ - $ 490 $ 33 $ - $ - $ 1,381,521

 - - 1,947 130 - 7,577 76,540,058

 - - 2,437 163 - 7,577 77,921,579

 - - (245) (17) - - (4,037,692)

 - - - - - - (18)

 - - (245) (17) - - (4,037,710)

 - - 2,192 146 - 7,577 73,883,869

 - - - 15,440 2,041 174 80,875

 - - - 238,219 475 5,113 6,351,874

 - - - 253,659 2,516 5,287 6,432,749

 - - - (55) - (82) (12,408)

 - - - - - - -

 - - - (55) - (82) (12,408)

 - - - 253,604 2,516 5,205 6,420,341

 - 98 55,140 471 85,415 61,653 202,777

 - 153 163,621 7,349 218,958 247,106 637,187

 - 251 218,761 7,820 304,373 308,759 839,964

 - - (6,144) (11) - (1,542) (7,697)

 - - - - (2,660) - (2,660)

 - - (6,144) (11) (2,660) (1,542) (10,357)

 - 251 212,617 7,809 301,713 307,217 829,607

 - 124,196 - - - - 239,427

 - 285,143 - - - 8,255 769,808

 - 409,339 - - - 8,255 1,009,235

 - (334) - - - - (735)

 - (2,741) - - - - (4,570)

 - (3,075) - - - - (5,305)

 - 406,264 - - - 8,255 1,003,930

 213,821 - - - - - 213,821

 421,779 - - - - 163 421,942

 635,600 - - - - 163 635,763

 (12,056) - - - - - (12,056)

 (27) - - - - - (27)

 (12,083) - - - - - (12,083)

 623,517 - - - - 163 623,680

 - - - - - 110,672 110,672

 - - - - - (816) (816)

 - - - - - 109,856 109,856

$ 623,517 $ 406,515 $ 214,809 $ 261,559 $ 304,229 $ 438,273 $ 82,871,283
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

90 United States Department of Labor

NOTE 15 - PROGRAM COST - Continued

B. Consolidating Statement of Net Cost by Major Program Agency 

Net cost by major program agency for the year ended September 30, 2012, consisted of the following:

Employment Office of Workers' Office Occupational

and Training Compensation of Safety and Health

(Dollars in thousands) Administration Programs Job Corps Administration

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental $ 1,364,953 $ 325,022 $ - $ - 

With the public 93,636,205 5,324,918 - 182

 Gross cost 95,001,158 5,649,940 - 182

Intra-governmental earned revenue (1,319,939) (3,018,284) - - 

Public earned revenue - (22) - - 

 Less earned revenue (1,319,939) (3,018,306) - - 

Net program cost 93,681,219 2,631,634 - 182

 Employment and training

Intra-governmental 37,027 - 33,428 - 

With the public 4,644,930 - 1,735,523 - 

 Gross cost 4,681,957 - 1,768,951 - 

Intra-governmental earned revenue (10,323) - - - 

Public earned revenue (28) - - - 

 Less earned revenue (10,351) - - - 

Net program cost 4,671,606 - 1,768,951 - 

 Labor, employment and pension

 standards

Intra-governmental - - - - 

With the public - - - - 

 Gross cost - - - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - - - - 

 Less earned revenue - - - - 

Net program cost - - - - 

 Worker safety and health

Intra-governmental - - - 126,394

With the public - - - 517,626

 Gross cost - - - 644,020

Intra-governmental earned revenue - - - (1,363)

Public earned revenue - - - (1,225)

 Less earned revenue - - - (2,588)

Net program cost - - - 641,432

OTHER PROGRAMS

 Statistics

Intra-governmental - - - - 

With the public - - - - 

 Gross cost - - - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - - - - 

 Less earned revenue - - - - 

Net program cost - - - - 

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - - 

 Less earned revenue not attributed to programs - - - - 

Net cost not assigned to programs - - - - 

Net cost of operations $ 98,352,825 $ 2,631,634 $ 1,768,951 $ 641,614
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 91 

Bureau of Mine Safety Employee Benefits Veterans' Wage and Other

Labor and Health Security Employment Hour Program 

Statistics Administration Administration and Training Division Agencies Total

$ - $ - $ 7,464 $ - $ - $ - $ 1,697,439

 - - 22,601 - - 865 98,984,771

 - - 30,065 - - 865 100,682,210

 - - (471) - - - (4,338,694)

 - - - - - - (22)

 - - (471) - - - (4,338,716)

 - - 29,594 - - 865 96,343,494

 - - - 10,637 521 123 81,736

 - - - 232,251 393 497 6,613,594

 - - - 242,888 914 620 6,695,330

 - - - (201) - (54) (10,578)

 - - - - - - (28)

 - - - (201) - (54) (10,606)

 - - - 242,687 914 566 6,684,724

 - - 49,142 1,016 92,161 67,618 209,937

 - - 137,011 37,856 275,465 190,928 641,260

 - - 186,153 38,872 367,626 258,546 851,197

 - - (6,193) (22) (632) (424) (7,271)

 - - - - (2,788) - (2,788)

 - - (6,193) (22) (3,420) (424) (10,059)

 - - 179,960 38,850 364,206 258,122 841,138

 - 123,645 - - - - 250,039

 - 290,398 - - - 131 808,155

 - 414,043 - - - 131 1,058,194

 - (417) - - - - (1,780)

 - (1,277) - - - - (2,502)

 - (1,694) - - - - (4,282)

 - 412,349 - - - 131 1,053,912

 221,565 - - - - - 221,565

 461,002 - - - - 327 461,329

 682,567 - - - - 327 682,894

 (13,286) - - - - - (13,286)

 - - - - - - - 

 (13,286) - - - - - (13,286)

 669,281 - - - - 327 669,608

 - - - - - 81,176 81,176

 - - - - - (22,166) (22,166)

 - - - - - 59,010 59,010

$ 669,281 $ 412,349 $ 209,554 $ 281,537 $ 365,120 $ 319,021 $ 105,651,886
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

92 United States Department of Labor

NOTE 15 - PROGRAM COST - Continued

C. Statement of Net Cost - Employment and Training Administration and Office of Workers’

Compensation Programs

Net cost for the year ended September 30, 2013, consisted of the following:

Employment Office of Workers'

and Training Compensation

(Dollars in thousands) Administration Programs

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits $ 65,542,488 $ 4,784,610

Grants 4,648,186 -

Interest 969,191 226,980

Administrative and other 1,361,812 377,861

 Gross cost 72,521,677 5,389,451

Less earned revenue (1,131,451) (2,905,997)

Net program cost 71,390,226 2,483,454

 Employment and training

Grants 4,411,803 -

Interest 1 -

Administrative and other 234,546 -

 Gross cost 4,646,350 -

Less earned revenue (12,246) -

Net program cost 4,634,104 -

Net cost of operations $ 76,024,330 $ 2,483,454

Net cost for the year ended September 30, 2012, consisted of the following:

Employment Office of Workers'

and Training Compensation

(Dollars in thousands) Administration Programs

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits $ 87,343,914 $ 5,061,376

Grants 4,695,049 -

Interest 1,249,025 227,761

Administrative and other 1,713,170 360,803

 Gross cost 95,001,158 5,649,940

Less earned revenue (1,319,939) (3,018,306)

Net program cost 93,681,219 2,631,634

 Employment and training

Grants 4,533,033 -

Interest 6 -

Administrative and other 148,918 -

 Gross cost 4,681,957 -

Less earned revenue (10,351) -

Net program cost 4,671,606 -

Net cost of operations $ 98,352,825 $ 2,631,634
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 93 

NOTE 16 - NON-EXCHANGE REVENUE

Non-exchange revenues reported on the Consolidated Statement of Changes in Net Position in FY 2013 and FY 2012

consisted of the following:

(Dollars in thousands) 2013 2012

Employer taxes

Unemployment Trust Fund

State unemployment taxes $ 46,205,383 $ 55,974,102

Federal unemployment taxes 7,747,614 7,058,220

 53,952,997 63,032,322

Black Lung Disability Trust Fund excise taxes 541,338 620,992

 54,494,335 63,653,314

Interest

Unemployment Trust Fund 1,270,780 1,586,401

Other 1,396 4,553

 1,272,176 1,590,954

Reimbursement of unemployment benefits and other 2,532,461 3,448,571

$ 58,298,972 $ 68,692,839

NOTE 17 - TRANSFERS WITHOUT REIMBURSEMENT

Transfers from (to) other Federal agencies in FY 2013 and FY 2012 consisted of the following:

(Dollars in thousands) 2013 2012

Budgetary financing sources

From H-1B Nonimmigrant Petitioner Account, Department of Homeland Security $ 199,640 $ 224,851

Other financing sources

From General Services Administration 4,764 966

$ 204,404 $ 225,817

The balance of $200.0 million and $224.9 million in budgetary financing sources for FY 2013 and FY 2012 reflect the 

elimination of intra-DOL transfers of $22.2 billion and $35.8 billion, respectively.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

94 United States Department of Labor

NOTE 18 - STATUS OF BUDGETARY RESOURCES

A. Apportionment Categories of Obligations Incurred

Obligations incurred reported on the Combined Statement of Budgetary Resources in FY 2013 and FY 2012 consisted 

of the following:

(Dollars in thousands) 2013 2012

Direct obligations

Category A $ 4,446,633 $ 4,737,614

Category B 37,017,563 51,645,520

Exempt from apportionment 73,913,459 96,500,468

Total direct obligations 115,377,655 152,883,602

Reimbursable obligations

Category A 334,110 261,825

Category B 2,399,662 3,138,940

Total reimbursable obligations 2,733,772 3,400,765

$ 118,111,427 $ 156,284,367

B. Permanent Indefinite Appropriations

DOL’s permanent indefinite appropriations include trust funds, the FAUC Fund, the Panama Canal Commission 

Compensation Fund, the Energy Employees Occupational Illness Compensation Fund, ETA and WHD H-1B funds, 

ETA’s Advances and Payments to the UTF, Short Time Compensation, and portions of SUIESO and Federal 

Unemployment Benefits and Allowances. These funds are described in Note 1-A.3. As of September 30, 2013 and 

2012, the Department returned unobligated, indefinite authority to Treasury in the amount of $8.4 and $10.0 

billion, respectively. 

C. Legal Arrangements Affecting Use of Unobligated Balances

UTF receipts are reported as budget authority in the Combined Statement of Budgetary Resources. The portion of 

UTF receipts collected in the current year in excess of amounts needed to pay benefits and other valid obligations 

are temporarily not available pursuant to public law. Therefore, these excess receipts are not classified as budgetary 

resources in the Combined Statement of Budgetary Resources. Conversely, when obligations exceed receipts in the 

current year, amounts are drawn from the temporarily unavailable collections to meet these obligations. 

Cumulative excess receipts are not included in unobligated balances in the status of budgetary resources included in 

that statement. All excess receipts are reported as assets of the UTF and are included in the Consolidated Balance 

Sheet. They will become available for obligation as needed in the future. 

The cumulative amounts of excess UTF receipts are denoted as unavailable collections in the Budget of the United 

States Government. The cumulative amount of these excess receipts as of September 30, 2013 and 2012,

reclassified from unobligated balances to UTF unavailable collections is presented on the following page.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 95 

NOTE 18 - STATUS OF BUDGETARY RESOURCES - Continued

C. Legal Arrangements Affecting Use of Unobligated Balances - Continued

(Dollars in millions) 2013 2012

Unemployment Trust Fund unavailable collections, beginning $ 14,908 $ 9,736

Budget authority from current year appropriations 74,237 88,111

Budget authority from current year borrowing authority 7,700 12,164

Less obligations $ (72,467) (95,103)

Excess (deficiency) of budget authority over obligations 9,470 5,172

Unemployment Trust Fund unavailable collections, ending $ 24,378 $ 14,908

D. Explanation of Differences between the Combined Statement of Budgetary Resources and the Budget 

of the United States Government

The Budget of the United States Government with actual amounts for the year ended September 30, 2013, has not 

been published as of the issue date of these financial statements. This document will be available in February 2014 

at http://www.dol.gov/dol/aboutdol/.

A reconciliation of budgetary resources, obligations incurred, distributed offsetting receipts, and net outlays, as 

presented in the Combined Statement of Budgetary Resources (SBR), to amounts included in the Budget of the 

United States Government for the year ended September 30, 2012, is shown below.

(Dollars in millions)

 Budgetary 

Resources 

 Obligations 

Incurred 

Distributed 

Offsetting 

Receipts Net Outlays

Combined Statement of Budgetary Resources $ 160,676 $ 156,284 $ 43,235 $ 104,834

Pension Benefit Guaranty Corporation reported separately 21,442 5,860 - (368)

Distributed offsetting receipts - - - 43,235

Fiduciary funds (included in the budget but not in the SBR) 194 136 - 135

Expired accounts (1,528) (105) - -

Other (37) (36) 35 22

Budget of the United States Government $ 180,747 $ 162,139 $ 43,270 $ 147,858

E. Undelivered Orders

Undelivered orders as of September 30, 2013 and 2012, were as follows:

(Dollars in thousands) 2013 2012

Undelivered orders $ 11,590,796 $ 11,390,942
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

96 United States Department of Labor

NOTE 18 - STATUS OF BUDGETARY RESOURCES - Continued

F. Appropriations Received

Appropriations from the Consolidated Statement of Changes in Net Position and the Combined Statement of 

Budgetary Resources are reconciled below.

(Dollars in millions) FY 2013 FY 2012

Appropriations Received, Consolidated Statement of Changes in Net Position $ 43,105 $ 62,229

Receipts recognized as revenue in current or prior years

Unemployment Trust Fund 76,029 104,944

Black Lung Disability Trust Fund 501 598

Other funds from dedicated collections 198 223

Repayment of debt from appropriated receipts

Unemployment Trust Fund (10,986) (22,005)

Black Lung Disability Trust Fund (209) (502)

Return of permanent indefinite authority (5,241) (9,247)

Reduction for sequestration, across the board reductions, and other (788) (20)

 59,504 73,991

Appropriations, Combined Statement of Budgetary Resources $ 102,609 $ 136,220

G. Borrowing Authority

As of September 30, 2013 and 2012, P.L. 113-6 (127 Stat. 412 dated March 26, 2013) and P.L. 112-74 (125 Stat. 

1056 dated December 23, 2011), respectively, granted borrowing authority for repayable advances and other debt 

in the amount of “such sums as may be necessary” to (1) the UTF for advances as authorized by sections 905(d) and 

1203 of the Social Security Act and (2) the BLDTF for advances as authorized by section 9501(c)(1) of the Internal 

Revenue Code. Although section 9501 of the Internal Revenue Code and P.L. 112-74 use the terminology

"advance," the Treasury has interpreted this to mean any debt owed by the BLDTF to the Bureau of the Fiscal 

Service.

Borrowing authority for the BLDTF was $401 and $214 million for FY 2013 and FY 2012, respectively. The borrowing 

authority was applied to repay debt of $401 and $214 million for FY 2013 and FY 2012, respectively.

Borrowing authority for the UTF was $7.7 and $12.2 billion for FY 2013 and FY 2012, respectively. The borrowing 

authority was used to allow states to borrow, as necessary, from the Federal government to pay unemployment 

benefits.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 97 

NOTE 19 - RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS 

(Dollars in thousands) FY 2013 FY 2012

Resources used to finance activities

Budgetary resources obligated

Obligations incurred $ 118,111,427 $ 156,284,367

Recoveries of prior year obligations (461,549) (369,860)

Less spending authority from offsetting collections (7,826,120) (8,460,059)

Obligations, net of offsetting collections and recoveries 109,823,758 147,454,448

Other resources

Imputed financing from costs absorbed by others 112,929 125,142

Transfers, net 4,764 966

Exchange revenue not in budget (985,901) (1,346,690)

Total resources used to finance activities 108,955,550 146,233,866

Resources used to finance items not part of the net cost of operations

Change in budgetary resources obligated for goods, services and

 benefits ordered but not yet received or provided (160,936) (237,196)

Resources that finance the acquisition of assets (66,477) (141,648)

Transfers that do not affect the net cost of operations (26,393,701) (40,693,007)

Total resources used to finance items not part of the net cost of operations (26,621,114) (41,071,851)

Total resources used to finance the net cost of operations 82,334,436 105,162,015

Components of the net cost of operations that will not require or generate

 resources in the current period

Components requiring or generating resources in other periods

Increase (decrease) in annual leave liability (39) 5,057

Increase in benefits liabilities 299,882 431,371

Increase in capitalized interest and other 196,245 67,513

Total 496,088 503,941

Components not requiring or generating resources

Depreciation and amortization 73,501 76,507

Revaluation of assets and liabilities 1,062,620 1,461,338

Benefit overpayments (1,095,362) (1,551,915)

Total 40,759 (14,070)

Total components of the net cost of operations that will not

 require or generate resources in the current period 536,847 489,871

Net cost of operations $ 82,871,283 $ 105,651,886
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

98 United States Department of Labor

NOTE 20 - CUSTODIAL REVENUE

Custodial revenues in FY 2013 consisted of the following:

Net Cash Increase

Collections (Decrease) in

and Transfers to Amounts to

U.S. Treasury be Collected Total

(Dollars in thousands) General Fund and Transferred Revenues

Civil monetary penalties

Occupational Safety and Health Administration $ 111,066 $ 12,490 $ 123,556

Mine Safety and Health Administration 99,907 7,792 107,699

Employee Benefits Security Administration 32,607 488 33,095

Wage and Hour Division 33,523 6,018 39,541

 277,103 26,788 303,891

Other custodial activity

Employment and Training Administration

 and other agencies 4,427 - 4,427

$ 281,530 $ 26,788 $ 308,318

Custodial revenues in FY 2012 consisted of the following:

Net Cash Increase

Collections (Decrease) in

and Transfers to Amounts to

U.S. Treasury be Collected Total

(Dollars in thousands) General Fund and Transferred Revenues

Civil monetary penalties

Occupational Safety and Health Administration $ 128,446 $ 2,951 $ 131,397

Mine Safety and Health Administration 133,434 4,364 137,798

Employee Benefits Security Administration 20,459 (1,569) 18,890

Wage and Hour Division 9,838 3,357 13,195

 292,177 9,103 301,280

Other custodial activity

Employment and Training Administration

 and other agencies 1,208 (32) 1,176

$ 293,385 $ 9,071 $ 302,456
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 99 

NOTE 21 – FUNDS FROM DEDICATED COLLECTIONS

DOL is responsible for the operation of certain funds from dedicated collections. Other funds from dedicated 

collections include Gifts and Bequests, Panama Canal Commission Compensation Fund, and H-1B Funds. The 

financial position of the funds from dedicated collections as of September 30, 2013, is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury $ 402,065 $ 128,793 $ 670,634 $ 1,201,492

Investments 29,607,507 - 52,594 29,660,101

Accounts receivable

Due from other Federal agencies

 for UCX and UCFE benefits 519,690 - - 519,690

Other - - 489 489

Total intra-governmental 30,529,262 128,793 723,717 31,381,772

Accounts receivable, net

State unemployment tax 463,900 - - 463,900

Due from reimbursable employers 785,307 - - 785,307

Benefit overpayments 670,993 17,001 - 687,994

Other - - 1 1

Advances 1,892,383 - - 1,892,383

Other - - 684 684

Total assets $ 34,341,845 $ 145,794 $ 724,402 $ 35,212,041

Liabilities

Intra-governmental

Accounts payable to DOL agencies $ 1,921,834 $ - $ 1 $ 1,921,835

Debt 29,695,634 6,026,639 - 35,722,273

Amounts held for the Railroad

 Retirement Board 188,076 - - 188,076

Other - 1 6,506 6,507

Total intra-governmental 31,805,544 6,026,640 6,507 37,838,691

Accounts payable - 6 3,025 3,031

Future workers' compensation benefits - - 46,423 46,423

Accrued benefits 2,328,158 13,370 - 2,341,528

Other liabilities - - 20,936 20,936

Total liabilities 34,133,702 6,040,016 76,891 40,250,609

Net position

Cumulative results of operations 208,143 (5,894,222) 647,511 (5,038,568)

Total liabilities and net position $ 34,341,845 $ 145,794 $ 724,402 $ 35,212,041
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

100 United States Department of Labor

NOTE 21 - FUNDS FROM DEDICATED COLLECTIONS - Continued

The net results of operations of the funds from dedicated collections for the year ended September 30, 2013, are 

shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits $ (65,484,089) $ (174,122) $ - $ (65,658,211)

Grants - - (85,296) (85,296)

Interest (969,191) (226,980) - (1,196,171)

Administrative and other (1,219,700) (2,594) (70,782) (1,293,076)

 (67,672,980) (403,696) (156,078) (68,232,754)

Earned revenue 1,094,587 - - 1,094,587

Net cost of operations (66,578,393) (403,696) (156,078) (67,138,167)

Net financing sources

Taxes 53,952,997 541,338 - 54,494,335

Interest 1,270,780 1,224 172 1,272,176

Reimbursement of unemployment benefits and other 2,509,649 - 96 2,509,745

Imputed financing - - 2,992 2,992

Transfers-in

Department of Homeland Security - - 208,619 208,619

DOL entities 26,395,361 - - 26,395,361

Transfers-out

DOL entities (4,384,449) (55,469) - (4,439,918)

Other financing sources - - (10,640) (10,640)

 79,744,338 487,093 201,239 80,432,670

Change in net position 13,165,945 83,397 45,161 13,294,503

Net position, beginning of period (12,957,802) (5,977,619) 602,350 (18,333,071)

Net position, end of period $ 208,143 $ (5,894,222) $ 647,511 $ (5,038,568)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 101 

NOTE 21 - FUNDS FROM DEDICATED COLLECTIONS - Continued

The financial position of the funds from dedicated collections as of September 30, 2012, is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury $ (354,700) $ 88,805 $ 608,221 $ 342,326

Investments 20,782,553 - 58,018 20,840,571

Accounts receivable

Due from other Federal agencies

 for UCX and UCFE benefits 578,111 - - 578,111

Other - - 908 908

Total intra-governmental 21,005,964 88,805 667,147 21,761,916

Accounts receivable, net

State unemployment tax 537,759 - - 537,759

Due from reimbursable employers 948,169 - - 948,169

Benefit overpayments 646,232 13,693 - 659,925

Other - - 4 4

Advances 1,339,191 - - 1,339,191

Other - - 930 930

Total assets $ 24,477,315 $ 102,498 $ 668,081 $ 25,247,894

Liabilities

Intra-governmental

Accounts payable to DOL agencies $ 2,288,912 $ - $ 116 $ 2,289,028

Debt 32,931,755 6,065,585 - 38,997,340

Amounts held for the Railroad

 Retirement Board 171,042 - - 171,042

Other - 1 7,263 7,264

Total intra-governmental 35,391,709 6,065,586 7,379 41,464,674

Accounts payable - 4 313 317

Future workers' compensation benefits - - 47,837 47,837

Accrued benefits 2,043,408 14,527 - 2,057,935

Other Liabilities - - 10,202 10,202

Total liabilities 37,435,117 6,080,117 65,731 43,580,965

Net position

Cumulative results of operations (12,957,802) (5,977,619) 602,350 (18,333,071)

Total liabilities and net position $ 24,477,315 $ 102,498 $ 668,081 $ 25,247,894
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

102 United States Department of Labor

NOTE 21 – FUNDS FROM DEDICATED COLLECTIONS - Continued

The net results of operations of the funds from dedicated collections for the year ended September 30, 2012, are

shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits $ (87,271,399) $ (207,971) $ - $ (87,479,370)

Grants - - (31,339) (31,339)

Interest (1,249,022) (227,743) - (1,476,765)

Administrative and other (1,572,126) (5,507) (70,578) (1,648,211)

 (90,092,547) (441,221) (101,917) (90,635,685)

Earned revenue 1,297,568 29 - 1,297,597

Net cost of operations (88,794,979) (441,192) (101,917) (89,338,088)

Net financing sources

Taxes 63,032,322 620,992 - 63,653,314

Interest 1,586,401 291 266 1,586,958

Reimbursement of unemployment benefits 3,457,681 - - 3,457,681

Imputed financing - - 3,462 3,462

Transfers-in

Department of Homeland Security - - 222,731 222,731

DOL entities 40,695,126 14,643 - 40,709,769

Transfers-out

DOL entities (5,089,281) (73,092) - (5,162,373)

Other financing sources - - - - 

 103,682,249 562,834 226,459 104,471,542

Change in net position 14,887,270 121,642 124,542 15,133,454

Net position, beginning of period (27,845,072) (6,099,261) 477,808 (33,466,525)

Net position, end of period $ (12,957,802) $ (5,977,619) $ 602,350 $ (18,333,071)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

FY 2013 Agency Financial Report 103 

NOTE 22 - FIDUCIARY ACTIVITY

The Department has one deposit fund and two trust funds that fall under the definition of fiduciary activity 

promulgated by SFFAS No. 31, "Accounting for Fiduciary Activities.” The schedule of fiduciary activity and net 

assets for these funds for the year ended and as of September 30, 2013, is shown below.

Longshore District of

Wage and Hour and Harbor Columbia

and Public Workers' Workmen's

Contracts Compensation Compensation Total

Restitution Act Trust Act Trust Fiduciary

(Dollars in thousands) Fund Fund Fund Funds

Fiduciary activity

Assessments $ 83,704 $ 126,235 $ 12,209 $ 222,148

Investment earnings - 20 1 21

Administrative and other expenses - 10 (15) (5)

Transfer of funds to Treasury (15,629) (2,116) - (17,745)

Disbursements to beneficiaries (37,585) (121,432) (8,455) (167,472)

Increase (decrease) in fiduciary net assets 30,490 2,717 3,740 36,947

Fiduciary net assets, beginning of year 119,294 19,972 1,106 140,372

Fiduciary net assets, end of year $ 149,784 $ 22,689 $ 4,846 $ 177,319

Cash $ 144,106 $ 343 $ 1 $ 144,450

Investments - 57,161 7,915 65,076

Other assets 5,678 4,088 554 10,320

Less: liabilities - (38,903) (3,624) (42,527)

Total fiduciary net assets $ 149,784 $ 22,689 $ 4,846 $ 177,319

The schedule of fiduciary activity and net assets for the fiduciary funds for the year ended and as of September 30, 

2012, is shown below.

Longshore District of

Wage and Hour and Harbor Columbia

and Public Workers' Workmen's

Contracts Compensation Compensation Total

Restitution Act Trust Act Trust Fiduciary

(Dollars in thousands) Fund Fund Fund Funds

Fiduciary activity

Assessments $ 58,013 $ 124,874 $ 7,934 $ 190,821

Investment earnings - 19 1 20

Administrative and other expenses - (46) - (46)

Transfer of funds to Treasury (5,271) (2,120) - (7,391)

Disbursements to beneficiaries (35,055) (124,268) (8,798) (168,121)

Increase (decrease) in fiduciary net assets 17,687 (1,541) (863) 15,283

Fiduciary net assets, beginning of year 101,607 21,513 1,969 125,089

Fiduciary net assets, end of year $ 119,294 $ 19,972 $ 1,106 $ 140,372

Cash $ 138,736 $ 9 $ 1 $ 138,746

Investments - 55,656 2,914 58,570

Other assets - 2,558 286 2,844

Less: liabilities (19,442) (38,251) (2,095) (59,788)

Total fiduciary net assets $ 119,294 $ 19,972 $ 1,106 $ 140,372
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2013 and 2012

104 United States Department of Labor

Note 22 - FIDUCIARY ACTIVITY - Continued

Unqualified opinions were expressed on separate financial statements, presented in accordance with U.S. GAAP, 

issued for the Longshore and Harbor Workers’ Compensation Act Trust Fund and the District of Columbia 

Workmen’s Compensation Act Trust Fund for FY 2012 and are available on DOL’s website at www.oig.dol.gov.

NOTE 23 - MATERIAL CONCENTRATION OF RISK

The Division of FEC within OWCP administers the payment of workers' compensation benefits to federal and postal 

workers for employment-related injuries and occupational diseases. Federal agencies and the U.S. Postal Service 

(USPS) reimburse the FECA Special Benefit Fund for payments made on behalf of its workers. In Note 11, Future 

Workers’ Compensation Benefits, the USPS liability as of September 30, 2013, of $15.8 billion represents the largest 

portion of the total projected gross liability of the Federal government for future FECA benefits attributed to other 

agencies of $35.2 billion as of September 30, 2013.

In October 2013 and 2012, USPS timely reimbursed the FECA Special Benefit Fund for costs incurred on its behalf 

during the 12 months ended June 30, 2013 and 2012, respectively. In the USPS annual report for the year ended 

September 30, 2013, USPS disclosed in the notes to its audited financial statements its severe lack of liquidity. 

The USPS’s portion of the FECA actuarial liability as of September 30, 2013, together with the USPS’s poor financial 

condition, represent a material concentration of risk for the Department. 

NOTE 24 - SUBSEQUENT EVENTS

The financial statements, notes, and required supplementary information (RSI) do not reflect the effects of the 

subsequent event described below.

Unemployment Insurance

Subsequent to September 30, 2013, the FUA of the UTF borrowed, as Advances from U.S. Treasury, $200 million at 

an interest rate of 2.375%. 
Required Supplementary Stewardship Information

(Unaudited)
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

106 United States Department of Labor

STEWARDSHIP INVESTMENTS IN HUMAN CAPITAL

Stewardship investments are made by DOL on behalf of the nation, providing long‐term benefits that cannot be 

measured in traditional financial reports. These investments are made for the general public, and are intended to 

maintain or increase national economic productive capacity. DOL’s stewardship investments are in human capital, 

reported as employment and training expenses in DOL’s net cost of operations. Within DOL, ETA, including the OJC, 

and the VETS administer training programs that invest in human capital.

Employment and Training Administration, Including the Office of Job Corps

ETA, including the OJC, incurred total net costs of $77.5 billion in FY 2013. The majority of these costs consisted of

unemployment benefits, which totaled $65.5 billion in FY 2013, a decrease of $21.8 billion (25.0%) over the 

previous fiscal year. Also included in ETA’s total net costs were investments in human capital of $4.7 billion, which 

provided services to over 9.2 million participants in FY 2013. These investments were made through job training 

programs authorized by WIA, Title V of the Older Americans Act, as amended, the Trade Act of 1974, as amended, 

the Health Care and Education Reconciliation Act of 2010, the National Apprenticeship Act of 1937, the American 

Recovery and Reinvestment Act of 2009 (ARRA) and other legislation.

Within ETA the OJC also invests in human capital through WIA’s Job Corps training program. OJC’s investment in 

human capital in FY 2013 was $1.5 billion, providing services to 79.6 thousand participants in primarily residential 

settings at 125 Job Corps centers. The ETA and OJC job training programs authorized by WIA are discussed below.

Adult, Dislocated Worker, Youth and Job Corps Programs

Authorized by the Workforce Investment Act (WIA) of 1998

 Adult employment and training programs – ETA awards grants to states to design and operate training 

and employment assistance programs for disadvantaged adults, including public assistance recipients. ETA’s 

FY 2013 investment in human capital through WIA adult programs was $883 million.

 Dislocated worker employment and training programs – ETA awards grants to states to provide 

reemployment services and retraining assistance to individuals dislocated from their employment. ETA’s 

FY2013 investment in human capital through WIA dislocated worker programs was $1.329 billion.

 Youth programs – ETA awards grants to states to support a wide range of program activities and services 

to prepare low‐income youth for academic and employment success, including summer jobs, by linking 

academic and occupational learning with youth development activities. ETA’s FY 2013 investment in human 

capital through WIA youth programs was $942 million.

 Job Corps program – ETA’s OJC awards contracts to support a system of primarily residential centers 

offering basic academic education, career technical training, work experience and other support, to 

economically disadvantaged youth. Large and small corporations and non‐profit organizations manage and 

operate 97 Job Corps centers under these contractual arrangements. The remaining 28 centers are 

operated through interagency agreements between DOL and the U.S. Department of Agriculture. In 

addition, 24 operators are contracted to provide outreach and admissions and career transition services. 

OJC’s FY 2013 investment in human capital through the Job Corps program was $1.525 billion.

 Reintegration of Ex‐Offenders programs – ETA supports programs to help individuals exiting prison make 

a successful transition to community life and long‐term employment through the provision of mentoring 

and job training programs to promote the successful return of adult and juvenile ex‐offenders into 

mainstream society. ETA’s FY 2013 investment in human capital through ex‐offender programs was $96 

million.
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

FY 2013 Agency Financial Report 107 

 National programs – ETA’s National programs provide evaluation resources and program support for WIA 

activities; including nationally administered programs providing employment and training services to 

segments of the population that have special disadvantages in the labor market, including grants to 

federally recognized Indian tribes and other Native American governments or non‐profit organizations, and 

to Migrant and Seasonal Farmworker service organizations ETA’s FY 2013 human capital investment in WIA 

National Programs was $170 million.

Community Service Employment for Older Americans Program

ETA also invests in human capital through the CSEOA program, authorized under Title V of the Older Americans Act, 

as amended in 2006. Known as the Senior Community Service Employment Program (SCSEP), the SCSEP is a 

federally sponsored community service employment and training program that provides part‐time training through 

on‐the‐job work experience in community service activities for unemployed, low‐income individuals ages 55 and 

older, so that they can prepare to enter or re‐enter the workforce. ETA’s FY 2013 investment in human capital 

through the CSEOA’s SCSEP was $445 million.

Trade Adjustment Assistance for Workers Program

The TAA for Workers program was authorized by the Trade Act of 1974, as amended and reauthorized with 

expanded eligibility to service sector workers by the Trade and Globalization Adjustment Assistance Act of 2009. 

This expanded eligibility was extended through December 31, 2013, by the Trade Adjustment Assistance Extension 

Act of 2011. The TAA for Workers program provides cash benefits; job search and relocation allowances;

employment services; and training to eligible workers displaced by international trade. Only TAA training costs are 

considered investments in human capital these costs were $257 million for FY 2013.

Trade Adjustment Assistance Community College and Career Training (TAACCCT) Grant Fund

Implemented in cooperation with the Department of Education, the TAACCCT program provides grants to eligible 

institutions of higher learning to improve education and employment outcomes for students. Authorized by the 

Trade Act of 1974 and Health Care and Education Reconciliation Act of 2010, the program enables educational 

institutions to prepare students to succeed in growing occupations by acquiring the skills necessary for high‐wage, 

in‐demand jobs. ETA’s FY 2013 human capital investment in the TAACCCT Grant Fund was $266 million.

National Apprenticeship Program

The National Apprenticeship Act of 1937 established the foundation for development of the nation’s skilled 

workforce through apprenticeship programs, which combine on‐the‐job learning with related technical instruction 

to teach workers the theoretical aspects of skilled occupations. Funding provides oversight for a national system of 

skilled and technical occupational training, which promotes apprentices, registers apprenticeship programs, 

certifies apprenticeship standards, and safeguards the welfare of apprentices. ETA’s FY 2013 investment in 

apprenticeship programs was $28 million.

Program Costs and Outputs

The cost of ETA and OJC investments in human capital and the participants served are shown in the chart below, for 

the five year period FY 2009 through FY 2013.
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

108 United States Department of Labor 

ETA and OJC Investmentsin Human Capital

Program Costs (in Millions) and Participants Served (1) (in Thousands)

For The Five Year Period FY 2009 through FY 2013

2013 2012 2011 2010 2009

Program Costs

Part. 

Served Costs

Part. 

Served Costs

Part. 

Served Costs

Part. 

Served Costs

Part. 

Served

WIA

Adult $883 6,761.5 $861 6,979.1 $960 7,025.2 $899 6,695.3 $878 4,921.8

Dislocated Worker 

(2) 1,329 1,340.4 1,524 1,358.4 2,039 1,570.6 2,539 1,250.4 1,440 842.1

Youth 942 224.0 944 239.6 1,124 245.0 1,431 316.3 1,125 438.9

Job Corps (5) 1,525 79.6 1,770 97.5 1,717 99.4 1,663 102.4 1,640 101.3

Ex‐Offenders 96 22.2 76 49.1 67 39.0 70 36.1 58 9.8

National Programs 

(3) 170 60.0 180 38.7 150 38.9 134 61.3 206 35.0

CSEOA

SCSEP 445 66.9 492 76.9 707 105.9 740 103.6 543 89.0

TAA for Workers 

Training 257 105.1 431 144.7 506 193.1 540 232.7 286 105.0

TAACCCT 266 18.1

Apprenticeship 28 366.0 29 410.0 32 432.2 28 485.4 25 301.6

Other (4) 212 109.3 95 357.7 135 104.9 139 95.8 120 N/A

TOTAL $6,153 9,153.1 $6,402 9,751.7 $7,437 9,854.2 $8,183 9,379.3 $6,321 6,844.5

(1) Participant numbers are from grantee reports submitted for the Program Year ending on June 30 of the corresponding fiscal year. In general, 

participants served increased in FY 2009 - FY 2011 as a result of greater demand for services due to the economic downturn and the increased 

availability of services and resources under ARRA.

(2) Dislocated Worker programsinclude Community Based Job Training Grants, National Emergency Grants and High Growth and Emerging 

Industry training. 

(3) National Programs include the Native American and Migrant and Seasonal Farmworker programs.

(4) Other includes training programs for highly skilled occupations funded through H1‐B fees, green jobs initiatives and costs for lapsed programs. 

(High Growth and Emerging industry grants were reclassified from Dislocated Workers to Other in FY 2013.)

(5) Job Corps participants served in the FY2013 and prior years report switches from reporting only the number of new enrollees to the number of 

participants served.

The table below compares the revised method to the prior method for reporting participants served:

Method/Reporting Year 2013 2012 2011 2010 2009

New students enrolled (reporting method used in 

prior FYs reports) 40,800 55,029 56,204 59,839 60,896

Students Served (reporting method used in the FY 

2013 report) 79,595 97,474 99,431 102,411 101,256

Program Outcomes

Outcomes for training programs comprising ETA’s investment in human capital will be presented in the

Department’s Annual Performance Report for FY 2013, available on the DOL website at

www.dol.gov/_sec/media/reports/ in February 2014.
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

FY 2013 Agency Financial Report 109 

Veterans’ Employment and Training Service

VETS administers programs that address the employment, training, and job security needs of Americans who have 

served in uniform. VETS prepares transitioning service members and military spouses for civilian employment and 

provides employment and training services to eligible veterans. VETS also protects service members and veterans 

by ensuring employers respect their rights to employment and reemployment; and ensures that federal employers 

give preferential hiring to veterans.

Program Activities

Jobs for Veterans State Grants (JVSG)

The Jobs for Veterans Act (JVA) of 2002, which allocates resources to the States through the JVSG program (38 

U.S.C. 4102A(b)(5)), supports the majority of VETS activities through these major VETS programs:

 Disabled Veterans’ Outreach Program (DVOP) Specialists – The DVOP Specialists (as required by 38 U.S.C. 

4103A), provide intensive services to meet the employment needs of veterans, including counseling, 

assessment, lifelong learning skills and referral to training, particularly to veterans with disabilities or those 

who recently separated from the military.

 Local Veterans’ Employment Representatives (LVER) Staff – The LVER staff (as required by 38 U.S.C. 4104)

conducts employer outreach on behalf of veterans, allowing States to develop marketing strategies and 

outreach activities that promote the hiring of veterans. The staff also provides individualized job 

development services for veterans, especially veterans determined to be job‐ready after receipt of 

intensive services from a DVOP specialist.

Transition Assistance Program (TAP)

The TAP (established by 10 U.S.C. 1144) operates as a partnership between the Departments of Labor, Defense, 

Homeland Security, and Veterans Affairs. The program provides separating service members and their spouses or 

individuals retiring from military service with career counseling and training. TAP workshops are provided 

throughout the United States and overseas.

Federal Management (VETS)

Federal management activities provide programs and policies to meet the employment and training needs of 

veterans. The majority of resources are devoted to Uniformed Services Employment and Reemployment Rights Act 

(USERRA) of 1994, codified at 38 U.S.C. Chapter 43, and Veterans’ Preference Rights (5 U.S.C. 2108, 3309) 

compliance and outreach. Activities are discussed below:

 Uniformed Services Employment and Reemployment Rights Act and Veterans’ Preference Rights –

USERRA protects civilian job rights and benefits for veterans, members of the National Guard and Reserves. 

Veterans Preference for Federal Employment is codified in 5 U.S.C. 2108 and 3309. VETS promotes a 

productive relationship between employer and employee by educating both on the employment rights of 

the individual veterans.

Homeless Veterans and Veterans’ Workforce Investment Programs

 Homeless Veterans Reintegration Program (HVRP) – The HVRP, codified at 38 U.S.C. 2021, provides 

employment assistance to homeless veterans through competitive grants to states or other entities in both 
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

110 United States Department of Labor 

urban and rural areas to operate employment programs to reach out to homeless veterans and help them 

become employed.

 Veterans’ Workforce Investment Program (VWIP) – The VWIP, (29 U.S.C. 2913), provides competitive 

grants for training and retraining of veterans to create highly skilled employment opportunities for targeted 

veterans.

Program Costs and Outputs

The full cost of VETS programs is included in the Consolidated Statement of Net Cost. The costs of VETS investments 

in human capital, and the participants served by this investment, are presented below, by major program.

VETS Investments in Human Capital

Program Costs and Participants Served (in Thousands)

For the Fiscal Years Ended FY 2009 through FY 2013

2013 2012 2011 2010 2009

Program Cost

Part. 

Serve

d

Cost(2) Part. 

Served Cost Part. Served Cost Part. Served Cost Part. Served

JVSG(1) $162,999 450.6 $210,671 508.8 $171,497 631.6 $191,802 709.0 $174,981 707.4

TAP(3) 13,176 187 13,093 153.0 7,089 143.1 7,928 129.0 7,233 124.7

USERRA(5)(6) 11,381 47.5 12,361 74.7 9,874 79.9 11,043 101.6 10,075 107.9

HVRP 40,691 17.4 35,562 19.8 28,385 17.0 31,746 14.4 28,962 13.7

VWIP(4) 2,157 1.9 9,855 4.3 7,863 3.9 8,794 3.3 8,023 3.6

TOTAL $230,404 704.4 $281,542 760.6 $224,708 875.5 $251,313 957.3 $229,274 957.3

(1) This category was previously broken into its constituent components of DVOPs and LVERs. However, to ensure consistency of each funding mechanism 

representing a single row, DVOPs and LVERs have been consolidated into a single row entitled JVSG 

(2) FY12 and prior cost allocated based on historical program cost.

(3) Department of Defense participant estimates.

(4) Public Law 113-6, Consolidated and Further Continuing Appropriations Act, 2013, did not provide funding for the Veterans’ Workforce 

Investment Program.

(5) USERRA Participants (USERRA Outreach Measure) reflects the number of people VETS connects with each year (service members, spouses, and 

employers) to inform them of their rights and responsibilities under the law.

(6) Assumes 30% of USERRA authorized staff workload is dedicated to USERRA outreach efforts.

Program Outcomes

Outcomes for the programs comprising VETS’ investment in human capital will be presented in the Department’s 

Annual Performance Report for FY 2013, available in February 2014 on the DOL website at:

www.dol.gov/_sec/media/reports/.
Required Supplementary Information

(Unaudited)
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

112 United States Department of Labor 

DEFERRED MAINTENANCE AND REPAIRS

DOL reports as general purpose plant, property and equipment, Structures, facilities and improvements, on which 

maintenance and repair activities may be deferred (deferred maintenance or DM). Over 99.3% of these buildings 

and other structures (based on net book value) are owned by ETA-OJC, and located at one hundred twenty-five (125) 

Job Corps centers throughout the United States. The remaining 0.7% is owned by MSHA. Periodic maintenance is 

performed to keep these properties in acceptable condition, as determined by DOL management. Maintenance 

requirements are stratified into critical and non-critical projects. Critical maintenance involves health and life safety

deficiencies and certain environmental and building code compliance deficiencies. To the extent possible, critical 

maintenance projects are funded shortly after they are identified. Non-critical maintenance projects are performed 

each year to the extent that funding constraints allow. Critical and non-critical maintenance projects that cannot be 

funded when scheduled are deferred to a future period.

Condition Assessment Surveys

Condition assessment surveys are conducted every three years at each property to determine the current condition 

of buildings and structures (constructed assets) and the estimated maintenance cost to correct deficiencies. Surveys 

conducted during years one and two of this three year cycle are updated to reflect maintenance and repairs

performed, and rolled up with current assessments to provide a condition assessment for the entire DOL portfolio of 

constructed assets. Condition assessment surveys are based on methods and standards consistently applied, 

including descriptions of the facility condition; standardized condition codes, classifications and categories; 

estimated costs of maintenance and repair actions and recommended maintenance schedules.

Asset Condition

Condition assessment surveys are used to estimate the current plant replacement value and deferred maintenance 

repair backlog for each constructed asset. Plant replacement value and repair backlog are used to calculate a 

Facilities Condition Index (FCI) for each building and structure. The chart below ranks each asset within one of five 

categories of asset condition, based on the assets FCI score, for the previous five year period.

Job Corps Center and MSHA Constructed Assets 

Ranking of Individual Asset Condition By FCI Score(1)

Fiscal Years 2009 – 2013

2013 2012 2011 2010 2009

Asset 

Condition

FCI 

Score

No. of 

Assets

Asset 

%

No. of 

Assets

Asset 

%

No. of 

Assets

Asset 

%

No. of 

Assets

Asset 

%

No. of 

Assets

Asset 

%

Excellent

90 -

100% 3,593 88.4 3,454 86.8 3,338 86.2 3,273 86.4 3,037 84.6

Good

80 -

89% 234 5.8 303 7.6 301 7.8 282 7.4 290 8.1

Fair

70 -

79% 117 2.9 93 2.3 100 2.6 90 2.4 95 2.6

Poor

60 -

69% 34 0.8 57 1.4 52 1.3 57 1.5 71 2.0

Very Poor < 60% 88 2.1 74 1.9 83 2.1 88 2.3 96 2.7

TOTAL 4,066 100 3,981 100 3,874 100 3,790 100 3,589 100

(1) FCI = 1 – (Repair Backlog / Plant Replacement Value). An FCI closer to 100 % indicates better asset condition. 
Annual Financial Statements

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Portfolio Condition and Deferred Maintenance and Repair Cost Estimates

The FCI assessments by building and structure are consolidated to calculate an FCI score for the entire portfolio of 

constructed assets, which is used to evaluate the overall asset condition of the Job Corps and MSHA portfolios. Job 

Corps and MSHA have set the goal of achieving and maintaining an FCI of 90% or greater (the standard used by the 

National Association of College and University Business Offices) for its portfolio of constructed assets as a level of 

acceptable condition for the periods reported. In 2013, the portfolio’s aggregate FCI score for 4,066 constructed 

assets was 94.0%, and deferred maintenance and repair costs to return the portfolio to an acceptable condition 

were estimated at $96.5 million, as shown in the table below. The final graph juxtaposes deferred maintenance cost 

estimates with the FCI trend line for the five year period ending in 2013.

Job Corps Center and MSHA Constructed Assets

Portfolio Condition and Deferred Maintenance and Repair Cost Estimates

Fiscal Years 2009 - 2013

Constructed Assets - FY Number of

Constructed 

Assets

Portfolio Condition 

Based on Aggregate 

FCI Score

Deferred Maintenance 

Costs to Return Assets To 

Acceptable Condition

Buildings and structures - 2013 4,066 Excellent - 94.0% $96,507,601

Buildings and structures - 2012 3,981 Excellent - 94.2% $104,599,502

Buildings and structures - 2011 3,874 Excellent - 93.7% $96,136,092

Buildings and structures - 2010 3,790 Excellent - 93.4% $89,827,363

Buildings and structures - 2009 3,589 Excellent - 91.7% $83,861,828
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114 United States Department of Labor

SOCIAL INSURANCE PROGRAMS

FASAB has classified certain government income transfer programs as social insurance programs. Recognizing that 

these programs have complex characteristics that do not fit traditional accounting models, the FASAB has 

developed accounting standards for social insurance programs which require the presentation of supplementary 

information to facilitate the assessment of the program’s long-term sustainability. 

DOL operates two programs classified under Federal accounting standards as social insurance programs, the UI 

Program and the Black Lung Disability Benefits Program. Presented below is the supplementary information for the 

two programs.

Unemployment Insurance Program

The UI Program was created in 1935 to provide income assistance to unemployed workers who lose their jobs 

generally through no fault of their own and are unemployed due to a lack of suitable work. The program protects 

workers during temporary periods of unemployment through the provision of UC benefits. These benefits replace 

part of the unemployed worker’s lost wages and, in so doing, stabilize the economy during recessionary periods by 

increasing the unemployed worker’s purchasing power. The UI program operates counter cyclically, with benefits 

exceeding tax collections during recessionary periods and UI tax revenues exceeding benefit payments during 

periods of recovery.

Program Administration and Funding

The UI program is administered through a unique system of Federal-state partnerships, established in Federal law 

but executed through conforming state laws by state officials. The Federal government provides broad policy 

guidance and program direction through the oversight of DOL, while program details are established through 

individual state UI statutes, administered through state UI agencies.

Federal and State Unemployment Taxes 

The UI program is financed through the collection of Federal and state unemployment taxes levied on subject 

employers and deposited in the UTF and Federal appropriations. The UTF was established to account for the 

receipt, investment, and disbursement of unemployment taxes. Federal unemployment taxes are used to pay for 

the administrative costs of the UI program, including grants to each state to cover the costs of state UI operations 

and the Federal share of extended UI benefits. Federal unemployment taxes are also used to fund an account 

within the UTF, to make advances to state UI accounts that are unable to make benefit payments because the state 

UI account balance has been exhausted. State UI taxes are used exclusively for the payment of regular UI benefits, 

as well as the state’s share of EB. 

Federal Unemployment Taxes

Under the provisions of the FUTA, a Federal tax is levied on covered employers, at a current rate of 6.0% of 

the first $7,000 in annual wages paid to each employee. This Federal tax rate is reduced by a credit of up to 

5.4%, granted to employers paying state UI taxes under conforming state UI statutes. Accordingly, in 

conforming states, employers pay an effective Federal tax of 0.6% (0.8% prior to July 1, 2011); employers in 

states with advances from the fund may pay a higher effective Federal tax rate because the Federal tax rate 

credit of 5.4% may be decreased in increments of 0.3% if a state has had an outstanding advance for more 

than two years. Additional Federal unemployment taxes collected as a result of the reduced Federal tax 
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rate credit are used to pay down the state’s outstanding advance balance. Federal unemployment taxes 

are collected by the Internal Revenue Service. 

State Unemployment Taxes

In addition to the Federal tax, individual states finance their UI programs through state tax contributions 

from subject employers based on the wages of covered employees. (Three states also collect contributions 

from employees.) Within Federal confines, state tax rates are assigned in accordance with an employer’s 

experience with unemployment. Actual tax rates vary greatly among the states and among individual 

employers within a state. At a minimum, these rates must be applied to the Federal tax base of $7,000; 

however, states may adopt a higher wage base than the minimum established by FUTA. State UI agencies 

are responsible for the collection of state unemployment taxes.

 

Unemployment Trust Fund

Federal and state UI taxes are deposited into designated accounts within the UTF. The UTF was established under 

the authority of Title IX, Section 904 of the Social Security Act of 1935, as amended, to receive, hold, invest, loan, 

and disburse Federal and state UI taxes. The U.S. Department of the Treasury acts as custodian over monies 

deposited into the UTF, investing amounts in excess of disbursing requirements in Treasury securities. The UTF is 

comprised of the following accounts:

Federal Accounts

The Employment Security Administration Account (ESAA) was established pursuant to Section 901 of the 

Act. Tax receipts collected under the FUTA are appropriated to the ESAA and used to pay the costs of 

Federal and state administration of the UI program and veterans’ ES and 97% of the costs of the state ES; 

and, amounts collected due to FUTA credit reductions are transferred to the FUA and are used to pay down 

balances of state advances that have been outstanding for more than two years. Excess balances in ESAA, 

as defined under the Act, are transferred to other Federal accounts within the Fund, as described below.

The Federal Unemployment Account was established pursuant to Section 904 of the Act. FUA is funded by 

any excesses from the ESAA as determined in accordance with Section 902 of the Act. Title XII, Section 

1201 of the Act authorizes the FUA to loan Federal monies to state accounts that are unable to make 

benefit payments because the state UI account balance has been exhausted. Title XII loans must be repaid 

with interest. The ARRA of 2009 waived interest on advances to state accounts for the period February 17, 

2009, through December 31, 2010. The FUA may borrow from the ESAA or EUCA, without interest, or may 

also receive repayable advances, with interest, from the general fund of the U.S. Treasury, when the FUA 

has a balance insufficient to make advances to the states. 

The Extended Unemployment Compensation Account was established pursuant to Section 905 of the Act. 

EUCA provides for the payment of extended unemployment benefits authorized under the Federal-State 

Extended Unemployment Compensation Act of 1970, as amended. Under the EB program, extended 

unemployment benefits are paid to individuals who have exhausted their regular unemployment benefits. 

These EB are financed one-half by State unemployment taxes and one-half by FUTA taxes from the EUCA. 

The EUCA is funded by a percentage of the FUTA tax transferred from the ESAA in accordance with Section 

905(b)(1) and (2) of the Act. The EUCA may borrow from the ESAA or the FUA, without interest, or may 

also receive repayable advances from the General Fund of the U.S. Treasury when the EUCA has a balance 

insufficient to pay the Federal share of EB. During periods of sustained high unemployment, the EUCA may 
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116 United States Department of Labor

also receive payments and non-repayable advances from the General Fund of the Treasury to finance EUC

benefits. Emergency unemployment benefits require Congressional authorization.

The Federal Employees Compensation (FEC) Account was established pursuant to Section 909 of the Act. 

The FEC account provides funds to States for unemployment compensation benefits paid to eligible former 

Federal civilian personnel and ex-service members. Generally, benefits paid are reimbursed to the Federal 

Employees Compensation Account by the various Federal agencies. Any additional resources necessary to 

assure that the account can make the required payments to States, due to the timing of the benefit 

payments and subsequent reimbursements, will be provided by non-repayable advances from the General 

Fund of the U.S. Treasury.

State Accounts

Separate state accounts were established for each state and territory depositing monies into the Fund, in 

accordance with Section 904 of the Act. State unemployment taxes are deposited into these individual 

accounts and may be used only to pay state unemployment benefits. States may receive repayable 

advances from the FUA when their balances in the Fund are insufficient to pay benefits. 

Railroad Retirement Accounts

The Railroad UI Account and Railroad UI Administrative Account were established under Section 904 of the 

Act to provide for a separate UI program for railroad employees. This separate UI program is administered 

by the Railroad Retirement Board, an agency independent of DOL. DOL is not responsible for the 

administrative oversight or solvency of the railroad UI system. Receipts from taxes on railroad payrolls are 

deposited in the Railroad UI Account and the Railroad UI Administrative Account to meet benefit payment 

and related administrative expenses. 

UI Program Benefits

The UI program provides regular and extended benefit payments to eligible unemployed workers. Regular UI 

program benefits are established under state law, payable for a period not to exceed a maximum duration. In 

1970, Federal law began to require states to extend this maximum period of benefit duration by 50% during periods 

of high unemployment. These extended benefit payments are paid equally from Federal and state accounts. 

 

Regular UI Benefits

The UI program is a cooperative Federal and state program with the federal government providing 

oversight. Eligibility requirements, as well as benefit amounts and benefit duration are determined under 

state law. Under state laws, worker eligibility for benefits depends on experience in covered employment 

during a past base period, which attempts to measure the workers’ recent attachment to the labor force. 

Three factors are common to state eligibility requirements: (1) a minimum duration of recent employment 

and earnings during a base period prior to unemployment, (2) unemployment not the fault of the 

unemployed, and (3) availability of the unemployed for work. 

Benefit payment amounts under all state laws vary with the worker’s base period wage history. Generally, 

states compute the amount of weekly UI benefits as a percentage of an individual’s average weekly base 

period earnings, within certain minimum and maximum limits. Most states set the duration of UI benefits 

by the amount of earnings an individual has received during the base period. Currently, almost all states 
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have established the maximum duration for regular UI benefits at 26 weeks. Regular UI benefits are paid by 

the state UI agencies from monies drawn down from the state account within the UTF.

Extended UI Benefits

The Federal/State Extended Unemployment Compensation Act of 1970 provides for the extension of the 

duration of UI benefits during periods of high unemployment. When the insured unemployment level 

within a state, or in some cases total unemployment, reaches certain specified levels, the state must 

extend benefit duration by 50%, up to a combined maximum of 39 weeks; certain states voluntarily 

extended the benefit duration up to a combined maximum of 46 weeks. Fifty percent of the cost of 

extended unemployment benefits is paid from the EUCA within the UTF, and 50% by the state, from the 

state’s UTF account. The ARRA of 2009 began temporary 100% Federal funding of EB. Subsequent 

legislation, most recently P.L. 112-240, the American Taxpayer Relief Act of 2012, authorized continuing 

100% Federal funding of extended unemployment benefits to December 31, 2013.

Emergency UI Benefits

During prolonged periods of high unemployment, Congress may authorize the payment of emergency 

unemployment benefits to supplement extended UI benefit payments. Emergency benefits began in July 

2008, authorized under the Supplemental Appropriations Act, 2008. This emergency program was 

temporarily extended and additionally funded by the Recovery Act and has been subsequently modified 

several times, most recently by P.L. 112-240, the American Taxpayer Relief Act of 2012, which extended the 

emergency unemployment insurance program to January 1, 2014. 

Federal UI Benefits

Unemployment benefits to unemployed Federal civilian personnel and ex-service members are paid from 

the Federal Employees Compensation Account within the UTF. These benefit costs are reimbursed by the 

responsible Federal agency and are not considered to be social insurance benefits. Federal UC benefits are 

not included in this discussion of social insurance programs. 

Program Finances and Sustainability

As of September 30, 2013, total assets within the UTF exceeded total liabilities by $208.1 million. At the present 

time there is a small surplus; any future surplus of tax revenues and earnings on these revenues over benefit 

payment expenses is available to finance benefit payments in future periods when tax revenues may be 

insufficient. Treasury invests any accumulated surplus in Federal securities. The net value of these securities, 

including interest receivable, as of September 30, 2013 was $29.6 billion. This interest is distributed to eligible 

state and Federal accounts within the UTF. Interest income from these investments during FY 2013 was $1.3 

billion. Federal and state UI tax and reimbursable revenues of $56.5 billion and regular, extended and emergency 

benefit payment expense of $65.5 billion were recognized for the year ended September 30, 2013.

As discussed in Note 1-K.1 to the consolidated financial statements, DOL recognized a liability for regular, extended 

and emergency unemployment benefits to the extent of unpaid benefits applicable to the current period and for 

benefits paid by states that have not been reimbursed by the UTF. Accrued unemployment benefits payable as of 

September 30, 2013 were $2.4 billion. 

During FY 2013, both the FUA and EUCA borrowed from the General Fund of the U.S. Treasury in the form of 

repayable advances and also repaid certain prior year (PY) advances. FUA had an outstanding repayable advances 

balance of $10.0 billion, bearing interest between 2.375% and 2.75% as of September 30, 2013. EUCA had an 
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118 United States Department of Labor

outstanding repayable advances balance of $19.6 billion bearing interest between 2.375% and 3.25% as of 

September 30, 2013.

Subsequent Events

This RSI does not reflect the effects of the subsequent events described below.

Subsequent to September 30, 2013, the FUA of the UTF borrowed, as Advances from U.S. Treasury, $200 million at 

an interest rate of 2.375%.

Effect of Projected Cash Inflows and Outflows on the Accumulated Net Assets of the UTF, in Constant Dollars 

The ability of the UI program to meet a participant’s future benefit payment needs depends on the availability of 

accumulated taxes and earnings within the UTF. The Department measures the effect of projected benefit 

payments on the accumulated net assets of the UTF, under an open group scenario, which includes current and 

future participants in the UI program. Future estimated cash inflows and outflows of the UTF are tracked by the 

Department for budgetary purposes. These projections allow the Department to monitor the sensitivity of the UI 

program to differing economic conditions, and to predict the program’s sustainability under varying economic 

assumptions.

The significant assumptions used in the projections include total unemployment rates, civilian labor force levels, 

percent of unemployed receiving benefits, total wages, distribution of benefit payments by state, state tax rate 

structures, state taxable wage bases, interest rates on UTF investments, and the Consumer Price Index-Urban

(CPI-U) for goods and services. The use of CPI-U factors allows the projections to be presented in constant dollars 

with FY 2013 as the base year. The valuation date for the projections is September 30, 2013. Cash projections 

depend on the assumptions used and actual experience may differ from the projections.

Presented on the following pages is the effect of projected economic conditions on the net assets of the UTF, in 

constant dollars, excluding the Federal Employees Compensation Account. 
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FY 2013 Agency Financial Report 119

Expected Economic Conditions 

Charts I and II graphically depict the effect of expected economic conditions on the UTF, in constant dollars, over 

the next ten years. 

Projected Cash Inflows and Outflows, in Constant Dollars, Under Expected Economic Conditions

Chart I depicts projected cash inflows and outflows of the UTF, in constant dollars, over the next ten years 

under expected economic conditions. Both cash inflows and cash inflows excluding interest earnings are 

displayed. Current estimates by the Department are based on an expected unemployment rate of 7.1% 

during FY 2014, decreasing steadily to 5.4% in FY 2018 and thereafter. Total cash inflows exceed total cash 

outflows in FY 2014 and through the end of the projected period. The net inflow decreases from $14.6 

billion in FY 2014 to $12.8 billion in FY 2015, and ranges between $10.5 billion and $1.7 billion thereafter. 

The net inflow is sustained by the excess of Federal tax collections over Federal expenditures.

Chart I

Effect of Expected Cash Flows on UTF Assets in Constant Dollars

Chart II demonstrates the effect of these expected cash inflows and outflows on the net assets of the UTF, 

in constant dollars, over the ten-year period ending September 30, 2023. Yearly projected total cash 

inflows, including interest earnings, and cash outflows, including interest payments, are depicted as well as 

the net effect of this cash flow on UTF assets. 

Total cash inflows exceed total cash outflows in FY 2014 and all other years in the projected period. The 

excess of total cash inflows over total cash outflows is highest in FY 2014. Starting at a $109.0 million fund 
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120 United States Department of Labor

balance deficit at the beginning of FY 2014, net UTF assets increase by about $67.5 billion over the next ten 

years to a $67.4 billion fund net assets balance by the end of FY 2023. The fund has a small fund balance 

deficit at the beginning of FY 2014, but ends FY 2014 with a $14.4 billion fund net assets balance.

Chart II

Sensitivity Analyses in Constant Dollars

Charts III (Sensitivity Analysis I) and IV (Sensitivity Analysis II) demonstrate the effect on accumulated UTF assets of 

projected total cash inflows and cash outflows of the UTF, in constant dollars, over the ten-year period ending 

September 30, 2023, in two sensitivity analyses. Each sensitivity analysis uses an open group, which includes 

current and future participants in the UI program. Sensitivity Analysis I assumes lower rates of unemployment and 

Sensitivity Analysis II assumes higher rates of unemployment compared to the expected economic conditions as 

shown in Charts I and II. Table I below summarizes the unemployment rates for expected conditions, Sensitivity 

Analysis I, and Sensitivity Analysis II.
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FY 2013 Agency Financial Report 121

Table I

Conditions 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Expected 7.10% 6.57% 6.15% 5.70% 5.40% 5.40% 5.40% 5.40% 5.40% 5.40%

Sensitivity

 Analysis I 6.91% 6.08% 5.60% 5.45% 5.40% 5.40% 5.40% 5.40% 5.40% 5.40%

Sensitivity

 Analysis II 9.11% 10.12% 7.82% 7.26% 7.05% 6.43% 5.61% 5.40% 5.40% 5.40%

Total Unemployment Rate for the Ten-Year Period Ending September 30, 2023

Effect on UTF Assets, in Constant Dollars, in Sensitivity Analysis I

In this sensitivity analysis, which utilizes a lower unemployment rate of 6.91% beginning in FY 2014, net cash 

inflows peak in FY 2014 and continue to be positive through 2023. Starting at a $109.0 million fund balance deficit 

at the beginning of FY 2014, net UTF assets increase by $68.0 billion over the next ten years to a $67.9 billion fund 

net assets balance by the end of FY 2023.

Chart III

Effect on UTF Assets, in Constant Dollars, in Sensitivity Analysis II

In this sensitivity analysis, net cash outflows including interest earnings and expenses are projected in

FY 2014 and FY 2015. Net cash inflows are reestablished in FY 2016 and peak in FY 2018 with a drop in the 

unemployment rate to 7.05% and then lower rates for FYs 2019 through 2023. The net assets increase 

$36.6 billion from a $109.0 million fund balance deficit at the beginning of FY 2014 to a $36.5 billion net 
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122 United States Department of Labor

assets fund balance in FY 2023. At the end of the projection period of sensitivity analysis II, net assets are 

$30.9 billion less than under expected economic conditions.

Chart IV

The example of expected economic conditions and two sensitivity analyses, in constant dollars, 

demonstrate the counter cyclical nature of the UI program, which experiences net cash outflows during 

periods of recession to be replenished through net cash inflows during periods of recovery. In the three 

scenarios, state accounts without sufficient reserve balances to absorb negative cash flows are forced to 

obtain advances from the FUA and to meet benefit payment requirements. Advances to states also deplete 

the FUA, which borrows from the ESAA and the EUCA until they are depleted. The FUA then requires 

advances from the General Fund of the U.S. Treasury to provide borrowings to states. (See following 

discussion of solvency measures for state UI programs.)
FY 2011

FY 2013 Agency Financial Report 123

Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

(Dollars in millions) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Balance, start of year $ (109) $ 14,446 $ 27,243 $ 37,700 $ 44,826 $ 51,362 $ 56,625 $ 58,357 $ 63,632 $ 65,601

Cash inflow

State unemployment taxes 49,661 46,965 44,001 41,219 39,824 38,879 38,112 38,811 38,922 39,166

Federal unemployment taxes 8,499 8,389 8,469 7,256 7,406 7,685 5,385 8,617 5,723 5,883

General revenue appropriation 4,803 - - - - - - - - -

Interest on loans 415 255 145 100 68 36 33 28 12 29

Deposits by the Railroad Retirement Board 39 85 144 145 106 80 97 126 126 102

Total cash inflow excluding interest 63,417 55,694 52,759 48,720 47,404 46,680 43,627 47,582 44,783 45,180

Interest on Federal securities 777 893 971 1,112 1,298 1,545 1,765 2,039 2,221 2,350

Total cash inflow 64,194 56,587 53,730 49,832 48,702 48,225 45,392 49,621 47,004 47,530

Cash outflow

State unemployment benefits 44,695 39,175 38,805 38,299 37,805 38,664 39,407 40,100 40,798 41,454

State administrative costs 4,021 3,918 3,923 3,924 3,928 3,930 3,931 3,932 3,941 3,950

Federal administrative costs 189 189 188 188 188 187 186 186 186 186

Interest on tax refunds 1 1 1 1 1 1 1 2 1 1

Interest on advances 619 394 245 184 135 71 26 17 - 8

Railroad Retirement Board withdrawals 114 113 111 110 109 109 109 109 109 109

Total cash outflow 49,639 43,790 43,273 42,706 42,166 42,962 43,660 44,346 45,035 45,708

Excess of total cash inflow excluding

 interest over total cash outflow 13,778 11,904 9,486 6,014 5,238 3,718 (33) 3,236 (252) (528)

Excess of total cash inflow over

 total cash outflow 14,555 12,797 10,457 7,126 6,536 5,263 1,732 5,275 1,969 1,822

Balance, end of year $ 14,446 $ 27,243 $ 37,700 $ 44,826 $ 51,362 $ 56,625 $ 58,357 $ 63,632 $ 65,601 $ 67,423

Total unemployment rate 7.10% 6.57% 6.15% 5.70% 5.40% 5.40% 5.40% 5.40% 5.40% 5.40% 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION IN CONSTANT DOLLARS

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT

FOR THE TEN-YEAR PERIOD ENDING SEPTEMBER 30, 2023

(1) EXPECTED ECONOMIC CONDITIONS
 

(Dollars in millions) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Balance, start of year $ (109) $ 15,931 $ 30,500 $ 41,670 $ 49,120 $ 55,098 $ 59,672 $ 61,743 $ 63,823 $ 65,624

Cash inflow

State unemployment taxes 49,624 46,789 43,307 40,087 38,984 38,042 38,511 38,834 38,951 39,393

Federal unemployment taxes 8,513 8,430 7,713 7,286 7,424 7,697 5,392 5,567 5,733 6,194

General revenue appropriation 4,784 - - - - - - - - -

Interest on loans 408 240 125 77 39 20 19 32 65 103

Deposits by the Railroad Retirement Board 39 85 144 145 106 80 97 126 126 102

Total cash inflow excluding interest 63,368 55,544 51,289 47,595 46,553 45,839 44,019 44,559 44,875 45,792

Interest on Federal securities 780 1,094 1,020 1,155 1,345 1,583 1,787 2,015 2,228 2,437

Total cash inflow 64,148 56,638 52,309 48,750 47,898 47,422 45,806 46,574 47,103 48,229

Cash outflow

State unemployment benefits 43,187 37,504 36,729 36,951 37,616 38,584 39,503 40,261 41,058 41,723

State administrative costs 3,998 3,887 3,884 3,893 3,916 3,923 3,927 3,929 3,940 3,950

Federal administrative costs 189 189 188 188 188 187 186 186 186 186

Interest on tax refunds 1 1 1 1 1 1 1 1 1 1

Interest on advances 619 375 226 157 90 44 9 8 8 8

Railroad Retirement Board withdrawals 114 113 111 110 109 109 109 109 109 109

Total cash outflow 48,108 42,069 41,139 41,300 41,920 42,848 43,735 44,494 45,302 45,977

Excess of total cash inflow excluding

 interest over total cash outflow 15,260 13,475 10,150 6,295 4,633 2,991 284 65 (427) (185)

Excess of total cash inflow over

 total cash outflow 16,040 14,569 11,170 7,450 5,978 4,574 2,071 2,080 1,801 2,252

Balance, end of year $ 15,931 $ 30,500 $ 41,670 $ 49,120 $ 55,098 $ 59,672 $ 61,743 $ 63,823 $ 65,624 $ 67,876

Total unemployment rate 6.91% 6.08% 5.60% 5.45% 5.40% 5.40% 5.40% 5.40% 5.40% 5.40% 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION IN CONSTANT DOLLARS

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT

FOR THE TEN-YEAR PERIOD ENDING SEPTEMBER 30, 2023

(2) SENSITIVITY ANALYSIS I LOWER UNEMPLOYMENT RATE 124 United States Department of Labor

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FY 2013 Agency Financial Report 125137

(Dollars in millions) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Balance, start of year $ (109) $ (11,096) $ (28,237) $ (23,704) $ (12,999) $ (1,783) $ 8,111 $ 18,926 $ 28,968 $ 35,056

Cash inflow

State unemployment taxes 50,229 51,539 53,392 53,340 51,773 48,398 45,709 42,868 40,536 39,686

Federal unemployment taxes 8,524 9,216 9,986 10,600 10,285 9,307 9,112 9,699 8,325 4,974

General revenue appropriation 5,007 55 20 - - - - - - -

Interest on loans 532 663 593 462 355 277 204 123 43 35

Deposits by the Railroad Retirement Board 39 85 144 145 106 80 97 126 126 102

Total cash inflow excluding interest 64,331 61,558 64,135 64,547 62,519 58,062 55,122 52,816 49,030 44,797

Interest on Federal securities 623 520 422 511 682 976 1,266 1,618 1,904 2,007

Total cash inflow 64,954 62,078 64,557 65,058 63,201 59,038 56,388 54,434 50,934 46,804

Cash outflow

State unemployment benefits 70,469 73,581 54,659 49,184 46,925 44,246 40,822 39,767 40,293 40,871

State administrative costs 4,421 4,508 4,236 4,114 4,085 4,035 3,970 3,938 3,941 3,950

Federal administrative costs 189 189 188 188 188 187 186 186 186 186

Interest on tax refunds 1 1 1 1 1 1 2 2 2 1

Interest on advances 747 827 829 756 677 566 484 390 315 268

Railroad Retirement Board withdrawals 114 113 111 110 109 109 109 109 109 109

Total cash outflow 75,941 79,219 60,024 54,353 51,985 49,144 45,573 44,392 44,846 45,385

Excess of total cash inflow excluding

 interest over total cash outflow (11,610) (17,661) 4,111 10,194 10,534 8,918 9,549 8,424 4,184 (588)

Excess of total cash inflow over

 total cash outflow (10,987) (17,141) 4,533 10,705 11,216 9,894 10,815 10,042 6,088 1,419

Balance, end of year $ (11,096) $ (28,237) $ (23,704) $ (12,999) $ (1,783) $ 8,111 $ 18,926 $ 28,968 $ 35,056 $ 36,475

Total unemployment rate 9.11% 10.12% 7.82% 7.26% 7.05% 6.43% 5.61% 5.40% 5.40% 5.40% 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION IN CONSTANT DOLLARS

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT

FOR THE TEN-YEAR PERIOD ENDING SEPTEMBER 30, 2023

(3) SENSITIVITY ANALYSIS II HIGHER UNEMPLOYMENT RATE
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126 United States Department of Labor

States with Minimally Solvent UTF Account Balances

Each state’s accumulated UTF net assets or reserve balance should provide a defined level of benefit payments over 

a defined period. To be minimally solvent, a state’s reserve balance should provide for one year’s projected benefit 

payment needs based on the highest levels of benefit payments experienced by the state over the last twenty years. 

A ratio of 1.00 or greater indicates that the state UTF account balance is minimally solvent. States below this level 

are vulnerable to exhausting their funds in a recession. States exhausting their reserve balance must borrow funds 

from FUA to make benefit payments. During FY 2009, the balances in the FUA were depleted and the FUA 

borrowed from the General Fund of the U.S. Treasury and continued to do so through FY 2013, although in FY 2012 

and FY 2013 the FUA repaid some borrowings. 

Chart V presents the state by state results of this analysis at September 30, 2013 in descending order by ratio. As 

the chart below illustrates, 37 state UTF accounts were below the minimal solvency ratio of 1.00 at September 30, 

2013.

Chart V

State Ratio State Ratio State Ratio

Wyoming 2.01 Maryland 0.97 Pennsylvania 0.00

Oklahoma 1.95 Puerto Rico 0.87 Texas 0.00

Nebraska 1.76 Tennessee 0.83 New Jersey 0.00

Mississippi 1.70 Hawaii 0.73 Georgia 0.00

Utah 1.35 Minnesota 0.69 Delaware 0.00

Maine 1.33 Vermont 0.51 Wisconsin 0.00

Alaska 1.28 Alabama 0.47 Missouri 0.00

Oregon 1.27 West Virginia 0.42 Connecticut 0.00

District of Columbia 1.21 Florida 0.32 Rhode Island 0.00

Iowa 1.21 Massachusetts 0.30 South Carolina 0.00

Louisiana 1.20 Virginia 0.26 Nevada 0.00

Washington 1.15 Kansas 0.20 New York 0.00

New Hampshire 1.13 New Mexico 0.19 Ohio 0.00

North Dakota 1.10 Arizona 0.08 Kentucky 0.00

South Dakota 1.09 Arkansas 0.00 North Carolina 0.00

Montana 1.05 Colorado 0.00 California 0.00

Idaho 0.00 Indiana 0.00

Illinois 0.00 Virgin Islands 0.00

Michigan 0.00

Minimally Solvent Not Minimally Solvent
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2011 FY 2013 Agency Financial Report 127

Black Lung Disability Benefit Program

The Black Lung Disability Benefit Program provides for compensation, medical, and survivor benefits for eligible 

coal miners who are totally disabled due to pneumoconiosis (black lung disease) arising out of their coal mine 

employment and the BLDTF provides benefit payments when no responsible mine operator can be assigned the 

liability. Other information about the BLDTF and social insurance reporting is also presented in Note 1-W of the 

financial statements.

Program Administration and Funding

The Federal Coal Mine Health and Safety Act sets Black Lung benefits at 37.5% of the base salary of a Federal 

employee at level GS-2, Step 1. Black lung disability benefit payments are funded by excise taxes from coal mine 

operators based on the sale of coal, as are the program’s administrative costs. These taxes are collected by the 

Internal Revenue Service and transferred to the BLDTF, which was established under the authority of the Black Lung 

Benefits Revenue Act, and administered by the U.S. Department of the Treasury. 

P.L. 110-343, Division B-Energy Improvement and Extension Act of 2008, enacted on October 3, 2008, in section 

113, (1) allowed for the temporary increase in coal excise tax rates to continue an additional five years beyond the 

statutory limit and (2) restructured the BLDTF debt by refinancing the outstanding repayable advances (which had 

higher interest rates) with discounted debt instruments similar in form to zero-coupon bonds (which had lower 

interest rates), plus a one-time appropriation. This Act also allowed that any subsequent debt issued by the BLDTF 

may be used to make benefit payments, other authorized expenditures, or to repay debt and interest from the 

initial refinancing. All debt issued by the BLDTF was effected as borrowing from the Treasury's Bureau of Public 

Debt. (See Notes 1-J and 8)

Program Finances and Sustainability

At September 30, 2013, total liabilities of the BLDTF exceeded assets by nearly $5.9 billion. This net position 

represents the accumulated shortfall of excise taxes necessary to meet benefit payments, administrative costs, and 

interest expense incurred prior to and subsequent to the debt refinancing pursuant to P.L. 110-343. Prior to 

enactment of P.L. 110-343, this shortfall was funded by repayable advances to the BLDTF, which were repayable 

with interest. Pursuant to P.L. 110-343, any shortfall will be financed with debt instruments similar in form to zerocoupon bonds, with a maturity date of one year and bear interest at the Treasury 1-year rate. Outstanding debt at 

September 30, 2013 was $6.0 billion, bearing interest rates ranging from 0.098% to 4.556%. Excise tax revenues of 

$541.3 million, benefit payment expense of $174.1 million, and interest expense of $227.0 million were recognized 

for the year ended September 30, 2013. The interest expense is accrued and capitalized to the principal of the 

debt until the debt reaches its face value at the time of maturity. On September 30, 2013, the BLDTF issued debt in 

the amount of $401.0 million, bearing interest at 0.098% and maturing on September 30, 2014. At September 30, 

2013, there were 28 debt instruments with staggered maturities of September 30 for years 2014 through 2040, 

with a total carrying value of nearly $6.0 billion and a total face value at maturity of $9.8 billion. Of these 28 debt 

instruments, 27 are from the October 2008 refinancing and one debt instrument was issued on September 30, 

2013.
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

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128 United States Department of Labor

Projected Cash Inflows and Outflows, in Constant Dollars

The beneficiary population is a nearly closed universe in which attrition by death exceeds new entrants by a ratio of 

more than ten to one. Projections for new participants are included in the overall projections and are considered 

immaterial. Therefore, the difference between the open group measure and the closed group measure due to new 

participants is immaterial and the same measure is presented for both the open group and the closed group.

The significant assumptions used in the projections, in constant dollars, are coal excise tax revenue estimates, the 

tax rate structure, the number of beneficiaries, life expectancy, Federal civilian pay raises, medical cost inflation, the 

interest rate on new debt issued by the BLDTF, and the CPI-U for goods and services . The use of CPI-U factors 

allows the projections to be presented in constant dollars with FY 2013 as the base year. The valuation date for the 

projections is September 30, 2013. Cash projections depend on the assumptions used and actual experience may 

differ from the projections. These projections are sensitive to changes in the excise tax rate and changes in interest 

rates on debt issued by the BLDTF.

These projections, in constant dollars, made over the 27-year period ending September 30, 2040, indicate that cash 

inflows from excise taxes will exceed cash outflows for benefit payments and administrative expenses for each 

period projected. Cumulative net cash inflows are projected to reach $5.1 billion by FY 2040. However, when 

payments from the BLDTF’s maturing debt are applied against this surplus cash inflow, the BLDTF’s cash flow turns 

negative in all periods included in the projections. Net cash outflows after payments on maturing debt are 

projected to reach $3.8 billion by the end of FY 2040, resulting in a projected deficit of $6.0 billion at September 30, 

2040. Amount totals in tables may differ slightly due to rounding. (See Chart I and Table I)

The net present value of future projected benefit payments and other cash inflow and outflow activities together 

with the fund’s deficit positions as of September 30, 2013, 2012, 2011, 2010, and 2009 are presented in the SOSI. 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2011 FY 2013 Agency Financial Report 129

Chart I

Projected Cash Inflows and Outflows with Sensitivity Analysis, in Constant Dollars

For the projected cash inflows and outflows with sensitivity analysis, in constant dollars, the significant assumptions 

for Federal civilian pay raises were modified to freeze raises during 2014 and 2015 (which in turn froze income 

benefits) and the administrative costs were reduced by 7.5% for FYs 2014 through 2023; however, the other 

significant assumptions were left unchanged. The Federal Coal Mine Health and Safety Act sets Black Lung benefits 

at 37.5% of the base salary of a Federal employee at level GS-2. The significant assumptions for Federal civilian pay 

raises were modified to reflect that no Federal employee statutory pay adjustment would take effect through 

December 31, 2015. As a result, because the Federal employee base salary would remain unchanged through 

2015, the rates for Black Lung benefits would likewise remain unchanged through 2015. Even after statutory pay 

adjustments return in 2016, they would be applied to lower amounts of benefits and this would decrease the 

benefit amounts through FY 2040. The administrative costs were reduced to reflect the effects of reduced budgets 

overall due to the sequestration which occurred during FY 2013. Cash projections depend on the assumptions used 

and actual experience may differ from the projections. These projections are sensitive to changes in the excise tax 

rate and changes in interest rates on debt issued by the BLDTF.

These projections with sensitivity analysis, in constant dollars, made over the 27-year period ending September 30, 

2040, indicate that cash inflows from excise taxes would exceed cash outflows for benefit payments and 

administrative expenses for each period projected. Cumulative net cash inflows would be projected to reach $5.3 

billion by the year 2040. However, when payments from the BLDTF’s maturing debt are applied against this surplus 

cash inflow, the BLDTF’s cash flow would turn negative in all periods included in the projections. Net cash outflows 

after payments on maturing debt would be projected to reach $3.5 billion by the end of the year 2040, and would 

result in a projected deficit of $5.6 billion at September 30, 2040. (See Chart II and Table II) Amount totals in tables 

may differ slightly due to rounding.
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

130 United States Department of Labor

Chart II

Open and Closed Group Measure with Sensitivity Analysis

For the open and closed group measure with sensitivity analysis, we modified the significant assumptions as 

described above (see Projected Cash Inflows with Sensitivity Analysis, in Constant Dollars) for Federal civilian pay 

raises and administrative costs, but the other significant assumptions were left unchanged.

In FY 2013, DOL refined the approach for selecting the interest rate assumptions and enhanced matching between 

the timing of cash flows and interest rates used in the open and closed group measure with sensitivity analysis. For 

FY 2013, projected annual payments were discounted to present value based on OMB’s interest rate assumptions 

which were interpolated to reflect the average duration of payments between 21.3 and 25.4 years for income 

payments, medical payments, administrative expenses, and coal excise tax collections. The interest rates used to 

discount the projections are between 2.79% and 2.95% for income payments, medical payments, administrative 

expenses, and coal excise tax collections. In FYs 2011 and 2012, the projections were discounted using an interest 

rate published by Treasury as of the start of the projection period for Treasury loans to government agencies for 

loans with a duration that approximated the projection period. 

As a result of changing the significant assumptions for Federal civilian pay raises and administrative costs as 

described above, for FY 2013 the actuarial present value of future benefit payments during the projection period to 

disabled coal miners and dependent survivors would decrease ($103,188) from $1,953,763 as reported on the SOSI

to $1,850,575; the present value of estimated future administrative costs during the projection period would 

decrease ($69,057) from $920,740 as reported on the SOSI to $851,683; the actuarial present value of future 

benefit payments and present value of estimated future administrative costs during the projection period for 

current and future participants would decrease ($172,245) from $2,874,503 as reported on the SOSI to $2,702,258; 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2011 FY 2013 Agency Financial Report 131

the excess of present value of estimated future excise tax income over actuarial present value of future benefit 

payments and present value of estimated future administrative costs during the projection period for current and 

future participants (open and closed group measure) would increase $172,245 from $4,620,297 as reported on the 

SOSI to $4,792,542. The trust fund net position deficit at the start of the projection period would remain 

unchanged.

Cash projections depend on the assumptions used and actual experience may differ from the projections. These 

projections are sensitive to changes in the excise tax rate and changes in interest rates on debt issued by the BLDTF.
Table I 

(Dollars in thousands) 2014 2015 2016 2017 2018 2019 - 2040 Total

Balance, start of year $ (5,894,222) $ (5,619,550) $ (5,351,096) $ (5,130,160) $ (4,933,985) $ (4,750,935) $ (5,894,222)

Cash inflow

Excise taxes 577,021 576,238 538,824 531,072 539,994 5,450,839 8,213,988

Total cash inflow 577,021 576,238 538,824 531,072 539,994 5,450,839 8,213,988

Cash outflow

Disabled coal miners benefits 169,703 156,866 145,432 134,831 124,914 1,354,569 2,086,315

Administrative costs 58,077 56,836 55,654 54,473 53,350 714,477 992,867

Cash outflows before repayment of

 debt and interest 227,780 213,702 201,086 189,304 178,264 2,069,046 3,079,181

Cash inflow over cash outflow 

 before repayment of debt and interest 349,241 362,536 337,738 341,768 361,730 3,381,793 5,134,807

Maturity of obligations refinanced October 2008 464,811 473,890 487,493 498,362 506,265 4,718,714 7,149,535

Interest on annual borrowings 386 923 2,542 9,693 20,944 1,757,096 1,791,583

Total cash outflow 692,977 688,514 691,120 697,359 705,473 8,544,856 12,020,299

Total cash outflow over total cash inflow (115,956) (112,276) (152,296) (166,287) (165,479) (3,094,017) (3,806,311)

Reduction of debt refinanced October 2008 390,627 380,730 373,233 362,462 348,529 1,899,790 3,755,371

Balance, end of year $ (5,619,550) $ (5,351,096) $ (5,130,160) $ (4,933,985) $ (4,750,935) $ (5,945,162) $ (5,945,162)

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

U.S. DEPARTMENT OF LABOR

CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND IN CONSTANT DOLLARS

FOR THE 27-YEAR PERIOD ENDING SEPTEMBER 30, 2040

(Unaudited)REQUIRED SUPPLEMENTARY INFORMATIONFinancial Section

132 United States Department of Labor t 
11

Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

Table II 

(Dollars in thousands) 2014 2015 2016 2017 2018 2019 - 2040 Total

Balance, start of year $ (5,894,222) $ (5,611,193) $ (5,330,265) $ (5,096,512) $ (4,887,894) $ (4,692,425) $ (5,894,222)

Cash inflow

Excise taxes 577,021 576,238 538,824 531,072 539,994 5,450,839 8,213,988

Total cash inflow 577,021 576,238 538,824 531,072 539,994 5,450,839 8,213,988

Cash outflow

Disabled coal miners benefits 165,701 148,672 136,889 126,953 117,640 1,279,884 1,975,739

Administrative costs 53,721 52,573 51,480 50,387 49,349 660,888 918,399

Cash outflows before repayment of

 debt and interest 219,422 201,246 188,369 177,340 166,989 1,940,772 2,894,139

Cash inflow over cash outflow 

 before repayment of debt and interest 357,599 374,992 350,455 353,732 373,005 3,510,067 5,319,849

Maturity of obligations refinanced October 2008 464,811 473,890 487,493 498,362 506,265 4,718,714 7,149,535

Interest on annual borrowings 386 905 2,443 9,214 19,800 1,613,440 1,646,186

Total cash outflow 684,619 676,040 678,304 684,916 693,054 8,272,926 11,689,860

Total cash outflow over total cash inflow (107,598) (99,802) (139,480) (153,844) (153,060) (2,822,087) (3,475,872)

Reduction of debt refinanced October 2008 390,627 380,730 373,233 362,462 348,529 1,899,790 3,755,371

Balance, end of year $ (5,611,193) $ (5,330,265) $ (5,096,512) $ (4,887,894) $ (4,692,425) $ (5,614,723) $ (5,614,723)

 U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION SENSITIVITY ANALYSIS

CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND IN CONSTANT DOLLARS

FOR THE 27-YEAR PERIOD ENDING SEPTEMBER 30, 2040 FY 2013 Agency Financial Report 133 t 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

134 United States Department of Labor

STATEMENT OF BUDGETARY RESOURCES

The principal Combined Statement of Budgetary Resources combines the availability, status, and outlay of DOL’s 

budgetary resources during FY 2013 and FY 2012. Presented on the following pages is the disaggregation of this

combined information for each of the Department’s major budget agencies.
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2013 Agency Financial Report 135

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Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

136 United States Department of Labor

COMBINING STATEMENT OF BUDGETARY RESOURCES

For the Year Ended September 30, 2013

Employment and Office of Workers' Office 

Training Compensation of

Administration Programs Job Corps

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 1,989,635 $ 817,406 $ 1,322,891

Recoveries of prior year unpaid obligations 381,166 7,085 19,291

Other changes in unobligated balance (187,523) (1,737) (7,069)

Unobligated balance from prior year budget authority, net 2,183,278 822,754 1,335,113

Appropriations (discretionary and mandatory) 96,223,426 2,272,746 1,634,317

Borrowing authority (discretionary and mandatory) 7,700,000 - -

Spending authority from offsetting collections (discretionary and mandatory) 4,165,101 3,059,918 950

Total budgetary resources $ 110,271,805 $ 6,155,418 $ 2,970,380

STATUS OF BUDGETARY RESOURCES

Obligations incurred $ 108,256,608 $ 4,946,175 $ 1,743,270

Unobligated balance, end of year

Apportioned 674,871 1,097,292 1,191,512

Exempt from apportionment - 54,279 -

Unapportioned 1,340,326 57,672 35,598

Total unobligated balance, end of year 2,015,197 1,209,243 1,227,110

Total budgetary resources $ 110,271,805 $ 6,155,418 $ 2,970,380

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 13,864,842 $ 314,213 $ 447,333

Obligations incurred 108,256,608 4,946,175 1,743,270

Less: Outlays (gross) (108,379,297) (5,025,459) (1,589,150)

Less: recoveries of prior year unpaid obligations (381,166) (7,085) (19,291)

Unpaid obligations, end of year 13,360,987 227,844 582,162

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (2,292,212) (19,166) -

Change in uncollected payments, Federal sources 356,599 18,176 -

Uncollected payments, Federal sources, end of year (1,935,613) (990) -

Obligated balance, start of year $ 11,572,630 $ 295,047 $ 447,333

Obligated balance, end of year $ 11,425,374 $ 226,854 $ 582,162

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 108,088,527 $ 5,332,664 $ 1,635,267

Less: actual offsetting collections (discretionary and mandatory) (4,521,700) (3,078,094) (950)

Less: change in uncollected customer payments from Federal 

 sources (discretionary and mandatory) 356,599 18,176 -

Budgetary authority, net (discretionary and mandatory) $ 103,923,426 $ 2,272,746 $ 1,634,317

Outlays, gross (discretionary and mandatory) $ 108,379,297 $ 5,025,459 $ 1,589,150

Actual offsetting collections (discretionary and mandatory) (4,521,700) (3,078,094) (950)

Outlays, net (discretionary and mandatory) 103,857,597 1,947,365 1,588,200

Distributed offsetting receipts (28,171,829) (1,371) -

Agency outlays, net (discretionary and mandatory) $ 75,685,768 $ 1,945,994 $ 1,588,200
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2013 Agency Financial Report 137

Occupational Employee Veterans'

Safety and Bureau of Mine Safety Benefits Employment Wage Other

Health Labor and Health Security and Training and Hour Program

Administration Statistics Administration Administration Service Division Agencies TOTAL

$ 17,486 $ 37,631 $ 3,813 $ 5,016 $ 5,001 $ 62,741 $ 130,079 $ 4,391,699

 8,759 5,427 3,058 4,166 6,149 4,597 21,851 461,549

 (5,833) (1,552) (890) (764) (1,755) (12,499) (2,281) (221,903)

 20,412 41,506 5,981 8,418 9,395 54,839 149,649 4,631,345

 537,496 513,551 353,702 173,573 36,188 256,354 607,687 102,609,040

 - - - - - - - 7,700,000

 2,269 79,949 1,639 5,969 214,438 3,455 292,432 7,826,120

$ 560,177 $ 635,006 $ 361,322 $ 187,960 $ 260,021 $ 314,648 $ 1,049,768 $ 122,766,505

$ 540,135 $ 628,228 $ 358,167 $ 182,363 $ 253,064 $ 261,531 $ 941,886 $ 118,111,427

 1,061 1,000 440 42 512 38,957 65,316 3,071,003

 - - - - - - - 54,279

 18,981 5,778 2,715 5,555 6,445 14,160 42,566 1,529,796

 20,042 6,778 3,155 5,597 6,957 53,117 107,882 4,655,078

$ 560,177 $ 635,006 $ 361,322 $ 187,960 $ 260,021 $ 314,648 $ 1,049,768 $ 122,766,505

$ 105,508 $ 92,723 $ 49,018 $ 60,312 $ 102,609 $ 55,996 $ 436,614 $ 15,529,168

 540,135 628,228 358,167 182,363 253,064 261,531 941,886 118,111,427

 (557,722) (616,260) (363,943) (183,849) (259,224) (286,052) (925,969) (118,186,925)

 (8,759) (5,427) (3,058) (4,166) (6,149) (4,597) (21,851) (461,549)

 79,162 99,264 40,184 54,660 90,300 26,878 430,680 14,992,121

 (2,993) (1,296) - - - - (9,225) (2,324,892)

 14 1,034 - - - - 3,012 378,835

 (2,979) (262) - - - - (6,213) (1,946,057)

$ 102,515 $ 91,427 $ 49,018 $ 60,312 $ 102,609 $ 55,996 $ 427,389 $ 13,204,276

$ 76,183 $ 99,002 $ 40,184 $ 54,660 $ 90,300 $ 26,878 $ 424,467 $ 13,046,064

$ 539,765 $ 593,500 $ 355,341 $ 179,542 $ 250,626 $ 259,809 $ 900,119 $ 118,135,160

 (2,283) (80,983) (1,639) (5,969) (214,438) (3,455) (295,444) (8,204,955)

 14 1,034 - - - - 3,012 378,835

$ 537,496 $ 513,551 $ 353,702 $ 173,573 $ 36,188 $ 256,354 $ 607,687 $ 110,309,040

$ 557,722 $ 616,260 $ 363,943 $ 183,849 $ 259,224 $ 286,052 $ 925,969 $ 118,186,925

 (2,283) (80,983) (1,639) (5,969) (214,438) (3,455) (295,444) (8,204,955)

 555,439 535,277 362,304 177,880 44,786 282,597 630,525 109,981,970

 - - - - - - (16,484) (28,189,684)

$ 555,439 $ 535,277 $ 362,304 $ 177,880 $ 44,786 $ 282,597 $ 614,041 $ 81,792,286
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

138 United States Department of Labor

COMBINING STATEMENT OF BUDGETARY RESOURCES

For the Year Ended September 30, 2012

Employment and Office of Workers' Office 

Training Compensation of

Administration Programs Job Corps

BUDGETARY RESOURCES

Unobligated balance brought forward, October 1 $ 1,922,143 $ 572,416 $ 641,913

Recoveries of prior year unpaid obligations 211,051 5,952 90,982

Other changes in unobligated balance (80,596) (2,055) (7,295)

Unobligated balance from prior year budget authority, net 2,052,598 576,313 725,600

Appropriations (discretionary and mandatory) 129,163,572 2,033,171 2,405,732

Borrowing authority (discretionary and mandatory) 12,164,421 214,000 -

Spending authority from offsetting collections (discretionary and mandatory) 4,841,048 3,020,880 37

Total budgetary resources $ 148,221,639 $ 5,844,364 $ 3,131,369

STATUS OF BUDGETARY RESOURCES

Obligations incurred $ 146,232,004 $ 5,026,958 $ 1,808,478

Unobligated balance, end of year

Apportioned 659,456 716,840 296,525

Exempt from apportionment - 56,721 -

Unapportioned 1,330,179 43,845 1,026,366

Total unobligated balance, end of year 1,989,635 817,406 1,322,891

Total budgetary resources $ 148,221,639 $ 5,844,364 $ 3,131,369

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations:

Unpaid obligations, brought forward, October 1 $ 14,184,446 $ 214,319 $ 520,104

Obligations incurred 146,232,004 5,026,958 1,808,478

Less: Outlays (gross) (146,340,557) (4,921,112) (1,790,267)

Less: recoveries of prior year unpaid obligations (211,051) (5,952) (90,982)

Unpaid obligations, end of year 13,864,842 314,213 447,333

Uncollected Payments: 

Uncollected payments, Federal sources, brought forward, October 1 (2,021,992) 67,465 -

Change in uncollected payments, Federal sources (270,220) (86,631) -

Uncollected payments, Federal sources, end of year (2,292,212) (19,166) -

Obligated balance, start of year $ 12,162,454 $ 281,784 $ 520,104

Obligated balance, end of year $ 11,572,630 $ 295,047 $ 447,333

BUDGET AUTHORITY AND OUTLAYS, NET

Budget authority, gross (discretionary and mandatory) $ 146,169,041 $ 5,268,051 $ 2,405,769

Less: actual offsetting collections (discretionary and mandatory) (4,586,704) (2,934,249) (37)

Less: change in uncollected customer payments from Federal 

 sources (discretionary and mandatory) (270,220) (86,631) -

Budgetary authority, net (discretionary and mandatory) $ 141,312,117 $ 2,247,171 $ 2,405,732

Outlays, gross (discretionary and mandatory) $ 146,340,557 $ 4,921,112 $ 1,790,267

Actual offsetting collections (discretionary and mandatory) (4,586,704) (2,934,249) (37)

Outlays, net (discretionary and mandatory) 141,753,853 1,986,863 1,790,230

Distributed offsetting receipts (43,211,817) (533) -

Agency outlays, net (discretionary and mandatory) $ 98,542,036 $ 1,986,330 $ 1,790,230
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

FY 2013 Agency Financial Report 139

Occupational Employee Veterans'

Safety and Bureau of Mine Safety Benefits Employment Wage Other

Health Labor and Health Security and Training and Hour Program

Administration Statistics Administration Administration Service Division Agencies TOTAL

$ 18,121 $ 37,253 $ 4,834 $ 16,787 $ 7,020 $ 70,534 $ 85,240 $ 3,376,261

 11,272 7,798 5,022 6,284 1,858 4,897 24,744 369,860

 (6,334) (1,830) (1,132) (9,986) (2,576) (12,153) (4,384) (128,341)

 23,059 43,221 8,724 13,085 6,302 63,278 105,600 3,617,780

 564,788 541,895 372,523 183,153 52,779 272,436 629,757 136,219,806

 - - - - - - - 12,378,421

 1,875 76,349 1,407 5,331 210,964 2,405 299,763 8,460,059

$ 589,722 $ 661,465 $ 382,654 $ 201,569 $ 270,045 $ 338,119 $ 1,035,120 $ 160,676,066

$ 572,236 $ 623,834 $ 378,841 $ 196,553 $ 265,044 $ 275,378 $ 905,041 $ 156,284,367

 129 1,510 751 30 1,235 6,419 81,293 1,764,188

 - - - - - - - 56,721

 17,357 36,121 3,062 4,986 3,766 56,322 48,786 2,570,790

 17,486 37,631 3,813 5,016 5,001 62,741 130,079 4,391,699

$ 589,722 $ 661,465 $ 382,654 $ 201,569 $ 270,045 $ 338,119 $ 1,035,120 $ 160,676,066

$ 102,235 $ 85,680 $ 46,847 $ 42,947 $ 89,194 $ 60,468 $ 440,983 $ 15,787,223

 572,236 623,834 378,841 196,553 265,044 275,378 905,041 156,284,367

 (557,691) (608,993) (371,648) (172,904) (249,771) (274,953) (884,666) (156,172,562)

 (11,272) (7,798) (5,022) (6,284) (1,858) (4,897) (24,744) (369,860)

 105,508 92,723 49,018 60,312 102,609 55,996 436,614 15,529,168

 (2,499) (711) - - (883) - (9,877) (1,968,497)

 (494) (585) - - 883 - 652 (356,395)

 (2,993) (1,296) - - - - (9,225) (2,324,892)

$ 99,736 $ 84,969 $ 46,847 $ 42,947 $ 88,311 $ 60,468 $ 431,106 $ 13,818,726

$ 102,515 $ 91,427 $ 49,018 $ 60,312 $ 102,609 $ 55,996 $ 427,389 $ 13,204,276

$ 566,663 $ 618,244 $ 373,930 $ 188,484 $ 263,743 $ 274,841 $ 929,520 $ 157,058,286

 (1,381) (75,763) (1,407) (6,247) (211,847) (3,005) (283,025) (8,103,665)

 (494) (585) - - 883 - 652 (356,395)

$ 564,788 $ 541,896 $ 372,523 $ 182,237 $ 52,779 $ 271,836 $ 647,147 $ 148,598,226

$ 557,691 $ 608,993 $ 371,648 $ 172,904 $ 249,771 $ 274,953 $ 884,666 $ 156,172,562

 (1,381) (75,763) (1,407) (6,247) (211,847) (3,005) (283,025) (8,103,665)

 556,310 533,230 370,241 166,657 37,924 271,948 601,641 148,068,897

 - - - - - - (22,570) (43,234,920)

$ 556,310 $ 533,230 $ 370,241 $ 166,657 $ 37,924 $ 271,948 $ 579,071 $ 104,833,977



(Unaudited)

FY 2013 Agency Financial Report 143

Inspector General’s Top Management Challenges
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144 United States Department of Labor

2013 Top Management Challenges Facing the Department of Labor

For 2013, the OIG considers the following as the mostserious management and performance challengesfacing the 

Department:

• Protecting the Safety and Health of Workers

• Protecting the Safety and Health of Miners

• Improving Performance Accountability of Workforce Investment Act Grants

• Ensuring the Effectiveness of the Job Corps Program

• Reducing Improper Payments

• Ensuring the Security of Employee Benefit Plan Assets

• Securing and Protecting Information Management Systems

• Ensuring the Effectiveness of Veterans’ Employment and Training Service Programs

For each challenge, the OIG presents the challenge, the OIG’s assessment of the Department’s progress in 

addressing the challenge, and what remains to be done. These top management challenges are intended to identify 

and help resolve serious weaknesses in areas that involve substantial resources and provide critical services to the 

public.

CHALLENGE: Protecting the Safety and Health of Workers

OVERVIEW

The Occupational Safety and Health Administration (OSHA) was established by the Occupational Safety and Health 

Act of 1970. OSHA’s mission is to assure, so far as possible, that every working man and woman has safe and 

healthy working conditions. OSHA ensures the safety and health of more than 130 million workers at over 8 million 

establishments by setting and enforcing workplace safety and health standards; providing training, outreach, and 

education; and encouraging continuous improvement in workplace safety and health. Combined with its state 

partners OSHA has approximately 2,200 inspectors – which translates to about one inspector for every 59,000 

workers.

CHALLENGE FOR THE DEPARTMENT

U.S. workplace fatalities have fallen steadily since OSHA was established in 1970. Most recently, for instance, from 

2011 to 2012, the fatal injury rate fell from 3.5 to 3.2 deaths per 100,000 full-time equivalent workers. However, 

with more than eight million entities under its oversight, OSHA is challenged in assuring that employers abate 

workplace safety and health hazards. To that end, since it can only reach a fraction of the entities it regulates, OSHA 

must target its compliance activities to those areas where it can have the greatest impact. OSHA also faces 

challenges in measuring the impact of its policies and programs, and those of the 21 states authorized by OSHA to 

operate their own safety and health programs, on reported declines in workplace injuries, illnesses, and deaths. 

Recent OIG audits have found that the highest risk industries and worksites were not always targeted and 

inspected; and OSHA lacked outcomes‐based performance metrics to measure and demonstrate the causal effect 

of its own Federal programs on the safety and health of workers nationwide. Without such metrics, OSHA cannot 

determine the effectiveness of either Federally‐operated or state‐run worker safety and health programs, and, as 

such, cannot ensure that its limited resources are being used efficiently and with the greatest possible impact on 

worker safety and health. 

 

 
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FY 2013 Agency Financial Report 145

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

OSHA established a workgroup in FY 2012 with state representatives and developed effectiveness measures for 

state-operated safety and health programs. OSHA formally revised the State Activity Mandated Measures in FY 

2013 and introduced 10 new measures, one of which is intended to help OSHA determine the effectiveness of State 

Plan inspection targeting. OSHA has also implemented a number of industry-specific National and Local Emphasis 

programs targeting areas such as Chemical Process Safety, Grain Facilities, and Nursing Homes, among others.

Moreover, OSHA is working on establishing regular processes for evaluating the success of its enforcement 

strategies. In this regard, the Department initiated a multi‐year study of OSHA’s Site Specific Targeting (SST) 

program to assess the impact of the program interventions on future employer compliance. The study is scheduled 

to be completed by September 2014.

OSHA is also currently working to develop program evaluation systems to ensure that its programs are being run 

effectively and efficiently. Specifically, OSHA has committed resources to determine the effectiveness of some of its 

more complex and resource-intensive investigations, such as fatality and catastrophe investigations by 

implementing an inspection weighting system. Additionally, OSHA has begun the rulemaking process to improve 

the tracking of occupational injuries and illnesses by expanding OSHA’s legal authority to collect and make available 

injury and illness information.

OSHA still needs to ensure it includes the highest risk worksites in SST program targeting, and prioritize and 

complete inspections of the highest risk worksites. OSHA also needs to move forward with its plans to test and 

evaluate the inspection weighting system intended to improve OSHA’s ability to target its resources. 

CHALLENGE: Protecting the Safety and Health of Miners

OVERVIEW

The Federal Mine Safety and Health Act of 1977, as amended, charges the Mine Safety and Health Administration 

(MSHA) with protecting the health and safety of more than 387,000 miners who work at over 14,000 mines 

nationwide.

CHALLENGE FOR THE DEPARTMENT

MSHA continues to be challenged in effectively managing its resources to meet statutory mine inspection 

requirements while successfully administering other enforcement responsibilities designed to help ensure miners 

are afforded all protections so they can safely return home at the end of each work day. While MSHA has made 

progress in this area, it must continue its efforts to instill a culture of mine safety and prevention of accidents to 

protect the rights of miners to report workplace safety and health concerns. Our recent audit of MSHA’s actions in 

response to two review reports that reviewed MSHA’s actions preceding the deadly explosion at the Upper Big 

Branch Mine found MSHA had made significant progress in implementing the reports’ recommendations, but needs 

to build a process into its internal review framework to rank and prioritize recommendations, and to continue to 

work on those recommendations that did not have anticipated completion dates to ensure they are being diligently 

pursued.

MSHA also remains challenged in maintaining a cadre of experienced, diverse and properly trained enforcement

staff to meet its statutory enforcement obligations. This challenge will soon be exacerbated by retirements, with 39

percent of MSHA’s health and safety personnel eligible to retire by 2017. This is a particularly pressing issue given 

that it takes nearly two years to train new mine inspectors. Moreover, with seventy-eight percent of MSHA’s top 

leadership becoming eligible for retirement by 2017, MSHA is challenged to develop future leaders in order to avoid 

leadership gaps in future years.
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DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

Fatality and injury rates were at an all-time low in FY 2011 and FY 2012 and this trend has continued in FY 2013. 

Other notable achievements included historic low levels of respirable dust – which results in black lung – at 

underground coal mines and an 18 percent drop in violations. However, mining remains an inherently dangerous 

industry with too many injuries and fatalities. To reduce those numbers, MSHA took a number of actions in FY 2013, 

including: making significant progress implementing recommendations from reviews conducted following the 

Upper Big Branch mine accident; improving its process for reviewing, approving and overseeing coal mine roof 

control plans; publishing an updated Accountability Program Handbook that addresses OIG recommendations 

made as a result of recent reviews; promulgating the final Coal Mine Examination Rule which requires underground 

coal mine operators to find and fix conditions consistent with the “Rules to Live By” standards. MSHA also 

published it final Pattern of Violations rule that implemented several of the OIG’s recommendations. Other actions 

taken by MSHA include diversified education efforts and increased outreach to both miners and representatives of 

miners on rights provided by the Mine Act. 

MSHA should continue to closely monitor its efforts to implement the recommendations made by the Upper Big 

Branch internal review. For the 100 recommendations resulting from the internal review, MSHA reports it has 

completed corrective actions for 68; 32 are still in process. MSHA has also taken several actions to address the 4 

recommendations made by an Independent Assessment Panel and needs to complete other actions it has outlined.

For coal mine roof control plans, MSHA needs to finalize its new Coal Mine Roof Control Plan Approval Procedures 

Handbook, which it anticipates will be completed by December 31, 2013. MSHA also needs to continue to follow 

up on all of its revised policy guidance to ensure the policy is being implemented as intended and is achieving the 

desired results.

With respect to succession planning, MSHA continues to identify and hire mine inspector candidates within 

authorized personnel levels. MSHA has also developed a draft succession plan and is engaged in succession 

planning activities. MSHA needs to continue its efforts to finalize a succession plan that will help MSHA maintain 

strong leadership and diversity into its workforce into the future, while staying focused on its primary mission to 

protect the safety and health of miners. 

CHALLENGE: Improving Performance Accountability of Workforce Investment Act Grants

OVERVIEW

In Fiscal Year 2013, the Department’s Employment and Training Administration (ETA) was appropriated $2.6 billion 

for grants to States for Workforce Investment Act (WIA) Adult, Dislocated Worker, and Youth programs. The WIA 

Adult formula program provides employment and training services through formula grants to states and territories. 

ETA also awards grants to states to provide reemployment services and retraining assistance to individuals 

dislocated from their employment. Youth programs are funded through grant awards that support program 

activities and services to prepare low‐income youth for academic and employment success, including summer jobs. 

In addition to the grants to States and territories for WIA Adult, Dislocated Worker and Youth, ETA also administers 

competitive grants to service providers to design and operate programs for disadvantaged, often unemployed 

persons. 

CHALLENGE FOR THE DEPARTMENT

The Department is challenged in ensuring that the WIA grant programs are successful in training and placing

workers in suitable employment to reduce chronic unemployment, underemployment, and reliance on social

payments by the population it serves. Our audit work over several decades, primarily as it relates to discretionary 

grants, has documented the difficulties encountered by the Department in obtaining quality employment and 

training providers; ensuring that performance expectations are clear to grantees and sub-grantees; obtaining 

accurate and reliable data by which to measure and assess the success of grantees and states in meeting the 

program’s goals; providing active oversight of the grant making and grant execution process; disseminating proven 
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FY 2013 Agency Financial Report 147

strategies and programs for replication; and, most critically, ensuring that training provided by grantees leads to 

placement in training‐related jobs paying a living wage. 

For example, a 2011 OIG audit of the WIA Adult and Dislocated Worker program found that 37 percent of program 

participants either did not obtain employment or their employment was unrelated to the training that they 

received. OIG projected that the amount of funds paid for this training outcome totaled approximately $124 

million. Similarly, our October 2012 audit of the $500 million Recovery Act Green Jobs program designed to train 

those most affected by the recession for jobs in “green” industries found that almost half of the training provided 

consisted of 1-5 days of instruction, that 92 percent of “credentials” received for participating in the training were 

merely certificates of completion, and that there were significant disparities in the participant job retention goals 

proposed by grantees and approved by ETA. Most recently, our December 2012 audit of discretionary grant 

closeouts found that grantees often failed to meet one or more of the goals in their grant agreement, yet ETA 

certified their performance as acceptable. A finding common in many of our audits has been the significant problem 

in obtaining accurate, reliable, and detailed performance data from grantees, which makes it more difficult for the 

Department to measure program success. 

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE 

ETA recently awarded 26 Workforce Innovation Fund grants with the goal of evaluating strategies for delivering 

services more efficiently, achieving better outcomes, and facilitating cooperation across programs and funding 

streams. ETA has indicated that it will capture promising practices and lessons learned and share them with the 

broader workforce system. In addition to this type of program evaluation, ETA should continue to closely monitor 

WIA grants and address the disconnections between the training provided and the realities of the job market. To 

that end, ETA should consider using Labor Market Information tools and provide technical assistance to grantees. 

ETA also needs to develop criteria for determining acceptable performance in its grant programs and implement a 

process that captures grantee performance results for use in future grant-making decisions.

ETA expects to receive the first evaluation report (on implementation) from the WIA Gold Standard Evaluation 

during the Fall of 2013, the first impact report in 2015 and the final report in 2016. Through this evaluation, ETA 

intends to measure the net impact of specific interventions, such as the incremental effects of the intensive and 

training services provided to adults and dislocated workers. The multi-year WIA Gold Standard is funded on an 

annual basis and is contingent on the availability of appropriated funding. In response to our audit of the Green 

Jobs program, ETA has taken a number of corrective actions, such as creating a Performance Reporting Workgroup 

that will identify recommendations for specific steps that ETA can take to clarify grantee data collection and 

reporting expectations, and developing and releasing its Enhanced Desk Monitoring Review tool. 

ETA and the Department have identified the reauthorization of WIA as a legislative priority and have specified 

several goals that the Department believes should be a focus of the reauthorization process. Among those goals is 

improving accountability by updating the performance measures used by WIA programs. The OIG considers these 

initiatives to be of importance. In particular, we recommend that ETA give maximum priority to developing 

processes to ensure grant agreements delineate clear, concise and measurable objectives that can be used to 

measure the success of grant performance, and that those programs or strategies that are successful are 

disseminated to the workforce investment system for replication. 

CHALLENGE: Ensuring the Effectiveness of the Job Corps Program

OVERVIEW

The Employment and Training Administration’s (ETA) Job Corps program provides residential and nonresidential

education, training, and support services to approximately 60,000 disadvantaged, at-risk youths, ages 16-24, at 125 

Job Corps centers nationwide. The goal of this $1.6 billion program is to offer an intensive intervention to this 

targeted population as a means to help them turn their lives around and prevent a life-time of unemployment, 

underemployment, dependence on social programs, or criminal behavior.
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CHALLENGE FOR THE DEPARTMENT

The Department is challenged in providing a safe, residential and nonresidential education and training program 

which results in outcomes that truly assist at-risk, disadvantaged youth in turning their lives around including: 

placement in training-related employment, attainment of education and industry-recognized credentials, entrance 

into advanced vocational/apprenticeship training, entrance into higher education, or enlistment in the military. Our 

audits have consistently documented the Department’s difficulty in ensuring the quality of residential life, a critical 

component of the Job Corps intensive intervention experience. Specifically, our audits have disclosed safety and 

health hazards and physical maintenance needs at various centers as well as, in some instances, a lack of 

enforcement of disciplinary policies.

Our audits have also demonstrated the challenge faced by the Department in obtaining and documenting desired 

program outcomes. ETA oversight of its centers did not adequately ensure academic and career technical training 

programs met performance goals and maximized student achievements. Specifically, under-performing programs 

were not identified for increased oversight and center assessments and performance improvement plans were not 

used effectively to improve performance. Additionally, most centers are operated by contractors through 

performance‐based contracts with incentive fees and bonuses which are tied directly to contractor performance. 

Absent strict oversight, there is a risk that contractors will overstate performance results and maintain disruptive 

students on site. We have also documented problems with ETA’s reporting of job training matches. 

Most recently, budgeting missteps and poor financial planning, management, and oversight forced Job Corps to 

reprogram $26.2 million in June 2012 to cover its Program Year 2011 (July 1, 2011 – June 30, 2012) operating costs 

and impose a 3-month enrollment freeze in early 2013 to avoid a projected $61.5 million budget overrun for 

Program Year 2012 (July 1, 2012 – June 30, 2013). Our audit of Job Corps’ funds and expenditures found the 

Department did not have a sound budget or spending plan for the Job Corps program or have a process in place to 

accurately project spending needs. If not adequately addressed, these financial management control weaknesses 

could result in further budget overruns and possibly future moratoriums on student enrollments. In addition, we 

have documented significant problems with centers being unable to ensure that major procurements are properly 

competed to ensure best value to the program and the taxpayers.

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

Job Corps is continuing its efforts to improve the quality of program services and achieve better outcomes for the 

students it serves. These efforts include implementing a standards-based system of teaching and learning, 

identifying and replicating the practices of high-performing centers as well as closing some chronically lowperforming centers. Job Corps also plans to increase its oversight of under-performing training programs by 

improving its monitoring, and by using performance improvement plans, center assessments, and other oversight 

activities more effectively.

To improve its reported performance data, Job Corps has updated its Job Training Match Crosswalk to align with 

the revised DOL O*NET-Standard Occupational Classification database, which characterizes all jobs in the U.S. labor 

market. 

To avoid the financial difficulties it experienced in PY 2011 and PY 2012, the Department has refined Job Corps’

processes for planning, requirements determination, budgeting, procurement and evaluation in order to enhance 

internal controls. This effort is intended to establish a more defined process for all aspects of financial and 

contractual activity well in advance of the start of a program year and allow for more rapid response to Job Corps 

budget changes. A key aspect will be the formalization of significantly enhanced communications among offices 

and leadership within ETA and the Department. Specifically, the Department established a new Office of Financial 

Administration within ETA and implemented a new management oversight process that includes the Office of the 

Chief Financial Officer, the Office of the Assistant Secretary for Administration and Management, and the Office of 

the Solicitor. The Department also adopted a new budgeting approach to adjust the number of students enrolled 

with the funding available in Job Corps’ appropriation. Additional training has been provided to staff members who 
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FY 2013 Agency Financial Report 149

monitor Job Corps’ contracts to improve their skills and enable them to provide better oversight. While these 

changes should help the agency to actively oversee the program and its expenses, Job Corps will need to be vigilant 

in its oversight to promptly identify and address potential problems.

ETA’s Office of Contracts Management (OCM) recently inspected the contracting purchasing systems for many Job 

Corps center operators. In instances where there was an inadequate purchasing program, the cognizant 

Contracting Officer withdrew the approved purchasing plans. These center operators must now have each 

purchase (subcontract) approved by the responsible Contracting Officer. 

OIG continues to recommend that Job Corps provide rigorous oversight of contractors at all centers to: ensure they 

provide a safe environment that is conducive to learning; improve the transparency and reliability of performance 

metrics and outcomes; and ensure that center operators and other service providers comply with applicable 

procurement requirements.

CHALLENGE: Reducing Improper Payments 

OVERVIEW

The Unemployment Insurance (UI), the Workforce Investment Act (WIA) and the Federal Employees Compensation 

Act (FECA) programs are at risk of making significant improper payments. For example, for FY 2013, the Department 

reported improper payments totaling approximately $7.68 billion for the UI program alone. Outlays for the UI 

program decreased in FY 2013 to an estimated $66.7 billion, compared with $90.19 billion in FY 2012. This decrease 

reflects the decline in the number of new claims, the drop in Federally-funded emergency and additional benefits, 

and the efforts of DOL and the state workforce agencies to reduce improper payments. The 2013 UI improper 

payment rate is 9.32 percent for the reporting period July 2012 to June 2013, which is below the 10 percent target 

established by the Improper Payments Elimination and Recovery Act of 2010 but slightly above the 9.23 percent 

target rate identified by the Office of Management and Budget (OMB). However, in 2013 the Department, in 

conjunction with OMB, made a change in the way it computes the improper payment rate by subtracting 

overpayments recovered from total estimated overpayments. The true UI improper payment rate without netting 

out subsequent recoveries actually increased from 10.78 percent for the 2012 reporting period to 11.50 percent in 

2013. 

The leading cause of UI overpayments is claimants who have returned to work and continue to claim UI benefits, 

and OIG investigations continue to uncover fraud committed by individual UI recipients who do not report or 

underreport earnings, as well as fraud related to fictitious employer schemes.

CHALLENGE FOR THE DEPARTMENT

The Department’s ability to identify and reduce the rate of improper payments in the UI, FECA and WIA programs 

continues to be a challenge for the Department. Notably, OMB has designated the Unemployment Insurance (UI) 

and Workforce Investment Act (WIA) programs as being particularly at risk for improper payments. Our audits have 

found that the Department lacked effective controls to ensure states are properly measuring improper payments 

and identifying and recovering overpayments for both the UI state and Federal programs. 

The Department also remains challenged in identifying the full extent of improper payments in the FECA and WIA 

programs. As highlighted in past OIG audits, the estimation method used for the FECA program does not appear to 

provide a reasonable estimate of improper payments. Without this information, the Department cannot implement 

the appropriate corrective actions that will reasonably assure taxpayers’ funds are adequately safeguarded. In 

addition, DOL OIG investigations continue to identify significant amounts of FECA compensation and medical fraud, 

which has often surpassed the Department’s improper payments estimates. For the WIA program, data are not 

readily available to allow the Department to directly sample grant payments and develop a statistically valid 

estimate of improper payments.
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150 United States Department of Labor

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

The Department continues to work with states to implement a number of strategies to improve the prevention, 

detection and recovery of UI improper payments. Among numerous other initiatives, the Department has launched 

a website that clearly identifies each state’s estimated UI improper payment rate and payments over a 3-year 

period, as well as each state’s progress in implementing the identified improper payment strategies. The 

Department has also undertaken the “Improper Payment High Priority States” initiative to reduce the UI improper 

payment rate in those states with unacceptably high levels over a prolonged period. In addition, the Department 

established a UI Integrity Center of Excellence to develop, implement, and promote innovative program integrity 

strategies to reduce improper payments, including the prevention and detection of fraud, in the UI program. 

However, the Department needs to employ cost benefit and return on investment analyses to evaluate the impact 

of those improper payment reduction strategies. The Department can further improve oversight of the states’ 

detection and prevention of UI overpayments by increasing the frequency of on-site reviews at State Workforce 

Agencies. In addition, the Department needs to continue pursuing legislation to allow States to use a percentage of 

recovered UI overpayments to detect and deter benefit overpayments.

With respect to improper payments in the FECA program, the Department developed a methodology for estimating 

the FECA improper payment rate and plans to implement it for FY 2014. In the WIA program, the Department has 

attempted to identify the full extent of improper payments by including estimates from other sources, but it should 

continue to consider other sampling methods in order to provide a more complete estimate of improper payments. 

Further, the Department needs to provide full disclosure in the Agency Financial Report regarding the limitations of 

the data used to estimate WIA overpayments.

CHALLENGE: Ensuring the Security of Employee Benefit Plan Assets 

OVERVIEW

The mission of the Department’s Employee Benefits Security Administration (EBSA) is to protect the security of 

retirement, health, and other private-sector employer-sponsored benefit plans for America’s workers, retirees, and 

their families. EBSA is responsible for administering and enforcing the fiduciary, reporting, and disclosure provisions 

of Title I of the Employee Retirement Income Security Act (ERISA). The agency is charged with protecting about 141 

million workers, retirees and their families who are covered by nearly 684,000 private retirement plans, 2.4 million 

health plans, and similar numbers of other welfare benefit plans which together hold estimated assets of $7.6 

trillion. 

CHALLENGES FOR THE DEPARTMENT

EBSA’s limited authority and resources present challenges in achieving its mission of administering and enforcing 

ERISA requirements protecting approximately 141 million participants and beneficiaries. An important part of 

EBSA's mission is to deter and correct violations of ERISA through a strong enforcement program to ensure workers 

receive promised benefits. Given the number of plans that the agency oversees relative to the number of 

investigators, EBSA has to focus its available resources on investigations that it believes will most likely result in the 

deterrence, detection, and correction of ERISA violations. In order to do so, EBSA must determine which of its 

enforcement initiatives are the most effective. EBSA has begun trying to quantify its results by using programs such 

as the Sample Investigation Program (SIP), which attempts to measure the effectiveness of enforcement initiatives. 

Among EBSA’s challenges over the past couple of decades has been the fact that billions in pension assets held in 

otherwise regulated entities, such as banks, escape audit scrutiny. Because ERISA authorizes these institutions to 

obtain so-called “limited scope audits,” presumably because they are being audited by other entities for other 

purposes, the independent public accountants that conduct their audits express “no opinion” on the financial 

statements of the assets they hold on behalf of plans. These concerns were renewed and heightened by recent 

audit findings that as much as $3.3 trillion in pension assets received these types of limited scope audits, providing 

no assurances to participants as to the financial health of their plans. EBSA is further challenged by the many 
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FY 2013 Agency Financial Report 151

changes that have taken place in the employee benefit plan community since ERISA was enacted in 1974, such as 

the shift from defined benefit retirement plans to defined contribution retirement plans, as well as the large 

increase in the types and complexity of investment products available to pension plans. For example, our 

September 2013 audit of EBSA’s oversight of employee benefit plans that hold alternative investments totaling 

almost $3 trillion found that EBSA needs to do more to ensure plan Administrator properly identify and value hardto-value investments.

EBSA is also responsible for oversight of health coverage provided by employers through the administration and 

enforcement of Title I of ERISA. EBSA oversees approximately 2.4 million employer-sponsored health plans covering 

approximately 150 million participants and beneficiaries. EBSA, in conjunction with the Department of Treasury and 

the Department of Health and Human Services, has worked to implement the Patient Protection and Affordable 

Care Act (PPACA). Beginning in FY 2014, key provisions of PPACA will come into effect, and EBSA will be challenged 

to ensure plan sponsors and their benefit plans comply with the new law. 

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

As an initial step in developing performance metrics to measure the effectiveness of its enforcement program, EBSA 

implemented a broad Sample Investigation Program (SIP) in FY 2011. Now in its third year, the SIP is designed to 

measure overall compliance with ERISA and the impact of ERISA investigations on compliance rates. In addition, 

data collected by the SIP will be used to evaluate the effectiveness of EBSA’s enforcement targeting strategies, as 

well as the impact of investigations on plan compliance. EBSA processed 273 SIP cases in 2013, and will implement 

a baseline compliance measure for 2014. 

EBSA should continue to work to obtain legislative changes to repeal the limited scope audit exception, obtain 

additional authority over plan auditors to address deficient benefit plan audits, and ensure that auditors with poor 

records do not continue to perform substandard plan audits. In the interim, EBSA should use existing authority to 

clarify and strengthen limited scope audit regulations and evaluate the ERISA Council’s recommendations on the 

issue. Finally, to mitigate potential challenges that may affect implementation and compliance with PPACA 

requirements, EBSA will need to take further action in its rulemaking, enforcement, reporting on benefits typically 

covered by employers, and Multiple Employer Welfare Arrangements (MEWA) regulations. These actions would 

help improve transparency to the public; provide additional compliance assistance to employers, plans and 

insurers; and help strengthen enforcement over MEWAs. 

CHALLENGE: Securing and Protecting Information Management Systems 

OVERVIEW

The Department’s Information Technology (IT) systems contain sensitive information that is central to its mission 

and to the effective administration of its programs. DOL systems are used to analyze and house the nation’s leading 

economic indicators, such as the unemployment rate and the Consumer Price Index. They also maintain critical data 

related to enforcement actions, worker safety, health, pension, and welfare benefits, job training services, and 

other worker benefits.

CHALLENGE FOR THE DEPARTMENT

Safeguarding data and information systems is a continuing challenge for all Federal agencies, including DOL. Recent 

OIG audits have identified deficiencies in configuration management, account management, vulnerability 

management, as well as security and access controls weaknesses in key departmental financial and support 

systems. These deficiencies can pose an increased risk to the security of data and information maintained in DOL 

systems. 

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

The Department has made progress in establishing risk mitigation as a priority via its Risk Management program. 

The Office of the Chief Information Officer (OCIO) established Priority Security Performance Metrics and began 
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152 United States Department of Labor

measuring agency progress on achieving these metrics resulting in the remediation and closure of 93% of prior year 

findings.

The Department has also begun an IT modernization program. As part of DOL’s IT modernization, users will 

eventually access their network accounts by logging on to their desktops and/or laptop computers using their PIV 

card. The IT Modernization program also includes consolidating the Department’s nine IT infrastructures in an effort 

to create a more unified and scalable IT service organization. In addition, DOL has acquired an enterprise IT system 

monitoring tool to assist in configuration management, vulnerability assessment, and accounting for the inventory 

of electronic devices connecting to each IT system. 

To improve upon identity management and security issues, DOL needs to continue to reduce its IT footprint by 

completing its data center consolidation efforts and reducing the number of external connections. Furthermore, 

while the migration of email to the cloud was delayed and is now scheduled for implementation later this year, the 

Department must take steps to ensure that DOL systems and data will be secure in the cloud computing 

environment prior to implementation. To enhance security, reduce identity fraud, and protect personal privacy, 

DOL also needs to ensure its PIV card workstation logon process is fully implemented throughout the Department. 

Most importantly, a greater presence in IT system security is needed at the Executive Level; continuing current Risk 

Management and Continuous Monitoring Program processes will assist in that effort as Executives become integral 

to the discussion and understanding of their IT security risks and control weaknesses, including setting mitigation 

priorities.

CHALLENGE: Ensuring the Effectiveness of Veterans’ Employment and Training Service 

Programs

OVERVIEW

The Veterans’ Employment and Training Service (VETS) provides assistance to veterans and transitioning service 

members by protecting their employment and reemployment rights through investigation and resolution of claims 

from protected individuals. VETS also assists veterans in obtaining and maintaining civilian employment through its 

Jobs for Veterans State Grants (JVSG) Program. JVSG supports two principal staff positions in the Workforce 

System: Disabled Veterans Outreach Program (DVOP) specialists and Local Veterans Employment Representatives 

(LVERs). DVOP specialists provide intensive services to meet the employment needs of disabled and other eligible 

veterans, with an emphasis on serving those who are economically or educationally disadvantaged, including 

homeless veterans. LVERs conduct outreach to employers and engage in advocacy efforts to increase employment 

opportunities for veterans. Another VETS’ program, the Transition Assistance Program (TAP), provides a three day

employment workshop to separating service members and their spouses at military installations worldwide. 

CHALLENGE FOR THE DEPARTMENT

VETS estimates that the U.S. military discharges about 270,000 service members annually. VETS is refocusing its 

efforts to ensure veterans who have significant barriers to employment are served by the DVOP program, while all 

other veterans will be served on a priority basis in DOL’s Wagner-Peyser and Workforce Investment Act programs.

These programs will be challenged to meet the employment needs of this expected influx of veterans. For VETS 

specifically, the Department projects that approximately 90 percent of future JVSG participants will require 

intensive services, such as career planning and counseling, skill assessment, referral to training and support 

services, and post-transition follow-up, to overcome significant barriers to employment.

VETS continues to be challenged to meet this increased demand for intensive services; our prior audit work has 

found that JVSG staff needed to do a better job of accurately assessing veterans’ needs and documenting intensive 

service activities. 
Top Management Challenges

(Unaudited)

FY 2013 Agency Financial Report 153

We have also found that VETS did not use measurable performance goals and outcomes to evaluate program 

effectiveness and lacked adequate contracting oversight for TAP workshop services. These deficiencies undermined 

VETS’s ability to ensure that it was providing a high-quality program which helped veterans successfully transition 

from military to civilian employment.

DEPARTMENT’S PROGRESS AND WHAT REMAINS TO BE DONE

In a joint effort with the Department’s Employment and Training Administration, VETS has launched the Veteran 

Gold Card program. The Veteran Gold Card provides post-9/11 veterans with extra support as they transition out of 

the military. Once a veteran has downloaded the Veteran Gold Card, he or she can access six months of 

personalized case management, assessments and counseling at the roughly 3,000 American Job Centers located 

across the country.

Over the past year, VETS has started working with State Workforce Agencies to convert LVERs to DVOPs in response 

to the increased demand for intensive services. VETS has also directed states to provide more oversight of DVOP 

services to ensure that veterans with significant barriers to employment are getting the assistance they need. In 

addition, VETS has requested an increase of 500 DVOPs in FY 2014. When combined with the conversions of LVERs 

to DVOPs already underway, VETS believes this will significantly increase the workforce focused directly on 

providing intensive services for those veterans with significant barriers to employment and should have a positive 

impact on employment outcomes for this population. VETS stated that it is developing clarifying guidance for 

distribution to State Workforce Agencies about the JVSG program, as well as a training program that will address 

JVSG expectations. The training is expected to be available in February 2014. VETS needs to closely monitor the 

program to ensure states can demonstrate that the DVOP program is operating as intended. VETS must also 

evaluate the effectiveness of the DVOP program and use evaluation results to modify and improve it.

VETS also completed a major effort to redesign the TAP employment workshop curriculum in January 2013. Unlike 

previous years, TAP is now mandatory for all separating service members and all workshops worldwide are being 

led by professional facilitators. The new workshop is designed to provide relevant, up-to-date content with a focus 

on experiential learning, best practices in career transition, and emphasis on networking and communicating the 

veteran's value to the hiring manager. VETS has developed and implemented outcome measures for FY 2014 to 

assess the effectiveness of the TAP workshops, and stated it is working with the Department of Defense and the 

Department of Veteran Affairs to explore new data sharing possibilities and ways to monitor veteran employment 

outcomes.

CHANGES FROM LAST YEAR:

Changes from the FY 2012 Top Management Challenges report include the deletion of the challenges pertaining to 

Foreign Labor Certification programs and procurement integrity. Although we still consider these challenges to be 

significant issues for the Department, we believe they no longer pose the greatest threat to the Department in 

meeting its mission to workers, retirees, beneficiaries and taxpayers. We will continue to conduct audit and 

investigative work and report the Department’s challenges in these program areas in our “Significant Concerns” 

section of the OIG’s Semiannual Report to the Congress.
(Unaudited)

154 United States Department of Labor

Summary of Financial Statement Audit and Management Assurances

The following tables provide a summary of the Department’s FY 2013 financial statement audit and its management 

assurances.

Summary of Financial Statement Audit

Audit Opinion Unmodified

Restatement No

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Ending 

Balance

Total Material Weaknesses 0 0

Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

Total Material Weaknesses 0 0

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified

Material Weaknesses Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

Total Material Weaknesses 0 0

Conformance with financial management system requirements (FMFIA § 4)

Statement of Assurance Systems conform to financial management system requirements

Non-Conformances Beginning 

Balance

New Resolved Consolidated Reassessed Ending 

Balance

Total Non-Conformances 0 0

Compliance with Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. System Requirements No noncompliance noted No noncompliance noted

2. Accounting Standards No noncompliance noted No noncompliance noted

3. USSGL at Transaction Level No noncompliance noted No noncompliance noted
(Unaudited)

FY 2013 Agency Financial Report 155

Improper Payments Reporting Details

In accordance with the Improper Payments Information Act (IPIA) of 2002, as amended by the Improper Payments 

Elimination and Recovery Act (IPERA) of 2010 and the Improper Payments Elimination and Recovery Improvement 

Act of 2012 (IPERIA) and implemented by OMB Circular No. A‐123, Appendix C, Requirements for Effective 

Measurement and Remediation of Improper Payments, the Department reviews its programs and activities annually 

to identify those that may be susceptible to significant improper payments. For programs and activities deemed “at 

risk,” the Department performs testing to estimate rates and amounts of improper payments, establishes improper 

payment reduction targets in accordance with OMB guidance, and develops and implements corrective actions to 

reduce and recover improper payments. Additionally, the Department conducts payment recapture audits for each 

program and activity that expends $1 million or more annually if conducting such an audit is cost effective.

DOL Review of Programs and Activities

Similar to prior years, the Department’s FY 2013 review of major programs and activities includes the following 

tasks:

 Reviewing the prior three years’ results of IPIA risk assessments and detailed tests.

 Reviewing DOL Office of Inspector General (OIG) and GAO audit reports issued for DOL programs to identify 

control weaknesses or other issues that could potentially impact improper payments.

 Reviewing results of the Department’s OMB Circular A‐123 internal control assessment to identify control 

weaknesses that could potentially impact improper payments for DOL programs.

 Reviewing DOL programs’ FY 2010 through FY 2012 funding levels for significant changes that may impact 

improper payments.

The review identified one program, the Unemployment Insurance (UI) benefit program, to be at risk of significant 

improper payments according to OMB criteria (i.e., programs with annual improper payments exceeding both $10 

million and 2.5% of annual program payments, or $100 million).

The cluster of Workforce Investment Act (WIA) grant programs was classified as at‐risk in OMB’s former Circular No. 

A‐11, Section 57, in 2001 due to its annual level of expenditures; however, the Department’s annual risk 

assessments have not supported the high‐risk designation.

The FECA benefit program was also classified as at‐risk in OMB’s former Circular No. A‐11, Section 57 in 2001. The 

Department’s past risk assessments have not supported the high‐risk designation for the FECA program.

During FY 2013, the Department performed detailed testing for the UI and WIA programs to estimate the level of 

improper payments and their major causes. DOL has taken corrective actions to address the causes and reduce 

improper payments in these programs and has established improper payment reduction targets in accordance with 

OMB guidance.
Other Information

(Unaudited)

156 United States Department of Labor

Table 1 shows the FY 2012 – FY 2016 targets and projected rates for Department’s “At‐Risk” programs.

Table 1: Target and Actual Improper Payments Rates for the Department’s “At‐Risk” Programs

DOL Program 2012 2013 2014 2015 2016

Target Actual Target Actual Target Target Target

Unemployment Insurance (UI) 9.7% 10.78% 9.23% 9.32% (See 

Note)

(See 

Note)

(See 

Note)

Workforce Investment Act (WIA) 0.44% 0.22% 0.44% 0.19% 0.44% 0.44% 0.44%

Note: Integrity rate target for FY 2013 is based on the alternative methodology explained in this document at Section II ‐ UI Statistical 

Sampling. The FY 2014 - FY 2016 targets will be set pending additional guidance and consultation regarding estimation methodology with 

OMB. FY 2012 target and results are based on the combined overpayment and underpayment rates and are not adjusted for overpayment 

recoveries.

Unemployment Insurance (UI)

The FY 2013 target error rate for UI’s improper payments was 9.23%, as compared to the estimated error rate of 

9.32% (8.82% net overpayment rate plus 0.50% underpayment rate) for the period July 2012 to June 2013, the most 

recent period for which data were available. The net overpayment rate is computed by subtracting overpayments 

recovered from total estimated overpayments, plus total estimated underpayments, divided by total projected 

budget outlays for FY 2013.

Workforce Investment Act Programs (WIA)

With regard to WIA programs, the Department continues to improve accuracy in rate estimation and program 

integrity. The rate for FY 2013 is 0.19%, which is less than half of the target of 0.44%. 

Unemployment Insurance Program

Overview

The single largest program at DOL is the UI program, which represented approximately $67 billion in outlays in FY 

2013. Because the improper payments for UI are above $750 million and are estimated to be over 10%, the UI 

program is classified as a “high‐priority” program, the only program with this designation within the DOL.

Enhancing Federal and state efforts to reduce improper payments in the UI program is a top priority at DOL. 

Additionally, the UI program is continuing to emphasize the recovery of overpayments by performing payment 

recapture activities and providing states with tools to aid their recovery efforts.

I. UI Risk Assessment 

The outlays for the State UI, Unemployment Compensation for Federal Employees (UCFE), Unemployment 

Compensation for Ex‐Service Members (UCX), Extended Benefits (EB), and Emergency Unemployment 

Compensation 2008 (EUC08) programs decreased in FY 2013 to an estimated $66.79 billion, compared with $90.19 

billion in FY 2012, reflecting the following:

 Improved labor market conditions;

 A significant drop in EUC08 program payments, which decreased from $39.58 billion in 2012 to an 

estimated $25.43 billion in 2013; and

 A sharp decrease in EB payments, from $4.94 billion in 2012 to an estimated $77 million in 2013.
Improper Payments Reporting Details

(Unaudited)

FY 2013 Agency Financial Report 157

The UI program’s estimated annual improper payments for 2013 are $6.225 billion, consisting of $5.891 billion in 

net overpayments (estimated overpayments of $7.347 billion minus $1.456 in overpayment recoveries) plus $334 

million in underpayments. Net overpayments (estimated overpayments minus recoveries) were $5.89 billion. The 

estimates are based on the results of the Benefit Accuracy Measurement (BAM) survey, which includes payments 

from the State UI, UCFE, and UCX programs, but does not include EUC and EB payments. For the purposes of 

reporting UI payment accuracy data required by the IPIA, the estimated improper payment rates are assumed to 

generally reflect the accuracy of benefit payments from the EUC and EB programs, although they are not directly 

measured by the BAM survey. The BAM survey methodology is described in Section II – UI Statistical Sampling. 

States reported total overpayment recoveries of $1.456 billion, which includes overpayments recovered from the 

State UI, UCFE, UCX, EUC, and EB programs. States report recovery data on the ETA 227 Overpayment Detection 

and Recovery Report. Recovery data cover the period July 2012 to June 2013, the most recent ETA 227 report data 

available.

II. UI Statistical Sampling

The following sampling was performed for the UI benefit program:

Sampling Process: Improper payment rates are estimated from the BAM program. BAM includes the three largest 

permanently authorized unemployment compensation (UC) programs: State UI1, UCFE, and UCX. The Department 

reports an improper payment rate, which is the combined Annual Report Overpayment Rate and the 

Underpayment Rate, required by the IPIA. Executive Order 13520 required “high‐priority” Federal programs to 

develop supplemental measures. The Department, in consultation with OMB, developed two supplemental 

measures ‐ the Operational Rate, which includes fraud and non‐fraud recoverable overpayments that state 

agencies are expected to identify and establish for recovery, and the Employment Service (ES) Registration Rate, 

which measures the percentage of UI claimants who were required to register with the state ES, but who were not 

actively registered during the paid week selected for the BAM audit. The Department reports these two 

supplemental measures quarterly for publication on the Department of the Treasury Payment Accuracy Web site 

(http://www.paymentaccuracy.gov/). These supplemental measures are also reported annually as part of the IPIA 

reporting requirements (see Table 4, Improper Payment Reduction Outlook).

BAM investigators in each state conduct comprehensive audits for randomly selected weekly samples of paid and 

denied claims. Effective January 2008, all paid claims sampled for BAM investigation must be matched with the 

National Directory of New Hires (NDNH) database to improve the ability to detect overpayments due to individuals 

who claim benefits after returning to work, the largest single cause of UI overpayments. The universe (population) 

includes paid and denied claims under the State UI, UCFE, and UCX programs. However, because the claims 

processes and eligibility requirements are very similar for the additional benefits paid to unemployed individuals 

under the EB and EUC programs, the estimated improper payment rates are assumed to generally reflect the 

accuracy of these benefit payments. Overpayment and underpayment rates for FY 2013 are shown in Table 4, 

Improper Payment Reduction Outlook, and are for the period July 1, 2012 to June 30, 2013. Data are reported for 

this period rather than the fiscal year because a higher percentage of BAM investigations have been completed and 

will, therefore, produce more accurate estimates. For the period July 1, 2012 to June 30, 2013, state agencies 

completed audits for 24,181 paid claims cases, a completion rate of 99.9%. Additional information about the BAM 

methodology can be found at: http://oui.doleta.gov/unemploy/bam/2011/CY_2011_BAM_Methodology.pdf.

During 2012, DOL developed a new metric to measure improper payments that takes into account the “net” effect 

of UI overpayment recoveries. This measure includes the two components that have been reported annually as part 

of the IPIA reporting requirements - total overpayments plus total underpayments - which continue to be estimated 

from BAM, and subtracts the amount of overpayment recoveries, which are based on actual amounts reported by 

 

1

The 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands (referred to as states/areas) administer UI programs. The U.S. 

Virgin Islands does not participate in BAM.
Other Information

(Unaudited)

158 United States Department of Labor

the state workforce agencies on the ETA 227 Overpayment Detection and Recovery Reports for State UI, UCFE, UCX, 

EB, and EUC. It should be noted: 

 Overpayments include fraud, non‐fraud recoverable, and non‐fraud non‐recoverable overpayments.

 Underpayments include benefits payable to the claimant and underpayments not payable due to state 

finality rules or other disqualifying issues.

 Both overpayment and underpayment rates include all causes.

On December 13, 2012, OMB informed the Department that this methodology is consistent with OMB’s IPERA 

implementing guidance (OMB memorandum M-11-16) and approved its use beginning with FY 2013 reporting.

III. UI Corrective Actions

OMB has established the following categories to classify the root causes of improper payments in the UI program:

 Documentation and Administrative Errors

 Verification Errors

 Authentication and Medical Necessity Errors

These categories do not align precisely with the way the UI program classifies root causes. The BAM survey collects 

data on state workforce agency actions associated with the processing of overpayments. Table 2 displays the 

crosswalk between the OMB classification for Documentation and Administrative Errors and Verification Errors and 

BAM data. Since UI does not provide medical benefits of any type, no UI overpayments fit the definition of the 

Authentication and Medical Necessity Errors category.

Table 2: OMB‐Specified Causes of Errors and BAM Data Crosswalk

Overpayment Causes (OMB Classification) Percent of Overpayments

Documentation and Administrative Errors Total (breakdown listed below) 11.30%

Agency Took Incorrect Action 6.24%

Procedures Not Followed by Agency 3.72%

Other Agency Errors 0.91%

Agency Provided Incorrect Information 0.43%

Verification Errors Total (breakdown listed below) 88.70%

Issue Not Detectable by Agency Procedures 76.62%

Agency Had Documentation/Did Not Resolve Properly 8.77%

Agency in Process of Resolving 2.72%

New Hire Cross‐Match 0.44%

Wage Record Cross‐Match 0.15%

Authentication and Medical Necessity Errors Total 0.00%
Improper Payments Reporting Details

(Unaudited)

FY 2013 Agency Financial Report 159

Table 3 reflects the root causes of UI overpayments. The Department classifies the root causes of UI overpayments 

according to the following categories:

Table 3: Root Causes of UI Overpayments

Annual Report Rate Overpayments Percent of 

Overpayments (2013 

IPIA Rate)

Benefit Year Earnings 34.60%

Work Search 24.33%

Separation 19.48%

Base Period Wages 4.55%

Able and Available 4.22%

Employer Service Registration 4.16%

Other Eligibility Issues13.85%

All Other Issues24.81%

Total 100.0%

1

The category “Other Eligibility Issues” includes refusal of work, self‐employment, failure to report for agency review or report requested 

information, citizenship status, and claiming benefits using a false identity.

2

The category “All Other Issues” includes adjustments to dependents’ allowance, adjustments to benefits due to claimant receipt of income 

from severance pay, vacation pay, Social Security, or employer pension, back pay awards, payment during a period of disqualification, or 

agency redetermination of eligibility.

Reducing Improper Payments in Unemployment Insurance

In response to the level of improper payments in the UI program, ETA has developed a Strategic Plan to address 

several root causes of improper payments. A high level summary of the Strategic Plan is available at 

http://www.dol.gov/dol/maps/Strategies.htm.

Funds for UI are disbursed and monitored through established systems and processes. In addition, the Department 

has taken and will continue to take various actions to minimize and manage risk, including the following:

 Conducting outreach to states and other eligible grant applicants to communicate policies and guidelines 

and utilizing the regional office Federal Project Officers to conduct and document quarterly desk reviews of 

financial obligations, expenditures, and program performance. Grantees identified as “high‐risk grantees” 

through these reviews are given priority attention for on‐site monitoring.

 Training grantees on Federal grant requirements, performance expectations, fiscal and program 

requirements, and allowable use of funds.

 Closely monitoring the draw‐down of UI’s funds from the specific accounts and ensuring systems are in 

place for reporting information required for monitoring and evaluating the operations of these programs.

 Conducting program reviews to ensure that the various activities are properly implemented, including the 

use of funds according to various operating instructions and guidance provided to the states.
Other Information

(Unaudited)

160 United States Department of Labor

Goals for improving UI’s improper payment program include:

 Working with the states to develop and implement processes to identify and recapture improper payments.

 Defining audit procedures to be performed on selected items.

 Developing a framework for identifying improper payments and providing guidance to implement that 

framework.

 Establishing appropriate payment recapture targets.

 Utilizing statutory and regulatory authorities to recapture improper payments.

Several factors contribute to improper UI payments. Efforts to reduce costs of taking claims and improve customer 

service prompted the states to design remote claims processing. The transition from in‐person claims to remote 

claims processing (phone and internet) has depersonalized the process, making it easier for claimants to make false 

statements, and has had the additional side effect of precluding valuable prevention activities (such as agency 

messaging to reinforce eligibility requirements with claimants and questioning claimants with respect to their active 

work search efforts and benefit year employment issues) and contributed to the rise of improper payments.

Additionally, the states are required to meet benefit payment timeliness performance standards, which may result 

in some eligibility decisions that are based on incomplete or untimely information.

DOL is actively working with the states to reduce improper payments. All states have been called to action to 

ensure that UI integrity is a top priority and to develop state-specific strategies to bring down the overpayment 

rate. Specific attention and assistance has been given to those states with the largest impact on the improper 

payment rate. This work is continuing with all the states, particularly those with high overpayment rates.

Additionally, DOL has provided states with supplemental funding to implement strategies and technology‐based 

infrastructure investments that will help the states prevent, detect, and recover UI overpayments. These grants 

demonstrate DOL’s commitment to the development of integrity‐related systems focused on the proper payment 

of UI benefits. These systems can result in significant savings of staff costs for integrity‐related activities, increased 

dollar amounts of overpayments recovered, and prevention of future overpayments.

Between FY 2005 and FY 2012, DOL provided approximately $187.1 million to states in supplemental funding for 

integrity related projects. Additionally, in FY 2011 $128 million in supplemental funding was provided to three 

consortia to address outdated IT system infrastructures, all of which are necessary to improve UI integrity. In FY 

2012, an additional $92.8 million was awarded to these consortia.

UI Program Letter (UIPL) No. 24‐13, issued in July 2013, provided funding opportunities that encourage states to 

continue efforts to aggressively target UI overpayment prevention and detection, and to develop state‐specific 

strategies to reduce the UI improper payment rate. The funding opportunities are designed to build from the 

supplemental funding provided in prior years to assist states in developing their own state‐specific strategies to 

prevent, detect, and recover improper payments.

In September 2013 DOL ETA awarded $176.4 million in supplemental funding to 40 states for the prevention, 

detection, and recovery of improper UI benefit payments; improve state performance; address outdated IT system 

infrastructures necessary to improve UI program integrity; and enable states to expand or implement 

Reemployment and Eligibility Assessment (REA) programs. These incentive funds will support state implementation 

of high‐priority activities, including:

 Activities to address Worker Misclassification;

 Implementation of other integrity‐related projects, including technology‐based prevention, detection, and 

collection activities;

 Implementing the State Information Data Exchange System (SIDES) earnings / wage verification and 

monetary and potential employer charges data exchange;
Improper Payments Reporting Details

(Unaudited)

FY 2013 Agency Financial Report 161

 Subscription fees for maintenance and operation of SIDES;

 Contract staff support for activities that do not require the use of state merit staff;

 UI IT Security and IT Contingency Planning projects; and

 Automation efforts that result in performance and system improvements.

Overpayment Prevention and Detection in Unemployment Insurance

Every state conducts post award audits for the prevention and detection of UI improper payments on benefit 

payments to determine whether error or willful misrepresentation has occurred in the payment of UI benefits. 

Every state audits all benefits payments by means of a cross‐match against National and State new hire directories 

and state wage files. However, under certain circumstances, states may exclude payments from these matches if 

the wages are being reported by the claimant, or if the payment was made to a claimant with a return‐to‐work 

date.

These activities are conducted through the use of automated tools and procedures that confirm the identity and 

legal status of the claimants, search for unreported earnings, and detect other forms of fraud or errors contributing 

to improper payments in the UI program.

States agencies also maintain the integrity of unemployment insurance and reduce the amount of improper 

payments by ensuring that employers contribute their fair share of tax and facilitate the return to work of UI 

claimants.

Some of the most useful tools and practices include:

1. BYE Issues (claimants continuing to claim UI benefits after returning to work)

a. NDNH – This database is managed by the Department of Health and Human Services, Office of Child 

Support Enforcement. The NDNH has claims information as well as wage and new hire information 

from employers including the Federal government and military. States use this database to 

cross‐match between the wage record data to detect unreported earnings and new hire data to 

identify individuals who continue to claim benefits after returning to work.

b. State Directory of New Hires – This tool provides information similar to the NDNH, but only 

contains data reports from employers within the state.

c. State Quarterly Wage Cross‐Match – Paid claims are matched against the quarterly wage records 

reported by employers to state tax units. The lag in reporting requirements for UI taxes can prevent 

identification of overpayments in a timely manner.

2. Separation Issues (claimants ineligible to receive benefits due to voluntary quit or discharge for cause)

a. State Information Data Exchange System – This automated data exchange promotes the receipt of

timely information from employers regarding the claimants’ separation from employment and 

verification of earnings upon returning to work. Timely and adequate information from employers 

provides the state agency with the necessary information to make a determination on the 

claimants’ eligibility and thus prevent improper payments.

3. Verification of Claimant Identity and Other Fraud Prevention Activities

a. State Department of Motor Vehicles – Helps verify the identity of the claimant.

b. Social Security Administration (SSA) – Helps confirm identity and benefits from SSA.

c. Systematic Alien Verification for Entitlement (SAVE) – Maintained by the Department of Homeland 

Security, SAVE confirms the legal status of non‐citizens. The wages used to establish a claim must 

be earned legally, and after filing a UI claim, non‐citizens must be legally authorized to seek and 

accept employment.

d. State and Local Prison Records – Some states match claimant data against these records to prevent 

fraud in the program.
Other Information

(Unaudited)

162 United States Department of Labor

e. Internal state databases record multiple claimants using the same contact information (phone 

numbers, addresses, bank accounts, or IP addresses). These tools can prevent fraud schemes.

4. Tax Fraud Detection

a. State Unemployment Tax Act (SUTA) Dumping Detection System (SDDS) – Use of SDDS software 

helps detect employers who manipulate their tax rates by, for example, shifting employees from 

accounts with higher tax rates to accounts with lower tax rates.

b. Worker Misclassification Programs – Includes audits and investigations to prevent worker 

misclassification by employers. Worker misclassification occurs when an employee is erroneously 

classified by an employer as a non‐employee, which reduces UI tax revenue, as well as the worker’s 

ability to receive UI benefits, worker’s compensation, Social Security benefits, health insurance 

coverage, retirement coverage, and protection under the Fair Labor Standards Act.

5. Reemployment and Continuing Eligibility

a. Worker Profiling and Reemployment Services – A system designed to identify claimants who are 

likely to exhaust benefits and refer them to services designed to assist them in returning to work 

quickly.

b. Reemployment and Eligibility Assessments – In‐person claimant interviews conducted at the 

One‐Stop Career Centers to review continuing UI eligibility and assess reemployment needs, 

including providing labor market information, assisting with the development of a work search 

plan, and referral to reemployment services and/or training when appropriate.

IV. UI Improper Payment Reporting

Table 4 shows the Improper Payment Reduction Outlook, for the UI program, for FY 2012 – FY 2016. FY 2012 

estimated improper rates and amounts have been revised due to the recoding of BAM data reported by 

Pennsylvania that reflected legislation establishing new active work search and registration requirements effective 

January 1, 2012. In April 2013, Pennsylvania requested that these improper payments be reclassified due to the fact 

that the rule making process had not been completed and, therefore, the new eligibility requirements could not yet 

be enforced. The Department approved this request in July 2013.

Table 4: UI Improper Payment Reduction Outlook FY 2012– FY 2016 ($ in millions)

Program FY 2012 FY 20133FY 20141FY 20151FY 20161

Outlay

s

IP % IP $ Outlay

s

IP % IP $ Est. 

Outlay

s

IP % IP $ Est. 

Outlay

s

IP % IP $ Est. 

Outlays

IP % IP $

UI Program 

Total

$90,190 10.78% $9,719 $66,788 9.32% $6,225 $46,340 (See 

Note)

(See 

Note)

$41,570 (See 

Note)

(See 

Note)

$42,010 (See 

Note)

(See 

Note)

Annual Report 

Rate 

Overpayments2

10.17% $9,168 8.82% $5,891

Underpayments 0.61% $551 0.50% $334

Operational Rate 5.99% $5,402 6.25% $4,174

Employment 

Service 

Registration

0.65% $587 0.46% $306

1

Integrity rate targets for FY 2014 to FY 2016 will be set pending additional guidance and consultation regarding estimation methodology with 

OMB.

2

For FY 2013 the overpayment rate reflects the Annual Report rate, which includes all overpayments, estimated form the BAM survey, minus 

overpayments recovered, reported on the ETA 227 Overpayment Detection and Recovery Report. The FY 2012 overpayment rate is not 

adjusted for overpayment recoveries.

3

The Department allowed New Jersey to suspend BAM operations as a result of Super Storm Sandy. Data for the BAM sampling period 

November 4, 2012, to February 2, 2013, have been estimated.

Data for the fourth quarter of calendar year 2012 have been estimated for New Mexico, due to methodological 

issues related to the operation of the BAM survey.
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FY 2013 Agency Financial Report 163

Actual UI outlays in FY 2013 include no benefit payments under the EB, Federal Additional Compensation (FAC) and 

EUC08 programs funded by the American Recovery and Reinvestment Act of 2009. Recovery Act UI modernization 

incentive and administrative cost payments to states are not included.

The rates were determined as described in Section II – UI Statistical Sampling and applied to the estimated outlays 

for the fiscal year. UI rates are estimates based on the BAM statistical survey of State UI, UCFE, and UCX payments.

Because the claims processes and eligibility requirements are very similar for the EB and EUC programs, the 

estimated improper payment rates are assumed to generally reflect the accuracy of these benefit payments. No 

benefits were paid under the FAC program in FY 2012 or FY 2013.

An estimated 2.89% of UI benefits were overpaid due to fraud in FY 2013, compared with a 2.85% fraud rate in FY 

2012. Overpayments due to fraud are included as part of both the IPIA Rate and Operational overpayment rates.

V. UI Recapture of Improper Payments Reporting

The UI program was deemed cost effective for payment recapture audits. Performing UI payment recapture 

activities and providing states with tools to aid recovery are top priorities at DOL. DOL’s recapture activities have 

focused on the following areas that offer the greatest opportunity for improvement:

 BYE Issues – These issues arise when a claimant continues to claim and receive UI benefits after returning 

to work.

 Separation Issues – These issues occur because the claimant files for benefits when they are ineligible to do 

so, and the state has not received documentation to that effect from the former employer before the claim 

is processed.

 Work Search Issues - These issues occur when the claimant has not met the state’s requirements to 

conduct an active search for work. 

 Employment Service (ES) Registration Issues – These issues occur when the claimant has not registered in 

the state’s Employment Service system (or job bank) when required to do so, and is therefore ineligible for 

UI benefits.

The Department coordinates with states to recover UI overpayments. Each state’s Benefit Payment Control (BPC) 

unit is responsible for promoting and maintaining UI program integrity through prevention, detection, investigation, 

establishment, and recovery of improper payments. BPC operations identify UI overpayments for recovery through 

such methods as cross‐matching claimant Social Security Numbers with State and National Directories of New Hires, 

wage record files submitted each quarter by employers, matches with other databases, such as Workers 

Compensation and State Corrections, and other sources such as appeals, reversals and tips and leads. States collect 

overpaid claims through offsets of UI benefits, Federal income tax refunds under the Treasury Offset Program 

(TOP), state income tax offsets, and direct cash reimbursement from the claimant. From FY 2004 through FY 2012, 

approximately $7.43 billion was recovered for the UI program (including the State UI, UCFE, UCX, EB, and EUC 

programs).

In February 2011, the Department of Treasury (Treasury) enacted a regulation to permit states to offset UI 

overpayments through TOP. As of September 2013, 36 states had implemented TOP and 11 other states have 

received supplemental funding, but have not yet implemented. An estimated $323.8 million in UI overpayments 

were recovered through TOP in FY 2013.

The states must hold the claimants liable to repay benefits that were received improperly and take an active role to 

recover improper payments (payment recapture audits). States may waive repayments for non‐fraud overpayments 

when it would be against equity and good conscience pursuant to their state’s law.

Some of the recovery activities and tools used by states include:
Other Information

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164 United States Department of Labor

 Offsets from benefits;

 Offsets from state and Federal income tax refunds;

 Offsets from lottery winnings, homestead exemptions, and other benefits, including the Alaska Mineral

 Refund;

 Interstate recovery agreements;

 Repayment plans;

 Civil Actions, including wage garnishments and property liens;

 Skip tracing, collection agencies, and credit bureaus;

 Probate and Bankruptcy;

 Referral to Office of Inspector General and other Law Enforcement Agencies;

 State and Federal Prosecution; and

 Establishment of interest and penalties on overpayments, which adds an incentive to repay quickly.

Table 5 provides a summary of UI overpayments established and recovered as a result of the activities described 

above.

Separate rates are shown for State UI, UCFE, UCX, and EB claims only and for State UI, UCFE, UCX, and EB plus EUC 

claims. Recovered overpayments for State UI claims are returned to the UI account from which the benefits were 

originally paid. EUC and EB overpayments that are recovered by the states are returned to the EUCA account within 

the UI Trust Fund.

Table 5: UI Overpayments Established and Recovered By Fiscal Year (Excluding Waivers)

Fiscal 

Year 

Overpayments 

Established 

UI/UCFE/UCX/EB

Overpayments 

Recovered 

UI/UCFE/UCX/EB

Recovered 

%

Overpayments 

Established 

UI/UCFE/UCX/EB + 

EUC

Overpayments 

Recovered 

UI/UCFE/UCX/EB + 

EUC

Recovered %

2004 $1,101,549,360 $528,941,410 48.02%

2005 $960,277,791 $488,807,550 50.90%

2006 $979,836,264 $511,524,977 52.21%

2007 $952,898,179 $531,724,056 55.80%

2008 $1,002,131,148 $571,160,044 56.99% $1,010,170,720 $572,970,520 56.72%

2009 $1,456,403,205 $850,987,241 58.43% $1,736,295,243 $914,626,113 52.68%

2010 $1,906,310,909 $966,016,812 50.67% $2,834,448,745 $1,179,889,999 41.63%

2011 $1,887,177,040 $997,967,260 52.88% $2,995,716,708 $1,298,988,280 43.36%

2012 $1,740,389,347 $1,015,228,074 58.33% $3,021,708,061 $1,400,128,425 46.34%

The states are required to report quarterly on overpayment detection and recovery activities on the ETA 227 

Report. The amounts established and recovered are based on reports submitted during the indicated fiscal year. 

However, the actual payment of benefits may have occurred in a prior fiscal year.

The information reported on the ETA 227 Report is based on actual counts of UI overpayments identified and 

recovered by the state agencies. This is in contrast to the estimates of UI overpayment rates and amounts that are 

reported for the IPIA, which are based on the results of BAM. BAM is a statistical survey of paid and denied UI 
Improper Payments Reporting Details

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FY 2013 Agency Financial Report 165

claims. The results of the BAM audits are projected to the population of benefit payments for all unemployment 

compensation programs: State UI, UCFE, UCX, EB, and EUC. These BAM estimates may be significantly higher than 

actual overpayments identified for recovery because: 1) the BAM audits detect eligibility issues that usual BPC 

detection methods will not identify, because it is very workload intensive and/or not cost effective to detect (for 

example, verification of all claimant work search activity or that all claimants were able and available for work); or 

2) the overpayment is not recoverable because the responsibility for the improper payment is the agency’s and/or 

the employer’s, rather than the claimant’s, or due to state finality rules.

“Overpayment Establishments” have been adjusted to subtract waivers, which are overpayments that the state 

agency has determined are not recoverable. The Unemployment Insurance Report Handbook (ET Handbook 401, 

4th edition, Section IV, Chapter 3, p. 10) defines a waiver as:

“A non‐fraud overpayment for which the state agency, in accordance with state law, officially relinquishes 

the obligation of the claimant to repay.”

Usually, this is authorized when the overpayment was not the fault of the claimant and requiring repayment would 

be against equity and good conscience or would otherwise defeat the purpose of the UI law.

DOL believes that this definition is consistent with the criteria established by OMB for evaluating the cost 

effectiveness of a payment recapture program in the revised Appendix C, Part I.B, Section 5 of Circular A-123.

Table 6 compares the overpayment establishment and recovery rates for UI/UCFE/UCX/EB claims versus EUC 

claims. The lower recovery rates for EUC reduce the overall recovery rates that include all UI benefit programs.

Table 6: Comparison of UI/UCFE/UCX/EB and EUC Overpayments Established and Recovered ($ in billions)

Fiscal 

Year

UI/UCFE/UCX/EB 

Outlays

Overpayments 

Established 

UI/UCFE/UCX/EB 

(excluding waivers)

Established As a 

Percent of Outlays

Overpayments 

Recovered

Recovered as a 

Percent of 

Established

2008 $38.88 $1.002 2.58% $0.571 56.99%

2009 $80.42 $1.456 1.68% $0.851 58.43%

2010 $72.36 $1.906 2.63% $0.966 50.67%

2011 $62.02 $1.887 3.04% $0.998 52.88%

2012 $50.61 $1.740 3.44% $1.015 58.33%

Fiscal 

Year 

EUC Outlays Overpayments 

Established*

Established As a 

Percent of Outlays

Overpayments 

Recovered

Recovered as a 

Percent of 

Established

2008 $3.55 $0.008 0.23% $0.002 22.54%

2009 $32.66 $0.280 0.86% $0.064 22.74%

2010 $72.09 $0.928 1.29% $0.214 23.04%

2011 $52.66 $1.109 2.11% $0.301 27.15%

2012 $39.58 $1.281 3.24% $0.385 30.04%
Other Information

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166 United States Department of Labor

The recovery rate for EUC overpayments is significantly less than the recovery rate for state UI and EB 

overpayments due to several factors:

 Many of these claimants have exhausted benefits, and therefore, states are unable to offset overpayments 

against their unemployment compensation payments.

 The legislation establishing the EUC program limits offsets to 50% of the amount payable to the claimant 

for the compensated week. The Middle Class Tax Relief and Job Creation Act of 2012 (Public Law 112‐96) 

removed this restriction, which contributed to the increase in recoveries of EUC overpayments in FY 2012.

 Claimants who have been unemployed for long durations have few resources available for the repayment 

of overpayments.

 The severe decline in the housing market removed the option that states have used to recover 

overpayments by attaching liens to an individual’s property and recovering the overpayments when the 

property is sold.

 Many states reassigned BPC staff to process claims when workloads increased sharply during the recession, 

thereby leaving fewer staff to identify and recover overpayments.

The ETA 227 Report captures data on the causes of overpayments, the method of detection, recovery and 

reconciliation, criminal and civil actions, and the aging of benefit accounts. After eight quarters, the overpayments 

are removed from the total outstanding balance on this report. This does not affect the state’s accounting 

practices. When overpayments are recovered that have been removed from the reported outstanding balance, the 

amount will be added back to report the recovery in the quarterly report, regardless of when the overpayment 

originally occurred. States are now able to attempt recovery of these older unemployment compensation debts 

through TOP by offsetting the claimant’s Federal income tax returns. When improper payments are recovered, they 

are returned to the states’ UI trust fund account from which they were paid.

A cost‐benefit analysis conducted in 2012, which updated the methodology of a cost‐benefit analysis conducted in 

2001, indicates that an additional $6.52 will be recovered for every $1 invested in BPC, based on the inflation 

adjusted average returns on investment for the period FY 2001 to FY 2011. In addition to the methodology 

replicating the FY 2001 study, regression models were constructed to identify variables with statistical associations 

with UI overpayment detections and recoveries. The period of analysis was FY 2007 to FY 2011 for all states and 

territories excluding the Virgin Islands. The model for UI overpayment detections indicates that estimated 

overpayments (from the BAM survey) explained the largest proportion of the variance, followed by EB benefit 

payments, and BPC funding. This indicates that state BPC operations can detect additional overpayments as the 

pool of overpayments expands up to a point using existing resource levels. The model indicates that agencies will 

identify and possibly recoup a little more than $5 in overpayments for every additional dollar in BPC funding they 

receive.

With respect to overpayment recoveries, the model suggests that recoveries are largely a function of the pool of 

overpayments and the amount of those overpayments that the agency establishes. The model also indicates that 

recoveries are unresponsive to changes in BPC resource levels, although these resources are important to support 

additional overpayment detections, which are in turn significant with respect to recoveries.
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FY 2013 Agency Financial Report 167

Table 7 shows the payment recapture audit reporting for the UI program.

Table 7: Payment Recapture Audit Reporting ($ in millions)

Status Benefits (UI)

Amount Subject to Review for Current Year (CY) 2013 Reporting $66,788

Actual 2013 Amount Reviewed and Reported N/A1

Amount Identified for Recovery in 2013 $2,579

Amount Recovered in 2013 $1,456

% of Amount Recovered Out of Amount Identified in 2013 56.5%

Amount Outstanding in 2013 $1,6852

% of Amount Outstanding Out of Amount Identified in 2013 65.3%2

Amount Determined Not to be Collectable in 2013 $1,3033

% of Amount Determined Not to be Collectable Out of Amount Identified in 2013 50.6%3

Amounts Identified for Recovery in Prior Years (PYs) 2004‐2012 $15,593

Amounts Recovered in PYs 2004‐2012 $7,428

Cumulative Amounts Identified for Recovery (CY + PYs) $18,172

Cumulative Amounts Recovered (CY + PYs) $8,884

Cumulative Amounts Outstanding (CY + PYs) $4,3584

Cumulative Amounts Determined Not to be Collectable (CY & PYs) $6,3333

Note: Amounts include State UI, UCFE, UCX, EB, and EUC programs. Data for FY 2013 are estimated based on data submitted on the ETA 227 

report for the period July 1, 2012, through June 30, 2013, the most recent period for which data are available.

1

UI payments are reviewed by each state, not by the DOL, in accordance with the provisions of the Social Security Act of 1935 and under state 

UI law. Each state follows review procedures, such as matching paid claims against the National Directory of New Hires and other databases 

to detect benefits which are improperly paid and use a variety of tools to recover benefits overpaid such as leveraging the U.S. Treasury 

Offset Program. Overpayments detected and recovered are reported to DOL on the quarterly Overpayment Report, ETA 227. 

2

Includes that portion of overpayments reported as outstanding on the ETA 227 and EUC 227 Reports (line 313) that were 360 days old or less 

as of the report date. Overpayment aging data are not available for EUC overpayments and have been imputed from UI, UCFE, UCX, and EB 

overpayment aging data.

3

Includes overpayments written off (ETA 227 and EUC 227 Reports, line 309) and receivables removed after two years unless recovery is in 

progress (ETA 227 and EUC 227 Reports, line 312).

4

Includes total overpayments reported as outstanding on the ETA 227 and EUC 227 reports (line 313) as of the report date.
Other Information

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168 United States Department of Labor

Table 8 shows the UI program’s established annual targets which drive performance. The targets are based on the 

rate of recovery.

Table 8: Payment Recapture Audit Targets ($ in millions)

Type of 

Payment 

Current Year 

2013 Amount 

Identified

Current Year 

2013 Amount 

Recovered

Current Year 

Recovery 

Rate 

(Amount 

Recovered / 

Amount 

Identified)

2013 Recovery 

Rate Target

2014 Recovery 

Rate Target

2015 

Recovery 

Rate Target

UI Benefits $2,579 1,2 $1,456 256.5% 255% 58% 65%

Note: Amounts include State UI, UCFE, UCX, EB, and EUC programs.

1

Excludes amounts waived for recovery.

2

2013 amounts based on data for the period July 1, 2012 through June 30, 2013, the most recent period for which data are available.

Table 9 is an aging schedule of the amount of overpayments identified through the UI program’s payment 

recapture audit program that are outstanding (i.e., overpayments that have been identified but not recovered).

Table 9: Aging of Outstanding Overpayments ($ in millions)

Type of Payment Current Year Amount 

Outstanding (0‐6 months)

Current Year Amount 

Outstanding (6 months to 

1 year)

Current Year Amount 

Outstanding (over 1 year)

UI Benefits $582.9 1$471.7 2$1,675.8 3

Note: Amounts include State UI, UCFE, UCX, and EB programs. Aging data are not available for EUC overpayments. Aging status is as of June 

30, 2013.

1

Amounts outstanding less than or equal to 180 days.

2

Amounts outstanding more than 180 days and less than or equal to 360 days.

3

Amounts outstanding more than 360 days.

Table 10 describes the purpose for which recaptured funds were used.

Table 10: Disposition of Recaptured Funds ($ in millions)

Type of 

Payment 

Agency

Expenses to 

Administer 

the Program

Payment 

Recapture 

Auditor Fees

Financial 

Management 

Improvement 

Activities

Original 

Purpose

Office of 

Inspector 

General

Returned to 

Treasury

UI Benefits $1,456 

No UI benefit overpayments were recovered outside of payment recapture audits.
Improper Payments Reporting Details

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FY 2013 Agency Financial Report 169

VI. UI Accountability

The ETA is responsible for Federal oversight of state unemployment insurance (UI) programs, including oversight of 

state activities to reduce and recover improper UI benefit payments. ETA has taken/continues to take the following 

steps to hold Federal managers accountable for reduction and recovery of improper UI payments by states. State 

workforce agencies administer the UI program and set operational priorities within the resources available. The 

Department has limited authority to link the performance of state workforce agency staff to improper payment 

reduction goals and targets. However, ETA has established a robust set of performance measures used to evaluate 

the states’ overall operational performance. States not meeting the criteria set for these measures are expected to 

submit corrective action plans as part of their annual State Quality Service Plan submission. The UI Performs 

measures are summarized at http://workforcesecurity.doleta.gov/unemploy/pdf/Core_Measures.pdf.

In response to the level of improper payments in the UI program, ETA developed a Strategic Plan to address the 

several root causes of improper payments which were described in detail earlier in this document at Section III – UI 

Corrective Actions. In FY 2013, ETA continued to focus on the following integrity related activities and ensure the 

annual performance standards for managers include the completion of significant milestones for the projects listed 

below.

 As part of their State Quality Service Plan (SQSP), states are required to prepare an Integrity Action Plan. 

The plan must identify the state officer(s) accountable for reducing improper payments, summarize the 

state’s assessment of whether it has the internal controls, human capital, and information systems and 

other infrastructure needed to reduce improper payments to minimal cost‐effective levels, and identify any 

statutory or regulatory barriers which may limit the agency’s corrective actions in reducing improper 

payments. Additionally, the plan must discuss the root causes of improper payments and present the 

state’s strategies to address these causes.

 ETA requires states to operate the BAM survey to measure and report the percent, dollar amount, and 

reasons for improper payments. Data are derived from investigations of a statistically valid sample of 

payments using federally prescribed procedures. ETA reviews this data for validity, analyzes the data for 

each state, and makes the data available publicly on ETA’s Office of Unemployment Insurance (OUI) Web 

site http://oui.doleta.gov/unemploy/bam/2011/bam-cy2011.pdf. Data review, analysis and publication are 

included in the performance plan of the Administrator of ETA’s OUI and in the elements and standards of 

numerous staff in that office.

 ETA has implemented a core performance measure for detection of overpayments by state UI programs. 

State performance data is available at http://oui.doleta.gov/unemploy/3yr_ranking.asp. States that fail to 

meet the performance criterion submit corrective action plans. Analysis of state performance and 

monitoring of states’ corrective actions continue to be evaluation factors in OUI managers’ performance 

plans.

 ETA has developed additional performance measures that require states to:

oReduce by 30% after the first year of implementation and by 50% after the second year of 

implementation those overpayments attributable to individuals who continue to claim UI benefits 

after they return to work;

oMeet the less than 10% improper payment rate criterion included in IPERA; and

oMeet a minimum UI overpayment recovery rate target.

 ETA has promoted and continues to promote cost effective methods for states to prevent, detect, and 

recover improper UI benefit payments. Development, delivery, and/or successful implementation of these 

initiatives by states have been and continue to be factors on which the OUI administrator and managers are 

evaluated. These initiatives were described in detail earlier in this document at Section III – UI Corrective 

Actions.

 National Integrity Conference: In order to provide a forum for disseminating successful practices for 

preventing, detecting, and recovering UI overpayments, ETA, working with the National Association of State 

Workforce Agencies (NASWA) sponsors a biennial National Unemployment Insurance Integrity Professional 
Other Information

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170 United States Department of Labor

Development Conference. The 2012 UI Integrity Summit was held in Arlington, Virginia, March 12‐14, 2012. 

The next conference is scheduled for spring 2014.

As part of its monitoring and oversight responsibilities of the State's UI operations, the Department takes an active 

role in facilitating and promoting strategies to reduce improper payments and meet the payment accuracy and 

recovery targets required by IPERA. However, it should be noted that these strategies require the cooperation and 

implementation by individual states, including in some cases changes to state laws and regulations. The 

Department has no explicit authority over how states establish priorities in administering their UI programs and, 

therefore, can only make recommendations and provide technical assistance in the use of these strategies.

VII. UI Agency Information Systems and Other Infrastructure

States have internal controls, processes, programs, and staff in place throughout all operations of the UI program 

dedicated to protection from internal threats and vulnerabilities. These threats and vulnerabilities include physical 

damage and harm to staff and property, misuse of administrative funds and assets by agency staff, and misuse of UI 

funds by agency staff. It is incumbent upon the state agencies to have a series of protections in place addressing 

controls such as the granting of systems access, developing and upholding security policies and procedures, the 

proper configuration of hardware and software, basic physical safeguards, backup tests and disaster recovery 

provisions, regular audits, ongoing employee training, etc.

While state Internal Security (IS) programs are intended to identify and eliminate system vulnerabilities, the risk 

remains of losses from the issuance of improper UI benefit payments and misuse of administrative funds due to 

fraud, waste, and abuse. States are expected to review these controls and update them regularly to eliminate new 

threats and vulnerabilities as technology and business practices in the administration of the UI program evolve.

Although integrity is the responsibility of all agency staff, the states have dedicated staff conducting BPC activities 

to prevent, detect, and recover improper payments. These staffs work closely with agency management to assure 

that sufficient controls are in place to prevent improper payments, conduct complex fraud investigations, and 

operate the activities required to recover improper payments if they have been made.

ETA is also engaged with the states to monitor activity and provide technical assistance to ensure that states are 

able to utilize the integrity tools that are available. For example, as a result of ETA monitoring, states modified 

computer matching procedures to improve the productivity of NDNH as a resource to detect improper payments.

ETA is also working closely with the state agencies to develop the information systems and infrastructure to 

support SIDES and to access TOP for UI overpayment recovery.

State UI benefit and tax systems vary in terms of their performance capacities, capabilities, and their adaptability to 

new UI programs and integrity strategies. In response, between FY 2005 and FY 2012 the Department provided 

approximately $187.1 million to states in supplemental funding for integrity‐related projects and awarded an 

additional $128.0 million in September 2011 and $92.8 million in September 2012 to three state consortia. (A 

description of these consortia is provided earlier in this document at Section III – UI Corrective Actions.) These 

resources will fund activities to support the prevention, detection, and recovery of improper UI benefit payments, 

improve performance, and address outdated IT system infrastructures, all of which are necessary to improve UI 

integrity.

UIPL No. 24‐13, issued in July 2013 and available at http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=6992, 

solicited state Supplemental Budget Request grant proposals. (UI integrity activities eligible for Supplemental 

Budget Request grants are discussed earlier in this document at Section III – UI Correction Actions.) Based on 

positive outcomes from previous investments in integrity efforts, UIPL No. 24-13 also invited states that commit to 

implementation of all core activities, or have already implemented the core activities, to submit Supplemental 

Budget Request grant proposals for consortium projects.
Improper Payments Reporting Details

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FY 2013 Agency Financial Report 171

In September 2013, ETA awarded $176.4 million in supplemental funding to 40 states for the prevention, detection, 

and recovery of improper UI benefit payments; improve state performance; address outdated IT system 

infrastructures necessary to improve UI program integrity; and enable states to expand or implement REA

programs. Included in these awards are three consortia grants totaling $98.8 million for projects designed to 

improve overall program quality, performance, and integrity.

VIII. UI Barriers

The UI program has several statutory barriers to reducing improper payments. States administer the UI program 

and set operational priorities. The Department has limited authority to ensure they pursue improper payment 

reduction activities. The most significant recent legislation affecting the UI program was The Middle Class Tax Relief 

and Job Creation Act of 2012 (Public Law 112‐96), February 22, 2012. A detailed description of the Act’s provisions, 

DOL guidance, and other reference documents can be found on the OUI Web page: 

https://www.oui.doleta.gov/unemploy/jobcreact.asp.

Other Barriers and Department Response

The Department of Treasury requires states to use merit‐based state government staff to access TOP data. 

However, several states use contract staff to perform program activities that require accessing TOP data. Some 

states have reported difficulties in implementing the TOP program due to Treasury’s mandate to use merit staff.

Treasury is working with the Department to provide customized technical assistance to resolve this issue.

ETA has developed Integrity legislation to mandate state implementation of TOP and SIDES, mandate state 

requirements related to NDNH, require states to implement specific corrective actions and use specified amounts 

of their grants to improve performance, and mandate that UI Penalty and Interest is UI Program Income. The 

package has been approved by the Department and ETA is drafting legislative specifications and language for 

clearance by OMB. Legislative language is expected to be transmitted to Congress, pending OMB approval.

Workforce Investment Act Grant Programs

Programs funded through the Workforce Investment Act of 1998 (WIA) form a comprehensive workforce 

investment grant strategy overseen by ETA for delivering employment and training services. WIA programs 

primarily provide grant funds to states, which in turn award the majority of the funds to local Workforce 

Investment Boards, which award sub-grants and/or contracts to One-Stop service centers/sub-grantees. WIA 

programs also provide grant funds to non-state grantees on a discretionary basis. The financial records and other 

documentation supporting WIA outlays at the state level, and lower tiers are located at the grantee and subgrantee locations rather than at the DOL National Office.

I. WIA Risk Assessment

The group of programs funded through Workforce Investment Act of 19981grants was classified as “at-risk” in 

OMB’s Circular A-11, Section 57, in 2001. The Department’s risk assessments over the past several years, however, 

do not support a high-risk designation, but the Office of the Chief Financial Officer (OCFO) and ETA continue to 

perform improper payments analysis each year.

While WIA is often referred to as one program, in actuality, WIA grants fund nearly a dozen different programs. 

Certain programs are considered a “cluster,” defined as a grouping of closely-related programs with similar 

compliance requirements. Clusters are treated as a single program for the purpose of meeting the audit 

requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, which 

provides the implementing guidance for the Single Audit Act of 1984, as amended in 1996 (SAA). The SAA 

 

1

Public Law No. 105-220, 112 Stat. 936-1059; 29 U.S.C. 2811 et seq. Regulations are at 20 C.F.R. parts 660-671.
Other Information

(Unaudited)

172 United States Department of Labor

establishes uniform audit requirements for States, local governments, Indian Tribes and non-profit organizations 

(non-Federal entities) receiving Federal awards. One of the main purposes of the SAA is to promote sound financial 

management, including effective internal control, with respect to Federal awards. For purposes of improper 

payments analysis, OCFO and ETA focus on programs included in the A-133 “WIA Cluster,” which consists of the 

WIA Adult Program (Catalog of Federal Domestic Assistance (CFDA) No. 17.258), WIA Youth Activities (CFDA No. 

17.259) and WIA Dislocated Worker Formula Grants.1These programs are authorized by Title I of WIA. 

DOL computed the estimated error rate for FY2013 based on an extensive analysis of all available sources of 

improper payment information, including questioned costs identified in OMB Circular A-133 Single Audit Act 

reports (SAA reports) for 2011 (the most recent year with complete information), recent Employment and Training 

Administration (ETA) regional monitoring reports, and DOL’s Office of the Inspector General (OIG) audit reports 

issued for the three most recent years ending March 31, 2013. 

Based on results of all analyses and assessments, the estimated rate of improper payments for WIA programs is 

about 0.194 percent—well under the established threshold of a risk-susceptible program. Applied to FY2013 

outlays of $2.995 billion, the estimated dollar amount is approximately $5.8 million. 

DOL remains consistent with how WIA funds are disbursed and monitored through established systems and 

processes. The Department continues to ensure that all grantees deliver agreed upon products and services, 

achieve negotiated performance outcomes, and operate in accordance with programmatic, administrative, and 

budgetary requirements, which minimizes and manages risk.

Specific objectives over grant performance include the following:

 Oversee grant compliance, progress, and achievement through the use of a variety of oversight tools.

 Identify grantees’ individual and collective training and technical assistance needs and arrange for such 

training and technical assistance within the parameters of available resources.

 Develop and update monitoring plans to target at‐risk grantees.

For FY 2013, the Department used the same methodology to estimate the improper payment rate for the WIA grant 

program as was used in FY 2012. This methodology is similar to previous measurements.

II. WIA Statistical Sampling

The following sampling was performed for the WIA grant program:

Sampling Process: Unlike DOL’s benefit programs, data is not readily available to allow the Department to directly 

sample grant payments and develop a statistically valid estimate of improper payments. The grant programs’ 

funding stream makes it very difficult to assess the improper payment rate on payments to final recipients. The 

Department provides grants to states, cities, counties, private non‐profits, and other organizations to operate 

programs, and relies significantly on Single Audit Act reports (which are required by the Single Audit Act of 19962) to 

monitor funding to all grant recipients. Based on a review of the definition of questioned costs in OMB Circular 

A‐133 and OMB's IPIA implementation guidance, the Department determined that questioned costs can be used as 

 

1

Program clusters are found in the OMB Circular No. A-133 Compliance Supplement, which is updated regularly. Over the years, other CFDA 

numbers have been included in the WIA Cluster: CFDA No. 17.260 Dislocated Workers, National Emergency Grants and CFDA No. 17.255 

Workforce Investment Act. To gather the most information possible, OCFO collected information on these additional programs.

2

The Single Audit Act of 1996 provides for consolidated financial and single audits of state, local, non‐profit entities, and Indian tribes 

administering programs with Federal funds. Non‐Federal entities that expend $500,000 or more of Federal awards in a year are subject to a 

consolidated financial single audit; any non‐Federal entities that do not meet this threshold are not required to have a single audit. All 

non‐Federal entities are required to submit all single audit reports to a Federal Audit Clearinghouse (Clearinghouse) that is administered by 

the Census Bureau.
Improper Payments Reporting Details

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FY 2013 Agency Financial Report 173

a proxy for improper payments. Therefore, in FY 2013 results of Single Audit Act (SAA) reports, along with other 

data, were utilized to determine the improper payment rate for the WIA grant program.

The Department reviewed FY 2011 (most recent available) Single Audit Act reports with DOL‐related findings from 

the Federal Audit Clearinghouse (which is the national repository of Single Audit Act reports) and identified all WIA 

program questioned costs included in such reports. As additional evidence that no other audit reports included 

questioned costs for the DOL grant programs, the Department selected and reviewed random samples of audit 

reports classified in the Clearinghouse database as not having any questioned costs.

In addition to using the Single Audit Act reports, the Department performed additional analyses to assess the level 

of improper payments, including a review of the results of monitoring work performed by ETA regional staff 

responsible for managing the WIA program and DOL OIG audit reports issued for the WIA program. To determine 

an approximate rate of improper payments for the grant programs, the Department divided the average annual 

amount of questioned costs from these sources by the three‐year average of direct program outlays leading up to 

that year. The resulting improper payment rate (assumed to be representative of the FY 2013 rate) was applied to 

the WIA program outlays for FY 2013 to determine the estimated improper payment amount for FY 2013.

The Department determined that it would not be cost effective to evaluate a statistically valid nationwide sample of 

WIA grantees and sub‐grantees each year and perform detailed reviews focused on measuring the nationwide WIA 

improper payment rate. However, the Department continues to consider methods for improving its methodology 

for estimating the rate.

III. WIA Corrective Actions

The WIA estimated improper payment rate for FY 2013 of 0.19% applies to two of OMB’s three categories of error, 

“Documentation and Administration Errors” at 0.17% and “Verification Errors” at 0.02%. No errors in the WIA 

program fit the definition of “Authentication and Medical Necessity Errors”.

The improper payment rate estimate work indicated that the major types of errors found in the WIA program are 

primarily administrative in nature, including allowable costs/cost principles, participant eligibility, and sub‐recipient 

monitoring.

Grant operations are monitored on a continuing basis to ensure that grant activities conform to requirements. 

Monitoring activities are carried out primarily at the regional level by Federal Project Officers (FPOs), and include 

annual risk assessments, on‐site monitoring visits, as well as annual and quarterly desk reviews, all tracked 

electronically in the Grants Electronic Management System (GEMS). Once each year for formula funded grants, and 

upon award for discretionary grants, FPOs assess the risk of each grant assigned using reported information and 

knowledge of the grantees and the grant activities. This assessment is also used to determine the level of 

monitoring to be used in the future (i.e., site visits or technical assistance). For all grants that are considered high 

risk according to the annual risk assessments, on‐site visits are conducted to give the FPO an idea of what activities 

are being carried out by the grantee, and whether or not the grantee is working within the legal limits of the grant. 

Quarterly reviews of financial and performance reports submitted by grantees are performed to ensure timeliness, 

accuracy, and satisfactory progress of completion toward program outcomes. At the end of each quarter, each 

grantee is required to submit a performance based progress report to the regional FPOs. Performance progress 

reports indicate participant service activity and accomplishments against project goals. The grant agreement 

outlines when the progress report is due (i.e., within 15 or 45 days), depending on the fund source. The FPO 

reviews this report to determine if the grantee is meeting projected goals and operating within the terms of the 

grant agreement. The review consists of the FPO comparing the report to the grant agreement to determine if the 

grantee has been performing according to its plan and will meet all goals for the grant as documented in the work 

plan. If there is a deviation, the ETA will work with the grantee to offer technical assistance and assist in getting the 

grant back on track.
Other Information

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174 United States Department of Labor

All reviews are documented, and deficiencies may result in formal corrective active plans. The FPOs provide both 

written and verbal results of reviews to regional management staff and grantees. A record of all of the above 

reviews (e.g., risk assessments, on‐site reviews, annual desk reviews, and quarterly reviews) is maintained in GEMS, 

which allows the FPOs to create an electronic working file of their grant management and oversight activity and 

also provides supervisors and program managers with key grants management information. Regional 

Administrators and their management team within the regional offices are responsible for ensuring that all 

required monitoring is conducted by FPOs.

The ETA Division of Policy Review and Resolution processes each grant at closeout, reviewing final grantee reports, 

the grant closeout package, FPO recommendations, and other documents available to them to determine whether 

the objectives of the grant were accomplished and that all funds were expended as authorized. Expenditures which 

are questioned are resolved through the normal determination process and disallowed costs are forwarded for 

collection.

The Audit Resolution staff receives grantee Single Audit Act reports, which identify questioned costs and/or 

administrative weaknesses in need of correction. These items evaluated using the same determination process 

noted above; disallowed costs are forwarded for collection, and resolutions reported back to the OIG. In addition, 

these units participate in special grantee reviews and provide fiscal policy training for grantee and Federal staff.

Overpayment Prevention and Detection

DOL has established processes that help to prevent, detect and/or recapture overpayments for the WIA program. 

DOL’s Employment and Training Administration (ETA) performs grant monitoring activities on direct grants on a 

periodic basis1. Similarly, for formula grants, the States monitor their sub‐recipients (pass‐through grantees), which 

in turn monitor their sub‐recipient grantees. DOL regional monitoring teams also make on‐site visits to select direct 

grantees and sub‐recipients each year. This cascading monitoring structure results in all grantees and sub‐grantees 

being monitored on a regular basis.

ETA also manages grant closeouts, reviewing final grantee reports, the grant closeout package, related 

recommendations, and other documents, to determine whether the objectives of the grants were accomplished 

and that all funds were expended as authorized. Questioned costs are resolved through the normal determination 

process.

In addition to these monitoring activities, DOL grant programs and their grantees and sub‐grantees are subjected to 

numerous GAO audits, DOL OIG audits, and annual audits by CPA firms who perform Single Audit Act audits of 

Federal grantees. These audits address a wide range of issues, including program effectiveness, management and 

operational issues, financial statements, internal controls, and identification of unallowable costs (questioned 

costs/improper payments). Grants are also covered in the annual DOL internal control assessment, per OMB 

Circular A‐123, Appendix A, which evaluates controls that could impact improper payments. All these monitoring 

activities and related audits and assessments serve as a basis for identifying and correcting issues that could 

potentially lead to improper payments. For FY 2013, DOL developed the Grants and Cooperative Agreements 

Closeout Handbook and tracked compliance through quarterly certifications to OCFO by ETA management. 

Use of Single Audit Act Reports to Prevent, Reduce, and Recapture Improper Payments

All non‐Federal entities that are subject to a Single Audit Act audit are required to submit summary level results 

from their audits and a copy of the audit report to the Federal Audit Clearinghouse (Clearinghouse), which is 

administered by the Census Bureau and operates on behalf of OMB. The Clearinghouse is a central repository of 

information on all Single Audits conducted each fiscal year. For findings noted in Single Audit Act reports, OMB 

 

1

Depending on the grant agreement, grant expenditures may be monitored either on a monthly or quarterly basis, in addition to annual 

reviews.
Improper Payments Reporting Details

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FY 2013 Agency Financial Report 175

guidelines require a corrective action plan to be included in the report, and, in subsequent reports, the status of 

prior year findings is to be reported.

DOL leverages Single Audit Act audits to review and address issues reported relative to DOL grant funds using an 

established periodic review cycle. Additionally, in the summer of each year, ETA verifies that a random sample of 

grantees has conducted and obtained Single Audit Act audits. ETA personnel select the random sample using IDEA 

software. They then access the Clearinghouse and verify that the selected grantees have had Single Audit packages 

filed within the prior two years. If any control deficiencies were noted in the audit package and audit report, ETA 

personnel will contact the DOL OIG to verify that the OIG has the report in its tracking system and is following up 

for resolution. If no report is in the Clearinghouse, ETA personnel will follow up with the grantee to determine if a 

Single Audit was conducted. If a Single Audit Act audits was conducted, then ETA personnel request the grantee to 

submit the report to the Clearinghouse. If not, the grantee is referred to the Office of Grants and Contracts 

Management for follow‐up.

For grantees with Single Audit Act reports identifying funding received directly from DOL and that also identify 

materials weaknesses or significant deficiencies, DOL OIG forwards the reports and finding details to the 

appropriate DOL agency for issue resolution. The responsible agency(s) then determines how to most appropriately 

resolve the questioned costs noted in the report. All findings for direct grantees are considered important to 

resolve, especially those deficiencies that are related to sub‐recipient monitoring, and all findings are tracked 

through to resolution.

The report itself may describe corrective actions that have already been taken, and the A‐133 auditor has accepted 

the actions taken as appropriate to resolve the finding. In this case, the agency simply verifies that the actions 

described in the report were taken.

With some questioned costs, a review must be conducted to determine the exact amount of questioned costs that 

are actually improper overpayments and therefore subject to recapture. These reviews may involve on‐site visits to, 

or email exchanges and discussions with, the grantee to establish the facts related to the questioned costs. At the 

conclusion of this review, the grantee will be informed of the agency’s final determination decision, and be required 

to take whatever corrective actions that may be required to resolve the questioned costs. The agency then verifies 

that the required actions were performed.

With most questioned costs, the amount of improper overpayments is clearly identified in the report, and the 

grantee is already engaged in the process of either reimbursing DOL for the overpayment or adjusting their 

drawdown for a subsequent period to reflect the fact that they have already received the funds to reimburse their 

subsequent grant expenditures. When refunds are collected, they are returned to the original year and 

appropriation from which the obligation was established. For cancelled appropriations, the refunds are returned to 

the U.S. Treasury.

For sub‐grantees with A‐133 Reports identifying funding received from direct grantees (e.g., states), monitoring of 

issue resolutions is the responsibility of the direct grantees that passed the funds through, although the appropriate 

DOL agency may also track resolution through their own grant monitoring and close‐out processes.

For example, within ETA, once determinations are final, they are referred to ETA’s accounting office to establish the 

debt. The ETA accounting office will perform standard collection activities to collect the debt, and if unable to do so, 

will refer the debt to Treasury for further collection efforts.

IV. WIA Accomplishments in the Area of Funds Stewardship Beyond the Primary Recipient

WIA grants support employment and training services by states and local entities and represent a major investment 

by the Federal Government for the benefit of the public. DOL oversees grantee and sub‐grantee operations through 

regular monitoring reviews by its regional office staff, using established systems and processes. The reviews target 
Other Information

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176 United States Department of Labor

at‐risk grantees and focus on high‐risk areas. The reviews assess performance and track data on quarterly financial 

reports back to the grantee’s source records and systems to identify and report problem areas.

V. WIA Improper Payment Reduction Outlook

Table 11 shows the Improper Payment Reduction outlook, for the WIA program, for FY 2012 – FY 2016.

Table 11: Improper Payment Reduction Outlook FY 2012– FY 2016 ($ in millions)

Prog. FY 2012 FY 20131FY 2014 FY 2015 FY 2016

Outlays IP % IP $ Outlays IP% IP$ Est. 

Outlays

IP % 

target

Est. IP 

$ 

target

Outlays IP % 

target

Est. IP 

$ 

target

Outlays Est. IP 

% 

target

Est. IP $ 

target

WIA $3,406 0.22% $7.5 $2,995 Target 

0.44%

Target 

$13.2

$3,550 0.44% $15.6 Projected

$3,384

0.44% $14.9 Projecte

d

$3,365

0.44

%

$14.9

Actual 

0.194%

Actual 

$5.81

1

The 2013 WIA IP rate is comprised of 0.17% overpayments and 0.02% underpayments.

VI. WIA Recapture of Improper Payments Reporting

During FY 2012, a pilot feasibility study was conducted to establish the feasibility and cost‐effectiveness of payment 

recapture audits at the grantee level for the WIA program. It was determined that payment recapture audits at the 

grantee level, while feasible for various types of outlays, would not be cost-effective; therefore, tables have not 

been provided. For WIA programs, identification of overpayments for recovery is primarily done through ETA’s 

onsite monitoring activities, Single Audit Act reports, and OIG program audits. From FY 2009 through FY 2013, 

approximately $1.5 million has been recovered. Table 12 displays overpayments recaptured outside of recapture 

audits.

Table 12: Overpayments Recaptured Outside of Payment Recapture Audits

Agency 

Source 

Amount 

Identified 

(2013)

Amount 

Recovered 

(2013)

Amount 

Identified 

(2009‐2012)

Amount 

Recovered 

(2009‐2012)

Cumulative 

Amount 

Identified 

(2009‐2013)

Cumulative 

Amount 

Recovered 

(2009‐2013)

WIA 

Post‐Payment 

Reviews 

$244,644 $31,022 $24,651,194 $1,436,586 $24,895,838 $1,467,608

For sub‐grantees with Single Audit Act reports identifying funding received from direct grantees (e.g., states), 

monitoring of issue resolutions is the responsibility of the direct grantees that passed the funds through, although 

the appropriate DOL agency may also track resolution through its own grant monitoring and closeout processes. For 

example, within ETA, once determinations are final, they are referred to ETA’s accounting office to establish the 

debt. The ETA accounting office performs standard collection activities to collect the debt, and, if unable to collect, 

refers the debt to Treasury for further collection efforts.

VII. WIA Accountability

ETA revised and expanded training for all grant managers in FY2012. GEMS tracks the grant managers’ grant review 

actions and provides the grant managers with financial and other information useful in managing the grants. The 

ETA Division of Policy Review and Resolution (DPRR) has requirements in its closeout grant officer performance 
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FY 2013 Agency Financial Report 177

standards relating to the requirement to follow up on Single Audit Act, OIG, or GAO audit findings and questioned 

costs relating to WIA grants, and the Director of the Office of Grant and Contract Management has overall 

responsibility for ensuring that these procedures are followed. As noted above, DOL also created the Grants and 

Cooperative Agreements Closeout Handbook, and tracks compliance through Quarterly Certifications provided to 

the OCFO by ETA management.

VIII. WIA Agency Information Systems and Other Infrastructure

WIA programs utilize various tools to execute the risk management process to assess and monitor grantees.

These tools include the Enterprise Business Support System (EBSS), in concert with GEMS. EBSS is a web-based 

solution used to track and manage grants. A component of the EBSS is the automated grant cost reporting system 

that captures grant costs and obligations, which improves fiscal integrity. The combination of the two is part of the 

cradle‐to‐grave electronic grants solution for the entire Department. The GEMS system, mentioned also in Section 

III of this document, is an online grants management tool meant to provide web accessible, role‐based context 

access to grant‐related information from multiple sources. The utilization of the GEMS system by the Federal 

Project Officers (FPO) and program management and financial staff allows ETA a coordinated and comprehensive 

repository of grant‐specific information. ETA published a data validation supplement to the Core Monitoring Guide

used by its FPOs. The supplement includes a “Resource and Tool Guide,” which provides step‐by‐step instructions 

and basic training on data validation for FPOs.

IX. WIA Barriers

No statutory or regulatory barriers exist that limit WIA's ability to address and reduce improper payments. WIA 

programs have the legal authority to establish receivables and implement actions to collect those receivables.

X. Other

Federal Employees’ Compensation Act Program

The Federal Employees’ Compensation Act (FECA) program is a workers’ compensation program covering more 

than three million federal and postal employees. The program provides medical benefits, income replacement, and 

support services to employees with work‐related injuries or, in the case of death, survivor benefits to family 

members.

In FY 2011 and 2012, the Department conducted risk assessments of the FECA program to estimate the risk of 

improper payments. Based on these analyses, the FECA program was determined not to be susceptible to 

significant improper payments. The process involved the following:

 FECA managers quantitatively assessed the risk of improper payments based on outlays,as well as 

qualitatively assessing the risk of improper payments associated with

o Payment processing controls;

o Internal monitoring controls;

o Human capital;

o Program complexity; and

o Nature of payments.

The results of these analyses are as follows:

 FECA managers rated the program as low risk for improper payments.
Other Information

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178 United States Department of Labor

 The improper payment amount projected through analysis of a random sample of payments plus the 

estimated annual amount of improper payments due to fraud indicated that the improper payment rate 

was well under 2.5 percent of outlays and $100 million.

 To validate the results of the risk assessment, a limited scope pilot payment recapture audit of the FECA 

medical program in FY12 indicated that FECA medical payments appears low-risk for improper payments.

 In FY13, internal control testing included attributes to determine whether payments were proper. Results 

indicate that, while there is some room for improvement in processes, the vast majority of payments are 

proper. A revised Improper Payment Methodology will be implemented in 2014 to validate the results.

Contracts/Procurement Payments

Payment Recapture Audits

To implement the requirement for recapture audits for certain programs under IPERA, the services of a contingency 

contractor were secured during FY 2012 to perform payment recapture audits for:

 Payments for procurement contracts, services, operations and maintenance, equipment, land or structures;

 Payments for rent, communications and utilities;

 Payments for printing and reproduction services; and

 Payments for supplies and materials

The contractor’s fees were based on overpayments identified and recaptured. The audit covered contract 

disbursements from October 1, 2007, through July 31, 2012, consisting of approximately 200,000 invoices totaling 

nearly $9 billion. The auditor analyzed disbursement data, vendor master data, and detailed purchase card data.

The audit firm assisted in the recapture of overpayments and provided a report, summarized below, listing areas for 

improvement in internal controls and identifying root causes of errors as well as best practice recommendations for 

preventing future disbursement errors. 

Highlights of Recapture Audit Activities

A full review of DOL’s contract payments from October 1, 2007, through July 31, 2012, identified $2.9 million in 

confirmed duplicate payments out of $8.96 billion in contract transactions – a rate of only 0.0325%. Of the $2.9 

million, $2.77 million had already been recovered through normal business processes prior to the recapture audit. 

The audit recovered $82,894 of confirmed duplicate payments. (Payments totaling $989,752 are still under review 

as potential duplicates. If all are confirmed as duplicate payments, the rate would rise to 0.044%.) In addition to the 

work to identify duplicate payments, vendor statement audits of 789 DOL vendors were also performed. This 

additional step identified $65,658 in overpayments, which were recovered. As of November 1, 2013, the overall 

departmental confirmed overpayment rate of contract payments is 0.0325%. (See table below.)

Contracts/Accounts Payable Recapture Audit

Contract 

Dollars 

Reviewed

Retrieved 

Overpayments 

(Pre-Audit)

Retrieved 

Overpayments 

(Post-Audit)

Total Confirmed Overpayment 

Rate

Total Potential 

Overpayments in Process

$8,964,459,789

$2,768,470 $148,552

Total Confirmed Overpayments $989,752

0.0325% $2,917,022

Even with the extremely low rate, the recovery audit contractor identified recommendations and best practices to 

assist DOL in its program integrity efforts. The following is a list of the most prevalent types of duplicate payments:
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FY 2013 Agency Financial Report 179

 Keying errors: Invoices keyed with slight variations or inconsistencies in vendor number, invoice number, 

invoice date, or invoice amount are the greatest causes of duplicate payments. 

 Multiple related vendors: When the same vendor is set up with multiple vendor numbers on the vendor 

master file, a processor can easily select the wrong vendor number allowing for duplicate payments to be 

processed. 

 Multiple Accounts Payable systems: The existence of multiple Accounts Payable systems or multiple 

instances of the same Accounts Payable system facilitates the creation of duplicate payments. DOL was 

subject to this risk during the crossover from its legacy financial management system, DOLAR$, to the New 

Core Financial Management System (NCFMS) on January 14, 2010.

In addition to the duplicate payment audit, the audit firm conducted a thorough vendor statement audit for highdollar contracts. Through a vendor statement audit, DOL can determine delays in processing flows and identify 

outstanding credits owed. Although many of the factors that cause statement claims occur outside the direct 

responsibility of the Accounts Payable business process, this area does have the ability to ensure these types of 

items are realized by DOL prior to being written off by the respective vendors. 

To conduct the vendor statement audit, the audit firm requested statements from 789 of DOL’s vendors with an 

annual spend of more than $100,000. The audit firm sent three request letters to each vendor. The overall response 

rate accounts for 77% of the aggregate spend of the suppliers targeted. This audit procedure recovered $65,657.97 

in overpayments.

Payment Recapture Audit Reporting

Program or Activity Accounts Payable

Type of Payment (Contract, Grant, Benefit, Loan, or Other) Contract

Amount Subject to Review for 2013 Reporting $8,964,459,789 

Actual Amount Reviewed and Reported (2013) $8,964,459,789 

Actual Amount Reviewed and Reported (2013) $149,448.40 

Amount Recovered (2013) $148,551.92 

% of Amount Recovered out of Amount Identified (2013) 99%

Amount Outstanding (2013) $896.48 

% of Amount Outstanding out of Amount Identified (2013) 0.5999%

Amount Determined Not to be Collectable (2013) $0.00 

% of Amount Determined Not to be Collectable (2013) 0.0000%

Amounts Identified for Recovery (2010) $5,900,000 

Amounts Recovered (2010) $5,600,000 

Cumulative Amounts Identified for Recovery (2010+2013) $6,049,448 

Cumulative Amounts Recovered (2010+2013) $5,748,552 

Cumulative Amounts Outstanding (2010+2013) $300,896 

Cumulative Amounts Determined Not to be Collectable (2010+2013) $300,000 

Do Not Pay Plan

This section describes an important part of DOL’s program integrity efforts designed to prevent, identify, and 

recapture improper payments. Specifically, the Do Not Pay (DNP) solution is a government-wide initiative mandated 

by the Improper Payments Elimination and Recovery Improvement Act (IPERIA) of 2012 (Pub. L. 112-248) to screen 

payment recipients before a grant, contract award or payment is made. Participation in the initiative is required 

under IPERIA and OMB guidance; the initiative is being managed by Treasury.
Other Information

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180 United States Department of Labor

Overview of DNP

IPERIA and OMB directives require agencies to integrate the use of existing Federal databases (collectively known 

as the “Do Not Pay List”) to verify eligibility for Federal payments in order to reduce and eliminate payment errors 

before they occur. DNP provides Federal agencies with a web-based single-entry access portal (Portal) to these 

existing databases and additional data analytics.

At DOL, the DNP Solution is being implemented in three phases over a three-year period and will be designed to 

address the Department’s three major business areas affected: Benefit Programs, Grant Programs, and Contracts. 

In addition, DOL has participated in post-payment reviews for all contract and benefit payments since May 2013.

Approach for Implementing DNP

Incorporating the DNP Solution fully into DOL’s business processes is a major undertaking involving the active 

cooperation of not only OMB, Treasury, and DOL component agencies, but also the states. The OCFO facilitated 

development of a Plan for enrollment and implementation with affected component agencies. DOL’s Accountable 

Officer for Improper Payments, the CFO, is responsible for monitoring and concurring with any changes to the 

Department’s DNP Plan. Component agencies work with OCFO to implement the DNP Solution in their business 

processes, provide status reports when requested, and clear any variations from the DNP Solution Plan with OCFO. 

Component agencies are responsible for implementation of DNP within their business processes and interfacing 

with state stakeholders where appropriate. 

Phase 1 involved choosing the following pilot programs from each of three major business areas: 

 Benefits Programs – UI and Office of Workers’ Compensation Programs (OWCP) benefit programs

 Grant Programs – ETA grant programs

 Contracts – Department-wide procurement and contract payment activities

Lessons learned from Phase 1 and best practices gained from the experience of other Agencies have been 

incorporated into DOL planning for Phases 2 and 3. Phase 1 is expected to be completed by September 2013.

Phase 2 will include expanded rollout of the DNP Solution to more states in the UI and Grants Programs, and will 

emphasize the continued improvement of previously incorporated programs. During Phase 2, DOL will also evaluate 

DNP Solution applicability to additional aspects of Contracts pre-payment and pre-award processes. Phase 2 is 

expected to be completed in September 2014.

During Phase 3, DOL plans to implement DNP across all program areas that can gain value from its use, including 

expanding implementation to all remaining interested states and DOL Benefit and Grant Programs. DOL currently 

plans to complete the majority of this phase by September 2015.

DNP for UI

DOL is coordinating with OMB and Treasury to provide access to the DNP Solution to state agencies for identifying 

potential UI improper payments and/or fraud. Supporting implementation of the DNP Solution is being 

accomplished through two projects: “The Work Number” and the UI Integrity Center of Excellence.

DNP Pilot of “The Work Number”

DOL is testing the effectiveness of cross-matching UI claim records against selected data sources through DNP, 

specifically using “The Work Number” a real-time database compiled by Equifax, directly from payroll feeds of 

employers across the country. It includes current employment and income data on about one third of the U.S. 

workforce and is the largest database of its kind. It is currently used by some government agencies for employment 

and earnings verification. DOL recruited Arizona and Colorado to participate in this pilot. The pilot states will 

conduct a value test for the use of DNP to support existing processes to verify the eligibility of beneficiaries for 
Improper Payments Reporting Details

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FY 2013 Agency Financial Report 181

continuing payments, and to study the feasibility of using the DNP Solution for pre-award activities. Arizona 

finalized an agreement with DNP and Equifax to access “The Work Number” for this pilot in February 2013, and an 

agreement for Colorado remains in development as of September 2013. In the meantime, DOL is moving forward 

with DNP, Equifax, and Arizona to commence the pilot with “The Work Number” during the first quarter of FY 2014 

while Colorado finalizes its agreement. Once the full pilot is completed the results and feedback from state partners 

will be shared with the UI system to promote DNP adoption.

UI Integrity Center of Excellence

DOL selected the New York State Department of Labor to establish a UI Integrity Center of Excellence (Center) to 

support the development, implementation, and promotion of innovative program integrity strategies to reduce 

improper payments, including the prevention and detection of fraud, in the UI program. The Center will:

 Collaborate with Treasury’s DNP unit to develop data analytics and predictive modeling methodologies and 

tools to improve UI fraud prevention and detection.

 Develop a secure portal to routinely communicate fraud schemes among states.

 Identify and pilot new strategies to combat improper payments and fraud, building on the work of states, 

other Federal and state government agencies, and the private sector.

 Identify and disseminate promising practices for state fraud prevention across the UI program.

 Identify state training needs on fraud solutions and integrity strategies, develop a comprehensive training 

plan, and provide training.

As part of its work, the Center is working with the DNP Solution’s Data Analytics Services as both work to develop 

data analytics and predictive modeling methodologies and tools. The Center will be sharing these tools with all 

states across the UI system.

DNP for Benefit Programs

DOL performs weekly pre-award and pre-payment checks against the full version of the List of Excluded Individuals 

and Entities (LEIE), a database designed specifically for Federal health programs. While the public version of LEIE is 

included as part of the DNP database, the full version contains more detailed information, including Tax 

Identification Numbers and Provider Numbers that are not in the public version. Based on post-payment validations 

with DNP showing no instances of improper payments, DOL has found this pre-award and pre-payment review to 

be highly effective.

DNP for the Black Lung Program

The Black Lung Program is currently using the DNP Portal to perform single online searches of the Social Security 

Administration’s (SSA) Death Master File to identify potential improper payments. Since August 16, 2013, the Black 

Lung Program has been successfully submitting current payment files to the Portal. The Black Lung Program will be 

utilizing the Portal for continuous monitoring of payments against the Death Master File upon completion of 

remaining technical issues.

DNP for ETA Grants Programs

ETA was selected as the pilot grantor agency to implement the Do Not Pay initiative for DOL, as its grant programs 

are representative of the various other DOL grants. Furthermore, ETA awards more grant dollars and has more 

active grant programs than all other DOL grantor agencies combined.
Other Information

(Unaudited)

182 United States Department of Labor

Grants awarded by ETA come in two forms, non-competitive and competitive. Generally, most non-competitive 

grants are directed by law and regulation in the form of formula funding. Competitive grants are awarded by ETA 

according to criteria established by law and regulation. In 2013, the pre-award vetting process was updated for 

both types of grant awards (competitive and formula). This process includes using the public version of GSA’s 

System for Award Management (SAM) which is accessible via the Portal along with other internal vetting 

procedures.

Once grants (both competitive and non-competitive) are awarded, the recipients are accountable for monitoring 

the use of grant funds. The recipients are responsible for: pre-award reviews of awards to contractors and subrecipients; pre-payment reviews of payments to recipient employees, program participants, sub-recipients and 

contractors; and post-payment reviews of all payees.

DNP for Contracts

DOL contract officers check 100% of contracts against the General Services Administration (GSA)’s System for 

Award Management (SAM) prior to award. The SAM public list is the primary component of DNP and includes all 

data sources with the exception of the Death Master File.

DNP Post Payment Reviews

Since May 2013, as part of Treasury’s post payment review process known as the “DNP Solution”, the Department 

participates in monthly post-payment reviews for all contract and benefit payments. These payments are matched 

against DNP databases and results are adjudicated by the Department. 
SCHEDULE OF SPENDING

For the Years Ended September 30, 2013 and 2012

(Unaudited)

FY 2013 Agency Financial Report 183

The Schedule of Spending presents an overview of how and where the Department is spending its money. It is 

presented on a budgetary basis, the same as the Combined Statement of Budgetary Resources (SBR). Amounts 

shown below as “Total amounts agreed to be spent” equal amounts shown as “Obligations incurred” on the SBR. 

FY 2012 amounts were changed to conform with revised OMB Circular No. A-136 presentation requirements.

To improve public transparency and the quality of data reported on USASpending.gov, DOL has begun reconciliation 

efforts between obligations reported on the financial statements and spending reported on USASpending.gov.

Obligations included on the financial statements that are not included on USASpending.gov generally include: 

financial assistance direct payments, personnel compensation and benefits, leases, interagency agreements, travel, 

and training. Differences may also exist due to timing differences between obligations reported in DOL's financial 

reporting system and data transmitted to USASpending.gov through the Federal Procurement Data System.

Schedule of Spending

(Dollars in millions) 2013 2012

Section I - What money is available to spend?

This section presents resources that were available to spend by the Department.

Total resources $ 122,766 $ 160,676

Less amount available but not agreed to be spent (3,125) (1,821)

Less amount not available to be spent (1,530) (2,571)

Total amounts agreed to be spent $ 118,111 $ 156,284

Section II - How was the money spent/issued?

This section presents services or items purchased and grouped for the Department’s 

 major programs based on obligations incurred.

Income maintenance

 Financial assistance direct payments $ 71,168 $ 91,161

 Net internal transfers between DOL funds 31,186 45,187

 Personnel compensation and benefits 292 301

 Contractual services and supplies 335 790

 Grants, subsidies, and contributions 4,298 4,747

 Interest 920 926

 Other 448 2,899

Employment and training

 Personnel compensation and benefits 151 148

 Contractual services and supplies 1,577 1,618

 Grants, subsidies, and contributions 4,665 5,350

 Other 273 299

Labor, employment and pension standards; worker safety and health; 

 statistics; other

 Personnel compensation and benefits 1,473 1,462

 Contractual services and supplies 989 1,053

 Grants, subsidies, and contributions 303 298

 Other 33 45

Total amounts agreed to be spent $ 118,111 $ 156,284

Section III - Who did the money go to?

This section identifies with whom the Department is spending money based on obligations incurred.

Individuals $ 71,222 $ 93,358

Net internal transfers between DOL funds 31,186 45,187

State and local governments 7,270 7,926

Other federal agencies 1,744 2,763

Vendors and other 2,877 2,796

Employees 1,771 1,874

Higher education 1,270 1,388

Not-for-profit organizations 771 992

Total amounts agreed to be spent $ 118,111 $ 156,284
184 United States Department of Labor

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Department of Labor Agency Pages

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Bureau of Labor Statistics http://www.bls.gov/

Employee Benefits Security Administration http://www.dol.gov/ebsa/

Employment and Training Administration http://www.doleta.gov

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DOL Enforcement Data 

http://ogesdw.dol.gov/
FY 2013 Agency Financial Report 185

Acronyms

ACSI American Customer Satisfaction Index

AFR Agency Financial Report

AMS Acquisition Management System

ARRA American Reinvestment and Recovery Act

BAM Benefit Accuracy Measurement

BLDTF Black Lung Disability Trust Fund

BLS Bureau of Labor Statistics

BPC Benefit Payment Control

BYE Benefit Year Earnings

CAO Chief Acquisition Officer

CFDA Catalog of Federal Domestic Assistance

CFO Chief Financial Officer

COLA Cost of Living Allowance/Adjustment

CPIM Consumer Price Index‐Medical

CPI-U Consumer Price Index-Urban

CSEOA Community Service Employment for Older 

Americans

CSRS Civil Service Retirement System

CY Current Year

DNP Do Not Pay

DOE Department of Energy

DOL U.S. Department of Labor

DPRR Division of Policy Review and Resolution

DVOP Disabled Veterans’ Outreach Program

EB Extended Benefits

EBSA Employee Benefits Security Administration

EBSS Enterprise Business Support System

EEOICPA Energy Employees Occupational Illness 

Compensation Program Act

ERISA Employee Retirement Income Security Act

ES Employment Service

ESAA Employment Security Administration 

Account

ETA Employment and Training Administration

EUC Emergency Unemployment Compensation

EUCA Extended Unemployment Compensation 

Account

FAC Federal Additional Compensation

FAUC Federal Additional Unemployment 

Compensation

FASAB Federal Accounting Standards Advisory 

Board

FCI Facilities Condition Index

FEC Federal Employees Compensation

FECA Federal Employees’ Compensation Act

FEHBP Federal Employees Health Benefit Program

FEGLIP Federal Employee Group Life Insurance 

Program

FERS Federal Employee Retirement System

FFMIA Federal Financial Management 

Improvement Act

FICA Federal Insurance Contribution Act

FLC Foreign Labor Certification

FLSA Fair Labor Standards Act

FMFIA Federal Managers’ Financial Integrity Act

FPO Federal Project Officer

FUA Federal Unemployment Account

FUTA Federal Unemployment Tax Act

FY Fiscal Year

GAAP Generally Accepted Accounting Principles

GAO U.S. Government Accountability Office

GEMS Grants e‐Management System

GSA General Services Administration

HVRP Homeless Veterans’ Reintegration Program

ILAB Bureau of International Labor Affairs

IPERA Improper Payments Elimination and 

Recovery Act

IPERIA Improper Payments Elimination and 

Recovery Improvement Act

IPIA Improper Payments Information Act

IS Internal Security

IT Information Technology

JVA Jobs for Veterans Act

JVSG Jobs for Veterans State Grants

LEIE List of Excluded Individuals and Entities

LMRDA Labor-Management Reporting and 

Disclosure Act

LPD Lost Production Day

LVER Local Veterans’ Employment 

Representative

MEWA Multiple Employer Welfare Arrangements

MSHA Mine Safety and Health Administration

NASWA National Association of State Workforce 

Agencies

NCFMS New Core Financial Management System

NDNH National Directory of New Hires

NIOSH National Institute for Occupational Safety 

and Health

OASP Office of the Assistant Secretary for Policy

OCFO Office of the Chief Financial Officer

OCIO Office of the Chief Information Officer

ODEP Office of Disability Employment Policy

OFCCP Office of Federal Contract Compliance 

Programs

OIG Office of Inspector General

OJC Office of Job Corps

OLMS Office of Labor-Management Standards

OMB Office of Management and Budget

OPM Office of Personnel Management

ORB Other Retirement Benefits

OSHA Occupational Safety and Health 

Administration

OUI Office of Unemployment Insurance

OWCP Office of Workers’ Compensation Programs

PBGC Pension Benefit Guaranty Corporation

PDO Proposed Decision and Order

PFEI Principal Federal Economic Indicator

PIV Personal Identification Verification

PPACA Patient Protection and Affordable Care Act

PP&E Property Plant & Equipment

PY Prior Year

RAE Revised Annuity Employee

REA Re-employment and Eligibility Assessment

RECA Radiation Exposure Compensation Act

RSI Required Supplementary Information

RSSI Required Supplementary Stewardship 

Information

RTW Return To Work

SAA Single Audit Act

SAM System for Award Management

SAVE Systematic Alien Verification for 

Entitlement

SBR Statement of Budgetary Resources

SCSEP Senior Community Service Employment 

Program

SCSIA Statement of Changes in Social Insurance 

Amounts

SDDS State Dumping Detection System

SFFAS Statement of Federal Financial Accounting 

Standards

SIDES State Information Data Exchange System

SIP Sample Investigation Program

SOSI Statement of Social Insurance

SQSP State Quality Service Plan

SSA Social Security Administration

SST Site Specific Targeting

SUIESO State Unemployment Insurance and 

Employment Service Operations

SUTA State Unemployment Tax Act

SWA State Workforce Agencies

TAA Trade Adjustment Assistance

TAACCCT Trade Adjustment Assistance Community 

College and Career Training

TAP Transition Assistance Program

TOP Treasury Offset Program

TSP Thrift Savings Plan

UC Unemployment Compensation

UCFE Unemployment Compensation for Federal 

Employees

UCX Unemployment Compensation for 

Ex‐Service Members

UI Unemployment Insurance

UIPL UI Program Letter

USC United States Code

USERRA Uniformed Services Employment and 

Reemployment Rights Act

USPS United States Postal Service

UTF Unemployment Trust Fund

VETS Veterans’ Employment and Training 

Service

VWIP Veterans’ Workforce Investment Program

WB Women’s Bureau

WCF Working Capital Fund

WHD Wage and Hour Division

WIA Workforce Investment Act
AGENCY FINANCIAL REPORT

U.S. DEPARTMENT OF LABOR 

Fiscal Year 2013

www.dol.gov